CUDDAPPAH GHOUSE KHAN Vs. BALASUBBA 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 Balasubba 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 14thMay, 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 Balasubba Rowther when the latter riled 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 Section 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." 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.

(2.) We have been referred to two English cases which were urged on Davar, J., of the Bombay High Court in In re Dwarkadas Tejbhandas 31 Ind. Cas. 918 : 40 B. 235 : 17 Bom. L.R. 925 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 (1891) 1 Ch. 305 : 60 L.J. Ch. 492 : 39 W.R. 343. 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.

(3.) The other English case is Rendall V/s. Blair (1890) 45 Ch. D. 139 : 59 L.J. Ch. 641 : 63 L.T. 265 : 38 W.R. 689, a case under the Charitable Trusts Act, 1853. The managers of a charity school purported to dismiss the plaintiff who was the master of the school. The question raised by the action was whether the managers had been properly appointed. The words of the section which was considered by the Court of Appeal, Section 17 of 16 and 17 of Vic. c. 137 ran: "Before any suit, petition, or other proceeding for obtaining any relief, order, or direction concerning or relating to any charity, or the estate, funds, property, or income thereof, shall be commenced, presented, or taken, by any person whomsoever, there shall be transmitted by such person to the said Board, notice in writing of such pro posed suit, petition, or proceeding...and the said Board...may, by an order, or certificate...authorise or direct any suit, petition, or other proceeding to be commenced, presented, or taken with respect to such charity." Kay, J., thought the suit ought not to have been begun without the leave of the Charity Com missioners. The Court of Appeal by a majority held that the action was not such as required the consent of the Charity Commissioners, but the whole Court held that even if the consent of the Charity Commissioners were necessary it was not necessary to obtain it before the commencement of the action. Cotton, L.J., admits in his judgment that consent ought to have been applied for before the action is begun but observes that the Statute does not say that, if the consent is not obtained the action must be dismissed and cannot be proceeded with till that consent is obtained. In the course of the decision the learned Lord Justice held that consent may be obtained after the petition or after the. action has been commenced. The learned Lord Justice thought that the sanction of the Charity Commissioners was necessary. Bowen, L.J., thought it was not. As it was, the present action was one solely to enforce a common law right and the consent of the Commissioners was only to be obtained where the administration of the trust was sought. The learned Judge agreed that, though it was not necessary to decide it, the proper course would not be to dismiss the action altogether but to, allow it to stand over to see if the consent of the Commissioners could be obtained. He thought the language is not such as would be used if it were intended that some preliminary step should be taken before the action is maintainable at all and that the absence of the consent of the Commissioners is only a bar to the Courts dealing with the action, not a bar to the original institution of the suit. This is where I venture to think the difference in language emerges, and the language of Section 28(2) of the Provincial Insolvency Act is intended to be a bar to the original institution of the suit. In my opinion, therefore, neither of the two English cases which are on different Statutes from the one we have to consider really touch the point. Beyond the decision in In re Dwarkadas Tejbhandas 31 Ind. Cas. 918 : 40 B. 235 : 17 Bom. L.R. 925 there is the observation of Sadasiva Ayyar, J., in Karooth Parakote Ammukutty V/s. Manavikraman 59 Ind. Cas. 568 : 43 M. 793 : 12 L.W. 331. The question before the learned Judge was whether a suit instituted against the Receiver appointed by a Court without obtaining the previous sanction of the latter affected the jurisdiction of the Court. It was held that the condition did not affect the jurisdiction but was one imposed to enforce due respect towards Courts of Justice and could be effectively cured by obtaining sanction during the course of litigation. The learned Judge in the course of his judgment said: "This sanction is not a condition imposed by statutory law, like the sanction mentioned in Section 92, Civil Procedure Code, or Section 17 of the Presidency Towns Insolvency Act." That, of course, is only a passing opinion, but in the absence of much clearer authority it is an opinion to be taken into consideration. The curious part about this case is that on the 16th August, 1925, the adjudication in insolvency was annulled and the annulment was confirmed by the High Court in May, 1926, and in April, 1925, the suit in the Bellary Court was dismissed on the ground that it was not maintainable under Section 28(2) although the learned Judge allowed the plaintiff liberty to apply for restoration under Section 151, Civil Procedure Code, as soon as sanction was granted either by the High Court on appeal or by the District Judge of Coimbatore on a remand of the matter to him. It is now, of course, too late for the appellant to begin a new suit on the promissory note and he is, therefore, forced to come to us to say that leave ought to have been given to him to prosecute his suit of 1924. For the reasons stated I think that the words in Section 28(2) of the Provincial Insolvency Act constitute a condition precedent and that leave must be obtained before the institution of the suit. I would, therefore, follow the ruling in In re Dwarkadas Tejbhandas 31 Ind. Cas. 918 : 40 B. 235 : 17 Bom. L.R. 925, and dismiss the Civil Miscellaneous Appeal with costs. Curgenven, J.