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1953 Supreme(Bom) 22

IN THE HIGH COURT OF BOMBAY
Chagla, C.J. and Shah J.C. , J.
Appellants: Jivraj Gordhandas and Anr.
Vs.
Respondent: Gaganmal Ramchand
O.C.J. Appeal No. 8 of 1953
Decided On: 17.02.1953
Counsels:
For Appellant/Petitioner/Plaintiff: K.T. Desai, Adv.
For Respondents/Defendant: P.N. Bhagwati and P.R. Vakil, Advs.

Headnote:A.Insolvency jurisdiction - Section 8(1), 92 Presidency Town Insolvency Act - substitution by petitioner creditors after dismissal of earlier suit - when a petitioning creditor files a petition for adjudication of a person insolvent he is not in the same position as a plaintiff in a suit, A plaintiff in a suit is dominus lite and he has every right to proceed with the suit or to withdraw it or to allow it to be dismissed for default, but a petitioning creditor is not a dominus lite in that sense, Once he presents a petition, the order that he seeks is not1 only for his benefit but for the benefit of the general body of creditors, and the Insolvency Court at all times has jurisdiction over that petition and can control it and regulate it - the order was made under section 8 (1) and not under section 92 - the court had the jurisdiction under Section 8 (1) to set aside the order of dismissal passed on 1-4-1953 and having set aside that order, it was competent to substitute the present respondents in place of the petitioning creditors, even though the respondents could not have availed themselves of the act of insolvency on which the original petitioning creditors relied as the foundation of their petition. ( para 2 and 5)

       B.Delay - The petition was dismissed on l-4-952, and the application was made on 11-10-1952 - delay on the part of respondents to apply - the jurisdiction under Section 8 (1) is so wide that the Court could exercise that jurisdiction suo motu even without the application of any party - there is nothing on the record which makes us take the view that the discretion was not properly or judicially exercised - no question of delay. ( para 6 and 7)

       C.Extract of Judgement :- We should like to suggest to the Judges doing Insolvency work that they might adopt a rule of practice, whereby, if a petitioning creditor does not want to prosecute his petition or when he wants the petition to be dismissed for want of evidence, before an order of dismissal is made the petitioning creditors should be directed to ad vertise the fact that they want to apply for dismissal of the petition and sufficient time should be given to enable any other creditor to apply to the Court for substitution. It is not desirable that any petition preferred by a creditor should be dismissed either for default or for want of evidence without proper notice being given to other creditors of the debtor. If the petitioning creditor is absent, then the Court can direct the Official Assignee or the Insolvency Registrar to give the necessary notice so as to enable other creditors of the debtor to know that the petition presented by the petitioning creditor is not being prosecuted.

       Distinguished from : Mating aye v. A. L. K.P. Chetyar Firm, AIR 1933 Rang 251 (D);

       L. C. T. R. M. s. Chettyar v. A. Section Chettyar Firm, AIR 1929 Rang 291 (C)

JUDGMENT - Chagla, C.J.

1. A creditors petition was presented for adjudicating the appellants insolvents on 3-12-1951. This petition was dismissed on 1-4-1952. On 11-10-1952, the respondents applied to the Insolvency Judge to set aside the order of dismissal and to substitute them in place o£ the petitioning creditors. The Insolvency Judge granted that application on 6-1-1953, and from that order this appeal is preferred.

2. The first contention of Mr. Desai is that the Court had no jurisdiction to grant this application in view of the fact that the application for substitution was made after the petition was dismissed, and reliance is placed on Section 92, Frssidency-towns Insolvency Act. That section provides that "Whore the petitioner docs not proceed with due diligence on his petition, the Court may substitute as petitioner any other creditor to whom the debtor is indebted in the amount required by this Act in place of a petitioning creditor." Mr. Desai is right when he contends that Section 92 refers only to a subsisting petition, and that the order of substitution conanplated by that section can only be made in a petition which is pending before the Court. But in our opinion the order made by the learned Judge, in the first instance, falls under Section 8 and not under Section 92. Section 8 (1) provides that the Court may review, rescind or vary any order made by it under its insolvency jurisdiction, and it has been laid down both here and in the English Courts that the jurisdiction conferred by this section is a very wide and far reaching jurisdiction. It is also in our opinion a very salutary jurisdiction. It must never be forgotten that when a petitioning creditor files a petition for adjudication of a person insolvent he is not in the same position as a plaintiff in a suit, A plaintiff in a suit is dominus lite and he has every right to proceed with the suit or to withdraw it or to allow it to be dismissed for default, but a petitioning creditor is not a dominus lite in that sense, Once he presents a petition, the order that he seeks is not1 only for his benefit but for the benefit of the general body of creditors, and the Insolvency Court at all times has juris-diction over that petition and can control it and regulate it. If the Court was satisfied that the order made by it on 1-4-1952, was not a proper order and that it should not have been made,it had got jurisdiction under Section 8 (1) to rescind that order and to restore the petition which was dismissed. Therefore, in substance, what Desai J. did was to exercise jurisdiction under Section 8 (1). He rescinded the order made by the insolvency Judge on 1-4-1952, and the petition which was dismissed being revived he allowed the respondents under Section 92 to be substituted as petitioners in place of the petitioning creditors.

3. The other contention raised by Mr. Desai is that the petitioners even under Section 92 cannot be; subsututed as petitioners because they cannot avail the miseves of the act of insolvency on which the petitioning creditors originally relied. Mr. Desai says that uader Section 12, Presidency-towns Insolvency Act, a petition must be grounded on an act of insolvency which has occurred within three months before the presentation of the petition, and if the respondents had desired to file an independent petition of their own on 11-10-19a2, Ihey could have obviously not relied on the act of insolvency on. which the petitioning creditors relied, and therefore Mr. Desai says that the respondents should, not have been substituted in place of the petitioning creditors. For this purpose reliance has been placed on two English decisions. The first is a decision reported in -- In re Maugham Ex parte Maugham, (18381 21 QBD 21 (A). In that case-what was really decided was that the power given to the Court under Section 104, Bankruptcy Act, 1883, which corresponds to Section 8 11) of our Act, could only be exercised by the Court which made the original order










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