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Chimakurti Seshayya Vs. Sait Hirachand Chunilal Firm Represented by Uttamchand - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1941Mad285; (1940)2MLJ672
AppellantChimakurti Seshayya
RespondentSait Hirachand Chunilal Firm Represented by Uttamchand
Cases ReferredW.D. Jordan v. Mahadeolal I.L.R.
Excerpt:
- - under section 72(2), there is a power given, not to the interested party, but to the court itself on being satisfied that an offence of the kind contemplated had been committed, to send the case to the magistrate. presumably a crediipr who has been wrongfully induced to give credit could himself complain to the magistrate under section 72 (1-) without obtaining the leave of the insolvency court. the proceedings have already been instituted and all that has 3 happened is that an attempt to get them stopped has failed......the instance of the creditor. however that may be, i hold that there was a right of appeal to the district judge by the insolvent against the order of the court directing his prosecution. it follows therefore that the correctness of the dismissal of the appeal by the district judge can be canvassed in revision.3. two main grounds have been urged in revision. the first is that the application of the creditor is barred by res judicata by reason of the previous decision. on 6th september, 1935, the creditor moved the court to prosecute the insolvent for obtaining credit without disclosing that he was an undischarged insolvent. the then subordinate judge refused to prosecute, directing the creditor first to establish the fact of his debt in a civil court. the creditor appealed to the.....
Judgment:

Wadsworth, J.

1. This Civil Revision Petition is preferred against a decision in appeal against an order directing the prosecution of an insolvent for an offence under Section 72 of the Provincial Insolvency Act.

2. A preliminary objection was taken by the respondent on the ground that the appeal itself was incompetent. The objection is based 'on English decisions - vide In re Marsden (1876) 2 Petition under Section 75(1) of the Provincial Insolvency Act praying that the High Court will be pleased to revise the order of the District Court of Guntur dated 7th March, 1939 and made in C.M.A. No. 89 of 1938 preferred against the order of the Court of the Subordinate Judge of Tenali, dated 7th July, 1938 and made in O.P. No. 4 of 1937.Ch. D. 786 and Ex parte Brown: In re Appleby (1876) 2 Ch. D. 799, where it is held that under the corresponding provisions of the Eilglish Bankruptcy Act, no notice should be given to the bankrupt before directing the trustee to prosecute for the offence of obtaining credit without disclosing the fact of bankruptcy and no right of appeal exists-in favour of the person to be prosecuted. It seems to me that the above decisions throw very little light on the question which I have to decide. The provisions of the English Bankruptcy-Act, though similar, are not identical with those of the Provincial Insolvency Act and the main reason which influenced the English Courts in denying a right of appeal or a right of notice to an insolvent are that the concession of such rights would be contrary to English criminal procedure and would imply that the person to be prosecuted had to state his defence and submit to decisions in appeal before his case was heard in the Criminal Court. It cannot be urged that such a procedure is foreign to. criminal procedure in India. Substantially the provisions of Section 72(2) of the Provincial Insolvency Act are analogous to those of Section 476 of the Criminal Procedure Code and there is nothing unreasonable in supposing that the Insolvency Court should ordinarily give notice to the insolvent before directing his prosecution or in holding that the decision to prosecute is a decision against which the aggrieved party has a right of appeal similar to that provided by Section 476-B of the Criminal Procedure Code. I note that Section 75 of the Provincial Insolvency Act gives a right of appeal to a person aggrieved not merely by an order made but by a decision come to. When the Court decides to prosecute an insolvent for an offence under Section 72 of the Act, does it not make decision which aggrieves the person to be prosecuted? Whether the creditor who moves the Court to prosecute has a grievance is another matter. There is a Nagpur decision reported in Pursingh v. Aladkhan , to the effect that he has no right of appeal. But it is unnecessary for me to go into that question though it may be noted as a matter of interest that in the present case there had been a prior refusal to prosecute reversed on appeal at the instance of the creditor. However that may be, I hold that there was a right of appeal to the District Judge by the insolvent against the order of the Court directing his prosecution. It follows therefore that the correctness of the dismissal of the appeal by the District Judge can be canvassed in revision.

3. Two main grounds have been urged in revision. The first is that the application of the creditor is barred by res judicata by reason of the previous decision. On 6th September, 1935, the creditor moved the Court to prosecute the insolvent for obtaining credit without disclosing that he was an undischarged insolvent. The then Subordinate Judge refused to prosecute, directing the creditor first to establish the fact of his debt in a Civil Court. The creditor appealed to the District Judge. As I have indicated, it is doubtful whether such an appeal lay. Nevertheless, it was entertained and the District Judge took the reasonable view that the Subordinate Judge should himself have found out whether there was a prima facie case on the facts before refusing to order prosecution. The matter was therefore. remanded to the Subordinate Judge who was directed to hold an enquiry into the facts. On the day when the enquiry should have been commenced, the creditor was absent and on the insolvent denying his indebtedness, the petition was dismissed. An application for restoration was made by the creditor but was rejected with an observation. that perhaps it is open to the creditor o file a fresh petition. The creditor did file a fresh petition and the Subordinate Judge held that there was no bar by reason of the previous order which was the for default. Thai reasoning of the learned Subordinate Judge is perhaps defective, but his conclusion is, I think, sound. It was upheld by the District Judge in appeal.

4. The point, as I understand it, is not whether the previous application was dismissed in default or dismissed on the merits. Under Section 72(2), there is a power given, not to the interested party, but to the Court itself on being satisfied that an offence of the kind contemplated had been committed, to send the case to the Magistrate. This is a power conferred not in the interests of this or that party but in order that the Court itself may prevent an offence against the insolvency law. Presumably a crediipr who has been wrongfully induced to give credit could himself complain to the Magistrate under Section 72 (1-) without obtaining the leave of the Insolvency Court. We are not therefore concerned with the question whether there is a bar of res judicata against the individual who gives the information on which the Insolvency Court acts, but whether the Court should or should not reconsider a decision of its own not to prosecute in the light of further information. There can be no question of a bar of res judicata operating against the Court. The most that can be said is that the Court cannot prosecute for an offence of which an accused person has already been acquitted and the Court will not ordinarily prosecute on the strength of information on which it has previously declined to act. In the present case, owing to the absence of the person who laid the information, the Court declined to proceed with the prosecution. On the subsequent occasion, the Court had before it far more materials and reasonably came to the conclusion that a prosecution was desirable in the interests of the maintenance of the ' insolvency law. It is no longer a question whether the creditor should succeed or the insolvent should succeed. It is the question whether the Court had materials before it which placed upon it a duty to take action. In such circumstances, no-question of res judicata arises and if it is a mere question whether the order of the Court is wise or unwise, it is not a matter that should be gone into in revision.

5. The second contention is based on a decision of the Calcutta High Court reported in W.D. Jordan v. Mahadeolal I.L.R.(1934)Cal. 605, to the effect that after an insolvent has obtained a discharge, the Insolvency Court has no jurisdiction to direct prosecution under Section 72(2) of the Provincial Insolvency Act. Assuming that this decision is correct, though there are criticisms which might be urged against the reasoning with which it is supported, it has to my mind no bearing on the present case. When, the Insolvency Court directed this complaint to be filed, the present petitioner was an undischarged insolvent over whom, the Insolvency Court certainly had jurisdiction. The complaint therefore was filed by the Court empowered to institute proceedings. When the insolvent appealed to the District Judge, there-was presumably a complaint pending before the Magistrate and that complaint had been regularly instituted. During the pendency of the appeal before the District Judge, the insolvent obtained his discharge. It is argued that the judgment of the District Judge dismissing the appeal amounts to an order under Section 72(2) of the Provincial Insolvency Act directing the filing of a complaint and that, having been passed after the discharge of the insolvent, that order is without jurisdiction. I cannot accept this contention. We are not here concerned with a decree of the trial Court becoming merged in the decree of the appellate Court. We are concerned with the act of the Insolvency Court in filing a complaint which act is subject to review by an appellate Court under Section 75 of the Provincial Insolvency Act. It cannot be contended that when the appellate Court declines to stop the proceedings instituted by the Insolvency Court, it is for the first time instituting those proceedings. The proceedings have already been instituted and all that has 3 happened is that an attempt to get them stopped has failed. They were instituted when the Court directing them had jurisdiction and the subsequent discharge of the insolvent before the appeal was dismissed cannot make those proceedings void.

6. In the result therefore I dismiss the civil revision petition with costs.


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