1. This is a decree-holder's appeal in an execution case. The judgment-debtors objected to the execution on the ground that it was barred by limitation. This objection was overruled by the learned Sub-Judge. On appeal by the judgment-debtors to the lower appellate Court the learned District Judge has given effect to this objection and has dismissed the decree-holder's application for execution as barred by limitation. Hence this second appeal. It appears that the last execution case against the judgment-debtors was disposed of on 3rd September 1929. On 10th January 1931 the judgment-debtors were adjudged insolvent by the Insolvency Court at the instance of the appellant. They thereupon appealed to this Court against the order of adjudication. On 5th July 1933, this Court set. aside the order of adjudication so far as it affected two of them. On 24th October 1933, that is, after the expiry of three years from the date of the disposal of the last execution case, the present application for execution was filed. It is not disputed that if the decree-holder is entitled to deduct the period from 10th January 1931 to 5th July 1933, from the date of disposal of the last execution case to the date of the filing of the present application, under the provisions of Section 78, Clause (2), Provincial Insolvency Act, his application for execution will be in time. The point for determination therefore is whether the provisions of the said section are attracted to the facts of the present case.
2. Section 78, Clause (2) of the Act is in these terms:
Where an order of adjudication has been 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 an application in respect of which the leave of the Court was obtained under Sub-section (2), Section 28) which might 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.
3. The contention of the learned advocate for the respondent is that the expression 'annulled under this Act' means 'annulled under Sections 35, 36, 39 and 43 of the Act' and that it does not contemplate the setting aside of an order of adjudication by the High Court on appeal from the order of adjudication under Section 75 of the Act. The word 'annul' has not been defined in the Act. It means 'to render void in law': see Short Oxford Dictionary, 1933 Edn. It is, however, contended by the learned advocate for the respondents that annulment presupposes a valid order of an adjudication and that where there is no valid order of adjudication, the question of annulment cannot arise. In other words, the contention is that if the order of adjudication was valid at the time when it was made but it is set aside subsequently on certain grounds which came into existence after the order of adjudication, it is a case of annulment, but if the order of adjudication was bad at its inception and was illegal and the application for adjudication is dismissed by the Court of appeal, it is not a case of annulment within the meaning of Section 78, 01. (2) of the Act. The obvious answer to this contention is that Section 35 contemplates also annulment of the order of adjudication on the ground that a debtor ought not to have been adjudged insolvent and that the order of adjudication is invalid at its inception.
4. It is next urged by the learned advocate for the respondents that the word 'annul' is coupled with the words 'under the Act' and consequently 'annulment under the Act' must refer to the provisions for annulment of the order of adjudication contained under the head 'annulment of order of adjudication' in the Act. Section 43, which also empowers a Court to annul the order of adjudication does not come under this head. The expression 'under the Act' means 'by virtue of the power conferred by the Act.' The Act gives right of appeal to the High Court against the order of adjudication. If the High Court sets aside the order of adjudication by virtue of the power conferred on it under the provisions of the Act, it certainly does so under the Act. So long as the order of adjudication remains in force a creditor cannot proceed in execution without the leave of the Court. We do not see any difference in principle between the setting aside of the order of adjudication in appeal against an order of adjudication and the annulment of the order of adjudication under Sections 35, 36, 39 and 43 of the Act so far as limitation is concerned. The disability of the creditor during the period from the date of the order of adjudication to the date, when the order is rendered void in law, is the same in both cases. We are therefore of opinion that the expression 'annulled under the Act' must render void in law whether by the Court of first instance or by the Court of appeal below by virtue of the powers conferred by the Act.
5. The appellant is therefore entitled to the benefit of Section 78, Clause (2), Provincial Insolvency Act and his application for execution is not barred by limitation. This view is supported by the decision of the Lahore High Court in Amar Singh v. Imperial Bank of India, Jullundur AIR 1933 Lah 953. The result therefore is that this appeal is allowed, the order of the learned District Judge is set aside and that of the learned Subordinate Judge is restored with costs throughout; hearing fee two gold mohurs.