SETH RATANLAL HARLALJEE MAHAJAN Vs. POONAMCHAND BOKHTAWARMAL MAHAJAN

JUDGEMENT

(1.) THE question here is whether an insolvency Court can enforce its orders once the adjudication has been annulled, under Section 39, Provincial Insolvency Act. The facts are as follows. The non-applicant here was adjudicated an insolvent. During the course of the proceedings he proposed a composition scheme, which scheme the creditors accepted and the Court sanctioned. The scheme was thereupon embodied in an order of the Court dated 18th January 1936. The order is in the following terms: The insolvent has filed a composition scheme and it has been accepted by the majority of the scheduled creditors and by more than &farac34;ths in value...therefore approve the scheme and pass the following order accordingly.

(2.) THE order provides for payment of the insolvent's debts to the extent of 6 annas in a rupee and fixes certain annual instalments. It also provides for interest and there is an exigibility clause. The order continues: The instalments shall be deposited into Court with interest as stated above for distribution amongst the creditors.

(3.) A similar question arose in Subramania Ayyar v. Supparaya Pillai A.I.R. 1936 Mad. 424 and Varadachariar, J. held that in cases like this the insolvency Court does not become wholly functus officio. He points out, for example, that the order of annulment can be set aside under Section 40 should the debtor not comply with the terms of the scheme. The question there was whether the Court could proceed against a surety and Varadachariar J. held, following the Privy Council decision in Raj Raghubar v. Jai Indra Bahadur Singh A.I.R. 1919 P.C. 55 , that all Courts have power to enforce their own orders. The Privy Council case was also a case of surety and the question was whether a charge could be enforced by the Court itself or whether recourse to a separate suit was necessary. Their Lordships said: