CUDDAPPA GHOUSE KHAN Vs. BALA SUBBA ROWTHER

JUDGEMENT

(1.) This is an appeal against the order of the learned District Judge of Coimbatore dismissing the appellant's petition under Section 28(2) of the Provincial Insolvency Act wherein the appellant asked for leave to prosecute his suit--O.S. No. 43 of 1924--on the file of the Sub- Court, "Bellary. It appears that on the 30 July, 1921 one Bala Subba Rowther, the respondent in the petition to the District Judge of Coimbatore, was adjudicated insolvent. On the 9 June, 1924 a suit was instituted in the Bellary Sub-Court on a promissory note which had been executed on 14 May 1921 by the insolvent to a third party and which in March, 1924 was transferred to the appellant here. The plaintiffs in the suit are said to have only become aware of the insolvency of Bala Subba Rowther when the latter filed his written statement. They have therefore applied to the Coimbatore Court which is the Insolvency Court for leave to prosecute the suit which, as stated, was refused on the ground that leave is a condition precedent to the institution of proceedings. The relevant provisions of the Provincial Insolvency Act are Secs.28(2) and the words No creditor . . . shall during the pendency of the insolvency proceedings have any remedy against the property of the insolvent in respect of the debt, or commence any suit or other legal- proceeding, except with the leave of the Court and on such terms as the Court may impose.

(2.) "The Court" in this sub-section is clearly the Court in which the insolvency proceedings take place. Section 29 enacts that any Court in which a suit or other proceeding is pending against a debtor shall, on proof that an order of adjudication has been made under this Act, either stay the proceeding or allow it to continue on such terms as the Court may impose. It would therefore seem that the proper remedy of the appellant here would have been to apply to the Bellary Court for leave to continue his suit against the insolvent, whereas he applied to the Insolvency Court in Coimbatore for leave to prosecute the suit. The corresponding provisions in the English Act are Secs.7 and 9 which contain practically the same provisions. So the short question is whether the learned District Judge was right in holding that the words in Section 28(2) or commence any suit or other legal proceeding except with the leave of the Court are to be construed as constituting a condition precedent.

(3.) We have been referred to two English cases which were urged on Davar, J., of the Bombay High Court in In re Dwarkadas Tejbahndas (1921) ILR 40 B 235, where the learned Judge sitting alone decided under Section 17 of the Presidency Towns Insolvency Act, where the words are identical, that leave is a condition precedent and cannot be granted after the suit is filed. The learned Judge went into the question at some length and held that the words of the section are clear and explicit and leave no room for any other construction. The first of these English cases is In re Wanzer, Limited (1891) 1 Ch. 305. There the company had taken premises in Glasgow and the landlord had proceeded by the Scotch method of sequestration for the purpose of realizing his rent. The landlord's hypotheca was in Scotch Law held to afford a security to him on the goods on the premises, and in spite of the order for winding up that was made, leave was given to proceed with the sequestration unless sufficient security was given by the tenant for the rent. This is a proceeding under the Companies Act, and it appears to establish that the proceeding at Scotch Law is such that the landlord is in the nature of a secured creditor. According to North, J., he is in a position analogous to that of a debenture holder. If that is so, he is no doubt at least partially outside the provisions of the law relating to companies winding-up, I do not think it can, as Davar, J., held, be in any way taken as a precedent in the present case.