J.H. Gee vs Shib Naraian and Others

Macpherson, J.—This is an appeal from the order of the District Judge of Manbhum-Sambalpur dated 26th February 1927 rejecting an application u/s 10(2) by the appellant, a debtor in an insolvency proceeding in respect of whom an order of adjudication under Act 5 of 1920 had been annulled, for leave to present a fresh insolvency petition.

The appellant had been adjudicated insolvent on 6th June 1925 and the period specified u/s 27 was six months from that date. He applied for his discharge on 28th November 1925. On 6th February 1926 the Court considering that he had not paid in a sufficiently large sum to entitle him to get a discharge directed him to pay in future at the rate of Rs. 25 a month and added:

he is directed to renew his application for his discharge six months hence.

The Court also permitted him to make the monthly payments direct instead of as previously to the Chief Auditor of the Bengal and North Western Railway of which he is a servant. Apparently no payments, were made.

On 10th August 1926 the office of the Court reported that no new application had been made nor any payment in accordance with the order of 6th February was made and the Court, another officer, ordered:

The order of adjudication is annulled u/s 43.

There was a considerable sum of money about Rs. 572 in deposit and it was "unfortunate that the Court failed to pass an order u/s 37(1) vesting that money in some person on behalf of the creditors who hid proved their debts. The appellant then moved the Court u/s 10(2) alleging as his reasonable cause for failing to prosecute his application for his discharge that he misunderstood the meaning of the Court''s order of 6th February as to the exact period within which he was to make application for his discharge and that he was prevented by the illness of his children from making the application. The Court, a third District Judge considered that neither of these excuses was reasonable cause for the failure and rejected the application.

In appeal a preliminary objection is taken that no appeal lies u/s 75(2). We have, however, considered, the matter and have decided that in the circumstances of the case the leave of the Court to prefer an appeal ought to be granted u/s 75(3). As to the merits it is in my opinion clear that in the order of 6th February 1926 it was not the intention of the Judge to pass an order such as is referred to in Section 43(1) requiring the debtor to appear dh a date exactly six months after 6th February.

He was obviously acting u/s 42(1)(a) and refusing to grant an absolute order of discharge for at least six months more, because the insolvent''s assets did not equal eight annas in the rupee on the account of his unsecured liabilities. Accordingly the order of annulment was not warranted since it was left open to the appellant to apply further at any time he please beyond, the specified period of six months, though it was expected that he would in the interval pay in a sum of Rs. 25 a month.

But even if the order of annulment was not warranted, nevertheless no appeal was presented therefrom. It was, however, open to the debtor to proceed as if that order, in spite of the weakness of the ground on which it proceeded was valid and to make the application u/s 10(2) which he actually made to be permitted to file a new petition in insolvency. The question therefore before us is the same as it was before the learned District Judge. Now it is manifest that the order of 6th February is, to say the very least, obscure and there can be no question that the first ground advanced u/s 10(2) by the appellant is not unlikely to have much force, namely, that he was misled by the form of the order into considering that he was not bound to renew his application on the expiry of six months but might do so at any time after the expiry of that period.

Accordingly without going into the further question whether his failure to apply was not also brought about in some measure by his domestic calamities, I would hold on his affidavit that the ground which he set forth, namely, that he was misled by the order of 6th February 1927 is reasonable and should have induced the learned District Judge to grant his prayer for permission to file a fresh petition of insolvency.

I would therefore decree this appeal, grant the permission craved u/s 10(2) and direct that both before the District Judge and in this Court the parties do bear their own costs. It may be indicated that after the order under appeal was passed the debtor withdrew the sum of Rs. 572-1-0 from the insolvency Court. It will be open to the District Judge upon the debtor presenting to him a new application in insolvency to pass such order in respect of that sum as he deems proper in the circumstances of the case

Adami, J.

I agree.