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L. Piarey Lal Vs. Mohammad Salamat Ullah Khan and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1937All435
AppellantL. Piarey Lal
RespondentMohammad Salamat Ullah Khan and ors.
Excerpt:
- - it seems to us that the madras view is in perfect consonance with the principles of english law. we are satisfied, therefore, that it has not been shown by the debtor that he will be able to pay his debts under section 25, insolvency act. the actual terms of this notice were that there were so many debts that he was not able to make payment and it was useless for the creditor addressed to continue to make demands and that he might do whatever he liked in the matter: you do what you like......a debtor or by the creditor; and an order of adjudication can be passed on the petition after the debtor's death. it may also be mentioned that in that case the insolvent had died in the trial court and his widow had been brought on the record as his legal representative and the creditor's petition was heard on the merits after overruling the widow's objection to be made a party. the appeal was also preferred by the widow and entertained by the madras high court without any objection having been apparently raised on behalf of the respondent that she had no right to continue the matter. it seems to us that the madras view is in perfect consonance with the principles of english law. section 17, provincial insolvency act, provides:if a debtor by or against whom an insolvency petition has.....
Judgment:

1. A preliminary objection is taken to the hearing of this appeal that this appeal has abated. The respondents had applied for the adjudication of Piara Lal as insolvent. The Court adjudicated him an insolvent and Piare Lal appealed to this Court. During the pendency of the appeal Piare Lal died and his heirs have been brought on the record. It is contended on behalf of the respondents that the right to contest the order for adjudication was a personal right vested in Piare Lal, and that on his death the appeal abated.

2. The learned Counsel for the respondents relies strongly on three cases of the Lahore High Court which no doubt to a certain extent support his contention. In Hardhian Singh v. Sham Sundar (1888) 69 P.R. 1888, it was held by a Division Bench of the Punjab Chief Court that under the provisions of the then Code of Civil Procedure an order made under Section 351 was purely personal and on the death of an insolvent no one represented him for the purpose of defending an appeal against an order declaring him insolvent. No English oases were considered and the opinion was expressed simply on the general view that the right was a personal one and that no one could represent the insolvent after his death. This case appears to have been followed by the learned Sir Shadi Lal, C. J. and Zafar Ali, J. in Narain Singh v. Gurbakhsh Singh A.I.R. 1928 Lah 119. The learned Chief Justice following the ruling in Hardhian Singh's case Hardhian Singh v. Sham Sundar (1888) 69 P.R. 1888 held that an appeal preferred against the adjudication of an insolvent abates on his death, as the right to sue does not survive within the meaning of Order 22, Rule 4, Civil P.C. This case was of course followed by a learned Single Judge of the Lahore High Court in Attar Chand v. Mian Mohammad Mobin A.I.R. 1932 Lah 121 where it was remarked that once the application of the creditors for adjudication had been dismissed, the debtor was wholly absolved from all manner of liability under the Insolvency Act, and on his death the liability did not survive so as to entitle the creditors to resurrect the case against his representatives.

3. On the other hand the Madras High Court in two cases has expressed a some-what contrary opinion. In Venkatarama Aiyar v. Official Receiver : AIR1928Mad476 it was held that an application by a debtor for adjudicating himself as an insolvent filed while he was alive could be continued and adjudication made even after his death, and in Ramathai Anni v. Kanniappa Mudaliar A.I.R. 1928 Mad. 480 it was held that Section 17, Provincial Insolvency Act, applies to the case of a debtor dying before the order of adjudication whether the petition for adjudication was presented by a debtor or by the creditor; and an order of adjudication can be passed on the petition after the debtor's death. It may also be mentioned that in that case the insolvent had died in the trial Court and his widow had been brought on the record as his legal representative and the creditor's petition was heard on the merits after overruling the widow's objection to be made a party. The appeal was also preferred by the widow and entertained by the Madras High Court without any objection having been apparently raised on behalf of the respondent that she had no right to continue the matter. It seems to us that the Madras view is in perfect consonance with the principles of English law. Section 17, Provincial Insolvency Act, provides:

If a debtor by or against whom an insolvency petition has been presented dies, the proceedings in the matter shall unless the Court otherwise orders be continued so far as may be necessary for the realization and distribution of the property of the debtor.

4. The language of this section is almost similar to that of Section 108, English Bankruptcy Act of 1883. In Ex parte Sharp; In re Walker (1886) 54 L.T. 682 it was held that where a debtor dies after a bankruptcy petition is presented, but before adjudication the Court should under Section 108 of the Act adjudicate him a bankrupt and the order of adjudication should be gazetted and advertised in the ordinary way. It was never considered that the right was a purely personal right and the matter should abate on the death of the debtor. The case where the death took place even before the notice was served on the debtor was however considered different because there was no provision for ordering substituted service in the case where the debtor was actually dead : see In re Easy; Ex parte Hill and Hymans (1887) 19 Q.B.D. 538. In In re Hardy v. Farmer (1896) 1 Ch. D. 904 the rule laid down in Ex parte Sharp; In re Walker (1886) 54 L.T. 682 that where a debtor dies the proceedings in the matter shall, unless the Court otherwise directs, be continued as if he was alive was accepted. It was however remarked that the old Section 108 could not be read as applying to a bankruptcy petition which had been dismissed, neither could it be applied to a case where the petition has been presented by a creditor but there has been no service during the debtor's lifetime. It was held that the construction put upon that section was a general one and there was no reasonable ground to say that the provisions of that section would not justify a continuance of the proceeding.

5. It seems to us that it is not correct to say that the question of adjudication is a purely personal matter which had no connexion with the property of the deceased. When a creditor applies for the adjudication of his debtor, his principal aim is to realize his debts out of the assets of the deceased, which is not a matter concerning the person of the insolvent only. Similarly where a debtor applies to be adjudicated insolvent he intends to have his estate administered and debts paid up and the surplus if any restored to him and himself discharged from all further liability. Even in such a case it cannot be said that the matter is a purely personal one of the insolvent. The general rule of the common law of Tort, actio personalis moritur cum persona, namely, that the personal action dies with the person, and in such a case death puts an end to the right of action, has not been applied and cannot be applied to bankruptcy proceeding. A creditor may be seriously prejudiced if it were to be held that the proceedings terminate automatically on the death of the debtor. He might have applied for the adjudication shortly before the expiry of the period of limitation for his suit expecting that he would recover his debts through the insolvency Court, and the debtor might die after the expiry of the period of limitation. If the application is to abate automatically, the creditor would be left without any remedy. Again where an adjudication order has been passed, if the right to continue the proceeding does not survive, the result would be that the heirs of the debtor would be deprived of their remedy to challenge the order by way of appeal and to take other objections which might have been open to the debtor. We do not think that there is anything in the Provincial Insolvency Act which would justify the view that the death of the debtor or insolvent brings about a complete abatement of the proceeding and there is no right surviving to the heirs of the deceased.

6. Section 75, Provincial Insolvency Act, expressly allows a right of appeal not only to the debtor but to every other person aggrieved by the decision. In the present case the order of adjudication had been appealed against by the insolvent himself and on his death his heirs wish to continue the appeal and to challenge the propriety of the order on the ground that the order should not have been made. If we were to hold that the appeal has abated, the result would be that the heirs would be deprived of the right to challenge the order of adjudication. We find no justification for the view that this is the necessary consequence of the death of the debtor. With great respect we are unable to agree with the view expressed by the Lahore High Court. We accordingly overrule the objection.

7. We now proceed to consider the merits of the appeal. The appeal is based on two grounds that the debtor appellant has not committed an act of insolvency and that the debtor is able to pay his debts. The petitioning creditors were four in number and they held three decrees, one of 1928 amounting now to Rs. 20,000, one of 1932 amounting to over Rs. 4,000, and one of 1927 amounting to Rs. 2,000. The estate of Piare Lal, the alleged insolvent, is now in the hands of a receiver in a partition suit. It is true that for a certain period that estate was paying sufficient inoome for an allowance of Rs. 1,200 per month to be paid to Piare Lal by the receiver, but owing to agricultural depression the income from the estate has declined and the learned District Judge is doubtful as to whether if all the property is sold it will be possible for the debts to be paid. In any case it is quite clear that at present there is no prospect of the debts being paid and the decrees are all lying standing and apparently nothing has been paid on these decrees. We are satisfied, therefore, that it has not been shown by the debtor that he will be able to pay his debts under Section 25, Insolvency Act.

8. Now as regards the alleged acts of insolvency the plaint set out that a notice had been given by a registered post card to applicant 2 on 4th September 1933 that it was not possible for Piare Lal to pay his debts and that he was not going to pay it. The actual terms of this notice were that there were so many debts that he was not able to make payment and it was useless for the creditor addressed to continue to make demands and that he might do whatever he liked in the matter:

Be it known to you that your dunning me over and over for your money is entirely useless. I am now so much indebted that I cannot pay oft my debts. You do what you like. But do not please worry me.

9. The contention in the first place was in para. 7 of the written statement that this creditor Israr Hasan Khan had obtained the signature of Piare Lal on a blank post card. Piare Lal gave evidence but he gave no explanation as to how it was that he came to make his signature on a blank postcard at the instance of a creditor. We cannot conceive that any one would sign on a blank postcard without any reason, and as no reason is given we agree with the lower Court that this evidence is not worthy of credit. Argument was then made that the post card would not amount to an act of insolvency within the meaning of Section 6(g). Section 6(g) requires:

If he gives notice to any of his creditors that he has suspended, or that he is about to suspend, payment of his debts.

10. In Crook v. Morley (1891) A.C. 316, there was a case where a debtor sent to his creditors a letter:

Being unable to meet my engagements as they fall due, I invite your attendance at uncertain place when I will submit a statement of my position for your consideration and decision.

11. That was held by the House of Lords to amount to an act of insolvency. We consider that the post card was almost parallel to that notice and, therefore, we consider that this postcard did amount to an act of insolvency. For these reasons we dismiss this appeal with costs.


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