Khusal Chand Sadani v. Balkissen Mohta .

1. This is a petition by one Khusal Chand Sadani residing at No. 26, Shib Thakur Lane, Calcutta-7 for adjudication of one Balkissen Mohta residing at No. 23, Kali Krishna Tagore Street as an insolvent. The petitioner's case is that the said Balkissen Mohta stood guarantee for due payment of a sum of Rupees 12,542/- interest and cost when an order by consent was made by the Company Court in petition No. 183 of 1970 filed by this petitioner in the matter of Belur Glass Works Limited. The said Belur Glass Works Limited failed to pay in terms of the said order and went into liquidation. Thereafter the petitioner proceeded against the said surety Balkissen Mohta for realisation of the sum and an order of attachment was passed by the Company Court on the 12th December, 1972 when the petitioner applied for execution. Pursuant to the order the right title and interest of Balkissen Mohta in his undivided one third share in premises No. 23, Kali Krishna Tagore Street was attached by the Sheriff of Calcutta on the 3rd of July, 1973. The petitioner's case is that the said debtor Balkissen Mohta three months before the date of presentation of this petition committed an act of insolvency namely that one third share in premises No. 23, Kali Krishna Tagore Street belonging to the debtor has been lying attached for not less than twentyone days in execution of the order dated the 25th of November, 1970. A sheriff's certificate is attached to the petition.

2. Mrs. Pal opposing the application on behalf of the debtor pointed out that under Section 9 (e) of the Presidency Towns Insolvency Act an ‘act of insolvency’ occurs if a property is attached in “execution of the decree of any Court.” Referring to Section 2(2) of the CPC she pointed out that decree is not only a formal expression of an adjudication conclusively determining the rights of the parties but the matters in controversy must be in a suit. She submitted that a strict construction was necessary of the word ‘decree’ mentioned in Section 9 (e) of the P.T Insolvency Act. She cited the case of Ramshai Mullmore v. Joylall reported in AIR 1928 Cal 840. That was a case before a Division Bench of this Court in which Rankin C.J held that an attachment in execution of an award is not attachment in execution of a decree within the meaning of Section 9 (e) for the purpose of creating an act of insolvency. He observed inter alia.

“It, is true enough that for the purpose of enforcing an award you may treat the award as though it were a judgment and therefore you may apply to it the provisions of Order 21 and various other provisions. It is another thing altogether to say that something which is not a decree must be taken to be a decree with the result that a man is to commit an act of insolvency so that he has to be adjudicated upon a petition…………….”

3. Relying on a decision in Re. Bankruptcy reported in (1907) 1 KB 478 it was held that the words “in execution of the decree of any Court for the payment of money cannot be extended by analogy. They must be extended, if at all, by the legislature. Unless the definition given by the legislature was complied with the Court could not hold that there has been an act of insolvency. Mrs. Pal also cited the case of Jyoti Bhusan v. Benaras Bank Ltd. reported in AIR 1962 SC 403 in which it was held that an application for execution of an order under the Companies Act, 1913 passed by the High Court is governed by Article 183 and not by Article 182 of the Limitation Act. It is not clear how the said case is of assistance to the debtor. A contention that a payment order passed by the Allahabad High Court under Section 187 of the Indian Companies Act, 1913 was not in exercise of ordinary civil authority and hence did not come within Article 183 of the Indian Limitation Act (1908) was negatived in that case.

4. Appearing on behalf of the creditor Miss Ojha contended that the word ‘decree’ substantially meant a final determination of the matters in controversy and what was essential was that the dispute must be of civil nature and not interlocutory in character. If those characteristics were present the order of adjudication by the Court could be treated as a decree. She also pointed out that there was difference between the old Arbitration Act on the basis of which the decision was made by Rankin C.J and the new Act. Under Section 17 of the new Arbitration Act a judgment is passed on an award but formerly no such judgment was passed.

5. Her submission was that the nature of arbitration proceedings is completely different from the nature of the proceedings before the Company Court. Arbitration is conducted in a private forum but in this case adjudication was done by the Court itself and that made a difference. She also pointed out that although a decree in terms of Section 2, sub-section (3) of the CPC mentioned a suit, the word ‘suit’ was nowhere defined.

6. Strictly speaking, the present case cannot be distinguished in principle from the case of Ramshai Mullmore reported in AIR 1928 Cal 840. In that case, for the purpose of enforcing the award, it was possible to treat the award as though it were the judgment but nonetheless it was something which was not a decree. In the present case also under Section 634 of the Companies Act, 1956 the order made by the Court is to be enforced ‘in the same manner as a decree’. The expression ‘in the same manner as a decree’, presupposes that the two are not synonymous. The words “same manner” only seek to place on the same footing things which are not the same. A thing which is not a decree is placed in the same category as a decree for the purpose of execution. In this respect a difference in the matter of new Arbitration Act is of no help to the petitioning creditor. A Division Bench of this Court has held that an attachment in execution of an award is not attachment in execution of decree. It has specifically stated that there can be no extension of the expression by analogy. That is precisely what is being sought to be done here. The order passed by the Company Court although it may involve adjudication by a Court of the matters in controversy between the parties in a civil matter, is nothing else than an order which under Section 634 of the Companies Act, may only be enforced “in the name manner as a decree made by the Court.” It may have many attributes of a decree but it is not a decree. It is true that a suit has not been defined but it is well established by authorities that a suit is one which is commenced by a plaint and where there is no civil suit there is no decree (1886) 13 Ind APP 160 (PC). In the case of Beni Madhab Khettry…Plaintiff; v. Abdul Razak…Defendant. reported in AIR 1933 Cal 673 it has also been held by Buckland J. that insolvency proceedings are not suits. Therefore, it is not possible to equate the expression “in execution of the decree of any Court” with “execution as a decree of order passed by the Company Court.” The Court may no doubt in some extreme cases, modify meanings of words used in the statutes by construing and interpreting them but that is usually done in cases of ambiguity, patent absurdities and internal contradiction. But normally in the words of Frankfurter “a Judge must not rewrite a statute, neither to enlarge nor to contract it……………He must not read in by way of creation. He must not read out except to avoid patent non-sense or internal contradiction. “In the instant case not only the words concerned are clear and free from ambiguity but I also, feel myself bound by the high authority of a Division Bench of this High Court presided over by Rankin C.J Yet it appears to me that such a construction may not always be in consonance with the ends of justice and may even circumscribe the purpose of the legislation by mere adherence to form without looking into the substance. Decades ago the attention of the legislature was drawn by the judgment of Rankin. C.J Sir Dinshaw Mulla in his commentaries on Insolvency also felt that an amendment might be considered. It is for the Parliament, in its wisdom to consider amendment of the concerned provision. The Court, however, feels that it has no option but to hold that the petition must fail. There will, however, be no order as to costs.

7. Petition dismissed.