The Chief Justice.-In application No. 552 of 1949 in Insolvency Petition No. 71 of 1940, Mack, J., held that an undischarged insolvent had no borrowing capacity at all and that the Act (the Presidency Towns Insolvency Act) provides no machinery by which any creditor who lends to an undischarged insolvent can recover his debt. He also held that no Court has got any power or jurisdiction to entertain a suit against the insolvent on the basis of a debt incurred by him while an undischarged insolvent. Krishnaswami Nayudu, J., in two applications which came up for disposal before him was not inclined to accept this view of Mack, J., and in view of the importance of the question raised, he considered it necessary that the appli- cations should be heard and disposed of by a Bench of this Court. This is how these applications came up before us for disposal.

Mack, J., came to the conclusion that an undischarged insolvent had no borrowing capacity at all, not on any authority but because he thought that it was the effect of some of the sections of the Presidency Towns Insolvency Act. The sections mentioned by him in his judgment are sections 17, 45, 46, 50, 52 and 102 of the Presidency Towns Insolvency Act. Section 17 lays down the effect of an order of adjudication, that the property of the insolvent vests in the Official Assignee and becomes divisible among his creditors and after the order of adjudication no creditor to whom the insolvent is indebted in respect of any debt provable in insolvency shall, during the pendency of the insolvency proceedings, have any remedy against the property of the insolvent in respect of the debt nor can any creditor commence any suit or other legal proceedings in respect of such debt except with the leave of Court. Section 45 provides that an order of discharge shall release the insolvent from all debts provable in insolvency except certain kinds of debts mentioned in sub-section(1). Section 46 deals with the debts which are provable in insolvency. Section 50 especially provides that after an order of adjudication has been made no distress for rent due before such order shall be made upon the goods or effects of the insolvent. Section 52 describes the insolvent’s property which is divisible among his creditors and sets out what it shall not comprise and what it shall comprise. Section 102 is a penal provision under which an undischarged insolvent obtaining credit to the extent of fifty rupees or upwards from any person without informing such person that he is an undischarged insolvent is liable on conviction to be punished with imprisonment for a term which may extend to six months or with fine or with both. It is obvious that none of the sections either expressly or impliedly affects the contractual capacity of an undischarged insolvent. In fact, Mack, J., himself recognised that there was no specific section in the Act which prohibited an insolvent from borrowing before he obtains his discharge from a creditor or money-lender lending money. On the other hand, the scheme of the Act in respect of debts which are covered by any particular proceeding in insolvency, shows clearly that any disability which a creditor may have is only in respect of debts provable in insolvency and these are only debts incurred by the insolvent prior to his adjudication. Under section 46, all debts and liabilities present or future, certain or contingent, to which the debtor is subject when he is adjudged an insolvent or to which he may become subject before his discharge by reason of any obligation incurred before the date of such adjudication, shall be deemed to be debts provable in insolvency. The effect of this provision is that any debt incurred by the insolvent after adjudication and before his discharge cannot be a debt provable in that insolvency. Section 102 appears to imply that an undischarged insolvent could obtain credit to any extent if he informs the person giving him credit that he is an undischarged insolven

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