JUDGMENT Syed Qamar Hasan, J.

1. This is a second appeal in execution preferred by the second judgment-debtor against the judgment and order dated 30-3-1959 of the Additional Subordinate Judge, Kurnool, who in his appellate jurisdiction affirmed the order of the District Munsif, Adoni, holding the E. P. 252/56 in O. S. No. 59/51 in time.

2. The facts are not much in dispute. O. S. 59/51 on the file of the District Munsif, Dhone resulted in a decree on 26-4-1952 against the appellant and the 3rd respondent and in favour of the 1st and 2nd respondents hereinafter to be referred to as decree-holders. Before any steps for execution were taken by the decree-holders, the appellant filed I. P. 26/53 in the Subordinate Judge's Court, Bellary. During the pendency of the insolvency proceeding, the decree-holder filed E. A. 18/53 on 27-1-1953 before the District Munsif, Dhone for transmission of the decree to the Court of the District Munsif, Adoni. The application was ordered and they filed E. P. 111of 1953 in the later but it was dismissed on 27-7-1953. The appellant was adjudged an insolvent on 13-10-1952 but the insolvency was annulled on 15-12-1954. Thereafter the decree-holders filed E. P. 252/56 on 23-4-1956. Despite receiving notice under Order 21, Rule 23 the first judgment-debtor preferred to remain ex parte. The appellant, however, resisted the application on the plea of limitation. That plea was elaborated by contending that E. A. 18/53 and E. P. 111/53 were filed during the pendency of the insolvency proceeding and no leave of the insolvency Court was obtained therefor as required by Section 28 (2) of the Insolvency Act; that the same cannot be regarded as an application in accordance with law or as step-in-aid of execution and therefore, E. P. 252/52 cannot be held to be within time. Further it was contended that the decree-holder was not entitled to the benefit of Section 78 (2) of the Insolvency Act since they had failed to tender evidence that he had proved his debt as required by the said Sub-section.

3. The District Munsiff held that Section 78 (2) of the Provincial Insolvency Act entitled the decree-holders to exclude the period from the date of the order of adjudication to the date of annulment. If the period is computed in the light of the said sub-section, E. P. 252/52 would be within time. With this view the Additional District Judge concurred. In the alternative he gave effect to the argument that since the E. P. was also against the first judgment-debtor, who was a solvent and not subject to any disability under the Provincial Act, Explanation I to Article 182 will also save time against the appellant.

4. The learned advocate argued that the Courts below have fallen into a manifest error in giving the benefit of Section 78 (2) of the Provincial Insolvency Act by ignoring the proviso to that subsection. The appellant, he urged, had taken the objection that as the decree debt has not been proved in Insolvency, there was left no occasion for the decree-holder to claim any exclusion of time under Section 78(2). Section 78 (2) is as follows :

"Where an order of adjudication has been annulled under this Act, in computing the period of limitation prescribed for any suit or application for the execution of a decree (other than a suit or application in respect of which the leave of the Court was obtained under Sub-section (2) of Section 28) which might have been brought or made but for the making of an order of adjudication under this Act, the period from the date of the order of adjudication to the date of the order of annulment shall be excluded:

Provided that nothing in this section apply to a suit or application in respect of a debt provable but not proved under this Act. The scope of the sub-section has been considered in S. Sogmull Lachiram Firm, Tenali v. V. Parandhamayya, ILR 1941 Mad 136 : (AIR 1940 Mad 716). It has been held therein that before a party can claim the benefit of the exclusion enacted by Section 78 of the Provincial Insolvency Act, two conditions have to be satisfied: (1) the suit or application in which the limitation is pleaded must be in respect of a debt provable under the Act and (2) it must also have been proved under the Act. In a recent Bench ruling of our High Court reported in Yerramilli Radraraju v. Yavanamanda Suryanarayana Raju, the significance of the word 'proved' has been considered and it has been held that the word 'proved' in the proviso to Section 78 (2) is used in the technical sense of proof of debt for the purpose of claiming distribution in the assets of the insolvent before the Insolvency Court.

5. The learned advocate for the respondents-decree-holders was not able to show that any such proof as required by Section 49 of the Provincial Insolvency Act has been tendered in the Insolvency Court. In this state of affairs, it cannot be said that the decree-holders were entitled to take advantage of the time between the dates of adjudication and annulment orders. The finding of the Courts below on the question of exclusion of the time cannot be sustained. The other contention to bring the E. P. within limitation centered round the second part of the paragraph of Explanation I to Article 182 of the Limitation Act. That paragraph lays down that where the decree or order has been passed jointly against more persons than one, the application if made against one or more of them or against his or their representatives shall take effect against them all.

6. It is not disputed that no question of limitation arises so far as the first judgment-debtor is concerned. But it is argued that because the decree was joint the limitation would be saved by reason of the explanation above quoted against the second judgment-debtor, the appellant herein.

7. The learned advocate for the respondent relied upon Section 43 of the Act and referred to the pronouncement of the Full Bench in Subbaiah Goundan v. Ramasami Goundan, . There it has been laid down that the effect of annulment is to vest the property retrospectively in the insolvent, in other words, the annulling of an order of adjudication is to wipe out altogether the insolvency and its effect except to the limited extent reserved under the Section. The argument on behalf of the respondent is that inasmuch as annulment is unqualified, the effect would be that both the judgment-debtors would be governed by the Explanation to Article 182. The contention on behalf of the appellant is that the Explanation is to be read with the provision of Section 78 (2) of the Provincial Insolvency Act because the same also prescribes how the period of limitation is to be computed when an order of adjudication has been annulled. No direct authority has been cited on one side or the other. The question is of sufficient interest and importance and I prefer to refer the case to Bench for an authoritative pronouncement instead of giving leave for a Letters Patent Appeal. Let the papers be placed before Bench.

JUDGMENT Kumarayya, J.:

8. This C. M. S. A. is on reference before us. It raises a short point of limitation.

8a. The facts are few and they are not in dispute. Respondents 1 and 2 obtained a money decree against 3rd respondent and the appellant on 26-4-1952 in the District Munsif's Court, Dhone in O. S. No. 59/1951. Shortly, thereafter on 7-8-1952, the appellant 2nd judgment-debtor filed I. P. 26/52 in the Sub Court Bellary and he was adjudged insolvent on 13-10-52. Respondents 1 and 2 (decree-holders) filed E. A. No. 18/53 on 27-1-53 in the District Munsif's Court, Dhone and got the decree transferred to the District Munsif's Court, Adoni, for execution. There, they filed E. P. 111/53 against both the J. Ds. No leave of the insolvency Court for the execution was taken in relation to the appellant as provided in Section 28 (2) of the Provincial Insolvency Act. The E. P. was at last dismissed on 27-7-53.

Within three years thereafter, the decree-holders filed E. P. No. 252/56 on 23-4-56 in the District Munsif's Court, Adoni. The appellant then was no longer under the insolvency jurisdiction, his adjudication having been annulled on 15-12-54 itself under Section 43 of the Provincial Insolvency Act. But he resisted the petition on the ground that the former E. P. was not a petition in accordance with law within the meaning of Art, 182 (5) of the Limitation Act due to the non-compliance with the provisions of Section 28 (2) of the Provincial Insolvency Act and the present E. P. filed after three years from the date of the decree is beyond time. It was also contended that the decree-holders were not entitled to the benefit of Section 78 (2) of the Insolvency Act in that they had failed to show that they had proved the debt under the provisions of the Insolvency Act. The District Munsif, after consideration of the provisions of Sections 28(2) 37 and 78 (2) of the Provincial Insolvency Act came to the conclusion that even if no leave for filing an E. P. was obtained from the Insolvency Court, the eventual annulment of adjudication without any conditions attached to it would restore the parties to their original position aa if no adjudication had been made and therefore the prior petition E. P. No. 111/1953 must be held to be an application in accordance with law and the present E. P. filed within three years from the date of its dismissal is well within time. In this view, he overruled the objections raised and proceeded with the execution petition.

9. The appellate Court upheld the order of the District Munsif on the ground that the decree-holders could avail of the benefit of the provisions of Section 78 (2) and therefore the period from the order of adjudication to the date of annulment of insolvency must be excluded for computing the period of limitation prescribed for the E. P. under Article 182 of the Limitation Act. If the period is so deducted, the present E. P. is well within time. An additional ground on which he upheld the order was that since the previous E. P. was against the 1st judgment-debtor also who was not subject to any disability under the Provincial Insolvency Act, the necessary consequence of Explanation I to Article 182 of the Limitation Act is that the petition shall take effect against the appellant as well and in that view, the E. P. is well within time. In the result, he dismissed the appeal with costs.

10. When the matter came up in Second Appeal, our learned Brother, Qamar Hasan, J. repelled the contention that Section 78 (2) of the Provincial Insolvency Act could be availed of by the decree holders as the proviso to that section, stood in their way. On the question, whether the Explanation to Article 182 applied to the Case, the learned Judge, in view of the contention raised that the Explanation should be read with Section 78 (2) of the Provincial Insolvency Act, referred the matter to this Bench for an authoritative pronouncement.

11. We may state at once that Sub-section (2) of Section 78 of the Provincial Insolvency Act has no application to the facts of the present case.

That sub-section permits the exclusion of the period from the date of adjudication to the date of the order of annulment in computing the period of limitation prescribed by the statute for a suit or application for the execution of a decree which might have been brought earlier but for the adjudication order. But under the proviso to that sub-clause, this concession is not available to any one in a suit or execution proceeding relating to a debt provable but was not proved under the Provincial Insolvency Act. It is not disputed that the E. P. in question relates to a debt provable but the decree-holders did not take steps to prove that debt as provided in Section 49 of the Provincial Insolvency Act. Therefore the provisions of Section 78 (2) could not be attracted. The lower appellate Court was manifestly in error in holding otherwise.

12. But that does not however conclude the matter as the question of limitation has been made to rest on a firmer basis. Two grounds, strong enough have been pointedly raised in this behalf. It may be remembered E. P. No. 256/56 is not tbe first of its kind and has been filed within three years from the date of dismissal of the previous E. P. No. 111 of 1953 which again was filed only within 1 1/2 years from the date of the decree itself. The contention is Article 182 (5) of the Limitation Act would bring the present application within the time. It is indeed so if the prior application was in accordance with law and was made to the proper Court for execution or to take some step in aid of the execution of the decree.

The next ground is made to rest on Explanation I to Article 182 which refers to the application mentioned in Clause (5) of Article 182 and enjoins that where the decree or order has been passed jointly against more persons than one, the application if made against any one or more of them, or against his or their representatives shall take effect in favour of all of them. It is indisputable that the previous application was within time and was made to a Court competent to execute the decree and further it sought for relief granted by and consistent with the terms of the decree. So, then, it was a petition in accordance with law to a proper Court for the execution of the decree. This position has not been disputed so far as the 1st J. D. is concerned. In relation to and judgment-debtor, appellant, however, it is urged that no E. P. against him after he was adjudged insolvent could have been filed during the pendency of insolvency proceedings save with the leave of the Court as enjoined in Section 28 (2) of the Provincial Insolvency Act and hence the previous petition is not an application in accordance with law so far as he is concerned. But it is common ground that his insolvency has subsequently been annulled under Section 43 unconditionally without any order of vesting of the property in some other person for the benefit of the creditor.

13. On a combined reading of Sections 43 and 37 of the Provincial Insolvency Act, the effect of this annulment would be that the general provisions of section 37 would have full effect and the insolvent would be reverted to his original position as at the time of adjudication, with all the powers and rights in respect of his property, as though no adjudication bad taken place at all. This legal position is no longer open to doubt or question as it is concluded by authority. In Arunachalam v. Narayanaswami, (FB) where the legal effect of annulment of adjudication made without making any vesting order under Section 37 came up for consideration before the Full Bench, the learned Judges after a consideration of the various authorities on the point held that in such cases the property does not revest in the insolvent but it reverts to him and that the effect of the annulment relates back to the data of adjudication. In this view of the matter, the question whether a debtor who was an insolvent but whose adjudication was subsequently annulled had a saleable interest in the property on the dates he effected sale during the period of insolvency was answered in the affirmative.

This ruling was followed by another Full Bench in Subbaiah v. Ramasami, (FB) wherein the learned Judges reviewed the entire case law while interpreting Section 37 of the Provincial Insolvency Act. It was a case where pending a mortgage suit, a petition to adjudicate one of the mortgagors as insolvent was filed. The adjudication order was made some time after the mortgage suit was decreed. The effect of the adjudication was that it related back to the date of the petition. In execution of the decree, the properties were brought to sale and the decree-holder purchased the same. The Official Receiver was not a party to the suit or to the execution proceedings. After the mortgaged properties were sold in Court auction, the insolvency was annulled for failure of the insolvent to apply for discharge without making any vesting order. The question was, what was the effect of the annulment. The learned Judges on the question of the implication of the word 'revert' used in S. 37 (1) of the Provincial Insolvency Act observed at page 91 thus :

"In other words, the object of using the word "revert" seems to be to put the clock back, subject however to the extent of holding as valid sales and dispositions of property and payments made before that date by the receiver."

Dealing with the authority in Ratnavelu Chettiar v. Franciscu Udayar, 1945-1 Mad LJ 472 : (AIR 1945 Mad 388) and the observations of Somayya, J., therein, the learned Judges observed thus :

"Somayya, J. in an elaborate judgment considered the question in detail and held that a suit instituted without leave of the Court after an insolvency without even making the official Receiver a party to the suit or execution proceedings was valid and that the decree and the sale were operative. The learned Judge was of opinion that once the adjudication was annulled without imposing any conditions, it must be taken that there was no insolvency at all and by reverter the prior state of things was restored and the property vested in the insolvent with retrospective effect."

At page 97, they summarised the position thus :

It has therefore been uniformly held in this Court from Ramasami Kottadiar v. Muthugesa Mudali, ILR 20 Mad 452 onwards that the effect of annulment is to vest the property retrospectively in the insolvent. In other words, the consequence of annulling an order of adjudication is to wipe out altogether the insolvency and its effects except to the limited extent reserved under the section. The Legislature introduced the fiction of vesting the title retrospectively in the insolvent. In view of this, the alienations made of property, movable or immovable, by the insolvent after adjudication, the decrees and execution proceedings suffered by him during such insolvency, the status of an agriculturist, notwithstanding the property is taken away and transferred from him, are all restored and validated with effect from the date of filing the insolvency petition in which the subsequent adjudication and the vesting of the property in the Official Receiver followed.

Referring to the observations of Reilly, J. in Jethaji Peeraji v. Krishnayya, ILR 52 Mad 648 : (AIR 1930 Mad 278), the learned Judges observed that this observation has been misunderstood in some cases. Section 37 does not provide that in all cases the clock is put back, but the setting back is always subject to the conditions which may be imposed by the Court, and the property may be vested even in the Receiver or other person and it is in that sense that the learned Judge used the expression. At page 99 they observed in this behalf thus :

"Reilly, J. does not go to the length of holding that as a consequence of an annulment, the clock is put back in its entirety, but only subject to the exceptions recognised in Section 37."

14. The following observations at page 103 which embody the conclusions reached may be advantageously referred to here :

"From the foregoing, it is clear that the weight of authority in this Court is in favour of the view that the effect of annulling the adjudication is to wipe out the effect of insolvency altogether and to vest the property in the insolvent debtor, subject however to the exceptions provided in Section 37. In our view, therefore, the decision of the Full Bench in was rightly decided and does not require reconsideration. It settled the conflict in this Court. The decree and execution proceedings in the present case are valid and binding on the insolvent. In cases of transfers of property by an insolvent during his insolvency, such transfers are retrospectively validated by reverter under Section 37 and if the conditions of Section 43 of the Transfer of Property Act are fulfilled, they may also be supported under that Section."

The law is thus well settled that when an adjudication is annulled without imposing any conditions and without vesting the property in any other person, it must be taken that the effect of annulling the adjudication is to wipe out the effect of insolvency altogether and the insolvent automatically reverts to his original position with all his powers and rights in respect of the property as though the adjudication was but a dream and hollow unreality. If that is the effect of unconditional annulment, as it is under the express provisions of law, the reverter must benefit both the debtor and the creditor. All disabilities and limitations directly flowing from the adjudication shall automatically get remedied or obliterated. Whatever the vitiating shortcoming on account of the E. P. being filed without the leave oi the Court it will, with the order of annulment, get automatically neutralised. The insolvent having reverted to his original status by the operation of law, it can no longer be argued that the E. P. filed against him was not a proper application in accordance with law by reason of insolvency. The retrospective effect being given to his status, the consequences will necessarily reach back to the date of the reverter. Judged thus, the argument that E. P. No. 111 of 1953 was not in accordance with law against and J. D. must necessarily fail. It follows therefore that the E. P. in question is not barred by limitation.

15. The question of limitation should fail on the other ground also. As already pointed out, having regard to the Explanation to Article 182 where a decree awards relief against two or mure defendants jointly, an application even against one of them shall take effect and save time as against all. That is clear from the language employed in the said Explanation. This position is in no way affected by Section 78 (2) of the Provincial Insolvency Act which only confers some concession to the creditors who satisfy the requisite conditions.

16. The Courts below have rightly rejected the plea of limitation advanced on behalf of the appellant. The appeal is therefore dismissed with costs.