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Judgment
Pandrang Row, J.—The petitioner is one of the creditors in the insolvency of one Chunduri Sambayya (I.P. No. 77 of 1931 on the file of the
Subordinate Judge''s Court, Tenali). He applied on the 9th July, 1937, u/s 25 of the Madras Debt Conciliation Act, 1936, praying that all further
proceedings in the insolvency may be stayed pending disposal of his application to the Debt Conciliation Board. The application was dismissed by
the Sub-Judge on the ground that the application of the petitioner to the Conciliation Board was itself prohibited by Section 28(2) of the Provincial
Insolvency Act and therefore his application for stay of the insolvency proceedings was incompetent. It is argued that this view of the Subordinate
Judge is not according to law but I am not satisfied that the objections to that view are well founded.
Section 25 of the Debt Conciliation Act says:
When an application has been made to a Board u/s 4, any suit or other proceedings then pending before a Civil Court in respect of any debt for
the settlement of which application has been made shall not be proceeded with until the Board has dismissed the application.
It may be mentioned in this connection that the application made by the petitioner to the Board has since been dismissed, and that the petitioner
has filed an application for the restoration of his previous application which is still pending. I am of opinion that the application contemplated in
Section 25 is an application which is not prohibited by law or in contravention of any statutory provision. In this case there can be no doubt that the
application was in contravention of Section 28(2) of the Provincial insolvency Act which declares that no creditor to whom an insolvent is indebted
in respect of any debt provable under the Act shall during the pendency of the insolvency proceedings have any remedy against the property of the
insolvent in respect of the debt, or commence any suit or other legal proceeding, except with the leave of the Court and on such terms as the Court
may impose. It is admitted that the leave of the Insolvency Court was not obtained for making the application to the Debt Conciliation Board. It
must therefore be held that the application to the Debt Conciliation Board was one made in contravention of a statutory provision and it is
impossible to accept the view that an application which is in direct contravention of a statutory provision gives a right to the very person who made
such an application without the leave of the Insolvency Court to approach the Insolvency Court and demand that the insolvency proceedings
should be stayed by reason of such an application. The legislature must be deemed to have meant only an application not'' otherwise contrary to
law in Section 25 of the Debt Conciliation Act. I do not think it can be said that the application to a Board is not a legal proceeding. The scheme of
the Act shows that it is a legal proceeding or at least the initiation of a legal proceeding. Applications u/s 25 of the Debt Conciliation Act come
within the mischief provided against in Section 28(2) of the Provincial Insolvency Act. The object of the provision in Section 28(2) of the Provincial
Insolvency Act is that once a person has been adjudged insolvent and his property is vested in the Official Receiver all claims of creditors in
respect of debts provable under the Insolvency Act should be decided by the Insolvency Court itself except in exceptional cases where for special
reasons the Insolvency Court gives leave to carry on legal proceedings elsewhere in respect of such debts.
I am of opinion in these circumstances that the order sought to be revised is not open to any legal objection. The petition therefore fails and is
dismissed with costs.