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1977 DIGILAW 398 (CAL)

Awdh Behari Singh v. Saifuddin Khan

1977-12-16

DHIRES CHANDRA CHAKRAVORTI, MURARI MOHAN DUTT

body1977
JUDGMENT Dutt, J. This appeal arises out of a proceeding under the Provincial Insolvency Act, 1920. 2. The respondents Nos. 2 and 3 were included in the list of scheduled creditors of the respondent No. 1 by the Insolvency court upon proof of their debts. The Appellant on July 2, 1969 entered appearance and filed an affidavit with the promissory note and prayed for inclusion of his name in the list of scheduled creditors. Before any order was passed by the court about the proof of the debt by the appellant, dividend was declared in favour of the respondents 2 and 3 for Rs. 6,000/- by an order dated July 25, 1969. The appellant filed an application praying for setting aside the said order. The court below however, dismissed the said applications on a finding that as the debt of the appellant was yet to be proved the dividend could not be declared also in his name as prayed for by him. Hence this appeal. 3. The only question that requires to be determined is whether the dividend should have been declared in favour of the Appellant along with the Respondents nos. 2 and 3. Section 63 of the Provincial Insolvency Act provides as follows : Section 63-"Any creditor who has not proved his debt before the declaration of any dividend or dividends shall be entitled to be paid out of any money for the time being in the hands of the receiver, any dividend or dividents which he may have failed to receive before that money is applied to the payment of any future dividend or dividents but he shall not be entitled to disturb the distribution of any dividend declared before his debt was proved by reason that he has not participated therein." 4. It follows from that section that the creditor who has not proved his debts shall not be entitled to disturb the distribution of any dividend declared before his debt was proved. The court below has placed reliance on section 63 in dismissing the applications of the appellant. Mr. Chandidas Roy Choudhury, learned Advocate appearing on behalf of the appellant submits that in view of section 49 of the Act it must be held that the appellant had proved the debt. The court below has placed reliance on section 63 in dismissing the applications of the appellant. Mr. Chandidas Roy Choudhury, learned Advocate appearing on behalf of the appellant submits that in view of section 49 of the Act it must be held that the appellant had proved the debt. Section 49 (1) provides that a debt may be proved by delivering or sending by post in a registered letter to the court an affidavit verifying the debt. It is not disputed that the appellant filed the certified copy of the decree in his favour and also an affidavit verifying the debt. It is contended that as soon as the requirements of sub-section 1 of Section 49 are fulfilled the debt becomes proved automatically. Prima facie, it seems that there is some force in this contention. If no objection is made by any other creditors to the debt which the appellant claims against the insolvent, in that case, formal order of the court would be sufficient accepting the debt on the basis of the documents referred to in sub-section (1) of section 49. Sub-section 3 of section 33, however, provides that any creditor may tender proof of his debt and apply to the court for an order directing his name to be entered in the schedule as a creditor in respect of any debt provable under the Act and oat entered in the schedule, and the court after causing notice to be served on the receiver and ether creditors who have proved their debts, and hearing their objections, if any, shall comply with or reject the application. Sub-section (3) of section 33 of clearly indicates that the court should adjudicate on the question whether the debt of any creditor has been proved or not only after hearing the objections that may be raised by the receiver or any other creditors who have already proved theirs debts. While section 49 lays down the mode of proof, section 33 (3) lays down the procedure to be followed by the court when an objection is filled either by the receiver or any other creditor who has proved the debt. So, in this view of the matter, it is difficult to accept the contention made on behalf of the appellant that as soon as the requirement of section 49 (1) are complied with, the debt must be held to have been proved automatically. So, in this view of the matter, it is difficult to accept the contention made on behalf of the appellant that as soon as the requirement of section 49 (1) are complied with, the debt must be held to have been proved automatically. The claim by the appellant is yet to be adjudicated by this court below after hearing the objections of the other creditors who have proved their debts. In our view, therefore, the court below was justified in dismissing the application of the appellant for declaration of the dividend also in his favour along with respondents nos. 1 and 2. 5. For the reasons aforesaid, this appeal is dismissed but there will be no order for costs. Let the records be sent down as expeditiously as possible. Chakravorti, J. : I agree.