M V MARULA SIDHAYYA Vs. GADIGI MUDDAPPA

JUDGEMENT

(1.) The appellant here was a creditor of three brothers who were adjudicated insolvents in I.P. No. 18 of 1922, on the file of the District Court of Bellary, In October 1924 a proposal for a composition in satisfaction of the insolvents debts was submitted to the Court under Section 38, Provincial Insolvency Act. The terms of the composition were that two sureties bound themselves to pay the creditors a dividend at five annas in the rupee, and were to be empowered to reimburse themselves out of the insolvents estate. A first charge over the entire estate with the exception of a house and a shop was to be given to the sureties. This proposal was approved by the Court in March 1925 and under Section 39 the adjudication was annulled. A list of creditors prepared by a vakil was declared to be the schedule of creditors, and the sureties were asked to give notice to such of those creditors as had not yet proved their debts. The appellant as one of these creditors submitted claims in respect of two debts. One was admitted by the sureties; the other; which was a claim upon a hundi, was disputed in a written note by one of the sureties, evidently acting for them both, which ends with the following passage: The said debt should not be allowed to be proved. As this matter is in dispute it should not be allowed to be proved in the Insolvency, but the creditor should, if he thinks he has any right, take an action.

(2.) On being informed of this objection the vakil for the creditor did not press his petition for proof of the debt, and on 29 September 1925 the District Judge passed the following order: Mr. P.V.R. saya that he does not press this petition, and will have recourse to other means Lodged. Return his documents.

(3.) A few days later the appellant filed a suit upon this Hundi debt in the Court of the District Munsif of Bellary (O.S. No. 900 of 1925) impleading the two sureties as well as the three insolvent brothers. The District Munsif gave him a decree for the sum claimed, personally as against the insolvents and to the extent of their properties in the hands of the sureties. In appeal the learned District Judge following the decision reported in Kamireddi Timmappa v. Devasi Harpal 1929 Mad. 167 dismissed the suit holding that the appellant's only remedy lay in the insolvency proceedings themselves, and that no suit was maintainable. Against this decree appellant has filed this second appeal to which the insolvents alone, and not the sureties, are parties. The question for our decision is whether appellant's suit is or is not maintainable.