Horwill, J.-The appellant filed a petition in the Court of the District Judge of East Godavari, the order on which is under appeal, to scale down his debt under section 19 of Madras Act IV of 1938. Evidence was adduced; and after hearing arguments, the learned Judge framed three points as arising for determination on the allegations in the petition and counter and on the evidence and arguments, They were:

(1) Whether the petitioner is barred by principles of res judicata from preferring the petition?

(2) Whether the petitioner is entitled to the benefits of Act IV of 1938? and

(3) What is the amount which will be due if the decree is scaled down? On the first point the learned District Judge decided in favour of the appellant. On the second point he held that the appellant was not possessed of any saleable interest in the property on the relevant dates, 1st October, 1937, and 22nd March, 1938, and that he was therefore not entitled to the benefits of Act IV of 1938. Because of this finding the petition had to be dismissed; and so the learned District Judge did not consider the third question as to the extent to which the decree would have to be scaled down.

The decree to be scaled down was passed in O.S. No. 32 of 1933. The appellant on his own application was adjudged an insolvent on 16th April, 1937; and on account of his own laches the adjudication was annulled on 5th March, 1941. The argument which appealed to the learned Judge was that both on 1st October, 1937, the relevant date referred to in Act IV of 1938, and on 22nd March, 1938, when the Madras Act IV of 1938 came into force, the property was vested in the Official Receiver; for those dates were subsequent to the adjudication and prior to the annulment of the adjudication. It is now well-settled law that the effect of the annulment of an adjudication is to bring about the same state of affairs as if the adjudication had never taken place. The learned advocate for the appellant has cited to us Ratnavelu Chettiar v. Franciscu Udayar1, in which Somayya, J., held that a transaction which had taken place between the date of adjudication and the date of annulment without the permission of the Court was valid, because the annulment dated back to the date of adjudication. In that, he followed Kothandaram Ravuth v. Murugesa Mudaliar2, in which on the Insolvency Act then in force the learned Judges held that the adjudication was null and void. After Somayya, J., had decided the above case, his decision came up for consideration by a Bench of this Court in Periya v. Kondayya1. There, the law bearing on the subject was considered in detail, and reference made not only to Kothandaram Ravuth v. Murugesa Mudaliar2, but also to an earlier decision on which Kothandaram Ravuth v. Murugesa Mudaliar2, was based, namely, Ramaswami Kottadiar v. Murugesa Mudali3. It was pointed out that although at the time when Ramaswami Kottadiar v. Murugesa Mudali3 and Kothandaram Ravuth v. Murugesa Mudaliar4, were decided, the law governing insolvency was the Indian Insolvency Act 11 and 12, Victoria, 1848; yet despite some slight change in the wording, the law relating to the effect of the annulment of the adjudication remained the same. In support of that conclusion three decisions of single Judges to that effect were referred to: Lingappa v. Official Receiver, Bellary4, Dharmasamarajayya v. Sankamma5, and Ratnavelu Chettiar v. Franciscu Udayar6. The judgment of Somayya, J., in particular was considered at some length; and it was pointed out that his remarks that if the annulment did not have retrospective effect, there would be no need for the clause validating acts done by the Court or by the Receiver, for they would be valid, were very pertinent. So there can be no doubt that the effect of the annulment of the adjudication on 5th March, 1941 was to bring about the same state of affairs as if there had never been an adjudication on 16th April, 1937, which means that on the relevant dates 1st O