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1987 DIGILAW 335 (KER)

VASU v. POPULAR BANK

1987-07-23

RADHAKRISHNA MENON

body1987
Judgment :- 1. The application of the petitioner under S.7,10 and 13 of the Kerala Insolvency Act, for short, The Insolvency Act, for getting himself adjudicated as insolvent was dismissed by the Sub Court, Ernakulam. On appeal the Appellate Court confirmed the said order, and it is against that judgment of the Appellate Court, this revision is filed. 2. Facts essential to decide the issue, lie in a narrow compass. The petitioner on a previous occasion bad filed IP 3 of 1978 for adjudication as insolvent, under S.7,10 and 33 of the Insolvency Act. This petition was dismissed for default on 16-10-1980. The application to restore the petition was dismissed on 24-2-1983. The petitioner challenged that order in appeal. The Appellate Court confirmed the order. The petitioner thereafter filed the present application under S.7,10 and 13 of the Insolvency Act from which this revision arises. 3. The facts disclosed from the files of the case do show that the petitioner filed both the applications for getting himself adjudged as insolvent, with a view to set at naught the order of arrest issued by the execution court where the first respondent bad initiated proceedings to execute the decree in OS 33/74. Both the petitions, i.e., IP 3 of 1978 as also the present application from which this revision arises, were presented under S.10(1)(b) of the Insolvency Act. 4. The courts below, after considering the various aspects of the case, have held that the dismissal of IP 3 of 1978 under R.8 of 0.9 precludes the petitioner from bringing the present petition. 5. The question thus arising for consideration is, whether the order dismissing the petition under S.10(1)(b) of the Insolvency Act for default under R.8 of 0.9 CPC. will preclude the 1st respondent debtor from maintaining a fresh petition under the same provisions for setting himself adjudged as insolvent? The answer to the question depends upon the construction of the provisions contained in 0.9 R.8 and 9 read with S.5 and 10(1) of the Insolvency Act. S.10(1) of the Insolvency Act reads: "10. will preclude the 1st respondent debtor from maintaining a fresh petition under the same provisions for setting himself adjudged as insolvent? The answer to the question depends upon the construction of the provisions contained in 0.9 R.8 and 9 read with S.5 and 10(1) of the Insolvency Act. S.10(1) of the Insolvency Act reads: "10. Conditions on which debtor may petition: (1) A debtor shall not be entitled to present an insolvency petition, unless he is unable to pay his debts; and (a) his debts amount to five hundred rupees; or (b) he is under arrest or imprisonment in execution of the decree of any Court for the payment of money; or (c) an order of attachment in execution of such a decree has been made, and is subsisting, against his property." This Section provides the conditions on which a debtor may prefer a petition forgetting himself adjudicated as insolvent. He shall accordingly furnish prima facie proof of his inability to pay the debt and shall also satisfy one of the three conditions stipulated namely, (1) his debts amount to five hundred rupees; or (2) he is under arrest or imprisonment in execution of the decree of any court for the payment of money; or (3) an order of attachment in execution of such a decree has been made and is subsisting against his property. These conditions provide "the media upon which the petitioner asks the court to arrive at a conclusion in his favour." Each one of these conditions therefore constitutes a distinct cause of action for the maintenance of the petition. It should in this connection be remembered that a cause of action has "no relation whatsoever to the defence the respondent may set up nor also it depend upon the character of relief prayed for" in the petition (vide M. L. Chand Kaur v. Pratap Singh 16 Cal. 98 PC and MD Chill Khan v. Mahbub Ali Mican AIR 1949 PC 78). The use of the word 'and' in the first part of the sub-section read with the word 'or' put after each sub-clause shows legislature wanted those conditions to be read as disjunctive and not conjunctive and therefore any one of these three conditions would constitute an independent cause of action for a debtor to maintain a petition. The use of the word 'and' in the first part of the sub-section read with the word 'or' put after each sub-clause shows legislature wanted those conditions to be read as disjunctive and not conjunctive and therefore any one of these three conditions would constitute an independent cause of action for a debtor to maintain a petition. The question therefore arises when a debtor applies for adjudication as insolvent stating any one of these conditions and if the said petition is dismissed for default, can the debtor maintain another petition on the same condition? This point requires to be considered in the light of the provisions contained in R.8 and 9 of 0.9 CPC. That, R.8 is applicable to the proceedings initiated under the Insolvency Act no more is a moot question in view of the decision of this Court in Thankappan v. Muhammedkutty (1969 KLR 104). The order dismissing TP 3 of 1978 therefore has rightly been treated by the petitioner as an order which falls under R.8 of 0.9 CPC. The petitioner therefore naturally moved the court under R.9 0.9 read with S.151 for an order to set the dismissal aside. That application however, was dismissed. The Appellate Court confirmed the said order. The petitioner thereafter has filed the present application. 6. The learned counsel for the petitioner submits that the order dismissing I. P. 3/78 for default will not preclude the petitioner from filing a fresh petition under S.10(1) of the Insolvency Act, notwithstanding the provisions contained in 0.9 R.9 CPC. In support of this contention he relied on a decision of the Madras High Court in Yerra Venkatagari Rangappa v. Maddipatla Konappa and others (AIR 1927 Madras 579). He made particular reference to the following passage in that judgment: - "The appellant's vakil relies on 0.9 R.9 of the Civil Procedure Code, and contends that the present petition does not lie. The case be cites, Venugopalachariar v. Chimanlal Sowcar (AIR 1926 Mad. 942: 49 Mad. 935), relates to an order of annulment and cannot apply to a second petition for being declared insolvent. We agree with Ram Pershad Bhagat v. Mahadeb Lal (1920) 2 Pat. LT 335: 61 IC 870) where it was held that such a petition lies. The case be cites, Venugopalachariar v. Chimanlal Sowcar (AIR 1926 Mad. 942: 49 Mad. 935), relates to an order of annulment and cannot apply to a second petition for being declared insolvent. We agree with Ram Pershad Bhagat v. Mahadeb Lal (1920) 2 Pat. LT 335: 61 IC 870) where it was held that such a petition lies. S.10(2) implies that, apart from annulment, a second petition lies." This decision of the Madras High Court relates to the interpretation of subsection 2 of S.10 of the Provincial Insolvency Act, 1920 (corresponding to sub-section 2 of S.10 The Kerala Insolvency Act) and hence the same has no application here. It is profitable to note here that S.10(2) implies that an insolvency petition is possible even if the order of adjudication was annulled. This sub-section thus contains a specific provision which runs counter to the provision contained in 0.9 R.9 CPC. Whatever that be the scope of 0.9 R.9 with reference to sub-section 1 of S.10 did not arise for consideration in this decision of the Madras High Court. The question therefore has to be decided on principles. 7. The provisions of 0.9 R.8 and 9 therefore require to be considered. On a plain reading of R.8 and 9 of 0.9 CPC, it is clear that they constitute a code. These provisions are the two sides of a coin and therefore they are inseparable. One cannot exist without the other. That is the intention of the Legislature is clear from the wordings of R.9. R.9 starts off with the words "where a suit is wholly or partly dismissed under R.8, the plaintiff shall be precluded from bringing a fresh suit in respect of the same cause of action". That does not mean that the dismissal of the suit under R.8 was intended to operate in favour of the defendant as res judicata. The order of dismissal when understood in the light of the provisions in R.9, imposes a certain disability upon the plaintiff whose suit has been dismissed. It therefore follows that if the cause of action f or the second suit is the same as the cause of action for the suit which was dismissed for default under R.8, then the party is precluded from bringing a fresh suit in respect of the same cause of action. It therefore follows that if the cause of action f or the second suit is the same as the cause of action for the suit which was dismissed for default under R.8, then the party is precluded from bringing a fresh suit in respect of the same cause of action. As already noted the provisions of the CPC govern the proceedings initiated under the Insolvency Act unless there exists any express provisions in the Insolvency Act to the contrary. (Vide S. S Insolvency Act). The petitioner has no case, that the Insolvency Act contains provisions prescribing the procedure regulating the proceeding that could be initiated under S.10(1) of Insolvency Act. The facts of the case do show that the cause of action for the second petition is the same as the cause of action for the first petition. Both IP 3/78 as also the present petition are filed under S.10(1) (b) of the Insolvency Act. Though repetition I should say, that the cause of action for both the petitions is the same. 8. The petitioner therefore is precluded from filing a fresh petition under S.10(1)(b). 9. From the discussion above it is clear that the courts below have rightly held that 0.9 R.9 applies to the facts of the case and therefore the petition is not maintainable. The CPC. is dismissed. No order as to costs.