ABDUL LATIF Vs. JRPERCIVAL, RECEIVER

JUDGEMENT

(1.) The appellant before me got a decree for money against one Abdul Hamid on 4th November 1933. Later on, on 22 December, 1933, the said Abdul Hamid was adjudicated an insolvent on the application of another creditor and the respondent, Mr. Percival, was appointed Receiver. He however failed to apply for his discharge with the result that on 15th August 1934 his adjudication was annulled. On that date, however, the Court did not vest his properties in any person, but later on a creditor moved the learned District Judge for making an order under Section 37, Provincial Insolvency Act, for vesting his properties in a person to be appointed by him. The learned District Judge on 18 September 1934, made such an order appointing Mr. Percival, as the person in whom the properties are to vest. The appellant before me filed an application for execution of his decree against Abdul Hamid on 28 January 1935, in the 4 Court of the Munsif at Chittagong. In the said application he prayed for sale of some immoveable properties which according to the purport of the aforesaid order of the learned District Judge dated 18 September 1934, had vested in Mr. Percival. Mr. Percival filed an objection under Section 47, Civil P. C., contending that the execution could not proceed, but the appellant was bound to come and take dividends from him in the usual course of administration of Abdul Hamid's affairs. This objection has been upheld by both the Courts below and the execution dismissed. The appellant challenges the correctness of these orders on two grounds:

(2.) His first ground is that the order passed by the learned District Judge on 18 September 1934, vesting Abdul Hamid's properties in Mr. Percival is without jurisdiction as the order annulling adjudication had already been made before. The contention is that a vesting order under Section 37 (1) can only be made at the time of the order of annulment and not later on. The second point is that, even assuming the vesting order so made was a good order, the appellant is not bound in law to recover his decretal dues through dividends to be paid by Mr. Percival in the course of his administration. He says that the insolvency proceedings ended with the order of annulment and that he can now pursue his ordinary remedies for realizing his decree, that is by execution, which had only been suspended by reason of the adjudication, with the only difference that he has to make Mr. Percival as an additional party (which he has not done) as the properties against which he wants to proceed are vested in him. He says that he is not bound to come in the administration of the assets held by the person in whom the insolvent's properties had vested by virtue of an order under Section 37. The contention has been carried further by the advocate for the appellant who urges that such a person has not right to administer, he cannot admit proofs and distribute the assets by declaring dividends. I have some doubts as to whether an appeal lay to the lower appellate Court or a second appeal lies here, but I need not pursue the point in detail as no preliminary objection has been taken. I consider Mr. Percival's position to be like that of a claimant who prefers his claim under Order 21, Rule 58 of the Code and not that of a representative of the judgment-debtor Abdul Hamid and his objection to the execution was not really an objection under Section 47 of the Code. But I need not pursue the point further as no preliminary objection has been taken either to the competency of the appeal in the lower appellate Court or in this Court. Some support is lent to my view by the course of proceedings in Ishar Das V/s. Fatema Bibi 1934 Lah 468, a case to which I will refer later on in connection with the first point raised before me by the appellant.

(3.) I shall now deal with the two points raised by the appellant. Regarding the first point I do not find anything in the language of either Section 43 or 37, Provincial Insolvency Act, which would suggest that the order of vesting property in a person appointed by the Court must be made at the time of making an order annulling the adjudication. Section 43 is one of the sections defining the circumstances under which the adjudication is to be annulled. A failure on the part of the insolvent to apply for discharge in time or to appear in support of his application for discharge does not automatically annul the adjudication. It requires an order of the Court. The annulment of the adjudication under the conditions defined in Section 43 is intended as a punishment to the insolvent. This is indicated by Sub-section 2 of Section 43. The protection conferred on him by reason of his adjudication is withdrawn, but it does not necessarily follow that he is to get back from the control of the Court his assets. An order annulling adjudication may be made in a variety of circumstances, e.g. (a) when a composition is approved by the Court, (b) when the Court is convinced that the man ought not to have been adjudicated at all, (c) when the debts are paid in full, (d) when the insolvent fails to apply for discharge in time or to prosecute his application for discharge. In the second and third of these cases it is but just that the assets still left in the hands of the Receiver should be returned to him. In the first case the bankruptcy proceedings continue only in another form, and in the fourth case unless these are special circumstances the Court ought to release from its hold the assets of the insolvent, but should act in such a way as would protect his creditors. The vesting of the property in a person appointed by the Court as provided in Section 37 of the Act is designed to carry this object into effect. Section 37 merely states the effect of an annulment and an adjudication can be annulled under a variety of circumstances which I have indicated above. The insolvency proceedings do not automatically terminate with the annulment, and it cannot be said that by an order passed under Section 43 of the Act the Judge loses seisin of the matter and cannot thereafter make any order in those proceedings. I fail to see why a vesting order under Section 37 cannot be made after the date of the annulment order.