Under Section 5, Provincial Insolvency Act the Court in exercising insolvency jurisdiction can follow the procedure prescribed in the Code only when there is no procedure prescribed in the Act with regard to a particular matter but not when it is provided for in the Act. In other words the provisions of the Civil Procedure Code will apply in the absence of any provisions in the Act. Where the Act prescribed a method by which a party can work out his remedy it is not open to him to call to his aid the provisions of the Civil Procedure Code.
Citation : AIR 1951 Mad 665
IN THE HIGH COURT OF MADRAS
Civil Revn. Petn. No. 1542 of 1949
Decided On: 05.09.1950
M.A. Jaleel Sahib
Seeniappa Ramaswami Mudaliar and Co., by its Managing Partner N.S. Srinivasan
P. Chandra Reddy, J.
1. An interesting question of law has been raised in this case, namely, whether a Court exercising insolvency jurisdiction can direct addition of parties under Order 1, Rule 10, Civil P. C. Both the Courts answered the question in the affirmative and hence this civil revision, petition.
2. A creditor filed an application for adjudging the petitioner an insolvent in the Court of the Subordinate Judge, Tiruchirapalli Pending the disposal of this petition the respondent herein came by way of an application under Order 1, Rule 10, Civil P. C. to be added as an additional party to the petition. This petition was ordered by the Subordinate Judge. On appeal by the debtor the order of the trial Court was confirmed.
3. In this petition it is urged by Mr. Ahmed Meeran, learned counsel for the petitioner that a Court while exercising insolvency jurisdiction has no jurisdiction to direct the addition of parties under Order 1, Rule 10, Civil P. C., when there is a specific provision made in Section 16, Provincial Insolvency Act for substitution of a party in certain cases. According to him, Section 16. Provincial Insolvency Act contemplates only substitution, and not addition of a party and therefore resort cannot be had to Order 1, Rule 10, Civil P. C. for addition of parties. Section 16, Provincial Insolvency Act lays down :
"that where the petitioner does not proceed with the diligence on his petition, the Court may substitute as petitioner any other creditor to whom the debtor may be indebted in the amount required by this Act in the case of a petitioning creditor."
The intention of the Legislature as expressed in this section appears to be that in cases where the petitioning creditor colludes with the debtor, sought to be adjudicated an insolvent, and does not prosecute the petition diligently, leave should be granted to another creditor, to whom the debtor is indebted, in the statutory amount, to come on record and proceed with the petition for adjudication. There does not seem to be any necessity for the addition of another creditor to the same petition having regard to the fact that sufficient safeguard is provided in Section 14, Provincial Insolvency Act, which says that no petition, whether presented toy a debtor or creditor shall be withdrawn without the leave of the Court. This affords sufficient protection against the petitioning creditor colluding with the debtor and withdrawing the petition presented by him. When an application for withdrawal is made the Court is put on its guard and will direct notices to be issued to the other creditors who are made parties to the petition. So the interests of the creditors are well protected even without any addition of parties to the application of the petitioning creditor.
4. In support of his submission that an insolvency Court has no jurisdiction to invoke the provisions of Order 1, Rule 10 Mr. Meeran has placed before me a decision of a Bench of our Court in 'Venugopalachariar v. Chinnu Lal', 49 Mad 935: MANU/TN/0162/1926 : AIR 1926 Mad 942. In that case the question for decision was whether an order for annulment passed under Section 43(1), Provincial Insolvency Act could be set aside by virtue of the provisions of Order 9, Civil P. C. what happened there was that an application filed by the insolvent under Section 43, Provincial Insolvency Act for annulling his adjudication was dismissed for default. Subsequently the insolvent filed an application under Order 9 to set aside that order. The learned Judges, Phillips and Madhavan Nair JJ. held that the Insolvency Court could not set aside the order under the provisions of Order 9, Civil P. C. because a definite remedy has been prescribed by Section 10(2) of the Act and therefore the insolvent could not have resort to the provisions of Order 9, Civil P. C. by virtue of the provisions of Section 5 of the Act. The following observations at p. 937 of this report may be usefully extracted :
"Under Section 5 of the Act the provisions of the Civil Procedure Code are to be applied subject to the provisions of the Act Section 10(2) provides a definite remedy for a debtor in respect of whom an order of adjudication has been annulled, and it gives him permission to present another petition on the same facts, provided that he satisfies, the Court that he was prevented from prosecuting his application by any reasonable cause. Such a remedy is certainly distinct from any remedy granted by the Civil Procedure Code and appears to prescribe definitely the procedure to be adopted. If that is so, then, I think, that the words 'subject to the provisions of this Act' in Section 5 must have their full force, when the Act prescribes a definite method by which the debtor can obtain his remedy it is not open to him to adopt other methods which would be open under the Civil Procedure Code."
Applying the principle underlying this decision to the present case I must hold that resort cannot be had by the respondent herein to the provisions of Order 1, Rule 10. A definite provision for substitution of a party has been made in Section 16, Provincial Insolvency Act. The remedy under Section 16, Provincial Insolvency Act is distinct from the one provided in Order 1, Rule 10, Civil. P. C. Under Section 16 of the Act a creditor who is aggrieved by the conduct of the petitioning creditor can come by way of an application for being substituted and not for being added as an additional party.
5. The learned counsel for the respondent argues that the Court exercising an insolvency jurisdiction is competent to direct the addition of parties under Order 1, Rule 10 by virtue of provisions of Section 5, Provincial Insolvency Act and placed reliance for this submission on a decision in 'Ayyasami Chetti v. The Official Receiver, Coimbatore', 61 ML J 719: MANU/TN/0136/1931 : AIR 1932 Mad 63. In that case on an application by the insolvent under Section 43, Provincial Insolvency Act his adjudication was annulled 'ex parte' the presiding Judge being under the impression that it was not contested. When the Official Receiver came to know of the order passed by the Ct. he immediately filed an application under Section 5, Provincial Insolvency Act read with Order 9, Rule 13 and Order 47, Rule 1, Civil P. C. This application was opposed by the insolvent on the ground that the Court had no jurisdiction to entertain the application for review of its order. The trial Court overruling this objection allowed the petition filed by the Official Receiver. In a petition in revision against that order this Court had to consider whether the insolvency Court had jurisdiction to entertain an application for review. The learned Judge Ananthakrishna Aiyar J. held that the mofussil Courts in the exercise of the insolvency jurisdiction have got a right to review their own orders and entertain applications under Order 9, C. P. C. to set aside for sufficient cause orders passed 'ex parte' by virtue of the provisions of Section 5, Provincial Insolvency Act. The learned Judge distinguished 'Venugopalachariar v. Chinnulal', 49 Mad 935: MANU/TN/0162/1926 : AIR 1926 Mad 942 on the ground that that was a case of an application by the insolvent himself, who could apply for re-adjudication under Section 10(2), Provincial Insolvency Act and also observed that there was a substantial difference between the case of an insolvent applying under Section 10(2) for adjudication and the case of creditors or Official Receivers applying for adjudicating the debtors insolvents under the same provisions of law. He further observed
"that if an application by Official Receiver was not allowed creditors were surely to be prejudiced in several cases if adjudications in insolvency be annulled and having regard to the limit of time prescribed by Sections 53 and 54 of the Act, their right would be seriously prejudiced in various cases if they be confined to enforcing them by filing fresh applications in insolvency to adjudicate the same man as insolvent."
The learned Judge was inclined to take the view that a Court exercising insolvency jurisdiction has jurisdiction to review its own order in appropriate cases or to set aside its own order under Order 9, Rule 13, Civil P. C. for sufficient causes, for the reason that there was not appropriate remedy provided for in the provisions of the Provincial Insolvency Act.
6. The decision in 'Abbi Reddi v. Venkatareddi MANU/TN/0239/1925 : AIR1927Mad175 referred to in 'Ayyasami Chetti v. The Official Receiver, Coimbatore', 61 M L J 719 : MANU/TN/0136/1931 : AIR 1932 Mad 63 is also to the same effect. That was also a case where the creditors who tendered proof of their debts applied to the insolvency Court to review an order of annulment on the application made by the insolvent. It was there held that under Section 5, Provincial Insolvency Act a Court exercising the insolvency jurisdiction had the same powers and had to follow the same procedure as in the exercise of original civil jurisdiction.
7. Under Section 5, Provincial Insolvency Act the Court in exercising insolvency jurisdiction can follow the procedure prescribed in the Code only when there is no procedure prescribed in the Act with regard to a particular matter but not when it is provided for in the Act. In other words the provisions of the Civil Procedure Code will apply in the absence of any provisions in the Act. Where the Act prescribed a method by which a party can work out his remedy it is not open to him to call to his aid the provisions of the Civil Procedure Code. It is only on this basis that the rulings in 'Venugopalachariar v. Chinnulal', 49 Mad 935: AIR1928 Mad 942; Ayyasami Chetti v. The Official Receiver, Coimbatore', 61 MLJ 719: MANU/TN/0136/1931 : AIR 1932 Mad 63 & 'Abbi Reddi v. Venkata Reddi MANU/TN/0239/1925 : AIR1927Mad175 can be reconciled. I am of opinion that the decisions in 'Ayyasami Chetti v. The Official Receiver, Coimbatore', 61 MLJ 719: MANU/TN/0136/1931 : AIR 1932 Mad 63, 'Abbi Reddi v. Venkata Reddi MANU/TN/0239/1925 : AIR1927Mad175 are not authorities for the proposition that the procedure prescribed under the Code is to be followed irrespective of whether in the Act a specific provision is made with regard to a particular matter or not. If I may say so with respect, I agree with the reasoning of the learned Judges in 'Venugopalachariar v. Chinnulal', 49 Mad 935 : AIR 1923 Mad 942. Further the provisions of Order 1, Rule 10 cannot be invoked by the respondent herein for being added as an additional party for another reason also. Order 1, Rule 10 lays down
"that a Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just order that the name of any party improperly joined, whether as plaintiff or defendant be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant or whose presence before the Court may be necessary in order to enable the Court, effectually and completely to adjudicate upon and settle all the questions involved in the suit be added."
This rule indicates that a Court can direct addition of another party under two circumstances; either the name of any person, who ought to have been joined originally, was not added as a party or where the presence of a party is absolutely necessary to enable the Court to come to an effective and complete adjudication upon the question involved in the suit. The position that there is no jurisdiction in a Court to add a party in any other case cannot be seriously disputed. See Mullah, 11th Edn., p. 517 and also the decision in 'Ramakrishnayya v. Satyanarayana MANU/TN/0335/1928 : AIR 1929 Mad 291 : 116 IC 137; 'Vaithilinga Pandara Sannadhi v. Sadasiva Aiyar MANU/TN/0439/1925 : AIR1926Mad836 and 'Devendra Kumar v. Mt. Batasi Bai MANU/NA/0051/1933. Now what I have to consider is whether the petitioner can come within either of the two alternatives mentioned in Order 1, Rule 10 (2). Admittedly the respondent in this case cannot come within the first alternative laid down in that Sub-rule (2). The only question is whether he is a person whose presence is necessary for an effective & complete adjudication of the matters in dispute. I do not think his presence is necessary for any effective and complete adjudication of the matters in dispute. It cannot be said his presence is necessary for any effective and complete adjudication of the matters in dispute in this case. Even in the application for being added as a party he does not mention that there is something in the matter which cannot be decided without his being a party to the application. All that he alleges in the application is that, if for any reason, the petitioning creditor does not choose to proceed with his petition diligently, he would be willing to go on with that application. On these allegations in the affidavit, it cannot be said that' his presence is absolutely necessary for deciding whether the debtor should be adjudicated an insolvent or not.
8. It follows that the petitioner cannot be added as an additional party under Order 1, Rule 10, Civil P. C. This petition is therefore accepted and the order of the Courts below is set aside.
9. But I make no order as to costs in this civil revision petition having regard to the circumstances of this case.