Rampratap Marwari vs Lachman Mistri

Fazl Ali, J.—This is an appeal by a creditor from an order of the District Judge of Manbhum, rejecting his application praying that the order adjudging one Lachman Mistri as an insolvent be set aside and Lachman Mistri''s insolvency petition be reheard. Lachman Mistri made his application on 18th June 1938, in which he mentioned four creditors including the appellant. It appears that notices were issued to all the four creditors including the appellant, but in the notice which was issued to the appellant he was described as Ram Kumar Marwari, and not as Rampratap Marwari. A notice stating that Lachman Mistri had made an application for being declared" in-solvent was also published in the Bihar Gazette on 20th July 1938. On 23rd July 1938, the learned Judge passed an ex parte order granting the application of Lachman Mistri for being declared insolvent.

On 23th July 1938, the appellant appeared in Court and made an application for setting aside that order on the ground that he had received no notice of Lachman''s application. The learned Judge dismissed this application on 20th March 1939, and hence this appeal.

The first question to be decided is whether an application for setting aside an insolvency order, which was made ex parte can be entertained.

It is contended on behalf of the respondent that such an application is not maintainable under the Insolvency Act, and the learned advocate appearing on his behalf contends that if such an application could be entertained, there would have been a provision in the Act similar to Section 25, Clause (1). In that clause it is provided that

in the case of a petition presented by a creditor, where the Court is not satisfied with the proof of his right to present the petition or of the service on the debtor of notice of the order admitting the petition, or of the alleged act of insolvency, or is satisfied by the debtor that he is able to pay his debts, or that for any other sufficient cause no order ought to be made, the Court shall dismiss the petition.

It is pointed out that whereas the Act specifically provides that in the case of a petition presented by a creditor the petition may be dismissed if the Court is satisfied that there was no service on the debtor of notice of the order admitting the petition, no similar provision is made where a petition is presented by a debtor and the creditor is not served with a notice. Section 18, Insolvency Act, provides that

The procedure laid down in the CPC 1908, with respect to the admission of plaints, shall, so far as it is applicable, be followed, in the case of insolvency petitions.

Again, Section 5 of the Act runs as follows:

(1) Subject to the provisions of this Act, the Court, in regard to proceedings under this Act, shall have the same powers and shall follow the same procedure as it has and follows in the exercise of original civil jurisdiction.

(2) Subject as aforesaid, High Courts and District Courts, in regard to proceedings under this Act in Courts subordinate to them, shall have the same powers and shall follow the same procedure'' as they respectively have and follow in regard to civil suits.

From these provisions it follows that Order 9, Rule 13, Civil P. 0� is applicable to proceedings under the Insolvency Act also and this view is supported by the decision of the Calcutta High Court in Mool Chand Ram v. Sarjoog Pershad (1908) 7 CLJ 268 and certain observations made in AIR Umar Din v. Raghu Nath AIR (1982) Lah 522. In my opinion, therefore, the learned Judge was competent to entertain the application made by the appellant before him. As to the merits of the application, it has been pointed out on behalf of the appellant that even the learned Judge has held that no notice was actually served on the appellant. The learned Judge has relied on the fact that a general notice had been duly published in the Bihar Gazette to the effect that Lachman Mistri had applied for being adjudicated insolvent and 23rd July 1938 had been fixed for hearing and he has held that in view of the notification the appellant must be presumed to have had sufficient notice of the insolvency petition as well as of the date of the hearing. Section 19, Insolvency Act, says that ''where an insolvency petition is admitted, the Court shall make an order fixing a date for hearing the petition'' and "notice of the order shall be given to creditors in such manner as may be prescribed.

As the rules, which govern the procedure in this province, are the same as those framed by the Calcutta High Court u/s 79 of the Act, it becomes necessary to refer to Rule 5 framed by the Calcutta High Court as regards the publication of notice to be issued u/s 19. This rule runs thus:

Notice of an order fixing the date of the hearing of a petition u/s 19(2) shall be published in the local official Gazette and advertized in such newspapers as the Court may direct. A copy of the notice shall also be forwarded by registered letter to each creditor to the address given in the petition.

It is to be noted that this rule nowhere provides that mere publication of the notice in the official Gazette will be enough. It distinctly provides that a copy of the notice should also be forwarded by registered letter to each creditor. In the present case, the registered letter never reached the appellant. The learned Judge has presumed that the appellant must have had notice of the insolvency petition, because it was published in the official Gazette, but I find that the names of the creditors who were mentioned in Lachman. Mistri''s petition were not published in the Gazette, and the notice was published as late as 20th July 1938, that is only three days before the date fixed for the hearing of the application.

The appellant has stated on oath that he had no notice of either the application or the date of the hearing, and, in my opinion, whatever presumption might arise from the fact of the publication of the notice in the Gazette has been rebutted by the onesided evidence given in this case. That being so, the learned District Judge ought to have allowed the petition of the appellant and reheard the matter. The learned Judge has endeavoured to show that the appellant has not been in any way prejudiced. He has stated in his order that even if it is assumed that the appellant is the only creditor, his own decree against the insolvent amounts to more than Rs. 1665, and that there is nothing to show that the insolvent had so much "assets as to enable him to pay up this amount. In my opinion, however, the learned Judge has in this matter misread the petition filed by the appellant before him.

However that may be, under the law as it stands the question of prejudice appears to me to be irrelevant. The appellant has shown that he had not received the notice issued u/s 19 of the Act, and as that provision is mandatory the learned Judge ought to have reheard the matter. In these circumstances I would allow this appeal. The order of the learned Judge is set aside. There will be no order as to costs.

Meredith, J.

I agree.