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1945 DIGILAW 190 (CAL)

Ganeshdas v. Surya Kumar Bose

1945-08-21

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JUDGMENT Clough, J. - This is a summons dated the 25th of June, 1945, which was adjourned to Court by Khundkar, J., on the 12th of July, 1945. The application is for an order that an attachment levied on the applicant's undivided one-fourth share in premises No. 23/1, Chattawalla Gullee, Calcutta, be set aside. The applicant is Surya Kumar Bose, the Defendant in Suit No. 2062 of 1939, which was filed against him by one Ganesh Das. The suit was instituted on 27th November, 1939, for principal and interest due on a hundi for Rs. 2,500 executed by the Defendant and dated the 27th of November, 1936. The suit was decreed ex parte on the 19th of January, 1940, for Rs. 3,959, interest on judgment and costs. In execution of this decree the applicant's property mentioned above was attached on the 24th of May, 1945. The applicant states that no notice under Or. 21, r. 22 was served on him and that he first became aware of the attachment and of the decree on the 11th of June, 1945, when a copy of the writ which had been found affixed to the premises was made over to him by one of his tenants. No application has, however, been made to set aside the ex parte decree on the ground of non-service of summons or upon any other ground. 2. It has been contended before me that this Court as a Court executing the decree should set aside the attachment for two reasons. First, that the decree is a nullity inasmuch as it was made in a suit filed during the pendency of the Defendant's insolvency proceedings, and no leave of the Court was obtained to institute the suit. Second, that the judgment-debt was a debt provable in the Defendant's insolvency: this was not done and the debt cannot now be realized by execution of the decree. 3. The dates which are material for the purpose of this application are the following: 4. The hundi was executed on the 27th of November, 1936. On the 6th of July, 1937, the Defendant was adjudicated insolvent. The adjudication order was notified in the Calcutta Gazette on the 22nd of July, 1937. On the 28th July, 1937, his schedule of affairs was filed. The hundi was executed on the 27th of November, 1936. On the 6th of July, 1937, the Defendant was adjudicated insolvent. The adjudication order was notified in the Calcutta Gazette on the 22nd of July, 1937. On the 28th July, 1937, his schedule of affairs was filed. On the 8th of September, 1939, an application was made for the discharge of the insolvent and on the 23rd of November, 1939, notice of this application was published in the Calcutta Gazette. On the 27th November, 1939, this suit was filed--without the leave of the Insolvency Court having been obtained. The 5th of December, 1939, was the date for hearing the application for discharge: This was adjourned. On the 19th of January, 1940, the ex parte decree in this suit was made. On the 1st of February, 1944, a scheme of composition was approved by the Insolvency Court, and on the 10th of August, 1944, an annulment order was published in the Calcutta Gazette. On the 23rd January, 1945, the scheme of composition having been worked out the trustee was discharged. On the 24th of May, 1945, the Defendant's property was attached in execution of the decree: the Defendant became aware of the attachment on the 11th June, 1945, and on the 25th June, he took out this summons. 5. It has been held in Gora Chand Haldar v. Prafulla Kumar. Roy I. L. R 53 Cal 166 (1925) that where a decree presented for execution was made by a Court which apparently had not jurisdiction, whether pecuniary or territorial, or in respect of the judgment-debtor's person, to make the decree, the executing Court is entitled to refuse to execute it on the ground that it was made without jurisdiction; and that within these narrow limits, the executing Court is authorised to question the validity of a decree. What is meant by the word "apparently" has been discussed in Amalabala Dasi v. Sarat Kumari Dasi 54 C. L J. 593 (1923). It has there been held that if the defect as regards jurisdiction appears upon the face of the decree itself or from the papers relevant for purposes of understanding it, the want of jurisdiction is apparent: but not otherwise. It has there been held that if the defect as regards jurisdiction appears upon the face of the decree itself or from the papers relevant for purposes of understanding it, the want of jurisdiction is apparent: but not otherwise. Now in this case in order to determine whether there was a want of jurisdiction as is alleged, an enquiry has to be made which travels beyond either the decree or the papers which must be referred to in order to understand it. This is not a case where the want of jurisdiction is apparent: and in my view the executing Court cannot enquire into the question whether the decree is or is not a nullity on the ground of want of jurisdiction. I have been referred to the case of Jnanendra Mohan Bhaduri v. Rabindra Nath Chakravarti L. R. 60 I. A. 71 S. C. 37 C. W. N. 401 (1932), where their Lordships of the Judicial Committee of the Privy Council referring to a decree upon an award made in proceedings under the Indian Arbitration Act. 1899 stated (at page 75,) that they agreed with the view taken by the Courts in India that the decree in the case was passed without jurisdiction, and was, therefore, incapable of execution as such. In that case a decree had been made in terms of an award as modified by agreement between the parties to arbitration proceedings. Having regard to the terms of the Arbitration Act the want of jurisdiction was obvious from the face of the decree itself. The observation in the judgment of the Privy Council does not therefore enlarge the restrictions on the executing Court's power of enquiry into the validity of a decree which has been recognised in the cases I have already mentioned. 6. In my view, therefore, the first of the applicant's two contentions on this application must fail on this ground, and I do not therefore come to any finding with regard to the other arguments urged in support of it. 7. The second contention is quite independent of the first, and on this part of his argument the Petitioner is. I think, entitled to succeed in the application. 8. The composition having been approved by the Court, was, by reason of sec. 7. The second contention is quite independent of the first, and on this part of his argument the Petitioner is. I think, entitled to succeed in the application. 8. The composition having been approved by the Court, was, by reason of sec. 90, Presidency Towns Insolvency Act, binding on all creditors so far as any debts due to them and provable in insolvency were concerned, and it was therefore binding on the Plaintiff. For the Plaintiff's debt was provable; it did not fall within any of the four classes of debt mentioned in sec. 45 of the Act in respect of which an insolvent does not obtain release by an order of discharge: and it was therefore not within the contemplation of sec. 32 of the Act, and was not a debt as regards which the scheme was not binding on him. It was the right of the Plaintiff to come in and prove before the trustee, and Rule 128 of the Calcutta Insolvency Rules gave him the right to come in and do so even though he had not proved before approval of the composition. 9. It has been held in Ganpat Rai v. Kani Ram Munna Lal 24 All. L. J. 283 (1925) that the approval of a scheme of composition operates as a discharge insolvent for all debts provable in insolvency which have not been brought before the Insolvency Court, and that in this respect the provisions of the Presidency Towns Insolvency Act are such that the decision in Flint v. Barnard [1888] 22 Q. B. D. 90 is authoritative in India. In Gilbey v. Jeffries (1883) 11 Q. B. D. 559 on the ground that it resulted in a discharge, an approved scheme of arrangement was successfully pleaded as a defence to an action on a provable debt; and in Seaton v. Deerhurst (1895) 1 Q. B. 853 it was held that execution decree must be stayed on the ground scheme of arrangement had been approved, though the trustee had disallowed the Plaintiff's proof of his debt for which he had already obtained a judgment. 10. 10. For the Respondent it has been urged that a composition is an arrangement between debtor and his creditors having as its basis the consent of parties--free or forced: and it is nonetheless an arrangement, even though it is binding on persons who have not consented, inasmuch as it has received the approval of a requisite majority who do. 11. It is said therefore that it is an adjustment and when the creditor's claim is a judgment it is an adjustment of a decree and as such cannot be recognised by any Court executing the decree unless the adjustment of the decree been certified or recorded under Or. 21, r. 2 the Civil Procedure Code. The Respondent has relied on Bava Ramasami Chetti v. Venkatasa Tawker 2 Mad. L. J 221 (1892) and on Thutta Venkataswami v. Vissamsetti Kotilingam 49 Mad. L. J. 730 (1925). The second of these authorities is not a case of insolvency at all. The first was decided before the passing of the Insolvency Act and it does not appear from the report that the provisions of the law relating to insolvency were discussed. It seems to me quite impossible to argue that a composition to which the Plaintiff was not a party was an adjustment of his decree to the satisfaction of the decree-holder within the meaning of Or. 21, r. 2 (1). Had the Plaintiff in fact been a party I do not think that I would have to "recognise an adjustment" within the meaning of Or. 21, r. 2 (3) before I could hold that a composition approved by the Court bars the decree-holder from executing his decree. The executing Court must refuse to execute the decree, not because of any adjustment of it, but because there is an approved scheme which, whether there are judgment-debtors or not, operates, by reasons of the provisions of insolvency law as a discharge of the insolvent from all debts which were provable, but were not proved. The Court takes notice of the scheme but is not at all concerned with its detailed effect on any decree that there may be against the debtor. 12. In my opinion the applicant has established that he is entitled to an order setting aside the attachment levied on his undivided one-fourth share in 23/1, Chattawalla Gallee, Calcutta, and I make the order applied for. 12. In my opinion the applicant has established that he is entitled to an order setting aside the attachment levied on his undivided one-fourth share in 23/1, Chattawalla Gallee, Calcutta, and I make the order applied for. Execution is stayed and the attachment set aside. 13. The applicant is entitled to the costs of this application. Certified for Counsel.