The Hon'ble The Chief Justice, P. JYOTHIMANI, J. and K.B.K. VASUKI, J.)

1. The above Civil Miscellaneous Appeal is filed by the creditor against the interlocutory order dated 6.8.2007 passed in I.A.No.240 of 2006 in I.P.No.1 of 2006 filed by the first respondent in the appeal on the file of the learned Principal District Judge, Cuddalore granting an order of protection restraining the appellant and respondents 2 to 5 from arresting or harassing or threatening the first respondent with both legal and out of court action and from detaining her in prison till the disposal of the insolvency petition.

2. The question that arose for consideration before the learned Single Judge was as to whether the insolvency Court is empowered to pass such interim order of protection before the order of adjudication is made by the insolvency Court.

3. Admittedly, the first respondent has filed the Insolvency Petition to declare herself as insolvent and adjudication has not been commenced. Pending the decision in the Insolvency Petition, she has moved the above said interlocutory application under Section 4 of the Provincial Insolvency Act, 1920 (for brevity, "the Act") for the protection stated above.

4. The learned Single Judge considering that two conflicting views have been taken by two Division Benches - one in Sinnaswami Chettiar v. Aligi Goundan and others, AIR 1924 Madras 893 and another in Nallagatti Goundan v. Ramana Goundan and others, AIR 1925 Madras 170, has referred the matter to the Hon'ble Chief Justice for constituting a Larger Bench to decide the following question:

"Whether the insolvency Court constituted under Provincial Insolvency Act of 1920 has power under the law to grant ad-interim protection from 'arrest or detention' before a final adjudication order is made adjudicating the individual as insolvent?"

Thus, the matter has been posted before the Full Bench for a decision.

5. In Sinnaswami Chettiar v. Aligi Goundan and others, AIR 1924 Madras 893, a Division Bench has held, by referring to Sections 23 and 31 of the Act, that an insolvent is not entitled to make an application under the Act for protection, before he is adjudicated, unless he has been arrested, since there was no necessity till then for any protection. The Division Bench, therefore, has held that in such event if there is an apprehension of arrest, he should expedite the matter and get his order of adjudication first and then ask for protection under Section 31 of the Act. The operative portion of the said decision is as follows:

".. An insolvent is not entitled to make an application under the Act for protection, before he is adjudicated, unless he has been arrested; because, there is really no necessity till then for any protection. If the insolvent wants to apply for protection, he ought to expedite matters, in such a way, as to get his order of adjudication first and then ask the Court to grant protection under Section 31."

6. In Nallagatti Goundan v. Ramana Goundan and others, AIR 1925 Madras 170, while considering Section 5 of the Act, of course without referring to the judgment in Sinnaswami Chettiar case, supra, a Division Bench has held that the District Court has inherent powers under Section 5 of the Act to pass protection order even before adjudication, which is as follows:

"... In our opinion, the District Judge has inherent powers under Section 5 of the Provincial Insolvency Act to grant the appellant the protection he has claimed."

7. Even though the matter is stated to have been settled, since a reference has been made and legal position is to be settled, we have taken up the matter.

8. Mr.S.K.Rakhunathan, learned counsel for the appellant would contend that the decision in Nallagatti Goundan case, supra, has not been supported with any reason except stating crisply that the District Judge has inherent powers to grant interim protection even before the process of adjudication is completed and therefore, according to him, it is not a law lai