Skip to content


Gulabchand Hiralal Vs. Hakimchand Chothmal and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai High Court
Decided On
Case NumberCivil Revn. Appln. No. 948 of 1963
Judge
Reported inAIR1972Bom192; (1971)73BOMLR882; ILR1972Bom585; 1972MhLJ156
ActsProvincial Insolvency Act, 1920 - Sections 43(1)
AppellantGulabchand Hiralal
RespondentHakimchand Chothmal and ors.
Appellant AdvocateV.B. Patwardhan and ;V.V. Divekar, Advs.
Respondent AdvocateK.J. Adbhyankar, Adv.
Excerpt:
.....me that the liability to make an application for discharge survived against the heirs of the insolvent chhaganlal on his death in 1942. i asked him to explain to me how the failure of a deceased insolvent to apply for discharge can entitle his creditors to have the insolvency annulled. but he insists that a creditor of an insolvent is given a right under section 43(1) of the act to have insolvency of a debtor annulled upon proof that the debtor had failed to make an application for discharge within the time fixed for the purpose. the penalty of annulment of adjudication order is visited on an insolvent debtor under section 43(1) upon his failure to apply for discharge. now, it is a well recognized and established maxim of law 'action personalis monitor cum persona' that personal..........then filed insolvency petition no. 12 of 1935 on march 14, 1935, for adjudication of the judgment- debtor chhaganlal hardee. another insolvency petition no. 14 of 1935 was filed by other two creditors of chhaganlal. the petitions were consolidated and by an order of adjudication dated july 30, 1936, chhaganlal was adjudicated an insolvent. the order of adjudication provided that chhaganlal should make an application for his discharge from insolvency within one year. this time expired on july 30, 1937. chhaganlal's appeals against the order of adjudication were dismissed in 1938. chhaganlal died in december in 1938. chhaganlal died in december 1942 without making an application for his discharge. several intervening litigations are referred to in the judgment of the trail court and the.....
Judgment:
ORDER

1. This is a revisional application on behalf of the original petitioner in application Ex. 413 in Insolvency Petitions Nos. 12 and 14 of 1935. The petitioner had obtained a decree for Rupees 27,000/- in Special Suit No. 349 of 1930 against Chhaganlal Hardee in February, 1935. He then filed Insolvency Petition No. 12 of 1935 on March 14, 1935, for adjudication of the judgment- debtor Chhaganlal Hardee. Another Insolvency Petition No. 14 of 1935 was filed by other two creditors of Chhaganlal. The petitions were consolidated and by an order of adjudication dated July 30, 1936, Chhaganlal was adjudicated an insolvent. The order of adjudication provided that Chhaganlal should make an application for his discharge from insolvency within one year. This time expired on July 30, 1937. Chhaganlal's appeals against the order of adjudication were dismissed in 1938. Chhaganlal died in December in 1938. Chhaganlal died in December 1942 without making an application for his discharge. Several intervening litigations are referred to in the judgment of the trail Court and the District Court with which I am not concerned in this revision application. About 18/20 years after the death of Chhaganlal the petitioner filed the above application Ex. 413 for annulment of adjudication of Chhaganlal under the provisions of Sect. 43(1) of the Provincial Insolvency Act (hereinafter referred to as 'the Act'). Now this section, inter alia, provides that if the debtor does not apply for an order of discharge within the period specified by the Court, the Court may annual the order of adjudication or make such order as it may think fit, and if the adjudication is so annulled, the provisions of Section 37 shall apply. The petitioner's case was that since Chhaganlal had failed to make any application within the time fixed by the above order and / or otherwise, the adjudication order must be set aside (annulled). The trial Court held that this was a fit case in which the order of adjudication was liable to be annulled and thus granted the petition of the petitioner. Whilst annulling the adjudication it directed that the properties of the insolvent comprised in Municipal No. 2412 do vest under Section 37 in the receivers - trustees for three of the proving creditors.

2.Some of the creditors of Chhaganlal who had not proved the debts due to them by Chhaganlal in the above insolvency filed Civil Appeal No. 1 of 1962 and the District Judge, Jalgaon, by his appellate order of remand dated December 31, 1962, set aside the order of the trial Court and directed that the application Ex. 13 in the appellate Court made on behalf of the receivers in insolvency on July 21, 1962, for leave to receivers to apply for discharge should be considered by the trial Court. The District Judge remanded the whole matter once again for further consideration by the trial Court. Whilst making the above order, the learned District Judge negatived the submission made on behalf of the petitioner that the creditors who had not proved their claims in insolvency had no locus standi in preferring the appeal. The learned Judge was of the view that it was open to the receivers to have the time for applying for discharge extended.

3.Mr. Divekar for the petitioner has submitted that the learned Judge should have held that the receivers had no right to apply for extension of time to make an application for discharge and further that the appellants (in the District Court) had no locus standi to institute the appeal, because they had not proved their claims for debts in insolvency. He, therefore, submitted that the learned Judge's order should be set aside in this revisional application.

4.Whilst Mr. Divekar made the above arguments, I called upon him to explain to me how the provisions in Section 43(1) were applicable to the facts of the present case. I asked him to satisfy me that the liability to make an application for discharge survived against the heirs of the insolvent Chhaganlal on his death in 1942. I asked him to explain to me how the failure of a deceased insolvent to apply for discharge can entitle his creditors to have the insolvency annulled. Mr. Divekar has pointed out to me that he has not found any such case in the books. But he insists that a creditor of an insolvent is given a right under Section 43(1) of the Act to have insolvency of a debtor annulled upon proof that the debtor had failed to make an application for discharge within the time fixed for the purpose. It appears to me that the application for annulment of adjudication order can never be made against a deceased insolvent. In law the right to apply for annulment of an adjudication order cannot survive against the heirs of a deceased insolvent. Now, in this connection, it is important to notice that ordinarily an order of adjudication is made in connection with a debtor and his estate for the protection of his creditors and the society. Ordinarily, the order of adjudication is made at the instance of one or more creditors. The purpose and effect of the law of insolvency is to have the estate of insolvents delivered in possession of representatives of Court and to have it distributed pro rate amongst the ordinary creditors. The disability that is inflicted against an insolvent under this law is that he cannot freely trade during the continuance of his insolvency until he obtains an order of discharge as is provided under Section 41. A debtor is compelled to apply for an order of discharge from insolvency so that the circumstances in which he involved himself in debts are made evident to the Insolvency Court. A debtor who might have incurred unreasonable speculative debts and / or unreasonable commercial debts can be held to be unworthy of discharge and the discharge order may be refused from time to time for a considerable number of years. The refusal to grant an order of discharge is for the purpose of continuing disabilities of an insolvent from trading freely and / or otherwise so as to cause injury and harm to unwary dealers and the society. When an insolvent debtor obtains an order of discharge, he becomes free from his previous debts and free from his disabilities which he incurs under the Act and thus is free to trade once again without any restrictions and disabilities. The right to apply for and obtain discharge is thus for personal benefit of the insolvent and has no relation whatsoever with the heirs of a deceased insolvent. The compulsion for application for discharge as contained in Section 41 is a personal liability inflicted against an insolvent debtor and has no relevance to the heirs surviving him upon his death. The penalty of annulment of adjudication order is visited on an insolvent debtor under Section 43(1) upon his failure to apply for discharge. This penalty and / or liability is also intended by the Legislature to be personal and has nothing to do with the heirs of a deceased insolvent. Now, it is a well recognized and established maxim of law 'Action personalis monitor cum persona' that personal causes of action and / or personal liabilities die with a deceased person. In my view, the right to apply for discharge is a personal right of an insolvent debtor which cannot survive in favour of any one upon his death. Similarly, the punishment of annulment of order of adjudication upon failure of application for discharge under Section 43(1) cannot be inflicted on the receivers in insolvency and / or creditors and / or heirs of a deceased insolvent. The right to inflict this penalty does not survive against any of these parties. Having regard to the above situation, in my view, the application Ex. 413 instituted by the petitioner in Insolvency Court was entirely misconceived and not maintainable. The order of adjudication made against Chhaganlal was not liable to be annulled by the trial Court for the reasons mentioned above.

5.As I have come to the above conclusion, I do not find it necessary to deal with the contentions made by Mr. Divekar relating to the locus standi of the creditors who had not proved their debts to institute the Civil Appeal No. 1 of 1962 in the District Court. Now, it requires to be stated that the application made by the receivers in the appellate Court for extension of time to apply for discharge was also entirely misconceived. Receivers in insolvency and / or heirs of a deceased insolvent can have no right of any kind to make an application for order of discharge under Section 41. The application Exh. 13 was also misconceived.

6.Under the circumstances, the petition for annulment of adjudication order being Ex. 413 in Insolvency Nos. 12 and 14 of 1935 that was originally filed by the petitioner is dismissed. There will be no order as to costs throughout. Receivers will be entitled to recover costs from the estate.

7. Application dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //