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1978 DIGILAW 759 (MP)

Prahlad Das Shivshankarlal (Firm) v. Allahabad Bank

1978-10-06

J.P.BAJPAI

body1978
Short Note : 1. The facts relevant for the purposes of this case are that according to the case put up by the Allahabad Bank, the plaintiff, a nationalised Bank, the defendants obtained credit by tendering certain railway receipts in respect of valuable goods to the tune of lacs. After obtaining over-draft on the basis of the aforesaid railway receipts, it was alleged that the defendants took the delivery of the goods at the railway station of the destination by making a false representation that the railway receipts were lost and the goods may be delivered on executing indeminity bond. Under these circumstances, the Allahabad Bank was compelled to institute a suit for recovery of the amount which was over drawn by the defendants on the basis of the railway receipts. 2. The learned counsel for the applicants contended that according to the provisions of section 29 of the Provincial Insolvency Act, the trial Court must have stayed the suit because the defendants have been declared insolvents and the fact that the order declaring them insolvent was subjudice in appeal was not sufficient for continuing the suit. It was also pointed out that a receiver has already been appointed and all the assets and properties of the defendants have been placed under his control. 3. Held : The provisions of section 29 of the Insolvency Act do not contain a complete prohibition restraining the Court from proceeding with the suit against the defendant, who has been declared insolvent or against whom the proceedings under the Provincial Insolvency Act are subjudice. The provisions of section 29 of the provincial Insolvency Act, permit the Court to continue to try the suit on such terms and conditions as may be deemed fit. In the present case, since the railway authorities of the Union of India has been also impleaded as a party defendant and damages have been claimed from it also in addition to the present defendants. The trial Court was of the opinion that under these circumstances, there was no case made out for staying the suit. There were special circumstances to justify the continuance of the suit. The applicants were not the only defendants. It was a claim for damages, and such a claim could not be proved in insolvency proceedings. Revision dismissed.