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Cites 14 docs - [View All]
The Provincial Insolvency Act, 1920
Section 34 in The Provincial Insolvency Act, 1920
Section 8 in The Provincial Insolvency Act, 1920
Section 11 in The Provincial Insolvency Act, 1920
[ The Bombay High Court (Letters Patent) Act, 1866 ]
Citedby 2 docs
Sm. Krishnamoni Dasi vs Baser Mondal And Ors. on 17 August, 1962
Hazareemull Heeralal vs Balaram Chatterjee And Anr. on 9 March, 1943

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Calcutta High Court
Satish Chandra Kundu And Anr. vs Naogaon Union Bank Ltd. And Ors. on 14 July, 1938
Equivalent citations: AIR 1938 Cal 753
Author: S Ghose


1. This matter has come up to us under the following circumstances: There was an insolvency case started at the instance of the creditors on 24th June 1935 and the debtor was adjudged to be an insolvent on 6th April 1936. He thereupon filed an appeal being Miscellaneous Appeal No. 240 of 1936 on 13th May 1936. Subsequently he filed an application under Section 8, Bengal Agricultural Debtors Act, 1935, before the Debt Settlement Board. On 30th May 1938 the Chairman of the Debt Settlement Board addressed a letter to the Registrar of this Court requesting that the hearing of the aforesaid miscellaneous appeal might be stayed. The question before us is whether, treating this as a notice under Section 34, Bengal Agricultural Debtors Act, this Court must stay the hearing of the aforesaid appeal. The debtor appellant; supports the notice for stay of his own appeal while the creditor respondents oppose it. It is now well settled that while it is for the Board to decide whether the applicant before it is a debtor, it is for the Court, to which the notice under Section 34 is sent, to decide whether there is a proceeding pending before it with regard to the debt, assuming it to be a debt within the meaning of the Bengal Agricultural Debtors Act. On the first point I may refer to the case in Soilabala Das Jaya v. Nityananda Sarkar . On the second point I may refer to the decision in Harish Chandra Pal v. Chandra Nath Saha and the cases cited there.

2. It is contended before us on behalf of the creditors that since an adjudication order has already been made there is no proceeding pending with regard to a debt. It may be mentioned here that on 20th May 1936 this Court made an order staying further proceedings in the insolvency case in the Court of the District Judge. This only means that the receiver will not proceed to sell the properties until further orders. I do not accept the contention of the learned Advocate for the creditors that an insolvency proceeding does not relate to a debt. The foundation of an insolvency proceeding is furnished by debt which may be one debt or a series of debts. But the position is somewhat different when the adjudication order has been made. Under Section 28, Provincial Insolvency Act, the whole of the property of the insolvent shall vest in the Court or the receiver and shall become divisible among the creditors and thereafter no creditor shall have any remedy against the property of the insolvent except with the leave of the Court. No doubt other proceedings are to follow, such as, proof of debt, framing of the schedule of creditors, and so on, but all these are merely directed towards the object of distributing the assets amongst the creditors. Except with regard to some special classes of debt mentioned in Section 44, the debtor is freed from the liability of being proceeded against outside the provisions of the Insolvency Act. Under the Bengal Agricultural Debtors Act "debt" includes all liabilities of a debtor, but the point is that after the ad. judication order in insolvency the debtor is no longer liable according to the ordinary procedure. A similar question was raised before a single Judge in the Nagpur High Court in Chottelal Behari Lal v. Nathuram (1987) 24 AIR Nag 288. There the C. P. Debt Conciliation Act (2 of 1933) and also the Provincial Insolvency Act were under consideration. The learned Judge points out that the Debt Conciliation Act cannot operate when a person seeking shelter under it has ceased to be a debtor and his debts have vanished;his property is no longer his and his creditors have lost their ordinary legal remedy against him. On behalf of the debtor our attention has been drawn to the case in Chanan Das v. Ghulam Mohammad (1937) 24 AIR Lah 861. There the question did not arise in this form. The question was whether an insolvency application came within the meaning of "other proceedings pending before a Civil Court" and the learned Judges decided in the affirmative.

3. Turning back to the provisions of the Bengal Agricultural Debtors Act, it seems to me that the position would be somewhat inconsistent if the Act should apply after an adjudication order in insolvency had been made. An application under Section 8 of the Act has to be framed under Section 11 according to which the applicant would have to give a list of creditors and debts and of properties, including properties which had been transferred by the debtor within two years. On the other hand, under Section 28, Insolvency Act, the properties must be taken to have been vested in the Court and it is not for the Debt Settlement Board to make a divesting order. Then it appears that a stage in the proceedings of the Board is reached when under Section 22 the Board would be entitled to make an order of adjustment of an insolvent debtor's debts. In view of the adjudication order it would be an impossible situation. A further difficulty will be found in the fact that under Section 53, Provincial Insolvency Act, the creditor would have already acquired the right of avoidance of voluntary transfer if made within two years of the petition for insolvency. In the present case, in fact, the creditors did complain that the debtor had made benami transfers. In these circumstances it seems to us that the right view to take is to hold that after the adjudication order has been passed, there is no proceeding pending before the Court with regard to a debt which may form the subject of an application under Section 8, Bengal Agricultural Debtors Act, 1935. In that view this Court will not stay the hearing of Miscellaneous Appeal No. 240 of 1936 in pursuance of the letter addressed by the Debt Settlement Board dated 30th May 1938.

4. I may as well dispose of another point which has been raised in the course of the argument. It is contended by the learned advocate for the creditors appearing before us that the High Court is not a Civil Court as mentioned in Section 34, Bengal Agricultural Debtors Act. In support of this view he-has referred to Section 16 of the Letters Patent in which the High Court is mentioned as a Court of Appeal from Civil Courts in the province, and he sought to make a distinction from Section 11 in which the High Court is mentioned as a Court of Original Civil Jurisdiction. It is contended that Section 34, Bengal: Agricultural Debtors Act, can only apply to those Civil Courts which came within the four classes of Courts defined by Section 3, Bengal and North West Province and Assam Act (12 of 1887). This however puts a very narrow construction upon the words "Civil' Court." It has already been held on the Original Side of this Court that a notice under Section 34, Bengal Agricultural Act, would apply to a proceeding in the High Court: Nursing Das Tunsook Das v. Chogemull and Baijnath Tamakuwalla v. Totmull . In taking; that view the learned Judges construed the words "Civil Court" in its ordinary sense. It seems to me that it would be taking too narrow a view to say that the High Court is not a Civil Court when it acts as a Court of Appeal under Section 16 of the Letters Patent. This contention therefore has no force. In the view that I have taken on the question, Miscellaneous Appeal No. 240 of 1936 will be boarded for hearing.

Patterson, J.

5. I agree.