Krishnan Nair vs Divakaran and Others

Kochu Thommen, J.—The revision Petitioner is the Petitioner in O.P. No. 16 of 1968 which arose under the Kerala Agriculturists'' Debt Relief Act, 1958 (Act 31 of 1958) (hereinafter referred to as ''the Act''). The Petitioner challenges the order of the trial court in I.A. No. 964 of 1976 in O.P. No. 16 of 1968 rejecting his application to amend the original petition to include in its ''B'' schedule a debt payable by him and to implead the creditor to whom he owes the debt.

The first Respondent who alone has entered appearance in the C.R.P. is one of the secured creditors. According to him the application for amendment is not maintainable as it will disturb the order of distribution already laid down by the court in O.P. No. 16 of 1968. Counsel for the revision Petitioner, however, contents that since the ''B'' schedule happens to be incomplete, the Petitioner has a right to seek an amendment of the same for the purpose of bringing in a provable debt which has been left out.

The application in the trial court was filed under Sections 15 and 18 of the Act. Section 15 relates to the right of a debtor to apply to the court for a settlement of his debts. Section 18 lays down the mode of settlement of the liability of the debtor by the court. Section 17 says that in the matter of determining the admissibility and the amount of each claim for the purpose of settlement, the procedure prescribed in the Insolvency Act, 1955, will mutatis mutandis apply. Section 35(2) of the Insolvency Act refers to what is a provable debt. It says:

Save as provided by Sub-section (1), all debts and liabilities, present or future, certain or contingent, to which the debtor is subject when he is adjudged an insolvent, or to which he may become subject before his discharge by reason of any obligation incurred before the date of such adjudication, shall be deemed to be debt provable under this Act.

If this provision were to apply, and it is not contended to the contrary, the debt which is sought to be included in the B schedule is undoubtedly a provable debt. Section 34 of the Insolvency Act allows a creditor to come forward at any time before the insolvent is discharged to tender proof of his debt and to apply to the court for an order directing his name to be entered in the schedule of creditors. Section 42 of the Insolvency Act allows the debtor to apply at any time after he is adjudged an insolvent to grant him a discharge. These provisions indicate that an amendment of the schedule of creditors is permissible under the Insolvency Act until such time as a debtor is discharged. What is a provable debt for the purpose of the Debt Relief Act is a matter for determination in accordance with the provisions of the Insolvency Act. If the debt in question is, as stated above, a provable debt such a debt can be included in the schedule by a necessary amendment.

It may, however, be noted that unlike the Insolvency Act, there is no provision for discharge of a debtor under the Debt Relief Act. Section 18 of the Act postulates the settlement of liabilities of the debtor. Under the section the debtor is entitled to one-fourth of the entire assets (not exceeding Rs. 6,500 in value) and only the remaining assets are available for settlement among the various creditors. Although the Act does not refer to a discharge of the debtor, it has to be presumed that once the entire assets are settled in the manner prescribed u/s 18 in respect of all the provable debts, the debtor shall be deemed to have discharged all his liabilities as on that date in respect of the provable debts.

The question here is not whether a creditor can come forward to include himself in the list of creditors, but whether a debtor has a right to include a provable debt which had not been included by him when he prepared the schedule of debts. If the Act, when read with the applicable provisions of the Insolvency Act, would allow a creditor to apply to the court to include his name in the list of creditors, I see no reason why the debtor himself should not seek an amendment of the schedule of debts for the purpose of including a provable debt, until the debts have been settled and the debtor is deemed to have been discharged of his liabilities as provided u/s 18.

In the present case, as I stated earlier, the only creditor who has entered appearance is the first Respondent who is a secured creditor. I am told by counsel for the Petitioner that the creditor whose credit is now sought to be included by the amendment is not a secured creditor. Whether or not that creditor is an unsecured creditor, I am not able to see how the first Respondent who is a secured creditor will be affected by the amendment of the ''B'' schedule. The first Respondent''s interests are well protected under the proviso to Section 18(b). The first Respondent is given the first priority among the secured, creditors even under the order dated 20th February 1970 in the O.P. That being the position, the first Respondent will not be aggrieved by the amendment which is now applied for by the revision Petitioner.

Counsel for the revision Petitioner submits that he has no objection to the first Respondent being allowed to take steps for the realisation of the amounts due to him in terms of the aforesaid order dated 20th February 1970. Subject to this, I see no objection in law to allowing an amendment of the ''B'' schedule as prayed for by the revision Petitioner. The impugned order is accordingly set aside and the application for amendment in I.A. 964 of 1976 is allowed.

The Civil Revision Petition is allowed in the above terms. The parties will bear their respective costs.