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Panna Lal-sham Lal Vs. Abdullah Usman and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1933All117
AppellantPanna Lal-sham Lal
RespondentAbdullah Usman and ors.
Excerpt:
- - 2. on the expiry of one year it was found that the insolvent had failed to apply for his discharge......not allowed the prayer of the appellants for payment to them of the price of 100 bags sold by the receiver. in appeal the order of the learned judge is challenged.3. it seems to us that the provisions of section 5, provincial insolvency act, (5 of 1920), gave power to the insolvency court similar to those conferred on ordinary civil courts in the exercise of their original civil jurisdiction. under section 144. civil p.c, where a decree is varied or reversed the court of first instance has power to order restitution so as to place the parties in the position which they would have occupied but for such a decree or order which was subsequently varied or reversed. it seems to us that the learned district judge had jurisdiction to order that as a result of the setting aside of the order.....
Judgment:

Sulaiman, C.J.

1. This is an appeal by the firm Panna Lal Sham Lal and arises out of a certain insolvency proceedings. It appears that this firm brought a suit against the debtor to recover Rs. 1,200 odd or in the alternative 100 bags of grain. It also appears that these bags were attached before judgment. While the suit was pending an application was made by some creditors for the debtor to be adjudged an insolvent and a receiver was appointed who took actual charge of the 100 bags along with other properties of the debtor. The appellants obtained their decree on 14th March 1927 while the application for insolvency was pending, and as a result their claim for the recovery of the amount, and in lieu thereof of the 100 bags was decreed. This was followed by an order of adjudication with direction to the insolvent to apply for discharge within one year. The appellants Panna Lal and Sham Lal filed an application in the insolvency Court claming three alternative reliefs. They asked for the 100 bags to be given to them or in the alternative for their price or again in the alternative to be entered as scheduled creditors. For some reason or other, the Court did not consider it expedient to grant the first two prayers, but ordered that the appellants should be entered in the schedule as creditors.

2. On the expiry of one year it was found that the insolvent had failed to apply for his discharge. The Court accordingly annulled the order of adjudication. It went on to direct the receiver to retain possession of the assets of the debtor and to distribute them among the creditors who were entered in the schedule. It may be noted that the appellants were ordered to be entered as scheduled creditors and their prayer for the bags to be handed over to them was not granted. Two days later than the annulment of the order of adjudication, an application was made by other creditors to be entered in the schedule and their application was dismissed. When the matter came up in appeal to the High Court, the High Court dismissed the appeal inasmuch as no appeal lay, but on the divisional side intervened and set aside the order under which the receiver had been directed to distribute the assets. The Bench pointed out that such an order was illegal and ultra vires because the Court could not have ordered the receiver after annulling the adjudication to distribute the assets and all that could be done under Section 37 of the Act was either to restore the property to the debtor leaving the ordinary remedy open to the creditors or to order the property to vest in some specified person. When the case went back to the Court below it was discovered that the receiver, in pursuance of the order directing distribution of the assets made by the District Judge, had already made some payments. Part of the amounts realized had been paid to the present appellants Panna Lal Sham Lal. The learned District Judge has therefore thought that these persons should be asked to refund the amounts which they received on distribution by the receiver and he has ordered accordingly. He has not allowed the prayer of the appellants for payment to them of the price of 100 bags sold by the receiver. In appeal the order of the learned Judge is challenged.

3. It seems to us that the provisions of Section 5, Provincial Insolvency Act, (5 of 1920), gave power to the insolvency Court similar to those conferred on ordinary civil Courts in the exercise of their original civil jurisdiction. Under Section 144. Civil P.C, where a decree is varied or reversed the Court of first instance has power to order restitution so as to place the parties in the position which they would have occupied but for such a decree or order which was subsequently varied or reversed. It seems to us that the learned District Judge had jurisdiction to order that as a result of the setting aside of the order directing the receiver to distribute the assets, the persons who have received payments under the distribution should be called upon to refund the amount to the receiver. His order to that extent is therefore correct. As regards the contention of the. appellants that they are to be allowed to have the price of the 100 bags inasmuch as they had attached these bags before the adjudication of the insolvent, we are of opinion that this is not a matter with which we can deal in these, proceedings. Now that the adjudication has been annulled and the debtor is no longer insolvent, the appellants are in a position to pursue their ordinary remedies. Their proper course may be to go to the execution Court for redress. We accordingly dismiss this appeal. The appellants must pay the costs of the receiver.


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