CHALAVADI NARASIMHAM Vs. CHALVADI RAMAYYA

JUDGEMENT

(1.) The present appeal, purporting to be under Section 75, Provincial Insolvency Act, is against the order passed by the District Judge of Nellore in an application filed by the appellants (insolvents) under Sections 4 and 5 of the Act, praying that a certain composition scheme be declared to be pending, that two interlocutory applications which were disposed of be reopened, and that Chalvadi Ramayya, the respondent, be removed from the schedule of creditors and directed to deposit a sum of Rs. 386-10-8 into Court. At the end of Para. 10 of his judgment, the learned District Judge dismissed the application as clearly untenable.

(2.) The main question argued before me is a preliminary one; whether an appeal lies on the ground that the insolvent has merely a spes and no legal interest in the property and is not therefore a person aggrieved. Reference has been made to the Full Bench decision of this Court in Harirao v. Official Assignee, Madras, 49 Mad. 461 : (A. I. R. (13) 1926 Mad. 666) where in considering the question whether an appeal lay under Section 8(2), Presidency Towns Insolvency Act by an insolvent, it was held that the insolvent was not a person aggrieved and that an appeal did not therefore lie. Section 8(2) enacts that: "Orders in insolvency matters shall, at the instance of any person, aggrieved, be subject to appeal as follows. . . . ." The wording is thus seen to be very different from that of Section 75, Provincial Insolvency Act, which says, "the debtor, any creditor, the receiver, or any other person aggrieved by a decision come to or an order made in the exercise of insolvency jurisdiction by a Court subordinate to a District Court may appeal. . . ." In considering the question before them, the learned Judges were referred to an earlier decision of this Court in Sivasubramania v Theethiappa, 47 Mad. 120 : (A I. R. (11) 1924 Mad. 163) in which it was held that an adjudicated insolvent was entitled as person aggrieved with in the meaning of Section 46(2) of Act III [3] of 1907 to appeal against the order admitting a person as a creditor; the reason given by Old-field J. in his judgment being that the insolvent would eventually be entitled to any surplus remaining after the creditors who had proved had been satisfied. That argument was clearly inconsistent with the reasoning in the Full Bench case, as Krishnan J. pointed out. Moreover, the decision in Sivasubramania v. Theethiappa, 47 Mad. 120: (A.I.R. (11) 1924 Mad. 163) was one based on the old Act, whereas in the present Act the word "insolvent" in Section 33 (3), which is the relevent subsection, was replaced by the word "receiver;" so in view of the Full Bench decision in Harirao v. Official Assignee, Madras, 49 Mad. 461 : (A. I. R. (13) 1926 Mad. 656 and the change of the wording of Section 33 (3) Sivasubramania v. Theethiappa, 47 Mad. 120: (A.I.R-(11) 1924 Mad. 163) can hardly be said to be good law. The law was considered by King and Bell JJ. in Subramania Aiyar v. Valliamma, I.L.R. (1946) Mad. 50: (A.I.R. (32) 1945 Mad. 287), where they very pertinently pointed out that the argument that the insolvent would never be a person aggrieved would mean that Section 68 would never have any application to an insolvent, although the legislature clearly intended insolvents to have a right under that section. The wording of Section 75 is not quite the same as Section 62, because the word "debtor" is used instead of "insolvent;" but the word "debtor" would clearly include an "insolvent." Venkataramanayya v. Bangarayya, 67 M. L. J. 942: (A. I. R. (22) 1935 Mad. 107) was apparently a case under Section 75(1), Provincial Insolvency Act, despite the headnote to the contrary; and there the principle laid down by the Pull Bench decision under the Presidency Towns Insolvency Act was applied to the corresponding provisions of the Provincial Insolvency Act, though there is nothing in the judgment which indicates that the attention of the learned Judges was drawn to the difference in the wordings of Section 75, Provincial Insolvency Act and of Section 8(2), Presidency Towns Insolvency Act. The learned Judges, however, noted that the Full Bench had approved of the decision in Sakhavat Ali v. Radha Mohan, 41 ALL. 243: (A. I. R. (6) 1919 ALL. 284) which was under the Provincial Insolvency Act. They however did not note that that decision was under the old Act and that Section 46 which corresponds to the present Section 75, gave a right of appeal only to "any person aggrieved" and not to the "debtor, any creditor, the receiver, or any other person aggrieved," as in the present Act. I also applied the principle laid down in the Full Bench case, in Chennabasappa v. Official Receiver, Bellary, 1943-1 M. L. J. 127: (A.I.R. (30) 1943 Mad. 266) but without referring to the peculiar wording of Section. 75, or to the other decisions. The only other decision of this Court which seems to deal with this matter is Kannappa Chettiar v. Subramania Chettiar, 1944-1-M. L. J. 55: (A. I. R. (31) 1944 Mad. 184) where Kuppuswami Aiyar J. discussed at length the various decisions quoted before him. He apparently found it difficult to reconcile these decisions and disposed of the case on the merits, applying the principle laid down (in Ahmed Mohammad Paruk v. Mohan Gopal Jew, 44 C. W. n. 665. I cannot however apply those principles in this case; because the learned Judges in this case dissented from the conclusions arrived at by the Full Bench of this Court in Harirao v. Official Assignee, Madras, 49 Mad. 461 : (A I. R. (13) 1926 Mad. 556) and by the Allahabad High Court in Sakhawat Ali v. Radha Mohan, 41 ALL. 243: (A. I. R (6) 1919 ALL. 284). In Makhanlal Govindram v. Bhagwan Singh, 17 Pat 201: (A. I. R. (25) 1938 Pat. 471), however, it was held that Section 76 of the Act gave the debtor a right of appeal.

(3.) It is thus seen that the decisions in Subramania v. Valliamma I. L. R. (1946) Mad. 50: (A. I. R. (32) 1945 Mad. 287) and Venkataramanayya v. Bangarayya, 67 M. L. J. 942: (A. I. R. (22) 1935 Mad. 107) are in direct conflict. It is true that there are certain differences in the wording of Sections 68 and Section 75; but the differences do not seem to me to affect the principle to be applied. If an insolvent has no right to file an application under Section 68, he would have no right under Section 75. Since the question here raised is of importance and is likely to arise frequently, it seems desirable that I should not attempt to decide this matter myself and that it should be referred to a Full Bench for disposal.