MANTRIPRAGADA SIVARAMAYYA Vs. OFFICIAL RECEIVER OF WEST GODAVARI

JUDGEMENT

(1.) These matters all arise out of the same insolvency. The civil miscellaneous appeal is preferred against the order approving the schedule of creditors and sanctioning the distribution of the dividend. The two sets of civil revision petitions are against two sets of applications under Section 19 of Madras Act IV of 1938 by the same insolvent, one of which was before the District Judge and the other before the District Munsiff of Ellore. All the applications under. Section 19 were dismissed.

(2.) The appellant was adjudged an insolvent on 1 October, 1934. On the 21 March, 1938, the Official Receiver approved a statement which contained the schedule of creditors, the rate of dividend declared and the amount of dividend due to each of the creditors. On the same date he issued a notice to all the proved creditors requiring them to make their objections, if any, within one week. The insolvent on the same day, 21 March, 1938, presented an application to the District Judge in which he prayed for stay of proceedings in the insolvency in anticipation of the passing of Madras Act IV of 1938 under which he hoped to get relief. Act IV came into force on 22 March, and on the 26 March, the insolvent filed a fresh application to the District Judge for stay of proceedings. Neither of these two applications quoted any provision of law under which stay could be properly granted. Nevertheless stay was ordered by the District Judge on 4 April, 1938. It could only have been ordered under the Court's inherent jurisdiction. No specific provision is however quoted nor does the order say up to what time the stay will operate. The prayer of the insolvent was for stay until he had filed his application under Act IV, and had paid off his creditor. Presumably, the intention of the District Judge was to stay proceedings only until orders had been passed on the anticipated applications under Act IV.

(3.) After the stay had been ordered the insolvent filed two sets of applications under Section 19 of Act IV of 1938, one before the District Judge and the other before the District Munsiff to scale down the decrees in favour of his creditors. He did not implead the Official Receiver in any of these applications as he should have done; nor did he take any action to get the non- decree debts scaled down under Act IV. The applications to the District Judge were dismissed on the 26 October, 1940, and the applications to the District Munsiff were dismissed on the 6 November, 1940, on the ground that a dividend had been declared before the passing of the Act so that Section 21 of Act IV would have no application. On the date of the dismissal of the application by the District Munsiff the Official Receiver declared a further dividend and both the distribution statements were submitted to the District Judge for sanction. The actual stay order seems to have been formally vacated on 3 December, 1940. On the 10th December, 1940, the dividends were approved.