Sinnaswami Chettiar vs Aligi Goundan and Others

This is an appeal from the order of the District Judge of Coimbatore refusing protection to the appellant who has filed a petition in insolvency in

that Court. The petition had been admitted but no order of adjudication had been made at the time the application for protection was made or even

now. The learned Judge has refused protection on the ground that the insolvent had made two fraudulent transfers just before he made the

application. We do not however propose to go into that question in appeal. Section 31 of the Provincial Insolvency Act deals with applications for

protection only after the order of adjudication is made and that stage had not been reached in this case yet. The only other provision which deals

expressly with what may be called protection before adjudication is Section 23. That section says, "" At the time of making an order admitting the

petition or at any subsequent time before adjudication, the Court may, if the debtor is under arrest or imprisonment in execution of a decree of any

Court for the payment of money, order his release on such terms as to security as may be reasonable and necessary."" The condition under which

the Provincial Insolvency Act allows the Court to interfere between an insolvent and his judgment-creditors before adjudication is where a decree-

holder has arrested him. An insolvent is not entitled to make an application under the Act for protection before he is adjudicated, unless he has

been arrested, because there is really no necessity till then for any protection. If the insolvent wants to apply for protection, he ought to expedite

matters in such a way as to get his order of adjudication first and then ask the Court to grant protection u/s 31. Neither the state of affairs

contemplated by Section 31 nor by Section 23 has arisen in this case. We, therefore, think that there is no necessity to grant protection at this

stage. If the insolvent is arrested hereafter, it will be open to him to apply u/s 23 and we have no doubt that the Court will consider his case on the

merits and not allow the order now passed by the District Judge to stand in the way of such consideration. Similarly if he gets an order of

adjudication, he may apply u/s 31. But at this stage we do not think it is necessary to interfere. The appeal is therefore dismissed with costs.