PANNA LAL Vs. OFFICIAL RECEIVER

JUDGEMENT

(1.) These are appeals brought by certain creditors against an order of the learned District Judge of Jhansi sitting as an insolvency Court dated 19 May 1929 in which he has refused to add the names of the applicants as creditors to whom distribution shall be made of the assets of a certain firm. This firm Abdulla Usman- Abdul Ghaffer was adjudicated insolvent in April 1927 on the application of certain creditors. The insolvent firm did not apply for discharge and accordingly on 29th April 1929 the Court directed that the insolvency should he annulled and that the assets in the hands of the receiver should be distributed among the creditors. That order has not been brought in appeal before us, but the applicants desire that they should also be added to the creditors to whom distribution should be made. After this order had been made the applicants applied to be added to the creditors and their applications were refused in the order of 19 May 1929 now before us in appeal. We consider that the order of 29 April 1929 was an order which was without jurisdiction because Section 37, Prov. Ins. Act, merely directs: Where an adjudication is annulled, the property of the debtor who was adjudged insolvent shall vest in such person as the Court may appoint, or, in default of any such appointment, shall revert to the debtor to the extent of his right or interest therein on such conditions (if any) as the Court may, by order in writing, declare.

(2.) We consider that this section does not allow an insolvency Court on annulling an insolvency to proceed to distribute the assets of the insolvent among any of the creditors. The distribution of assets is a proceeding in insolvency and by annulling the insolvency, the Court comes to the conclusion that it will not proceed with the insolvency. Having come to that conclusion, the course open to the Court is either to return the. property to the debtor on condition that he furnishes security which will make it available to the creditors to take their remedy under the ordinary civil law, or pending such security or for some other reason the Court may direct the property of the. insolvent in the hands of the receiver to vest in a certain person. But the words: "to vest in such person" do not mean distributing the property among the creditors. Such vesting is only for the purpose apparently of making the property available to creditors to proceed through the civil Court. Although the order of 29 April 1929 has not been brought before us in appeal, still it is open to us to alter that order under the powers of this Court under Section 115, Civil P.C. Accordingly, we set aside that order except for the portion which directs that from the assets in the hands of the receiver the fee due to the receiver will be paid and whatever may be due to successful objectors will be allowed. Having therefore set aside the portion of the order which directs distribution among the creditors, we remand this case to the District Judge for passing a suitable order under Section 37, Prov, Ins. Act, which shall either vest the balance of the property in such person as he may appoint or will revert the balance of the property to the debtor under suitable conditions if any.

(3.) In appeal No. 169 the Official Receiver will receive the costs in the remaining appeals. The appellants whose case has failed will pay their own costs. No one has appeared on the other side. These appeals therefore fail and are dismissed.