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Submitted to:
Prof. Anand Shrivas
Submitted by:
Vidit Harsulkar (2015-021)
IV Year, VIII Semester
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CONTENTS
Bibliography ............................................................................................................................ 11
2
LIST OF CASES
1. Beckham v. Drake
2. Defries v. Milne
5. Guy v. Churchill
6. Howard v. Crowther
7. Hodgon v. Sidney
9. Miller v. Jackson
LIST OF STATUES
CHAPTER I: INTRODUCTION
Tort law serves to protect a person's interest in his or her bodily security, tangible
property, financial resources, or reputation. Interference with one of these interests is redress
able by an action for compensation, usually in the form of unliquidated damages. The law of
torts therefore aims to restore the injured person to the position he or she was in before the
tort was committed (the expectation or rightful position principle).
The law of torts determines whether a loss that befalls one person should or should not be
shifted to another person. Some of the consequences of injury or death, such as medical
expenses incurred, can be made good by payment of damages. Damages may also be paid, for
want of a better means of compensation, for non-pecuniary consequences, such as pain.
In "The Aims of the Law of Tort" (1951) Glanville Williams saw four possible bases on
which different torts rested: appeasement, justice, deterrence and compensation. The law
tends to emphasise different aims in relation to intentional torts from those in relation to
negligence or strict liability. After Williams' article, there grew up a school of economic
analysts of law who emphasized incentives and deterrence.
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Under the Common law, a convicted person, in spite of his imprisonment, retains all civil
rights which cannot be taken away expressly or by necessary implication. 1 In the law of torts,
every person has a capacity to sue and to be sued in tort. There are some variations to this
rule in case of certain persons and their position has, therefore, been specifically discussed in
the following cases:
1. Act of State – how far is state vicariously liable for the torts of its servant.
2. Corporations.
3. Minor
4. Independent and joint tortfeasor (Composite Tortfeasor)
5. Insolvency
1
Ratanlal and Dhirajlal, THE LAW OF TORTS, p 33; Raymond v. Honey (1982) 1 All ER, p.759
2
R K Bangia, LAW OF TORTS, Allahabad publication.
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While studying the concept of insolvency, one must first understand the meaning of the word
‘insolvent’ and ‘receiver’ or ‘official assignee’.
Insolvency in general terms can be defined as 1) the condition of having more debts
(liabilities) than total assets which might be available to pay them, even if the assets were
mortgaged or sold. 2) a determination by a bankruptcy court that a person or business cannot
raise the funds to pay all of his/her debts. The court will then "discharge" (forgive) some or
all of the debts, leaving those creditors holding the bag and not getting what is owed them.
The supposedly insolvent individual debtor, even though found to be bankrupt, is allowed
certain exemptions, which permit him/her to retain a car, business equipment, personal
property and often a home as long as he/she continues to make payments on a loan secured
by the property.
3.1 Receiver
1) is a neutral person (often a professional trustee) appointed by a judge to take charge of the
property and business of one of the parties to a lawsuit and receive his/her rents and profits
while the right to the moneys has not been finally decided. Appointment of a receiver must be
requested by petition of the other party to the suit, and will only be authorized if there is a
strong showing that the moneys would not be available when a decision is made. The funds
are held for the prevailing party. 2) a person appointed to receive rents and profits coming to
a debtor either while a bankruptcy is being processed or while an arrangement is being
worked out to pay creditors, so that funds will be paid for debts and possibly available for
distribution to creditors.
The receiver is appointed by the process of receivership, performed by the court to
take custody of the property, business, rents and profits of a party to a lawsuit pending a final
decision on disbursement or an agreement that a receiver control the financial receipts of a
person who is deeply in debt (insolvent) for the benefit of creditors. Thus, the term "the
business is in receivership."
As regard torts committed against an insolvent, a distinction is to be drawn between
tort committed against the person and tort committed against property. A right of action
passes to the official assignee or receiver if the action is exclusively in respect of a tort,
resulting in injury to an insolvent’s property. A right of action in respect of a tort exclusively
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3
Howard v. Crowther (1841) 8 M& W 601, 151 ER 1179.
4
Hodgon v. Sidney (1866) LR 1 Exch313.
5
Bekham v. Drake (1849) 2 HL Cas 579 at 632, 9 ER 1213.
6
Wilson v. United Counties Bank Ltd. (1920) AC 102, HL.
7
Defries v. Milne [1913] 1 Ch 98 at 109, CA, per Farwell IJ.
8
Dawson v. Great Northern and City Railway Co. [1905] 1 KB 260 at 271, CA, per Striling LJ.
9
Seear v. Lawson [1880] 15 ChD 426, CA; Guy v. Churchill [1884] 40 ChD 481
10
King v. Victoria Insurance Co. Ltd. [1896] AC 250, PC; Compania Columbiana de Seguros v. Pacific Steam
Navigation Co.
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King v. Victoria Insurance Co. Ltd. [1896] AC 250, PC
12
Bankruptcy Act 1914 s 30(1)
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trustee13. The bankrupt remains liable to be sued for his tort, even after his discharge, so the
facts give rise to a claim for unliquidated damages in both tort and contract, the claim is
provable against the trustee as a claim contract.14
Power to sue
Where the tort protects only a purely personal interest, for example, assault or
slander15 the bankrupt retains the right to sue, and the claim does not pass to the trustee for
the benefit of creditors. Where the purpose of the tort is to preserve property, for example
with an action of recovery of land, the cause of action passes to the trustee.
If there are two separate causes of action in the sense that two different actions may
be brought in respect of them16, one of which personal, for example, in respect of damage to
business interests, the personal right remains with the bankrupt and the proprietary one vests
in the trustee.17 Those rights of action are given in respect of the immediate and present
violation of the possession of the bankrupt, independent og his rights to property, and are an
extension of the protection given to his person; further, the primary personnel injury to the
bankrupt is the principal and essential cause of action.18
13
If the claim have been liquidated before the bankruptcy, the plaintiff can prove it in the bankruptcy: Ex p
Mumford [1808] 15 Ves 28, 33 ER 763.
14
Re Great Orme Tramways Co [1934] 50 TLR 450. See also [205] limitation of actions.
15
Re Wilson, ex P Vine [1878] ChD 364, CA
16
Re Wilson, ex P Vine [1878] ChD 364, CA
17
Wilson v. United Countries Bank Ltd. [1920] AC 102 at 131, HL, per Lord Atinkson; cf Re Kavanagh (a
bankrupt) [1950] WN 15, CA (the fullest report)
18
Beckham v. Drake (1849) 2 HL Cas 579 at 612, 9 ER 1213 Cresswell J.
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The stream of insolvency laws may be segregated chiefly under two heads: personal
insolvency, which deals with individuals and partnership firms governed by Provisional
Insolvency Act, 1920 and Presidency Towns Insolvency Act, 1908 and corporate insolvency,
whose consequence is winding up of the company under the Companies Act, 1956.
In the process of liberalisation, deregulation and adopting market economy, India is
experiencing a massive growth of retail loans to individuals, housing loans and credit card
users. On account of phenomenal rise in retail lending it will be necessary in the near future
to give a re-look at the personal insolvency laws to ensure that any insolvency proceedings
against individuals are also expeditiously decided.
However, the basic tenets of corporate insolvency may be classified as:
Restoring the debtor company to profitable trading where it is practicable;
To maximise the return to creditors as a whole where the company itself may not be
saved;
To establish a fair and equitable system for the ranking of claims and then distribution
of assets among creditors, involving a redistribution of rights;
To provide a mechanism by which the causes of failure may be identified and those
guilty of mismanagement brought to book;
Placement of the assets of the company under external control;
Substitution of collective action for individual pursuits;
Avoidance of certain transactions and fraudulent conveyances, dissolution and
winding up etc.
In context of corporate laws, the word ‘insolvency’ has neither been used nor defined.
However, s. 433 (e) covers a company, which is ‘unable to pay its debts’, and thus constitutes
a ground for winding up of the company. Inability to pay its debts would be a case where, a
company’s entire capital is lost in heavy losses and no accounts are prepared and filed and no
business is done for one year. In such circumstances, the registrar of companies makes out a
case of inability to pay debts. These debts however, would only include debts, incurred after
the legal. Incorporation of the company. Inability to pay debts has even been amplified in s.
434 wherein, a creditor with a due of Rs. 500 or more serves a demand by registered post and
the company neglects to pay, secure or compound the same in three weeks, in cases where the
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execution of a decree returned unsatisfied and also where the court is otherwise satisfied that
the company is unable to pay its debts.
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BIBLIOGRAPHY
Books –
1. R K Bangia, LAW OF TORTS, 21st ed.(2008), Allahabad law agency
2. Halsbury, LAWS IN INDIA, 29(1) torts, Butterworths publications.
3. Justice G P Singh, THE LAW OF TORTS, 25th ed.(2008), Wadhwa &Company Nagpur
4. Sumant Batra,1st ed., (2002). AN OVERVIEW OF THE NEW INDIAN INSOLVENCY
BILL.
Reports -
1. V.B. Balakrishna Eradi. J., Committee Report.
2.Stewart, UNCITRAL Model Law and Cross-Border Insolvency, conference on Legal
Aspects of Cross-Border Insolvency.
Internet-
1. http://en.wikipedia.org/wiki/Tort#Liability.2C_defenses.2C_and_remedies
www.lawguru.com
2.http://dictionary.law.com/default2.asp?searched=insolvent&type=1&submit1.x=&submit1.
y=&submit1=Look+up