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Vishwanath Balmukand Gujarathi (Deceased) by His Heirs Vs. Shivdayal Dhulilal Padiyal and anr. - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Application No. 2142 of 1978
Judge
Reported in1984(1)BomCR339
ActsBombay Rents, Hotel and Lodging House Rates Control Act, 1947 - Sections 3, 12(2) and 13(1)
AppellantVishwanath Balmukand Gujarathi (Deceased) by His Heirs
RespondentShivdayal Dhulilal Padiyal and anr.
Appellant AdvocateY.S. Jahagirdar and ;K.J. Abhyankar, Advs.
Respondent AdvocateA.P. Vaze, Adv. for respondents No. 1
Excerpt:
.....- legal proceedings which is hit by bar under section 28 (2) is suit for proceedings in respect of property of insolvent which has vested in court or in receiver and becomes divisible among creditors - present suit based on contract of tenancy - filed by insolvent against tenant not covered by section 28 (2) - right of insolvent to institute suit cannot cause any prejudice to rights of creditors of official receiver - held, order set aside and remitted back to appeal court for hearing appeal on merits in accordance with law. - indian evidence act, 1872 section 24: [v.s. sirpurkar & deepak verma,jj] dying declaration - multiple murders by accused - dying declaration not implicating one accused - evidence of eye witnesses however completely fixing his criminal liability ocular..........thereafter the present suit was filed. in the suit it was alleged by the plaintiff that the suit property was released by the insolvency court and the plaintiff was put in possession of the property for his personal use and, therefore, he had let out one room to the defendant. in the said suit a decree was claimed under section 13(1)(g) of the rent act on the ground that the plaintiff requires the suit premises reasonably and bona fide for the use of his business. the decree under clause 12(3)(a) and 12(3)(b) was also claimed. the defendant resisted the suit claim by contending that the suit property vests in the receiver appointed in the insolvency proceedings and, therefore, the suit without the permission of the insolvency court was not maintainable. he also denied other.....
Judgment:

C.S. Dharmadhikari, J.

1. This writ petition is filed by the petitioner-plaintiff against the order passed by the Joint Civil Judge, (Junior Division), Kopargaon dated 16th of September, 1975 and confirmed by the District Judge, Ahmednagar vide his order dated 29th November, 1977.

2. It is common ground that the plaintiff and his brother are partners of the joint Hindu Family firm styled as 'Kashinath Balmukun' carrying on business at House CST No. 1791. Admittedly this house belongs to the joint Hindu Family firm. This firm was adjudged as an insolvent in an Insolvency Petition No. 7 of 1948. It is also an admitted position that some time in year 1961 the original plaintiff Vishwanath who was the partner of the said firm leased out one room in the said house to respondent on a monthly rent of Rs. 14/- per month. This rent was subsequently increased to Rs. 20/- per month. On 11th June, 1971 the plaintiff issued a notice under section 12(2) of the Bombay Rent Act calling upon the defendant-tenant to pay all arrears of rent which were for more than six months. Thereafter the present suit was filed. In the suit it was alleged by the plaintiff that the suit property was released by the Insolvency Court and the plaintiff was put in possession of the property for his personal use and, therefore, he had let out one room to the defendant. In the said suit a decree was claimed under section 13(1)(g) of the Rent Act on the ground that the plaintiff requires the suit premises reasonably and bona fide for the use of his business. The decree under Clause 12(3)(a) and 12(3)(b) was also claimed. The defendant resisted the suit claim by contending that the suit property vests in the Receiver appointed in the Insolvency proceedings and, therefore, the suit without the permission of the Insolvency Court was not maintainable. He also denied other allegations made in the plaint. Parties adduced evidence in support of their rival contentions. The trial Court held that the suit without permission of the Insolvency Court and without joining the Receiver as party, is not maintainable. The trial Court, therefore, dismissed the suit of the plaintiff with costs. Being aggrieved by this judgment and decree the plaintiff filed as appeal before the District Court. The learned District Judge also held that the suit filed by the plaintiff in his own right and without the permission of the Insolvency Court and without even joining the Receiver as party is not maintainable. The Appeal Court however held that the defendant on his own showing is in arrears of rent for more than six months and, therefore, decree for possession could have been passed under section 12(3)(a) of the Rent Act. However Appeal Court did not pass such a decree since the suit itself was not maintainable. The Appeal Court also held that the plaintiff has not proved his claim under section 13(1)(g) of the Rent Act. As already observed it is against these judgments and decrees, the present writ petition is filed.

3. Shri Jahagirdar, the learned Counsel appearing for the petitioner contended before me that in the plaint it was alleged by the plaintiff that he is an agriculturist and the suit property is merely a farm house. In view of this accordingly, the property was not liable for attachment under section 60(c) of the Code of Civil Procedure and, therefore, cannot vest in the Receiver even if the petitioner was declared as an insolvent. He also contended that even an insolvent can maintain an action against the third party who is not a creditor. Under the Rent Act to be a landlord it is not necessary that he should be the owner of the suit property. A person who is entitled to recover rent or to whom rent is payable is also a landlord, within the meaning of the Rent Act. In spite of the adjudication in the Insolvency proceedings the petitioner still continues to be the landlord qua the defendant-tenant and to such a suit, therefore, the provisions of the Insolvency Act are not applicable. In support of this contention Shri Jahagirdar has placed strong reliance upon the decision of this Court in 31 Bombay L R 357 Ram Chandra Genuji Thosar v. Shripati Sukaji Gade. He has also placed reliance upon the decision of the Allahabad High Court in : AIR1935All675 Abdul Rahman defendant-Appellant v. Nihal Chand plaintiffs respondent as well as the decision of Travancore and Cochin High Court in A.I.R. 1957 T.C. 241 Alleppy A.T.T. Devaswom v. Ponnu Nihar Pillai Kannu Pillai. He has also placed reliance upon the decision of this Court in 72 Bombay L R 709 Bank of Maharashtra v. V.D. Datar.

4. On the other hand it is contended by Shri Vaze the learned Counsel appearing for the respondents that as a result of the adjudication in the insolvency proceedings the petitioner loses his status since the property vests in the Receiver. As a result of this vesting of the property petitioner loses his status as a landlord or owner of the property and, therefore, he cannot institute any suit in his own name. In support of this contention Shri Vaze had placed reliance upon the decision of this Court in 40 Bombay Law Reporter 956 Balkrishna Ramchandra Konkar v. Calcutta Soap Works.

5. In my opinion the controversy raised in this writ petition will have to be restricted to the facts of the present case as well as the provisions of the Bombay Rent Act. It is an admitted position that the lease in favour of the defendant-tenant was created in the year 1961 i.e. after the adjudication order in the Insolvency proceedings was passed. The term landlord is defined by section 5(3) of the Bombay Rent Act which means any person who is for the time being receiving or entitled to receive the rent in respect of any premises, whether on his own account or on account of or on behalf or for the benefit of any other person etc. The decree claimed in the present suit is also based on the provisions of the Bombay Rent Act. In a suit between the landlord and a tenant, the tenant is not entitled to deny the title of his landlord, and admittedly in the present case the lease was created by the plaintiff after the adjudication order. If the contention raised by the defendant is accepted then the plaintiff was not entitled to create any lease in favour of the defendant in the year 1961. A person who has derived advantage under the lease created in the year 1961 i.e. after the adjudication order cannot be permitted to raise a contention that the plaintiff is not entitled to institute a suit based on the contract of tenancy. In any case he is stopped from doing so by his own conduct since with open eyes he had entered into a contract of lease with the plaintiff after adjudication order.

6. Even otherwise the bar created by section 28(2) of the Provincial Insolvency Act read with section 59 will not cover such a suit. It is not necessary for me to consider the effect of section 28(2) and section 59 of the Insolvency Act in view of the Division Bench decision of this Court in the Bank of Maharashtra v. Vasant Dattatraya Datar, 72 Bombay Law Reporter 709. After making reference to sub-section (2) of section 28 of the said Act, this is what the Division Bench has observed in the said decision :

''It is clear from the words of this sub-section (2) of section 28 that they create a bar against a creditor if he wants to proceed against the property of the insolvent in respect of debt which is provable in insolvency and when the suit or any other proceeding is to be commenced during the pendency of the insolvency proceedings.'' The bar also is not an absolute one because such a suit or any other legal proceedings can be commenced with the leave of the Court. The object of this provision is that when management of the insolvent's property is taken over by the insolvency Court, the interest of all the creditors must be safeguarded, because the property vests in the insolvency Court or the Receiver for the benefit of the creditors. But the section is unambiguous, that it is only the property of the insolvent which cannot be proceeded against. The words 'commence any suit or other legal proceeding in section 28(2) must be read as referring to a suit or proceeding against the insolvent and relating to the property of the insolvent which vests in the Court or the Receiver. The phrase, 'suit or other legal proceeding' in section 28(2) of the Provincial Insolvency Act came in for construction before a Division Bench of the Calcutta High Court in Damodar v. Banwarilal and taking the similar view the Divisional Bench observed. (p. 473)

''.........the words 'suit or other legal proceeding' (in section 28(2)) mean suit or other legal proceeding against the property of the insolvent, which vests in the Receiver and the remedy against which is controlled by that sub-section.''

It is, therefore, clear that the only suit or legal proceeding which is hit by the bar under section 28(2) is a suit or proceeding in respect of the property of the insolvent which has vested in the Court or in the Receiver and becomes divisible among the creditors as provided by sub-section (2) of section 28.''

Hence the present suit which is based on a contract of tenancy and is filed by the insolvent against his tenant i.e. a third party, for the benefit of the estate is not covered by section 28(2) of the Provincial Insolvency Act. The right of the insolvent in a case like this to institute the suit cannot cause any prejudice to the rights of the Creditors of the Official Receiver.

7. So far as the decision on which reliance is placed by Shri Vaze is concerned, that was a case where the plaintiff who was adjudged as an Insolvent had sought leave to sue in forma pauperis for recovery of a sum of Rs. 30,000.00/- from the defendants, the Calcutta Soap Works and it was held therein by the Single Judge of this Court that the proceedings were not maintainable in view of the provisions of sections 28 and 59 of the Provincial Insolvency Act. Admittedly such is not the case in the present case. Further the view taken by the Single Judge is no more good law in view of the Division Bench decision in Bank of Maharashtra v. V.D. Datar 72 Bom.L.R. 709. Even otherwise in the said case itself the learned Single Judge had made a reference to the Full Bench decision of the Allahabad High Court in Abdul Rahman v. Nihal Chand : AIR1935All675 . The Full Bench of Allahabad High Court in terms has held that there is no specific provision in the Act under which every suit by an Insolvent after his adjudication is in express terms prohibited. It was also held by the Full Bench that in a case where an insolvent filed a suit for money lent by him after adjudication and where the Receiver had not intervened, that suit cannot be thrown out on the mere ground that the plaintiff is an Insolvent. Similar view seems to have been taken by the Travancore Cochin High Court in A.I.R. 1957 T.C. 241 Alleppey Ananthanarayanapuram Thuravoor Thirumala Devoswam v. Ponnu Nihal Pillai Kannu Pillai. In any case so far as the present suit filed under the Bombay Rent Act is concerned, it cannot be said the such a suit is barred by section 28(2) or section 59 of the Provincial Insolvency Act. Therefore, it will have to be held that both the Courts below committed an error apparent on the face of record in holding that the suit itself was not maintainable.

8. So far as the merits of the case are concerned, it is no doubt true that a cursory finding has been recorded by the Appeal Court in that behalf. However it is contended by Shri Vaze that the said finding requires reconsideration since the Appeal Court has not applied its mind fully to the material placed on record, as it had taken a view that the suit itself was not maintainable. There is much substance in this contention. Therefore, in my opinion it will be better if the matter is remanded back to the Appeal Court for hearing the appeal afresh in accordance with law, after giving a reasonable opportunity of being heard to both the parties. Since the matter is being remanded back to the Appeal Court the plaintiff-landlord is also entitled to raise and argue the contention based on section 13(1)(g) of the Bombay Rent Act and challenge the findings recorded by the trial Court in that behalf.

9. Hence rule is made absolute and the matter is remitted back to the Appeal Court for hearing the appeal on merits in accordance with law. However in the circumstances of the case there will be no order as to costs.

10. At this stage a prayer is made by Shri Jahagirdar, the learned Counsel for the petitioner that the Official Receiver be allowed to be joined as party to the suit. I find no objection to this course being followed. Therefore, liberty to the plaintiff to join the Official Receiver as a party to the suit.


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