C JABBARCHAND Vs. C OLIVER

JUDGEMENT

(1.) THE two questions that arise for my consideration in this revision petition relate to the effect of an order of annulment passed under Section 35 of the Provincial Insolvency Act on a creditors money claim and the meaning to be given to the words 'the debts of the insolvent have been paid in full' occurring in that Section.

(2.) THE relevant facts in regard to these two questions are not in dispute. The petitioners instituted O.S. 412 of 1957 against the respondents as the heirs of one Mr. Oliver for recovery of Rs. 960 -0 -0 with costs and future interest from the assets of the deceased debtor. Oliver executed a promissory note of Rs. 1,000/ - in favour of Jabharchand, agreeing to pay interest at Rs. 5/ - per cent per mensem. Thereafter, he filed an application for adjudication as an insolvent and was adjudged as such on 2 -9 -1949. The petitioners proved their debts and were paid Rs. 1028/ - on different dates in respect of the dividends declared by the Insolvency Act. Oliver applied for a discharge and he died before any order could be passed on that application. The Petitioners filed an application for an order of annulment and such an order was passed on 12 -8 -1957. Thereafter, the petitioners instituted a suit on 4 -9 -1957 against the heirs of Oliver for recovery of Rs. 962/ - alleging that the amount was due to them under the promissory note after deducting what had been paid to them prior to the date of annulment. The suit was resisted by the heirs of Oliver on the ground that the debts had been paid in full prior to the order of annulment and that the plaintiffs had no cause of action to institute the suit for recovery of any amount under the promissory note. The trial Court rejected the contentions on the ground that the amount of Rs. 1028/ - paid to the plaintiffs did not amount to payment of the debt in full and that the assets of deceased Oliver were liable for payment of the balance of the debt. The Court accordingly passed a decree in favour of the plaintiffs for Rs. 614 -4 -0 with future interest at 3 per cent per annum and proportionate costs of the suit. Being aggrieved by the judgment and decree, the defendants filed Regular Appeal No. 4 of 1958 and challenged the correctness of the decree of the trial Court on the very grounds urged by them in the trial Court. The learned Civil Judge who heard the appeal came to the conclusion that the order of annulment had been passed under Section 35 of the Provincial Insolvency Act (which corresponds to an identical Section of the Mysore Insolvency Act - -hereinafter referred to as the Act - -and that the payment of Rs. 1028/ - which according to the Official Receiver in the Insolvency amounted to payment of sixteen annas in a rupee in respect of the proved debt and that the plaintiffs were not entitled to maintain the suit. He accordingly allowed the appeal and dismissed the suit directing the parties to bear their respective costs.

(3.) SECTION 37 of the Provincial Insolvency Act which deals with the effect of annulment lays down that :