Guntur Akkayya vs Pathuri Appayya

Alfred Henry Lionel Leach, C.J.—This is an appeal from a judgment of Happell, J., under Clause 15 of the Letters Patent. The question

involved is one of construction of Section 78(2) of the Provincial Insolvency Act, 1920.

On the 25th February, 1933, the appellant obtained a decree against the respondent for the payment of Rs. 1,148-6-8 and costs. During the

pendency of the suit the respondent applied to the Court of the Subordinate Judge of Bapatla for his adjudication in insolvency and on the 4th July,

1933, an order of adjudication was passed. The respondent was given one year in which to apply for his discharge. He did not make the

application and on the 11th November, 1934, a creditor applied for the annulment of the order of adjudication u/s 43 of the Act. On the 21st

November, 1934, the Court annulled the order of adjudication and u/s 37 passed an order vesting the insolvent''s property in the Official Receiver

for administration for the benefit of the creditors. On the 12th April, 1935, the appellant tendered proof of his debt which the Official Receiver

accepted. In the year 1939, the amount was, however, scaled down to Rs. 663-3-8 under the provisions of the Madras Agriculturists'' Relief Act.

The Official Receiver realised some of the insolvent''s assets and on the 10th May, 1940, he paid to the creditors a dividend. The appellant''s

share was Rs. 123-8-0. On the 19th January, 1943, the Official Receiver wrote to the creditors saying that no saleable property was left and on

the 12th February, 1943, the Subordinate Judge passed an order closing the proceedings. It transpired, however, that the Official Receiver still

had in his possession Rs. 771 belonging to the insolvent and on the 9th December, 1943, the appellant applied for the execution of his decree by

the attachment of this sum. The respondent opposed the application on the ground that the appellant''s decree was barred by the law of limitation.

The District Munsiff of Guntur and the Subordinate Judge of Guntur on appeal found for the appellant, but on appeal by the respondent to this

Court, Happell, J., held that the application for execution was out of time. The plaintiff has appealed from this decision.

Section 78(2) of the Provincial Insolvency Act reads as fellows:

Where an order of adjudication has been annulled under this Act, in computing the period of limitation prescribed for any suit or application for the

execution of a decree (other than a suit or application in respect of which the leave of the Court was obtained under Sub-section (2) of Section 28)

which might have been brought or made out for the making of an order of adjudication under this Act, the period from the date of the order of

adjudication to the date of the order of annulment shall be excluded:

Provided that nothing in this section shall apply to a suit or application in respect of a debt provable but not proved under this Act.

Happell, J., held that the order of annulment referred to in the section meant any order annulling the order of adjudication and the fact that an order

had been passed u/s 37 vesting the insolvent''s assets in the Official Receiver had no bearing. The argument advanced on behalf of the decree-

holder was that there was no effective annulment until the insolvency proceedings were formally closed on the 12th February, 1943 ; but the

learned Judge refused to accept this contention. He considered that the "" order of annulment "" had a definite meaning attributed to it by the

provisions of the Act and that the meaning could not be enlarged when construing Section 78(2).

We are in full agreement with the opinion expressed in the judgment under appeal. Sub-section (2) of Section 78 starts with the words "" where

an order of adjudication has been annulled under this Act"". The order of the 21st November, 1934, was an order annulling the adjudication under

the Act and it is the date of that order which is material. The appellant could have kept his decree alive by applying periodically for the execution of

his decree. The fact that the available assets of the insolvent had been vested in the Official Receiver for administration purposes could not

preclude the plaintiff from applying for execution. Without deciding the point, we will assume that he would require the leave of the Insolvency

Court if he wished to proceed against any of the assets held by the Official Receiver, but this would not affect the position.

In Ramaswami Pillai v. Govindasami Naicker (1918) 36 M.L.J. 104 : ILR 42 Mad. 319 a Bench of this Court held that in computing the period

of limitation for suits instituted against a person who had been adjudicated an insolvent but whose insolvency was annulled, Section 15 of the

Limitation Act did not permit the deduction of time during which the order was in force as u/s 16, Clause 2 of the Provincial Insolvency Act, 1907

(which corresponds to Section 28(2) of the present Act), an order of adjudication did not effect an absolute stay of suits against the insolvent but

only made it necessary that leave to sue should be obtained from Court before institution. In M.N.S.T. Chidambaram Chettiar Vs. A.L.M.

Meyyappa Chettiar and Others, the present Bench held that the order of injunction contemplated by Section 15 of the Limitation Act is an

injunction or order which specifically stays execution of the decree and a preliminary decree in an administration suit could not be regarded as

amounting to an injunction or order within the meaning of that section. Therefore, Section 15 of the Limitation Act cannot help the appellant. As the

adjudication was annulled in 1934 the application for execution is hopelessly time-barred.

The appeal is dismissed with costs.