1983 PLP 1567 (CLC)

GUL MUHAMMAD KHAN. J.-This is a certificated appeal against the order dated 11th February, 1972 passed by a learned Single Judge of this Court in S. A. O. 45/72. The respondent Maseel Ahmad made an applica tion on 5th May, 1962 under sections 10(1) and 13(I) of the Provincial Insolvency Act, 1920, to adjudicate him as insolvent. He mentioned his eight creditors, excluding the appellant and the amounts due to each one of them, He also gave a list of his assets.

2. The present appellant objected to the very proceedings and made an application praying that the same being collusive and frivolous, be dismissed. His application was, however, rejected and Maseel Ahmad was adjuged as insolvent on 11th October, 1962. The appellant filed a review petition which was rejected on 29th November, 1962. His appeal also failed and was rejected on 9th April, 1963 by the District Judge. Another application filed by him under section 25 of the Act on 25th April, 1963 for annulment of the adjudication, also did not succeed. The appellant was asked to move when the respondent asked for absolute discharge. An appeal against that order was also dismissed as time-barred.

3. The Insolvency Judge allowed Maseel Ahmad an absolute discharge on 11th May, 1967. A review petition against that order failed. On 21st September, 1967 the appellant made an application under sections 4, 5 and 33(3) of the Act to enter his name also as a creditor but that too was rejected on 21st December; 1967 as barred by time. An appeal taken against that order was rejected on 9th October, 1971 by the District Judge. A second appeal in the High Court also met the same fate on 11th February, 1972 as mentioned above. The reason given in the impugned orders was that as the creditors could make an application under sec tion 33(3) of the Act, only before the discharge of insolvent, the one made, thereafter, was not maintainable.

4. This appeal was made in 1972. Subsequently, through orders dated 22nd September 1976, and 16th November, 1977 the respon dents Nos. 2 to 9 have been ordered to be proceeded against ex pane. Even respondent No. 1 has not .appeared today. He is also not represented by a counsel either. We, are, therefore, obliged to proceed ex parte against him also. The appellant informs us that despite the order of discharge the final dividend has not been made anal a large sum of the in solvent is yet available for distribution.

5. The appellant, who also appears personally, contends that the pro visions of section 33(3) are made directory in 'nature and they, in no way, restrict the right of a creditor who can apply till such time that all the assets have not been distributed. He has referred to three judgments of the pre-partition Indian Courts but none of them is directly applicable. They pertain to either a situation where there was a conditional discharge of the insolvent or an applicant creditor was the one who had already proved another debt. All the three cases have been mentioned by the appellant in his grounds of appeal and so they need not be noted here. Some observa tions out of one of them have been noted in para. 8 below.

6. The contention of the appellant, however, has much force when section 33(3) is read with section 64 of the Provincial Insolvency Act. Keeping both the provisions in view one would not err to say that the restriction given in section 33(3) is not mandatory and conclusive but only directory. This view is supported by Arjun Dos Kundu v. Marchia Telini (A I R 1936 Cal. 434) wherein it was observed that the provisions of that subsection are directory and that the applicant can come on the schedule of creditors as long as there are any assets available for distribution amongst the creditors and till the final dividends are distributed and till the administration is complete.

7. The learned Judge went on to say later in the above case that :- "Section 64, therefore, will still have to be invoked in such cases where the discharge order has been made a long time ago but the assets have been realized by the Receiver a long time thereafter, and the time for making a final dividend may have arrived, a long time after the discharge of the insolvent. In such a case, on the wording of lire statute, clearly a creditor who has nut already proved his debt,. will not be debarred from proving his debt within the time given in the notice issued under section 64 of the Act. , This 'principle leads me to think that the words of section 33, clause (3) which include creditors whose claim had already been notified but whose debts have not already been proved, are merely directory".

8. In Jhan Bahadur Singh v. Bailiff of the District Court (A I R 1927 Rang. 263) the view of the Court was that no period of limitation has been prescribed in the Provincial Insolvency Act, for applications by creditors to be brought on to the schedule of creditors and the same can be done as long as there are assets and till the final dividend is distributed. It was further held that the matter was intended to be left to the discretion of the Insolvency Court. The case of Sivasubramania Pillai v. Theethtappa Pillai (A I R 1924 Mad. 163) was also about conditional discharge, but the following observations therein are relevant to the case in band :- "We accordingly hold as a fair construction and one which will recon cile the policy of the Act and section 39(4) with section 24(3) that the words we are concerned with in the latter are not restrictive, but, as Vaughan Williams, J. said in the second of those decisions of similar words, `as soon as may be after the making of a receiving order' in the Bankruptcy Act of 1883, Schedule II R. I. merely. directory arid that non-compliance with them does not in any way deprive dry creditor of his right or limit his right."

9. Thus, the view taken by the Courts about section 33(3) read w' section 64 is that it is discretionary for a Court to permit a creditor to apply and prove his debt even after an absolute discharge has been allowed to an insolvent. It is submitted with respect that it appears to be the correct position of law. Even the purpose of law being to see that every liability of the insolvent is taken care of and he is allowed to start afresh social and financial life, it will be on the interest of both the parties that the appellant is allowed to prove his debt. The learned Insolvency Judge, however, shall not delay in proceedings which are already too old and permit the appellant only such an opportunity which is absolutely necessary. This appeal is thus allowed. The impugned orders are set aside and the case sent back to the Insolvency Court to allow the appellant a reasonable opportunity to prove his debt. M. A. K. Appeal accepted.