1959 (8) TMI 57 - HC - Indian Laws

Court affirms lower court, allows claim in schedule of debts without insolvency court leave. Decree valid for insolvency.

The court dismissed the appeal, affirming the lower court's decision allowing the claim to be admitted in the schedule of debts. It held that the second ... - Issues Involved:1. Validity of the decree passed in the second appeal without the leave of the insolvency court.2. Whether the second appeal was a continuation of the original suit or a new proceeding.3. The necessity of including the Receiver as a party in the appeal.4. The applicability of Section 28(2) of the Provincial Insolvency Act to the second appeal.Detailed Analysis:1. Validity of the Decree Passed in the Second Appeal Without the Leave of the Insolvency Court:The appellants contended that the decree passed by the Patna High Court in the second appeal was void because it was filed without the leave of the insolvency court, as required under Section 28(2) of the Provincial Insolvency Act. The court below overruled this objection, stating that the second appeal was merely a continuation of the original money suit and not a new proceeding. Therefore, no leave of the insolvency court was necessary. The court further held that the decree was valid and the decretal debt could be proved in insolvency.2. Whether the Second Appeal Was a Continuation of the Original Suit or a New Proceeding:The court analyzed whether the filing of the second appeal constituted the commencement of a new proceeding or was merely a continuation of the original suit. The court referred to various authorities and concluded that an appeal is a continuation of the suit and not the commencement of a new proceeding. The court cited the Full Bench decision of the Madras High Court in Chappan v. Moidin Kutti and other relevant cases to support this view. Therefore, the second appeal filed by Kaluram was a continuation of the original suit, which had been initiated before the insolvency proceedings.3. The Necessity of Including the Receiver as a Party in the Appeal:The appellants argued that the decree was void because the Receiver, appointed in the insolvency proceeding, had not been made a party to the appeal before the Patna High Court. The court below rejected this contention, stating that the money suit was not in respect of any property and that the judgment-debt on the basis of the trial court's judgment was already included in the petition for insolvency. The court held that it was not necessary to make the Receiver a party to the appeal, as the appeal was a continuation of the suit, which had been filed before the adjudication of insolvency.4. The Applicability of Section 28(2) of the Provincial Insolvency Act to the Second Appeal:The court examined whether Section 28(2) of the Provincial Insolvency Act, which prohibits the commencement of any suit or other legal proceeding without the leave of the court, applied to the second appeal. The court concluded that Section 28(2) is controlled by the earlier part of the section and applies only to suits or legal proceedings against the property of the insolvent. Since the second appeal was a personal action against the insolvent for a money claim and not against the insolvent's property, Section 28(2) did not apply. Therefore, the appeal could proceed without the leave of the insolvency court.Conclusion:The court dismissed the appeal and affirmed the order of the lower court, which had allowed Kaluram's claim to be admitted in the schedule of debts. The court held that the second appeal was a continuation of the original suit and did not require the leave of the insolvency court or the inclusion of the Receiver as a party. The decree passed in the second appeal was valid, and the decretal debt could be proved in insolvency. The court also noted that the Receiver may not have been well-advised in joining the appeal and suggested that the learned District Judge look into the Receiver's conduct.