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Brij Kishore and anr. Vs. Parshotam Das and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1937All303
AppellantBrij Kishore and anr.
RespondentParshotam Das and ors.
Excerpt:
- - the matter therefore resolves itself into this that applications which are perfectly valid have been made, one by the creditors under the insolvency act and the other by the landlords under the encumbered estates act......on 16th august 1935 the debtors made an application to the collector under the united provinces encumbered estates act, and on the same date the collector passed an order under section 6 of that act. the question therefore arose in the insolvency court whether an interim receiver should be appointed or whether the further proceedings in the insolvency court should be stayed under the amended section 7, encumbered estates act. the insolvency court held that a stay of these proceedings should be ordered and that order of stay has been upheld by the district judge in appeal. no order of adjudication had been passed by the insolvency court. the creditors in revision contend that section 7, encumbered estates act which sets out that all proceedings pending at the date of the said order in.....
Judgment:
ORDER

1. This is a civil revision by two creditors under the following circumstances : On 13th August 1935 these applicants made an application against six persons that they should be adjudged insolvents. On 15th August 1935 an application was made for appointment of an interim receiver for the estate of these insolvents. On 16th August 1935 the debtors made an application to the Collector under the United Provinces Encumbered Estates Act, and on the same date the Collector passed an order under Section 6 of that Act. The question therefore arose in the insolvency Court whether an interim receiver should be appointed or whether the further proceedings in the insolvency Court should be stayed under the amended Section 7, Encumbered Estates Act. The insolvency Court held that a stay of these proceedings should be ordered and that order of stay has been upheld by the District Judge in appeal. No order of adjudication had been passed by the insolvency Court. The creditors in revision contend that Section 7, Encumbered Estates Act which sets out that all proceedings pending at the date of the said order in any civil or revenue Court in the United Provinces in respect of any public or private debt to which the landlord is subject, or with which his immoveable property is encumbered, except an appeal or revision against a decree or order, shall be stayed etc., does not relate to insolvency proceedings. The argument is that an insolvency Court is not a civil or revenue Court. Learned Counsel argues that the Provincial Insolvency Act, (Act 5 of 1920), confers a special jurisdiction and therefore the Courts exercising that jurisdiction are not civil Courts. In the Provincial Insolvency Act it is provided in Section 3 that the District Courts shall be the Courts having jurisdiction under this Act, and in Section 5(2) that the District Courts shall have the same powers and shall follow the same procedure as they respectively have and follow in regard to civil suits. In view of these provisions we are of opinion that the insolvency Courts are civil Courts and that the provisions of Section 7(1)(a) apply to those Courts. The next argument made for the applicants in revision was that under the provisions of Section 48(2), Encumbered Estates Act the insolvency proceedings are an exception to the general rule laid down in Section 7 and should not be stayed. The language of this sub-section is as follows:

Subject to the provisions of Sub-section (1) the landlord or any creditor may present a petition that the landlord be adjudged insolvent but any amount or amounts due under any order passed by the Collector under Section 27 or Section 28 shall for the purpose of the insolvency proceedings be deemed to be a debt or debts secured upon such of the landlord's subsisting property in land as has been reported by the Special Judge under Sub-section (2) of Section 19 to be liable to attachment or sale.

2. Now there is no doubt that under the circumstances of the present case the creditors are not barred by the provisions of Sub-section (1) because the creditors presented their application to the insolvency Court on 13th August 1935 before the application had been made under the Encumbered Estates Act on 16th August 1935. They therefore made their application before the bar arose. But at the same time it must be noted that Section 4, Encumbered Estates Act, has a proviso as follows:

Provided also that no landlord who has been adjudicated insolvent and has not been discharged shall apply under this section.

3. This proviso indicates that a landlord who has not been adjudicated insolvent may make an application under the Act. The application therefore by the landlord-debtors on 18th August 1935 was a valid application under the Encumbered Estates Act. The matter therefore resolves itself into this that applications which are perfectly valid have been made, one by the creditors under the insolvency Act and the other by the landlords under the Encumbered Estates Act. The contention for the applicants is that these two proceedings should go on in both Courts. It does not appear at all probable that the Legislature could have intended any such result. Both proceedings are proceedings for the liquidation of the debts of these landlords and it is difficult to see how concurrent jurisdiction could be exercised by two Courts and concurrent proceedings for the same object in regard to the same debts and the liquidation of those debts out of the same property could possibly continue. It appears to us therefore that Section 48(2) cannot be construed in the manner desired by the applicants in revision. The meaning which appears to us to attach to this rather difficult sub-section is that it is open to the creditors to present their application outside the period barred by Sub-section (1), but when such an application has been presented, the provisions of Section 7 will apply and the proceedings in the insolvency Court will be, stayed just in the same manner as the proceedings in any other civil or revenue Court.

4. Against this view learned Counsel for the applicants in revision urged that there would be no point in such a provision of law and he argued that it was not clear on such a view when the proceedings which were stayed could be continued. It may be that after the period has expired which is denned in Section 48(1), then it will be open to the insolvency Court to continue its proceedings; but this is not a matter which is the subject of the revision before us. The revision before us is only on the point as to whether the stay order of the insolvency Court is a valid order or not. Various sections have been referred to and various comments have been made as to the procedure under the Encumbered Estates Act, but we do not consider that it is necessary to investigate this matter in detail. It appears to us that the plain meaning of Section 7 and Section 48(2) is that the application in insolvency which has been filed by the creditors will be stayed and will remain pending during the disposal of the case in the Court of the special Judge and of the Collector under the Encumbered Estates Act. Accordingly we dismiss this application in revision with costs.


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