MAMRAJ Vs. BRIJ LAL CHAKRAVARTI

JUDGEMENT

(1.) The respondents, who held a mortgage of certain property from the appellant, Mamraj, brought a suit upon the mortgage against Mamraj and his son, Hanuman Das, and obtained, a decree for sale which was made absolute on May 8th, 1909. The mortgaged property was sold, but the proceeds of the Bale were not sufficient to satisfy the decree. After the institution of the suit but before the decree was passed, Mamraj was adjudicated an insolvent and a receiver was appointed. The respondents applied for a decree for the balance still due to them making the receiver a party to the proceedings. The application was resisted on the ground that as the respondents had enforced their security and recovered a certain amount they could claim nothing more. The objection was overruled. Hence this appeal.

(2.) The objection is obviously not sustainable as regards the appellant Hanuman Das, for he has not been adjudicated an insolvent, and the respondents are clearly entitled to continue their suit against him. The respondents as secured creditors were entitled under Section 31 of the Provincial Insolvency Act to realize their security, as they did, and to prove for the balance of their claim. The question is whether the respondents are entitled to continue their suit against Mamraj and obtain a decree against him under Order XXXIV, Rule 6. Section 16 of the Insolvency Act provides that on the making of an order of adjudication no creditor to whom the insolvent is indebted in respect of any debt provable under the Act shall, during the pendency of the insolvency proceedings, have any remedy against the property or person of the insolvent in respect of the debt or commence any suit or other legal proceeding except with the leave of the Court and on such terms as the Court may impose. When the sole defendant to a suit for the recovery of a debt is adjudicated an insolvent it seems clear that the proper course is to stay the suit and leave the plaintiff to prove his debt in the insolvency proceedings. This has been held to be the proper course in England See Barter v. Dubeux and Co. (1881) L.R. 7 Q.B.D. 413. In the same case it was pointed out that where there is an action against two defendants and one becomes bankrupt, it being a claim against both, of course, the one who does not become bankrupt cannot be made liable unless the action goes on, and such a case is governed by a rule corresponding to Order XXII, Rule 10, and the trustee in bankruptcy may be made a party. Judgment is not given against the trustee or that he pay out of the estate, but judgment being against the other defendant, the plaintiff is at liberty to prove in the bankruptcy the amount of the claim established, and there the trustee is a party because it is necessary both as against the bankrupt s estate and the other defendant that the action should go on. Many of the provisions of the Indian Insolvency Act, including Section 16, are taken from the English Bankruptcy Act, and where the provisions correspond, the decisions of the English courts may properly be referred to as guides to the construction of the Indian Act. The respondents application under Order XXXIV, Rule 6, was a continuation of their suit for the recovery of the mortgage money. A decree under Order XXXIV, Rule 6, is plainly a remedy within the meaning of Section 16 of the Insolvency Act; therefore the respondents are not entitled to obtain such a decree against the appellant Mamraj. I would, therefore, allow this appeal in part and set aside the decree of the court below so far as it affects the appellant Mamraj or his property or the receiver, and leave the respondents to prove their claim in the insolvency proceedings against the estate of Mamraj. The decree of the court below should stand as against Hanuman Das but not so as to make him personally liable for the amount. I would make no order as regards the costs of this Court. Karamat Husain, J.

(3.) I agree.