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Moolchand Kanhaiyalal Tiwari Vs. Nihalkaran Chhatra Karan and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMadhya Pradesh High Court
Decided On
Case NumberCivil Revn. No. 243 of 1959
Judge
Reported inAIR1961MP199
ActsProvincial Insolvency Act, 1920 - Sections 29
AppellantMoolchand Kanhaiyalal Tiwari
RespondentNihalkaran Chhatra Karan and anr.
Appellant AdvocateG.D. Patel, Adv.
Respondent AdvocateS.R. Joshi, Adv.
Cases ReferredBrownscombe v. Fair
Excerpt:
- - the court directed the stay of the suit observing as follows :with a view to avoid further complicationsi deem it better to stay the suit rather than tocontinue it. it appears that the trial court failed to consider the essential aspect of the matter and stayed the suit by observing that the stay was necessary for avoiding further complications......and claimed decree against either of the defendants in the alternative. during the pendency of the suit ramchandra, on his petition, was adjudicated insolvent. after the order of adjudication was passed ramchandra presented a petition in the court below invoking the jurisdiction of the court under section 29 of the provincial insolvency act. the court directed the stay of the suit observing as follows :'with a view to avoid further complicationsi deem it better to stay the suit rather than tocontinue it.'2. having regard to the terms of section 29 of the provincial insolvency act it is no doubt discretionary that the trial court before whom a suit or proceeding against the insolvent is pending either to stay the proceeding or to allow it to continue on such terms as such court may.....
Judgment:
ORDER

V.R. Newaskar, J.

1. The only question involved in this revision petition is whether the Court below is justified in staying the suit on the ground that one of the defendants is adjudicated an insolvent. The trial Court in exercise of its jurisdiction under Section 29 of the Provincial Insolvency Act directed the stay of the present suit. The suit is based on a promissory-note executed by defendant Ramchandra in the name of Ramachandra Rambhau Trivedi, Manager, Malwa Bhandar and in the signature Ramchandra mentioned after signing his own name 'for Malwa Bhandar Manager'. Plaintiff's case is that defendant No. 1 Nihalkaran is the proprietor of Malwa Bhandar.

He filed the present suit against both the defendants and claimed decree against either of the defendants in the alternative. During the pendency of the suit Ramchandra, on his petition, was adjudicated insolvent. After the order of adjudication was passed Ramchandra presented a petition in the Court below invoking the jurisdiction of the Court under Section 29 of the Provincial Insolvency Act. The Court directed the stay of the suit observing as follows :

'With a view to avoid further complicationsI deem it better to stay the suit rather than tocontinue it.'

2. Having regard to the terms of Section 29 of the Provincial Insolvency Act it is no doubt discretionary that the trial Court before whom a suit or proceeding against the insolvent is pending either to stay the proceeding or to allow it to continue on such terms as such Court may impose. But as held in Brownscombe v. Fair, (1888) 58 LT 85, by Wills, J.; the discretion is not arbitrary one but is to be exercised on recognised principles and the principle underlying the above section is that on the bankruptcy of a man no more litigation between the bankrupt and his creditor should be permitted except in special circumstances.

In order therefore to exercise discretionary power under Section 29 of the Provincial Insolvency Act it is incumbent upon the Court to consider whether there are special circumstances to justify the continuance of the suit. It appears that the trial Court failed to consider the essential aspect of the matter and stayed the suit by observing that the stay was necessary for avoiding further complications. The learned Judge did not even mention, what are the likely further complications in this case.

The possibilities arc that the plaintiff's suit would be dismissed totally against both the defendants or it would he dismissed as against the insolvent or as against Nihalkaran. In that event there does not appear to be any reason to suppose that the continuance is likely to create any com-plication. The object of the provision, being that the insolvent should no longer be bothered by means of further litigation since the debt is provable against him in the insolvency, it seems that; where the insolvent is the only defendant and the claim relates to a debt there is greater reason than not to stay the suit.

But where besides him another person is also sued and the claim, is laid in the alternative the continuance of the suit is more desirable than its stay. Because if the suit is totally stayed the plaintiff's chance to obtain a decree against a defendant who is not adjudicated an insolvent is also withheld. In that event there are special circumstances to justify the continuance of the suit particularly when the insolvent stands a chance of totally being relieved of a liability on a finding by the Court in his favour.

It is no doubt relevant to consider as to whether the insolvent or his estate should be exposed to further costs for continuing the suit. In case the suit is stayed and the debt is allowed to be proved in the insolvency he would be relieved of those costs but this can be achieved by imposing certain conditions. The Court may permit the continuance of the suit subject to the condition that the insolvent or his estate would not be liable for any costs incurred by the plaintiff hereafter.

3. The order passed by the Court below I directing stay of suit therefore involves material irregularity in the exercise of jurisdiction.

4. I would therefore set aside the order and direct the continuance of the suit subject to the condition that the defendant insolvent Ramchandra would not be liable to costs incurred by the plaintiff hereafter in continuing his suit against this defendant,

5. The petitioner would be entitled to get his costs of this petition from the other side.


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