Horwill, J - (1.)The appellant filed a petition in the Court of the District Judge of East Godavari, the order on which is under appeal, to scale down his debt under Section 19 of Madras Act IV of 1938; Evidence was adduced; and after hearing arguments, the learned Judge framed three points as arising for determination on the allegations in the petition and counter and on the evidence and arguments, They were: (1) Whether the petitioner is barred by principles of res judicata from preferring the petition ? (2) Whether the petitioner is entitled to the benefits of Act IV of 1938? and (3) What is the amount which will be due if the decree is scaled down ? On the first point the learned District Judge decided in favour of the appellant. On the second point he held that the appellant was not possessed of any saleable interest in the property on the relevant dates, 1 October, 1937, and 22nd March, 1938, and that he was therefore not entitled to the benefits of Act IV of 1938. Because of this finding the petition had to be dismissed; and so the learned District Judge did not consider the third question as to the extent to which the decree would have to be scaled down.
(2.)The decree to be scaled down was passed in O.S. No. 32 of 1933. The appellant on his own application was adjudged an insolvent on 16 April, 1937; and on account of his own laches the adjudication was annulled on 5 March, 1941. The argument which appealed to the learned Judge was that both on 1 October, 1937, the relevant date referred to in Act IV of 1938, and on 22nd March, 1938, when the Madras Act IV of 1938 came into force, the property was vested in the Official Receiver; for those dates were subsequent to the adjudication and prior to the annulment of the adjudication. It is now well-settled law that the effect of the annulment of an adjudication is to bring about the same state of affairs as if the adjudication had never taken place. The learned advocate for the appellant has cited to us Ratnavelu Chettiar V/s. Franciscu Udayar ., in which Somayya, J., held that a transaction which had taken place between the date of adjudication and the date of annulment without the permission of the Court was valid, because the annulment dated back to the date of adjudication. In that, he followed Kothandaram Ravuth V/s. Murugesa Mudaliar , in which on the Insolvency Act then in force the learned Judges held that the adjudication was null and Void. After Somayya, J., had decided the above case, his decision came up for consideration by a Bench of this Court in Periya V/s. Kondayya ., There, the law bearing on the subject was considered in detail, and reference made not only to Kothadaram Ravuth V/s. Murugesa Mudaliar , but also to an earlier decision on which Kothandaram Ravuth V/s. Murugesa Mudaliar , was based, namely, Ramaswami Kottadiar V/s. Murugesa Muddli . It. was pointed out that although at the time when Ramaswami Kottadiar V/s. Murugesa Mudali ; and Kothandaram Ravuth V/s. Murugesa Mudaliar , were decided, the law governing insolvency was the Indian Insolvency Act 11 and 12, Victoria, 1848; yet despite some slight change in the wording, the law relating to the effect of the annulment of the adjudication remained the same. In support of that conclusion three decisions of single Judges to that effect were referred to : Lingappa v. Official Receiver, Bellary (1937) 47 L.W. 366, Dharmasamarajayyav. Sankamma , and Ratnavelu Chettiar V/s. Franciscu Udayar . The judgment of Somayya, J., in particular was considered at some length; and it was pointed out that his remarks the at if the annulment did not have retrospective effect, there would be no need for the clause validating acts done by the Court or by the Receiver, for they would be valid, were very pertinent. So there can be no doubt that the effect of the annulment of the adjudication on 5 March, 1941 was to bring about the same state of affairs as if there had never been an adjudication on 16 April, I937, which means that on the relevant dates 1 October, 1937 and 22nd March, 1938 the property vested in the appellant.
(3.)The learned District Judge felt himself compelled to follow Venkataramayya v. Pundarikakshudu . In that case, as in the present case, the relevant dates occurred during the period between the adjudication and the annulment of the adjudication; but the learned Judge overlooked the distinction between that case and this in that there, upon the annulment of adjudication, it was ordered that the property should continue to vest in the Official Receiver. If it had revested in the insolvent, then the date on which the revesting would be deemed to have taken place would: be the date on which the original order of adjudication was passed, which would, in effect, mean the wiping out of the intermediate period. Where, how-ever, at the time of the annulment of the adjudication, an order is passed continuing the property in the Official Receiver, no question arises of the revesting of the property in the insolvent; nor does the annulment of adjudication have the effect of putting the insolvent in the same position; with regard to his property as he would have been in had he not been adjudicated an insolvent. It is not therefore surprising that in the judgment of Wadsworth, J. who delivered the judgment in that case, we find only a passing reference to the effect of Secs.37 and 43. The learned Judges almost entirely confined their consideration to an examination of Section 21 of the Agriculturists Relief Act. They did not therefore consider what effect the annulment of adjudication would have upon the ownership of the property on the relevant dates. Verkataramayya V/s. Pundarikatshudu , is therefore easily distinguished; and we are bound by the other decisions above referred to. We therefore hold that the property must be deemed to have been the property of the insolvent on 1 October, 1937 and 22nd March, 1938, and that therefore the provisions of Madras Act IV of 1938 would apply.