Andhra HC (Pre-Telangana)
Sanapala Narasamma And Others vs Mallana Laxminarayana, Kaviti Mandal ... on 27 August, 1999
Equivalent citations: 1999(5)ALD464, 1999(5)ALT755, AIR 2000 ANDHRA PRADESH 219, (1999) 5 ANDHLD 464 (1999) 5 ANDH LT 755, (1999) 5 ANDH LT 755
Author: Vaman Rao
Bench: Vaman Rao
ORDER
1. This civil revision petition is directed against the order of Senior Civil Judge of Sompeta dated 27-9-1998 passed in IA No.178 of 1998 in IP No.4 of 1996 allowing the said petition filed under Section 31 of the Provincial Insolvency Act filed by the petitioners seeking protection order from arrest and detention in execution proceedings filed by respondent No. 1 herein.
The petitioners herein are the respondents Nos.1 to 4 and the respondent No.1 herein is the petitioner in the said LA.
The parties will be referred to as they were arrayed before the Senior Civil Judge in the said LA.
2. The bare facts which are necessary and relevant to the petition may be stated as follows:
The petitioner filed an application under Sections 7 and 11 of the provincial Insolvency Act against the respondents-creditors to adjudicate him as insolvent and to discharge liabilities mentioned in the schedule annexed to the petition. The second respondent filed EP No.2 of 1996 in OS No.30 of 1989 on the file of the Sub-Court, Sompeta for realisation of decretal amount and has taken coercive steps for arrest. The amount covered by this E.P. was also included in the schedule annexed to the insolvency application. It is stated that the petitioner suppressing this fact, filed an application under Order 21, Rule 37 of CPC for arrest of the petitioner/judgment debtor and arrest warrant was issued in execution proceedings. Hence, this application has been filed for protection order restraining the decree-holder from taking steps for arrest and detention of the petitioner in execution proceedings in EP No.2 of 1996.
3. The Respondent Nos. 1 to 4 opposed the petition and filed a counter. The filing of the insolvency petition by the petitioner (Judgment debtor) is admitted. It is stated that the second respondent has filed EP No.2 of 1996 in OS No.30 of 1996 on the file of the Senior Civil Judge, Sompeta under Order 21, Rules 37 and 38 of CPC. On receipt of summons in the execution petition, the petitioner filed IP No.4 of 1996 under Sections 7 and 11 of Provincial Insolvency Act. The petitioner/judgment debtor failed to appear in the Court and arrest warrant was issued and he was arrested and produced on 1-5-1998 and was released on personal bond of Rs.50,000-00. The petitioner made an application under Order 21, Rule 106 CPC and it was dismissed on 22-4-1998.
On 12-11-1998 the Court issued an order under Order 21, Rule 38 ..... and in compliance of the order, the petitioner was arrested an produced on 25-11-1998 who is since been lodged in civil prison. Under these circumstances it is stated that there are no grounds for issuing protection order to the petitioner.
4. The learned Senior Civil Judge held that the petitioner was entitled to protection order and the petitioner, who was lodged in civil prison, has been directed to be released.
5. The only question that arises in the Civil Revision petition is whether during the pendency of Insolvency proceedings an order for protection of the judgment debtor can be passed under Section 31 of Provincial Insolvency Act.
6. The learned Counsel for the petitioners contends that Section 31 would come into play only after the judgment debtor has been declared as insolvent and not during the pendency of Insolvency proceedings. Section 31(1) is extracted below for reference:
"31. Protection order :--(1) Any insolvent in respect of whom an order of adjudication has been made may apply to the Court for protection, and the Court may on such application make an order for the protection of the insolvent from arrest or detention."
A plain reading of this provision would make it abundantly clear that an order for the protection under Section 31 can be passed in favour of the insolvent in respect of whom an order of adjudication has been made. In this case admittedly the insolvency proceedings arc still pending and no order of adjudication has yet been made. The learned Counsel for the respondents, however, submits that even during pendency of insolvency proceedings protection order can be passed by virtue of inherent powers of the Court. The learned Counsel invites my attention to the provision under Section 5 of Provincial Insolvency Act, which reads as follows:
"5. General powers of Courts :--(1) Subject to the provisions of this Act, the Court, in regard to proceedings under this Act, shall have the same powers and shall follow the same procedure as it has and follows in the exercise of original civil jurisdiction.
(2) Subject as aforesaid, High Courts and District Courts, in regard to proceedings under this Act in Courts subordinate to them, shall have the same powers and shall follow the same procedure as they respectively have and follow in regard to civil suits."
On the basis of this provision, the learned Counsel for the respondents contends that in as much as Section 5 contemplates that in regard to the proceedings under this Act the Court shall have the same powers and shall follow the same procedure as it has and follows in the exercise of original civil jurisdiction. From this it is contended 'that inherent powers under Section 151 CPC are available to Insolvency Court and in exercise of Inherent powers of the Court protection order can be passed even during insolvency proceedings before adjudication of the judgment debtor as insolvent. In this regard the learned Counsel for the petitioners also invites my attention to the provision of Section 23 of Provincial Insolvency Act and argues that at the time of admitting Insolvency petition or at any subsequent stage before adjudication the Court has power to order the release of any judgment debtor if he has been arrested in execution of the any Court for payment of money.
Section 23 reads as follows:
"23. Release of debtor:--(1) At the time of making an order admitting the petition or at any subsequent time before adjudication, the Court may, if the debtor is under arrest or imprisonment in execution of the decree of any Court for the payment of money, order his release on such terms as to security as may be reasonable and necessary".
The learned Counsel for the respondents (petitioner herein) relies on a judgment of Madras High Court in Sinnaswamy Chettiar v. Aligi Gowdan and others, AIR 1924 Mad. 893, in support of his contention that before adjudication an insolvent has no right to be protected unless he is- arrested in execution of a decree. The learned Counsel for the petitioners however relies on another judgment of Madras High Court in the case of Nallagatti Goundan v. Ramana Goundan and other, AIR 1925 Mad. 170, in which it has been held that by virtue of Section 5 of Provincial Insolvency Act the District Judge has inherent powers to grant interim protection. This view is apparently contrary to the view taken in Sinnaswamy Chettiar v. Aligi Goundan and others (supra). However, on merits of the case, the learned Judges did not interfere with the orders passed by the District Judge refusing to pass an order of interim protection pending adjudication.
7. The learned Counsel for the respondents also relied on the judgement in the case of Ch. Venkat Subba Rao v. S.M. Yerukalaiah, 1986 (2) APLJ 50 (SN), what has been held in this case is that the execution of the decree by way of arrest of judgment debtor who is declared as insolvent can be ordered even in the absence of leave of lnsolvency Court if the execution proceedings were allowed earlier to the date of declaration and judgment debtor failed to avail protection under Section 32 Provincial Insolvency Act. Obviously, this authority has no bearing on the question tinder consideration before this Court in this case.
8. Apparently, there is a conflict of views taken in Sinnaswamy Chettiar v. Aligi Goundan and others case and Nallagatti Goundan v. Ramana Goundan (supra). Though in Sinnaswamy Chettiar v. Aligi Goundan (supra), there is no discussion about powers of the Court under Section 5 of Provincial Insolvency Act, but it has been held categorically that unless the judgement debtor is declared as insolvent, protection orders under Section 31 cannot be passed in his favour. Provision under Section 23 has also been considered in this judgement. It has been held that before adjudication an insolvent has no right to be protected unless he is arrested in execution of a decree. The provision under Section 23 clearly contemplate that an order under it is can be passed only where the judgement debtor has been actually arrested. It is obvious that an order under Section 23 of the Provincial Insolvency Act cannot be passed where the judgement debtor apprehends arrest and approaches the Insolvency Court for protection to prevent his arrest. Such a protection from arrest could be ordered only under Section 32 of Provincial Insolvency Act which can be availed only after adjudication and not during pendency of adjudiction proceedings. As against this in the case of Nallagatti Goundan v. Ramana Goundan (supra) it has been categorically held that under Section 5 of Provincial Insolvency Act the Insolvency Court has powers to grant ad-interim protection to a person who has applied for being adjudicated as insolvent during the pendency of such proceedings. In the case of Jewraj Kharewalla v. Lalbhai Kalyuanbhai and Company, AIR 1926 Cal. 1011, a Division Bench of Calcutta High Court has held that there is no provision in Provincial Insolvency Act in respect of orders to prevent the arrest of the petitioner pending the hearing of the petition for insolvency. The learned Judge reserved their opinion as to whether the Court has jurisdiction to make an order of interim protection under inherent powers under Section 5 of Provincial Insolvency Act. In (he case of Ch. Ghulam Sarwar v. Guru Piara and others, AIR 1934 Lahore 113, the Lahore High Court clearly held that Insolvency Court has no power under Section 5 of Provincial Insolvency Act to issue a protection order to prevent the arrest of the judgement debtor against whom the warrant of arrest was issued. The Court can direct release of the judgement debtor after the arrest by virtue of powers conferred under Section 23 of Provincial Insolvency Act.
9. It may be mentioned that the judgements of Madras High Court rendered prior to 1954 are binding on this Court. In view of conflicting views expressed in the two Division Bench decisions of Madras High Court referred to above I would have been inclined to frame a question and refer the matter for consideration by Division Bench of this Court. But from the facts of this case it does not appear to be necessary.
10. It cannot be disputed that under Section 23 of Provincial Insolvency Act, the Insolvency Court has limited powers to order protection even during the pendency of adjudication proceedings. Those powers are restricted to passing an order for release of judgement debtor who has been actually arrested in execution of a money decree, on such terms as to security, as may be reasonable and necessary for reasons to be recorded. Section 23 does not empower the Court to pass an order to prevent the arrest of the judgement debtor who is sought to be arrested an detained in prison for execution of a decree. Section 23 would come into play only where the debtor is under arrest or imprisonment in execution of the money decree passed by any Court. The facts of this case as seen from the order under revision in para 6 and 7 would show that the debtor was already detained in prison as on the date of the order namely 27-11-1998. The operative portion of the order in para 9 mentions:
"Therefore, the petitioner who is already under arrest for (sic in) civil prison is released in EP No.2 of 1996 in OS No.30 of 1989."
Thus, in this case the order that has been passed is strictly in conformity with Section 23 of Provincial Insolvency Act. Though the learned Senior Civil Judge has observed that the petitioner was entitled to get interim protection order under Section 31 Provincial Insolvency Act, it must be deemed to be an order passed under Section 23 of Provincial Insolvency Act on the basis that the debtor was already arrested as on the date of passing of the orders.
11. In view of these distinct facts, this Civil Revision Petition has to be dismissed and is accordingly dismissed.