1. This appeal is against an order passed in proceedings for execution of a mortgage decree, by which the Court below held that the decree-holder was bound by a composition which was approved of by the Insolvency Court and under which the decree-holder was bound to accept 7 annas in the rupee.
2. It appears that the decree-bolder appellant had a mortgage decree against the judgment-debtor. He had also money due to him under a mortgage bond, and a decree for Rs. 5,000 and odd against the judgment-debtor. The judgment-debtor in the insolvency proceedings put in an application, in which he stated that certain creditors had agreed to accept lesser sums in satisfaction of the amount of debts due to them. The name of Jagmohan Prodhani was entered in the list as a decree-holder and it was stated that he had agreed to accept Rs. 13,000 in full satisfaction of the debts due to him under the mortgage decree, the mortgage bond and the money decree. In the said petition the judgment debtor suggested a composition with regard to soma other creditors. This was on the 18th of September 1916. Jagmohan put in a petition on the 3rd January 1917, stating that there was no agreement on his part to accept Rs. 13,000 in satisfaction of the debts due to him, which by guess amounted to about Rs. 19,000. The consideration of the question stood over until the 17th Marsh, and the order sheet in the insolvency case dated the 17th March 1917 runs as follows: 'Objections to the composition proposed are now withdrawn by the Pleaders on behalf of the creditor present, provided payment ii made in cask I approve the scheme of composition as set forth in the petition, provided that the secured creditors shall have preference. A schedule win be prepared in accordance with the provisions under Section 24 of the Insolvency Act. The applicants are given one month in which the Gouripur property may be sold and the proceeds rateably distributed.' It appears that on the 17th March 1917 a petition was pat in by the decree-holder Jagmohan, in which it was stated that besides the mortgage decree and mortgage bond, he had obtained a money decree for Rs. 5,000 odd in Suit No. 5 of 1915 and if it was paid rateably in cash he was ready to accept the money due under that decree (in Suit No. 5 of 1915) dated the 27th April 1915. A copy of the decree was also annexed to the petition. On the 2nd May 1917, however, an order was made that 'three weeks' time be allowed for disposal of the Gouripur property, schedule prepared, signed and hung up in Court.' The schedule contains the name of Jagmohan, and all the three debts, namely, the mortgage decree, the mortgage bond and the money due under the decree, are entered in the column 'Description and Amount of Debts,' and Rs. 7,437-8-0 shown as the amount sanctioned by Court at 7 annas per rupee. Now so far as the petition of the 17th March 1917 is concerned, it clearly refers to the money decree, and it can be taken as consent given by the decree-holder to the composition scheme, only so far as the money decree was concerned. On the other band, there are expressions used in the order of the Court dated the 17th March 1917, which indicate that consent was given in respect of all the debts. It is difficult to say what the Judge meant by say in the secured creditors shall have preference' for the order was that the Gouripur property may be sold and the proceeds rateably distributed. It is contended on behalf of the appellant that it was the equity of redemption in the Gouripur property which, was intended to be cold. If that is so, it is difficult to see why the order was made that 'secured creditors shall have preference,' unless it is held that the property itself was to be sold and out of the proceeds of the sale, the secured creditors were to be satisfied first and the unsecured creditors would get their debts rateably. However that may be, it is clear that unless any consent had verbally been given by the Pleader for the decree-holder, there was no consent given on his behalf by the petition of the 17th March 1917 which, we hays shown, clearly refers to the money decree. It appears that notwithstanding the order of 17th March 1917 and the schedule prepared by the Insolvency Court under which the decree-bolder Jagmohan was to get only Rs. 7,000 and odd in full satisfaction of his dues, the judgment-debtor was prosecuting an appeal in this Court, in which the question raised was whether the decree-holder was bound by an adjustment of the decree under which he was to get only Rs. 13,000 in satisfaction of his dues. This appeal was disposed of on the 3rd December 1917 and the judgment-debtor applied for leave to appeal to his Majesty in Council against the order of this Court dismissing the appeal.
3. It does seem strange that if Jagmohan, the creditor, had consented to the composition and was entitled to get Rs. 7,000 and odd in satisfaction of his debts, why the judgment-debtor should carry on an appeal or apply for leave to appeal to His Majesty in Council which, if successful, would result in an order for Rs. 13,000 in favour of the creditor. It is suggested by the learned Counsel on behalf of the judgment-debtor that the decree-holder had repudiated his consent to the composition and the judgment-debtor was not certain whether the composition would stand, and that, therefore, be was proceeding with the appeal in this Court.
4. There can be no doubt that the decree-holder was a secured creditor in respect, of the mortgage decree and the mortgage bond and there is no doubt that they were unaffected by any composition, unless it was consented to by him. Of course it was open to him to agree to the composition and if the Court approved of the composition and prepared a schedule, that would be binding upon him, if he consented to it. The question, therefore, is whether he did consent to the composition. As stated above, he did not, by his petition dated the 17th March, signify his consent to the composition in respect of the secured debts. The only question, therefore, is whether there was any verbal consent. Upon that point the Court below says. 'Unfortunately the withdrawal bf their objections to the scheme of composition by the creditor's Pleaders was apparently made verbally and was not confirmed by any written petition or application'. Whether there was any consent verbally made by the Pleader of the decree-holder Jagmohan is the most important question in the case, but no evidence has been taken on the point.
5. Having regard to the amount in dispute which exceeds Rs. 10,000, we think that there should be a further enquiry in the matter. The case will be remanded to the lower Court to take the evidence of the Pleaders for the parties and the Court below will come to a finding, upon the evidence and the circumstances of the case, whether the decree-holder Jagmohan consented to the composition in respect of his secured debts. If he did consent, the order of the Insolvency Court is binding upon him and he is bound by the composition. If, however, he did not consent, then he is entitled to execute the mortgage decree and the Court will proceed with the execution of the decree.
6. The case will accordingly go back to the lower Court in order that a further enquiry be made in the matter and for final disposal of the case according to law. Costs will abide the result, the cost in this Court being assessed at two gold mohurs.
7. Let the record of the case be sent down, without delay.