1.The question referred to us is in consequence of a difference of opinion between Waller and Pandalai, JJ., and is as follows:
Had the District Judge power under Order 47, Rule 1 of the Civil Procedure Code to review his order of 10th July, 1926, on the ground of error of law, that is to say, non-compliance with Section 35 of the Provincial Insolvency Act?
2. The facts upon which this question is based are as follows:- The insolvent got himself fraudulently and collusively adjudicated. In order to defeat a claim in a suit filed against him by a genuine creditor he arranged with a bogus creditor to have an insolvency petition filed before the decree could be passed and he was accordingly adjudicated an insolvent. Later on, however, the original creditor dropped out and another bogus creditor stepped in to continue the proceedings. He put in his proof of claim before the Official Receiver who rejected it. He appealed to the District Judge and his appeal was dismissed. In dismissing the appeal, the District Judge annulled the adjudication. Then another creditor filed a petition under Order 47, Rule 1, Civil Procedure Code, in the District Court praying for a review of the order passed by the District Judge on appeal and on the 26th August, 1926, the District Judge passed the following order:
I see no reason to review my order; moreover, according to the latest decision in Venugopalachariar v. Chunnilal Sowcar I.L.R. (1926) 49 Mad. 935 : 51 M.L.J. 209 the Insolvency Court cannot revise an order annulling an adjudication except under Section 10(2). The petition is dismissed with costs.
3. Against this order, the creditor presented a Civil Miscellaneous Appeal to this Court. Our learned brothers, Waller and Krishnan Pandalai, JJ., before whom the appeal was argued, differed upon the question as to whether or not the District Judge had power under Order 47, Rule 1, Civil Procedure Code, to review his order. Waller, J. is of the opinion that although Section 35 of the Provincial Insolvency Act gives no power to the Insolvency Court to annul an adjudication suo motu and the District Judge was wrong in annulling the adjudication, his error did not fall within the category of mistakes apparent on the face of the record or anything analogous to them. Reliance is placed by him upon Chhajju Ram v. Neki , a decision of the Privy Council. In that case, the Privy Council were dealing with the third class of cases within Rule 1 of Order 47 of the Civil Procedure Code giving power to review on any other sufficient reason being shown. It was held that the words 'any other sufficient reason' mean a reason sufficient on grounds at least analogous to those specified immediately previously in the rule and that a decision which proceeded upon an incorrect exposition of the law was not covered by the words 'any other sufficient reason'. Krishnan Pandalai, J., takes a different view. In his opinion there is a difference between wrongly understanding or applying the law and not being aware of conditions legally necessary for exercising a power given by law. He says:
I am inclined to treat the order of Mr. Walsh of 10th July, 1926, either as an instance of error apparent on the face of the record or one analogous to it which is all that the Privy Council decision requires to give the Court the power of review.
4. Upon this difference of opinion the matter has been referred to us.
5. We are of opinion, however, that the question, as framed, does not correctly raise the point necessary for the decision of this appeal. If the District Judge has the power of review in this case it is because of some mistake or error apparent on the face of the record and, in our view, the question is not to be tested by any consideration of whether the District Judge in making the order annulling the adjudication was in error because Section 35 of the Provincial Insolvency Act does not entitle the insolvency Court to do so suo motu but requires an application to be made as a condition of such order. What we have to consider here is what it was the District Judge was asked in the appeal before him to do. The alleged bogus creditor had put in his proof of claim before the Official Receiver. The Official Receiver rejected it. He accordingly presented O.P. No. 37 of 1926 to the District Court, Guntur. In that petition he asked that the order of the Official Receiver rejecting his proof might be reversed and that the petitioner's debt might be ordered to be included in the schedule of creditors. A counter-petition was put in by one Chilankuri Punnayya, one of the creditors, in which it was contended that the order of the Official Receiver rejecting the petitioner's claim was correct and that the debt of the petitioner was a bogus one. This counter-petition prayed for a dismissal of the petitioner's claim with costs. It must be observed, therefore, that the only question before the District Judge was whether or not the Official Receiver's order dismissing the petitioner's proof was correct and that all the District Judge was asked to do by the petitioner was to reverse the Official Receiver's order and by the counter-petitioner to dismiss the petitioner's request. These are facts apparent on the face of the record. There is another fact apparent on the face of the record and that is that not only did the District Judge dismiss the petitioner's petition but he proceeded to do that which neither party had prayed the Court to do, namely, to annul the adjudication. It is, therefore, apparent that, on a petition in an insolvency asking for a certain remedy, he dismissed the insolvency petition itself. These facts, apparent on the face of the record, do not, in our view, render necessary any examination of the Insolvency Act or any consideration of whether the District Judge ignored Section 35 of the Act. It is, therefore, unnecessary to consider the matter from the point of view of whether there was here a wrong exposition of the law. In our view of the matter it is unnecessary for the appellate Court to apply the test which is raised in the question referred to us, because there was here an error apparent on the face of the record and the District Judge, therefore, had the power of review under Order 47, Rule 1 of the Civil Procedure Code. The case will, therefore, go back to the appellate Court to be considered in the light of our opinion.