GANPATLAL HARDEODAS AGARWAL Vs. TULSIRAM MANGILAL AGARWALE

JUDGEMENT

(1.) THE order in this case will govern also Civil Revision No. 788 of 1941. The defendant executed promissory note in favour of the plaintiff in 1980, on 8th March 1930 in civil Revision No. 25 of 1942 and on 4th February 1930 in civil Revision No. 788 of 1941. On 16th February 1931, the creditors of the defendant presented a petition to adjudge him insolvent. On 12th February 1932, an order of adjudication was passed against the defendant. On 6th January 1989, the order of adjudication was annulled. The present suit was instituted for recovery of the amount due, on 28th January 1941 in civil Revision No. 25 of 1942 and on 2nd January 1941 in civil Revision No. 788 of 1941. The main dispute in the case between the parties is whether the plaintiff's suit is within time. The plaintiff wanted to escape the bar of limitation by pleading that he was entitled to deduct the whole period during which the proceedings in insolvency were pending, i.e., from 16th February 1931 (the date of the presentation of the insolvency petition) to 6th January 1939 (the date of annulment of the order of adjudication). The contention for the defendant was that under Section 78(2), Provincial Insolvency Act, the creditor is entitled to deduct only the period from the date of adjudication to the date of annulment" of the order of adjudication; the creditor is not entitled to rely on Section 23(7) of the Act and thereby exclude the whole period from the date of presentation of the petition to the date of annulment of the adjudication on the legal fiction that the adjudication relates back to the date of the presentation of the petition. The Court below held that the defendant's contention was sound, and it dismissed the plaintiff's suits. Against this decision, the two applications for revision have been filed.

(2.) THE view taken by the lower Court finds support in Venkataramayya v. Subbarayudu A.I.R. 1936 Mad. 290 and Sambayya v. Pedda Subbayya A.I.R. 1938 Mad. 19 My attention has been invited to the decision in Kewal Krishna v. Special Official Receiver, Punjab A.I.R. 1939 Lah. 384 where it was held that a debt incurred between the date of petition and the date of adjudication is not provable under the provisions of Section 34(2), Provincial Insolvency Act, as that section is governed by Section 23(7) of the same Act for all purposes. No doubt there are observations in this case which lead one to think that Section 23(7), Provincial Insolvency Act, which contains the doctrine of relating back of an order of adjudication to the date of the presentation of the application governs all other sections of the Insolvency Act, and it was held in that view that Section 23(7) did govern Section 34(2) also. There are also cases in which it has been held that for purposes of Section 34(2), Provincial Insolvency Act, the material date is, in view of the provision in Section 23(7) of that Act as to relation back', the date of the presentation of the petition; and on this basis it has been held that a debt which could have been enforced in a Court of law on the date of the presentation of the insolvency petition but the remedy by suit in respect of which had become barred by limitation before the date of the order of adjudication was a debt provable under the Provincial Insolvency Act: Subramania Ayyar v. Meenakshisundaram Chettiar A.I.R. 1937 Mad. 577 But as observed in Bandeally Jaffer v. Peer Mohamed A.I.R. 1938 Mad. 19 the proof of a debt in bankruptcy is one thing while the maintainability of an action thereon in a Court of law is another. The mere fact that for purpose's of Section 34(2), it has been held in some cases that Section 23(7) governs is not sufficient to warrant me to come to the conclusion that Section 78(2) is also similarly governed by Section 28(7).

(3.) IN view of this clear wording of Section 78(2), it does not stand to reason to hold that the date of the order of adjudication was meant to be the date of the presentation of the petition. There is an assumption in A.I.R. 1938 Rang. 75 as if the period between the presentation of the petition and the date of the annulment should be deducted in computing the period of limitation to a suit; but that is a mere assumption. There is nothing to indicate that there was a decision by the Rangoon High Court on the point. It is possible to argue that the proceedings taken after the date of the presentation and before the date of the adjudication would be futile and it would be a hardship to the creditor who did not sue because an insolvency petition was filed to say that he is not entitled to a deduction of the time between the date of the presentation of the insolvency petition and the date of the order of adjudication. Creditors are expected to know their rights and to take steps, in time to see that they are not met with the plea of limitation afterwards. It may be that this is a matter for the Legislature to intervene just as it intervened by amending Sections 51 and 58, Insolvency Act. But so long as the words stand as they are and so long as there is no clear bar to the institution of a suit by a creditor simply because an application for insolvency has been filed against the debtor the words in Section 78(2) have to be given effect to. There is nothing in the Provincial Insolvency Act that Section 23(7) should be read with all other sections of the Act wherever the expression "date of the order of adjudication" has been used. I am therefore clearly of the opinion that the view taken by the Court below is correct. I dismiss the application for revision with costs. Counsel's fee Rs. 10 in each case.