1. This appeal arises from a suit brought on a promissory note executed in 1929 by the 1st defendant against whom in February, 1932, the plaintiff filed an insolvency petition. That, insolvency petition for reasons into which we need not enter remained pending for nearly eight years and was finally dismissed in December, 1939. It was in August, 1940, that the plaintiff brought the present suit on the promissory note. On a cursory inspection of the dates of course it will be seen that such a debt would be barred by limitation, but the plaintiff contended that his suit fell within the provisions of Section 14 of the Limitation Act. The learned Subordinate Judge refused to accept this contention and dismissed the suit on this one question of limitation leaving the other issues untried. In so doing he awarded no costs to the defendants, stating merely that he passed this order 'under the circumstances of the case'. Against this the plaintiff has appealed and the two defendants have filed a memorandum of cross-objections.
2. Section 14 of the Limitation Act runs as follows:
In computing the period of limitation prescribed for any suit, the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a Court of first instance or in a Court of appeal, against the defendant, shall be excluded, where the proceeding is founded upon the same cause of action and is prosecuted in good faith in a Court which, from defect of jurisdiction, or other cause of a like nature, is unable to entertain it.
It must now be mentioned that the reason why the insolvency petition was dismissed was that the plaintiff charged the 1st defendant with having alienated the greater part of his property in order fraudulently to prefer certain creditors and to defeat the interests of others and it was finally held that these alienations did not amount to any such fraudulent preference. It seems to us perfectly clear from an examination of the language of Section 14 that it cannot be of any assistance to the appellant. In the first place, it is obvious that the words 'unable to entertain it' cannot apply to the action of the Insolvency Court. This is not a case in which an Insolvency Court was debarred from entertaining a petition filed by the appellant. That petition specifically mentioned the facts which it was necessary to prove in order to show that the 1st defendant was an insolvent and all that the Insolvency Court has done is to hold that those facts have not been proved. The whole petition has been disposed of on its merits and to say that a Court which has considered all the merits of a case and held that the facts alleged by a petitioner have not been proved and therefore dismissed his application is unable to entertain it seems to us to be stretching a liberal interpretation of language to an impossible length.
3. The learned advocate for the appellant relies upon two rulings and in particular one reported in Firm Lorind Chand v. Bahadur Khan A.I.R. 1935 Lah. 736. That is a case which is almost on all fours with the present case in so far as the other civil proceeding there considered was an attempt to adjudicate a defendant an insolvent. Section 14 was applied by the learned Judges without any consideration, however, of the words 'unable to entertain it'. In our view it was unnecessary for them to consider those words because they make it clear on page 737 that the real reason why that insolvency petition should have been dismissed and was eventually dismissed was that the acts of insolvency alleged in. the petition itself were vague and indefinite and did not fall within the definition of that expression in the Provincial Insolvency Act. That means when paraphrased, that the Insolvency Court could have discovered for itself by referring to the section of the Insolvency Act and the recitals of the petition before it that it had no jurisdiction to consider those recitals on their merits. That is a case which is fundamentally different from the case here where the Court could not have dismissed the insolvency petition in limine but was bound to consider it on its merits. The other case is of a Bench of this Court reported in Alagappa Chettiar v. Somasundaram Cheltiar 1937 M.W.N. 465. That case does not deal with insolvency. It is a case where a suit was eventually filed under Section 73 of the Code of Civil Procedure after the plaintiff had made an unsuccessful attempt to get an order under that section revised by the High Court. The High Court refused to interfere in revision on the ground that the remedy by suit had all along been open to the plaintiff. Of course in one sense of the word it is not true to say that the 'High Court had no jurisdiction to entertain the revision petition or that it dismissed it from any defect of jurisdiction, but when the High Court dismissed it because another remedy was open to the plaintiff, that in effect amounted to a declaration of the High Court that it would not consider the petition on its merits for a reason which was Very similar to or 'of a like nature' to lack of jurisdiction.
4. As we have already indicated, the real question in this case is the interpretation of Section 14. Section 14 has no doubt been rightly applied if we may say so with respect both by the learned Judges of the Lahore High Court and the learned Judges in this Court to the facts which they had before them. We are quite unable to hold that it can be applied to the facts of the present case. We think the decision therefore of the learned Subordinate Judge was right and this appeal must be dismissed with costs.
5. On the question of the Memorandum of cross-objections a full discretion is vested in the trial Court with reference to the matter of costs. But Section 35 lays down that if the Court does not follow the regular rule that costs shall follow the event, it must state its reasons in writing. We are unable to hold that a mere reference to the circumstances of the case with no further detail mentioned is a sufficient compliance with the provisions of Section 35(2) of the Civil Procedure Code. When we examine the circumstances of the case all that appears is this, that upon the issue of limitation the plaintiff has failed and the defendants have succeeded. There has been no trial upon the other issues. The plea of limitation is in no sense an unjust plea. Limitation is provided for by the laws of the land just as any other plea is provided for and we cannot subscribe to the doctrine that because a defendant has succeeded on a plea of limitation he should not be granted his costs. 'We therefore think that this is a fit case for interference with the order of the learned Subordinate Judge. At the same time the fact remains that the other issues have not been tried and if they had been it might have been discovered by the Court that on issues of fact the defendants had no good case. We think that in the circumstances of the case we should order that in the lower Court the plaintiff do pay the defendants' costs but that those costs be fixed at Rs. 100 only in view of the fact that the other issues in the case were left untried.