Madras Dock Labour Board, Represented By Its Secretary v. P. Thandavakrishna Naidu
1986-02-10
K.M.NATARAJAN
body1986
DigiLaw.ai
JUDGMENT K.M. Natarajan, J. 1. This application is filed by third-party-creditors of the insolvent under Section 17 of the Presidency Towns Insolvency Act, for grant of leave to them to prosecute the suit C.S. No. 379 of 1978 on the file of this Court against the insolvent, who is arrayed as the 1st respondent. 2. It is averred in the affidavit filed in support of the application that the 1st applicant is Madras Dock Labour Board and the 2nd applicant is the Administrative Body, constituted by the Government of India under the Madras Dock Workers (Regulation and Employment) Scheme, 1956. They filed the suit O.S. No. 379 of 1978 on the file of this Court against Messrs. P. Devarajulu Naidu and Sons and three of its partners, namely, the insolvent P. Thandavakrishna Naidu and two others for recovery of Rs. 1,99,789.95. While the suit was pending, the first respondent was adjudicated insolvent in I.P. No. 34 of 1981 on 22.4.1981 by this Court. The applicants also filed a claim before the Official Assignee, the second respondent herein, in Claim No. 8 of 1983 and the claim is pending before the second respondent. It is further averred that since the suit is ripe for trial, they have to proceed against all the defendants, including the insolvent, who are jointly and severally liable for the amount in the said suit and hence they seek for leave to prosecute the suit against the insolvent. 3. The said application was resisted by the insolvent as well as the Official Assignee. The first respondent filed a counter-affidavit and the second respondent filed a report. 4. In the counter-affidavit filed by the insolvent, it is alleged that no leave is necessary for the continuance of the suit in view of the provisions of Section 17 of the Presidency Towns Insolvency Act, that the claim of the applicants is one provable in insolvency, that the suit is already pending prior to the adjudication and that proof has also been tendered before the 2nd respondent and it is pending. According to the insolvent, it was only for the commencement of the suit subsequent to adjudication, leave of the insolvency court is contemplated and necessary.
According to the insolvent, it was only for the commencement of the suit subsequent to adjudication, leave of the insolvency court is contemplated and necessary. There is no legal impediment for the applicants prosecuting the suit and when a decree is obtained, the claim can be made based on the decree and orders have got to be passed by the Official Assignee in the said claim. 5. The Official Assignee who is the 2nd respondent has stated in his report that the insolvent disclosed the first applicant, namely, Madras Dock Labour Board as a creditor in a sum of Rs. 2,48,274.17 that a claim was also filed by the said Board with him on 7.1.1983 for a sum of Rs. 1,99,789.95 and that it is pending. He has also stated that with reference to the suit pending against the insolvent for recovery of the amount due, no leave is necessary for the continuation of the suit under Section 17 of the Presidency Towns Insolvency Act. 6. The only point that arises for consideration in this application is, whether leave is necessary for prosecuting the pending suit against the insolvent for recovery of the money due from him which is provable in insolvency. 7. In the instant case, admittedly the suit was filed in 1978 in C.S. No. 379 of 1978, before this Court for recovery of the money due to the applicants against the insolvent and others and it is only subsequently, he was adjudicated insolvent on his own petition on 23.4.1981. The applicants have also made a claim before the Official Assignee, after adjudication, for recovery of the said sum and the same is pending. According to the learned Counsel for the applicants, by way of caution the applicants have preferred this application for granting leave and that they would abide by the orders of the Court. 8. Section 17 of the Presidency Towns Insolvency Act reads as follows: 17.
According to the learned Counsel for the applicants, by way of caution the applicants have preferred this application for granting leave and that they would abide by the orders of the Court. 8. Section 17 of the Presidency Towns Insolvency Act reads as follows: 17. Effect of order of adjudication:-On the making of an order of adjudication, the property of the insolvent wherever situate shall vest in the Official Assignee and shall become divisible among his creditors, and thereafter, except as directed by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable in insolvency shall, during the pendency of the insolvency proceedings, have any remedy against the property of the insolvent in respect of the debt or shall commence any suit or other legal proceedings except with the leave of the Court and on such terms as the Court may impose: Provided that this section shall not affect the power of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been passed. On a careful reading of the above provision, it is clear that this Section 17 of the Presidency Towns Insolvency Act has no reference to suits or other proceedings actually pending against the debtor at the date of the order of adjudication. Hence, no leave is necessary to continue the suit commenced before the order of adjudication. Learned Counsel for the appli-cants drew my attention to the commentaries in the text books, of Mulla on the Law of Insolvency In India (Third Edition), wherein the same view was affirmed in para 242 at page 191. The other decisions of the Lahore and Allahabad High Courts referred to therein are in respect of mortgage suits where a personal decree is sought for against the insolvent in pending suit. The decisions of this Court reported in Chidambaram v. Sellakumara (1941) 2 M.L.J. 684 : 54 L.W. 495 : I.L.R. (1942) Mad. 1 : A.I.R. 1941 Mad.903 (F.B.) and Jiana Mohamet sherief Maracair v. Official Assignee, Madras (1945) 2 M.L.J. 318 : I.L.R. (1948) Mad. 436 : 58 L.W. 462 : A.I.R.1946 Mad.
The decisions of this Court reported in Chidambaram v. Sellakumara (1941) 2 M.L.J. 684 : 54 L.W. 495 : I.L.R. (1942) Mad. 1 : A.I.R. 1941 Mad.903 (F.B.) and Jiana Mohamet sherief Maracair v. Official Assignee, Madras (1945) 2 M.L.J. 318 : I.L.R. (1948) Mad. 436 : 58 L.W. 462 : A.I.R.1946 Mad. 25 are in respect of suit by creditor under Section 53 of the Transfer of Property Act to set aside alienation made by the debtor before adjudication, in which it was held that such a suit is not in respect of the property of the insolvent and as such, no leave is necessary. As rightly contended by the learned Counsel for the insolvent, only for the commencement of suit subsequent to adjudication with reference to the claim provable in insolvency, leave is contemplated and necessary under Section 17 of the Act. In the instant case, admittedly the suit was pending prior to the adjudication and the applicant also has preferred a claim so far as the insolvent is concerned before the Official Assignee, the second respondent herein. 9. Even though the applicants have not sought for leave to implead the Official Assignee, the second respondent, as a necessary party in the suit, yet, in view of the contention raised in the report filed by the Official Assignee, it has become necessary to observe that since this suit in C.S. No. 379 of 1978 is one for recovery of money against the defendant, who has been subsequently adjudicated as insolvent, it cannot be said to relate to the property of the insolvent and in such a suit, the Official Assignee is neither a proper nor a necessary party in view of Section 68 of the Presidency Towns Insolvency Act, There is no legal impediment for the applicants from prosecuting the suit and in case any decree is passed It is open to them to make a claim basing on the said decree before the Official Assignee so far as the insolvent is concerned. For all these reasons, these applicants are not entitled to the relief prayed for in the application. In the result, the application fails and is dismissed. There will be no order as to costs.