Vol. 15 · pages 71–75

54 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES views in this matter. The Madras and Calcutta High Courts have held that the period cannot be extended. The Allahabad High Court has held that the period can be extended. It is therefore felt that both for the purpose of removing what might be called and injustice, because, if the creditor is not able to present a petition within three months by reason of the fact that the court is closed, it is certainly not his fault, and secondly also in order to remove the conflict of decisions, it is proposed by this amendment that in any case where the period expires on a day when the court is closed, it shall be lawful to present a petition on the day on which the court reopens. Coming to clause 3, it amends section 21 of the Presidencytowns Insolvency Act. Section 21 deals with annulment of adjudication. Under section 21, although the power of annulment is given to the court, the matter is left within the discretion of the court. The words are, “the court may”. Then, this section 21 is contrary to section 35 of the Provincial Insolvency Act: because, under section 35 of the Provincial Insolvency Act, the power is obligatory and the wording is, “the court shall”. Similarly, it is found that the existing section 21 is also to some extent inconsistent with its own section 13 subclause 4. Because, there it is stated that if the grounds exist for dismissing a petition, the court shall dismiss it. There is no reason why in the case of annulment the power should be discretionary and in the case of dismissal, the power should be compulsary. It is therefore felt that it would be desirable to bring the Presidency-towns Insolvency Act in conformity with the Provincial Insolvency law and use the word “shall” in the place of the word “may”. Then, I come to clause 4. Clause 4 makes an amendment to section 53 of the Presidency-towns Insolvency Act. Section 53 deals with the rights of an execution creditor against the property of an insolvent, who has obtained a decree against the debator before he was adjudged insolvent. The question has arisen as to what should be the terminus, so to say, of the rights of the executing creditor : should the terminus be the presentation and admission of the petition of insolvency or should the terminus be the adjudication. It is felt that the

55PARLIAMENTARY DEBATES proper terminus, the equitable terminus would be the admission of the petition ; because, admission of the petition means that there are other creditors who are also recognised as having a right to a share in the property of the debtor. It is therefore unreasonable to permit the prior executing debator to continue to appropriate the property until the date of adjudication. There may be a considerable time between the admission of the petition of insolvency and the actual adjudication by the court. Therefore, this section substitites the word “admission” for the word “adjudication”. Then, I come to clause 5. Clause 5 introduces a new section, section 101A in the Presidency-towns Insolvency Act. The necessity for the introduction of this new section is this. As I just now stated, there is a provision for the annulment of adjudication. Now, the effect of the annulment of adjudication is that proceedings which by reason of adjudication are terminated or cannot be initiated, become open. What the section permits is that on annulment other persons who have a right to sue or proceed against the debtor will be free to so. The law of limitation comes in their way. As lawyer Members of the House would know, one of the principles of the law of limitation is that once limitation begins, it does not stop. Nothing can prevent limitation being suspended. Therefore what happens is this …………… Shri Tyagi (Uttar Pradesh): I could not follow. Dr. Ambedkar: I cannot open a class now. The point is that as the right to sue begins long before the annulment by the time the annulment order is passed, the suit or the proceeding is time-barred. The question is raised whether this is a right thing to do, because if the proceedings or the right to sue is suspended, it is suspended not because of any fault on the part of the person who has this right to sue, but because the law says that when an adjudication is made all proceedings shall be suspended. Consequently, in order to remove this iniquity, what is proposed is this : That by this new section 101A, it will be open for the Court and for the party to have the time taken between adjudication and annulment excluded from the computation of the period

56 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES of the limitation laid down by the law, so that the right to sue may practically be deemed to have occurred when the annulment has taken place. Anyhow the period will not serve as an additional bar to any delay or lapses that might have occurred on the part of the person who has the right to sue. Now, clauses 6 is merely clause 2 of the Bill. All that it does is this, that it introduces the same proviso in the Provincial Insolvency Act, so that even under the Provincial Insolvency Act, if the period of three months for filling the petition falls on the day on which the Court is closed, it would be open for a party to file the petition on the day when the Court re-opens. Then, the last clause also amends the Provincial Insolvency Act. Under the present law, it is provided that along with the order of the adjudication, the Court also fixes the date for the discharge of the petitioner and he is required to appear on the day on which the date is fixed for his discharge. Now, the words are “He shall appear and the court, if he does not appear, shall” take a certain action, as stated therein. The section so far as the wording is concerned, is mandatory, but curiously enough the Courts have interpreted ‘shall’ as ‘may’ making it discretionary. It is felt that probably the Courts have really carried out the intention of the Legislature in treating ‘shall’ as ‘may’. Similarly, the Presidency Towns Insolvency Act has also the word ‘may’ and not ‘shall’. Therefore, this amendments proposes to accept the decision or the interpretation of the Court and substitute ‘may’ of ‘shall’. These are all the clauses in the Bill. I might say that these amendments are very much overdue. These amendments were suggested a long time ago, in fact before the War, but it was not possible to undertake any legislation while the war was there. Consequently, there has been this delay. I might tell the House that these amendments have been approved by the Provincial Governments and the Provincial Governments, have also stated that although the subject of insolvency falls in the Concurrent list, it is desirable these amendments should be made by a law made by Parliament, so that they may be uniform throughout the

57PARLIAMENTARY DEBATES country. That is the reason why this Bill has been brought forward. Mr. Chairman : Motion moved : “That the Bill further to amend the law relating to insolvency, be taken into consideration.” *Dr. Ambedkar: I am glad that my friend Shri Biswanath Das raised the points to which he made reference in the course of his speech. I should like to say that before bringing forth this Bill I myself was of the opinion that the time had come when these two enactments should be amalgamated into a single Act. The distinction which has been existing in our insolvency law between the Presidency towns and the other areas seems to me no longer justifiable. But I found that the amalgamation of the two Acts into one single enactment would take time and would also require special agency to be employed in the Law Department for the purpose of collating the sections. However, owing the financial stringency it was not possible for me to obtain the staff that was necessary to undertake this task in the expediency with which we intended to proceed. That was the reason why I kept back my original project of bringing forth a single enactment. I have, however, not abandoned that project and as soon a circumstances propitious to that purpose are available. I will certainly place a single, enactment before Parliament. With regard to the other question that he has raised, whether the jurisdiction in insolvency should be the District Court or Courts of small jurisdiction, as well as the other sections to which he made reference which according to him, are sections which are abused by the insolvent, I don’t think they are matters which can be debated on this particular occasion. The law of insolvency, as everyone knows, is a sort of legal relief against misfortune or mishap. It is quite possible that persons who ought not to get the benefit of the legal relief do get it, but that is a complaint which may not be made merely against the insolvency law—it can be made against * P. D., Vol. 1, Part II, 3rd February 1950, pp. 191-93.

58 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES almost every law. It is never possible for the Legislature to enact a measure which will be so tight as to be completely fool-proof and knave-proof. There will always be available many crooks who will be able to find out ways and means of getting round the act and abusing it. However, there is not the slightest doubt about it that the intention of my friend Mr. Das, that we ought not to allow any loophole in a law of this kind which would enable undeserving persons to get the relief which the law intends to give only to the really unfortunate, is a praise worthy object and no doubt in future legislation it will be borne in mind. With regard to the points made by my friend Mr. Karunakara Menon, I think he has not followed what I stated in my opening remarks. He has forgotten that what we really are trying to do is to bring either the Provincial Law in conformity with the Presidency Law or to bring the Presidency law in conformity with the Provincial Law. We are not making any particular innovation which is not to be found in either of the two Acts. If he does not like the word “shall” which is introduced in some sections of the Provincial Act and wants “may”, then he shall also have to give his justification as to why the word “shall” should continue in the Provincial legislation. All that I have done is to bring the two in conformity so that there may be no obvious inconsistency in legislation in matters of this sort. If, as I have said, he has still any points of contention he can raise them when a new Bill consolidating the whole is brought before Legislature. For the moment these are only pressing amendments which both the Provincial Governments as well as, if I may say so, all the High Courts have accepted. Mr. Chairman: The question is: “ That the Bill further to amend the law relating to insolvency, be taken into consideration.” The motion was adopted. Mr. Chairman: The question is : “That clauses 2 to 7 stand part of the Bill.” The motion was adopted.