Kesava Pillai vs Ramakrishna Panicker and Others

P.T. Raman Nayar, J.—I think the court below was right in bolding that an application made u/s 16 of the Travancore Debt Relief Act, II of 1116, cannot be withdrawn although my reasons might not be quite the same. Once such an application has been entertained, the position of the applicant-debtor is akin to that of a debtor who has been adjudicated insolvent and there can be no question whatsoever of any withdrawal of the proceedings. For, by reason of clause (e) of sub-section (3) of section 16, the court gets control of all the assets of the debtor even if there is no actual vesting as in insolvency. Thereafter the court holds the assets in trust for settling the liabilities of the debtor and paying the debtor his due share in accordance with section 19; and I should think (although this is not expressly provided for) it may return to the debtor any surplus left after the debts have been discharged, in other words, after the liabilities have been fully settled, a contingency not ordinarily to be expected. I am not impressed with the argument (assuming that it was seriously advanced) that all that section 16(3)(e) says is that the debtor should make a statement that he unconditionally leaves all his assets in the control of the court and that such a statement, especially when made by a debtor, is not tantamount to his actually leaving the assets in the control of the court. In fact, by the very entertainment of an application u/s 16 of the Act there is, as I have said, a stage reached similar to that in section 28 of the Provincial Insolvency Act and I think it is because there can be no question of withdrawal that the Act advisedly makes no provision similar to Section 14 of the Provincial Insolvency Act for the withdrawal of a petition. Neither is there provision for anything like annulment. The statement in Hathi Bhai Sait v. Gopala Pillai (33 T.T.J. 627 at page 628) that section 18 of the Debt Relief Act says that the procedure prescribed in the Insolvency Act shall mutatis mutandis be applicable to the proceedings u/s 16 and that there can be a withdrawal by leave of court is not quite correct, for, section 18 does not make the Insolvency Act applicable mutatis mutandis to all proceedings pursuant to section 16, but only to the determination of the admissibility and amount of the claims by or against the debtor. I have no doubt in my mind that, once the court is seized of the assets of the debtor and holds it in trust for the benefit of the creditors and of the debtor himself, there can be no question of any return of the assets to the debtor or of any withdrawal of the proceedings until that trust has been discharged in accordance with section 19, although I might not go to the extent of saying, as was said in Sankaran v. Kochukutty (1953 K. L. T. 883 at page 914) that, on the admission of an application, the creditors and the debtor become co-owners of the debtor''s assets.

I might add that if an application made u/s 16 is allowed to be withdrawn, especially after it has been pending for some time (in this particular case for 9 years) it might well be that creditors who refrained from filing suits or executing decrees expecting that their claims would be settled in the proceedings will find that their claims are barred by time, for, I find no provision in the Act similar to section 78of the Provincial Insolvency Act enabling the exclusion of the period for which the application was pending. And, section 14 of the Limitation Act might not be a complete answer applicable to all cases although in the particular case considered in Parameswaran Kartha v. Valia Raja (1958 KLT 577 = 1958 K. L. J. 831) it was held to apply. This, of course, cannot affect the construction to be placed on the statute, but is sufficient to show that a withdrawal of proceedings once initiated u/s 16 of the Act was never contemplated.

It is pointed out that the Travancore Debt Relief Act, 1116 has been repealed by Section 26(1) of Kerala Act 31 of 1958 as amended by Act 2 of 1961. But that cannot help the petitioner, for, it seems to me plain enough that clauses (b), (c) and (e) of section 4 of the Interpretation and General Clauses Act, 1125 would apply to enable the continuance of the proceeding as if the repeal had not been affected. No different intention appears from sub-section (2) of section 26 of Act 31 of 1958 as amended by Act 2 of 1961, for, as I read it, all that that subsection means is that a debtor may opt to have the repealed enactment applied to his debt if he thinks that more favorable than the provisions of Act 31 of 1958. There is nothing in the sub-section to indicate that a legal proceeding instituted under any of the repealed enactments is to abate. I dismiss the petition with costs. Advocate''s fee Rs. 50/-.