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Dattatraya Chandraya Bachuwar Vs. K.L. Bawachekar - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberSecond Appeal No. 806 of 1935
Judge
Reported inAIR1940Bom51; (1939)41BOMLR1258
AppellantDattatraya Chandraya Bachuwar
RespondentK.L. Bawachekar
DispositionAppeal dismissed
Excerpt:
.....and 54 made by the subordinate courts are clearly covered by this clause, and the decision of the district judge in appeal from such orders must therefore be final, and not appeasable to the high court. after going through the evidence we are not satisfied that we would be justified in interfering in revision. 8. it is contended that the burden of proving good faith under section 53 of the act was wrongly thrown on the opponent. it appears from the evidence that the insolvent had been heavily indebted to several persons, and there is ample justification for the view which both the learned judges have taken that the opponent must have been perfectly well aware of the heavy indebtedness of the insolvent. 40,000 and practically no other property from which the other creditors could have..........and 54 made by the subordinate courts are clearly covered by this clause, and the decision of the district judge in appeal from such orders must therefore be final, and not appeasable to the high court. to hold that the second proviso to section 75 which allows second appeals in the case of decisions of the district court on appeal under section 4 covers also decisions of the district court on appeal under sections 53 and 54 would render the provisions of sub-section (1) of section 75 nugatory, and would in effect mean that every order made by the district court on appeal from a decision under sections 53 and 54 would, in spite of the express provisions of section 75(1), be subject to a second appeal.4. the same question has been considered by a bench of the madras high court in.....
Judgment:

N.J. Wadia, J.

1. This is a second appeal against the decision of the Assistant Judge of Sholapur confirming an order made by the First Class Subordinate Judge of Sholapur under Sections 53 and 54 of the Provincial Insolvency Act. The petitioner in the application, who was the receiver of the estate of certain insolvents, applied for setting aside a sale-deed passed by the| insolvents to the opponent, the present appellant, on December 15, 1930, alleging that the sale by the insolvents which had been made within two years of the insolvency was not bona fide and for valuable consideration, but was hollow and fraudulent, and intended to defraud other creditors. The trial Court came to the conclusion that the opponent was not a bona fide purchaser for value and that the sale was a fraudulent one and intended to give preference to the opponent and to defraud other creditors, and it therefore set aside the sale. This order was confirmed1 in appeal by the Assistant Judge, and the opponent has come in second appeal.

2. A preliminary objection has been raised by Mr. Coyajee for the respondent that no second appeal lies. The application to the Subordinate Judge was under Sections 53 and 54 of the Provincial Insolvency Act and the order made by the learned Subordinate Judge, which was confirmed by the Assistant Judge, was under those sections. Section 75(1) of the Act provides that the debtor, any creditor, the receiver, or any other person aggrieved by a decision come to or an order made in the exercise of insolvency jurisdiction by a Court subordinate to a District Court, may appeal to the District Court, and the order of the District Court upon such appeal shall be final. Under this section, therefore, the order made by the District Court in appeal is final and no second appeal would lie. The section provides, however, that the High Court, for the purpose of satisfying itself that an order made in any appeal decided by the District Court was according to law, may call for the case and pass such order with respect thereto as it thinks fit. The proviso, therefore, allows a revision application to the High Court against orders made by the District Court in appeal. The second proviso says that any such person aggrieved by a decision of the District Court on appeal from a decision of a subordinate Court under Section 4 may appeal to the High Court. It is contended for the appellant that all orders made under Sections 53 and 54 of the Act are also orders made under Section 4 and that a second appeal therefore lies in the case of such orders to the High Court from the decision of the District Court. Section 4 of the Act provides that subject to the provisions of the Act, the Court shall have power to decide all questions whether of title ox priority or of any nature whatsoever, and whether involving matters of law or of fact, which may arise in any case of insolvency coming within the cognisance of the Court.

3. The question whether a second appeal lies against an order made by a District Court in appeal from an order made by a Subordinate Judge under Sections 53 and 54 of the Provincial Insolvency Act has been considered by this Court in two unreported cases. In Virappa Basappa Bileangadi v. Rachappa Balapa Hosmani (1937) S.A. No. 854 of 1935 Mr. Justice Rangnekar sitting singly held that in such. Cases no (Sic) lay to the High Court, and the same view was taken by (Sic) in Anant Raghunath Puranik v. Shantaram (Sic) (1938) S.A. No. 741 of 1935. The view which was taken in both these cases was that the words 'subject to; the provisions of this Act' in Section 4 were intended to. take out of the purview of that section cases which are provided for by other sections of the Act, such as Sections 53 and 54. It is true that cases falling under Section 53 and to some extent those falling under Section 54 would be cases involving questions of title and may to that extent be considered to fall also under the wider provisions of Section 4. The) difficulty, however, is created by the language of Section 75. Sub-section (1) of that section expressly deals with orders made by the District Court on appeal from orders made in the exercise of insolvency jurisdiction by a Court subordinate to the District Court. Orders under Sections 53 and 54 made by the Subordinate Courts are clearly covered by this clause, and the decision of the District Judge in appeal from such orders must therefore be final, and not appeasable to the High Court. To hold that the second proviso to Section 75 which allows second appeals in the case of decisions of the District Court on appeal under Section 4 covers also decisions of the District Court on appeal under Sections 53 and 54 would render the provisions of Sub-section (1) of Section 75 nugatory, and would in effect mean that every order made by the District Court on appeal from a decision under Sections 53 and 54 would, in spite of the express provisions of Section 75(1), be subject to a second appeal.

4. The same question has been considered by a bench of the Madras High Court in Alagirisubba Naik v. Official Receiver of Tinnevelly I.L.R. (1931) Mad. 989 It was held in that case that no second appeal could lie against an order made by a-District Munsif annulling a sale under Section 53 of the Provincial Insolvency Act. As has been pointed out in that case Section 4 of the present Act, Provincial Insolvency Act, V of 1920, did not exist in the earlier Act of 1907, and the section appears to have been introduced in the present Act because of conflicting decisions as to the power of an insolvency Court to deal with certain questions of title or priority other than those falling under Sections 53 and 54. Provisions corresponding to the present Sections 53 and 54 existed in the Act of 1907 and under the earlier Act also no second appeal lay from! a decision of the District Court in appeal from orders under those sections. No change was made by the new Act in those provisions, and it would be difficult to hold that the Legislature altered the previous procedure and provided a second appeal from orders made by Subordinate Courts under Sections 53 and 54 without expressly saying so, and merely indirectly by the provision that orders, under the new Section 4 were subject to second appeal. It has been pointed out by Reilly J. in the Madras case that Section 4(3) of the Act of 1920 provides that the Court need not decide every question of title or priority or any question of the nature described in Sub-section (1) of that section which may arise in an insolvency case before it but may decline to go into such a question and yet may sell the debtor's interest in the property concerned. If all questions falling under Section 53 were considered: as questions falling under Section 4, it would mean that the Court would have a discretion to decline in certain cases to go into the question whether a sale falling Under Section 53 [(sic) ] a receiver. No such discretion is given to the Court (Sic) Insolvency Act, nor had the corresponding (Sic) Act given any such discretion, and it cannot have been the intention of the Legislature, nor is it possible to infer from the language of the Act, that it was the intention of the Legislature to alter the law on the subject and to give to the Court under Section 53 a discretion to refuse to decide whether a particular transfer came within the purview of the section. The language of Section 4 is extremely wide. It gives the Court power to decide all questions whether of title or priority! or of any nature whatsoever. With respect, I agree with the view which was taken by the learned Judges in the Madras case referred to above that the words 'or of any nature whatsoever' are incompatible with the ejusdem generis rule of interpretation, and that Section 4(1) must be taken to give the Court power, subject to the provisions of the Act, to decide all questions which may arise in any case of insolvency coming within the cognizance of the Court or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case. That being so, if the second proviso to Section 75, which deals with decisions of the District Court on appeal from decisions of the Subordinate Courts 'Under Section 4', were interpreted in the way in which the, appellant asks us to, the provisions of Section 75(J), which expressly provide that no second appeal shall lie from orders made in the exercise of insolvency jurisdiction by a Subordinate Court, would be rendered absolutely nugatory. The only way in which Section 4 can be interpreted so as to make the Act intelligible and consistent is to hold that it was not intended to cover orders made under Sections 53 and 54. The fact that Schedule (1) to the Act which specifies the cases in which the decisions and orders of a District Court come to or made otherwise than in appeal are appeasable to the High Court, refers separately to orders made under Section 4, and those made under Sections 53 and 54 and other sections of the Act leads to the same conclusion, that it was not the intention of the Legislature that the second proviso to Section 75 should refer to orders made Under Sections 53 and 54.

5. No authority has been cited to us in support of the view that a second appeal lies against such orders. We have been referred to two cases, Sholapur Spinning Co., Ld. v. Pandharimath : AIR1928Bom341 and Balubihai v. Kalymji (1937) 40 Bom. L.R. 884 in both of which second appeals were admitted from orders made under Sections 53 and 54 of the Provincial Insolvency Act. In neither of these cases, however, was any question with regard to the admissibility of such appeals raised, and the attention of the Court was therefore not directed to the point now raised before us. In another case, Keshavlal Mohanlal Shah v. Ranchhodlal Maganlal Shah (1938) S.A. No. 765 of 1938, to which also our attention has been drawn, a revision application had been filed against an order made by a Subordinate Judge under Sections 53 and 54 of the Provincial Insolvency Act, and on a preliminary objection being raised that application was allowed to be treated as a second appeal, and was (Sic) judgment does not mention the grounds on which the [(sic) allowed to be converted into a second appeal, and it (sic) the judgment that the question whether a second appeal]

6. In our opinion the view taken in Alagirisubba Naik v. Official Receiver of Tinnevelly, and in the two second appeals, No. 854 of 1935-Virappa Basappa Bileangadi v. Rachappa Balappa Hosmani and No. 741 of 1935 Anant Raghunalh Purmik v. Shmtmam Ramchandra Pandit,-to which I have referred, is correct, and no second appeal lies against the order made by the Subordinate Judge in the present case. The appeal must, therefore, be dismissed.

7. We are asked to treat this as a revision; application and we have allowed it to be argued as such. After going through the evidence we are not satisfied that we would be justified in interfering in revision.

8. It is contended that the burden of proving good faith under Section 53 of the Act was wrongly thrown on the opponent. The application was however both under Section 53 and Section 54, and so far as the second issue with regard to fraudulent preference was concerned, both in the Subordinate Judge's Court and in the lower appellate Court the burden was rightly thrown on the receiver. Both the learned Judges have accepted the statements made by the receiver, and from those statements and the facts elicited in the cross-examination of the opponent it appears that the view which they have taken that fraudulent preference has been proved is correct. The sale was entered into on December 15, 1930, only eight days before the vendor was adjudicated an insolvent. It appears from the evidence that the insolvent had been heavily indebted to several persons, and there is ample justification for the view which both the learned Judges have taken that the opponent must have been perfectly well aware of the heavy indebtedness of the insolvent. The opponent himself has stated that he had made demands for his own out standings and that he had not been paid. The learned Judges have found that out of the consideration of Rs. 12,000, Rs. 7,000 were paid before the Sub-Registrar. The rest of the consideration is alleged to have been made up of a debt of over Rs. 5,000 due on promissory notes. The promissory notes were not forthcoming. It is also alleged that an amount of over Rs. 2,000 was remitted and for the balance the shop of the debtor was purchased. Considering that the insolvent had very heavy debts to the extent of Rs. 30,000 to Rs. 40,000 and practically no other property from which the other creditors could have been satisfied, the transaction, in our opinion, did amount to a dishonest preference given to the opponent.

9. We see no reason, therefore, for interfering in revision. The appeal is dismissed with costs.


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