K. Lakshmandoss vs Raghava and Veera and Ors .

Ramanujam, J.—An interesting question of law has arisen in this appeal, which is directed against the common order of Ismail J. (as he then

was) in L P. No. 66 of 1977and Appln. No. 561 of 1977 and 70 of 1978 on the file of the original Side of this Court

The said I. P. No. 66 of 1977 has been filed on 6-8-1977 u/s 9(e) of the Presidency Towns solvency, Act, here in after referred to as the Act,

by a creditor by name Munusami Reddiar for adjudication of the firm of Messrs Raghava and Veera and its partners; Messrs Raghava Reddi and

Veera Reddi as insolvents. The said insolvency petition was contested by the debtors. On 24-9-1977 one Lachhmandas, the appellant herein, who

was another creditor of the same debtors filed, Appln. No. 561 of 1977 u/s 92 of the Act, for substituting him in the place of the petitioning

creditor in I. P. 66 of 1977 and for permission to continue the insolvency proceedings against the debtors alleging that the debtors are trying to

settle with the petitioning creditor, that it is apprehended that the petitioning creditor may not prosecute the insolvency petition diligently, and that,

therefore, it is just and necessary that he should be substituted in the place of the petitioning creditor. Another creditor by name Messrs Ajit India

Pvt. Ltd., also filed an application No. 70 of 1978 for substitution under S. 92 of the Act on the same ground. However, the petitioning creditor

Munuswami Reddiar died during the pendency of the said insolvency petition. When the insolvency petition and the applications for substitution

came up for hearing on 7-9-1978 before the Court, a request was made by the learned counsel who was appearing for the petitioning creditor for

grant of time to bring on record the legal representatives of the deceased petitioning creditor. The Court, however, felt that there was no need to

adjourn the matter any further as there was no petition before the court to bring the legal representatives on record as on date, and dismissed the

insolvency petition. As far as the two substitution applications referred to above are concerned, the court took the view that the substitution

applications cannot be ordered u/s 92 of the Act, as that section contemplates the court substituting another petitioner only where the original

petitioning creditor does not proceed with due diligence on his petition, and as the original petitioning creditor is dead, the question of his not

proceeding with due diligence on his petition does not arise. In this view the learned Judge dismissed the applications for substitution. The applicant

in Appln. No. 561 of 1977 has filed this appeal questioning the correctness of the dismissal of the application for substitution on the ground that

Section 92 had no application in the case of death of the petitioning creditor. Thus the interesting question of law that arises is as to whether

Section 92 could be invoked by other creditors in the event of the petitioning creditor dying, as a result of which the insolvency petition is not

prosecuted.

The learned counsel for the appellant firstly contends that there is no question of abatement of insolvency proceedings, that the object of Section

92 is to see that the benefit of filing of the insolvency petition by one creditor should go to the entire body of creditor''s and this object will be

entirely defeated if the insolvency petition filed by one creditor is treated as having abated on his death, and that a petition for adjudication is by its,

cry nature a representative action for the benefit of the entire body of creditors and in such a representative action there is no question of any

abatement and any other creditor can take advantage of the existence of the petition and continue the same again as a representative of all the

creditors. The learned counsel secondly contends that even assuming the theory of abatement applies to insolvency proceedings, the expression

''Petitioner'' occurring in Section 92 can be interpreted as including the legal representatives so that, if the legal representatives do not bring

themselves on record in the place of the deceased petitioning creditor and proceed with due diligence in the insolvency petition, substitution is

possible under the said section and the non-prosecution with due diligence of the petition may be either by the petitioning creditor or by his legal

representatives and Section 92 will apply in either case and that if the legal representatives of the deceased petitioning creditor do not bring

themselves on record and continue the proceedings, Section 92 could be invoked by another creditor.