DAVOOD MOHIDEEN ROWTHER Vs. SAHABDEEN SAHIB

JUDGEMENT

(1.) The facts sufficient for the disposal of these revision petitions are fully stated in the order of reference and it is unnecessary to repeat them. On those facts the question arises whether, after a person is adjudged an insolvent, a suit filed by a creditor for the recovery of a debt provable in insolvency without the leave of the Insolvency Court is maintainable and can the Court in which the suit is instituted give leave to continue it? The sections of the Provincial Insolvency Act relevant to this question are Secs.28 and 29. Section 28, Clause 2 runs thus: On the making of an order of adjudication, the whole of the property of the insolvent shall vest in the Court or in a Receiver as hereinafter provided, and shall become divisible among the creditors, and thereafter, except as provided by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable under this Act 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 proceedings, except with the leave of the Court and on such terms as the Court may impose.

(2.) Section 29 runs thus: 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 against him under this Act, either stay the proceeding, or allow it to continue on such terms as such Court may impose.

(3.) Unhampered by authority, reading both sections together and giving the words their plain and natural meaning the following propositions are clearly deducible: (i) Section 28(2) is mandatory and after an order of adjudication is made, no suit or other proceeding can be instituted against the insolvent or his property without the leave of the Insolvency Court and such leave is a condition precedent to the right of action; and (ii) where any suit or other proceeding is pending on the date of the adjudication in any Civil Court, such Court on being apprised of the order of adjudication can in its discretion either stay the suit or proceeding or give leave to continue the same.