HIGH COURT OF CALCUTTA
GUHA, BANERJEE, JJ.
Damodar Mukherjee - Appellant
Versus
Bonwabilal Agarwalla - Respondent
Decided on : Aug 24, 1959
PROVINCIAL INSOLVENCY ACT - SECTION 28 (2) - INTERPRETATION - APPEAL - CONTINUATION OF SUIT - LEAVE OF COURT - NECESSITY - DECREE IN APPEAL - VALIDITY - REALIZABILITY OUT OF INSOLVENT'S PROPERTY - RECEIVER - NECESSARY PARTY.
Fact of the Case:
Kalooram, the father of respondent No. 1, was an assignee of a promissory note, executed by the appellants Nos. 2 and 3. He instituted a suit, in the Court of the Subordinate Judge at Purulia, on the said promissory note, on July 31, 1936, and obtained a decree. The debtors, who are the present appellants Nos. 2 and 3, preferred an appeal against the aforesaid decree in the Court of the District Judge at Manbhum-Singhbhum. The learned District Judge reversed the decree passed by the trial court and dismissed the claim made by Kalooram. While the appeal was pending before the Court of the District Judge, three creditors, who are respondents Nos. 2 to 4 in this appeal, filed an application, on October 14, 1936, for adjudication of the appellants Nos. 2 and 3 as insolvents. There was an order, dated June 14, 1937, passed on the said application adjudging the appellants Nos. 2 and 3 as insolvents.
Finding of the Court:
The Court held that the filing of an appeal is not the commencement of a new proceeding, but a continuation of the suit. Therefore, the appeal before the Patna High Court was a continuation of the suit filed by Kalooram against the present insolvent appellants, and there could not be any question of seeking leave from the Insolvency Court under section 28 (2) of the Provincial Insolvency Act and of making the Receiver -in -insolvency a party to the suit. Consequently, it was not necessary to take the leave of the court or to make the Receiver a party to the appeal before the Patna High Court, which was a mere continuation of the suit.
Issues: 1. Whether the filing of an appeal is the commencement of a new proceeding or a continuation of the suit? 2. Whether it is necessary to obtain leave of the Insolvency Court under section 28 (2) of the Provincial Insolvency Act and to make the Receiver -in -insolvency a party to the suit and appeal? 3. Whether the decree passed in the appeal is valid and the decretal debt can be proved in insolvency?
Ratio Decidendi: 1. The Court held that the filing of an appeal is not the commencement of a new proceeding, but a continuation of the suit. This view is supported by several authorities, including I. L. R. 22 Madras 68, I. L. R. 15 Cal. 94, and 19 C. W. N. 359. 2. The Court held that it is not necessary to obtain leave of the Insolvency Court under section 28 (2) of the Provincial Insolvency Act and to make the Receiver -in -insolvency a party to the suit and appeal in respect of a personal claim against the insolvent, such as a suit for bare claim of money against the insolvent. 3. The Court held that the decree passed in the appeal is valid and the decretal debt can be proved in insolvency.
Final Decision: The Court dismissed the appeal and affirmed the order passed by the lower Court, allowing the application of Kalooram praying for admitting his claim under the decree, in the schedule.
1. BANERJEE, J.- This appeal is directed against an order passed by the learned District Judge of Purulia, exercising jurisdiction under the Provincial Insolvency Act. By that order, the learned District Judge allowed an application by one Kaluram Lodha, alias Kalooram Marwari, for inclusion of himself as a creditor, in respect of a debt under a decree amounting to Rs. 5381/-, in a pending insolvency proceeding.
2. THERE is no dispute about the facts here in below stated. Kalooram, the father of respondent No. 1, was an assignee of a promissory note, executed by the appellants Nos. 2 and 3. He instituted a suit, in the Court of the Subordinate Judge at Purulia, on the said promissory note, on July 31, 1936, and obtained a decree. The debtors, who are the present appellants Nos. 2 and 3, preferred an appeal against the aforesaid decree in the Court of the District Judge at Manbhum-Singhbhum. The learned District Judge reversed the decree passed by the trial court and dismissed the claim made by Kalooram. The date of the appellate decree was June 11, 1937.
While the appeal was pending before the Court of the District Judge, three creditors, who are respondents Nos. 2 to 4 in this appeal, filed an application, on October 14, 1936, for adjudication of the appellants Nos. 2 and 3 as insolvents. There was an order, dated June 14, 1937, passed on the said application adjudging the appellants Nos. 2 and 3 as insolvents.
3. ON August 2, 1937, Kalooram preferred a second appeal, before the High Court of Judicature at Patna, against the appellate decree dismissing his claim on the promissory note. The aforesaid appeal was registered as S. A. 390 of 1937. By a judgment, dated October 21, 1938, Wort and Agarwalla, JJ. allowed the appeal with costs and decreed Kalooram's claim on the promissory note. The decree passed by the Patna High Court is printed at pages 5 and 6 of the Supplementary Paper Book in this appeal.
4. THEREAFTER, on October 27, 1941, Kalooram filed an affidavit, in the aforesaid insolvency case, in proof that a sum of Rs. 5381/- was due to him under the aforesaid decree on promissory note, inclusive of interest and costs.
On February 4, 1943, Kalooram filed a petition praying for admitting his claim in the Schedule of debts, after service of notice under section 33 (3) of the Provincial Insolvency Act. We need mention here that in the Schedule to the petition, dated October, 14, 1936, filed by the respondents Nos. 2 to 4, for adjudication of appellants Nos. 2 and 3 as insolvents, Kalooram's name was already included as a creditor, but the money due to him was shown only as Rs. 3530/ -.
5. TWO objections were filed to the aforesaid application, one by the insolvents and the other by the Receiver, appointed in the aforesaid insolvency proceeding.
6. THE objections in substance were two-fold, (i) the appeal before the Patna High Court having had been filed, without the leave of the insolvency court first had and obtained, under section 28 (2) of the Provincial Insolvency Act, the decree passed in that appeal was a void decree and the sum due under a void decree should not be allowed to be proved in insolvency, (ii) the Receiver, appointed in the insolvency proceeding, not having had been made a party to the appeal before the Patna High Court, the debt due under the decree was not realizable out of the assets of the insolvent vested in the Receiver, and the decree should be treated as void against the Receiver. Kalooram died after having filed the objection. His son, the respondent No. 1, proceeded with the objection.
The Court below over-ruled the objections and allowed the application by Kalooram filed on February 4, 1943, for admitting his claim in the Schedule of debts. I quote below two extracts from the order made by Court below as to why it rejected the objections :- (a) "as to the first ground of objection, the decision would rest on the finding whether Second appeal is included in the expression 'other legal p
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