Judgement ORDER :- Insolvent is the applicant. This application is filed under S.21 of the Presidency Towns Insolvency Act, for annulling the order of adjudication dated 6-10-1975 on the ground that the petitioning creditor was a secured creditor, and when he had not complied with the requirements under S.12(2) of the Act, the order of adjudication secured by him itself was without jurisdiction, and therefore the present application is maintainable. In the supporting affidavit, insolvent states as follows : He was adjudged an insolvent on 6-10-1975, on a petition filed by the first respondent herein, who is a secured creditor. Under Section 12(2) of the Act, the petitioning creditor shall state in his petition that he either relinquishes his security for the benefit of the creditors or give an estimate of the value of the security in which event alone, he would be entitled to present a petition under the Act and when the first respondent had not fulfilled any of the conditions mentioned in Section 12(2) of the Act, the order secured by him, would not be binding on the applicant herein. As the applicant was not aware of the full facts earlier, he could not file the application for annulment and that he filed an application for discharge in Appln. No.316 of 1979, which was dismissed on 1-2-1980. As he ought not to have been adjudicated as an insolvent, the present attempt made to bring to sale the property in which he had already released his life interest in favour of his wife in 1962, is without jurisdiction and therefore the sale of the property deserves to be set aside and the order of adjudication be annulled. 2. First respondent in his counter would state that the present application is an abuse of process of Court, that the petitions came to be filed because of the failure of the applicant to pay the monthly rent of Rs. 200 on and from 1-7-1972, which formed part of the consolidated order of the High Court dated 18-4-1975 made in Applns. No.1911 of 1973 and 2311 of 1973. Since the applicant did not comply with the order passed in the aforesaid applications, the first respondent herein filed Appln. No.1775 of 1974 for executing the order for payment of rent in respect of the mortgage property, and it was granted by this Court by order dated 30-8-1974. No.1911 of 1973 and 2311 of 1973. Since the applicant did not comply with the order passed in the aforesaid applications, the first respondent herein filed Appln. No.1775 of 1974 for executing the order for payment of rent in respect of the mortgage property, and it was granted by this Court by order dated 30-8-1974. It is, thereafter, E.P. No.9 of 1975 in O.S. No.18 of 1972 was filed for attachment of moveables at premises No.82 Habibullah Road, and the order of attachment was effected on 1-4-1975, which continued to be in force for more than 21 days which itself amounted to an act of insolvency. It is on this act of insolvency, I.P. No. 46 of 1975, came to be filed and by order dated 6-10-1975, the applicant herein was adjudged as an insolvent. 3. It is true that the first respondent is holding a mortgage decree in O.S. No.18 of 1972, with reference to which he has preferred his claim before the official Assignee which has been admited in a sum of Rs. 60,462.33. The applicant was fully aware of the nature of application filed, and he cannot plead that he is ignorant of the contents of the application. When he filed an application for discharge, he was fully aware of the circumstances under which the application had been filed. Having acquiesced in the proceedings, he cannot now turn round and plead that the order of adjudication was illegal. He had failed to file an appeal, therefore, that order of adjudication has become final. He cannot now challenge the same as one passed without jurisdiction. The claim that he has released his life interest in the property is untrue. No document of release was ever produced. The suit filed by his wife in O.S. No.5029 of 1976 in the City Civil Court, claiming title to the property was dismissed. His son had now filed O.S. No.4066 of 1980, for an injunction and claiming title to the property and all these go to show that the only aim of the applicant is to protract the proceedings and defeat the right of the first respondent to secure relief in insolvency Court. 4. In the reply affidavit, the applicant would state that even in the report submitted by the Official Assignee (second respondent herein), in Appln. 4. In the reply affidavit, the applicant would state that even in the report submitted by the Official Assignee (second respondent herein), in Appln. No.316 of 1979, he had stated that only one secured claim had been admitted in a sum of Rs. 60432.63, and it relates to the claim made by the first respondent herein. The first respondent had not filed any claim for any unsecured debt. Even in the report, it has been stated that the applicant may be discharged on the ground that the secured creditor can work out his remedy outside insolvency and since no unsecured creditor has filed a claim in the estate the insolvent may be granted discharge. When the insolvency petition had been filed without anywhere stating that he is an unsecured creditor, the present plea that he is also an unsecured creditor in respect of the rental amount is unacceptable. As for the present application, it is maintainable under Section 21 of the Act. 5. When the application came before this Court for hearing, at one stage, it was felt that the applicant may file an application for review in respect of the orders passed on 6-10-1975, and thereafter the review application filed, but it had been dismissed. 6. Mr. Gopalraj, counsel for the applicant, would first state that when the basic requirement contemplated under Section 12(2) of the Act is not existing merely because an order of adjudication had been passed, it would deprive the insolvent to seek for an order of annulment, when S.21(1) of the Act enables him to secure an order of annulment, if he is also to show that such an order ought not to have been passed. In this case, according to him, even if the insolvent had not raised the objections regarding the maintainability of the petition, during the earlier stages of the proceedings, when he filed application for annulment, the right to bring to the notice of the Court about the lack of jurisdiction to entertain the petition is in no manner taken away by any provisions under the Act and the aspect of jurisdiction can also be canvassed by the insolvent for securing an order of annulment under S.21 of the Act. He states that the applicant herein was not aware of the contents of the insolvency petition and that is only now he realises about the illegality committed by the first respondent in filing a petition without fulfilling the conditions contemplated under Section 12(2) of the Act. Therefore, he would contend that the aspect of jurisdiction is not totally lost to the insolvent-applicant herein, and that in an application filed for annulment it is well open to him to show that the insolvency petition itself was not properly instituted. 7. Counsel for the first respondent would plead that when the applicant had acquiesced in the proceedings during the past five years, he cannot any longer plead that the order of adjudication was passed without jurisdiction in that, the first respondent was only a secured creditor, who had not complied with the requirements of S.12(2) of the Act. He would also plead that first respondent is not only a secured creditor, but is also an unsecured creditor in respect of the rental amount, which the applicant was bound to pay, and which he had failed to pay on time as directed by this Court by order dated 18-4-1975 in Applns. Nos.1911 and 2311 of 1973, and hence, when execution was taken for realising the said amount, it only represents an unsecured debt and therefore, the petition was properly laid by an unsecured creditor. 8. It is not in dispute that first respondent is holding a mortgage decree in O.S. No.18 of 1972, and it is in respect of that mortgage transaction, there was the obligation on the part of the applicant herein to pay the monthly rent of Rupees 200 as ordered in Appln. No.1911 of 1973 and Appln No.3211 of 1973 by order dated 18-4-1975, and it was not complied with by the applicant herein. This claim of rent formed an integral part of mortgage transaction. A perusal of the petition discloses that first respondent had relied upon the act of insolvency under S.9(e) of the Act, in that, the order of attachment effected on 1-4-1975 had continued for more than 21 days. It was secured because of the default committed in payment of rents. In paragraph 12 he had reserved his right to proceed against the properties by enforcement of the mortgage decree passed already in his favour. 9. It was secured because of the default committed in payment of rents. In paragraph 12 he had reserved his right to proceed against the properties by enforcement of the mortgage decree passed already in his favour. 9. The contention that the applicant herein was not aware about the claim made by the first respondent in the said insolvency cannot be accepted. He was aware that the petition was filed by a secured creditor, He was also aware that the petitioning creditor had reserved his right in respect of the enforcement of the mortgage decree. He had participated in the proceedings right through, being fully aware of the claim made as against him. The very fact that he filed Appln. No.316 of 1979 for discharge speaks that he knew that the petition was filed by the first respondent who was a secured creditor. 10. Counsel for the first respondent contends that when with full knowledge of the applicant herein, an order of adjudication had been obtained, he cannot now turn round and plead to the contra, and himself being bound by the order of adjudication, he cannot question the right of the first respondent to maintain the petition. It is indisputable, as stated earlier, that the applicant was fully aware of the nature of proceedings taken by him. But would it prevent him from seeking for annulment of the proceedings by demonstrating to Court that the proceedings initiated was without jurisdiction at a time when the proceedings are pending in Court? 11. When proceedings already initiated are pending in court, it would not be proper to hold that the affected party cannot even bring to the notice of the Court about lack of jurisdiction in the institution of the proceedings mainly because he had not, at the earlier stages of the proceedings, raised any objection on the aspect of jurisdiction. 12. In so far as Presidency Towns Insolvency Act is concerned, under S.8(1) of the Act, the court may review, rescind or vary any order made by it under its insolvency jurisdiction. By claiming that the applicant had acquiesced in the proceedings and thereby disentitled himself to file the present application, can the first respondent insist that the insolvency proceedings be further continued, even though he had not complied with the requirements of S.12(2) of the Act? 13. By claiming that the applicant had acquiesced in the proceedings and thereby disentitled himself to file the present application, can the first respondent insist that the insolvency proceedings be further continued, even though he had not complied with the requirements of S.12(2) of the Act? 13. A Full Bench of this Court in Periakaruppan Chettiar v. Arunachala Chettiar ILR (1940) Mad 441 : ( AIR 1940 Mad 375 ), had taken the view that S.35 of the Provincial Insolvency Act empowers the court to annul the adjudication, if in the opinion of the court, a debtor ought not to have been adjudged insolvent. This section is identical to S.21 of the Presidency Towns Insolvency Act. It was held in the above said decision that this section contains no restriction on the power of the court to set aside the adjudication, where it is shown that the debtor ought not to have been adjudged insolvent, and the fact that a debtor does not object to an order of adjudication being passed against him is not a bar to the granting of an application for an order setting aside the adjudication under the provisions of Section 35 and that when an adjudication has taken place under the Provincial Insolvency Act, and it has been shown that no act of insolvency has been committed, the Court has no discretion in the matter and it must annul the adjudication, and that the word used is 'shall' and the section in this respect differs from S.21 of the Presidency Towns Insolvency Act where the word 'may' is used (S.21 as it stands now, uses the word 'shall'.) 14. Therefore, even though the applicant herein had been aware of what had been pleaded in the main petition and he had also filed an application for discharge, while filing applications for annulment, it is well open to him to demonstrate before Court that the order of adjudication itself was without jurisdiction. It is the bounden duty of the first respondent herein to satisfy the Court even now, that he could have filed the petition for adjudication. It is the bounden duty of the first respondent herein to satisfy the Court even now, that he could have filed the petition for adjudication. If it be shown that he had no right to institute the petition under S.21 of the Act, an order of annulment has to be necessarily granted, when one of the circumstances contemplated therein is for the debtor to show that "he ought not to have been adjudged insolvent." Hence on the first point about applicant having been fully aware of the first respondent being a secured creditor, and whether because of acquiescence, he cannot maintain the present application, it has to be held, following the Full Bench decision that, as and when it is shown to Court that the petition itself was filed without jurisdiction, an order of annulment is the only proper order that may be passed. 15. The second point taken to oppose the present application is that, there is no power in this Court, at this stage, to take into account the aspect of jurisdiction. It is stated that when the applicant has failed to prefer an appeal as against the order of adjudication, it has become final and binding upon him. Review petition filed by him in 1980 had been dismissed. Therefore it is pleaded that an order of annulment is not the proper relief that can be granted under the circumstances of this case. 16. As for the powers that can be exercised by this Court, as held by the Full Bench stated supra, the court has wide powers to grant relief and more so, when S.8 of the Presidency Towns Insolvency Act enables the court to review, rescind or vary an order made by it under its insolvency jurisdiction. Section 21(1) of the Act is to the effect that if the court is of the opinion that a debtor ought not to have been adjudged insolvent, then it shall, on an application by any person interested, pass an order of annulment to the adjudication. 17. Section 21(1) of the Act is to the effect that if the court is of the opinion that a debtor ought not to have been adjudged insolvent, then it shall, on an application by any person interested, pass an order of annulment to the adjudication. 17. In dealing with a case which arose under Provincial Insolvency Act in Kumarappa Chettiar v. Chidambaram Chettiar, (1938) 2 Mad LJ 385 : ( AIR 1938 Mad 898 ), it was held that what is required to be ascertained is whether the court acted without jurisdiction when it passed order of adjudication and if it is found that it has so acted, then there being 'no act of insolvency on which the adjudication order could be passed, the court had no jurisdiction to adjudicate' and therefore the relief can be granted. 18. The powers that can be exercised under Section 8 of the Act had been taken note of and in spite of absence of a similar provision under the Provincial Insolvency Act, it was held that in such cases, the necessary relief has to be granted by the same court. Hence in the instant case, when first respondent has filed the petition without fulfilling the conditions under Section 12(2) of the Act and is admittedly a secured creditor, the petition itself was filed without jurisdiction, and hence under Section 21 of the Act, the applicant herein is able to establish that an order of adjudication ought not to have been passed thus enabling him to secure an order of annulment. 19. The third point taken by the counsel for the first respondent is that, it is not correct to contend that the first respondent is only a secured creditor when the attachment was secured only on the ground of failure to pay the monthly rents covered by the mortgage transaction. It is indisputable that the first respondent is a secured creditor, who has also secured a decree on the basis of the mortgage executed in his favour. It is in respect of the mortgaged property and the mortgage transaction, there was liability on the part of the applicant herein to pay periodical rents and it is not open to the first respondent to contend that this claim can be segregated from the mortgage decree. It is in respect of the mortgaged property and the mortgage transaction, there was liability on the part of the applicant herein to pay periodical rents and it is not open to the first respondent to contend that this claim can be segregated from the mortgage decree. In fact, he had only made a claim in respect of the mortgage transaction and had not made any claim as an unsecured creditor. Such being the nature of claim made, merely because the present application is filed, he cannot at this distance of time claim that he is also an unsecured creditor. There being no other claim by any unsecured creditor, first respondent had filed a report on 23rd August, 1979 stating that discharge may be granted to the applicant herein since the secured creditor can work out his remedy outside insolvency and no unsecured creditor has filed any claim at the stage of insolvency. Therefore first respondent was only a secured creditor and he has not complied with the requirements of Section 12(2) of the Act. 20. In paragraph 14 of the petition, he had reserved his right to proceed on the basis of the mortgage decree already passed in his favour. When such is the clear stand taken by the first respondent, that he is only a secured creditor, the objection taken by the applicant herein that he is not an unsecured creditor and that the first respondent is only a secured creditor has to be upheld. 21. By referring to the decision in G. Gurusami Pilial v. Shri C.C. Co-op. Society Bank Ltd., AIR 1954 Trav Co 419, it was sought to be contended that in respect of rental portion, it would be an unsecured debt. But it was held therein that the term 'secured creditor' is to be understood as confined to his capacity 'qua' the secured debt and not comprehending his capacity as regards debts for which there is no security, whereas in the instant case, the collection of rental amount is not independent of the mortgage transaction which forms part of the secured debt. Therefore, it is only because of this nature of transaction existing between the parties, first respondent did not file any claim petition as an unsecured creditor. Hence the first respondent cannot now resile from his stand and claim that he is also an unsecured creditor. 22. Therefore, it is only because of this nature of transaction existing between the parties, first respondent did not file any claim petition as an unsecured creditor. Hence the first respondent cannot now resile from his stand and claim that he is also an unsecured creditor. 22. For all the reasons above stated the applicant has clearly established that first respondent is a secured creditor, who had not fulfilled the requirements of Section 12(2) of the Act before instituting I.P. No.46 of 1975 and therefore, it was a proceeding instituted without jurisdiction and hence the applicant herein ought not to have been adjudged as in insolvent, and therefore he would be entitled to an order of annulment under Section 21 of the Act. 23. In the result, the application is ordered as prayed for. No costs.