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Ulfatrai Maniram Vaishya Vs. Proprietors of Firm Ramcharanlal Shrikrishnalal and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMadhya Pradesh High Court
Decided On
Case NumberLetters Patent Appeal No. 1 of 1959
Judge
Reported inAIR1963MP228; 1963MPLJ884
ActsProvincial Insolvency Act, 1920 - Sections 11, 36 and 44(2)
AppellantUlfatrai Maniram Vaishya
RespondentProprietors of Firm Ramcharanlal Shrikrishnalal and ors.
Advocates:B.D. Gupta, Adv.
DispositionAppeal dismissed
Cases ReferredSasti Kinkar Banerjee v. Hursookdas Chogemull
Excerpt:
- - 11. before i leave off the case, i would like to observe that some doubt is expressed as to whether in the event of proceedings having been already taken in the agra insolvency court, can proceedings for insolvency be subsequently initiated at gwalior as well? but the high court has discretion either to exercise its jurisdiction or to restrain its exercise, on being satisfied that the matter may be dealt with more conveniently by the other court. , i would like to observe that the insolvency court should, before deciding whether the insolvent in the present case is entitled to an order of discharge take into account the following facts:.....from all debts provable under the act. the appellant ulfatrai proved his present debt in the agra insolvency court, and, after the discharge order from the agra court, the insolvent must be deemed to have realised a larger sum than the rawalpindi creditors, and proved against him in the agra insolvency court, including the debt of the appellant. release from a proved debt means that not only the remedy (further proceedings forthe realisation of the balance of the proved debt in another court) is barred but the debt itself is also extinguished. see the observations of blackburn j. in thompson v. cohen, (1872) 7 qb 527 (532). i feel further fortified in my opinion by a decision of the madras high court in abdul khuthus sahib v. inayatullah, air 1941 mad 620 in which the english view.....
Judgment:

A. K. Khan, J.

1. This is an appeal under Clause 10 of the Letters Patent against an order of a Single Judge passed in Civil Misc. Appeal No. 2 of 1959, upholding the decision of the Additional District Judge, Gwalior, in insolvency proceedings.

2. The facts out of which this appeal arises in short are that one Shantilai filed a petition dated 4-2-52 in the Insolvency Court, Gwalior, alleging that he had dealings with the Firm known as 'Ramcharan Lal Shrikishen' of which Jagannath and Madanial are the owners, that a sum of Rs. 1864/7/9 is due from the firm, that the firm is heavily indebted to many other persons (the names and the amount due from the firm is then given) and that the firm is unable to liquidate its debts. It was also alleged that the owners of the Firm (Jagannath and Madanlal) had transferred to Agra its goods to some persons as trustees and that the only property left in Lashkar, Gwalior, is some cloth and a shop. The petitioner prayed that the owners of the firm be adjudged insolvents and that money be distributed rateably among all the creditors. Mr. Murlidhar Maheshwari, an Advocate of this Court was appointed a Receiver on 4-2-52 and on 3-3-53, the court made an order of adjudication and Jagannath and Madanlal were adjudged as insolvents.

3. Before the distribution of any dividend, on 5-8-53, one Ulfat Rai (the present applicant) filed a petition, stating he has a firm under the style and name of Maniram Ulfatrai, Bhind, that he is the owner of the above firm, which had dealings with the firm of Ramcharanlal Shrikishenlal, Lashkar, of which the two insolvents are the owners, that a sum of Rs. 17,493A including interest is due to his firm from the insolvents and that he be allowed to prove his debt.

4. It was also stated in the petition that the two insolvents were also the owners of a firm at Agra by the name of Madanlal Srikishen, that the District Judge, Agra, adjudged them as insolvents, that in the Agra Court, the petitioner proved his debt, that at Agra he received a sum of Rs. 2,263/3/4 on 15-5-53 from the Agra Receiver.

5. This petition was opposed by Radheylal, a creditor of Gwalior on the ground that in fact, Ulfatrai of Bhind had dealings with the insolvents' firm at Agra and not with the firm at Gwalior, that in respect of his debt Ulfatrai had received the final dividend from the Agra Court, that the Agra Court had passed an order of discharge on 25-4-55 and the discharge order of the Agra Court operates as a release from all the debt proved by Ulfatrai in Agra Court and that he cannot be accorded an opportunity to prove his debts again, in respect of which the insolvents have obtained a release.

6. The learned Additional District Judge upheld the contention of Radheylal. It relied upon Section 44(2) of the Provincial Insolvency Act and said that the effect of the order of discharge at Agra was to release the insolvents from the debts proved in the Agra Court. According to him the debt was wiped out. In appeal, this decision was upheld and the present appeal under Letters Patent is filed against the decision of the Single Bench.

7. The main question to be considered in this case is: What is the effect of an order of discharge?

8. According to Clause 2 of Section 44 of the Provincial Insolvency Act, an order of discharge releases the insolvent from all debts provable under the Act. The appellant Ulfatrai proved his present debt in the Agra Insolvency Court, and, after the discharge order from the Agra Court, the Insolvent must be deemed to have realised a larger sum than the Rawalpindi creditors, and proved against him in the Agra Insolvency Court, including the debt of the appellant. Release from a proved debt means that not only the remedy (further proceedings forthe realisation of the balance of the proved debt in another court) is barred but the debt itself is also extinguished. See the observations of Blackburn J. in Thompson v. Cohen, (1872) 7 QB 527 (532). I feel further fortified in my opinion by a decision of the Madras High Court in Abdul Khuthus Sahib v. Inayatullah, AIR 1941 Mad 620 in which the English view was adopted and I find myself in respectful agreement with this view.

9. No plea of fraud has been taken by the appellant in his petition dated 5-8-53 before the Insolvency Court Gwalior either.

10. On 28-8-1961, Mr. Bhagwandas Gupta under Order 23 Rule 3 C.P.C. filed a compromise which is between the appellant Ulfatrai and the objector Radheylal. (creditor) to the effect that he withdraws his objection that Ulfatrai is not entitled to prove the debt (in respect of which the insolvent has been discharged by the Agra Insolvency Court) in the present proceedings before the Gwalior Insolvency Court and that the case be sent back to the Insolvency Court, Gwalior for further proceedings in the case. But in the view that I have taken, namely, that the insolvent is released from the debt which the appellant now seeks to prove by an order of discharge passed by the Agra Court, this compromise cannot be recorded, it being against the law.

11. Before I leave off the case, I would like to observe that some doubt is expressed as to whether in the event of proceedings having been already taken in the Agra Insolvency Court, can proceedings for Insolvency be subsequently initiated at Gwalior as well?

12. Section 11 of the Provincial Insolvency Act lays down that an Insolvency petition shall foe presented to a court, having jurisdiction of the place where the debtor ordinarily resides, or, where he carries on business. The debtor may in some cases carry on business at one or more places. It, therefore, follows that the debtor may be adjudged insolvent by the court having jurisdiction in each of the places where he ordinarily resides, or, where he carries on business. To provide for such an eventuality, Section 36 of the Act provides that in case petitions for insolvency are presented concurrently in more than one court, one of the two courts may annul adjudication or stay proceedings in consideration of the fact that the property of the debtor can be more conveniently distributed by the other court. But this is a matter within the discretion of the court, and, both the courts may continue the proceedings.

13. According to English Law, the pendency of bank-ruptcy proceedings in one place (Ireland), would not in any way limit the jurisdiction of the English Court to make a receiving order (In Ex Parte McCulloch, (1880) 14 Ch. D. 716).

14. Indian decisions also follow the English pattern. In re Aranvayal Sabhapathy, ILR 21, Bom 297 the debtor had first been adjudged an insolvent at Madras. Subsequently at the instance of certain creditors resident in Bombay, he was adjudged insolvent again in Bombay for the relief of creditors at Bombay. Similarly where insolvency proceedings were started at Rawalpindi, and, subsequently at Delhi at the instance of debtor and the Delhi creditors respectively, and the Delhi creditors had to realise a larger sum than the Rawalpindi creditors, and the Rawalpindi creditors had agreed with the debtor to accept part payment of their debts out of the sale proceeds of the debtor's property situate at Rawalpindi, it was held by the Lahore High Court that having regardto the peculiar circumstances of the case, it would be proper to allow the proceedings to continue in Doth the courts : Kedar Nath v. Dwarka Das Badri Das, AIR 1928 Lah 848. It has been observed by the Privy Council in Sasti Kinkar Banerjee v. Hursookdas Chogemull, 31 Cal WN 1002: (AIR 1927 PC 162) that

'Notwithstanding the previous adjudication by a District Judge, the High Court has power to make a further adjudication against the same debtor when he is within its jurisdiction under the Presidency-Towns Insolvency Act. Section 22 of the Act (which corresponds to Section 36 of the Provincial Insolvency Act) gives any party who may so desire, an opportunity for satisfying the High Court that the proceedings before it should be stayed orthe adjudication by it annulled in view of the other proceedings before the District Court. But the High Court has discretion either to exercise its jurisdiction or to restrain its exercise, on being satisfied that the matter may be dealt with more conveniently by the other court.'

15. Thus both according to English and Indian Law, it would appear that the proceedings for insolvency can concurrently go on in two courts which may have jurisdiction to entertain them, but it is always open to a party to apply to the court either to annul its adjudication or stay all proceedings and the court having a regard to the fact as to where the property of the debtor can be more conveniently dealt with, pass such order as the exigency of the case may require.

16. For reasons stated above, there is no substance in the appeal. Appeal is dismissed and the parties must bear their own costs.

P.R. Sharma, J.

17. Although I agree with the conclusion arrived at in this case by my learned brother Khan J., I would like to observe that the Insolvency court should, before deciding whether the insolvent in the present case is entitled to an order of discharge take into account the following facts: (1) his conduct in concealing his property situate at Gwalior from the Insolvency Court at Agra, (2) the result of the order of adjudication passed by the Agra Court on 12-5-1952 having regard to the provisions of Sub-sections (1) and (2) of Section 28 of the Provincial Insolvency Act, (3) the effect of the order of discharge passed by the Agra Court, on the present proceedings and (4) whether it would be proper and legal to allow only the creditors who have appeared in the present case, with the exception of the present appellant, to receive a share in the assets of the insolvent or proceeds thereof, to the exclusion of the creditors who proved their debts before the Agra Court. Even though the insolvency proceedings may be initiated in two Courts the law contemplates that the assets of the insolvent should be pooled together for their being distributed amongst all the creditors of the insolvent. The insolvent in the present case, as also the appellant, have in the concurrent proceedings before the Agra and Gwalior Courtsmade an attempt to secure a distribution of the assets amongst the creditors of the insolvent on a regional basis. It is for the Insolvency Court at Gwalior to see whether this should be permitted. Since these points are not directly involved in this Letters Patent Appeal, I do not think it fit to express any opinion on these points contrary to the views expressed by my learned brother. By adopting such a course further unnecessary delay in the proceedings would be caused.

18. In the result this appeal shall stand dismissed.


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