CALCUTTA HIGH COURT
Nasim Ali, J., Narsing Rau, J.
Madan Lal Jhunjhunwalla - Appellant
Versus
H.H. the Nawab Sayed Reza Ali Khan Bahadur Mustaid Jung - Respondent
Decided On : 06-12-1939
Immunity - Insolvency Proceedings - Section 86, Civil P.C. - [Provincial Insolvency Act] - 86(1), Civil P.C.
Fact of the Case:
The debtor filed a petition for insolvency, with the creditor being a Ruling Chief. The insolvency petition was initially challenged on the grounds of jurisdiction, leading to conflicting decisions by the Subordinate Judge and the District Judge. The creditor appealed against the decision on jurisdiction, but not against the order of adjudication.
Finding of the Court:
The Court held that the provisions of Section 86, Civil P.C. do not apply to insolvency proceedings initiated by a petitioning debtor, as they are not equivalent to suits. The Court also emphasized that the immunity of a foreign sovereign does not extend to bar insolvency proceedings, and that the Court's powers in insolvency proceedings are not limited by Section 86 of the Code.
Issues: Jurisdiction in insolvency proceedings, applicability of Section 86, Civil P.C., and the extent of immunity of a foreign sovereign in insolvency proceedings.
Ratio Decidendi: The provisions of Section 86, Civil P.C. do not apply to insolvency proceedings initiated by a petitioning debtor, and the immunity of a foreign sovereign does not extend to bar insolvency proceedings.
Final Decision: The rule was made absolute, and the order of the District Judge was set aside. The petitioner was entitled to costs.
JUDGMENT
Nasim Ali, J. - On 1st September 1938, the petitioner, hereinafter referred to as the debtor, filed a petition in the Court of the Subordinate Judge at Asansol for being adjudicated insolvent under the provisions of the Provincial Insolvency Act. In this petition the opposite party who is a Ruling Chief, hereinafter referred to as the creditor, was stated to be his only creditor to whom he was indebted to the extent of Rs. 90,102-2-10 on account of a decree for rents and taxes in respect of certain houses in the town of Calcutta obtained by the opposite party against him on the original side of this Court in Suit No. 1632 of 1932. Notice of this insolvency petition was given to the creditor in the manner prescribed by rules made under the Provincial Insolvency Act. On 14th November 1938, the creditor appeared and applied for time to file his objections. This application was allowed and the creditor was given time till 5th December 1938 to file his objections. The creditor however did not do this on that date and the case was adjourned thrice in order to enable him to file his objections. On 24th January 1939, the creditor filed his objections stating, inter alia, that the Court has no jurisdiction to try the proceeding and that he was not made a party in the proper way. The advocate for the creditor on that date asked the Subordinate Judge to try the issue of jurisdiction first. The Subordinate Judge thereupon fixed 7th February 1939 for the hearing of this matter. On this last mentioned date he heard the parties and on 9th February came to the conclusion that the insolvency petition could not proceed as it was filed without the consent of the Governor-General in Council u/s 86(1), Civil P.C. On 7th March 1939 the debtor applied for review of this decision. Notice of this application was given to the creditor. On 25th April 1939, the learned Subordinate Judge came to the conclusion that the insolvency petition was maintainable without the previous consent of the Governor-General in Council and adjourned the case to 22nd May 1939 for hearing on the merits. On 22nd May 1939 the Subordinate Judge found that the debts of the debtor exceeded Rs. 500 and that he was unable to pay his debts. He, accordingly, made the usual order of adjudication. On 24th May 1939, the creditor appealed to the District Judge of Burdwan against the decision of the Subordinate Judge dated 25th April 1939. He however did not appeal against the order of adjudication made on 22nd May 1939. On 29th June 1939, the District Judge allowed the appeal and dismissed the insolvency proceedings as he was of opinion that Section 86 of the Code was a bar in view of the fact that the previous consent of the Crown representative was not taken. On 14th July 1939 the debtor obtained the present rule for revision of this order by this Court u/s 115 of the Code.
2. The reasons given by the learned District Judge in support of his decision are : (a) the insolvency petition is to be taken as a plaint in view of the provisions of Sections 18, 19(2) and 5, Provincial Insolvency Act; and (b) the prayer of the debtor for being adjudicated an insolvent amounts to a declaration that the debtor was unable to pay his debts and that they would be extinguished after the declaration of such dividends as the receiver declared.
3. Section 86, Civil P.C., so far as it is relevant for the purpose of the present rule, as amended by the Government of India (Adaptation of Indian Laws) Order, 1937 is in these terms:
Any such Prince (Sovereign Prince) or Chief (Ruling Chief) and any ambassador or envoy of a foreign State may, in the case of the Ruling Chief of an Indian State with the consent of the Crown representative certified by the signature of the Political Secretary, and in any other case with the consent of the Central Government, certified by the signature of a Secretary to that Government but not without such consent, be sued in any competent Court.
4. This Section in terms applie
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