1. ' This appeal under section 86 of the Insolvency (Karachi Division) Act, 1909 arises out of a decision of Official Assignee of Karachi in the matter of Muhammad Razaullah Khan Durrani, Insolvent, rejecting the claim preferred by Muhammad Idris son of Muhammad Ibrahim, the appellant in the sum of Rs, 16,000 as a creditor. Muhammad Razaullah Khan Durrani was adjudicated insolvent on his own application by an order of this Court dated 10th November 1969. The Insolvent had shown the appellant in the schedules filed by him, as an unsecured creditor for a sum of Rs, 16,000. The appellant filed his proof of claim before the Official Assignee, Karachi, on 14th February 1970, which was however rejected by the decision impugned in this appeal.
2. It is contended by Mr. G. Raymond, the learned counsel for the appellant that since the appellant had been admitted to vote for the sum of Rs, 16,000 by the Official Assignee at a general meeting of the creditors held on 31-7-1971, in his office, pursuant to the notice dated 12-7-1971, the Official Assignee could not have afterwards rejected his claim. Mr. G. Raymond also contended that even otherwise, on merits the claim ought not to have been rejected inasmuch as the Official Assignee rejected it for want of proof though not only the insolvent had shown the debt in the Schedule filed by him, but the appellant proved it by his oral evidence. He particularly relied upon the entry said to have been made on 2-10-1966, in the ledger book of the insolvent which was scored out by the insolvent himself.
3. Taking up the second contention first, I find that the claim of the creditor was rejected for reasons that the entry relied upon by the creditor had completely been scored out by the insolvent himself and the same was not decipherable and there was no other documentary or oral evidence led by the creditor except his own statement and that he had never demanded from the insolvent the return of the loan or given any notice in writing in this regard. The learned Official Assignee further relied upon the statement of the insolvent by which he had explained the reasons why he had shown in the schedule Muhammad Idris as one or his creditors and also the reasons for scoring out the entry in the ledger book, The explanation was that he had made Muhammad Idris his creditor at his request, although no payment was ever made by Muhammad Idris to the insolvent. I was initially of the view that if the insolvent has shown himself as borrower of the amount and credited the same in the account of Muhammad Idris and had also subsequently shown the amount in the schedule that could be sufficient. Proof. But, on examination of the ledger book I had to change my opinion. The entry therein dated 2-10-1966 for Rs, 16,000 though completely scored out, is to some extent decipherable. The ink of the entry as well as of the lines by which it has been scored out appears to be one and the same. Above this entry there is another entry dated 1-10-1966. The ink of this entry is different from the one scored out. Opposite to the page on which the entry in question is made, there are entries including one dated 2-10-1966. The ink of all the entries on the opposite page as well as of entry dated 1-10-1966, on the same page is one and the same, but is different from the entry in question. This leads to an inference that the entry in question and the entry on the opposite page of the same date could not have been made on one and the same date. The entry in question must have been made at some other time. This lends support to the statement of the insolvent that he had made the entry on 21-6-1968, at the request of the creditor and bad scored it out after four days and that he had not received any amount from him, otherwise also there was no reason for the insolvent to score out the entry. I am therefore of the opinion that the claim of the creditor was rightly rejected by the Official Assignee.
4. Taking up the first contention of Mr. G. Raymond that since the appellant was allowed on 3-3- 1970 by the Official Assignee to vote for the composition, at a general meeting of the creditors he, in view of the provisions of section 28 of the Insolvency (Karachi Division) Act, 1909, where-under only those creditors who have proved their debt are allowed to vote-for or against the composition, be deemed to have proved his claim and his claim must be deemed to have been accepted by the Official Assignee.
2. ' However, there is some controversy with regard to the fact whether the Official Assignee allowed the appellant to vote for or against the composition or not. According to Mr. G. Raymond, the appellant was allowed to vote for the composition and in support of his contention, the learned Advocate relies upon the statement contained, in the decision itself, wherein Mr. Zahoor Hussain, the then Official Assignee states that : "1 he claims were invited from various creditors of the insolvent and in response to that one Muhammad Idris son of Muhammad Ibrahim filed his claim of Rs, 16,000 on 5-2-1970 against the insolvent. Muhammad Idris had attenaed the meeting of the creditors convened by the Official Assignee to consider the proposal for composition and scheme and he was ado wed to exercise his vote on 3-3-1970."
3. ' However, Mr. Fida Hussain, the present Official Assignee has produced the Minutes Book which shows that the creditor was allowed on 3-3-1970 by the then Official Assignee to exercise his vote for the purpose of the meeting due to be held on 4-3.1970, the agenda whereof did not include the proposal for composition. The proposal for composition came up for consideration, for the first time, in the meeting held on 31-1-1971, and failed as the statutorily required majority of the creditors, did not support it. The second proposal for composition was considered in the meeting held on 19- 2-1972, which also failed for the aforesaid raison. The third proposal for compose ion came up for consideration in the meeting held on 9-5-1972, wherein the appellant was not present. The above stated facts, as borne out by the record, have been verified by Mr. Raymond. Conformed with this factual position, Mr. G. Raymond, the learned counsel for the appellant then contended that once the creditor is allowed to vote for any purpose, whatsoever, his claim must be deemed to have been accepted by the Official Assignee for all purpose including payment of dividend and it could not be rejected afterwards by him.
4. 'In support of this contention, the learned Advocate for the appellant relied on Aakubhai Bhimji Purshottam (1). The learned counsel fertilize contended that even if the appellant had failed to attend any meeting of the creditors that would not make any difference for he would he deemed to have voted against the proposal and in support of this contention the learned Advocate relied upon the following observation of Mulla in the Law of Insolvency in India, p. 345 (2nd Edition) : "The proposal will be taken to be accepted if a majority in number and three-fourths in value of all the creditors whose debts are proved resolve to accept. A creditor who does not vote in effect votes against the proposal."
5. ' He also referred to Kedar Nath Sen v. Amulya Ratan Sanyal (2) in support of his aforesaid contentions.
6. ' Therefore, in order to appreciate the contentions raised by the learned Advocate for the appellant it is necessary to refer to the various provisions of the Insolvency (Karachi Division) Act, 1909 (hereinafter called the Act).
7. ' Section 26, subsection (1) of the Act provides that at any time after the making of an order of adjudication against an insolvent, the Court on an application of a creditor or of the Official Assignee may direct that a meeting of creditors shall be held to consider the circumstance of the insolvency and the insolvents' schedule and his explanation thereof and generally as to the mode of dealing with the property of the insolvent, and subsection (2) thereof provides that with respect to the summoning of and proceedings the rules in the First Schedule shall be observed. Rule 9 in the First Schedule provides that a creditor shall not be entitled to vote at a meeting unless he has duly proved a debt provable in insolvency to be due to him from the insolvent and the proof has been duly lodged one clear day before the time appointed for the meeting. Under Rule 15 in the First Schedule, Official Assignee has been given power to admit and reject a proof, but the provisions thereof show, that proof is only for the purpose of voting at the meeting. This rule further provides that if the Official Assignee is in doubt whether the proof of a creditor should be admitted or rejected, he shall mark the proof as objected to, and shall allow the creditor to vote, subject to the vote being declared invalid in the event of the objection being sustained on appeal to the Court.
8. ' However, under section 48 of the Act, with respect to the mode of proving debts, right of proof be secured and other creditors, the admission and rejection of proofs and other matters referred to in the Second Schedule, the rules contained in that Schedule have to be observed. Rule 2 in the Second Schedule provides the mode of lodging of proof, which is by an affidavit verifying the debt and delivering it or sending it by post in a registered letter to the Official Assignee. Rule 4 provides what the affidavit should contain, refer or specify and rule 25 in the Second Schedule enjoins
(1) AIR 1932 Bora. 557 (2) AIR 1942 Cal. 79 ' the Official Assignee to examine every proof and the grounds of the debt, and in writing admit or reject it in whole or in part or require further evidence in support of it.
9. ' I may also refer to rule 647 of the Sind Chief Court Rules (Original Side) for these Rules still hold the field. This rule provides t "Every person claiming to be a creditor under any composition or scheme, who has not proved his debt before the approval of such composition or scheme, shall lodge his proof with the trustee thereunder, if any, or, if there is no such trustee. With the Official Assignee who shall admit or reject the same. No creditor shall be entitled to enforce payment of any part of the sums payable under a composition or schemes unless and until he has proved his debt and his proof has been admitted."
10. ' From the perusal of the record and the narration of the facts stated herein-'before, it is clear that on the 3rd March 1970 when the Official Assignee allowed the appellant to vote at the meeting due to be held on the 4th March 1970 it was for the purpose of section 26 of the Act and the endorsement of the Official Assignee on the affidavit filed by the appellant in proof of his debt shows that the appellant was admitted to vote for the purposes of meeting held on the 4th of March 1970 pursuant to the order of the Court passed under section 26 of the Act. It is also clear from the affidavit filed by the appellant before the Official Assignee a copy whereof is annexed to the memo. Of appeal as Annexure 'A', that the proof of debt was not admitted for the payment of dividend as in the form of affidavit - below the words, "Admitted to rank for dividend", filed by the appellant, the Official Assignee did not pass any order and left the space blank. No doubt, till then the Official Assignee had not examined the proof and had not in writing admitted or reject it in whole or in part and, therefore, it could not be said that the admission of the appellant to vote at the meeting due to be held on 4th March was also for the purpose of payment of dividend or in compliance of the provisions of section 48 of the Act and Rule 25 of the Second Schedule.
11. A creditor is entitled to dividend only if his proof is admitted in writing in whole or in part by the Official Assignee in accordance with the provisions of rule 25 of the Rules in the Second Schedule which was admittedly not done till 3rd March 1970.
12. ' Moreover, the provisions in rule 15 of the First and rule 25 of the Second Schedules make it quite clear that the Official Assignee is empowered to admit or reject a proof at two occasions and for two different purposes. Under rule 15 in the First Schedule for the purpose of voting at a meeting and under rule 25 in the Second Schedule for the purpose of payment of dividends and both the decisions are made subject to appeals to the Court under two different provisions namely, rule 15 of the First Schedule and section 86 of the Act. Therefore, even if it is held that the appellant is deemed to have proved his debt and that the Official Assignee admitted it that would be only for the purposes of section 26 of the Act and not for the purpose of payment dividends, for acceptance of proof under the former would not for all purpose because under rule 25 of the Rules contained in the Sewn Schedule the Official Assignee may accept a proof in whole or in part.
13. Acceptance as a creditor under rule 9 would not make a creditor, a credito for the amount claimed without admission of the proof as otherwise, it would make the provisions in rule 25 in the Second Schedule in the context of the case, redundant or surplus, a result which is against all cannons of interpreta-1 ton of statutes.
14. ' If any authority is needed, I shall refer to Allan Rafi-ud-Din v. The Chief Settlement Commissioner
(1) wherein at page 313 of the report, while construing the provisions of paragraph 15-A of the Schedule to the Displaced Persons (Compensation and Rehabilitation) Act, 1958 and of section 10
(b) thereof, it was observed by their Lordships of the Supreme Court as follows:- "There is yet another serious aspect of this matter. If an order under paragraph 15-A is at all sustainable under section 10 (b) on the ground that the power under the former is covered by the powers under the latter, then, paragraph 15-A will be rendered redundant and superfluous, for every order made under that paragraph can be said to have been made under section 10 (b). Can the Legislature be presumed to have intentionally enacted paragraph 15-A as a superfluous provision ? No legislative enactment, according to the universally accepted principle, should be held to be redundant or superfluous, and effort must be made by Courts to give effect to every enactment."
15. 'In Re : Kakubhai Bhirnjl Parshotam (2) cited by the learned Advocate for the appellant, the creditor had lodged his proof with the Official Assignee before the composition was arrived at but the Official Assignee had not admitted or rejected the proof and after the proposal of composition had gone through, the trustee rejected the proof. Against the decision of rejection of the claim by the trustee, the creditor took out a notice of motion for an order that his claim under the decree of the Bombay High Court be admitted by the trustee. A preliminary objection was taken on behalf of the respondent that the procedure adopted by way of notice of motion and not an appeal was wrong.
16. In this case it was contended on behalf of the creditor that when his claim under the High Court decree was lodged for proof before the Official Assignee before the composition or scheme was arrived at and the Official Assignee had neither admitted nor rejected the proof of the appellant's claim, it must be taken to have been proved before the Official Assignee before composition or the s:heme was arrived at. While dismissing the preliminary objection, it was observed by the learned Judge that whether the matter is regarded in the light of this contention or not it was clear that even supposing the respondent had jurisdiction under rule 115 to reject the applicant's claim, this Court would have jurisdiction to review its order under the terms of rule 112 of the Insolvency Rules and it was further observed that in any case the Court in the absence of any proper provision would have inherent jurisdiction to revise the order of a Trustee under a composition or scheme.
17. With regard to the contention raised on behalf of the creditor it was observed by the learned Judge that "This contention in my opinion is sound."
18. ' Therefore, it will be seen that the main question decided in the case was not the one which is involved in the instant case and even for his opinion that the contention raised on behalf of the creditor was sound, the learned Judge gave no reasons and, in fact, he did not decide the question.
19. Therefore, the case cited by Mr. Raymond is not of any help to the appellant and is easily distinguishable. Moreover, rule 115 of the Bombay
(1) PLD 1971 SC 252 (2) AIR 1932 Bora. 557 ' High Cortiles which is equivalent to rule 647 of Sind Chief Court Rules, as stated by Mr. Raymond at the bar, and which was relied upon in the cited case, itself provides that no creditor shall be entitled to enforce the payment of any part of sums payable under a composition or scheme unless and until he has proved his debt and his proof has been admitted.
20. 'Since in the cited case the proof was not admitted by the Official Assignee the contention in my opinion, was bound to fail.
21. ' The case of Kedar Nath Sen v. Amulya Ratan Sanyal (1) relied upon by the learned Advocate for the appellant is also not relevant to the facts of the case as none of the questions involved, was involved in that case.
22. ' In my opinion reference to the above quoted passage in the Law of Insolvency by Mulla is also irrelevant as it is not now the case of the appellant and it could not be, that he had attended the meeting at which the proposal for composition was considered and as such no argument can he advanced on the basis of the provisions of section 28 of the Act and no advantage can be taken in pursuance of those provisions and, in such circumstances, the question of negative vote also does not arise.
23. ' 1, therefore, dismiss the appeal.
(1) AIR 1942 Cal. 79