M.C. Jain, J.
1. This revision is directed against the order of the Additional District Judge. Churu, dated April 4, 1977, whereby he allowed the application of Girdharilal (defendant No. 3) under Section 29 of the Provincial Insolvency Act, 1920 (V of 1920) (hereinafter referred to as 'the F. I. Act'), And consequently stayed the proceedings of the suit.
2. A few relevant material facts giving rise to the present revision petition may briefly, be stated as under.
The plaintiff M/s. Harshamal Shivbox instituted a suit for the recovery of Rs. 18,916.95 p. against M/s. Ramkishan-das Sagarmal and its partners and ex-partner and the legal representatives of the ex-partners. It was alleged by the plaintiff-firm that Sagarmal Nathmal, Poosraj alias Pushpraj, Girdharilal, Hulashchand and Mst. Ratni Bai were the partners of the defendant-firm and this firm continued its business up to St. 2020 at Bombay. After St. 2020, the firm, stopped its business Sagarmal and nathmal expired in St. 2020 and St. 2021, respectively. Poosraj alias Pushpraj was excluded from the partnership firm on 5-4-1360. The plaintiff impleaded the legal representatives of Sagarmal and Nathmal and also impleaded Poosraj as defendants. Besides that, the partners of ,he defendant-firm were impleaded as defendants. The plaintiff has alleged that not only the partners of the firm, but also the legal representatives of the deceased partners of the firm, as well as the ex-partner Poosrai are ail liable for the payment of the suit money. The plaintiff-firm prayed for a decree against the firm, its present partners, ex-partner, as well as legal representatives of the deceased partners.
3. Two separate written statements were filed by two sets of defendants. One written statement was filed by defendants Nos. 2 to 5, namely, Poosraj alias Pushpraj, Girdharilal, Mst. Goda-wari, and Mst. Rsmibai and the other has been filed by Hulashchand, Narayan Prasad, and Smt. Naybadi Bai. Tn hoth the written statements it was pleaded that the defendant-firm was closed on account of losses and insolvency proceedings are pending for adjudicating the defendant-firm, as insolvent, and on this basis a plea was taken that the suit cannot continue.
4. On 25th November, 1976. Gir-dharilal (defendant No. 3) submitted an application under Section 29 of the P.I.Act for staying the proceedings in the suit. It was stated in the application that the defendant-firm has been adjudicated as insolvent by the Bombay High Court and in view thereof the suit cannot continue, so the proceedings in the suit may be stayed. On 6-1-1977 the certified copy of the adjudication order of the Bombay High Court was submitted by defendant No. 3. Reply to the application was filed by the plaintiff on 10-2-1977. After hearing the parties, the learned Additional District Judge allowed the application and stayed the proceedings in the suit. One of the arguments, which was advanced on behalf of the plaintiff-petitioner before the Additional District Judge, was that the adjudication order of the Bombay High Court is not operative against all the defendants. There are parties arrayed as defendants, who have not been adjudged as insolvents by the Bombay High Court. This contention of the plaintiff-petitioner was negatived by the learned Additional District Judge. So far as the question of maintainability of the suit is concerned, the learned Additional District Judge was of the opinion that when suit is instituted in ignorance of the order of adjudication, then the proper course is only to stay the suit and not to dismiss it. The learned Additional District Judge also found that the suit is in respect of the balance amount of a 'khata' and is not based on any breach of contract and he further found that even if the names of all the partners have not been stated in the order of adjudication, it is of no consequence, as the property of all the partners vests in the Court or in the receiver. Dissatisfied with the order of the learned Additional District Judge, the plaintiff has preferred i his revision petition.
5. I have heard Shri R. Balia and Shri Sumer Chand Bhandari, learned counsel for the petitioner, and, Shri H. M. Parekh, assisted by Shri Dalpat-raj Bhandari, for Girdharilal, non-petitioner No. 4.
6. Mr. Balia, learned counsel for the petitioner, vehemently urged that the application for stay of proceedings under Section 29 was not maintainable, as no order of adjudication was made against the debtors under the P. I. Act. According to him, Section 29 is attracted only when the order of adjudication has been made under the P. I. Act.
7. Mr. H. M. Parekh, learned counsel for respondent No. 4, submitted that the application may be treated to be the application under Section 17 of the Presidency-Towns Insolvency Act (III of 1909) (hereinafter referred to as 'the P. T. I. Act'). He concedes that the application under Section 29 of the P. I. Act does not lie, as no order of adjudication has been made under that Act. In fact the order of adjudication has been made under the P. T. I. Act. According to him, Section 17 has two parts. On the making of an order of adjudication, under the first part, the property of the insolvent wherever situate shall vest in the official assignee and under the second part, it is provided, that no creditor shall commence any suit or other legal proceedings after the order of adjudication except with the leave of the Court and on such terms as the Court may impose. According to Mr. Parekh, after the order of adjudication, the plaintiff could not have conmenced the suit against the defendants, so the suit was not maintainable and was liable to be dismissed, but the lesser course was adopted by the defendants by moving the court only for stay of proceedings, as the plaintiff can prove its claim against the defendant-firm before the Insolvency Court. Reference was made by Mr. Parekh to a decision of this Court in Narsingh Das v. Bhairon Dan (AIR 1961 Rai 81). Mr. Parekh urged that the bar regarding the commencement of the suit embodied in Section 17 has a purpose and object behind it. The pur-pose and object behind it, is that when the properties of the insolvent vest in the official assignee and when debt is provable under Section 46 of the P. T. I. Act, then no suit or other legal proceedings should be allowed to be commenced, as the Insolvency Court can be said to be seized with the question of determination of all the debts due from the insolvents and if any suit or proceedings are to be commenced, then they can only be commenced with the leave of the Insolvency Court and on such terms as the Insolvency Court may impose.
8. Mr. Balia, learned counsel for the petitioner, refuted the submission of Mr. Parekh and urged that Section 17 of the P. T. I. Act cannot be pressed into service for stay of the proceedings of the suit. For stay of proceedings in both the Acts, there are specific sections. But so far as the provisions of P. T, I.Act are concerned, the Courts situated outside the Presidency-towns cannot act under the P. T. I. Act, as their proceedings are governed by the P. I. Act. But the provisions for stay under the P. I, Act cannot be invoked, as no order of adjudication has been made under that Act. So in such a situation the suit or the proceedings instituted in the Courts outside the Presidency-towns can neither be dismissed, nor stayed and in respect of such suits and proceedings, the provisions of the P. T. I. Act can have no application. He urged that this question was not the subject-matter of controversy and was not considered in Narsingh Das's case (supra) cited by Shri Parekh.
9. The question arises as to whether the proceedings in the suit could be stayed in view of the order of adjudication made by the Bombay High Court, as far back as 5-4-1966 much before the filing of the suit. The suit was filed on 3-10-66. It may be stated that the two Acts contain specific provisions for stay of proceedings. Section 18 of the P. T. I. Act is analogous or similar to Section 29 of the P. I. Act. Similarly, Section 17 of the P. T. I. Act is identical to some extent to Section 28 of the P. I. Act. Both these provisions, namely, Section 17 and S; 28 of the two Acts, provide for vesting of the property of the insolvent in the official assignee under the P.T.I. Act or in the Court or in a receiver under the P. I Act and both the provisions further lay down that no creditor shall commence any suit or legal proceedings in respect of any debt provable under the Insolvency Acts, except with the leave of the Court and on such terms as the Court may impose. Section 18 of the P.T.I. Act and Section 29 of P. I: Ad are as under:--
'18. Stay of Proceedings:-- (1) The Court may, at any time after the making of an order of adjudication, stay any suit or other proceeding pending against the insolvent before any Judge or Judges of the Court or in any other Courts subject to the superintendence of the Court.
(2) An order made under Sub-section (1) may be served by sending a copy thereof, under the seal of the Court, by post to the address for service of the plaintiff or other party prosecuting such suit or proceeding and notice of such ordershall be sent to the Court before which the suit or proceeding is pending.
(3) Any Court in which proceedings are pending against a debtor may, on proof that an order of adjudication has been made against him under this Act, either stay the proceedings or allow them to continue on such terms as it may flunk just.'
'29. STAY OF PENDING PROCEEDING :-- Any Court in which a suit or other proceeding is pending against a debtor shall, on proof that an order of adjudication has been made against him under this Act, either stay the proceedings or allow it to continue on such terms as such Court may impose'. It would appear from the above provisions relating to stay of proceeding that when an order of adjudication has been made under the respective Acts, then any Court has been conferred with a power to stay the proceeding, or to allow it to continue on such terms as such Court may impose. The words 'any Court' occurred in Sub-section (3) of Section 18 of the P. T. I. Act, and these words occurred in the beginning of Section 29 of the P. I. Act. For the applicability of Section 29, the order of adjudication is required to be made under the P. I. Act and for the application of Section 18(3) of the P. T. I. Act, the order of adjudication is required to be made under the P. T. I. Act. In the P. T. I. Act. Section 1 only deals with short title and commencement. So far as its application is concerned, it can be gathered from the preamble and the long title of the Act. The P. T. I. Act is an Act to amend the law relating to insolvency in the Presidency towns. The expression 'the Court' has been defined under Section 2. Clause (h), as the Court exercising jurisdiction under the P. T. I. Act and Section 3 deals with the Courts having jurisdiction in insolvency. Section 3, lays down that the Courts having jurisdiction in insolvency under this Act shall be the High Courts at Calcutta, Madras and Bombay. These three High Courts thus are the Courts having jurisdiction under the P. T. I. Act and the P. T. I. Act is the law relating to insolvency in the Presidency towns. Outside the Presidency towns for matters relating to insolvency, the P. T. I. Act would not apply and it is the P. I Act, which will apply. The P. I. Act under Sub-section (2) of Section 1 provides extentof its application and the preamble of the P. I. Act gives us an idea that it is an Act to consolidate and amend the law relating to insolvency as administered by Courts having jurisdiction outside the presidency-Towns. Section 2(1)(b) defines the expression 'District Court' as the principal Civil Court of original jurisdiction in any area outside the local limits for the time being of the Presidency-towns. Section 3(1) of the P. I. Act lays down that the District Courts shall be the Courts having jurisdiction under the P. I. Act, The words 'any Court' occurring in Sections 18 and 29 of the two Acts have to be considered in the light of the preamble of the two Acts and in the light of the definition of the words 'the Court' or the 'District Court', which is the Court having jurisdiction under the P. I. Act and the word 'court' occurring in P. I. Act would mean the 'District Court'. The words 'any Court' in Sections 18 and 29, would, therefore, mean the Court other than the Insolvency Court. If the provision of Section 18 is scrutinised, then it would appear that the insolvency Court, that is, the High Court, who has made the order of adjudication is empowered to stay the suit or other proceedings pending against the insolvent before any Judge or Judges of that Court or the High Court is even empowered to stay any suit proceeding pending against the insolvent in any other Court, subject to the superintendence of that High Court. The words 'any Court' occurring in Sub-section (3) of Section 18 would necessarily be some Court other than the Insolvency Court and may even be Court, which may be beyond the superintendence of that High Court, which is an Insolvency Court. That is the words 'any Court' may be the Courts situated outside the Presidency-towns or even be the Court, which may subject to the superintendence of that High Court or which may not be so subject and it is only on such construction that Sub-section (3) of Section 18 can be given its due operation. Where an order of adjudication has been made under the P. T. I. Act and if any proceedings are pending against a debtor in a Court situated outside the Presidency-towns or in a Court situated in an area where the powers of superintendence of that insolvency Court does not extend, then by exercise of power under Sub-section (3) of Section 18, that Court can stay the proceedings. The words 'any Court' are of general import and these words of general import cannot be construed in a narrow sense. As already stated there is no extent of application clause under the P. T. I. Act and the P. T. I. Act only amends the law of insolvency in the Presidency-towna Viewed in this light, the words 'any Court' occurring in Sub-section (3) of Section 18 have to be interpreted. Section 29 of the P. I Act has not been found to be applicable, because there was no order of adjudication made under that Act. But, in my opinion. Sub-section (3) of Section 18 can be attracted in view of the fact that the order of adjudication has been made under the P. T. I. Act and the words 'any Court' are the words of wider import.
I am unable to agree with the submission of Mr. Parekh that the application submitted by defendant No. 3 Girdhari-lal can be treated, as an application under Section 17 of the P. T. I. Act. As already stated above, Section 17 does not deal with stay of proceedings. It deals with the effect of order of adjudication. There was no prayer that in view of the provision of Section 17, the suit is not maintainable. The prayer was only for stay of proceedings in the suit. Such a prayer, in my opinion, is not covered under Section 17. The Narsingh Dass's case (AIR 1961 Raj 81) (supra) cited by Shri Parekh is undoubtedly a case where this Courl considered the question of maintainability of suit despite the order of adjudication. In that case the suit was instituted by the plaintiff Bhairon Dan and the allegations were that there was a firm in the name of Bhairon Dan Madangopal which did business in cloth at Calcutta and defendant No. 1 Narsingh Das and defendants Nos. 4 and 5 were its partners. Defendants Nos. 2 and 3 were the sons of Narsingh Das and were members of a joint Hindu trading family. The defendant Narsingh Das had been adjudicated insolvent by the Insolvency Court at Calcutta. I. N. Modi. J., in that case observed that when once vesting takes place, the provisions of Section 17 of the P. T. I. Act come into play, and no creditor with respect to a debt provable in insolvency, can proceed against the insolvent except by recourse to the insolvency Court, nor can he fileany independent suit for the recovery of his debts except with the leave of the insolvency Court and it was held that the position, therefore, boils down to this that the present suit against Narsingh Das or for that matter against his sons was altogether incompetent. It was also observed in that case, as under (At P. 85):--
'Thus, it may be safely premised as a general rule that obligations arising out of a contract are provable in insolvency and that the entire purpose underlying the insolvency jurisdiction is to give a complete discharge to the debtor from all contractual obligations to pay sums of money, whether liquidated or unliquidated, and the only right of any person under a contract with a person who is subsequently adjudged insolvent with respect to such pecuniary claims is to come in and prove his claim in the insolvency Court.
'Having regard to this state of the law which has been entirely missed by the courts below, it clearly seems to me that the debts or liabilities of the defendant Narsinghdas arising out of the partnership business which he was carrying on in partnership with the plaintiff and defendants Nos. 4 and 5 and which was dissolved on the 18th April, 1948 (corresponding to Chet Sudi 9 S. 2005) before he was adjudicated insolvent were clearly provable in insolvency, even as-suming that such liabilities were not ascertained sums of money and were unliquidated.
'That being so, according to the provision contained in Section 17, the plaintiff would occupy the position of a creditor within the meaning of that section; and in respect of all such debts, his only remedy was to proceed against the property of the insolvent before the Insolvency Court, and he was under a clear disability to commence any suit or other legal proceeding against the insolvent without the leave of the insolvency Court.''
It would appear that by applying Section 17 read with Section 46, the suit was held not maintainable in the court outside the Presidency towns. The question before me is only confined to stay of the suit in view of the order of adjudication. I need not enter into the question of correctness of the decision in Narsingh Das's case (supra). For there appears to be divergence ot opinion onthe question whether a suit should be dismissed or should oaiy be stayed or should be allowed to be continued with certain terms. So without entering into that controversy, what I am required to examine, is as to whether the additional District Judge, Churu, was justified to stay the proceedings in the suit, although he may have erred to stay under Section 29 of the P. I. Act. In my opinion under Sub-section (3) of Section 18, an order in the nature of stay of suit, could be passed by any Court situated outside the Presidency towns, which may even be beyond the superintendence of the insolvency Courts in Presidency towns. Apart from the provision of Sub-section (3) of Section 18, the Court is otherwise competent to stay the proceedings considering the effect of order of adjudication. As already considered above, the property of the insolvent vests in the official assignee or in the Court or in the receiver, as the case may be, under the two laws and further both the laws make a provision for imposing disability on a creditor to sue the insolvent except with the leave of the Insolvency Court. It would be open to the creditor to prove his debt against the insolvent and obtain necessary relief from the Insolvency Court in the insolvency proceedings: It would appear from the provisions of the two laws that the proceedings against the debtor have to be centralised and that object of law would be fulfilled, in case the Court, where the suit is pending, stays the proceedings in the suit.
I am unable to agree with the submission of Mr. Balia that even if the proceedings are allowed to be continued or as a matter of fact the proceedings would continue, as the words 'any Court' do not cover a court outside the Presidency towns or a Court beyond the superintendence of the Insolvency Court, so the suit instituted in any Court, governed by the P. I. Act, would continue and there is no provision for stay of such suit and if such course is adopted, it would only mean that the debt is only being proved and sought to be decreed by that Court. But so far as its execution is concerned, the execution would only be possible against the property, which vests in the official assignee or in the Court or in a receiver. As already cansidered above, when specific provisions relating to the stay of proceedings are incorporated in the twoenactments, a situation, as - urged by Mr. Balia, in my opinion, is beyond contemplation and comprehension. Besides that, I have already considered that apart from the provisions of Sections 18(3) and 29 of the two Acts, the Court can otherwise also stay the proceedings. Thus, I hold that though the application is not maintainable under Section 29 of the P. I Act, but still the application is otherwise maintainable either under Section 18(3) of P. T. I. Act or under inherent powers of the Court.
10. Now the main question, which needs further deeper scrutiny, examination and consideration, is whether the whole suit could have been stayed in the absence of any order of adjudication against the legal representatives of the ex-partners Sagarmal and Nathmal and the ex-partner Poosraj alias Pushpraj. A perusal of the order of adjudication would reveal that the order of adjudication is made only against the firm M/s. Ramkishan Das Sagarmal and its partners, namely Girdharilal, Hulashchand and Mst. Ratnibai. These were the partners on the date of order of adjudication. Section 99 of the P. T. I. Act makes a provision for proceedings in partnership name. Any person carrying on business under a partnership name may be proceeded under the P. T. I. Act in the name of the firm. Rule 154 of the Pre-sidency-Towns Insolvency Rules, Bombay provides that an order of adjudication made against a firm shall operate as if it were an order of adjudication made against each of the persons who at the date of order is a partner in that firm. It would appear from this rule that even if specifically names of any individual partner do not find mention in the order of adjudication, still it would be treated as order of adjudication against such partners, as well, provided he is a partner on the date of order of adjudication. As proceedings can be instituted, in the insolvency in the partnership name, it implies that all the partners of the firm are before the Insolvency Court and each individual partner, who is a partner on the date of order of adjudication would be considered as an adjudicated insolvent. Thus, it would appear that so far as the order of adjudication is concerned, it will have effect only on those partners, who are partners on the date of order of adjudication and it is their, properties along with the proper-ties of the firm, which will vest in the official assignee. If under the partnership law. there is a liability for payment of debt even of those partners, who have ceased to be the partners or those partners, who have died leaving behind heirs and legal representatives, then so far as the order of adjudication is concerned, it will not have any effect on such ex-partners or the heirs of the deceased ex-partners or Ihe estate of the ex-partners and, therefore, their estate would not vest in the official assignee.
11. Mr. Parekh submitted that when the debt is provable in insolvency and When the debt is determined against the insolvent firm, the suit cannot proceed even against ex-partners. In this connection suffice it to say that the suits and other proceedings, which are contemplated under Section 18(3) of the P. T. I. Act and under Section 29 of the P. I. Act are suits or other proceedings against insolvent and not debtors, who have not been adjudicated as insolvents. It cannot be denied that the legal representatives of the deceased partners Sagarmal and Nathmal, and ex-partner Poosraj have not been adjudicated as insolvents. Only the three partners have been adjudicated as insolvents and admittedly the debtors other than the three adjudicated insolvents, were not the partners in the firm on the date of adjudication. Thus, the order of adjudication does not operate over them and, their properties would not vest in the official assignee. It cannot be conceived that their properties would be excluded from the hands of creditors. The property of the ex-partners would not be proceeded against, even when ultimately under the partnership law they are found to be liable for payment of the amount. The ex-partners' property would otherwise he saved, if it is held that the suit against them cannot be proceeded. In my opinion the property of the ex-partners can only be proceeded against then the suit against such ex-partners is allowed to be continued and their liabilities are finally determined in the suit in view of the fact that the order of adjudication has no effect on their estate. Thus, I do not agree with the submission of Mr. Parekh that the suit is required to be stayed and cannot be proceeded when the debt is provable before the Insolvency Court. The learned Additional District Judge, in my opinion, was wrong, in holding that theproperty even of the ex-partners, whose names did not find mention in the order of adjudication, vests in the Court or in the receiver and so far as the present case is concerned, in the official assignee and he was also wrong that the order of adjudication will even operate against the ex-partners or their heirs.
12. If the question of stay is considered in the light of the effect of theorder of adjudication on the property ofthe ex-partners or their legal representatives, then the conclusion would be irresistible that the suit against themshould not be stayed tO my mind,therefore, it is clear that the suit couldnot have been stayed against the legalrepresentatives of the deceased partnersSagarmal and Nathmal and the ex-partner Poosrai alias Pushpraj.
13. Now the question that survives for consideration, is, as to whether the suit should be allowed to be continued only against the ex-partners and their legal representatives or it should be al-lowed to continue even against the adjudicated insolvents. It may be mentioned that what is the present position of the debt in question before the Insolvency Court, is not known. Whether any proceeding in relation to the debt in question, has taken place before the Insolvency Court? In the absence of such information, what should be the proper course of adion?. When discretion for stay cannot be exercised in relation to ex-partners or their legal representatives defendants, whether discretion for slay should be exercised with regard the adjudicated insolvents. The defendant-firm shall have to be continued as the defendant, as even the ex-partners and the adjudicated insolvent partners, continued to conduct business in the name of the firm. This appears to be a special circumstance that ex-partners, or their legal representatives had not been adjudicated as insolvents. In such a special situation, it would be proper that the debt may be allowed to be adjudged at one place, that is, before the trial court. But as the adjudicated insolvents would be compelled to defend the suit, if the suit is allowed to continue against them, it would be justified that the plaintiff-petitioner should bear the costs of the defendants, who have been adjudicated as insolvents. In Moolchand Kanhaiyalal Tiwari v. Nihalkaran Chhatra Karan (AIR1961 Madh Pra 199), it was observed, as under:--
'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 tc the condition that the insolvent or his estate would not be liable for any costs incurred by the plaintiff hereafter.'
14. In the present case as well the suit is also against persons who are not adjudicated insolvents. Apart from that Girdharilal and Hulas Chand, who are sons of the deceased partners Sagarmal and Nathmal, would remain parties in their capacity of legal representatives and they would be liable to the extent of the property inherited by them so it would be proper that the suit may be allowed to be continued subject to the condition that the costs of the adjudicated insolvent defendants for the conduct of the suit, may be borne by the plaintiff.
15. I may also refer to an objection raised by Mr. Parekh regarding maintainability of revision. He urged that the question of stay was discretionary with the trial Court and the trial Court has not in any way committed any illegality or material irregularity in the exercise of its jurisdiction. An erroneousview, according to Mr. Parekh, cannot be a ground for interference under Section 115, C. P. C. In this connection suffice it to say that the learned trial Court seriously erred in exercise of is jurisdiction to have stayed the suit even against them, who have not been adjudicated as insolvents. The suit against them could not have been stayed, as their liability would remain undetermined. In this view of the matter the trial Court failed to exercise the jurisdiction, which was vested in it, On this question also, reference can be made to the above decision of the Madhya Pra-desh High Court.
16. No other point has been argued before me, nor any point survives forconsideration.
17. In the result this revision petition is allowed. The impugned order of the Additional District Judge, Churu, is set aside and the plaintiff-petitioner is allowed to continue the suit against the defendants with the condition that the plaintiff will bear the costs of adjudicated insolvents in defending the present suit. Costs shall be easy of the prer sent revision petition.