The Court clarified that the power to set aside an adjudication is not restricted to the materials available at the time of adjudication, and if no act of insolvency has been committed, the Court must annul the adjudication.

Alfred Henry Lionel Leach, C.J.

1. These six Civil Revision Petitions deal with three different matters arising out of the adjudication in insolvency of one Palani Goundan and his son Kandaswarai Goundan by the Subordinate Judge of Coimbatore, but they may all be conveniently dealt with in one judgment. Ihe order of adjudication was passed on the 26th September, 1928, on a petition filed by P.S.A.R.A.R. Arunachalam Chettiar who alleged that the insolvents had fraudulently preferred another Chettiar, Somasundaram by name, by executing in his favour on the 2nd June, 19-7, a mortgage of immovable property. The insolvents did not enter an appearance and the order of adjudication was passed without opposition. On the 14th October, 1929, the petitioning creditor applied to the Court for an order under the provisions of Section 54 of the Provincial Insolvency Act setting aside the mortgage in favour of Somasundaram. The Subordinate Judge held that the fraudulent preference alleged had been established and set. aside the transaction. An appeal followed to the District Judge of Coimbatore, who allowed it. The petitioning creditor then asked this Court to restore the order of the Subordinate Judge in the exercise of its revisional powers. This Court, however, agreed with the District Judge that there was no fraudulent preference and consequently refused to interfere with his order. On the 25th March, 19^5, as the result of this Courts decision the insolvents applied to the Subordinate Judge for the annulment of the adjudication and a similar application was filed by a creditor, P.R.S.A.R. Peria-karuppan Chettiar. These petitions were allowed and the adjudication was set aside under the provisions of Section 35 of the Act. On appeal the District Judge reversed this decision and three of the petitions now before the Court, namely, Nos. 572, 720 and 721, ask this Court to revise the District Judges order.

2. Section 35 of the Provincial Insolvency Act says that where in the opinion of the Court a debtor ought not to have been adjudged insolvent the Court shall, on the application of the debtor, or of any other person interested, by order in writing, annul the adjudication. The Subordinate Judge held that the Court had an unrestricted power to set aside the adjudication where it was established that the order of adjudication ought not to have been passed. The District Judge considered that the power of the Court was restricted to a case where it could be shown that on the materials before it at the time of the adjudication the order ought not to have been passed. Although at a later stage it becomes apparent that the order of adjudication would not have been passed if the Court had been in possession of the whole of the facts the Court has, in the opinion of the District Judge, no power to set aside the adjudication.

3. The section contains no restriction on the power of the Court to set aside the adjudication where it is shown that the debtor ought not to have been adjudged insolvent. The District Judge has read something in the section, which is not there and moreover his decision is opposed to principle. In the words of James, L.J., in Ex parte Learoyd : In re Foulds (1878) 10 Ch. D. 3:

A man cannot be duly adjudged a bankrupt, unless the great requisite of all exists, that he has committed an act of bankruptcy. That is the capital offence of which he must have been guilty before he can be duly adjudged a bankrupt.

4. If no act of insolvency has been committed the estate cannot be administered under the provisions of the Provincial Insolvency Act and Section 35 has been inserted in the Act to give the Court lower to set aside an adjudication which ought not to have been made. Section 35 of the Provincial Insolvency Act corresponds to Section 35 of the Bankruptcy Act of 1883. In In re Hester : Ex parte Hester (1889) 22 Q.B.D. 632, a case which was decided under the Bankruptcy Act of 1883, Charles, J., said:

Is it a case in which, if he