One Chhotubhai obtained a decree against the respondent for Rs. 559-5-6 in Civil Suit No. 120 of 1939 of the file of the Civil Judge (Junior Division) at Broach. The decree was passed on 17-11-1939. The decree was assigned by the decree-holder Chhotubhai to the petitioner. The petitioner as assignee of the decree filed, on 5-12-1950, an application in the Court of the Civil Judge (Senior Division), Broach, exercising insolvency jurisdiction for serving a notice of insolvency upon the respondent under S. 6A of the Provincial Insolvency Act.
2. The respondent failed to comply with the notice within one month. The Insolvency Court at Broach passed an order on 28-2-1951, holding that an act of insolvency had been committed by the respondent. The petitioner then applied on 23-4-1951 by Miscellaneous Application No. 2 of 1951 to the Insolvency Court at Broach for an order adjudicating the respondent an insolvent.
3. The respondent appeared in answer to the notice and contended that the Court at Broach had no jurisdiction to adjudicate him insolvent. The Insolvency Court) at Broach accepted the contention of the respondent and by order dated 14-11-1951 ordered that the petition be returned for presentation to the proper court. On 15-11-1951, the petitioner presented the petition to the Court of the Civil Judge, (Junior Division), at Borivli, Bombay Suburban District.
4. The respondent contended that the petition filed against him in the Borivli Court did not comply with the conditions prescribed by S. 9 of the Provincial Insolvency Act and the Court had no jurisdiction to adjudicate him insolvent. The learned Insolvency Judge heard the objection relating to jurisdiction as a preliminary issue and by order dated 24-10-1952, held that the Court had jurisdiction to adjudicate the respondent insolvent even though the petition was filed in the Borivli Court more than three months after the act of insolvency on which the petition was grounded had occurred.
5. In so holding, the learned Insolvency Judge relied upon S. 14 of the Indian Limitation Act and held that the time spent in the Broach Court was liable to be excluded, in computing the period of three months, and if the time was so excluded, the petition complied with the condition prescribed by S. 9(1)(c) of the Provincial Insolvency Act.
6. In other words the learned Insolvency Judge held that the period prescribed by S. 9(1)(c) was a period of limitation and S. 14 of the Limitation Act applied to applications for adjudication.
7. The respondent preferred an appeal to the District Court at Thana and the District Judge reversed the order passed by the Insolvency Judge. The learned District Judge held that the period prescribed by S. 9(1)(c) was not a period of limitation and the petition not having complied strictly with the requirements of S. 9 of the Provincial Insolvency Act, was liable to be rejected.
8. The learned District Judge accepted the contention of the Respondent that institution of proceedings within the period prescribed by S. 9(1)(c) was a condition precedent to the exercise of jurisdiction by the Insolvency Court. The learned Judge set aside the order of adjudication and dismissed the petition filed by the petitioner. The petitioner has applied to this Court in revision under S. 75 of the Provincial Insolvency Act.
9. Section 9 of the Provincial Insolvency Act prescribed “conditions on which a creditor may petition” for adjudicating his debtor an insolvent. Sub-section (1) of S. 9 states:
“9. (1) A creditor shall not be entitled to present an insolvency petition against a debtor unless—
(a) the debt owing by the debtor to the creditor, or, if two or more creditors join in the petition, the aggregate amount of debts owing to such creditors, amounts to five hundred rupees, and
(b) the debt is a liquidated sum payable either immediately or at some certain future time, and
(c) the act of insolvency on which the petition is grounded has occurred within three months before the presentation of the petition.”
10. Sub-section (1) is followed by a proviso which was added by Act III of 1950. The proviso states:
“Provided that where the said period of three months referred to in clause (c) expires on a day when the Court is closed, the insolvency petition may be presented on the day on which the Court re-opens.”
11. The primary question which falls to be determined is whether by enacting that the condition that the act of insolvency on which the petition is grounded must have occurred within three months before presentation of the petition the Legislature intended to prescribe a period of limitation for petitions by creditors or to provide a condition precedent to the exercise of jurisdiction by the Insolvency Court.
12. Mr. Gambhirwala who appears on behalf of the petitioner contends that even though in form clause (c) provides one of the three conditions on the performance of which the Insolvency Court may exercise jurisdiction to adjudicate the debtor an insolvent in substance the Legislature has prescribed a period of limitation within which a petition for adjudication must be filed.
13. In support of that contention, Mr. Gambhirwala relies upon the judgment of a Full Bench of the Allahabad High Court, in — ‘Raja Pande v. Sheopujan Pande’, 1942 All 429 (AR V 30) (FB) (A). Mr. Gambhirwala also contends that in any event, the petition having been originally filed in the Broach Court on 23-4-1951 and that Court having returned the petition for presentation to the proper Court and the same petition having been presented in the Insolvency Court at Borivli on the next day after the petition was returned for presentation to the proper Court, the petition in the Borivli Court must be regarded as a continuation of the proceeding instituted in the Broach Court and must be regarded as lodged within three months from the date on which the act of insolvency was committed.
14. Now, from the marginal note to S. 9 of the Provincial Insolvency Act it appears that the Legislature intended to prescribe “conditions on which creditor may petition” for an order of adjudication. Clauses (a) and (b) of sub-s. (1) indisputably prescribe conditions on the fulfilment of which a creditor may petition for adjudicating his debtor an insolvent.
15. If the debt relied upon does not amount to five hundred rupees, the creditor cannot present an insolvency petition against the debtor. Similarly if the claim is not a liquidated sum, payable either immediately or at some certain future time, the creditor cannot present the insolvency petition.
16. The opening words of S. 9 also make the fulfilment of the requirement contained in clauses (a), (b) and (c) a condition precedent to the exercise of jurisdiction by the Insolvency Court.
17. The Legislature in terms has provided that the creditor shall not be entitled to present an insolvency petition against a debtor unless conditions specified therein are fulfilled.
18. It is difficult to accept the contention of Mr. Gambhirwala that even though the Legislature has, in form, prescribed that certain conditions must be fulfilled before the creditor can present an insolvency petition and clauses (a) and (b) prescribe such conditions, what is prescribed by clause (c) is not a condition but is merely a period of limitation which in certain eventualities is capable of being extended.
19. The language used in clause (c) in form prescribes a condition and not a period of limitation. It appears clear from the expression used that it was the intention of the Legislature that the act of insolvency must have occurred within three months before the presentation of the petition and except as expressly provided the fulfilment of that condition cannot be dispensed with.
20. That view is supported by the proviso enacted by the Parliament by Act III of 1950 which provides that if the three months expire on a day on which the Court is closed, the insolvency petition may be presented on the day on which the Court re-opens.
21. If by S. 9(1)(c) the Legislature intended to prescribe a period of limitation within which a petition for adjudication may be filed by a creditor, it was plainly unnecessary for the Legislature to have prescribed that the three months may be extended if on the day they expire the Court is closed.
22. By S. 4 of the Limitation Act, it is expressly provided that where the period of limitation for an application expires on a day when the Court is closed, the application may be instituted on the day on which the Court re-opens. If the condition that the petition must be presented within a period of three months were, in substance, intended to prescribe a period of limitation, then by virtue of S. 29(2) of the Indian Limitation Act, S. 4 thereof will apply to the petition and that it was not necessary for the Legislature to enact the proviso.
23. In ‘1942 All 429 (AIR V 30) (FB) (A)’, the period of three months from the date of the Act of insolvency expired on a day on which the Insolvency Court was closed, and the petition for adjudication was presented on the next day on which the Court re-opened. The Court held that the application complied with the requirements of S. 9(1)(c).
24. The learned Judges who constituted the Full Bench arrived at their decision on different grounds. Iqbal Ahmad C.J and Plowden J., expressed the opinion that the period of three months in S. 9(1)(c) was a ‘period of limitation’ but they observed that even if it were not, S. 10 of the General Clauses Act applied to petitions for insolvency.
25. They also expressed the opinion that a petition for adjudicating a debtor an insolvent was not a suit, appeal or application for which a period of limitation was prescribed by any special or local law and therefore the sections referred to in S. 29(2) of the Limitation Act did not apply thereto.
26. Dar J. held that S. 9(1)(c) prescribed a period of limitation for an application under a special law and by the operation of S. 29(2), S. 4 of the Limitation Act applied to a petition for adjudication. The Court in that case refused to accept the view that S. 9(1)(c) of the Provincial Insolvency Act did not prescribe a period of limitation taken by the Madras High Court in — ‘Chenchuramana Reddi v. Arunachalam’, 1935 Mad 857 (AIR V 22) (FB) (B), and the Calcutta High Court in — ‘Muradan Sardar v. Secy. of State’, 1939 Cal 313 (AIR V 26) (C).
27. It is difficult to appreciate the distinction between ‘a petition’ and an application within the meaning of S. 29(2) of the Limitation Act. However in view of the proviso enacted by the Parliament by Act III of 1950, the question whether in the circumstances the petition for adjudication in Raja Pande's case (A), may be regarded as maintainable is academic.
28. But for reasons hereinbefore mentioned, I am unable to agree with the view that S. 9(1)(c) prescribes a period of limitation and is not in form and substance a condition on the strict compliance of which alone a petition for adjudication can be maintained.
29. In my view, S. 9(1)(c) does not prescribe a period of limitation for presentation of a petition by a creditor for adjudication but sets out a condition precedent, and by applying the rule contained in S. 14 of the Limitation Act a petition filed after the expiry of three months cannot be made to conform to the strict requirement of S. 9(1)(c) of the Provincial Insolvency Act.
30. It is true that the petition for adjudicating the respondent an insolvent was lodged in the Insolvency Court at Broach on 23-4-1951 but that Court had no jurisdiction to entertain the petition. The Broach Court having no jurisdiction to entertain the proceedings, the proceeding taken in the Insolvency Court at Borivli cannot be regarded as an extension of the proceeding filed in the former Court, and the petition must be regarded as presented on 15-11-1951.
31. The petition having been presented more than three months after the date on which the act of insolvency is grounded occurred it must be regarded as not complying with the requirement of S. 9 of the Provincial Insolvency Act. The learned District Judge, therefore, was in my view, right in dismissing the petition.
32. The rule is therefore discharged with costs.
D.H.Z
Rule discharged.