ABDUL RAHMAN Vs. VILAYAT HUSSAIN

JUDGEMENT

(1.) This is an appeal from an order of the learned District Judge of Manbhum- Singhbhum revoking a previous order made by the insolvency Court granting the appellant permission to file a suit against the insolvent. The insolvent was one Vilayat Hussain who had incurred a liability with the Bengal Nagpur Railway Urban Bank. The appellant was one of his sureties. It appears that the Urban Bank proceeded against the appellant for the sum for which he had stood surety but the latter was not satisfied with proving his debt as a creditor but asked for permission to bring a suit against the insolvent. It appears that the appellant thought that he was not a creditor within the meaning of that term as used in the Insolvency Act. His application was heard in the absence of the insolvent and was granted. He then filed a suit in the Court of the local Munsif against the insolvent. The insolvent, on hearing that permission had been granted for a suit to be brought against him, moved the District Judge to vacate his order. On consideration the District Judge came to the conclusion that the previous order was erroneous and should never have been passed. The appellant, having been called upon by the creditor to pay the insolvent's debt, was clearly a creditor of the insolvent, and the debt was one provable in the insolvency. As the order had been made ex parte, he vacated it and declined to grant the appellant permission to bring a suit.

(2.) Mr. Sarkar who has appeared for the appellant has argued that the Court had no power to vacate its previous order. It must be remembered that the previous order was made in the absence of a person who was vitally interested, namely, the insolvent. The effect of it was to render the insolvent open to further harassment. In such a case the insolvent should have been given an opportunity to appear and to contest the application. If he had appeared, it would undoubtedly have been brought to the notice of the Court that the order was manifestly wrong because the appellant was a creditor within the meaning of the Insolvency Act. It has been held in Balla MaL V/s. Mt. Fatima Bibi A.I.R. 1934 Lah. 468, that an insolvency Court possesses the same powers, as other J civil Courts have, to correct its own errors, committed inadvertently or by an oversight. At p. 705 Tek Chand J., who delivered the judgment of the Bench, observed: I have therefore no doubt, that the Legislature has recognised the existence of inherent powers in insolvency Courts to pass appropriate orders in the same manner and to the same extent as other civil Courts. There is also the important fact that the order of 5 October was passed in the absence of the Official Beceiver, and as observed by Rankin C.J. in Sarat Kumar Roy V/s. Nabin Chandra Bam Chandra Shaha where an ex parte order is passed in insolvency proceedings the person affected may bring the matter to the notice of the Court and it is always open to it to undo the order on the ground that the original order was made on insufficient materials or that for other reason it should not have been made .

(3.) As I have stated, the order, which the learned Judge vacated, was one vitally affecting the insolvent, and as it was passed without notice to the insolvent the Court was entitled on these authorities to go into the matter afresh and to vacate the order if it thought proper. In my view, the original order should never have been made, and the subsequent order vacating it was proper. The result therefore is that this appeal fails, and I would dismiss it with costs. Manohar Lall, J. I agree.