Bombay High Court
Jehangir Cursetji Mistri vs Kastur Pannaji Oswal on 25 January, 1939
Equivalent citations: (1939)41BOMLR583
JUDGMENT John Beaumont, Kt., C.J.
1. In the two suits, out of which these revision applications arise, the plaintiff sued the defendant on money claims in the Small Cause Court at Poona, the suits having been commenced on February 2, 1938. The defence in each case was that, as the defendant had been adjudicated insolvent in August, 1935, the plaintiff's suit did not lie, since he had not obtained leave to sue under Section 28(2) of the Provincial Insolvency Act. The answer to that defence was that the insolvency had been brought to an end subject to a condition which allowed the creditors to sue.
2. The material facts relating to the insolvency are that the adjudication took place in 1935, and certain sums were paid into Court by the insolvent. Subsequently he applied for his discharge, and the learned Subordinate Judge at Poona, before whom the application came, was of opinion that the debtor had not paid eight annas in the rupee, and, therefore, ought not to be given an unconditional discharge, and he made the following order : "I do not grant an absolute order of discharge but grant a conditional one the condition being that the creditors may recover their dues, if within time, until they become irrecoverable." That seems to me to be a very singular order to make in insolvency. It destroys the whole effect of the insolvency. The object of an adjudication in insolvency is to free the debtor from the claims of his existing creditors, which are to be satisfied out of the property of the debtor which the Court takes possession of and distributes among the creditors; and for the Court to discharge the insolvent but to leave1 him liable to debts incurred before insolvency defeats the object of the adjudication.
3. The order is sought to be justified under Section 41(2)(c) of the Provincial Insolvency Act. That section provides that the Court may grant an order of discharge subject to any conditions with respect to any earnings or income which may afterwards become due to the insolvent, or with respect to his after-acquired property. It is clear that the condition imposed by the learned Judge has nothing to do with the future earnings or income or with after-acquired property, and in my opinion the condition is invalid in law.
4. The question then arises as to the meaning and effect of the order. Is it an order of discharge subject to a void condition, or is it an order refusing discharge? Taking the words of the order as a whole and having regard to the statement therein that the learned Judge was not prepared to grant an unconditional discharge, I think I must take the order as amounting to a refusal to grant discharge. If the order amounts to an absolute discharge, the plaintiff's debt is released under Section 44(2). But if the order amounts, as I hold that it does, to a refusal of discharge, then the question arises as to what is the effect of the plaintiff having failed to obtain leave from the Court under Section 28(2).
5. It was held by Mr. Justice Tyabji in Bhimaji v. Chunilal Jhaverchand (1931) I.L.R. 57 Bom. 623 : S.C. 34 Bom. L.R. 683 that where a suit was commenced against an insolvent without obtaining leave, the suit need not be dismissed but might be stayed. Therein he differed from a previous decision of Mr. Justice Davar in In re Dwarkadas Tejbhandas (1915) I.L.R. 40 Bom. 235 : 17 Bom. L.R. 925, which had been followed by Mr. Justice Blackwell in Maya Ookeda v. Kuverji (1931) 34 Bom. L.R. 649, though the latter decision was not apparently brought to the attention of Mr. Justice Tyabji. There being conflicting decisions of Courts of co-ordinate jurisdiction, I have to determine which of them should be followed, and I have no hesitation in following the decisions of Mr. Justice Davar and Mr. Justice Blackwell. It seems to me that the language of Section 28(2) is perfectly plain. It provides that after adjudication no creditor to whom the insolvent is indebted in respect of any debt provable under the Act shall during the pendency of the insolvency proceedings have any remedy against the property of the insolvent in respect of the debt, or commence any suit or other legal proceeding, except with the leave of the Court. This prohibition seems to me to impose a condition precedent to the commencement of the suit, and if the leave of the Court is not obtained, the suit must necessarily be dismissed.
6. I must make the rule absolute with costs, and dismiss the plaintiff's suits with costs, but this is without prejudice to any right the plaintiff may have to prove for his debt in the insolvency.