KESAVA PILLAI Vs. RAMAKRISHNA PANICKER

JUDGEMENT

(1.) I think the court below was right in holding that an application made under S.16 of the Travancore Debt Relief Act, II of 1116, cannot be withdrawn although my reasons might not be quite the same.

(2.) Once such an application has been entertained, the position of the applicant debtor is akin to that of a debtor who has been adjudicated insolvent, and there can be no question whatsoever of any withdrawal of the proceedings. For, by reason of Cl. [e] of sub-s.(3) of S.16, the court gets control of all the assets of the debtor even if there is no actual vesting as in insolvency. Thereafter the court holds the assets in trust for settling the liabilities of the debtor and paying the debtor his due share in accordance with S.19; and I should think (although this is not expressly provided for) it may return to the debtor any surplus left after the debts have been discharged, in other words, after the liabilities have been fully settled, a contingency not ordinarily to be expected. I am not impressed with the argument (assuming that it was seriously advanced) that all that S.16 (3) (e) says is that the debtor should make a statement that he unconditionally leaves all his assets in the control of the court and that such a statement, especially when made by a debtor, is not tantamount to his actually leaving the assets in the control of the court. In fact by the very entertainment of an application under S.16 of the Act there is, as I have said, a stage reached similar to that in S.28 of the Provincial Insolvency Act and I think it is because there can be no question of withdrawal that the Act advisedly makes no provision similar to S.14 of the Provincial Insolvency Act for the withdrawal of a petition. Neither is there provision for anything like annulment. The statement in Hathi Bhai Sait v. Gopala Pillai (XXXIII TLJ. page 627 at page 628) that S.18 of the Debt Relief Act says that the procedure prescribed in the Insolvency Act shall mutatis mutandis be applicable to the proceedings under S.16 and that there can be a withdrawal by leave of court is not quite correct, for, S.18 does not make the Insolvency Act applicable mutatis mutandis to all proceedings pursuant to S.16, but only to the determination of the admissibility and amount of the claims by or against the debtor. I have no doubt in my mind that, once the court is seized of the assets of the debtor and holds it in trust for the benefit of the creditors and of the debtor himself, there can be no question of any return of the assets to the debtor or of any withdrawal of the proceedings until that trust has been discharged in accordance with S.19, although I might not go to the extent of saying, as was said in Sankaran v. Kochukutty (1953 KLT page 883 at page 914) that, on the admission of an application, the creditors and the debtor become coowners of the debtors assets.

(3.) I might add that if an application made under S.16 is allowed to be withdrawn, especially after it has been pending for some time (in this particular case for 9 years) it might well be that creditors who refrained from filing suits or executing decrees expecting that their claims would be settled in the proceedings will find that their claims are barred by time, for, I find no provision in the Act similar to S.78 of the Provincial Insolvency Act enabling the exclusion of the period for which the application was pending. And, S.14 of the Limitation Act might not be a complete answer applicable to all cases although in the particular case considered in Parameswaran Kartha v. Valia Raja [ 1958 KLT 576 it was held to apply. This, of course, cannot affect the construction to be placed on the statute, but is sufficient to show that a withdrawal of proceedings once initiated under S.16 of the Act was never contemplated.