1. This is an appeal by one Kanai Lal Nandy and others who have been adjudicated insolvents on the petition of a creditor who is a respondent before us. In this petition of the creditor two acts of insolvency were alleged: (1) the two appellants filed a petition for adjudication as insolvents in the Court of the District Judge of 24-Pargannas on 5th January 1932 and thus committed an act of insolvency which continued from 5th January 1932 to 14th March 1932, the date on which it was dismissed for default; and (2) that some of the properties of the appellants had bean sold in execution of the decree of the First Munsif's for payment of money in certain execution cases on 18th January 1932. The present application of the petitioning creditor was made on 9th April 1932. The appellants objected to the said petition on the ground, amongst others, that the petition before insolvency is time-barred inasmuch as the act of insolvency as alleged by the said creditor in para. 8(a) of the petition took place more than three months before the filing of the petition of insolvency and also on the ground that assuming that the sale in execution of the decree for money was an act of insolvency the sale having taken place more than three months before the filing of the creditor's petition, the said petition is barred by limitation.
2. The learned District Judge was of opinion that the petition of the petitioning creditor was not time-barred apparently in the view that the petition of the creditor was filed on 9th April 1932 within three months from the date of the dismissal of the appellants' petition for insolvency for non-prosecution on 14th March 1932. Against this order of adjudication the present appeal has been brought and it is contended by Mr. Gupta, who appears for the appellant that the order of the District Judge is wrong. He argues that under the provisions of Section 9, Clause (c), Provincial Insolvency Act, the act of insolvency which is based on the application of the appellants to be adjudicated as insolvents has occurred beyond three months before the presentation of the petition and consequently having regard to the provisions of Section 9, Clause (c) the present application of the petitioning creditor is barred. He argues that as soon as the petition was filed by the debtor the appellants' act of insolvency was committed and the petition of the petitioning creditor should have been filed within three months from that date. In support of this contention he has relied on a passage in the Tagore Law Lectures on Insolvency by the Right Hon'ble Sir Dinshaw Mulla which occurs at p. 95 of the said book. The learned lecturer points out that a debtor commits an act of insolvency if he petitions to be adjudicated insolvent. The presentation of the petition by the debtor is in itself an act of insolvency. He does not cease to be so even if the petition is dismissed and any creditor may present an insolvency petition against a debtor founded on this act of insolvency. But it must be done within three months of the date on which the debtor presented his petition. In support of this view reference is also made to a decision of this Court given with reference to somewhat identical provisions of the Presidency Towns Insolvency Act.
3. In the case of Anupama Devi v. Gurudas Chatterjee : AIR1931Cal246 , Buckland, J., sitting on the original side of this Court held that the fact of the presentation of the petition for insolvency by the debtor was an act of insolvency and not the fact that it would remain on the files of the Court for disposal and that time must run from the date of the presentation of the petition. This would appear from the bottom of p. 1274 of the report which states what was held by Buckland, J. An appeal was taken to the High Court on its appellate side and apparently the learned Counsel did not think it right to challenge this proposition as laid down by Buckland, J., in that suit. We are of opinion therefore that the view taken by the learned Judge is wrong and that so far as this act of insolvency is concerned the act occurred beyond three months from the date of the presentation of the application of the appellants to be adjudicated insolvents the present petition of the creditor is barred. Mr. Chakravarty who appears for the respondents contends that it was open to the learned District Judge to extend the period of four days from 5th April to 9th April under the provisions of Section 78, Provincial Insolvency Act, which as he points out is a new section and is not to be found in the Presidency Towns Insolvency Act. The difficulty in accepting this contention is that this case was never made in the Court below. It depends on facts and the appellants might rightly say that this ought not to be entertained in the Court of appeal as it is dependent on facts which require to be investigated. We are not therefore prepared to allow this point to be raised as there is no indication of the point either in the petition for insolvency or in the judgment of the learned District Judge.
4. The second act of insolvency alleged is that some of the properties of the appellants had been sold in execution of a decree and that this petition of the petitioning creditor is within three months of that date and therefore having regard to the provisions of Section 6, Clause (e), Provincial Insolvency Act, the application of the petitioning creditor should be allowed. It is pointed out however on behalf of the appellants that the sale in execution of the money decree took place on 23rd November 1931 as will appear from the order sheet which is to be found at the last page of the paper-book. This act of insolvency also was committed beyond the period of three months and is barred under the provisions of Section 9, Clause (e) of the Act. It is argued however for the respondents that the sale was not confirmed till 18th January 1932 and consequently the act of insolvency alleged in Section 6, Clause (e), must be taken to have occurred not on the date of the sale, but on the date of the confirmation of the sale and if that view is taken then the petition of the creditor is within time and in support of this contention reference has again been made on behalf of the respondents to a passage in Tagore Lectures of Sir Dinshaw Mulla at p. 93, where the learned author says with reference to an act of insolvency mentioned in Clause (e) that the act of insolvency not being an act of the debtor runs from the time when it is completed, that is, from the moment after the completion of the sale. The learned author does not state that the word 'completion' there is equivalent to 'confirmation of the sale.' A sale is complete as soon as property is knocked down and purchased by somebody; confirmation cornea later. There is no authority for the contention that when Section 6, Clause (e), says that the act of insolvency occurs when the property is sold, we must read into the language of the statute as if the words were 'when the sale was confirmed.' The legislature knew the distinction between 'sale' and 'confirmation of a sale' and it has used language which will go to show that the act of insolvency is committed as soon as the property is sold and undoubtedly the property was sold on 23rd November 1931, that is beyond three months from the presentation of the petition out of which the present appeal arises.
5. The result is that the order of the learned District Judge must be set aside and the petition of the petitioning creditor must be dismissed. There will be no order as to costs.
M.C. Ghose, J.
6. I agree.