In Re: of Ladha Parbat and Jethalal Parbat (Cause. No. 46/1931.) [1932] EACA 35 (1 January 1932)

## INSOLVENCY JURISDICTION

## Before LUCIE-SMITH, J.

## Cause No. 46/1931.

IN THE MATTER OF LADHA PARBAT AND JETHALAL PARBAT, carrying on business as LADHA PARBAT & BROS.

Lien as against trustee in bankruptcy—Second lien—Registration of Titles Ordinance (Cap. 142) (Form "U", Sch. I)-The Australian Torrens System.

$Held$ (21-4-32): That a lien duly constituted is effective as against the trustee in bankruptcy.

Phadke for Trustee.

Daly for Mepa Versi and Bros.

A Receiving Order was made against the debtors on 22nd May, 1931, and on 23rd June, 1931, the debtors were adjudicated bankrupt. The debtor, Ladha Parbat, was the registered owner of a plot of land identified as L. O. No. 209/1243 and situate at Pangani, Nairobi. On 26th September, 1929, a lien was created on the said land in favour of one M. M. Bhutt, by deposit of title deeds. On 6th June, 1930, and before the amount due under the first mentioned lien had been paid a second lien was registered in favour of the said Bhutt and Mepa Versi and Brothers jointly. A claim was lodged in the bankruptcy proceedings by Mepa Versi & Bros. The first lien-holder relied on his security. The applicant (trustee) sought the Court's directions as to whether the incumbrance of 6th June, 1930, was valid or otherwise, and whether Mepa Versi & Bros. should be treated as secured or unsecured creditors.

Phadke.—The property has been sold and after satisfying the first lien-holder there remains some Sh. 5,000. The same documents cannot be deposited with two different people. The trustee is not satisfied that the first lien was satisfied by registration of the second lien.

Referred to Registration of Titles Ordinance (Cap. 142) and to Form "U" of Schedule I (See Ord. 32 of 1931). Indian Transfer of Property Act.

$Daly$ —A lien is not a charge. The first lien-holder joined in the second lien.

Kunhan Mayan and others v. The Bank of Madras, 19 M. 234.

JUDGMENT.—This is an application for directions by the trustee in bankruptcy as regards the validity or otherwise of a lien purported to be granted by the debtor in the bankruptcy to Messrs. Mepa Vershi & Co. on 6-6-30.

From the amending Ordinance 32/31, section 8, it would seem obvious that the intention of the Legislature in section 66 of Cap. 142 was that the word "lien" there used should be interchangeable as "charge or lien" as was done in section 7 of the Yorkshire Registries Act, 1884, and means a lien or charge - by reason of a deposit of title deeds.

The position as regards subsequent mortgages under the Torrens System is laid down and discussed in Hogg's Australian Torrens System at pp. 963 et seq. and at p. 971, the learned author says: "The considerations which apply to sub-mortgages apply also to mortgages of a charge. So, with respect to charges subsequent to the first, the same principles apply as in the case. of puisne mortgages and further advances by a first mortgagee."

A lien or charge was given by the debtor to M. M. Bhutt on 9-9-29 and duly registered on 28-9-29.

A second lien or charge was given by deposit of the same title deeds on 6-6-30 and duly registered on the 7-6-30. This second lien was in favour of M. M. Bhutt the original holder of the deeds and Mepa Vershi Bros.

The result would appear to be that M. M. Bhutt held the title deeds firstly in respect of his lien of 28-9-29, and secondly, jointly for himself and Mepa Vershi Bros. in respect of the lien of $7-6-30$ .

I understand that for convenience both these liens have been discharged and the property sold. It appears to me that the proceeds of such sale should be applied first in satisfaction of M. M. Bhutt's claim under his lien, and the balance applied to the liquidation of the claim of Mepa Vershi that was secured by their lien of 7-6-30. After such payment Mepa Vershi Bros. would come in as unsecured creditors in respect of any balance remaining due to them.

In the circumstances of the case the costs of this application will be paid out of the estate.

Ņ,