1. This is an appeal preferred by the appellant-petitioner against the orders of the learned Third Additional District Judge, Bangalore, on I. As. Nos. III, IV, V and VIII in Insolvency Case No, 11 of- 1932-33 dismissing I. A. No. III and allowing the other three applications.
2. The petitioner in Ins. 11/32-33 was one Putta Narasimhanna, He died on 22-10-36 and his wife the present appellant, was brought as his legal representative to continue the insolvency proceedings at her own request. She filed I. A. No. III in the Court of the District Judge, Bangalore,praying that the order of adjudication passed in favour of her deceased husband might be annulled. She urged various grounds in this behalf, but the then learned District Judge dismissed that petition on 14-11-1949. This order was taken in appeal in R. A. 67/50-51 on the file of this Court, and the appeal was dismissed on 11-1-52.
Though I. A. No. III was thus disposed of finally, the petitioner reagitated the matter before the Third Additional District Judge and he also rejected the application as not maintainable. A portion of this appeal relates to that order.
3. We are of opinion that the appeal, so far as the order on I. A. No. III is concerned, is not maintainable inasmuch as I. A. No. in was finally disposed of by this Court on 11-1-1952 in R A. 67/50-51. In view of that order, it was not open to the petitioner to re-agitate the matter before the lower Court.
No fresh order on I. A. No. III was necessary and the order of the learned District Judge that the application was not maintainable and that therefore, it was rejected, may be taken merely as a repetition of the previous order of the then learned District Judge which culminated in the order in R. A. 67/50-51. Under these circumstances, we hold that the appeal, so far as the order on I. A. No. III is concerned, is not competent and that the same is liable to be dismissed.
4. I. As. Nos. IV and V are two applications filed by respondent 1 Chikkavankatappa. He claims to be the assignee for consideration of a portion of the decree passed in O. S. 57/30-31 on the file of the learned Subordinate Judge, Bangalore, under Ex. I, the assignment deed, from A. Gopalakrishnappa, one of the joint decree-holders in that suit. I. A. No. IV is filed by him praying that he may be brought on record as assignee of the decree and that the assignment in his favour may be recognized. He has filed I. A. No. V praying that he may be permitted to prove his debt referred to in the affidavit filed along with it.
5. I. A. No. VIII is filed by respondent 2, Shampur Papanna, who claims to be the assignee of another portion of the decree passed in O. S. 67 of 1930-31 under Ex. II from A. Krishna Rao, one of' the joint decree-holders in that case. He prays that his assignment may be recognized and that he be allowed to prove his debt.
The petitioner opposed these applications on various grounds and her objections were ultimately overruled by the learned Judge who held that the assignments in favour of respondents 1 and 2 under Exs. I and II respectively were true and valid and that they were entitled to prove their debts. He accordingly allowed I, As. Nos. IV, V and VIII and dismissed I. A. No. III. As stated already, the present appeal is directed against those orders.
6. We have held that the appeal in so far it relates to the order on I. A. No. III is concerned is not competent. The other point that remains for consideration is whether there are sufficient reasons to interfere with the orders passed by the learned Judge on I. As. Nos. IV, V and VIII. We are of opinion that the said orders are correct and have to be upheld. The learned District Judge has found that the assignments in favour of respondents 1 and 2 are true and supported by consideration. We find no grounds to differ from those findings.
Gopalakrishnappa's interest in the decree in O. S. 57 of 1930-31 on the file of the learned Subordinate Judge, Bangalore, has been assigned in favour of respondent 1 Chikkavenkatappa underEx. I for a consideration of Rs. 6,000/- of which Rs. 3,650/- has been paid in cash before the Sub-. Registrar and the balance was paid to Devanga Bank towards the debt of Gopalakrishnappa. P. W. 1 is the assignee Chikkavenkatappa and P. W. 3, the attestor of Ex. I the assignment deed. They have sworn to the genuineness of Ex. I and to the fact of consideration having passed under it.
7. AS regards the assignment of the decreein favour of respondent 2; there is satisfactoryevidence in support of the genuineness of thetransaction. P. W. 2 is the assignee; P. W. 1 isrespondent 1 and P. W. 4 is the assignor. Thesewitnesses have sworn to the genuineness of theassignment under Ex. II and to the passing ofconsideration.
No reason is assigned or even suggested as to why the evidence of these witnesses should be rejected. The said evidence has been accepted by the learned District Judge who had the advantage of observing the demeanour of the witnesses, and we find no grounds to differ from him with respect to the credibility of these witnesses. We agree with his finding that the assignments are true and that the same are supported by consideration.
8. The more important point that arises for consideration is whether respondents 1 and 2 can be allowed to prove their debts. The lower Court has held that they are entitled, which finding, we think, is correct.
The contention urged on the side of the petitioner is that the order of adjudication was passed on 24-7-33, that one year's time was granted by the Court to the creditors to prove their debts, that that period expired on 24-7-34, that the insolvent died long subsequent to that i.e. on 22-11-36, that his death brought about an automatic discharge of the insolvent and that the respondents cannot be allowed to prove their debts at this late stage. We think that this contention urged by the petitioner has rightly been negatived by the learned District Judge.
9. It is true that the respondents or their predecessors-in-interest did not prove their debts within the time allowed by Court. That circumstance cannot be taken to be such a serious omission on the part of the respondents as to deprive them of the opportunity of proving their debts.
Fixing of some time for proof of debts at the time of passing an order of adjudication is only j for the convenience of parties. As found in the case reported in - 'Nazar Khan v. J. S. Barrclough' : AIR1936Cal807 , delay in applying for proof of debts is not per se fatal to acceding to the prayer for the inclusion of debt in the schedule.
10. It has also to be remembered that no period of limitation is prescribed in the Insolvency Act. during which a creditor should apply for proof of his debt. But this right of creditor to prove his debt is subject to the condition that he (creditor) should apply for proof of debts before the insolvent is granted an unconditional order of discharge and his assets are realised and distributed and the surplus, if any, is paid to the insolvent Vide 54 Mys HCR 261 (B).
Again as can be seen from the provisions of Sections 33(3), 41 and 42, Insolvency Act, the granting of an unconditional order of discharge is dependent on the realisation and distribution of the property of the Insolvent when only the termination of the insolvency proceedings can be said to have taken place. Therefore the proof of debts must take place before an order of discharge is passed.
Hence it may safely be held that the granting of an unconditional order of discharge is the last act in bringing about a final termination of the insolvency proceedings. In this case, as found by the Court below, and, as a matter of fact, the insolvency proceedings are not yet terminated because the realisation of the assets of the insolvent and the distribution of the same among his creditors are not yet complete.
11. The other contention urged by the learned counsel for the petitioner is that the death of the insolvent brought about his automatic discharge and that, therefore, no debts can be proved after that event by virtue of the provisions of Sub-section (3) of Section 33, Insolvency Act.
No doubt, this sub-section provides that a creditor could prove his debt before an order of discharge is passed. It has to be remembered in this connection that the order of discharge contemplated under Section 33(3) is one made on the application of the debtor. It does not contemplate a case where the insolvent dies without filing an application for discharge.
12. Now the question, that arises for consideration is whether the death of the insolvent brings about an automatic discharge of the insolvent as contended by the learned counsel for the petitioner. His contention is that as soon as an insolvent dies, he must be deemed to have been discharged and the insolvency proceedings terminated.
In support of his contention, reliance is placed on a solitary decision of the Lahore High Court reported in -- 'Asa Nand v. Bishan Singh'. 147 Ind Cas 695: (AIR 1933 Lah 997) (C). His Lordship there has held that ordinarily the proceedings will not terminate until there is a discharge of the insolvent and that the matter is otherwise when the insolvent is dead in which case there will be an automatic discharge of the insolvent.
But this decision does not seem to support the view' of the learned counsel that death of an insolvent brings about his immediate discharge. The learned counsel for the petitioner very much harped on the words 'automatic discharge' appearing in the Lahore decision. ' If, as contended by the learned counsel, a discharge of the insolvent takes place immediately after the death of the insolvent irrespective of the other conditions, we think the position resulting Will be an anomalous one giving rise to unnecessary complications. Suppose an insolvent dies immediately after an order of adjudication is made and even before the expiry of the time granted to the creditors to prove their debts. Does it in such a case mean that the insolvency proceedings are terminated and that the creditors cannot prove their debts?
The words 'automatic discharge' do not, in our opinion, mean 'immediate discharge'. Those words can only mean a discharge brought about without any direct or immediate stimulus from without. This must be the meaning in which the words 'automatic discharge' are used in the Lahore decision.
13. As pointed out already, it is only after the assets of the insolvent are realised and distributed that a debtor can be granted an unconditional order of discharge and the insolvency proceedings can be said to be terminated. In the Lahore case relied on by the learned counsel for the petitioner, the insolvent's properties had already been distributed prior to his death, and that was evidently the reason why the learned Judge said that there was an automatic discharge of theInsolvent and the proceedings had terminated as there was nothing more to be done.
We are sure the decision of the learned Judge would have been otherwise if the property of the insolvent had not till then, been distributed. We may also point out, in this connection, that even the learned Judge who decided the Lahore case was not himself sure of the correctness of the decision he was giving as can be gathered from his concluding words viz.-
'The point is' not free from difficulty and Itherefore dismiss the appeal but make no ordersas to costs.'
We are of opinion that death of an insolvent is no bar to the Court suo motu granting an order of discharge to a deceased insolvent when the other conditions required under the Act, i. e., the realisation of his assets and the distribution of the same among his creditors are completed and when there is nothing else to be done.
It is clear from a reading of Section 17 that the Court is competent to adjudge a person as an ill-solvent even after his death and continue the proceedings. It is so held in the case reported to - 'Venkatramama Ayyar v. Official Receiver Tinnevelly' : AIR1928Mad476 & -- 'Ramathai Anni v. Kanniapaa Muda-liar', ILR 51 Mad 495: (AIR 1928 Mad 480) (E). In the first case, it is further held that the words 'proceedings in the matter' under Section 17, Insolvency Act include subsequent steps in connection with the petition of which the earliest will be 'the adjudication of the insolvent without which nothing can be done.
When the order of adjudication can be passed in favour of a deceased petitioner, we do not see any reason to doubt the jurisdiction of the Court to grant an unconditional order of discharge in favour of a deceased insolvent when the proceedings otherwise terminate. Even otherwise, an automatic discharge may be taken as having occurred when the insolvency proceedings finally terminated. Under these circumstances, we see no reasons to interfere with the order of the lower Court.
14. In the result, the orders of the learnedDistrict Judge on I. As Nos. IV. V & VIII arc confirmed and this appeal stands dismissed with costs.Advocate's fee Rs. 50/-.
15. Appeal dismissed.