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Chalavadi Narasimham and anr. Vs. Chalvadi Ramayya and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Case NumberA.A.O. No. 470 of 1946
Judge
Reported inAIR1950Mad492
ActsProvincial Insolvency Act, 1920 - Sections 50, 68, 75 and 75(2)
AppellantChalavadi Narasimham and anr.
RespondentChalvadi Ramayya and anr.
Appellant AdvocateT. Venkatadri and ; P.S. Ananth, Advs.
Respondent AdvocateK. Umamaheswaram, Adv.
DispositionAppeal dismissed
Cases Referred and Makhan Lal Govindram v. Bhagwan Singh Mistri
Excerpt:
civil - maintainability - sections 38, 39, 50, 68, 75 and 75 (2) of provincial insolvency act, 1920 - whether appeal lies on ground that insolvent merely spes and no legal interest in property and therefore not person aggrieved - in regard to facts of case reference necessary to position of debtor with reference to compositions and schemes of management - even after adjudication sections 38 and 39 give insolvent debtor opportunity of having his adjudication annulled his property or such part of it as remains undisposed of revested in him - insolvent directly interested in and is himself party to proceedings under sections 38 to 40 - insolvent aggrieved person by adverse order of court passed under sections 38 to 40 - insolvent have right of appeal against such order under section 75 -.....orderhorwill, j.1. the present appeal, purporting to be under section 75, provincial insolvency act, is against the order passed by the district judge of nellore in an application filed by the appellants (insolvents) under sections 4 and 5 of the act, praying that a certain composition scheme be declared to be pending, that two interlocutory applications which were disposed of be reopened, and that chalvadi ramayya, the respondent, be removed from the schedule of creditors and directed to deposit a sum of rs. 386-10-8 into court. at the end of para. 10 of his judgment, the learned district judge dismissed the application as clearly untenable. 2. the main question argued before me is a preliminary one; whether an appeal lies on the ground that the insolvent has merely a spes and no legal.....
Judgment:
ORDER

Horwill, J.

1. The present appeal, purporting to be under Section 75, Provincial Insolvency Act, is against the order passed by the District Judge of Nellore in an application filed by the appellants (insolvents) under Sections 4 and 5 of the Act, praying that a certain composition scheme be declared to be pending, that two interlocutory applications which were disposed of be reopened, and that Chalvadi Ramayya, the respondent, be removed from the schedule of creditors and directed to deposit a sum of Rs. 386-10-8 into Court. At the end of Para. 10 of his judgment, the learned District Judge dismissed the application as clearly untenable.

2. The main question argued before me is a preliminary one; whether an appeal lies on the ground that the insolvent has merely a spes and no legal interest in the property and is not therefore a person aggrieved. Reference has been made to the Full Bench decision of this Court in Harirao v. Official Assignee, Madras, 49 Mad. 461 : A. I. R. 1926 Mad. 666 where in considering the question whether an appeal lay under Section 8(2), Presidency Towns Insolvency Act by an insolvent, it was held that the insolvent was not a person aggrieved and that an appeal did not therefore lie. Section 8(2) enacts that:

'Orders in insolvency matters shall, at the instance of any person, aggrieved, be subject to appeal as follows. . . . .'

The wording is thus seen to be very different from that of Section 75, Provincial Insolvency Act, which says,

'the debtor, any creditor, the receiver, or any other person aggrieved by a decision come to or an order made in the exercise of insolvency jurisdiction by a Court subordinate to a District Court may appeal. . . .'

In considering the question before them, the learned Judges were referred to an earlier decision of this Court in Sivasubramania v Theethiappa, 47 Mad. 120 : A I. R. 1924 Mad. 163 in which it was held that an adjudicated insolvent was entitled as person aggrieved with in the meaning of Section 46(2) of Act III [3] of 1907 to appeal against the order admitting a person as a creditor; the reason given by Old-field J. in his judgment being that the insolvent would eventually be entitled to any surplus remaining after the creditors who had proved had been satisfied. That argument was clearly inconsistent with the reasoning in the Full Bench case, as Krishnan J. pointed out. Moreover, the decision in Sivasubramania v. Theethiappa, 47 Mad. 120: A.I.R. 1924 Mad. 163 was one based on the old Act, whereas in the present Act the word 'insolvent' in Section 33 (3), which is the relevent sub-section, was replaced by the word 'receiver;' so in view of the Full Bench decision in Harirao v. Official Assignee, Madras : AIR1926Mad656 and the change of the wording of Section 33 (3) Sivasubramania v. Theethiappa, 47 Mad. 120: A.I.R. 1924 Mad. 163 can hardly be said to be good law. The law was considered by King and Bell JJ. in Subramania Aiyar v. Valliamma, I.L.R. (1946) Mad. 50: A.I.R. 1945 Mad. 287, where they very pertinently pointed out that the argument that the insolvent would never be a person aggrieved would mean that Section 68 would never have any application to an insolvent, although the legislature clearly intended insolvents to have a right under that section. The wording of Section 75 is not quite the same as Section 62, because the word 'debtor' is used instead of 'insolvent;' but the word 'debtor' would clearly include an 'insolvent.' Venkataramanayya v. Bangarayya : AIR1935Mad107 was apparently a case under Section 75(1), Provincial Insolvency Act, despite the headnote to the contrary; and there the principle laid down by the Pull Bench decision under the Presidency Towns Insolvency Act was applied to the corresponding provisions of the Provincial Insolvency Act, though there is nothing in the judgment which indicates that the attention of the learned Judges was drawn to the difference in the wordings of Section 75, Provincial Insolvency Act and of Section 8(2), Presidency Towns Insolvency Act. The learned Judges, however, noted that the Full Bench had approved of the decision in Sakhavat Ali v. Radha Mohan : AIR1919All284 which was under the Provincial Insolvency Act. They however did not note that that decision was under the old Act and that Section 46 which corresponds to the present Section 75, gave a right of appeal only to 'any person aggrieved' and not to the 'debtor, any creditor, the receiver, or any other person aggrieved,' as in the present Act. I also applied the principle laid down in the Full Bench case, in Chennabasappa v. Official Receiver, Bellary : AIR1943Mad266 but without referring to the peculiar wording of Section. 75, or to the other decisions. The only other decision of this Court which seems to deal with this matter is Kannappa Chettiar v. Subramania Chettiar : AIR1944Mad184 where Kuppuswami Aiyar J. discussed at length the various decisions quoted before him. He apparently found it difficult to reconcile these decisions and disposed of the case on the merits, applying the principle laid down (in Ahmed Mohammad Paruk v. Mohan Gopal Jew, 44 C. W. n. 665. I cannot however apply those principles in this case; because the learned Judges in this case dissented from the conclusions arrived at by the Full Bench of this Court in Harirao v. Official Assignee, Madras : AIR1926Mad556 and by the Allahabad High Court in Sakhawat Ali v. Radha Mohan : AIR1919All284 . In Makhanlal Govindram v. Bhagwan Singh, : AIR1938Pat471 , however, it was held that Section 76 of the Act gave the debtor a right of appeal.

3. It is thus seen that the decisions in Subramania v. Valliamma I. L. R. (1946) Mad. 50: A. I. R. 1945 Mad. 287 and Venkataramanayya v. Bangarayya : AIR1935Mad107 are in direct conflict. It is true that there are certain differences in the wording of Sections 68 and Section 75; but the differences do not seem to me to affect the principle to be applied. If an insolvent has no right to file an application under Section 68, he would have no right under Section 75. Since the question here raised is of importance and is likely to arise frequently, it seems desirable that I should not attempt to decide this matter myself and that it should be referred to a Full Bench for disposal.

4. Another question which might well arise in the disposal of this civil miscellaneous appeal is whether the appeal is maintainable because despite the various sections under which the application in the lower Court purports to have been filed, it seems to have been an application for review (though the matter has not been fully discussed before me). If so, then the question may arise whether the provisions of Order 47, Rule 7, Civil P. C., should be applied, in which case no appeal would lie, as was held in Nanak Ram Motilal v. Jugal Kishore, A. I. R. 1935 Pat. 177: 162 I. C. 490 or whether the provisions of Section 75, would override the provisions of Order 47, Rule 7, as Patanjali Sastri J., held in Veerayya v. Koti Reddi : AIR1941Mad588

Order of Full Bench.

5. Rajamannar C. J.--In the course of the arguments before us, it became evident that the ruling of the Full Bench in Hari Rao v. Official Assignee, Madras : AIR1926Mad556 though it was given on the provisions of the Presidency Towns Insolvency Act, has been followed in cases arising under the Provincial Insolvency Act, particularly in construing the expression 'person aggrieved'. That ruling was entirely based on the view taken in two English decisions in Ex parte Sheffield; In re Austin, (1879) 10 Ch. D. 434: 40 L. T. 15 and In re Leadbitter (1879) 10 ch. D. 388 that the insolvent has no legal interest in his estate but has merely a hope or expectation of being entitled to the surplus, if any, which may be left when the proceedings in insolvency terminate.

6. Learned Judges of this Court as well as other Courts have felt that the rule enunciated in such an unqualified manner may not be correct--see Ahmed Mohammed Peruk v. Mohan Gopal Jew, 44 C. W. N. 665, Kunda Singh v. Official Receiver, A. I. R. 1939 Lah. 499: 187 I. C. 241, Kannappa Chettiar v. Subramania Chettiar : AIR1944Mad184 and Subbaramaiah v. Balarami Reddi : (1948)1MLJ346 . In the last mentioned case, Govindarajachari J. was of the opinion that the line of reasoning in Harirao v. Official Assignee, Madras : AIR1926Mad556 was not altogether reconcilable with that adopted in another Full Bench ruling in Subbaraya Goundan v. Virappa Chettiar Bank, 57 Mad. 89: A. L. R. 1933 Mad. 851.

7. We think it therefore desirable that the question is considered by a Full Bench of five Judges. [In pursuance of the aforesaid Order of Reference, this appeal coming on for hearing, the Court expressed the following]

OPINION

8. Viswanatha Sastri J. -- The question that arises for consideration in this reference to a Full Bench relates to the right of a debtor, adjudicated an insolvent, to prefer an appeal to this Court from an order of the District Court, passed in the exercise of its inaolvency jurisdiction. Though the arguments before us covered a wide ground, the statutory provisions that fall to be considered are Sections 68 and 75, Provincial Insolvency Act (V [5] of 1920). Section 68 provides a remedy by way of an application to the Court if 'the insolvent or any of the creditors or any other person is aggrieved by any act or decision of the receiver.' Section 75 gives a right of appeal to 'the debtor, any creditor, the Receiver or any other person aggrieved by a decision come to or an order made in the exercise of insolvency jurisdiction.' Similar provisions, though not in identical language, had been enacted by Section 22 and 46, Provincial Insolvency Act of 1907 (repealed by Act V [5] of 1920) and are found in SECTIONS 86 and 8(2) respectively 'of the Presidency Towns Insolvency Act (III [3] of 1909). Insolvency is entirely a creature of statute law and legislation in India has been modelled on the English Bankruptcy Acts of 1883 and 1914. Even the phraseology employed in Sections 68 and 75 of Act v [5] of 1920 and Sections 86 and 8(2) of Act III [3] of 1909 is similar to that of the corresponding provisions of Sections 80 and 108, English Bankruptcy Act of 1914. The phrase 'aggrieved person' found in these provisions has lent itself to considerable refinement in the decisions of English Courts and has been the subject of interpretation by the Court of Appeal in England. In interpreting the corresponding provisions of the Indian enactments, Courts in this country have generally adopted extracts from the judgments of the English Courts as a touchstone whereby to determine whether or not an insolvent debtor had a right of appeal in particular cases.

9. It is indisputable that Sections 68 and 75 of Act V [5] of 1920 in terms give the insolvent debtor a right to apply to the Court against an act or decision of the Official Receiver and a right of appeal against a decision or order of a Court exercising insolvency jurisdiction. The question is whether there are any, and if so, what limits to this right. The appellant's learned advocate argued that under Section 68 the insolvent is given a statutory right to apply to the Court against any act or decision of the Receiver and under Section 75 he is given a right of appeal against the decision or order of a Court exercising insolvency jurisdiction. He drew our attention to the change in the language of Section 75 of Act V [5] of 1920 which specifically includes the debtor as a person entitled to prefer an appeal, whereas the corresponding Section 46 of Act III [3] of 1907 (now repealed by Act v [5] of 1920) gave a right of appeal only to 'any person aggrieved by an order' without defining the meaning of that expression. Section 8(2), Presidency Towns Insolvency Act and Section 108, English Bankruptcy Act, 1914, give a right of appeal to 'any person aggrieved' by orders made by a Court in the exercise of insolvency jurisdiction. His argument is that in order to resolve the controversy that had arisen under Section 46 of Act III [3] of 1907 and the corresponding provisions of Section 8(2), Presidency Towns Insolvency Act as to when a debtor could be considered to be an 'aggrieved person' within the meaning of those provisions, the Legislature, when it enacted Section 75 of Act V [51 of 1920, specifically included the debtor as a person entitled to appeal. He argues that in view of the express mention of 'the debtor' as a person entitled to apply under Section 68 and appeal under Section 75 of Act V [5] of 1920, it is no longer material to enquire whether the debtor' is also an 'aggrieved person' before the Court entertains an appeal at his instance from an order or decision of a Court exercising insolvency jurisdiction. This argument has an appearance of simplicity but we cannot accept it. If the insolvent is not aggrieved by an act of the receiver or order of the Insolvency Court cadit quaestio. It is only when a debtor is 'aggrieved' and his grievance is a 'legal grievance' that he gets a right to apply under Section 68 or to appeal under Section 75. The question therefore still remains when is an insolvent considered to be an 'aggrieved person' within the meaning of Sections 68 and 75 of Act V [5] of 1920?

10. A debtor may be adjudged an insolvent either on his own petition or on the petition of his creditors. A wrongful refusal to adjudicate a debtor on his own petition or an improper adjudication of the debtor on a creditor's petition can be challenged by the debtor by an appeal under Section 75, he being a 'person aggrieved' by the order. In the case of a wrongful refusal to adjudicate, the statutory right given to a debtor to apply for adjudication if the conditions prescribed by Act V [5] of 1920 are satisfied, is affected to his prejudice and in the case of a wrongful adjudication at the instance of a creditor, his status and civil rights are seriously impaired. An order under Section 26 of Act V [5] of 1920 declining to award compensation to a debtor against whom a frivolous or vexatious petition for adjudication has been filed brings him within the category of an 'aggrieved person' because he has been denied compensation for injury to his credit and reputation. On the making of an order of adjudication, the property of the debtor including his after-acquired property but excluding property exempted under Section 28 (5) of Act v [5] of 1920 vests in the Official Receiver. If the Receiver takes or attempts to take possession of property exempted by Section 28 (6) from vesting in him, the insolvent's rights of property are invaded and he is a 'person aggrieved' by the act of the Receiver. An order of Court refusing to annul the adjudication of a debtor under Section 35 or rejecting his proposal for a composition or a scheme of management under Section 38 or refusing him an absolute discharge or granting him only a conditional discharge under Section 41 or making a complaint of an offence under Section 69 would place the insolvent in the position of an 'aggrieved person'. Orders in respect of these matters affect the status, civil rights and liberty of the insolvent. In the cases above enumerated the insolvent would have a right of appeal against adverse orders of the insolvency Court under Section 75 of the Act as a 'person aggrieved'. So much was conceded and, in our opinion, rightly conceded by the respondent's learned advocate.

11. His contention, however, is that it is only with reference to orders of the kind above enumerated that the insolvent can at all be said to be an 'aggrieved person' and allowed to exercise the right of appeal given under Section 75 of the Act. It is said that his rights extend no further and he can have no 'legal grievance' in respect of any act or decision of the Official Receiver or the order a Court in the course of the insolvency proceedings other than orders of the kind above specified. The argument runs on familiar lines. On an adjudication, the property of the insolvent vests in the Receiver and he ceases to have any interest, legal or equitable, therein. He has, therefore, no concern with the manner in which the property is managed, sold or realised or the proceeds thereof distributed by the Receiver. It is recognised that if the debts of the insolvent are paid in full and his adjudication is thereupon annulled, the property of the debtor not disposed of by the receiver reverts to him under Rs. 35 and 37 and that the insolvent is also entitled to any surplus proceeds that might remain after payment in full to his creditors under Section 67 of Act V [5] of 1920, but it is contended that these possibilities are mere expectations, chances or hopes of the insolvent which might never be realised and which do not give him any right recognised by law. It is said that the insolvent has, therefore, no locus standi to control the acts of the Receiver in the course of his administration, to impugn a sale, lease or other transaction with reference to the estate concluded by the Receiver or to question the admission of proofs of creditors by the Receiver. The same disability which stands in the way of an application to the Court under Section 68 also bars an appeal by the insolvent under Section 75 of the Act. The insolvent having no legal rights, can have no legal grievances and cannot therefore, be deemed to be a person aggrieved within the meaning of Section 68 and 75 of the Act. So ran the argument which was sought to be supported by reference to several decisions of the English Courts and of the Courts in this country which have followed the English cases.

12. Before we examine these decisions, we must, with respect, observe that there has been a tendency in some of the decisions cited to us to supersede the words of the Legislature by language used by Judges in particular cases in order to explain how they arrived at a particular conclusion. A phrase or term of expression found to be convenient in a particular case or context should not be allowed to dislodge the words of Sections 68 and 75 of Act V [5] of 1920 which alone must rule. Decisions of the English Courts are illustrations of the way in which learned and eminent Judges have looked at cases and in that sense are useful and suggestive. But tests or guides suggested by the English Courts in the light of their experience of business methods and bankruptcy administration prevailing in England need not be applied wholesale to other surroundings and thus be allowed by degrees to substitute themselves for the words of the Indian enactments. The locus classicus for the view advanced by the learned advocate for the respondent is to be found in a triology of decisions of the Court of Appeal in England in In re Leadbitter, (1879) 10 Ch. D. 388, Ex parte Sheffield; In re Austin, (1879) 10 Ch. d. 434 : 40 L. T. 15 and Ex parte Sidebotham, (1880) 14 Ch. D. 458 : 49 L. J. Bk. 41 Needless to say that we have approached these pronouncements with all the respect due to the distinguished Judges of the Court of Appeal remembering at the same time that we are not bound to accept every one of their expressions as if the words employed were those of a statute. These three cases have greatly influenced the course of subsequent decisions both in England and in this country and have controlled its interpretation of the relevant provisions of the Indian enactments by our Courts. It is therefore necessary to examine these cases with a view to extract the principle behind them.

13. In re Leadbitter, (1879) 10 Ch. D. 388, the Court of Appeal (Jessel M. R., Baggallay and Thesiger L. JJ.) held that a bankrupt who had obtained his discharge, his creditors having been paid in full, was not entitled to obtain the taxation of a bill of costs paid by his trustee in bankruptcy to the solicitor of a mortgagee of the bankrupt, for selling the property and paying off the mortgage during the pendency of the bankruptcy. The ground of decision was that the bankrupt was not 'a party interested' and the trustee in bankruptcy was not a 'trustee' within the meaning of Section 39, Solicitors Act, so as to give a right to the bankrupt to have the bill of costs taxed. The following passage from the judgment of Jessel M. R. is relied upon :

'There was no surplus till all the debts had been paid in full; therefore, pending the bankruptcy, the bankrupt was not a person interested in the property; the probability of a surplus could not make him so.'

This passage must, however, be taken along with an earlier passage in the judgment of the Master of the Rolls which runs thus :

'It has always been held that the words 'party interested' mean party interested under the trust deed, will or intestacy.'

All that this case decided was that the trustee in bankruptcy was not in the same position as a trustee under a deed of trust or a will, nor could the bankrupt be considered to be a cestui que trust. This case was not decided with reference to the provisions of the English Bankruptcy Act.

14. In Ex parte Sheffeild In re Austin, (1879) 10 Ch. D. 434 : 40. L. t. 15, a bankrupt obtained an order for the examination of a creditor with respect to a proof tendered by him for a large sum against the bankrupt's estate, but the bankrupt abandoned the proposed examination. Thereafter a person claiming to have advanced 360 as a loan to the bankrupt, since his bankruptcy, on the security of his surplus estate and to be an assignee of such surplus applied for leave to examine the creditor. The Registrar acting as a Judge in bankruptcy rejected the application and an appeal from his order was dismissed with costs by the Court of Appeal, no reasons being given in the judgment. Jessel M. R. is reported as having observed during the course of the arguments, as follows :

'The bankrupt has no property in the surplus. The trustee is not a trustee for him. He has nothing more than a mere expectation.'

Jessel M. R. however speaking with a different train of thought, is reported to have observed,

'A bankrupt cannot in this way create a right of interference in the administration of his estate. The mischief would be enormous. A bankrupt could do nothing to embarrass the administration of his estate.'

These interlocutory observations of the learned Judges of the Court of Appeal during the course of the arguments tend to show that the conclusion of the Court, though unanimous, was not reached by the same line of reasoning.

15. In Ex parte Sidebotham, (1880) 14 Ch. D. 458:49 L. J. Bk. 41, the expression 'person aggrieved' found in Section 71, English Bankruptcy Apt of 1869, was the subject of interpretation by James L. J. Section 71 of that Act, so far as it is now relevant, was in these terms,

'Any person aggrieved by an order of a local Bankruptcy Court in respect of a matter of fact or law made in pursuance of this Act may appeal to the Chief Judge in Bankruptcy.'

As the observations of the learned Lord Justice, taken out of their context, are apt to mislead, it is necessary to examine briefly the facts of that case. The Comptroller in Bankruptcy made a report that the trustee in bankruptcy had caused loss to the estate in the sum of 1263 by his misfeasance and required the trustee to make good the loss. The trustee failed to do so, where, upon the Comptroller reported to the Court that the trustee should be directed to comply with his requisition. The Court refused to make such an order and the Comptroller accepted the decision. Sidebotham, the bankrupt, who had not obtained his discharge, appealed against the order and it was argued on his behalf that if the order asked for by the Comptroller had been made and the trustee directed to pay 1253, the estate would have paid a dividend of more than 10 shillings in the pound and the bankrupt Would have been in a position to obtain his discharge under Section 48 of the Act. James L. J. while holding that the bankrupt was not a 'person aggrieved' and had no locus standi to appeal, stated his reasons in language which has since become classical. The relevant passage is as follows:

'It is said that any person aggrieved by an order of the Court is entitled to appeal. But the words 'person aggrieved' do not really mean a man who is disappointed of a benefit which he might have received if some other order had been made. A 'person aggrieved' must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something or wrongfully refused him something or wrongfully affected his title to something.'

That in a case like the above the bankrupt was not without a remedy by an application to the Court and an appeal, if the order happened to be adverse to the bankrupt, was made clear by the following passage in the judgment of the Lord Justice :

'In the present case no one is prejudiced by the refusal of the Court to act on the Comptroller's report, except in so far as he has lost any benefit which he might have obtained if an order had been made; there is nothing to embarrass him in any proceedings which be may wish to take against the trustee. If there has been any misfeasance on the part of the trustees the bankrupt or any creditor has a right under Section 20 to apply to the Court, not because the Comptroller has made a report to the Court, but because he is entitled to make his own case against the trustee. And that is the course which ought to have been taken in the present case, and there the person who made the application would have been in the position of a litigant and would have had the right of appealing from any order which the Court might have made.'

It would be seen from the above passage that the decision of the Court was based on the grounds that the application by the Comptroller did not raise a litis contestatio, neither the Comptroller nor the trustee being in the position of a litigant, that whatever was done by the Court on the report of the Comptroller was done ex mero motu and that there was nothing like a judgment, decision or order which could form the subject of an appeal. The bankrupt and his creditors were recognised as falling within the category of 'aggrieved persona' empowered by Section 20 to make an application to the Court complaining of the misfeasance of the trustee. Section 20, Bankruptcy Act of 1869 corresponds to Section 68 of Act v [5] of 1920 and was in these terms :

'The bankrupt, or any creditor, debtor, or other person aggrieved by any act of the trustee may apply to the Court and the Court may confirm, reverse or modify the act complained of, and make such other order in the premises as it thinks fit.'

This decision of the Court of appeal, far from supporting the contention of the respondent, is decisively against him as regards the interpretation of Sections 68 and 75 of Act v [5] of 1920.

16. In Ex parte Official Receiver, In re Reed, Bowen & Co., (1887) 19 Q. B. D. 174 : 56 L. J. Q. b. 447 and In re Lamb, 1894-2-Q. B. 805: 64 L. J. Q. B. 71, decided by the Court of Appeal, the meaning of the expression 'person aggrieved' was further explained, the leading judgment in both oases being that of Esher M. R. In Ex parts Official Receiver, (1887) 19 Q. B. D. 174 : 56 L. J. Q. B. 447, the Official Receiver was held entitled to appeal against an order of the Registrar in Bankruptcy refusing or adjourning an application of the receiver under Section 20, Bankruptcy Act of 1883 for immediate adjudication of a debtor on the non-approval by the registrar of a scheme of arrangement accepted by the creditors. Under Section 104 (2), Bankruptcy Act of 1883, corresponding to Section 75 of the Act V [5] of 1920, orders in bankruptcy matters were subject to appeal at the instance of any person aggrieved. The contention of the respondent in the case cited was that the Official Receiver was not a 'person aggrieved' by the order and had no locus standi to appeal against it. The majority of the Court of Appeal (Fry L. J. dissenting) held that the Official Receiver had a right of appeal as a 'person aggrieved' within the meaning of Section 104 (2). The reasoning of Fry L. J. was that the Official Receiver was a public officer who had done his duty by putting the facts before the Registrar, that he had no more interest and he was no more aggrieved by the order of the Court than any other member of the public, that he had suffered no legal grievance and that the adverse decision of the Registrar had not wrongfully affected his title to any property, he being entitled to nothing. The learned Lord Justice relied in support of his conclusion on the observations of James L. J. in Ex parte Sidebotham, (1880) 14 ch D. 458 : 49 L. J. Bk. 41 already cited. Esher M. R. with whom Lopes L. J. agreed, took a different view, basing his decision upon the words of the Act even 'with the gloss put upon them' in Ex parte Sidebotham, (1880) 14 Ch. D. 458 : 49 L. J. Bk. 4l. After pointing out that the observations of James L. J. would not be taken as an exhaustive definition of the term 'person aggrieved' in Section 104 (2) the majority of the Court held that a person who is by law empowered to make and makes an application to the Court or any person who is brought before a Court to submit to a decision, is, if the decision goes against him, thereby a 'person aggrieved' by that decision. In the view of the majority the grievance of the appellant who seeks to appeal, while it should be a legal grievance, need not necessarily be a pecuniary grievance, a grievance to his property or his person. In In re Lamb; Ex parte Board of Trade, 1894 2 Q. B. 805 : 64 L. J. Q. B. 71, the Court of appeal reaffirmed the view of the majority in Ex parte Official Receiver, (1887) 19 Q. B. D. 174 : 56 L. J. Q. B. 447.

17. There is an instructive judgment of Farwell J. in Bird v. Philpott, 1900 1 Ch. 822 : 69 L. 3. ch. 487, to which reference is useful. Parwell J. held that an undischarged bankrupt has power to dispose of any part of his assets that might remain after payment of his liabilities, before that surplus was ascertained, and gave effect to a charge created by the bankrupt on such surplus in favour of a bona fide lender who, without notice of the bankruptcy, advanced money to the bankrupt for the purchase of real estate with a stipulation for a charge thereon. In that case there was a second adjudication of the debtor and it was decided that the trustee in the second bankruptcy only took that part of the surplus of the first bankruptcy which had not been effectually dealt with by the bankrupt before the date of the second bankruptcy. The contention of the trustee in the second bankruptcy was that all the properties of the bankrupt including his after-acquired property vested in the trustee of his first bankruptcy and it was not competent to the undischarged bankrupt to deal with the unascertained surplus so as to interfere with the trustee in the second bankruptcy, and reliance was placed on the decisions of the Court of Appeal above cited. Farwell J. repelled this contention in this way :

'It has been said that Ex parte Sheffield; In re Austin, (1879) 10 Ch. D. 434: 40 L. T. 15 and In re Leadbitter, (1879) 10 Ch. D. 388, decided that a bankrupt cannot deal with the possibility of a surplus until all the debts in the first bankruptcy have been paid and the surplus has been ascertained. I do not think that these decisions decided anything to that effect at all. If they did, they would have overruled prior decisions--of the Lord Chancellor amongst others--which were not referred to and they would be, in my opinion, contrary to the whole spirit and principle on which the Bankruptcy Act is now built. aS I read the Bankruptcy Act, the trustee takes all the bankrupt's property for an absolute estate in law, but for limited purposes, namely, for the payment of the creditors under that bankruptcy, and that bankruptcy only--on the payment of principal and interest and all the cost of the bankruptcy. Subject to that, he is a trustee for the bankrupt of the surplus. We as a trustee are in a better position than an ordinary trustee to the extent pointed out in Ex parte Sheffield; In re Austin, (1879) 10 Ch. D. 434: 40 L. T. 15 and In re Leadbitter, (1879) 10 Ch. D. 388, that is to say, the bankrupt has not the ordinary right of a cesti que trust to intervene until the surplus has been ascertained to exist and all the creditors and interest and costs have been paid. He cannot trouble the trustee by taxing (the bill of costs or interfere with the administration of the estate in any way, but, subject to that and subject to his non-interference with the administration and with the management of the trustee during the bankruptcy in the due course of the execution of his duty, he can, in my opinion, demand the surplus, and be has a right to the surplus--a right which he can dispose of by will or deed or otherwise during the pendency of the first bankruptcy, even before the surplus is ascertained, although such disposition will of course be ineffectual unless in the event there prove to be a surplus upon which it can operate.'

18. The learned Judge referred to the observations of Lord Westbury in Troup v. Ricardo, (1866) 34 L. J. Ch. 91: 11 L. T. 399, in Support of his reasoning. If we may say so with respect, the passage above cited from the judgment of Farwell J. accurately sets forth the result of the prior decisions of the Court of Appeal and the rights and liabilities of the bankrupt.

19. Mr. Umamheswaram, the learned advocate for the respondent, relied upon a later decision of the Court of appeal in Janet v. Barcley's Bank Ltd., 1947 1 Ch. 187: 1947 1 ALL E. R. 72, affirming a judgment of Wynn Parry J. reported in Jagrat v. Barcley's Bank Ltd;, and Wash, 1947 1 Ch. 54. It is necessary at the outset to point out that no question arose in that case as to when and whether a bankrupt could be considered to be an 'aggrieved person' and entitled as such to apply to the Court against an act or decision of the receiver or to appeal from an order of the Court in bankruptcy proceedings. There a lady who was the owner of real property mortgaged to a bank giving a power of private sale to the mortgagee. She was thereafter adjudged a bankrupt and all her properties vested in the receiver. She died without redeeming the mortgage and leaving a will appointing her husband as executor. The mortgagee with the concurrence of the receiver sold the property to a third person who claimed possession from the executor. The executor brought an action claiming a rescission of the sale and an injunction restraining the purchaser from interfering with his occupation of the property. The action was dismissed on the following among other grounds, stated in the judgment of Wynn Parry J. and adopted by the Court of Appeal :

'On the wife being adjudicated bankrupt, all her property passed to and vested in the Official Receiver under Section 58, Bankruptcy Act, 1914. Thereafter only the trustee could deal with the property; only he could effectively complain against the mortgagee; only he could settle accounts with the mortgagee. The bankrupt, the wife, could not go behind the trustee . . . . . . . .

The mere fact that a bankrupt has a future interest In a possible surplus does not mean that he has a present interest and there is, in my view, nothing but confirmation of this proposition to be found in Bird. v. Philpott, 1900 1 Ch. 822: 69 L. J. Ch. 487 which Mr. Fortune, for the husband, cited in favour of his argument. In my judgment, therefore, the husband, as the wife's executor, has no locus standi to assert that the sale was made at an undervalue.'

The ratio decidendi of the case rested in Section 53. English Bankruptcy Act of 1914 (corresponding to Section 28 (2), Provincial Insolvency Act) which vested the equity of redemption in the Official Receiver. Thereafter neither the bankrupt nor her executor could bring an action to restrain the mortgagee from selling the property in the exercise of his power of sale or the purchaser at such sale from entering into possession. There was no occasion for the Court to consider whether the bankrupt had a right to apply to the Court exercising bankruptcy jurisdiction complaining of an act or decision of the receiver who sells or concurs in a sale of the mortgaged property for a grossly inadequate value.

20. The last of the cases decided by the English Courts to which reference has to be made is a decision of Herman J. in In re Debtor V. Dodwell, 1949 1 ALL. E. R. 510. There the learned Judge dismissed the application of a bankrupt under Sections 80 and 105, Bankruptcy Act praying for an injunction restraining the trustee in bankruptcy from disposing of any part of the property comprised in the estate, an order for the removal of the trustee, enquiries into his remuneration and his costs, charges and expenses in managing the estate and an order for him to pay in full all creditors other than the Commissioners of Inland Revenue. The learned Judge had to consider the statutory rights of the bankrupt and summed up the position in these words,

'It seems to me clear that there must be circumstances in which the Court can Interfere at the instance of a bankrupt to control the actions of the trustee. This is apparent from the terms of Section 80 itself, and is confirmed by the all embracing language of Section 105. I need not, I think, attempt to define what these circumstances are. They cannot, I think (in the absence of fraud) justify Interference in the day to day administration of the estate, nor can they entitle the bankrupt to question the exercise by the trustee in good faith of his discretion, nor to hold him accountable for an error of judgment. Administration in bankruptcy would be impossible if the trustee must answer at every step to the bankrupt in the exercise of his powers and discretions in the management and realisation of the property.'

There is no warrant in the decisions of the English Courts for the extreme position taken by the respondent that the insolvent has no right whatever to complain to the Court about the mal-administration or misfeasance of the receiver and that he is reduced to the position of an impotent spectator of the administration of his estate.

21. We now turn to the decisions of the Courts in India. In Sivasubramania Pillai v. Theethiappa Pillai, 47 Mad. 120: A. I. R. 1924 Mad, 163, this Court (Oldfieid and Venkatasubba Rao J.) held, without reference to prior decisions, that where the insolvency Court admitted the proof of a creditor whose debt was alleged to be not provable in insolvency, it was open to the insolvent to appeal against the order as a 'person aggrieved' within the meaning of Section 46 of Act III [3] of 1907 corresponding to Section 75 of the present Act V [5] of 1920. In Harirao v. Official Assignee, Madras : AIR1926Mad656 a Full Bench of this Court held that an insolvent had no right of appeal against an order of the insolvency Court overruling his objections to a sale for property forming part of the estate by the Official Assignee. The learned Judges purported to follow Ex parte Sheffield; In re: Austin, (1879) 10 Ch. D. 434: 40 L. J. 15 and In re Leadbitter, (1879) 10 Ch. 388, Coutts-Trotter C. J. referred to the two cases above cited and negatived the right of appeal on the ground that 'the mischief of allowing a bankrupt on the contingent chance of his ultimately acquiring title to some surplus which might never be realised, to interfere with and embarrass the administration of the estate would be immeasurable.'

Krishnan J. also referred to the two cases above cited and observed,

'As pointed out in those rulings the insolvent has, after adjudication, no legal interest in his estate which has vested in the Official Assignee and he has no legal right to interfere in the realisation of that estate and he cannot be treated as aggrieved by any order passed in the course of such realisation.'

Nevertheless the learned Judges left open the question whether the insolvent was a 'person aggrieved' by an order admitting the proof of a creditor to which he had objected and refrained from overruling the decision in Sivasubramania Pillai v. Theethappa Pillai, 47 Mad. 120: A. I. R. 1924 Mad. 163 It is difficult to reconcile this reservation of the insolvent's right to object to the proof of a creditor with the reasoning of the learned Judges that the insolvent had no interest whatever in the property vested in the receiver and was not therefore concerned in any way with the sale of such property by the receiver. It is the insolvent's possible right to any surplus that might remain after his debts are paid off that would furnish a justification for his objection to the proof of a creditor as well as to a prejudical sale of property effected by the receiver. The learned Judges of the Full Bench rested their decision not upon the language of Section 8(2), Presidency Towns Insolvency Act, though it is obvious that they must have had it in view, but upon the principles which, according to them had been authoritatively laid down by the two decisions of the Court of appeal above referred to. Even if we were to be guided solely by the decisions of the English Courts we consider that the learned Judges of the Full Bench stated the rule in far too wide terms, particularly Krishnan J. in the passage extracted above.

22. The decision of the Full Bench was followed and applied by Beasley C. J. and King J. to a similar case arising under the Provincial Insolvency Act in Venkataramayya v. Bangarayya : AIR1935Mad107 . In that case an appeal sought to be preferred to this Court under Section 75 of the Provincial Insolvency Act by an insolvent complaining of a sale effected by the receiver was dismissed on the ground that the insolvent was not a person aggrieved within the meaning of Section 75. In Chenna Basavayya v. Official Receiver of Bellary : AIR1943Mad266 , Horwill J. held, following the earlier decisions of this Court, that an insolvent whose properties had vested in the Official Receiver had no locus standi to apply under Section 68, Provincial Insolvency Act to set aside a sale of the properties by the receiver on the ground of irregularity. In Kannappa Chettiar v. Subramania Chettiar : AIR1944Mad184 Kuppuswami Aiyar J. after referring to most of the decisions above cited, held that an insolvent could apply under Section 68 of Act V [5] of 1920 to set aside a sale effected by the Official Receiver but only on proof of fraud, illegality or mistake vitiating the sale. This was a departure from the extreme view taken in Harirao V. Official Assignee, Madras : AIR1926Mad556 . The matter was taken very much further in Subramania Iyer v. Valliamma, I. L. R. (1946). Mad. 50 : A. I. R. 1945 Mad. 287, where King and Bell JJ., held that the widow and legal representative of a deceased adjudicated insolvent could apply under Section 68 of Act V [5] of 1920 to set aside a sale held by the Official Receiver even though there was no fraud or illegality or mistake vitiating the sale. The learned Judges overruled an objection to the maintainability of the application based on the decisions of this Court in Harirao v. Official Assignee, Madras : AIR1926Mad566 and Venkataramayya v. Bangarayya : AIR1935Mad107 . After referring to these two decisions they observed,

'These cases, following the principles of certain English decisions, laid down that as the insolvent had no longer any legal interest in his estate, he could not be a person aggrieved by any act which might merely have the effect of diminishing that estate in certain eventualities. If this principle be followed it seems to us clear, of course, that respondent I would hare no locus standi to apply under Section 68. But unfortunately for the argument Section 68 definitely contemplates the insolvent as a person who might be aggrieved by an act or decision of the Receiver. If the principle of the English decision under Harirao V, Official Assignee. Madras : AIR1926Mad556 is to be pressed to its logical conclusion then the inclusion of the insolvent as a person who might possibly be aggrieved, in Section 68 is incomprehensible.'

This decision marked a definite departure from the view taken by the Pull Bench and the subsequent decisions which followed the Full Bench and was cited with approval in Subbaramayya V. Balarami Reddi : (1948)1MLJ346 .

23. We shall now briefly notice the decisions of the other High Courts. In Sakhavat Ali V. Radha Mohan, : AIR1919All284 , it was held that an insolvent could never be aggrieved in the legal sense of the word by the sale of property vested in the receiver in which the insolvent had no interest and that he had therefore no locus standi to apply to the Court for relief under Section 22 of Act III (3) of 1907 corresponding to Section 68 of Act V [5] of 1920. This decision was accepted as good law and followed by a Full Bench of this Court in the case above cited but we are unable to agree with it for the reasons already stated. In Sidram V. Mahallaya, A. I. R. 1941 Bom. 415: 197 I. C. 409, Divatia J. following the Allahabad case and the Pull Bench of this Court, held that an insolvent had no locus standi to complain about a sale effected by the Official Receiver and upheld the dismissal in limine of his application under Section 68 of the Provincial Insolvency Act to set aside the sale. In Parukh v. Mohan Gopal Jew, 44 C. W. n. 665, a view different from that taken by the Full Bench of this Court prevailed. In a case which arose under Section 86, Presidency Towns Insolvency Act (corresponding to Section 68 of the Provincial Insolvency Act) Derbyshire C. J. and Mukerji J. affirming a judgment of Lort-Williams J. pointed out that in the face of the provisions of Section 86 it was not correct to say that in no case had the insolvent a right to challenge a sale by the Official Assignee. They ruled however that the insolvent could not successfully challenge the sale unless he established that there ha! been fraud on the part of the Official Assignee or some illegality in the sale which went to the root of it or some mutual mistake on the part of those buying and selling. In Kunda Singh v. Official Receiver, A. I. R. 1939 Lah. 499: 187 I. C. 241, Tekchand J. held that an insolvent had a right to apply to the Court under Section 68 of Act V [5] of 1920 to set aside a sale effected by the receiver. In Makhan Lal Govindram v. Bhagwan Singh : AIR1938Pat471 , the Court held that an insolvent had a right of appeal under Section 75, Provincial Insolvency Act against an order of the insolvency Court admitting the proof of a creditor. The learned Judges relied on the language of Section 75 which expressly included a debtor in the category of persons who might be aggrieved by an adverse order.

24. There is one other aspect from which the point now under discussion may be considered. Judgment-debtors who had been adjudged insolvents have been recognised by this Court as having a right to apply to set aside execution sales of properties which once belonged to them though vested in the Official Receiver on their adjudication. They have been treated as persons whose interests are affected by the court sales and allowed to apply under Orser 21 Rule 90, Civil P. C., to set aside such sales and to appeal from adverse orders passed on their applications. (See Swaminatha Odayar v. Kalyanarama Aiyangar : AIR1933Mad694 , Subbaraya Gounder v. Virappa Ghettiar Bank, 57 Mad. 89: A. I. R. 1933 Mad. 891 and Manthri Goundan v. Arunachala Goundan : AIR1940Mad569 .) In the last of the cases above referred to, it was held that the words 'whose interests were affected by the sale' in Order 21, Rule 90, Civil P. C. must be construed in their ordinary sense and that 'it is too much to say that merely because a person is adjudicated insolvent his interests are not adversely affected by the sale of property that belonged to him before adjudication.' Reference may also be made to Subbaramiah v. Balarami Reddi : (1948)1MLJ346 where all the earlier cases on this topic are assembled by Govindarajachariar J. If, as the respondent contends, the insolvent has no legal interest and has merely a chance, a hope or expectation of getting any surplus assets that might be left after his creditors are paid in full and is in the eye of law a total stranger to the property which vested on his adjudication in the Official Receiver, it is difficult to see how he could be allowed to set aside an execution sale of the property under Order 21, Rule 90, Civil P. C. as a person 'whose interests are affected by the sale.'

25. In view of the explicit and all embracing language of Sections 68 and 75 of Act V [5] of 1920 it cannot be maintained that the insolvent can never apply to the Court under Section 68 questioning the acts of the Official Receiver or appeal under Section 75 from an adverse order of the Court passed on such application. The constitution of this Bench relieves us from the thraldom of judicial dicta found in the reported cases. We cannot supersede or dislodge the words of Sections 68 and 75 by the phraseology, however alluring and attractive, employed by the learned Judges of the English Courts in the decisions already cited. The argumsntum ab inconvenienti which loomed large in English decisions does not justify us in departing from the plain language of Sections 68 and 75. Further, the decisions of the English Courts do not speak with one voice, nor do they proceed on the same line of reasoning. Where the law as expounded by the English Court is left in a state of doubt, with varying statements by different learned Judges, it is open to us to choose that opinion or that line of reasoning which is in consonance with logic and the language of our own enactments. The Full Bench decision in Hart Rao v. Official Assignee Madras : AIR1926Mad556 in so far as it laid down that the insolvent could, in no circumstances, apply to the Court under Section 86, Presidency Towns Insolvency Act (Section 68 of the Act V (5) of 1920) to set aside a sale by the Official Assignee because he had no legal interest in the estate and could not, for the same reason, appeal against an adverse order under Section 8(2) of that Act (Section 75 of Act v (5) of 1920) is, we think, erroneous and must be overruled. If there is a flagrant case of a sale by the receiver for a gross undervalue if a sale or lease is granted secretly and without public notice for a wholly inadequate price or rental, or if a sale or lease is granted in favour of a benamidar or a person in whom the receiver is personally interrested without disclosing that fact to the Court, if property on which there is no subsisting encumbrance is sold for an undervalue as if it were subject to prior encumbrances, if there is a concealment of material facts or, a misrepresentation of such facts so as to prevent purchasers from having a fair idea of the real value of the property sold, if the property sold is so incorrectly described as to mislead purchasers into thinking that its value is negligible when in fact it is valuable, in cases like these, the insolvent is an 'aggrieved person' and would, in our opinion, have a remedy by way of an application to the Court under Section 68 and an appeal under Section 75, Provincial Insolvency Act. In such cases the insolvent's rights to the surplus estate or the proceeds of the estate after paying off the debts and to obtain an annulment of the adjudication or an absolute discharge under Sections 41 and 42 of Act v [5] of 1920 by payment of eight annas in the rupee, is prejudiced and the insolvent is an 'aggrieved person'. The extreme contention of the respondent that even in such cases the insolvent has no legal grievance and has no right to complain to the Court against the acts of the official receiver would, if accepted, reduce him to the position of a person who is civilitur morthus. Such, however, is not his position in the eye of law.

26. It does not follow from what we have said that the insolvent has a right to call upon the receiver to justify every act or step in the management and realisation of the property or to account to him for the expenses, costs and charges in the course of such administration. Such interference by the insolvent in the day to day administration of the estate would be a source of enormous mischief and would paralyse and retard the administration in insolvency. The Official Receiver is an officer of the Court. The insolvent has, after all, only a contingent right or a mere expectation or hope of a surplus after payment of his creditors. The title to the property is vested in the Official Receiver and it is in the interests of creditors that the insolvent is deprived of his property and the Official Receiver takes charge of it. The price which the insolvent has to pay for freedom from the worries and demands of his creditors is the denudation of his property. The insolvent is not a beneficiary or a cestui que trust, nor is the receiver a trustee for him with the obligations created by the Trusts Act. It is these considerations that led the English Courts to confine within very strict limits the rights of a bankrupt to control the actions of the receiver daring the bankruptcy. Attempts of the insolvent to interfere with the administration of the estate by the receiver have been looked at askance by Judges because it is only in rare cases that such interference has been found to be justified. If the insolvent fails to prove his allegations, the successful party has no means of recovering his costs. This is another reason against allowing the insolvent an unfettered right of interference with the administration of the estate by the Official Receiver. Sales held by the Official Receiver should not be interfered with at the instance of the insolvent except in cases where there has been a fraud, illegality or serious irregularity which has resulted in substantial loss to the estate. Section 59, Provincial Insolvency Act gives the receiver plenary power to sell all or any part of the property of the insolvent. Section 59, Clauses. (c) to (k) impose on the receiver the obligation to obtain the leave of the Court in connection with the matters therein enumerated. Subject to the specific restrictions imposed by Section 59, it is for the Official Receiver to decide when a particular property should be sold or leased, the mode of advertising or publishing transactions by way of sale, lease or mortgage, the loss in which the property should be sold or leased and kindred matters pertaining to the realisation of the estate. It is only if any transaction of sale, lease or mortgage effected by the receiver is vitiated by serious infirmities of the kind already described and substantial loss has resulted there, from, that the insolvent can claim to be an aggrieved person and will have a right to apply to the Court under Section 68 or prefer an appeal under Section 75.

27. Mr. Umamaheswaram for the respondent contended that the insolvent had no right to apply to the Court under Section 68 of Act v [5] of 1920 as an aggrieved person to expunge or reduce the debt of a creditor whose proof had been admitted by the Official Receiver. He relied on the language of Section 33 of the Act and particularly on sub-section (2) as amended by Act XXXIX [39] of 1926 by the substitution of the word 'receiver' for the word 'insolvent.' Section 33 does not require a notice to the insolvent before the proof of a creditor is admitted by the receiver. Section 50 which allows a creditor to apply to the Court to expunge or reduce the debt of a rival creditor entered by the receiver in the schedule, does not give a similar right to the insolvent unless the application is made in connection with a pending scheme or composition. On these grounds it was urged that the insolueut had no right to apply to the Court under Section 68 of the Act complaining of the admission of a debt by the receiver. This contention cannot be accepted. Section 50 gives a special right to the receiver to apply to the Court for expunging or reducing a debt which he has himself included in the schedule. The creditor is also given such a right if the receiver declined to act. The insolvent is given the same right under Section 50, but only if a scheme or composition is pending. There is no limit of time prescribed for the application under Section 50 of the Act whereas an application to the Court under Section 68 has to be made within 21 days of the act of the receiver complained of. The remedies under Sections 50 and 68 are different in their scope and Section 50 does not exclude the applicability of Section 68 or disable the insolvent from objecting under that section to a debt admitted by the Official Receiver. The only limitation is that the application under Section 68 must be made within 21 days of the act or decision of the receiver unlike an application under Section 50 which can be made at any time during the pendency of the insolvency proceedings.

28. In ordinary cases questions as to the proof of a creditor ought to be left to be dealt with by the receiver. But if the receiver either fraudulently or under a mistake of fact or law admits proof of a debt which does not exist or which has ceased to be legally recoverable wholly or in part, as for instance, under the law of limitation or under the several enactments passed in this country in recent years for the relief of debtors, there is no reason why the insolvent should not be held to be an aggrieved person entitled to apply to the Court under Section 68 and to appeal under Section 75 against an adverse order. In England where a strict view has been taken of the bankrupt's rights it has been held that the bankrupt could apply to expunge a proof if he could show that but for the impugned debt there would be a surplus of his estate (Ex parte Austin (1876) 4 Ch. D. 13. There the application was made under Rule 166 of the Bankruptcy Rules of 1870. It was conceded by Davey Q. C., counsel for the trustee who opposed the application, that it was open to the bankrupt to apply to the Court under Section 20 of the Bankruptcy Act, 1869, (corresponding to Section 68 of the Act v [5] of 1920) objecting to the proof of the creditors. Baggalley C. J. also held that it was open to the bankrupt to object to the proof of the creditor under Section 20 of the Act. In Exparte Sidebottam, (1880) 14 Ch. d. 458: 49 L. J. Bk. 41 James L. J. was of the opinion that the bankrupt could apply under Section 20 of the Bankruptcy Act, 1869 (corresponding to Section 68 of Act v (5) of 1920) if there has been a misfeasance on the part of a trustee or receiver. In Ex parte Bacon; In re Bond, (1880) 17 Ch. D. 447, James L. J. allowed a bankrupt to apply to reduce the proof of a creditor to which no objection had been taken under Section 20 of the Bankruptcy Act of 1869, though in that case an arrangement had been entered into under Section 28, Bankruptcy Act of 1869 by which he undertook to pay the creditors a composition. Such a case would fall under Section 60(2) of Act V [5] of 1920. It was conceded in that case that the bankrupt could have objected to the proof of a creditor by an application under Section 20 of the Act. Such authority as there is, in reported decisions under the Provincial Insolvency Act, is to the effect that the insolvent has a right of appeal against an order of the Court erroneously admitting proof of a debt. Sivasubramania Pillai v. Theethappa Pillai, 47 Mad. 120 : A. I. R. 1924 Mad. 163 decided under Section 46 of Act III [3] of 1907 and Makhan Lal Govindram v. Bhagwan Singh Mistri, : AIR1938Pat471 decided under Section 75 of Act v [5] of 1920.

29. Having regard to the facts of the present case, reference is necessary to the position of a debtor with reference to compositions and schemes of management. Even after adjudication, Sections 38 and 39 of Act v [5] of 1920 give an insolvent debtor an opportunity of having his adjudication annulled and his property or such part of it as remains undisposed of, revested in him. The insolvent is directly interested in and is himself a party to the proceedings under Sections 38 to 40 of the Act. He would be an 'aggrieved person' by an adverse order of the Court passed under Sections 38 to 40 and he would have a right of appeal against such order under Section 75. The Court is required by Section 38 to frame a schedule of creditors whose claims have to be satified under a composition or scheme. Under Section 50 (2) of the Act the Court is empowered to expunge a dabt or reduce the amount of a debt upon the application of a debtor in the case of a composition or scheme and if the Court passes an order adverse to the insolvent under Section 50 (2) he has a right of appeal under Section 75 as a person aggrieved by the order. In this case the application by the debtor to the District Court purported to be made with reference to a scheme or composition and for the expunging of the debt of the respondent from the schedule of creditors. Under Section 75(2) of the Act an appeal would lie to this Court from the order of the District Court rejecting the debtor's application. The present appeal will therefore have to be heard by the teamed Judge before whom it came on for hearing at the outset on the other points raised by the parties to the appeal.

(After the expression of the opinion of the Full Bench this appeal coming on for final disposal, the Court delivered the following Judgment :)

30. The appellant let in no evidence on which to substantiate his allegations.

31. As to the question whether the composition scheme is still pending the petitioner was given abundant opportunity to fulfil the scheme. It is too late now, year after the scheme was first put forward, to contend that it is still pending.

32. The appeal is dismissed with costs (one set) ; but the costs will not include the costs before the Full Benches. The Official Receiver may meet his expenses out of the estate.


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