Full satisfaction of petitioning creditor can justify annulment of insolvency adjudication despite pending unadjudicated claims.

In insolvency proceedings, adjudication may be annulled where the debtor ought not to have been adjudged insolvent or where the insolvent's debts are shown to have been paid in full. The text notes that once the petitioning creditor's decretal dues were deposited and accepted in full satisfaction, that creditor could not continue to press for insolvency adjudication. It also states that claims before the Official Assignee by other claimants, not yet reduced to decrees or orders for payment, could not by themselves sustain the proceedings after the petitioning creditor was satisfied. An undertaking-cum-indemnity was treated as adequate protection for later claimants.

---

---

Issues: Whether the orders adjudicating the judgment debtors insolvent were liable to be recalled and the adjudication annulled after the decretal dues of the petitioning creditor were deposited and the petitioning creditor agreed to accept the amount in full satisfaction; and whether the claims lodged before the Official Assignee by other claimants could prevent such annulment.

Analysis: The judgment proceeded on the footing that insolvency adjudication may be annulled where the debtor ought not to have been adjudged insolvent or where the debts of the insolvent are proved to have been paid in full. It was found that the petitioning creditor's claim had been settled by deposit of the decretal amount in court and that the creditor could not continue to press for an insolvency adjudication once its own debt stood satisfied. The Court further held that the other claimants before the Official Assignee were not in the position of the petitioning creditor, since their claims had not matured into decrees or orders for payment of money and therefore could not sustain the insolvency proceedings after full settlement of the petitioning creditor's dues. The undertaking-cum-indemnity arrangement by the well-wisher was treated as sufficient protection for future claimants who may subsequently obtain final decrees or orders.

Conclusion: The recall of the adjudication orders was justified and the insolvency adjudication was annulled, with the judgment debtors directed to pay costs and the Official Assignee discharged.

---