Judgment :- 1. This Civil Revision Petition arises out of certain proceedings in insolvency. Respondent 2, S. P. Luiz was adjudicated an insolvent on 12-8-1950 on the application of respondent 1, a creditor. After the adjudication, neither respondent 1 nor any other creditor of the insolvent put the Official Receiver in possession of any fund for the administration of the estate and the Official Receiver had also no other funds in his hands for administering the estate. Therefore, he reported the fact to the court and the court issued notices to respondent 1 and other alleged creditors for depositing the necessary amount and rendering the requisite assistance to him. None complied with this notice and the debtor also did not apply for his discharge within the time specified in the order of adjudication. As a result of this, the administration was closed and the order of adjudication annulled on 5-3-1951. At the time of the annulment no order was passed as regards the vesting of the debtor's (respondent 2's) property. Subsequently in a suit (O. S.80 of 1944) in which he had obtained a decree against the present revision petitioner, respondent 2 filed a petition to enter satisfaction of the decree. Then, respondent 1 filed a petition in the insolvency court for setting aside the order of annulment passed on 5-3-1951 stating that by oversight he had not been able to pay the necessary amount to the Official Receiver and render assistance for administering the insolvent's estate. This petition was opposed by the present revision petitioner, who was the judgment-debtor in O. S.80 of 1944 and who had discharged the decree debt therein by payment of the decree amount to respondent 2 at a time when there was no impediment to make such a payment. The Insolvency Court upheld the objections of the revision petitioner and dismissed the application for setting aside the order of annulment. Respondent 1 took up the matter in appeal to the District Court of South Malabar. The learned District Judge, while upholding the order of Insolvency Court refusing to set aside the order of annulment, remanded the case to the Insolvency Court with a direction that an order under S.37 of the Provincial Insolvency Act vesting the debtor's property, in the Official Receiver should be passed and the Official Receiver directed to continue the administration of the Estate.
Against the appellate order of the District Judge the revision petitioner has filed this Civil Revision Petition. 2. The view taken by the learned District Judge is that when an order of adjudication is annulled an order under S.37 of the Provincial Insolvency Act should also be passed vesting the debtor's properties in some person to be administered for the benefit of the creditors and that if no such order is passed at the time of annulment it is open to the court to pass the order subsequently. In support of this view he has relied upon the decision of the Patna High Court in Chouthamal v. Jokhi Ram (A I. R.1933 Patna 84). In that case it was held that the order of annulment on the debtor's failure to apply for discharge is intended to punish lam by withdrawing the protection which he gets by the order of adjudication, that an order of annulment without making a provision for the protection of the creditors defeats the ends of justice and leads to an abuse of the process of law, and that if while passing the order of annulment the court by some oversight or other fails to pass orders for the protection of the creditors there is no reason why it cannot pass such orders when the mistake is pointed out to it. S.43 (1) of the Provincial Insolvency Act provides that when an adjudication is annulled on the failure of the debtor to apply for discharge the provision of S 37 will apply, and S.37 provides: "When an adjudication is annulled all sales find dispositions of property and payments duly made, and all acts theretofore done by the court or Receiver, shall be valid; but subject as aforesaid, the property of the debtor who was adjudged insolvent shall vest in such person as the court may appoint or in default of any such appointment shall revert to the debtor to the extent of his right or interest therein on such condition (if any) as the Court may, by order in writing declare". . It is clear from S.37 that in all cases of annulment of adjudication the court is not bound to pass an order for vesting the debtor's property in some person and that it has got a discretion either to pass a vesting order or not to pass the same.
. It is clear from S.37 that in all cases of annulment of adjudication the court is not bound to pass an order for vesting the debtor's property in some person and that it has got a discretion either to pass a vesting order or not to pass the same. If no vesting order is passed, the properties revert to the debtor whose adjudication has been annulled. That is clear from the portion of the section underlined, by me. Imposition of conditions on the insolvent in cases in which his properties are to revert to him is also not obligatory and is a matter of discretion. The words "if any" within the brackets and the word ' may" before the words "by order in writing declare", clearly indicate that the Statute gives a discretion to the Court in the matter of imposing conditions on the debtor in cases in which the properties are to revert to him on annulment of adjudication. No doubt, as pointed out in Chouthmal v. Jokhi Ram (A. I. R.1933 Patna 84) an order of annulment without making provision for the protection of the creditors would defeat the ends of justice and lead to an abuse of the process of the court But if the case is one where there is no creditor to be protected, one fails to see why an order under S.37 of the Provincial Insolvency Act vesting the debtor's properties in some other person or imposing conditions on the debtor if the properties are to revert to him should be passed at the time of the annulment.. In the present case no creditor has proved his debt in insolvency in spite of ample opportunities given for that purpose. Even respondent 1 who has now applied for cancellation of the annulment order, has not cared to prove his debts in spite of the notice issued by the court. Neither respondent 1 nor any other alleged creditor has deposited the necessary funds required by the Official Receiver for the administration of the estate or done anything to render him the least assistance. No creditor, barring respondent 1 has also come forward to ask for cancellation of the annulment order. Both the courts below have concurrently found that respondent 1's excuses for his default to render necessary assistance to the Official Receiver or to pay the requisite amount to him cannot be accepted.
No creditor, barring respondent 1 has also come forward to ask for cancellation of the annulment order. Both the courts below have concurrently found that respondent 1's excuses for his default to render necessary assistance to the Official Receiver or to pay the requisite amount to him cannot be accepted. In this court even respondent 1 has not cared to appear. It is plain from these circumstances that respondent 1 only wants to harass the revision petitioner and that he does not want to prosecute the insolvency proceedings for the protection of his interests or the interests of the other creditors. The revision-petitioner has discharged the debt due from him to the debtor at a time when there was no impediment to pay the amount directly to him. The present attempt seems to be to obtain a vesting order and then attempt to execute against the revision petitioner the decree he has already discharged. No doubt the revision petitioner may be able to establish the fact of discharge in the execution proceedings when the Official Receiver takes out execution against him. But so long as it is not shown that there are any creditors whose claims have not been satisfied or who have yet to get money from him it is not possible to hold that the protection of the creditor's interests requires an order under S.37 of the Provincial Insolvency Act either vesting the debtor's properties in some person or imposing conditions on him. I, therefore, hold that this is not a fit case for giving a direction to the Insolvency Court to pass an order under S.37 of the Provincial Insolvency Act. In the circumstances of the case the Insolvency Court was right in exercising its discretion and refusing to pass an order under the said section. 3. The Civil Revision Petition is therefore, allowed. The order of the District Judge is set aside in so far as it remands the case to the Insolvency Court for passing an order under S.37 of the Provincial Insolvency Act and the order of the Insolvency Court dated 1/th August 1953 is restored. Allowed.