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Sisram and ors. Vs. Ram Chander Mal - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1930All104
AppellantSisram and ors.
RespondentRam Chander Mal
Excerpt:
- - how far the decree passed under circumstances like these will be effective for obtaining satisfaction of the bond is another question and does not call for any decision at this stage......among the creditors, and that 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 proceeding, except with the leave of the court. if, the debt contracted under the bond is provable in insolvency proceedings, the consequence laid down by the section, namely, that no legal proceedings can be taken against the insolvent except with the leave of the court, must follow, section 34 specifies the debts which are provable in insolvency proceeding. it provides all debts and liabilities, present or future, certain or contingent, to which the debtor is subject when he is adjudged an.....
Judgment:

Niamatullah, J.

1. This is an application for revision of an order passed by the learned Additional Subordinate Judge of Moradabad. It arises out of a suit brought by the plaintiffs for recovery of Rs. 199-10-0 on foot of a bond executed by Niadar Singh defendant 4, Indar Singh defendant 5 and Imrat Singh, father of defendants 1 to 3. It was contested op a variety of grounds one of which was that Niadar Singh defendant 4 was an undischarged insolvent and leave of the insolvency Court not having been obtained for the institution of the suit the same was not maintainable against him. This ground prevailed in the Court of first instance, but the lower appellate Court has overruled it and decreed the suit against all the defendants. The present application for revision has been filed by the defendants.

2. The only question argued before me is whether, in the absence of leave of the insolvency Court, the lower appellate Court was justified in passing a decree against the undischarged insolvent. It appears that the bond on which the suit is based was executed after the order of adjudication. An insolvent is not under any disability in the matter of entering into contracts and the bond is, therefore, not open to objection on the score of its validity. As to whether a suit can be instituted against him on foot of a bond executed after the order of adjudication depends on the provisions of Section 28, Insolvency Act, which lays down that the whole of the property of the insolvent shall vest in the Court or in a receiver and shall become divisible among the creditors, and that 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 proceeding, except with the leave of the Court. If, the debt contracted under the bond is provable in insolvency proceedings, the consequence laid down by the section, namely, that no legal proceedings can be taken against the insolvent except with the leave of the Court, must follow, Section 34 specifies the debts which are provable in insolvency proceeding. It provides all debts and liabilities, present or future, certain or contingent, to which the debtor is subject when he is adjudged an insolvent, or to which he may become subject before his discharge 'by reason of any obligation incurred before the date of such adjudication, shall be deemed to be debts provable under this Act. The test, therefore, is that the debt should have existed at the date of the order of discharge, or if contracted subsequent thereto, it should be based on a liability existing at the time of adjudication. The obligation under the bond in suit was incurred several years after the order of adjudication. It is true that the loan advanced under the bond was applied by the insolvent in satisfaction of certain debts which existed at the time of adjudication, but the liability which is sought to be enforced in the present suit was a new obligation and incurred when the bond was executed. The circumstances are not such as to establish a case of subrogation. In this view of the matter I am constrained to hold that the debt in question in this case is not provable in insolvency proceedings, and, therefore, leave of the Court was not necessary as a condition precedent to the institution of the present suit. The decree passed by the lower appellate Court is, therefore, open to no objection. How far the decree passed under circumstances like these will be effective for obtaining satisfaction of the bond is another question and does not call for any decision at this stage.

3. For the reasons stated above this application for revision cannot succeed and is dismissed with costs.


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