ARJUN DAS KUNDU Vs. MARCHIA TELINI

JUDGEMENT

(1.) The respondent before me applied under Section 10, Provincial Insolvency Act for being adjudicated as an insolvent. She said in her application that her assets were almost nil. She mentioned the names of her creditors, the appellant being one of them. The application was dated 1 September 1930 and the adjudication order was passed on 25 August 1931, by which the insolvent was directed to apply for discharge within six months of the said order. As there were no appreciable assets, the Court did not appoint a Receiver on her adjudication. In the application she gave an information that she had instituted a suit for some land against her husband and if she won that suit, her assets could be used for the purpose of meeting the creditors, but she had no present means for satisfying her creditors. The present appellant, although his name was given in the application as a creditor, did not take any steps to prove his debt before the discharge of his insolvent. The insolvent applied for her discharge and on 9 September 1932, the Court directed that the final discharge should await the disposal of the suit then pending in the Serampore Munsif's Court, the suit which the insolvent had filed against her husband.

(2.) On 9 December 1932, the insolvent informed the Court that she had won the suit. The Court stated in its order that the creditors had not taken any interest in the case and she was not responsible for her debts in that they were caused by litigation forced on her. The Court accordingly granted an absolute order of discharge on 9 December 1932. After this order the appellant appeared on the scene. He wanted to prove his debts and wanted the property of the insolvent which she got as a result of the said suit, to be brought under the administration of the Court in the insolvency proceedings. The insolvent opposed subsequently, and it is against the order passed by the Court below on 8 February 1934, the present appellant has filed the present appeal. For the purpose of deciding the controversy in this case, two facts are important, firstly, that it was known to the Court from the time of the filing of the application for adjudication that the appellant was a creditor of the insolvent, and secondly that no dividend has been declared up to now, much less the final dividend. The learned District Judge in support of the order he passed, has held that the effect of the absolute discharge under the provisions of Section 44, Provincial Insolvency Act, was to release the insolvent from all debts provable under the act and that such debts had to be proved in the proceedings before the order of absolute discharge was made.

(3.) Under Section 33 (3) of the act, says he, it is imperative on the creditor to prove his debt before the discharge of the insolvent. The learned Judge has further remarked that as none of the creditors of the insolvent had proved their debts before the final discharge, the property which has been recovered by the insolvent as a result of the aforesaid suit is no longer available for distribution in the insolvency proceedings, but that property though acquired before the discharge order, is to be enjoyed by the insolvent absolutely and without any restriction. In my judgment none of these reasons appears to me to be sound and the learned Judge has overlooked not only certain important provisions of the Insolvency Act but has committed fundamental errors with regard to matters of principle applicable to such cases. The principle underlying all bankruptcy proceedings, in my judgment, is this: that when a debtor is adjudicated an insolvent at his instance all his assets there which he has at the time of the presentation of the application and all assets which he may acquire before his final discharge, must come in the hands of the Court in order that the said assets may be administered, and his creditors whose debts can be proved in the insolvency proceedings may get their debts pro rata from these assets. When an insolvency proceeding takes place at the instance of the creditor there is the self-same principle.