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M.R.M. Rama Pillai Vs. Kasamuthu Nadar and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil;Limitation
CourtChennai
Decided On
Reported inAIR1929Mad715; 121Ind.Cas.485
AppellantM.R.M. Rama Pillai
RespondentKasamuthu Nadar and ors.
Cases ReferredMachanjeeri Ahmed v. Govinda Prabhu A.I.R.
Excerpt:
- - act, the application for execution is clearly barred by limitation. i am not satisfied that there has been any subsequent disability or inability in this case, even assuming that disability or inability principle would apply to the case of an execution application. act, and any person claiming to take advantage of an exception should clearly prove that he comes within it. statement that time which has once begun to run will as a rule continue to do so, even though subsequent events occur which make it impossible that an action should be brought, and that the rule holds good with respect to all statutes of limitation......of such creditor does not prevent the usual proceedings being taken to realize the debt due to the creditor (insolvent). before adjudication the creditor could take the necessary proceedings. interim receiver may be appointed under section 20 of the act who could take the necessary proceedings: after adjudication, the rights of the creditor (the insolvent) become vested in the court or in the receiver appointed by the court. section 58 specifically says that where no receiver is appointed the court shall have all the rights of, and may exercise all the powers conferred on, a receiver under the act. under section 59 the receiver is bound with all convenient speed to realize the property of the insolvents. in these circumstances there seems to be no legal obstacle to the realization of.....
Judgment:

Anantakrishna Ayyar, J.

1. Civil Revision Petition 1233 of 1927. One Vala Subramaniam Pillai was decree-holder in Small Cause Court Suit No. 661 of 1923 on the file of the Court of the Subordinate Judge of Tuticorin. The decree is dated 4th May 1923. The decree-holder Vala Subramania Pillai was subsequently adjudged insolvent on 21st January 1925 on an application filed on 22nd December 1924. It is said that a special receiver was appointed on 30th, March 1926. The outstandings including decrees due to Vala Subramania Pillai were sold in auction and the petitioner Rama Pillai became the purchaser on 12th June 1926, and the deed of assignment Ex. A, was executed in favour of Rama Pillai by the special receiver on 27th August 1926. Rama Pillai filed an application for execution of the decree in Small Cause Suit No. 661 of 1923 on 17th November 1926. This application has been dismissed by the learned Subordinate Judge on the ground of limitation and it is against that order that Rama Pillai has filed this revision petition.

2. The decree sought to be executed being dated 4th May 1923, prima facie the application filed by the assignee decree-holder Rama Pillai on 17th November 1926 is barred by limitation. Before the lower Court the petitioner sought to get over the plea of limitation by contending that the effect of the adjudication of the original decree holder Vala Subramaniam Pillai was to prevent limitation from running and that the time between the adjudication and the date of the appointment of the special receiver should be deducted and that subsequently the execution application is not barred by limitation. The lower. Court disallowed that contention and held that the execution of the decree was barred by limitation. The learned advocate who appeared for the petitioner argued the case elaborately before me and contended that on a proper construction of Section 78, Pro. Ins. Act, it must he held that the execution application is not barred by limitation. He also contended that on general principles also, the period mentioned above should be deducted. He referred to me the observations of Bacon, C.J. in the case reported in ex parte Lancaster Banking Corporation, In re, Westy l0 Ch D 776 to the following effect:

When a bankruptcy ensues there is an end to the operation of that statute, with reference to debtor and creditor. The debtor's rights are established and the creditor's rights are established in the bankruptcy and the Statute of Limitations has no application at all to such a case or to the principles by which it is governed.

3. He referred also, among others, to the cases reported in Baranashi v. Bhabadeb : AIR1921Cal456 and Sivasubramania v. Theethiappa A.I.R. 1924 Mad. 163.

4. I am of opinion that the above cases do not help the petitioner in the present case. The question in the above cases arose between the insolvent who was the judgment-debtor and the insolvent's creditor. In such cases it was held that the effect of insolvency is to vest the property of the insolvent in the Official Receiver for the benefit of the creditors and that all personal remedies against the bankrupt were to be stayed. None of them was a case where the insolvent was the creditor or decree-holder, and attempt was made to realize the debt due to the insolvent from his debtors.

5. Section 78, Prov. Ins. Act, is clear on that point. It is a new section added by Act 5 of 1920. Sub-clause 2 of the section enacts as follows:

Where an order of adjudication has bean annulled under this Act, in computing the period of limitation prescribed for any suit or application for the execution of a decree (other than a suit or application in respect of which the leave of the Court was obtained under sub Section 28, Section (2), which must have been brought or made but for the making of an order of adjudication under this Act, the period from the date of the order of adjudication to the date of the order of annulment shall be excluded; provided that nothing in this section shall apply to a suit or application in respect of a debt provable but not proved under this Act.

6. The wording of the section, to my mind, makes it clear that it applies only to cases where creditors of an insolvent propose to institute suits or file applications for the execution of the decrees' against insolvents. The effect of Section 28) of the Act is to prevent creditors to whom the insolvent is indebted in respect of any debt provable under the Act, from having any remedy against the property of the insolvent in respect of the debt during the pendency of the insolvency proceedings, and they are prohibited from commencing any suit or other legal proceedings except with the leave of the Court against the property of the insolvent. Prior to the enactment of Section 78, Sub-clause (2), it was held that the period during which creditors of the insolvent were thus prohibited from taking proceedings against the property of the insolvent should not be deducted, when proceedings were subsequently started or continued after an order of adjudication had been annulled: see Ramaswami Pillai v. Govindaswami Naicker [1919] 42 Mad. 319. The new Section 78 (2) enacts that such time shall be excluded in the particular circumstances mentioned in the section. As far as I am able to see there was no question of enlarging the period of limitation in favour of insolvents who happen to be either decree-holders or creditors, in so far as proceedings to be taken against their debtors are concerned. The language of Section 78, Sub-clause (2) is not in my judgment capable of the construction contended for by the petitioner. The reason is clear; in the case of creditors of an insolvent who were prohibited by Section 78 from proceeding with their remedies during the insolvency of their debtor, it is only just and proper that the period during which their hands were, so to speak, tied, should be excluded, when after the annulment of the adjudication, they are left free to take proceedings against the debtor (the late insolvent). But the case is quite different in my opinion when the creditor is the insolvent himself. The insolvency of such creditor does not prevent the usual proceedings being taken to realize the debt due to the creditor (insolvent). Before adjudication the creditor could take the necessary proceedings. Interim receiver may be appointed under Section 20 of the Act who could take the necessary proceedings: after adjudication, the rights of the creditor (the insolvent) become vested in the Court or in the receiver appointed by the Court. Section 58 specifically says that where no receiver is appointed the Court shall have all the rights of, and may exercise all the powers conferred on, a receiver under the Act. Under Section 59 the receiver is bound with all convenient speed to realize the property of the insolvents. In these circumstances there seems to be no legal obstacle to the realization of debts due to an insolvent; and there being no sort of prohibition in taking proceedings to realize such debts, there is no reason for excluding any period on this ground. Under the Limitation Act there is the provision contained in Section 9, that where once time has begun to run no subsequent disability or inability to sue stops it, provided that where letters of administration to the estate of a creditor have been granted to his debtor, the running of the time prescribed for a suit to recover the debt shall be suspended while the administration continues. It is clear that in the case before the Court time began to run from the date of the decree which Vala Subramania Pillai obtained on 4th May 1923. Unless the petitioner is able to bring his case under the proviso to Section 9, Lira. Act or Clause (2), Section 78, Prov. Ins. Act, the application for execution is clearly barred by limitation. I am not satisfied that there has been any subsequent disability or inability in this case, even assuming that disability or inability principle would apply to the case of an execution application. As pointed out already there was the decree-holder (insolvent) who was able to take the necessary steps till adjudication. There was the Court and the receiver who could have taken the necessary proceedings after adjudication. Therefore I am not able to see how any question of disability or inability arises in this case. But it was argued that there is a general principle which could be invoked to support the case of exemption claimed in this case. It was contended that there was no person who could really of his own accord take proceedings in execution in this case and reference was made to the decision of the Privy Council in the case reported in Chan Kit San v. Ho Fung Hang [1902] A.C. 257. I am not able to see how that case is really of any help to main deciding the question that I have now to decide. In the case before the Privy Council, a person was a partner in a business, and by his death the partnership was dissolved. A suit for partnership account filed by the administrator of the deceased partner was held not to be barred by limitation and that Statute of Limitations (Hongkong Ordinance No. 13 of 1861, Section 8) ran from the grant of letters in 1897 and not from the grant of probate in 1886, of a forged will, which on revocation was void ab initio. There the cause of action arose only oh the death of a partner, limitation had not begun to run before that partner's death. That was not a case that could come under the principle of Section 9, Lim. Act. The principle of that decision is really that enunciated by Section 17, Lim. Act. It is not contended that Section 17, Lim. Act, has any application to the present case. That being so, I am not able to see how the decision in Chan Kit San v. Ho Fung Hang [1902] A.C. 257 really is of any help to the decision of the present case. Section 78. Ins. Act really enacts a further exception to Section 9, Lim. Act, and any person claiming to take advantage of an exception should clearly prove that he comes within it. On a reference to the English cases I find support for the view that the contention raised by the petitioner is really unsustainable. In Halsburys Laws of England, Vol. 19, p. 54, I find the. statement that

time which has once begun to run will as a rule continue to do so, even though subsequent events occur which make it impossible that an action should be brought, and that the rule holds good with respect to all Statutes of Limitation.

7. There is the following further statement:

In respect of debts provable in bankruptcy, the statute ceases to run during the bankruptcy, but will continue to run afresh if and when the bankruptcy is annulled. In the case, however, of the bankruptcy of a creditor, the statute runs against the trustees.

8. Again at p. 191, para. 395 runs as follows:

Proceedings in bankruptcy or for the winding up of a company are for the benefit of all creditors, and prevent the statute from running in favour of the person or company indebted. If as a condition of rescinding a receiving order money is paid into Court to provide for all debts in full such debts are not barred by the statute, although payment is not claimed within six years of the rescinding of the order. Proceedings in bankruptcy and winding up have, with reference to the statute, no effect as regards debts due to the bankrupt or company.

9. In Williams on Bankruptcy 11th Edn, p. 382, under Section 105. Bankruptcy Act of 1914, it is stated:

that the Statute of Limitation is bar to a motion made under the provisions of this section, such motion being equivalent to an action, and if the statute would have been an answer to an action by the bankrupt, it will be an answer to a motion by the trustee.

10. Nor am I unable to see that within the meaning of Section 15, Lim. Act, there has boon stay of execution of the decree by an injunction or order to make the decision in Shunmugam v. Moidin [1885] 8 Mad. 229 to apply to this case: see Ramaswami Pillai v. Govindaswami Pillai.

11. I have proceeded on the assumption that the order of adjudication has been annulled in this case. If it has not been, then the decision in Machanjeeri Ahmed v. Govinda Prabhu A.I.R. 1928 Mad. 977 would disentitle the petitioner to exclude the period in question under Section 78 of the Act. Some other arguments by analogy were urged before me, but as I do not think that they are of any real help to the decision of the point before me, I have not thought it necessary to refer to the same. For the foregoing reasons I am of opinion that the application for the execution of the decree filed by the petitioner is barred by limitation and that the decision of the lower Court is right. The revision petition is accordingly dismissed with costs.

12. Civil Revn. Petn. No. 1234 of 1927 is dismissed with costs for the reasons given in the judgment in the connected Civil Revn. Petn. No. 1233 of 1927, delivered to-day.


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