TMI Blog2003 (7) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... 1976, which was dismissed on 25.10.1977 by the Subordinate Court, Tuticorin. He filed appeal in C.M.A. No. 116/77 before the District Court challenging the order of dismissal, which was allowed on 17.10.1978. The appellant purchased 249 shares of Rajapalayam Mills belonging to the debtor Kasi Naicker by depositing the amount to get the shares released in its favour with the consent of the debtor. When the bank neither released the share certificates nor returned the money deposited by it, the appellant filed IA No. 6/79 in I.P. No. 7/76 under Section 55 of the Act for declaration that 249 shares of Rajapalayam Mills belong to it or in the alternative to return the money with interest paid by it. The said petition was allowed by order dated 19.10.1984 directing the bank to pay sum of ₹ 25,155.40 with interest at 9% per annum from 24.8.1978 to the appellant. Kasi Naicker filed C.M.A. No. 40/84 aggrieved by the said order made in IA6/79 in I.P. 7/76 in the court of District Judge Tirunelveli. The appeal was allowed holding that the order of adjudication dates back to the date of filing of the petition and, therefore, any transaction by the insolvent thereafter would not bind th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insolvency petition by the debtor Kasi Naicker on the date when it purchased the shares. As already noticed above the trial court had allowed the claim of the appellant but the District Court in appeal took a view that although the order of adjudication was passed on 17.10.1978 it related back to the date of filing the insolvency petition in IP 7/76 in 1976 in view of Section 28(7) of the Act and as such the purchase of shares made by the appellant is not protected under Section 55 of the Act. The answer to the question depends upon the proper construction and interpretation of provisions of Sections 28 and 55 of the Act. Sections 28 and 55 read: - 28. Effect of an order of adjudication (1) On the making of an order of adjudication the insolvent shall aid to the utmost of his power in the realization of his property and the distribution of the proceeds among his creditors. (2) On the making of an order of adjudication, the whole of the property of the insolvent shall vest in the Court or in a receiver as hereinafter provided, and shall become divisible among the creditors, and thereafter, except as provided by this Act, no creditor to whom the insolvent is indebted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the presentation of any insolvency petition by or against the debtor. The object of Section 28 of the Act is to secure unrestricted right to dispose of insolvent's property after an order of adjudication is made. This Section clearly states that during the pendency of the insolvency proceedings, the creditor shall not commence any proceeding against the property of the insolvent in respect of his debt without the leave of the Insolvency Court. On making an order of adjudication, the whole of the property of the insolvent shall vest in the court or in a receiver, as the case may be, in terms of sub-section (2). An obligation is placed upon the insolvent to assist the official receiver to realize the assets. When sub-section (1) is read alongwith sub-section (7), the effect would be an order of adjudication relates back to the date of presentation of insolvency petition and the order of adjudication takes effect from the date of the presentation of the insolvency petition. Consequently, vesting of property under sub-section (2) also relates back to the date of presentation of the insolvency petition. Combined reading of sub-sections (1), (2) and (7) makes the position cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from its very unambiguous and clear language, is mandatory........... Taking a contrary view that an order of discharge or dismissal passed by an employer in contravention of the mandatory conditions contained in the proviso does not render such an order inoperative or void, defeats the very purpose of the proviso and it becomes meaningless. It is well-settled rule of interpretation that no part of statute shall be construed as unnecessary or superfluous. The proviso cannot be diluted or disobeyed by an employer......... The interpretation of statute must be such that it should advance the legislative intent and serve the purpose for which it is made rather than to frustrate it. Once the requirements of Section 55 of the Act are satisfied, the appellant is entitled for the protection of the said Section as a bona fide transferee. Taking a contrary view takes away the very protective umbrella specifically made available to a bona fide transferee covered by Section 55. Protection provided for bona fide transfer in Section 55 is in a way exception to Section 28(7). Proviso to Section 55 of the Act protects bona fide transactions mentioned in clauses (a) to (d) of Section 55. As p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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