TADIKONDA BHADRAMMA Vs. TADIKONDA PARVATEESAM AYYAVARU (INSOLVENT)

JUDGEMENT

(1.) These appeals are against the dismissal by the Lower Court of three petitions by a petitioning creditor under Section 53 of the Provincial Insolvency Act seeking to avoid certain alleged fraudulent alienations. The alienations attacked date from June and July, 1921. The insolvency petition was filed on 12 October, 1921. The three petitions, which were by the appellant, were put in 1925. The District Judge's order was passed on 29 April, 1927. The District Judge did not finally decide the petitions on the merits, because he discovered during the hearing of the petitions that the insolvent had failed to apply for his discharge within the time granted, and that the time granted had expired on 31 August, 1926. The appellant applied for extension of time but the District Judge refused it and went on to hold that by force of Section 43 of the Provincial Insolvency Act the adjudication is automatically annulled and that therefore the three petitions will fail. Under Section 37 he ordered the property of the insolvent to vest in the Official Receiver; but he evidently regarded the dismissal of the petitions as an automatic consequence of the annulment; and it is that legal position that has been attacked here.

(2.) The respondents contended inter alia that the District Judge had definitely decided that he would not exercise his power, if he had the power under Section 37, to allow the enquiry into the petitions to be continued. But I am quite clear that that is not so. The learned Judge says, regarding one petition, that he would have set it aside if the petitions had not failed on the technical ground, and of another he says that he finds it impossible to give a decision on the merits as the evidence has not been concluded. In his final order dismissing the petitions he makes no distinction between one and another but deals in one sentence with all three. So it is clear that he regarded himself as having no option but to dismiss the petitions once the adjudication was annulled. The correctness of that legal position has to be examined.

(3.) It is clear from Secs.43 and 37 that when an adjudication is annulled under Section 43 the insolvency proceedings will come to an end except so far as they are kept alive by orders passed under Section 37. That position has been clearly laid down by a Bench of this Court in Jethaji Peraji Firm V/s. Krishnayya (1929) I.L.R. 52 M. 648 : 57 M.L.J. 116, where the Bench considers and to some extent relies upon the judgment of Tiruvenkatachariar, J. and myself in Timmappa V/s. Devasi Harpal (1928) 56 M.L.J. 458. The point from which the Bench differs from my judgment is, if I may say so with respect, based on some misapprehension of the language used by me. I say at page 462, "Under Section 43 therefore the annulment of adjudication is evidently intended to put an end to the insolvency proceedings as a whole." The Bench takes that to mean that I was saying that nothing of the insolvency jurisdiction remains after an order is passed under Section 43. But as Section 37 is itself stated by Section 43 to come into operation on the annulment of adjudication under Section 43, my language was not intended to convey that Section 37 did not come into operation at all. It is clear, however, that the adjudication is annulled save in so far as some direct order is passed and some direct condition is imposed by the Court under Section 37. Prima facie, therefore, if the adjudication is annulled under Section 43, the insolvent is placed status quo ante the insolvency. But Section 37 says that all sales and dispositions of property and payments duly made, and all acts theretofore done, by the Court or receiver, shall be valid; but, subject as aforesaid, 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.