V. R. NARAYANA MURTHY v. K. S. JAGANNATHA AND BROS
1974-07-10
GOVINDA BHAT
body1974
DigiLaw.ai
( 1 ) THE petitioner is the defendnnt in SC. 367 of 1972 on the file of the couit of the Civil Judge, Shirnogo, which is a suit for recovery of a sum of rs. 450 on the basis of an on demand promissory note. The said suit was instituted on 20-11-1972 by the respondent. During the pendency oi the said suit, the petitioner was adjudged as an insolvent in Ins. Case No. 2 of 1970 on the file of the same Court. The order of adjudication was made ori 20th Aug. 1973. After the said adjudication, the petitioner filed an application in SC. 367 of 1972 for its stay under S. 29 of the Provincial insolvency Act, 1920. The Civil Judge, while dismissing the application, made the following order : this is an application U. s. 29 of the Provincial Insolvency Act to stay further proceedings in the suit. The fact that the. defendant has been adjudged insolvent on 20-8-73 is borne out from Ex. D1 copy of the order sheet in Ins. Case No. 2 70 on the, file of the Prl. Civil Judge, shimoga. On hearing the Counsel on both, sides, I think that it is not, expedient to, stay further proceedings in the suit. In case the debt is proved, suitable orders would be passed while passing the judgment. IA-I is rejected. Evidence by 27-2-74. ( 2 ) UNDER the scheme of the Provincial Insolvency Act, no, suit can be instituted against an insolvent after an order of Adjudication is made without the leaye of the Insolvency Court. In respect of suits and other proceedings pending on the date of adjudication as insolvent, the Court has the discretion to stay or not to stay a suit. But that discretion is one to be exercised on recognised principles. The Court cannot arbitrarily refuse to stay the suit. Where a suit is in respect of a debt provable in insolvency, it should be stayed unless there are special circumstances as, for instance, that the suit was at the time of insolvency ripe for hearing and the amount of proof against the insolvent's estate would not be seriously affected. In Brownscombe v. Fair (1888) 58 L. T. 85. , Wills, J. , said :" The discretion is not an arbitrary one, but is to be, exercised on recognised principles. Now there is such a principle here.
In Brownscombe v. Fair (1888) 58 L. T. 85. , Wills, J. , said :" The discretion is not an arbitrary one, but is to be, exercised on recognised principles. Now there is such a principle here. The intention of the Legislature in the Bankruptcy Act was that on the bankruptcy of a man no more litieation between the bankrupt and his creditors should be permitted except in special circumstances. " ( 3 ) THE learned Civil Judge has not stated that the suit, at the time of insolvency, was rice for hearing and that the amount of proof against the insolvent's estate would not be seriouslv affected. The discretion of the court below has not been properlv exercised. The respondent-plaintiff can prove his debt in the insolvency proceedings. The proper course is to stay the suit. Accordingly, I allow this revision petition, reverse the order of the court below and order stay of the suit. No costs. --- *** --- .