( 1 ) THIS order shall also govern disposal of misc. Appeal No. 354/1996 (Sushiladevi and Ors. v. M/s. Bapulal balkrishna and Others) and Misc. Appeal No. 366 /1996 (Sushiladevi and Ors. v. M/s. Prahladrai Prakashchandra and Ors.), as they arise out of common order passed by 1st additional District Judge, Neemuch, in Insolvency Cases Nos. 1/1980, 2/1980 and 3/1980, decided on 3-4-1996. Contesting parties appearing before us today, submitted that all the aforesaid three matters have been settled but looking to short but interesting question involved in these appeals, it is necessary to narrate factual matrix of the case. ( 2 ) A firm M/s. Shrikrishna Oil Mill and ginning Factory was carrying on its business from Neemuch having two partners in the same namely; Harnarayan and gopikishan. Both of them had share in the said partnership for profit and loss to the extent of fifty per cent each. It appears that said Firm ran into financial difficulties. It was not able to pay debts to its creditors. Three of such creditors filed application before aforesaid Court, u/s. 9 of Provincial insolvency Act, 1920 (for brevity shall be referred to herein as, "the Act") against the partnership Firm i. e. , Shri Krishna Oil Mills and Ginning Factory - respondent No. 3 herein; senior partner Shri Harnarayan respondent No. 4 herein; and, another partner shri Gopikishan for adjudicating them as insolvent. During the pendency of said petition filed by creditors and before their adjudication, one of the partners namely; gopikishan died. ( 3 ) ON his death, LRs of said Gopikishan i. e. present appellants - his widow and three sons - moved application purporting to be one filed "under Order 1, Rule 10 of CPC for being joined them as respondents in the said insolvency proceedings. Those applications were opposed by the partnership Firm as well as by creditors. ( 4 ) TRIAL court heard parties at length and rejected application of present appellants on 25-1-1996. Admittedly, against this order of rejection of appellants application for being impleaded as respondents in the original insolvency proceedings, no appeal or revision was preferred, as according to appellants, it was not maintainable. Thus, in any case, said order attained finality in so far as it relates to proceedings before trial court. ( 5 ) THEREAFTER, trial Court proceeded to decide Insolvency Application of creditors on merits.
Thus, in any case, said order attained finality in so far as it relates to proceedings before trial court. ( 5 ) THEREAFTER, trial Court proceeded to decide Insolvency Application of creditors on merits. All the three Insolvency Petitions were consolidated and by common order, which is being impugned in this and connected appeals, respondents Nos. 3 and 4 have been adjudicated as insolvent. On coming to know about said order being passed against respondent Nos. 3 and 4, present appellants, even though they were not parties to said litigation, have preferred this appeal u/s. 75 (2) of the Act treating themselves to be persons aggrieved. Notices of this appeal were directed to be issued to respondents. Respondents appeared and challenged maintainability of these appeals. primarily on the ground that admittedly appellants were not parties to litigation out of which impugned order has arisen, therefore, at their instance said appeal would not be maintainable. This question came to be considered by this Bench on 4-9-1998. After hearing arguments of parties, Court has already held that present appellants would be included in the words, "any such person aggrieved employed in Section 75 (2) of the act under which an appeal has to be preferred in the high Court by any such decision or order of a district Court, as is specified in Schedule 1. Needless to say that such an order would fall in Schedule I. Thus, an appeal would lie to High Court only against such an order. The Court has already held that the words, "any such person" are wide enough and would take into its ambit even those persons who were not parties to litigation but are likely to be adversely affected in the ultimate result of said litigation. Thus, this controversy of respondents that present appeal against impugned order would not be maintainable at the instance of appellants, has already been set at rest. ( 6 ) AS has been mentioned by us in preceding para that even though parties have informed the Court that they have settled the matter amongst themselves amicably, but looking to the question involved we thought it fit to set remaining controversy arising in this appeal, at rest.
( 6 ) AS has been mentioned by us in preceding para that even though parties have informed the Court that they have settled the matter amongst themselves amicably, but looking to the question involved we thought it fit to set remaining controversy arising in this appeal, at rest. ( 7 ) MOOT question that now remains to be considered is whether in insolvency proceedings after death of one of debtors, his legal representatives would be entitled to be joined as one of the respondents or not. Section 17 deals with regard to continuation of proceedings on death of debtor. Said Section reads as under : 17. Continuance of proceedings on death of debtor. If a debtor by or against whom an insolvency petition has been presented dies, the proceedings in the matter shall, unless the Court otherwise orders, be continued so far as may be necessary for the realisation and distribution of the property of the debtor. ( 8 ) A bare perusal of aforesaid Section makes it clear that on death of debtor, proceedings shall not be abated and shall neither come to an end and adjudication with regard to insolvency of a debtor shall be continued till it comes to a logical end. Obvious reason appears to be behind this Section is that proceedings relating to matter of realisation and distribution cannot be conducted unless there is person in whom the property is vested, which vesting will take place only on adjudication. Thus, in any case, proceedings would not stand abated even after death of debtor, the final order of adjudication has been passed. ( 9 ) IDENTICAL question came up for consideration before Calcutta high Court reported in AIR 1980 Cal 590 Ramesh chandra Sil v. Charu Chandra Mohuri, the division Bench considered two earlier judgments Madras High court and held that in an application filed u/s. 9 of the Act by a debtor or a creditor for adjudication, while he was alive can be continued and adjudication made even after his death. Their Lordships have also held that indeed it seems to us that when proceedings were to be continued and it was not necessary that they should be dropped, it is only right that they should go on in the presence of legal heirs.
Their Lordships have also held that indeed it seems to us that when proceedings were to be continued and it was not necessary that they should be dropped, it is only right that they should go on in the presence of legal heirs. They have further gone to hold that their presence was necessary for the continuance of proceedings for the purpose of realisation and distribution of property of debtor. ( 10 ) FULL Bench of Lahore also had occasion to consider this aspect of the matter reported in, AIR 1942 Lahore 211, Bhagat ram v. Firm Chanpat Mal Jawala Dass. The full Bench has held as under : with great respect, it is not correct to say, as has been assumed in some of the decisions of this Court, that the adjudication of a person as an insolvent is a matter purely personal to him. It affects not only his person but also his property which but for the adjudication would, on his death, have devolved on his heirs. They have a material interest in the proceedings which have a very far reaching effect on their rights. The right to resist the creditors application for adjudication is, therefore, not a mere personal right which lapses on the death of the insolvent, it is a right which survives. ( 11 ) THE ratio decidendi of aforesaid cases clearly indicate that on death of debtor who had been arrayed as one of the respondents in insolvency proceedings, his legal heirs would certainly have a right to be brought on record and to contest matter on merits. Thus, in our considered opinion, approach which has been adopted by trial Court does not appear to be proper, legal and reasonable. Needless to say, as valuable rights of legal heirs have been adjudicated upon in their absence and behind their back, that does not appear to be either mandate or the intention of the provisions of the Act. Apart from the above, we are of the considered opinion that parties should be given full right to contest the matter on merits. This is also the requirement of princlples of natural jus tice.
Apart from the above, we are of the considered opinion that parties should be given full right to contest the matter on merits. This is also the requirement of princlples of natural jus tice. ( 12 ) AS has been mentioned above, since this question has become only academic to this appeal as they have made a statement at bar that they have intention to settle the dispute provided present appellants are joined as respondents in the insolvency proceedings. Parties who have appeared before us through their Advocates have submitted that they shall meet out liability of each of creditors to the extent of fifty per cent each but would also share residue to same proportion. Be that as it may, the question is yet to be decided by the trial Court. ( 13 ) IN the light of the discussion mentioned hereinbefore, impugned order passed by trial Court cannot be sustained in law. Same is hereby set aside and quashed. Application filed by appellants under Or. 1 R. 10 of CPC for being joined as respondents in each of Insolvency Proceedings is hereby allowed. Necessary amendment shall be incorporated before trial Court in this regard. Parties shall thereafter enter into an amicable settlement as has been mentioned above. They agree that they would appear before trial Court on 6th April, 2004 and no fresh notices would be sent to either of parties. Trial Court shall thereafter decide the matter at an early date and preferably within a period of six months, if the parties submit an application with regard to an amicable settlement arrived at between them. ( 14 ) THUS, this and connected appeals stand finally disposed of. This order be retained in ma No. 289/1996 and a copy each be placed in the record of connected appeals. Office is directed- to send back records immediately. Parties to bear their own costs. Order accordingly .