DIWAN BAHADUR GOVINDAS CHATURBHUJADAS Vs. NRAMADOS

JUDGEMENT

(1.) Appellant, Diwan Bahadur Govindoss Chaturbhujadoss, plaintiff in the trial Court, was the secured creditor of the Respondent N. Ramadoss, first defendant in the trial Court, who pledged with him, through his agent, the second defendant, certain jewels as security for a loan of Rs. 12,000. Respondent was adjudicated insolvent on 20 September 1921. The appellant got no notice from the Official Assignee and before he attempted to prove for the balance of what was due to him, the adjudication was annulled on 20 February 1922. Appellant brought this suit to recover the balance due to him after deducting the value of his security, which lie has since realized.

(2.) The learned Judge held that he was not entitled to anything and dismissed the suit against this defendant. He acted upon first impressions, as there is no decided case in this country as to the rights of a secured creditor to recover the balance of any debt which he has failed to prove in insolvency when the adjudication has been annulled owing to the debtor having compounded with his other creditors. The learned Judge quoted the case of Flint V/s. Barnard (1889) 22 Q.B.D., 90, as being an. authority for the principle that the effect of a composition between a debtor and his creditors is the same as the effect of a discharge, viz., that it releases a debtor from all debts provable in bankruptcy. If I rightly understand that decision, it only decided what are debts provable in bankruptcy and included among them liabilities which mature into debts due after acceptance of composition.

(3.) In this country the position of an insolvent whose adjudication has been annulled is not the same as that of a discharged insolvent The Presidency Towns Insolvency Act gives the effect of an order of discharge in Section 45. An order of discharge releases an insolvent from all debts provable in insolvency except certain debts of a special, nature, such as debts owing to the Crown. An adjudication may be annulled either under Section 21 when it is found by the Court that a debtor ought not to have been adjudged insolvent or where it is proved that all his debts have been paid in full, or it may be annulled under Section 30 when a proposal of composition has been accepted by a majority of his creditors. The effect of annulment appears in Section 28, which states that the property of the debtor shall vest in such person as the Court may appoint, or in default of such an appointment shall revert to the, debtor, to the extent of his interest therein. In Bombay there are rules for the vesting of the property in a person appointed by the Court. Here, as there are no such rules and no such appointment has been made, the property must necessarily revert to the debtor.