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Sidram Pandharinath Malwadkar Vs. N.M. Mahallya - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberCivil Revision Application No. 515 of 1940
Judge
Reported in(1941)43BOMLR805
AppellantSidram Pandharinath Malwadkar
RespondentN.M. Mahallya
Excerpt:
provincial insolvency act (v of 1920), section 68--insolvent--receiversale of property by receiver--insolvent's right to impeach the sale--'person aggrieved'--interpretation.;an insolvent has no locus standi, under section 68 of the provincial insolvency acticle 1920, to impeach a sale effected by the receiver in insolvency.;hari rao v. official assignee, madras (1926) i.l.r. 49 mad. 461, f.b., and sakhawat ali v. radha mohan (1918) i.l.r. 41 all. 243, followed.;kunda singh v. official receiver [1939] a.i.r. lah. 499, dissented from.;the expression 'person aggrieved', as used in the section, means a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something or wrongfully refused him something or wrongfully..........and sold his house. an application was preferred by the insolvent to the first class subordinate judge in insolvency for setting aside the sale on the ground that it was not properly conducted, that it did not fetch an adequate price and his estate, therefore, suffered a loss thereby. the application was resisted by the receiver on the preliminary ground that the insolvent had no locus standi to impeach the sale made by him as all the property of the insolvent had vested in him, and he had, therefore, no interest in it at the date of the application.2. the application was made under section 68 of the provincial insolvency act, which provides as) follows:--if the insolvent or any of the creditors or any other person is aggrieved by any act or decision of the receiver, he may apply to.....
Judgment:

Divatia, J.

1. This application arising under the Provincial Insolvency Act has been preferred by the insolvent. After the petitioner was adjudicated insolvent, the receiver appointed by the Court took charge of his properties and sold his house. An application was preferred by the insolvent to the First Class Subordinate Judge in insolvency for setting aside the sale on the ground that it was not properly conducted, that it did not fetch an adequate price and his estate, therefore, suffered a loss thereby. The application was resisted by the receiver on the preliminary ground that the insolvent had no locus standi to impeach the sale made by him as all the property of the insolvent had vested in him, and he had, therefore, no interest in it at the date of the application.

2. The application was made under Section 68 of the Provincial Insolvency Act, which provides as) follows:--

If the insolvent or any of the creditors or any other person is aggrieved by any act or decision of the receiver, he may apply to the Court, and the Court may confirm, reverse or modify the act or decision complained of . . . . . . .

3. The learned Judge upheld the receiver's contention on the ground that the insolvent cannot be said to have been aggrieved by the act of the receiver, as at the date of the sale the property did not belong to the insolvent but was vested in the receiver for the benefit of his creditors. For that purpose the learned Judge relied on a recent full bench decision of the Madras High Court in Hari Rao v. Official Assignee, Madras (1926) I.L.R. 49 Mad. 461, F.B. The insolvent appealed to the District Court against that order. The learned Assistant Judge confirmed that order on the same ground that the insolvent cannot be deemed to be a person aggrieved by the act of the receiver. This revision petition is filed against that order in appeal.

4. It is contended that Section 68 expressly gives the insolvent the right to apply to the Insolvency Court against any act of the receiver which might operate to his prejudice. Reliance is also placed on Section 67 of the Provincial Insolvency Act which says that 'the insolvent shall be entitled to any surplus remaining after payment in full of his creditors with interest as provided by this Act', and it is urged that as the insolvent is interested in the surplus, he would be aggrieved if the property fetches an inadequate price on account of misfeasance of the receiver in conducting the sale. But the question is whether he has a present interest in the surplus at the date of his application. The decision in Hari Rao v. Official Assignee, Madras is based on the authority of Ex parte Sheffield: In re Austin (1879) 10. Ch. D.434. It was held there that the bankrupt, while undischarged, had no interest in the surplus beyond a mere hope or expectation. It is also held in In re Leadintter (1878) 10. Ch. D. 388 that the trustee in bankruptcy does not stand in the position of a trustee for the bankrupt, but he is a trustee for the creditors. The Allahabad High Court has held in Sakhawat Ali v. Radha Mohan (1918) I.L.R. 41. All. 243 that the insolvent cannot be regarded as an aggrieved person in the sale proceedings conducted by the receiver. The question there was whether the insolvent had a right to appeal under Section 35 against an order of the insolvency Judge sanctioning the sale. The position would be the same in the case of an application to the Court under Section 68, because under both these sections the application or appeal could be made by the insolvent only if he was aggrieved by the receiver's act. As observed by James L.J. in Ex parte Sidebotham: In re Sidebotham (1880) 14. Ch. D. 458 'A 'person aggrieved' must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something, or wrongfully refused him something, or wrongfully affected his title to something.'

5. The Lahore High Court has held in Kunda Singh v. Official Receiver (1939) A.I.R. Lah. 499 that an insolvent has the right to apply to the Court against an act of misfeasance by the receiver in conducting the sale, but that decision does not consider the position in law that the insolvent has no legal estate in the property vested in the receiver and that his right to the surplus is a mere hope or expectation.

6. In my opinion, the lower Courts have rightly followed the Madras and Allahabad decisions in rejecting the insolvent's application on this preliminary ground.

7. The rule is, therefore, discharged with costs.


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