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K. Lakshmandoss Vs. Raghava and Veera and ors . - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberO.S.A. No. 25 of 1979
Judge
Reported inAIR1981Mad48
ActsPresidency Towns Insolvency Act, 1909 - Sections 92
AppellantK. Lakshmandoss
RespondentRaghava and Veera and ors .
Appellant AdvocateG. Nandalal and ;S. Vanangamudi, Advs.
Respondent AdvocateM.S. Gunasekaran, ;I. Subramanian, ;N. Karthikayan and ;K.C. Rajappa, Advs.
Excerpt:
.....original petitioner dies, the other creditors are entitled to substitute themselves as petitioning creditors, if they are so inclined. if no other creditor is forthcoming, the court, of course, will have no alternative except to close the proceedings. but, where, as in this case, the other creditors are willing to prosecute the petition by substituting themselves as petitioning creditors, the court cannot close the proceedings on the ground that the legal representatives have not been brought on record. therefore, section 92 of the act can be invoked by other creditors in the event of the death of the petitioning creditor.; it is true, a substitution can be ordered only when the original petition is pending and not when it has been disposed of. however, if we hold that substitution..........counsel who was appearing for the petitioning creditor for grant of time to bring on record the legal representatives of the deceased petitioning creditor. the court, however, felt that there was no need to adjourn the matter any further as there was no petition before the court to bring the legal rpresentatives on record as on date, and dismissed the insolvency petition. as far as the two substitution applications referred to above are concerned, the court took the view that the substitution applications cannot be ordered under section 92 of the act, as that section contemplates the court substituting another petitioner only where the original petitioning creditor does not proceed with due diligence on his petition, and as the original petitioning creditor is dead, the question of.....
Judgment:
1. An interesting question of law has arisen in this appeal, which is directed against the common order of Ismail J. (as he then was) in L P. No. 66 of 1977and Appln. No. 561 of 1977 and 70 of 1978 on the file of the original Side of this Court

2. The said I. P. No. 66 of 1977 has been filed on 6-8-1977 under Section 9(e) of the Presidency Towns solvency, Act, here in after referred to as the Act, by a creditor by name Munusami Reddiar for adjudication of the firm of Messrs Raghava and Veera and its partners; Messrs Raghava Reddi and Veera Reddi as insolvents. The said insolvency petition was contested by the debtors. On 24-9-1977 one Lachhmandas, the appellant herein, who was another creditor of the same debtors filed, Appln. No. 561 of 1977 under Section 92 of the Act, for substituting him in the place of the petitioning creditor in I. P. 66 of 1977 and for permission to continue the insolvency proceedings against the debtors alleging that the debtors are trying to settle with the petitioning creditor, that it is apprehended that the petitioning creditor may not prosecute the in. solvency petition diligently, and that, therefore, it is just and necessary that he should be substituted in the place of the petitioning creditor. Another creditor by name Messrs Ajit India Pvt. Ltd., also filed an application No. 70 of 1978 for substitution under S. 92 of the Act on the same ground. However, the petitioning creditor Munuswami Reddiar died during the pendency of the said insolvency petition. When the insolvency petition and the applications for substitution came up for hearing on 7-9-1978 before the Court, a request was made by the learned counsel who was appearing for the petitioning creditor for grant of time to bring on record the legal representatives of the deceased petitioning creditor. The Court, however, felt that there was no need to adjourn the matter any further as there was no petition before the court to bring the legal rpresentatives on record as on date, and dismissed the insolvency petition. As far as the two substitution applications referred to above are concerned, the court took the view that the substitution applications cannot be ordered under Section 92 of the Act, as that section contemplates the court substituting another petitioner only where the original petitioning creditor does not proceed with due diligence on his petition, and as the original petitioning creditor is dead, the question of his not proceeding with due diligence on his petition does not arise. In this view the learned Judge dismissed the applications for substitution. The applicant in Appln. No. 561 of 1977 has filed this appeal questioning the correctness of the dismissal of the application for substitution on the ground that Section 92 had no application in the case of death of the petitioning creditor. Thus the interesting question of law that arises is as to whether Section 92 could be invoked by other creditors in the event of the petitioning creditor dying, as a result of which the insolvency petition is not prosecuted.

3. The learned counsel for the appellant firstly contends that there is no question of abatement of insolvency proceedings, that the object of Section 92 is to see that the benefit of filing of the insolvency petition by one creditor should go to the entire body of creditor's and this object will be entirely defeated if the insolvency petition filed by one creditor is treated as having abated on his death, and that a petition for adjudication is by its, cry nature a representative action for the benefit of the entire body of creditors and in such a representative action there is no question of any abatement and any other creditor can take advantage of the existence of the petition and continue the same again as a representative of all the creditors. The learned counsel secondly contends that even assuming the theory of abatement applies to insolvency proceedings, the expression 'Petitioner' occurring in Section 92 can be interpreted as including the legal representatives so that, if the legal representatives do not bring themselves on record in the place of the deceased petitioning creditor and proceed with due diligence in the insolvency petition, substitution is possible under the said section and the non-prosecution with due diligence of the petition may be either by the petitioning creditor or by his legal representatives and Section 92 will apply in either case and that if the legal representatives of the deceased petitioning creditor do not bring themselves on record and continue the proceedings, Section 92 could be invoked by another creditor.


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