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Sidhraj Bhojraj Vs. Alli Haji - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtMumbai
Decided On
Case NumberSuit Nos. 1289-1380 of 1921
Judge
Reported inAIR1923Bom33; (1922)24BOMLR509; 67Ind.Cas.757
AppellantSidhraj Bhojraj
RespondentAlli Haji
Excerpt:
.....adjudicated insolvent and his petition is dismissed and the adjudication order cancelled. the period of time so taken up in insolvency proceedings cannot be deducted in computing the period of limitation.;section 17 of the presidency towns insolvency act 1908 does not present an absolute bar to the creditor's right to institute a suit. the creditor cannot, therefore, claim a deduction of the time during which the insolvency was pending, in computing the period of limitation in any suit brought by the creditor after the insolvency proceedings are quashed. - - the only excuse he may have had was that there bad been previous decisions of the small cause court to the effect that the period during which insolvency proceedings were pending could be excluded from the period of limitation......debt, is the time during which insolvency proceedings were pending to be deducted in computing the period of limitation ?(2) is section 17 of the presidency towns insolvency act a bar absolute to the creditor's right to institute a suit so as to enable creditor to claim a deduction of the time during which the insolvency was pending, in computing the period of limitation in any suit brought by the creditor after the insolvency proceedings are quashed ?3. judgment in the case was delivered by the third judge contingent on the opinion of the high court under section 69(2) of the presidency small cause courts act. but in spite of that the defendant applied to the full court. this would seem to be irregular as there was no decree or order against which an appeal would lie. though the appeal.....
Judgment:

Norman Macleod, C.J.

1. This is a reference by the Third Judge of the Court of Small Causes.

2. The following questions have been referred :-

(1) Where after a debt has become due and payable and time has begun to run against the creditor, the debtor is adjudicated insolvent and his petition is subsequently dismissed and the adjudication order cancelled if the creditor institutes a suit thereafter against the debtor to recover the debt, is the time during which insolvency proceedings were pending to be deducted in computing the period of limitation ?

(2) Is Section 17 of the Presidency Towns insolvency Act a bar absolute to the creditor's right to institute a suit so as to enable creditor to claim a deduction of the time during which the insolvency was pending, in computing the period of limitation in any suit brought by the creditor after the insolvency proceedings are quashed ?

3. Judgment in the case was delivered by the Third Judge Contingent on the opinion of the High Court under Section 69(2) of the Presidency Small Cause Courts Act. But in spite of that the defendant applied to the Full Court. This would seem to be irregular as there was no decree or order against which an appeal would lie. Though the appeal was heard by the Full Court and both Judged were of opinion that a case should be stated, still the reference comes before us as on a case stated by the Third Judge alone.

4. We have not had the advantage of hearing the parties or their advocates.

5. We think both the questions should be answered in the negative.

6. When once time has begun to run against a plaintiff for the institution of a suit which he is competent to file, it will continue to run unless stopped by some provision of the Limitation Act. In this case the plaint was presented on the 10th July 1921. The suit was to recover the balance due on account of sugar sold and delivered to the defendant from the 16th March 1916 to the 31st October 1917. To save the bar of limitation the plaintiff relied upon the fact that the defendant was adjudicated insolvent on the 7th January 1919 by an order of the High Court which was annulled on the 5th October 1920.

7. The plaintiff contends that the period during which the adjudication order was in force should be excluded under Section 15 of the Indian Limitation Act That section says that where the institution of a suit has been stayed by an injunction or order, the time of continuance of the injunction or order, the day on which it was issued or made and the day on which it was withdrawn shall be excluded in computing the period of limitation prescribed for the suit. The plaintiff would then have to show that the institution of his suit was stayed by an injunction or order, or that it could be said that the institution of his suit was stayed by virtue of the provisions of Section 17 of the Presidency Towns Insolvency Act. That section says that on the making of an order of adjudication no creditor to whom the insolvent is indebted in respect of any debt provable in insolvency shall during the pendency of the insolvency proceedings have any remedy against the property of the insolvent in respect of the debt or shall commence any suit or other legal proceeding except with the leave of the Court or on such terms as the Court may impose. It cannot, therefore, be said that when an adjudication order is made there is any injunction or order against the institution of a suit by a creditor. Before a creditor can institute a suit he must comply with the formality prescribed by the section, and it is only when leave is relused that it can be said that there is an injunction or order staying the institution of the suit. In Ramaswami Pillai v. Govindaswami Naicker I.L.R. (1918) Mad. 319 the same question arose and it was decided that the period during which insolvency proceedings were pending could not be excluded. I think a certain amount of confusion of thought is due to the fact that with regard to the proof of debts in insolvency the date of the adjudication order determines a creditor's right to prove (Section 46 of the Presidency Towns Insolvency Act), but a creditor has always to face the risk that the order may be annulled when made on a creditor's petition on the ground that no act of insolvency has been committed and for want of prosecution when made on the debtor's petition. The creditor, therefore, should see that his debt is acknowledged in the schedule, for even if his proof is admitted by the Official Assignee his claim may be barred if the adjudication order is annulled. Cases of real hardship must be very rare, for if a creditor allows the greater part of the time prescribed for instituting his suit to pass by, he has only himself to thank if the time expires pending insolvency proceedings. In this case it would appear that from the 7th January 1919 until the 5th October 1920 the plaintiff did nothing to protect himself either by getting an acknowledgment of his claim from the debtor or by asking for leave to put a suit on the file. The only excuse he may have had was that there bad been previous decisions of the Small Cause Court to the effect that the period during which insolvency proceedings were pending could be excluded from the period of limitation.

Shah, J.

8. We not have been assisted with any argument in this case: and the questions referred to us are not altogether free from difficulty.

9. On the whole I do not think that there is sufficient ground for not accepting the view taken by the Madras High Court in Ramaswami Pillai v. Govindasami Naicker I.L.R. (1918) Mad. 319. It may work hardship in some cases. But in the absence of any order of the Insolvency Court refusing leave to commence the suit, it is difficult to hold that the provisions of Section 15 of the Indian Limitation Act can apply. The mere fact of an adjudication order having been made does not necessarily mean that there is an injunction or order staying the institution of a suit within the meaning of Section 15 of the Indian Limitation Act, though the effect of the order of adjudication read with Section 17 of the Presidency Towns Insolvency Act is to prevent a creditor from commencing any suit against his debtor without the leave of the Court.

10. I do not consider it necessary to refer to the English decisions bearing on this point, as I do not think that the difficulty of interpreting the provisions in the Indian Acts on the point is removed thereby. In spite of the possible hardship in some cases, I think that on the whole the view of the Madras High Court is right.

11. I, therefore, agree that the questions should be answered as proposed by my Lord the Chief Justice.


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