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Sarat Chandra Pal Vs. Barlow and Co. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1928Cal782,113Ind.Cas.860
AppellantSarat Chandra Pal
RespondentBarlow and Co.
Cases ReferredRam Sankar Roy v. Harsookdas Chhogniull
Excerpt:
- .....18, presidency towns insolvency act, a judge of this court sitting in insolvency has power to stay proceedings pending in respect of the same debtor in a district court.2. the facts involved are as follows : the appellant, sarat chandra pal, who is the debtor and who carried on business in calcutta, made an application on 29th october 1927 to the district judge of hooghly to be adjudicated an insolvent. that application was made under the provisions of the provincial insolvency act. on the application being made, the learned district judge of hooghly made an order for the appointment of an interim receiver. the district judge further directed that notices should be sent to the debtor's creditors and fixed 5th november 1927, for the hearing of the petition. this data was afterwards.....
Judgment:

C.C. Ghose, J.

1. In this matter the question that has been referred to the Fall Bench is as follows:

Whether, under Section 18, Presidency Towns Insolvency Act, a Judge of this Court sitting in insolvency has power to stay proceedings pending in respect of the same debtor in a District Court.

2. The facts involved are as follows : The appellant, Sarat Chandra Pal, who is the debtor and who carried on business in Calcutta, made an application on 29th October 1927 to the District Judge of Hooghly to be adjudicated an insolvent. That application was made under the provisions of the Provincial Insolvency Act. On the application being made, the learned District Judge of Hooghly made an order for the appointment of an interim Receiver. The District Judge further directed that notices should be sent to the debtor's creditors and fixed 5th November 1927, for the hearing of the petition. This data was afterwards altered an ultimately the hearing was fixed for 26th November 1927. The respondents, Messrs. Barlow & Company, who are the creditors of the debtor, appeared before the District Judge on 26th November 1927 and applied for and obtained time to oppose the debtor's application. On 29th November 1927, they made an application to this Court in its insolvency jurisdiction against the debtor and obtained an order of adjudication. It appears that the debtor was indebted to the extent of about Rs. 76,000 to various creditors and that the debt due to the respondents alone amounted to something like Rs. 39,000 and further that almost all the creditors were residents of Calcutta.

3. The insolvent was served on 9th December 1927, with an office copy of the order of adjudication made by this Court bearing date 29th November 1927. The respondents, it appears, made an application to the District Judge of Hooghly for stay of the insolvency proceedings in the Hooghly Court and of the sale by the interim Receiver which the District Judge had ordered already; but the learned District Judge refused the application, and the sale by the interim Receiver took place on 3rd December 1927. On 6th December 1927, the Reigstrar in Insolvency of this Court made an order upon the debtor that he should appear and produce his books of account before him on 13th December 1927. The respondents thereafter obtained a rule from the learned Judge exercising the insolvency jurisdiction of this Court calling on the insolvent to show cause why the insolvency proceedings in the District Court of Hooghly should not be stayed. This rule came on for hearing before my learned brother Costello, J., who, by his order dated 12th March 1928, directed that all further proceedings in the Court of the District Judge of Hooghly in the insolvency Case pending before him, being Insolvency case No. 79 of 1927, be stayed until the further orders of this Court. Against this order the insolvent preferred an appeal to this Court being Appeal No. 34 of 1928 and it is on the hearing of the said appeal before the learned Chief Justice and Page, J., that the present reference to a Pull Bench has been made.

4. It appears that the present respondents preferred an appeal to this Court on its appellate side against the order of the District Judge refusing to make an order for stay of the proceedings under Section 36, Provincial Insolvency Act. That appeal was disposed of by a Division Bench of this Court on 13th August 1928, this Court holding that the order of the District Judge referred to above should be set aside and that all proceedings in the Hooghly Court in the matter of the insolvency of the debtor should be stayed.

5. Now the question whether under Section 18, Presidency Towns Insolvency Act, a Judge of this Court sitting in insolvency has power to stay proceedings pending in respect of the same debtor in a District Court came up for consideration before my learned brother Buckland, J., in May 1925, in the matter of one Sashti Kinkar Banerji. Buckland, J., stayed the proceedings in the District Court.

6. It may be desirable at this stage to set out the material sections in the Presidency Towns Insolvency Act.

7. Section 17 runs as follows:

On the making of an order of adjudication the property of the insolvent, wherever situate, shall vest in the Official Assignee and shall become divisible among his creditors, and thereafter, except as directed by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable in insolvency shall, during the pendency of the insolvency proceedings, have any remedy against the property of the insolvent in respect of the debt or shall commence any suit or other legal proceeding except with the leave of the Court and on such terms as the Court may impose : provided that this section shall not affect the power of any secured creditor to realize or otherwise deal with his security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed.

8. Section 18 runs as follows:

(1) The Court may, at any time after the making of an order of adjudication, stay any suit or other proceeding pending against the insolvent before any Judge or Judges of the Court or in any other Court subject to the superintendence of the Court; (2) an order made under Sub-section (1) may be served by sending a copy thereof, under the seal of the Court, by post to the address for service of the plaintiff or other party prosecuting such suit or proceeding, and notice of such order shall be sent to the Court before which the suit or proceeding is pending (3). Any Court in which proceedings are pending against a debtor may on proof that an order of adjudication has been made against him under this Act, either stay the proceedings or allow them to continue on such teems as it may think just.

9. Section 22 runs as follows:

Where it is proved to the satisfaction of the Court that insolvency proceedings are pending in any other British Court whether within or without British India against the same debtor and that the property of the debtor can be more conveniently distributed by such other Court, the Court may annul the adjudication or may stay all proceedings thereon.

10. Buckland, J., in his judgment in the case of Sasti Kinkar Banerji observed as follows:

Section 18 has been specifically referred to, but I am by no means certain that the applicant need necessarily be confined to that section, for Section 90 provides that in proceedings under this Act the Court shall have the like powers and follow the like procedure a3 it has and follows in exercise of its ordinary original civil jurisdiction. Further, the Court which I am asked to deal with is as between this Court and the Court over which unquestionably this Court exercises superintendence one which is subordinate to this Court, The position therefore is not the same as that where the Court in which it is desired to stay proceedings is independent of this Court. In such a case it might possibly be open to the party desiring the stay to apply for an injunction as in the case of suits but that is not a matter I need pursue.

11. Buckland, J., then referred to the decision in the Bombay High Court in re Manick Chand A.I.R. 1922 Bom. 390, and observed that in his opinion this Court in insolvency had power to stay insolvency proceedings pending in another and subordinate Court. On the construction of the section itself Buckland, J., was of opinion that the words 'other proceeding' should not be held ejusdem generis or analogous to a suit.

12. There was an appeal against the order of Buckland, J., and the same was heard by my learned brethren Greaves and Cuming, JJ., in August 1925. It appeared from the facts that the insolvent Sasti Kinkar Banerji was adjudicated as such by the District Judge of Birbhum on 6th August 1921, at the instance of a creditor. In March 1925, the same debtor was adjudicated an insolvent by this Court at the instance of another creditor. Greaves, J, agreed with Buckland, J., that the Birbhum Court was subject to the superintendence of this Court and that being so, the only question for consideration was whether the insolvency proceedings at Birbhum fell within the words 'other proceeding' in Section 18. He held, not without hesitation, that the construction put by Buckland, J., was right Cuming, J., agreed with Greaves, J.,

13. The matter raised in the present reference was further considered by the Bombay High Court in the case of In re. Naginlal Maganlal Jaichand A.I.R. 1925 Bom. 543, It was held therein by Taraporewala J., that Section 18, Presidency Towns Insolvency Act, did not empower the High Court in its insolvency jurisdiction to stay insolvency proceedings in respect of the same debtor pending in a District Court, the wording of that section being consistent only with the construction that 'insolvency proceedings' are not included therein.

14. In my view, the judgment of the Bombay High Court in re Naginlal is clearly right and the judgment oil Greaves, J., and Cuming, J., in the unreported case in appeal from original Order. No. 67 of 1925 Ram Sankar Roy v. Harsookdas Chhogniull should be overruled. I am of opinion that the legislature in Section 18, Presidency Towns Ins. Act, had not in view the question of stay by this Court of insolvency proceedings pending in a District Court, inasmuch as other machinery had been provided therefor.

15. Before I proceed to deal with the sections in the Presidency Towns Insolvency Act, I desire to refer to two sections in the Provincial Insolvency Act. Section 29, Provincial Insolvency Act runs as follows:

Any Court in which a suit or other proceeding is pending against a debtor shall, on proof that an order of adjudication has been made against him under this Act either stay the proceeding or allow it to continue on such terms as such Court may impose. (Compare this with Section 3 of Sub-section 18, Presidency Towns Insolvency Act).

16. The other section is Section 36, and it is as follows:

If in any case in which an order of adjudication has been made, it shall be proved to the Court by which such order was made that insolvency proceedings are pending in another Court against the same debtor and that the property of the debtor can be more conveniently distributed by such other Court the Court may annual the adjudication or stay all proceedings thereon.

17. If an application for stay is refused there is provision for an appeal to the High Court under Section 76 of the Act.

18. Section 29, Provincial Insolvency Act, follows Section 28 of that Act which deals with the question of the effect of an order of adjudication. Under Section 28, on the making of an order of adjudication the whole of the property of the insolvent vests in the Court or in a Receiver and becomes divisible among the creditors and thereafter no creditor of the insolvent can have during the pendency of the insolvency proceedings any remedy against the property of the insolvent in respect of the debt or commence any suit or other legal proceeding except with the leave of the Court and on such terms as the. Court may impose, the Court referred to being the District Court acting under the Provincial Insolvency Act. Section 29 is ancillary to Section 28 and it is provided thereby that any Court in which a suit or other proceeding is pending should, on proof that an order of adjudication has been made under the Provincial Insolvency Act, either stay the proceeding or allow it to continue on such terms as the Court may think fit. It is clear from the words used in Section 29 that the 'other proceeding' referred to therein is and must be a proceeding in the nature of a suit or a proceeding in a suit itself. Under Section 36, the District Court, when an order of adjudication has been made under the Provincial Insolvency Act, may, in cases where it is made clear that insolvency proceedings are pending in another Court against the same debtor and that the property of the debtor can be more conveniently distributed by such other Court, annul the adjudication or stay all proceedings thereon.

19. Section 36, Provincial Insolvency Act has its counter part in Section 22, Presidency Towns Insolvency Act, and the like powers are given to the 'Courts' referred to in Section 3, Presidency Towns Insolvency Act. Section 18, Presidency Towns Insolvency Act follows Section 17 where the question of the effect of an order of adjudication under the Presidency Towns Insolvency Act is dealt with. It is provided therein that, on the making of an order of adjudication, the property of the insolvent wherever situate shall vest in the Official Assignee and shall become divisible among his creditors and that thereafter, except as directed by the Act, no creditor to whom the insolvent is indebted in respect of any debt provable in insolvency shall, during the pendency of the insolvency proceedings, have any remedy against the property of the insolvent in respect of the debt or shall commence any suit or other legal proceeding except with the leave of the Court and on such terms as the Court may impose. Then there follows the proviso quoted above and which again is in the same terms as Sub-section (6) of Section 28, Provincial Insolvency Act. Section 17, Presidency Towns Insolvency Act is in fact very similar to Section 28, Provincial Insolvency Act. Section 18, Presidency Towns Insolvency Act, is ancillary to Section 17 and, in order to carry out that has already been indicated in Section 17, i.e., to ensure the proper administration and distribution of the insolvent's estate among the creditors, power is given by Section 18, Sub-clause (1), to this Court in its insolvency jurisdiction to stay any suit or other proceedings pending against the insolvent before any Judge or Judges of the Court or in any other Court subject to the superintendence of the Court.

20. Construing therefore Section 18, Presidency Towns Insolvency Act, in the light of what has immediately gone before, I think the wording is more consistent with the interpretation that 'insolvency proceedings' are not included under that section and further that the expression 'other proceedings' can only refer to proceedings in the nature of suits, execution or other legal process. I base my decision on the section itself and not on any such consideration as was referred to in the course of the argument before us namely that an insolvency proceeding initiated on the debtor's application for being adjudicated an insolvent can hardly be described as a proceeding against the insolvent.

21. I agree with the view taken by Taraporewala, J., as regards the meaning of the expression 'other proceedings and of the words' any other Court subject to the superintendence of the Court', and I have very little to add thereto.

22. I would, therefore, answer the reference to the Full Bench by saying that, under Section 18 Presidency Towns Insolvency Act, a Judge of this Court sitting in insolvency has no power to stay proceedings pending in respect of the same debtor in a District Court under the Provincial Insolvency Act.

Rankin, C.J.

23. I have had the advantage of reading the judgment about to be delivered by C.C. Ghose J., I agree with that judgment. I am of opinion that there is enough in the language of Section 18, Presidency Towns Insolvency Act, and in the context of that section to show that it is addressed to the question of compelling persons with claims against the insolvent to prosecute their claims in the insolvency jurisdiction where this is the proper course and that the section is not addressed to the question of competing jurisdictions in insolvency.

Suhrawardy, J.

24. I agree.

B.B. Ghose, J.

25. I agree. In my opinion Section 18, Presidency Towns Insolvency Act, refers only to a suit or other proceeding for enforcing a claim against the insolvent which may be adequately dealt with under the provisions of that Act, and not to proceedings under the Provincial Insolvency Act.

Mukherji, J.

26. I would give the same answer to the question and my reasons are practically the same as my learned brother C.C. Ghose, J., has given in his judgment.


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