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TMI Blog1959 (8) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... d promissory note, on 31-7-1936, and obtained a decree. The debtors, who are the present appellants Nos. 2 and 3, preferred an appeal against the aforesaid decree in the court of the District Judge at Manbhum-Singhbhum. The learned District Judge reversed the decree passed by the trial court and dismissed the claim made by Kalooram. The date of the appellate decree was 11-6-1937. 3. While the appeal was pending before the court of the District Judge, three creditors, who are respondents Nos. 2 to 4 in this appeal, filed an application, on 14-10-1936, for adjudication of the appellants Nos. 2 and 3 as insolvents. There was an order, dated 14-6-1937, passed on the said application adjudging the appellants Nos. 2 and 3 as insolvents. 4. On 2-8-1937, Kaluram preferred a second appeal, before the High Court of Judicature at Patna, against the appellate decree dismissing his claim on the promissory note. The aforesaid appeal was registered as S. A. No. 390 of 1937. By a judgment, dated 21-10-1938, Wort and Agarwalla JJ. allowed the appeal with costs and decreed Kaluram's claim on the promissory note. The decree passed by the Patna High Court is printed at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvocate for the creditor argued that it was not so and that no leave of the Insolvency Court was necessary inasmuch as the Second Appeal in this case was a mere continuation of the original money suit. Section 28(2) prohibits without leave of the Court a creditor from commencing any suit or other legal proceeding which would by its nature hamper or affect prejudicially the administration of the insolvent's property in the insolvency proceedings. In the present case, the money Suit had been decreed by the trial court long before the initiation of the present insolvency proceeding. So, there was no commencement of any suit or other legal proceeding. Moreover, the execution debt had already been mentioned in the insolvency petition. The second appeal preferred was a mere continuation of the suit which had already been decreed. (b) The second contention, namely, that the decree passed in second appeal was void as the receiver was not a party is equally unsustainable. Under Section 28(2) of the Act no creditor to whom the insolvent is indebted in respect of any debt provable under this Act has any remedy against the property of the insolvent in respect of the debt. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon him by the concluding portion of Sub-section (2), Section 28, which debars a creditor from commencing any suit or other legal proceeding, except with the leave of the Court. An application for execution of a decree is certainly the commencement of a legal proceeding; and therefore an application for execution comes within the mischief of the second part of Sub-section (2) Section 28. ........Having regard to the express terms of Sub-section (2), Section 28, Provincial Insolvency Act, I am of opinion that the decree-holder was under a disability from taking any step in execution of his decree until leave had been obtained. (b) A case reported in Prankishna v. Jnananda Roy AIR1942Cal47 , decided by Edgley and Biswas, JJ. In that case a suit for ejectment of a tenant had been decreed. The tenant appealed. While the appeal was pending, the Bengal Non-Agricultural Tenancy (Temporary Provisions) Act, 1940, came into force and thereupon the appellant himself applied for stay of the appeal, under the provisions of that Act. In that context their Lordships observed as follows: An appeal undoubtedly arises out of a suit, and may in a sense be regarded as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our of the petitioner ...... It may be pointed out also in this connection that it has been held that the expression 'other legal proceeding' in Section 446 of the Indian Companies Act should not be construed ejusdem generis with word 'suit', preceding it, but the expression includes all legal proceedings . 14. In support of his other contention that the leave of the Insolvency Court should have been obtained for the purpose of filing the second appeal before the Patna High Court and that the Receiver should have been made a party to the appeal and without having done so the assets in the hands of the Receiver could not be made liable for the decretal debt, Mr. Ghosh sought to place reliance on the following authorities: (i) a decision reported in AIR 1931 Pat 3571 decided by Kulwant Sahay and Macpherson, JJ., in which their Lordships observed: It is next contended that the bar as against the commencement of any suit or other legal proceeding must refer to a suit or proceeding against the property of the insolvent which is dealt with in the first part of Section 28, Sub-section (2). In my opinion there is no justification fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is a document creating a charge in his favour. (iii) A decision reported in Ponnusami Chittiar v. Kaliaperumal Naicker AIR 1929 Mad 480, decided by Wallace J. His Lordship made the following observations in that case: Section 28(2) lays down that no creditor to whom the insolvent is indebted in respect of any debt provable under the Act shall, during the pendency of the insolvency, commence any suit except with the leave of the Court. From Section 26, Civil Procedure Code and Order 4, Rule 1. it is clear that a suit commences with the presentation of a plaint. Therefore, Section 28(2) implies that until leave of the Court is obtained, the plaint shall not be entertained. The plaintiffs' plaint, therefore, should have been rejected in limine, and I do not think he can claim to maintain the suit now because it can now be presented without the leave of the Court. ..... A suit commenced without leave cannot be continued by obtaining leave at a subsequent stage. No doubt, as was recognised this may work hardship in certain cases, for example, where the plaintiff is ignorant of the insolvency proceedings altogether. But after all, the Gazette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, which makes the observations in AIR1942Cal47 not strictly applicable to the case with which we are concerned. In the decision reported in (1958) Cal. L. J. 233, the observation that the expression other legal proceeding in Section 446 of the Companies Act includes all legal proceedings is only a general statement without particular reference to the question. with which we are concerned, namely whether an appeal is a commencement of a new proceeding, or merely a continuation of the suit. The decisions relied on by Mr. Ghose are, therefore, not of much-assistance. 16. There are, on the other hand, weighty authorities in support of the proposition that an appeal is a continuation of the suit and not commencement of a new proceeding. Reference may be made in this connexion to the Full Bench decision of the Madras High Court reported in Chappan v. Moidin Kutti ILR Mad 68 in which Subramania Ayyar, J. observed as follows, at page 80 of the report: Now, according to Webster's Dictionary the first meaning, in law, of the noun 'appeal' is 'the removal of a cause of a suit from an inferior to a superior Judge or Court for re-examination or re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Vakil for the appellant has not disputed that the term 'suit' includes the appellate stage. This indeed is clear from the decision, in the case of Gagan Chand v. Casperz 4 CWN 44 and Batasa Sarkar v. Jaiti Bewa 3 C WN 62 n. In fact it has been held in the case of Shyama Churn y. Debendra Nath. ILR Cal 484, that the term suit includes even the execution proceedings based on the final decree made in the suit. 19. If it was necessary for us to dismiss this appeal on the ground that the appeal before the Patna High Court was a continuation of the suit, filed by Kaluram against the present insolvent appellants, we might have been inclined to do so and might have in that case held that the suit having had been filed prior to the adjudication of the appellants Nos. 2 and 3 as insolvents, there could not be any question of seeking leave from the Insolvency Court under Section 28(2) of the Provincial Insolvency Act and of making the Receiver-in-insolvency a party to the suit and consequently might have further held that it was not necessary to take the leave of the court or to make the Receiver a party to the appeal before the Patna High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial Assignee when the defendant has become insolvent, and this is not the case of the assignment of any interest, within the meaning of Section 372 of the Code of Civil Procedure, such as would enable the plaintiff to proceed against the Official Assignee. We think, therefore, that the Subordinate Judge was wrong in placing Mr. Miller's name on the record; but his name having been wrongly placed there, we think that the judgment against him in this form must be wrong, and the reason is that such a judgment would work manifest injustice and prevent the beneficial operation of the Insolvency Sections of the Act, because a judgment of this kind, as against Mr. Miller, comes to this, that he is to pay the money out of the estate in his hands, and that this man, the plaintiff, is entitled to get the whole of his claim, and that is to be paid in full if the whole estate of the insolvent is sufficient to pay him. This is clearly wrong, 24. In another case reported in Chandmull v. Ranee Soondery ILR Cal 259, also a case under the Insolvent Act (11 and 12 Vict., Cap 21), the husband of the defendant was adjudicated an insolvent in 1891 and the usual order was made vesti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with regard to insolvent's property. 27. To the similar effect is the view expressed by Mukherji and Bennet, JJ. in a case reported in Harnam Chandar v. Rup Chand AIR1932All382 . We quote below a relevant extract: Learned Counsel argued that this appeal was a legal proceeding and as the appellant had not got the permission of the Insolvency Court, therefore, the appellant was not entitled to commence this appeal. We consider however that the words 'commence any suit or other legal proceeding' must be read in conjunction with something else in the sub-section, for if they were read independently, they would prevent a creditor from indulging in any litigation at all. The expression in the subsection which must govern this clause is 'have any remedy against the property of the insolvent in respect of the debt' . 28. Before leaving this tonic we desire to quote a very good summary of the law on this point to be found in Mulla's Law of Insolvency (Tagore Law Lectures, 1929). In the Second Edition of the Book, at pages 690, 691 the following passage appears: Where a suit is brought against a defendant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property of the insolvent or is it a suit or legal proceeding which might ultimately result in a decree, which if executed or sought to be enforced would be payable out of the assets of the insolvent and thereby affect the property? The argument of Mr. Krishnaswami Iyer is that it should be such as directly and immediately affects the property and that we cannot hold 'Relating to the insolvent's property' to mean 'affecting the property, because that construction would result in, every cause of action which the insolvent had, being continued or defended by the Official Receiver for the benefit of the insolvent, while the law clearly is that so far as regards merely personal actions the receiver cannot continue them but he can continue actions which are not personal. .....We do not think there is any authority for holding that the words 'Relating to' must be taken, to mean 'affecting'. Mr. Ananatakrishna Iyer himself admits that such a construction, which would give the Official Receiver power to conduct suits of a purely personal nature, which no Court has yet allowed to be done, would be placing an undue stretch on the Section. 33. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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