Shital Dass and Another vs Deohans

Jagat Narayan, J.—This is an appeal by the creditors u/s 75(1) of the Insolvency Act against an order of the District Judge, Bharatpur, holding that the provision contained in Section 9(1)(c) that the act of insolvency on which the petition is grounded should have occurred within 3 months before the presentation of the petition is not a period of limitation but is a condition precedent and that Sections 5 and 14 of the Limitation Act are not applicable.

The act of insolvency was committed on 2-5-1961. The creditors filed a petition u/s 9 before the Agra Court as the agricultural land which the debtor had transferred to defeat them, was situate in the district of Agra. It was finally held by the District Judge, Agra on 10-7-63 that since the debtor was not residing in Agra that Court had no jurisdiction. The petition was returned for presentation to proper Court on 27-7-63. It was filed in the Court of the District Judge, Bharatpur on 9-8-63. If Section 14 of the Limitation Act is applicable to petitions filed u/s 9(1)(c) then the present petition would be within limitation.

The majority of High Courts have held that the period of 3 months prescribed u/s 9(1)(c) is not a period of limitation but is a condition precedent. But a Full Bench of the Allahabad High Court however held in Raja Pande v. Sheopujan Pande AIR 1942 All 429 (FB), that this period is a period of limitation and not a condition precedent. But at the same time the majority of the Judges constituting the Full Bench held that the Provincial Insolvency Act is a special law within the meaning of Section 29(2), Limitation Act which contained a complete Code in the matter of limitation therefore the application of Sections 4, 9 to 18 and 22 except to the extent to which they are made applicable by the provisions of the Provincial Insolvency Act, is expressly excluded.

The learned counsel for the appellants has relied on the decision of the Bombay High Court in Chhaganlal Sakerlal Vs. The Municipality of Thana, in which it was observed-

"Express exclusion is clearly exclusion by specific words in that behalf and not by a process of logical reasoning or implication from the words of the special or local law."

In the present case there is express exclusion in the sense that express words have been used for making provision for limitation for filing petitions and appeals and applying Sections 5 and 12 of the Limitation Act to applications and appeals u/s 78. In Vidyacharan Shukla Vs. Khubchand Baghel and Others, it was observed-

"The contention is that Sub-section (3) of Section 116A of the Act not only provides a period of limitation for such an appeal, but also the circumstances under which the delay can be excused, indicating thereby that the general provisions of the Limitation Act are excluded. There are two answers to this argument. Firstly, Section 29(2)(a) of the Limitation Act speaks of express exclusion but there is no express exclusion in Sub-section (3) of Section 116-A of the Act; secondly, the proviso from which an implied exclusion is sought to be drawn does not lead to any such necessary implication."

From the above observation it is clear that exclusion by necessary implication amounts to express exclusion.

In this view of the matter Section 14 of the Limitation Act is not applicable to a petition u/s 9 of the Insolvency Act. No decision was cited by the learned counsel for the appellant in which Section 14 might have been held to apply to petitions under the Insolvency Act.

Next it was contended that Section 5 of the Limitation Act is applicable by virtue of Section 78 of the Insolvency Act. The latter section applies Sections 5 and 12 of the Limitation Act to "applications" and "appeals" under the Insolvency Act. In all decided cases a distinction has been drawn between a "petition" and an "application," under the Insolvency Act. u/s 9 the creditor files a "petition" for adjudication and u/s 10 the debtor files a "petition" for adjudication. u/s 32 the word "application" has been used. So Section 5 of the Limitation Act is also not applicable to a petition u/s 9.

In the result the appeal is dismissed. Having regard to the circumstances of the case, I leave the parties to bear their own costs of this appeal.