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Thangeshwara Chettiar Vs. Ramamurthi Chetti - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in159Ind.Cas.689
AppellantThangeshwara Chettiar
RespondentRamamurthi Chetti
Cases ReferredGopalu Pillai v. Kothandarama Ayyar
Excerpt:
provincial insolvency act (v of 1920), section 33 - policy of insolvency acts--presidency towns insolvency act (iii of 1909), section 30 compared--harassment of insolvent after adjudication--creditor whose debt is not entered in schedule is not bound by composition--his remedy lies elsewhere. - .....remedy to recover the excepted debt by suit had not been, taken away. there of course the creditor's debt had been expressly excepted and apparently the creditor had taken the proper steps to have his debt dealt with by the insolvency court which is not the case here although it remains to be seen whether that distinguishing feature makes any difference. in that case the decision of the lahore high court in khalil-ul-rahman. v. ram sarup a.i.r. 1926 lah. 489 : 95 ind. cas. 204 : 8 lah. l.j. 286 : 27 p.l.r. 588, was followed. both in that case and in the case in gopalu pillai v. kothandarama ayyar : air1934mad529 , the distinction between the provincial insolvency act and the presidency towns insolvency act is emphasized and, if the words of these two acts are strictly followed,.....
Judgment:
ORDER

Beasley, C.J.

1. This Civil Revision Petition raises an interesting point under the Provincial Insolvency Act. The petitioner obtained a decree for Rs. 200 odd against the respondent. Subsequent to the date of that decree, the respondent was adjudicated an insolvent under the Provincial Insolvency Act and included the petitioner's decree debt in his schedule of debts. Later on a composition was agreed to, which was approved by the Court. The petitioner took no steps whatever in the insolvency to prove his debt and therefore his debt was not included in the schedule to the composition. After this composition the adjudication was annulled. Thereafter the petitioner took steps to enforce his decree by execution and sought the arrest of the respondent. I am told that since the insolvency the respondent has acquired some more property and in the record before me it is difficult to understand why the appellant did not execute his decree or attempt to do so on this property. He however chose the other method by means of the arrest of the respondent. The learned District Munsif held that he was bound by the decision in Kamir Reddi Timmappa v. Devasi Harpal A.I.R. 1929 Mad. 157 : (1929) 115 Ind. Cas. 115 : 29 L.W. 23 : (1929) M.W.N. 22 : 56 M.L.J. 458, a decision of Wallace and Thiruvenkatachariar, JJ. In that case Wallace, J., expressed himself very strongly upon this point stating:

In Khalil-ul-Rahman v. Rum Sarup A.I.R. 1926 Lah. 489 : 95 Ind. Cas. 204 : 8 Lah. L.J. 286 : 27 P.L.R. 588, a decision of the Lahore High Court, the creditor had taken no notice of the insolvency proceedings at all and had refused to prove his debt therein. It was held that he was not bound by the composition and could have his remedy de hors the insolvency. If that case is an authority for the position that the approval by the Court of a composition ipso facto puts the insolvent at the mercy of any creditor who refused to come in, I must express disagreement with it for the reasons already given.

2. These observations certainly are authority in support of the order made here which was one dismissing the execution petition. There is, however, a case of more recent date, viz., Gopalu Pillai v. Kothandarama Ayyar A.I.R. 1934 Mad. 529 : 153 Ind. Cas. 916 : 57 M. 1082 : 40 L.W. 110 : 67 M.L.J. 843 : 7 R.M. 378, a decision of Ramesam and Cornish, JJ. There the facts, were rather stronger than those in this case because the creditor whose debt was included in the schedule of insolvent's debts had his debt expressly excepted from the composition by the consent of the parties. This was apparently done because it was difficult to include this debt in the composition. The adjudication was annulled and the property vested in the debtor on the Court's approval of the composition and it was held that the creditor's remedy to recover the excepted debt by suit had not been, taken away. There of course the creditor's debt had been expressly excepted and apparently the creditor had taken the proper steps to have his debt dealt with by the Insolvency Court which is not the case here although it remains to be seen whether that distinguishing feature makes any difference. In that case the decision of the Lahore High Court in Khalil-ul-Rahman. v. Ram Sarup A.I.R. 1926 Lah. 489 : 95 Ind. Cas. 204 : 8 Lah. L.J. 286 : 27 P.L.R. 588, was followed. Both in that case and in the case in Gopalu Pillai v. Kothandarama Ayyar : AIR1934Mad529 , the distinction between the Provincial Insolvency Act and the Presidency Towns Insolvency Act is emphasized and, if the words of these two Acts are strictly followed, then I am bound to say that the decision in Gopalu Pillai v. Kothandarama Ayyar : AIR1934Mad529 , is correct. All the relevant words of Section 39, Provincial Insolvency Act, are:

The Court shall frame a schedule in accordance with the provisions of Section 33, the order of adjudication shall be annulled and the composition or scheme that be binding en all the creditors entered in the said schedule so far as relates to any debts entered therein.

4. If these words are to be strictly followed it seems clear that a creditor whose debt is not entered in the schedule is rot bound by the competition and can have a remedy elsewhere against the insolvent. On the other hand, the words in Section 30, Presidency Towns Insolvency Act, are as follows:

The composition or scheme shall be binding m all the creditors so far as relates to any debt due to them, from the insolvent and here are the important words) and provable in insolvency.

5. If the plain meaning is to be given to those words, that section means that if any composition creditor has a debt which he could prove in insolvency and does not do so, he is nevertheless bound by that composition; and that is the view taken by Ramesam and Cornish, JJ., in Gopalu Pillai v. Kothandarama Ayyar : AIR1934Mad529 . In my view I should follow this latter decision and hold that the learned District Munsif was wrong in thinking that Kamir Reddi Timmappa v. Devasi Harpal A.I.R. 1929 Mad. 157 : 115 Ind. Cas. 115 : 29 L.W. 23 : (1929) M.W.N. 22 : 56 M.L.J. 458, was the decision which he must follow although in fairness to him it must be observed that the decision in Gopalu Pillai v. Kothandarama Ayyar : AIR1934Mad529 , was not brought to his notice. I am bound to add, however, that I can see no reason why a different result should be reached by reason of a composition in a mofussil insolvency to that which is reached in a Presidency town insolvency. It does appear to me that, of the two Acts, the Presidency Towns Insolvency Act, more correctly carries out the policy of the Insolvency Acts. That policy is that when a person is indebted all his debts should be dealt with in the insolvency. It does not seem to me to be right that a creditor who has got a debt which is provable in insolvency, should stand aside when all the other creditors or most of them have their debts dealt with, by the Insolvency Court and refuse to come in or take any notice of a composition scheme and then, as soon as the adjudication is annulled, proceed once more to harass the insolvent. It seems to me that the Provincial Insolvency Act ought to be amended and brought into conformity with Section 30, Presidency Towns Insolvency Act. Although; this Civil Revision Petition must be allowed with costs, I shall not revise the order refusing the arrest of the respondent because whatever may be the state of the law, that at any rate was in the circumstances the right order to make although the reason for making it was not well founded. The petitioner will be able to pursue his remedies against whatever property the respondent possesses.


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