JUGALPADA DUTT Vs. GANESH CHANDRA PAL

JUDGEMENT

(1.) THIS appeal arises out of an order made in the course of insolvency proceedings. One Ganes Chandra Pal was on his own application adjudged an insolvent on the 10th January 1914. On the 11th May 1915 notices were issued to the creditors to prove their claims within a month. The creditors were those mentioned in the list attached to the insolvent s application. Among the creditors was the appellant Jugalpada Dutta. He claimed to be a secured creditor and it appears that in response to the notice to which I have referred, he filed in proof of his claim the mortgage bond executed by the insolvent in his favour together with an affidavit. On the 12th June 1915, another creditor Hridoy Nath Pal presented an application to the District Judge in which he prayed inter alia that the mortgage in favour of the appellant should be annulled under Section 36 of the Provincial Insolvency Act, at any rate that is how we understand the prayer in question. Upon that the District Judge appears to have issued a general order upon the creditors whose debts had been contested to prove them. It does not appear from the order-sheet that any special notice was issued to the appellant calling upon him to show cause why his mortgage should not be annulled. Apparently the matter in which the appellant was interested with other matters came before the District Judge on the 28th August 1915. One witness was examined on behalf of the creditor Hridoy Nath Pal. The learned District Judge made his order from which this appeal is preferred on the 4th September 1915. He first dealt with certain other matters and then coming to the appellant s mortgage bond he says: "In the case of Jugal though there are two witnesses named one is illiterate." Then he adds referring to Jugal s debt and the debt of another creditor: "It is noticeable that the affidavits are written by the insolvent s Pleader or by his clerk. Those debts, therefore, cannot be said to have been proved." It is obvious that the learned Judge regarded the question before him merely as a question of the proof of the debt though, in the result so far as the appellant is concerned, the order has been treated as in effect an order annulling the mortgage under Section 36. The distinction which the Act makes between secured and unsecured debts was lost sight of. The materials before the learned Judge were not sufficient to justify him in making an order under Section 36; and unless the order is treated as an order under that section, then in relation to a secured debt it has no meaning. We roust add that when a question arises whether a transfer should or should not be annulled under Section 36, it is requisite that the transferee should have proper notice that proceedings are contemplated under that section and a proper opportunity to put his case before the Court. In the present case the proceedings were of an extremely summary character and no one seems to have realised either at their inception or during their progress that any question under Section 36 was involved. In the circumstances and on the materials on this record we are of opinion that this order cannot be allowed to stand.

(2.) THE result is that the order appealed from will be set aside so far as the appellant is concerned; but at the same time we must leave it open to the District Judge, if occasion should arise for so doing, to deal with the matter according to law under Section 36 of the Act. In the meantime it will be open to the appellant to take what steps he may be advised to take in order to realise his security. THE appellant himself was in some respects to blame for not bringing before the learned District Judge and not insisting upon his own rights as a secured creditor. We shall, therefore, make no order as to costs.