A. Subramania Iyer Petitioner v. S. Meenakshisundaram Chettiar And Another S

1. This Civil Revision Petition (under Section 75 of the Provincial Insolvency Act) arises out of an application praying that the respondents' debts which were admitted by the Official Receiver may be expunged from the schedule. The matter has been dealt with in the courts below on the assumption that the respondents' claim could have been enforced in a court of law on the date of the presentation of the insolvency petition but that the remedy by suit had become barred by limitation before the date of the order of adjudication. The case has been argued before us on the same assumption.

2. Section 34(2) of Act V of 1920 provides that all debts to which the insolvent is subject when he is adjudged an insolvent (etc.) shall be debts provable under the Act. The Courts below have upheld the respondents' contention that in view of the provision in Section 28(7) as to 'relation back' the "criterion date was the date of the filing of the petition"; in support of the conclusion, they have relied on Venkata Hanumantha Rao v. Gangayya (1928) 55 M.L.J. 168 : I.L.R. 51 Mad. 594, where it was held that a petition duly filed by a creditor might under Section 16 be allowed to be continued by another creditor whose claim might (if a suit were necessary) have become barred between the date of the presentation of the insolvency petition and the date of the substitution. The trial court further relied on the use of the expression "the commencement of the insolvency" in the course of the judgment in Sivasubramania v. Theethiappa (1923) 45 M.L.J 166 : I.L.R. 47 Mad. 120. The latter case is clearly distinguishable; but as regards the former case, it cannot be denied that the reasoning on which the decision has been based affords support to the respondent's contention, though it is perhaps possible to justify the decision on a different ground, viz., that the petition filed by a creditor must be regarded as a kind of representative proceeding and that the other creditors are in a sense parties thereto even from the outset.

3. There are two decisions directly in point, one of the Lahore High Court, under the Provincial Insolvency Act Nizam v. Babu Ram (1933) I.L.R. 14 Lah. 730 and the other of the Bombay High Court, under the Presidency Towns Insolvency Act Byramji Bomanji v. Official Assignee, Bombay A.I.R. 1930 Bom. 130; and they support the conclusion arrived at by the Courts below. In Sankaranarayana Aiyar v. Alagiri Aiyar (1918) 35 M.L.J. 296 and Rangiah v. Appaji Rao (1926) 51 M.L.J. 719 : I.L.R. 50 Mad. 300, there are observations to the effect that on the ground of principle, if not also as a matter of construction, the relation-back doctrine must be held to govern the interpretation of the expression 'order of adjudication' occurring in some of the later sections of the Act. In Atchuta Ramayya Garu v. Official Receiver, East Godavari (1935) 69 M.L.J. 241 : I.L.R. 58 Mad. 1032, both the learned Judges expressed the opinion that the restriction imposed by clause (2) of section 28 on the institution of suits by creditors must in view of Section 28(7) be held to relate back to the date of the presentation of the petition; and if this were the correct view, it would only be logical to hold that even for purposes of Section 34(2), the same is the material date cf. Harrison v. Kirk (1904) A.C. 1 at 5.

4. Having heard the point fully argued we think it right to say that if the matter were res Integra, we should have hesitated (sic) come to the conclusion reached or suggested in the cases above referred to. The scheme of the English Bankruptcy Law since 1883 is to regard the date of the receiving order as the material date for questions like the present and to dissociate them from questions relating to the vesting of the title in the trustee (which only follows on adjudication) and from the doctrine as to 'relation back' whose purpose and effect were explained by the Master of the Rolls in Pollitt, In re (1893)1 Q.B. 455 at 457. The observations in some of the earlier English decisions (which have been quoted in the later cases) must, it seems to us, be understood with due regard to the state of the law when those cases were decided. The Provincial Insolvency Act however has not wholly followed the scheme of the English Act of 1883; not only has it not introduced the intermediate stage of a 'receiving order' but it has departed from modern English practice in fixing the date of the presentation of the Insolvency petition as the material date for most purposes. In the notes appended to the Bill of 1905, it was stated that this was considered to be 'in accordance with the law in force in the Presidency Towns' (11 and 12 Vic, c. 21). Further, the Act provides for the relation back, not of the trustee's title or of the commencement of the insolvency but, of the order of the court. It is therefore not possible to say with confidence how far the legislature in this country intended to dissociate or has in the result dissociated questions like the one now before us from the doctrine of 'relation back' in the sense in which it has been introduced by the Act.

5. In a matter where certainty and uniformity of practice is more important than theoretical unassailability, we do not feel justified in dissenting from the view which has been expressed or assumed in the several cases above referred to, in several provinces. Presumably creditors must for many years have acted on the view thus sanctioned and it seems reasonable to leave it to the legislature to alter it, if necessary. On this ground we dismiss this Revision Petition, but without costs.