Andhra HC (Pre-Telangana)
G. Subba Rao vs Food Corporation Of India And Ors. on 22 July, 2003
Equivalent citations: AIR2004AP16, 2003(5)ALD751, [2004]51SCL370(AP), AIR 2004 ANDHRA PRADESH 16, (2003) 5 ANDHLD 751 (2003) 2 ANDHWR 624, (2003) 2 ANDHWR 624
Author: L. Narasimha Reddy
Bench: L. Narasimha Reddy
ORDER L. Narasimha Reddy, J.
1. The Food Corporation of India, the first respondent herein has filed O.S. No. 1624 of 1985 in the Court of the Senior Civil Judge, City Civil Court, Hyderabad against the petitioner herein for recovery of an amount of Rs. 1,25,624-72/-with interest at 18% per annum. The suit was decreed on 27-6-1991. No appeal was filed against the decree and it became final. The first respondent filed E.P. No. 45 of 2001 in the Court of the Senior Civil Judge, Bhongir for execution of the decree.
2. To protect himself, the petitioner filed an I.P. under the Provincial Insolvency Act, 1920 (for short 'the Act') to declare him as insolvent in the executing Court. The first respondent herein is arrayed as the sole respondent in the I.P.
3. Through orders dated 15-4-2003, the Court below had returned the IP. on the ground that it was not maintainable in view of Section 8 of the Act. The said order is challenged in this revision petition under Article 227 of the Constitution of India.
4. Sri A. Prabhakar Rao submits that the bar contained in Section 8 of the Act operates only when a creditor presents I.P. According to him filing, of insolvency petitions is permissible for debtors as well as creditors under Section 7 of the Act and the bar contained in Section 8 is to be read only in the context of a creditor filing an IP. against a Company or Corporation. The learned Counsel submits that such an interpretation would be in consonance with the schemes of the Companies Act which provides for initiation of proceedings including winding up petitions, against Companies only in the High Court. According to him, when an I.P. is maintainable against the State, it cannot be held not maintainable against a Corporation or a Company.
5. Sri B. Anjaneyulu, learned Counsel for the respondents on the other hand submits that the bar contained in Section 8 of the Act is absolute and does not permit of any doubt.
6. When the petitioner presented an IP. before the Court below, it was returned with an objection to the effect that Section 8 of the Act prohibits filing of such petitions against Companies or Corporations and Food Corporation of India being a Company, the IP. is not maintainable. Section 8 of the Act reads as follows:
Exemption of Corporation, etc., from insolvency proceedings :--No insolvency petition shall be presented against any Corporation or against any Association or Company registered under any enactment for the time being in force.
7. From a reading of the same, it is evident that the bar imposed therein or exemption granted in favour of Companies and Corporations is absolute. It is true that Section 7 of the Act permits filing of insolvency petitions by creditors as well as debtors. The question of a creditor filing an IP. against a Company does not arise. The language of Section 8 of the Act does not permit of any dichotomy of the petitions filed by the creditors on the one hand and debtors on the other hand, irrespective of the category of persons to file the I.P. As long as Companies figure as the respondents therein, the exemption in favour of such Companies operates.
8. Placing reliance upon the judgment of Calcutta High Court reported in Aswini Kumar v. Dominion of India, , the learned Counsel for the petitioner submits that when the State itself is not exempted from the operation of the order passed under the Act, the Companies or Corporations cannot be placed on higher pedestal. The subject-matter, in the case before the Calcutta High Court related to the nature of protection, accorded to an insolvent.
9. Section 31 provides for protection in favour of persons who are declared as insolvents. A doubt arose as to whether an order of protection so passed could operate against the State also. Interpreting the provisions of the Act, the Calcutta High Court held that no exception is carved out in favour of a State, insofar as the operation of the order of protection is concerned. In fact, the Act does not prohibit filing of IP's against the State. It was in this context that the Calcutta High Court held that the order of protection passed under Section 31 of the Act in favour of an insolvent operates against the State also. The decision would not be of any help to the petitioner herein; to maintain the IP. against the Company. Section 31 of the Act deals with a situation where a person has already been declared as insolvent. When the I. P. itself is not maintainable against a Company, the purport of order of protection against such Companies becomes insignificant. Viewed from any angle, the objection raised by the Court below for return of I.P. cannot be found fault with. The Civil Revision Petition is accordingly dismissed.
10. It is however made clear that it shall be open to the petitioner to seek such protection, as he is entitled under the provisions of the Code of Civil Procedure in case any warrant for arrest in Civil Prison is issued against him in pending E.P.