K V CHANDRAMOULESWARAN Vs. G KRISHNASWAMI NAIDU

JUDGEMENT

(1.) This revision petition is against the order of the learned District Judge of Coimbatore confirming the order of the learned Subordinate Judge of the same place dismissing a petition under Section 16, Provincial Insolvency Act, and Sections 151 and 152, Civil P. C.

(2.) One Krishnaswarni Naidu filed a petition against the two respondents, namely, second and third respondents in this petition, for adjudicating them insolvents in I. P. No. 24 of 1946 on the file of the Sub Court, Coimbatore. The respondents who were sought to be adjudged insolvents pleaded that no amount was due to the first respondent, the petitioning creditor. The third respondent in particular pleaded that he was not unable to pay his debts and actually deposited in court on 22-2-1947 a sum of Rs. 1680, being the entire amount claimed by the first respondent-petitioning creditor, as due to him. The third respondent also challenged the first respondent to establish his claim by way of suit and draw the amount if ho obtained a decree in respect of his claim. On such deposit of the sum of Rs. 1680 the learned Subordinate Judge who heard the application dismissed the said petition of the first respondent by an order dated the 24th February 1947. The learned Subordinate Judge in his order held that as a result of the deposit it followed that the respondents were in a position to pay their debts and that it was not necessary therefore to go into the question whether there was really any debt due to the petitioner in the said petition. Ho opined that in the circumstances there was no longer any necessity, nor sufficient grounds to adjudicate the respondents as insolvents. He further ordered that as per the agreement entered into between the respondents and the petitioning creditor, the amount deposited in court could be kept earmarked to meet the debt of the petitioning creditor if any, and if the petitioning creditor could establish his claim in a suit and obtain a decree he can draw the money from court. In the opinion of the court, the agreement entered into between the petitioning creditor and respondents 2 and 3 was a right one and it accordingly directed the money deposited to be kept earmarked for the claim o the petitioner as and when he obtained a decree against respondents 2 and 3. It also gave time for the filing of the suit by the petitioning creditor and directed that in default of a suit being filed within the time stipulated the 2nd respondent (3rd respondent in C. R. P. No. 473 of 1950) could draw out the amount deposited in court by him. In the event of the petitioning creditor getting a decree, the amount in court deposit will bo paid off in satisfaction of the decree, was the further direction made by the learned Subordinate Judge. On the strength of this order the learned Subordinate Judge thought that there was no more justification for proceeding with the application of the petitioning creditor and so dismissed the same. Nearly five months after this dismissal order, the petitioner now before me filed a petition, I. A. No. 130 of 1947 in the said I. P. No. 24 of 1946 praying that the Sub Court should be pleased to reopen I. P. No. 24 of 1946 on its file and substitute and implead the petitioner as the 2nd petitioning creditor in the said insolvency petition and allow the petitioner to continue the application for the adjudication of the 2nd respondent before him as an insolvent. This petition was purported to be filed under Section 10 of the Provincial Insolvency Act and also under Sections 151 and 152 C. P. C. The learned Subordinate Judge who heard this application, dismissed the application holding that a prayer of the kind contained in the application of the petitioner could be granted only if the original petitioning creditor did not proceed with his application against respondents 2 and 3 with diligence. According to him, Section 16 provided that where the petitioner does not proceed with due diligence with his petition, the court may substitute as petitioner any other creditor to whom the debtor may be indebted in the amount required by the Act in the case of a petitioning creditor. He said in so far as the dismissal of I. P. No. 24 of 1946 was not on the ground that the petitioning creditor had not proceeded with the petition with due diligence, Section 16, Provincial Insolvency Act, would not entitle the present petitioner to sustain the application for being brought on record in substitution of the original petitioning creditor. In dismissing the said application the learned Subordinate Judge also relied upon a ruling of a Division Bench of the Rangoon High Court in --'Gye Maung v. A.K.P. Chettyar firm', AIR 1933 Rang 251 (A), in which the facts were identical with the facts of the present petition.

(3.) Against this order oi dismissal, the petitioner preferred an appeal before the District Judge of Coimbatore, questioning the validity of the order of the learned Subordinate Judge. But the learned District Judge who heard the appeal in C. M. A. No. 32 of 1949 agreed with the learned Subordinate Judge and dismissed the appeal holding that the petition of the petitioning creditor was dismissed not on default of the petitioning creditor or for lack of due diligence on his part but that the petition was dismissed on merits and that under Section 25(1), Provincial Insolvency Act, if the court was satisfied that the debtor was able to pay his debts, the court had no alternative but to dismiss the petition and inasmuch as the order dated 22-2-1947 passed by the learned Subordinate Judge was on that basis there was no alternative for the learned District Judge but to dismiss the said appeal.