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Jewraj Khariwal Vs. Doyal Chand Johury and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1928Cal211
AppellantJewraj Khariwal
RespondentDoyal Chand Johury and anr.
Cases ReferredDurpa Narayan Bera v. Begin Behary Mitter
Excerpt:
- .....judge should, before making the orders, have held a. judicial enquiry, it being contended that the words 'preliminary enquiry' in section 70 mean a judicial inquiry, that is to say, upon sworn evidence. in my judgment this contention is without substance. section 70, as it now it stands, after the amendment effected by the repealing. act (10 of 1927), reads as follows:where the court is satisfied, after such preliminary enquiry, if any, as it thinks necessary, that there is ground for such enquiry into an offence referred to in section 69, and appearing to have been committed by the insolvent, the court may record a finding to that, effect and make a complaint of the offence in writing to a magistrate of the first class having jurisdiction and such magistrate shall deal with such.....
Judgment:

Suhrawardy, J.

1. This is an appeal against an order of the District Judge of 24 - Parganas passed under Section 70, Provincial Insolvency Act, 1920, directing the prosecution of the appellant on making a complaint to a Magistrate of some offences mentioned in Section 69 of the Act. It appears that one of the creditors of the insolvent made an application before the District Judge complaining of certain fraudulent acts of the insolvent which were mentioned under seven heads in the petition. There was also a report from the Receiver in which it was complained that the insolvent had not disclosed all his properties. The learned Judge, presumably on the material before him held that

he was satisfied that the insolvent had wilfully failed to perform the duties imposed on him by Section 22 of the Act by not producing his accounts and other books and by withholding documents relating to his affairs and that he had failed to disclose certain property to wit, two motor cars.

2. The appellant has appealed against the propriety of this order, having obtained special leave from this Court under Section 75, Provincial Insolvency Act. The point which has been pressed before us is that the District Judge ought to have held a preliminary enquiry before making a complaint under Section 70, and in the present case he did not give sufficient opportunity to the insolvent to prove that he had not committed the offences mentioned in the Judge's order. Great stress is laid on the words 'after such preliminary enquiry, if any, as he thinks necessary' in Section 70 as it now stands. In order to understand what is meant by those words in the section it may be necessary to go back into the history of Section 70 of the Act. In the Act of 1907 Section 43 which dealt with offence in the course of insolvency proceedings, provided thus:

If a debtor, whether before or after the making of an order of adjudication wilfully makes false entries in the inventories, &c.;, the Court may sentence him, by order in writing, to simple imprisonment for a term which may extend to one year; and in every such case the Court shall record the facts constituting the offence with the statement (if any) made by the debtor.

3. In practice the wording of the section was found to be vague and unworkable and it was, therefore, considered necessary to make it more explicit. Section 43 of the Act of 1907 was accordingly replaced by Section 70 of the Act of 1920. That section provided as follows:

Where the Court is satisfied that there is ground for enquiring into any offence referred to in Section 69 the Court shall direct that a notice be served on the debtor in the manner prescribed in the Code of Criminal Procedure, 1898 for services of summons calling upon him to show cause why a charge or charges should not be framed against him.

4. The section further provided that the Insolvency Court might try the charge itself and convict the accused and sentence him to terms of imprisonment not exceeding three years. The last clause of Section 70 provided that the Court might instead of itself inquiring into an offence under Section 69 make a complaint thereof in writing to the nearest Magistrate of the First Class. Section 70 of the Act of 1920 therefore authorized the insolvency Court either to enquire into the offence itself and punish the accused or to send him to a Magistrate for trial. Then came the report of the Civil Justice Committee, 1924-25, which recommended that the procedure in this respect should be simplified and assimilated to that in England and recommendation was made in the following words:

We think, moreover, that the necessity for notice to the insolvent might well be discarded altogether and that the procedure in such cases might be further assimilated to the procedure in England whereby an order for prosecution should be obtained from the bankruptcy Court without consulting the bankrupt on the subject, the bankrupt having plenty of time and opportunity to say when he is arraigned before the criminal Court.

5. Attempt was made to give effect to this recommendation and Section 70 of the Act of 1920 was amended by Act 9 of 1926 By that Act the first three clauses of Section 70 of the Act of 1920 were repealed and following clauses substituted:

Where the Court is satisfied, after such preliminary enquiry, if any, as it thinks necessary, that there is ground for enquiring into any offence referred to in Section 69 and appearing to have been committed by the insolvent, the Court may record a finding to that effect and make a complaint of the offence in writing to a Magistrate of the First Class having jurisdiction, and such, Magistrate shall deal with such complaint in the manner laid down in the Code of Criminal Procedure, 1898.

6. The effect of this amendment to take away the power from the insolvency Court of itself trying the insolvent and sentencing him to punishment, and also to dispense with the necessity of serving notice on the debtor setting forth the substance of the offence and of hearing him in answer. In place of the latter provision in the Act of 1920 it was enacted that the insolvency Court might hold a preliminary inquiry, if any, before ordering the prosecution of the insolvent. It is not necessary for our present purpose but I may mention that the amendment made in 1926 was so clumsily done that the last two Clauses (4 and 5), of Section 70 and the last sentence in Section 69 of the Act of 1920 were left undisturbed. These clauses, by amendment made in 1926, had become redundant and meaningless. This omission was subsequently discovered and Acts 10 and 12 of 1927 were passed with certain repealed words in the amending Act 9 of 1926 in Section 69 of the Act of 1920 the effect of which is that Section 70 stands as it was enacted by the Act of 1926 minus Clauses (4) and (5) of Section 70 of the Act of 1920. The amendment made in 1927 does not affect this case as the order of the learned District Judge was passed before the Act of 1927 came into force the order being dated 2nd February 1927. Now we have to consider the meaning of the words 'after such preliminary enquiry, if any, as it thinks necessary' that have been introduced into the section by the Act of 1926. If the plain and natural meaning is given to these words they make it discretionary with the Judge; (1) to hold a preliminary enquiry: and (2) if it holds one, to have it of such a nature as it thinks necessary. In other words the Judge may or may not hold a preliminary enquiry and, if he decides to hold one, he may make such enquiry as he thinks necessary in order to satisfy himself that there is ground for enquiring into the offences-referred to in Section 69. That seems to be the ordinary sense in which the word have been used leaving it entirely to the discretion of the Judge to determine how he will be satisfied before ordering the prosecution of the insolvent. But Reference has been made to Section 476, Criminal P.C., 1898, where those very words are used in connexion with the procedure in case of complaints by Courts of Justice. In interpreting those words in the section the Courts have held that they make it entirely discretionary with the Court to order inquiry; but in some oases the superior Courts have interfered with the order of the inferior Court on the-ground that the case is such in which preliminary enquiry ought to have been made. There are considerations which do not depend upon any interpretation of the statute but upon the facts of each particular case. For myself I prefer to adopt the dictum of Pigot, J. in the case Baperam Surma v. Gouri Nath Dutt [1892] 20 Cal. 474:

Although it may sometimes well be that a preliminary inquiry ought to be held, the adoption of a rigid rule to that effect would simply introduce into the criminal procedure in this country a new stage as a matter of imperative necessity.... We do not think that such a practice is rendered imperative by the law, and it is not desirable that it should be necessarily, and in every case, introduced.

7. In the case of Durpa Narayan Bera v. Begin Behary Mitter [1911] 14 C.L.J. 123 it has been held that the holding of a preliminary enquiry in a proceeding under Section 476, Criminal P.C., is discretionary and a person against whom an order for prosecution has been passed without such an enquiry cannot complain. Then the learned Judges add, 'unless he has been prejudiced by the omission.' This qualification might have been considered necessary in that case; but there is nothing in the law to support the view that the discretion of the Judge is in any way restricted or saddled with any qualification by the law. It is not always safe to interpret one statute with reference to another statute dealing with a different subject; but as Section 70, Provincial Insolvency Act and Section 476, Criminal P.C., deal with offences, though of different nature, it might be taken that in introducing the words in Section 70 the legislature had Section 476, Criminal P.C., in view. Considering the history of Section 70, Provincial Insolvency Act, as I have attempted to detail above, it would appear that the legislature intended that the Judge should satisfy himself in any way he thinks proper before ordering a prosecution; and this interpretation is justified by the omission from the amending Act of the direction which made it necessary for the Court to serve a notice on the debtor and hear him before ordering his prosecution. As the section now stands the Court may pass an order under Section 70 ex parte and in the absence of the insolvent. This being the law the District Judge has not acted in contravention of any provision of the law. The question that remains for consideration is whether in the circumstances of the present case he has exercised his judicial discretion properly or whether he should have given the insolvent an opportunity of satisfying him that there was no ground for ordering his prosecution. It appears that the creditor filed a statement formulating the charges and the nature of the evidence he sought to produce. The insolvent's pleader was informed of that fact and he took time to look into the charges. A week after the learned Judge heard the pleader for the insolvent and also the creditor and on the following day held that he was satisfied that the insolvent had committed the offences under the Act.

8. Section 70 of the Act of 1920, as I have observed, was amended by removing from it the procedure under which the District Judge could himself try and convict the insolvent as it was found in practice that it entailed waste of time of the insolvency Court and as it was found undesirable that the Court dealing with insolvency proceedings should itself try the offence in regard to which it might reasonably be held to have formed an opinion prejudicial to the alleged offender. If we adopt the view that has been pressed before us, namely, that the District Judge ought to hold a preliminary enquiry by which is suggested a judicial enquiry giving opportunity to both sides to adduce evidence and fight the matter out before him the object of the amendment would be entirely lost. In that case there should be two enquiries: one before the Judge and another before the Magistrate to whom the case might be sent. I am not prepared to hold that in the present case the learned Judge has not exercised his judicial discretion properly in ordering the prosecution of the insolvent. But it is argued that the learned Judge ought not to have relied upon the report of the receiver and upon the petition filed by the creditor. We do not know if the learned Judge merely relied upon the allegation made by the creditor. But it seems to me that he was within his rights in attaching importance to the report of the receiver, his own officer. There is no question whether the report of the receiver is admissible in evidence according to the Evidence Act; it is the report of an officer of the Court bringing certain facts to its notice; and the Court, after perusing the report, may in its discretion call for proof of the facts alleged or act upon the report. The fact that the learned Judge out of the seven charges made by the creditor, picked out two for consideration shows that he gave proper consideration to the case after hearing the insolvent's pleader and has come to a conclusion which cannot be said on the aterials before him to be wrong. I will, therefore, dismiss the appeal with costs four gold mohurs to come out of the estate of the insolvent.

Graham, J.

9. The facts shortly are that the appellant, Jewraj, applied on 27th June 1927 to be adjudged an insolvent and a receiver was appointed. In the case of the proceedings which followed, it transpired, or at all events it is alleged, that the insolvent had wilfully failed to perform some of the duties imposed on him by Section 22, Provincial Insolvency Act, by not producing his account books and other books and by withholding documents relating to his affairs; and further that he had failed to disclose certain property, to wit, two motor-cars. A report was called from the receiver and on the basis thereof and on hearing the pleaders on both sides the learned Judge ordered the prosecution of the insolvent under Section 69 of the Act and1 directed to issue a letter of complaint to the Magistrate as provided for in Section 70 of the Act. The main ground on which the orders are assailed is that they have been passed upon insufficient materials-and that the learned Judge should, before making the orders, have held a. judicial enquiry, it being contended that the words 'preliminary enquiry' in Section 70 mean a judicial inquiry, that is to say, upon sworn evidence. In my judgment this contention is without substance. Section 70, as it now it stands, after the amendment effected by the repealing. Act (10 of 1927), reads as follows:

Where the Court is satisfied, after such preliminary enquiry, if any, as it thinks necessary, that there is ground for such enquiry into an offence referred to in Section 69, and appearing to have been committed by the insolvent, the Court may record a finding to that, effect and make a complaint of the offence in writing to a Magistrate of the First Class having jurisdiction and such Magistrate shall deal with such complaint in the manner laid down in the Code of Criminal Procedure, 1898.

10. It is clear that the Court has the discretion to make a preliminary enquiry or not as it thinks fit. It is not bound to do so. Speaking myself I do not think that upon the facts of the present case we should be justified in interfering with the discretion which has been exercised by the learned District Judge. It seems to me further to be open to some doubt whether the words 'preliminary enquiry' in Section 70 of the Act necessarily mean a judicial enquiry on sworn evidence. We have not been shown any authority in support of this proposition. It is to be born in mind that in the insolvency proceedings the report of the receiver is often acted upon by the Court and I see no reason why the learned District Judge, acting as he did upon the report of the receiver and after hearing the pleaders on both sides, should not be held to have sufficiently complied with the requirements of the section. It is to be observed that what the section requires is that the Court should be satisfied that there is ground for enquiry. What seems to be contemplated is that the enquiry should be made, if necessary, before the Magistrate instead of taking up the time of the District Judge whose time ought not to be wasted over such matters. The Magistrate has to deal with the complaint in the manner laid down in the Criminal Procedure Code and it by no means follows that he will necessarily issue process on the complaint without making a preliminary enquiry or directing investigation as he is empowered to do under Section 202, Criminal P.C. I agree, therefore, with my learned brother that the appeal fails and should be dismissed. Civil Rule 408(m) of 1927 is discharged.


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