S.A.S. Subbiah Aiyar vs The Official Receiver

Krishnan Pandalai, J.—The two Lower Courts have arrived at opposite conclusions on the question whether when a debtor against whom a

petition in insolvency has been presented dies before adjudication and the proceedings are continued u/s 17 of the Provincial Insolvency Act the

Official Receiver or creditors can invoke the power of the Court to set aside settlements and alienations voidable under Sections 53 and 54. The

first Court gave a negative answer and the lower appellate Court an affirmative answer to this question. I venture to think that the difficulty felt by

the Lower Courts is due rather to the form of the order of adjudication which the Insolvency Court passed in the case rather than to anything

obscure in the provisions or language of the Act.

The facts are simple and undisputed. A creditor''s petition (I.P. No. 58 of 1927) was filed against one Section K. Krishna Aiyar. He died some

15 months afterwards before any order of adjudication was passed. Notice of the petition was sent to his minor son (2nd respondent) and on 4th

February, 1929, the Court passed an order that the estate of the 1st respondent (Krishna Aiyar) be and the same hereby is adjudged as insolvent

and that the Official Receiver, Tinnevelly, is appointed Receiver to administer it. The 2nd respondent (son of Krishna Aiyar) was ordered to

produce the accounts and documents of title before the Official Receiver in one month and to perform all the other duties i-mposed by the said Act

and also to apply for discharge of the estate within one year from the date of the order. In the course of the subsequent proceedings the Official

Receiver applie''d to,, set aside certain alienations under Sections 53 and 54. The appellant, the alienee, took inter alia the objection that the

application was incompetent as his transferor had not been declared insolvent but only his estate. This objection was literally correct but only

literally so. For it assumed firstly, that when proceedings are continued against the debtor after his death before the order for adjudication, the

order passed u/s 17 must be not of the debtor himself but of his estate only and secondly, that when an order is passed as in the present case

expressed to be adjudging the estate insolvent, it means in the circumstances something different from an order against the debtor. Both these

assumptions are wrong. As to the first point, it is concluded by the authority of Venkatarama Aiyar v. The Official Receiver, Tinnevelly ILR (1927)

51 Mad. 344 : 54 M.L.J. 585 and Ramathai Anni v. Kanniappa Mudaliar ILR (1928) 51 Mad. 495 : 55 M.L.J. 235. In those cases on facts

similar to the present, the Court had passed orders adjudging the deceased debtor insolvent. The objection raised was that on the language of

Section 17 as amended by the Act of 1920 there could be no order of adjudication against a dead man and it was argued that that was the effect

of altering the words ""as if he were alive"" which occurred in the old section to ""as far as may be necessary for the realisation and distribution of the

property of the debtor"". This contention was fully dealt with in the later case and rejected in both cases by this Court, the result being that the

proper order to pass in a case like the present is to adjudge the deceased debtor and not his estate. I asked learned Counsel on both sides for any

rule or precedent by which an order adjudging the estate insolvent is contemplated by the Provincial Insolvency Act. They did not refer to and I am

not aware of any such. It is to be noted that the Provincial Insolvency Act does not contain any provision similar to Sections 108 and 109 of the

Presidency Towns Insolvency Act corresponding to Section 130 of the English Bankruptcy Act empowering the Insolvency Court to administer

insolvent estates. Therefore considerations and decisions applicable to that power must not be confused with cases falling within Section 17 of the

Provincial Insolvency Act which corresponds to Section 93 of the Presidency Towns Insolvency Act and Section 112 of the English Bankruptcy

Act. The form of the order of adjudication in this case is probably due to this distinction not being borne in mind. However that may be, the

contention that when a debtor dies after the petition but before adjudication the powers of the Court under Sections 53 and 54 are automatically

withdrawn because the transferor being dead cannot be adjudged insolvent is clearly untenable in view of the decisions above mentioned by which

I am bound. It follows that if the order of adjudication in the present case had been in terms one adjudging the debtor, and not his estate, insolvent

the ground of the appellant''s objection to the proceedings under Sections 53 and 54 would disappear. Learned Counsel for appellant seemed to

suggest that he could still maintain his objection and base it on the changed language of Section 17 of the Act. With respect, I fail to see how he

can do so except by showing that the two decisions are wrong. Not only am I bound by them but I respectfully agree with them that the change of

language in Section 17 was not intended to limit by a side wind the powers of the Court in insolvency when the debtor dies after petition but before

adjudication to the power of administration of insolvent estates of persons who die before the petition - a power which is not conferred on

Provincial Courts of Insolvency at all. Learned Counsel had to admit that the language of the section cannot have the effect of so limiting the

Courts'' power where the debtor dies after adjudication. If so, the words which are perfectly general cannot have a different effect merely because

the debtor dies at an earlier stage - before adjudication. I am therefore of opinion that the substantial ground of the objection fails.

But the second part of the objection which is based on the form of the order remains. I have stated that the proper form of order of adjudication

in the case was to adjudge the debtor himself and not his estate. I was at first inclined to give some effect to this objection. But on consideration I

think I ought not to do so. The phraseology of an order is certainly important as is shown by this very case. But after all, the language used by

every Court is only the vehicle of its thought and every Court is entitled to full faith and credit for its orders being understood in the way it was

intended. Advantage will not be allowed to be taken of slips or errors of language due to a bona fide belief that the Court is adopting the form

appropriate for the occasion. I have no doubt that the Judge who passed the order of adjudication intended to pass the right order but expressed

himself as adjudging the estate because he thought that that was the proper way to word the order against a dead man. Either the decision in

Ramathai Anni v. Kanniappa Mudaliar ILR (1928) 51 Mad. 495 : 55 M.L.J. 235 was not then reported or was not brought to his notice. In those

circumstances I must give effect to the order in the way in which it was intended. After all if full effect is given to the appellant''s objection all that

follows is that the Insolvency Court has not yet passed any order of adjudication. Not only will it then be open to the Court to make a fresh order

if necessary but the only effect it will have will be to throw into confusion all that may have happened in the insolvency within the last three years to

which no one has taken any objection and in which the appellant has no interest whatever. The appellant''s objection has really no merits and no

decree or order will be interfered with on account of any irregularity or error not affecting the merits or the jurisdiction of the Court. I am therefore

of opinion that the order of adjudication should be read, understood and given effect to as if the debtor himself had been adjudicated.

The appeal fails and is dismissed. There will be no order as to costs.