IN THE HIGH COURT OF MADRAS
Wadsworth, J.
N. Muthusami Chettiar
Versus
Periyal Achi and Anr.
Decided On : 23.07.1940
Official Receiver - Insolvency - Section 43, Provincial Insolvency Act - Summary of Acts and Sections: The court discussed the provisions of Section 43 of the Provincial Insolvency Act regarding the annulment of an adjudication for the default of the debtor, the effect of a subsequent annulment order upon a suit filed by the legal representative of a deceased insolvent impleading the Official Receiver, and the prohibition of suits against an insolvent without the leave of the Court. The court also considered the effect of Section 78, Provincial Insolvency Act, which suspends limitation operating on behalf of the creditors who have proved their debts.
Fact of the Case:
The plaintiff, widow of the deceased insolvent, sued the first defendant for the sale proceeds of the property acquired under a decree which she asserts forms part of her husband's estate. The adjudication of her husband was eventually annulled, and the suit was within time as regards one item but was barred as regards the other item.
Finding of the Court:
The court found that the plaintiff had no legal basis for her suit at the time when it was filed, and the suit for one item was time-barred before the adjudication was annulled. However, the suit was maintainable for the second item as it was within time when the adjudication was annulled.
Issues: The issues involved the maintainability of the suit when the plaintiff's husband's estate had vested in the Official Receiver, the effect of a subsequent annulment order upon a suit filed by the legal representative of a deceased insolvent, and the prohibition of suits against an insolvent without the leave of the Court.
Ratio Decidendi: The court held that the suit was maintainable for the second item as it was within time when the adjudication was annulled, but the suit for the first item had to be dismissed as the plaintiff had no cause of action when the suit was filed.
Final Decision: The petition was allowed to the extent that the petitioner was entitled to three-fourths of his costs in revision.
Wadsworth, J.
1. The petitioner was the first defendant in a suit for recovery of money collected by the first defendant as a result of a decree which is alleged to be the property of the plaintiffs husband. The facts are rather peculiar. The decree in question was transferred from a third party to the name of the first defendant and it is alleged that the real owner was the plaintiffs husband who is now dead. The plaintiffs husband was adjudged an insolvent in 1930. He died in June, 1934, at or about the time when the first defendant effected a sale of the properties acquired in execution of the decree in question. It would appear that at the time of his death the plaintiffs husband had failed to carry out the Courts orders in prosecution of his insolvency and had not applied for a discharge. It would also appear that the debts due to creditors in the insolvency were the subject of an extra judicial composition. In June, 1937, the plaintiff, widow of the deceased insolvent sued the first defendant for the sale proceeds of the property, acquired under the decree which she asserts forms part of her husbands estate. She impleaded in her suit the Official Receiver and alleged that the Official Receiver had taken no action to get possession of this money for the estate. At the time when she filed this suit, she was taking steps for the annulment of the adjudication of her husband but she does not in her plaint specifically pray that the money claimed in the suit should be made payable to the Official Receiver. She claims it for herself, possibly anticipating that the annulment of the adjudication would intervene before the suit was decreed. The adjudication was eventually annulled in an appellate order of the District Judge. At the time of the annulment the suit was barred as regards one item but was still within time as regards the other item. The learned District Judge annulled the adjudication knowing of the extra judicial composition since, having regard to the death of the insolvent and all the circumstances, he thought it unnecessary to endeavour to undo this composition.
2. A preliminary issue was framed in the suit on the question whether the suit was maintainable when the plaintiffs husbands estate had vested in the Official Receiver. Ordinarily this Court will not entertain revision petitions against decisions on issues which are not decisions of the whole suit, but in the circumstances of the present case it seems to me that the matter should be decided in revision. It essentially relates to the jurisdiction of the Court to entertain the suit and it relates to a matter which, if decided wrongly in favour of the plaintiff, may result in an elaborate trial which would otherwise be unnecessary.
3. The question is by no means free from difficulty. Ordinarily speaking the provisions of Section 43, Provincial Insolvency Act, regarding the annulment of an adjudication for the default of the debtor will scarcely apply to the estate of a dead man, and one would think that the proper order to pass would be one under Section 17, merely terminating the administration; the debtor being dead and no further administration being necessary in the interests of the estate. However, it does appear in this case that before the death of the insolvent there was a default from which annulment would normally result. I am not therefore prepared to say that the annulment order was improper. In any case we are not now concerned with its correctness, ft has been made and is binding.
4. What is the effect of a subsequent annulment order upon a suit filed by the legal representative of a deceased insolvent impleading the Official Receiver, which suit should strictly have been filed by the Official Receiver himself? There is no clear authority on the subject. The Court below relies on a decision in Lingappa v. Official Receiver AIR1937Mad717 , which itself is rather an unusual case. It purports to follow Ramasami Kottadiar v. Murugesa Mudali (1897
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