Skip to content


The Official Receiver Vs. Veeranki Samudralu and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAndhra Pradesh High Court
Decided On
Case NumberCivil Revn. Petn. No. 502 of 1972
Judge
Reported inAIR1975AP27
ActsCode of Civil Procedure (CPC) , 1908 - Sections 115 - Order 1, Rule 10 - Order 21, Rule 90 - Order 22, Rule 10; Limitation Act, 1963 - Sections 21(1); Provincial Insolvency Act, 1920 - Sections 20
AppellantThe Official Receiver
RespondentVeeranki Samudralu and ors.
Appellant AdvocateG.S. Dwarakeswara Rao, Adv.
Respondent AdvocateC.V. Narasimha Rao, Adv.
DispositionPetition allowed
Excerpt:
(i) civil - interim receiver as impleader- order 21 rule 90 and order 1 rule 10 of code of civil procedure, 1908 - interim receiver appointed by insolvency court to administer debtor estate made application for impleadment - person whose interest is affected by sale had right to apply to set it aside - person can apply under order 1 rule 10 where proceedings are pending - observed application of interim receiver maintainable. (ii) application of limitation act - order 22 rule 10 of code of civil procedure, 1908 and section 21 (1) of limitation act, 1963 and section 20 of provincial insolvency act, 1920 - interim receiver is statutory representative of debtor - not case of substitution or addition - section 21 (1) of limitation act not to apply - held, limitation bar not applicable. -..........1973 in o. s. no. 66 of 1963 on the file of the sub-court, machilipatnam under order 1, rule 10, civil procedure code to permit him to come on record and contest the execution proceedings. that application was dismissed and hence this revision petition by the official receiver.2. the petitioner was appointed as an interim receiver in i. p. no, 28 of 1966 on the file of the sub-court, vijayawada, to administer the affairs of the debtors, pending adjudication on a creditor's petition. the debtors, who are respondents 3 to 5 herein, filed an application under order 21, rule 90. civil procedure code to set aside a sale held in execution of the decree in o. s. no. 66 of 1963. that application was still pending. the interim receiver, who is appointed in i. p. no. 28 of 1966, wanted to come.....
Judgment:
ORDER

A.V. Krishna Rao, J.

1. The petitioner herein, the Official Receiver Krishna, Machilipatnam, had filed an application E. A. No. 369 of 1970, in E. P. No. 696 of 1973 in O. S. No. 66 of 1963 on the file of the Sub-Court, Machilipatnam under Order 1, Rule 10, Civil Procedure Code to permit him to come on record and contest the execution proceedings. That application was dismissed and hence this revision petition by the Official Receiver.

2. The petitioner was appointed as an Interim Receiver in I. P. No, 28 of 1966 on the file of the Sub-Court, Vijayawada, to administer the affairs of the debtors, pending adjudication on a creditor's petition. The debtors, who are respondents 3 to 5 herein, filed an application under Order 21, Rule 90. Civil Procedure Code to set aside a sale held in execution of the decree in O. S. No. 66 of 1963. That application was still pending. The Interim Receiver, who is appointed in I. P. No. 28 of 1966, wanted to come on record and contest the proceedings. The property was sold in execution of the decree in O. S. No. 66 of 1963 on 21-4-1964. The application of the Receiver was opposed by the decree-holder and the purchaser.

3. The short question in this revision petition is, whether the revision petitioner has any locus standi to file the application to get himself impleaded in the proceedings and contest the same. Under Section 20 of the Provincial Insolvency Act the Court is empowered to appoint an Interim Receiver when making an order admitting the insolvency petition-The Court shall ordinarily appoint an Interim Receiver of the property of the debtor or any part thereof where the debtor is the petitioner and in case where a creditor is the petitioner, may also appoint an interim Receiver. On such appointment, the Court may direct the Interim Receiver to take immediate possession of the estate of the debtor and once such a direction is given the Interim Receiver shall have such powers as can be conferred on a Receiver appointed under the Code of Civil Procedure as the Court may direct. Where the Court does not appoint an Interim Receiver at the time of admitting the application for insolvency it has nevertheless the power to make such an appointment at any subsequent time before adjudication and the provisions of the section shall apply.

4. The main object of appointment of an Interim Receiver is to preserve the assets of the debtor and hand them over to the Official Receiver when an order of adjudication of the debtor is made. It may be noticed that the debtor at this stage is not yet an insolvent and he continues to be the legal owner of the properties. It is manifest from a reading of this section that the Interim Receiver has only such powers which the Court may confer on him either expressly or by necessary implication. The powers are those exercisable by a Receiver under the Code of Civil Procedure. Therefore, when a Court makes an order appointing an Interim Receiver, it should give directions as to which of the powers ordinarily conferable upon a Receiver appointed under the Civil Procedure Code should be exercised by the Receiver in any particular case.

5. It is beyond controversy that the appointment of an Interim Receiver does not have the effect of vesting or transferring the title in the debtor's property to him. Where the Court merely makes an order directing the Interim Receiver to take charge of the properties of the debtor, pending disposal of the insolvency petition, it must of necessity mean that the property in the possession of the debtor is to be taken into custody by the Receiver. In the present case, there was sale in execution of a decree before the insolvency petition was filed. The debtors had filed an application to set aside the sale under Order 21. Rule 90. Civil Procedure Code and the same was pending on the date when the creditor's application to adjudicate the debtors as insolvents was filed and an Interim Receiver was appointed. By that date as the sale was not confirmed, the title was not yet In law transferred to the purchaser. The title and possession to the property sold must as on that date be still held to be that of the debtors. If by reason of the appointment of the Interim Receiver he was directed to take charge of the debtor's property I see no valid reason as to why the Receiver could not step in and participate in the proceedings pending under Order 21 Rule 90 C. P. C. for, the Interim Receiver is charged with the duty of protection of the property of the debtors and if the sale has been an improper one liable to be set aside, it is his duty to see that the title does not vest in a purchaser under such a sale. As the title has not yet vested in the purchaser, in order to preserve the property, the law does not prevent the Receiver from filing an application under Order 21. Rule 90, Civil Procedure Code. If he could initiate such a proceeding himself, what warrant is there for holding that he cannot seek to be impleaded in a petition filed already under Order 21, Rule 90, Civil Procedure Code. If he takes steps to come on record and contest the application under Order 21. Rule 90. Civil Procedure Code, he would be clearly discharging the duty which his appointment as Interim Receiver casts on him viz.. the protection and preservation of the property of the debtors. Now under Order 21, Rule 90, Civil Procedure Code, any person whose interests are affected by a Court sale is empowered to apply to the executing court to set aside the sale on the grounds mentioned in the rule. The Interim Receiver being a person charged with the possession of the property must be held to be a person having an interest in retaining such property. In such circumstances, he can be truly characterised as a person whose interests are affected by the Court sale entitling him to apply under Order 21. Rule 90, Civil Procedure Code.

6. I place reliance for what is stated above upon the Full Bench decision of the Madras High Court reported in Sailappan v. Subbaiah. : AIR1963Mad156 . The question referred to the Full Bench was whether an Interim Receiver appointed under Section 20 of the Provincial Insolvency Act is entitled to apply to set aside a Court sale of a property of a debtor under Order 21, Rule. 90, Civil Procedure Code. Ramachandra lyer, C. J., has considered the several decisions cited before him (counsel did not draw my attention to this Full Bench decision) during the course of the arguments. I, consider it unnecessary to deal with each of the other authorities cited by the learned Counsel before me. After a careful analysis of the various decisions bearing upon the point, the Full Bench expressed its concluded opinion as follows (at page 160):

'In cases where an interim Receiver is appointed under Section 20 of the Provincial Insolvency Act subsequent to the date of the execution sale as well as in cases where he has been appointed before, we are of opinion that it is perfectly competent to the insolvency court to clothe the Receiver with authority to take proceedings to set aside the sale. Such authority can be given expressly or even impliedly and if such Court directs the interim Receiver to take charge of the property which had been sold (the sale not having been confirmed), he would have authority to institute all necessary proceedings to retain the property and thereby make the title of the debtor mere perfect.'

I am in respectful agreement with the above neat statement of law laid down by the learned Chief Justice which directly has a bearing on the question before me. Here in the case before me, there is no positive order of the Insolvency Court sanctioning the intervention of the interim Receiver in these particular proceedings. It would appear that with regard to certain other execution sales, express permission was granted where certain creditors sought permission of the Insolvency Court to authorise the interim Receiver to intervene in the execution proceedings on behalf of the debtors. Should this fact make any difference? It is not argued before me that the order appointing the Receiver has in any way restricted the powers of the interim Receiver in the discharge of his duties qua receiver in relation to the debtor's properties. If the interim Receiver has been appointed apart from any specific conferment of any particular power, he has quite obviously in law a duty to take into custody and retain the property of the debtors, pending disposal of the insolvency petition. He is undoubtedly a person whose interest is affected by the sale, as he is a statutory representative of the debtor. For an application to be filed under Order 21, Rule 90, Civil Procedure Code, it is immaterial that the property is not vested in the interim Receiver, as it would vest in the case of a Receiver after adjudication. The Court below held that the interim Receiver has no locus standi to make the application to come on record on the ground that the interim Receiver in law was not an official Receiver in whom the properties of the debtor were vested and that so long as there was no adjudication of the debtors, they alone continued to be the legal owner of the property and not the interim Receiver. He held that as there was authority for holding that an interim Receiver could not make an application under Order 21. Rule 89. Civil Procedure Code he could not also make an application under Order 21, Rule 90. Civil Procedure Code. This view of the learned Judge cannot be correct for the reasons given by me earlier viz., that the interim Receiver is a person whose interests are affected by the Court's sale within the meaning of Order 21, Rule 90, Civil Procedure Code. Further as pointed out by the learned Chief Justice in : AIR1963Mad156 the words employed in Order 21. Rule 89, Civil Procedure Code enabled only a person 'holding an interest' in the property to apply. The Court below had held that the interim Receiver had not moved the Insolvency Court for granting the permission to him to contest the present proceedings. But I do not think that this presents any insuperable obstacle in the way of the interim Receiver, for the very order of appointment in this case to take charge of the debtors' estate by necessary implication clothes the interim Receiver with the authority to make the present application, as in my view he fulfils the description of a person whose interests are affected by the sale.

7. My attention was drawn to 8 judgment of my learned brother. Samba-siva Rao, J.. in C. R. P. No. 503 of 1972 dated 23-3-1973 (Andh Pra). That matter had arisen out of the same insolvency proceedings. Some property was gold in execution of a decree and the judgment-debtors filed the application under Order 21, Rule 90, Civil Procedure Code for setting aside the sale. The Court on an application by the creditors had directed the interim Receiver to come on record in those proceedings. On the strength of that direction, the interim Receiver filed an application under Order 1. Rule 10, Civil Procedure Code. That was dismissed by the lower Court on the ground that the properties did not vest in the interim receiver and that therefore he had no locus standi. In revision. Sambasiva Rao, J., held that the interim Receiver had an interest in the matter and was therefore at least a Proper party and that the refusal on the part of the lower court to permit him to come on record would result in excluding a proper party from the arena of the dispute. In that view of the matter, the learned Judge set aside the order of the Court below and allowed the interim Receiver's Revision Petition. It is pointed out to me that in that case the respondent was not represented. I therefore, think that the learned Judge did not have the advantage of a full argument before him in the case. But he clearly held that the interim Receiver in such a case would be a proper party and permitted the interim Receiver to come on record.

8. Another point which remains to be considered is this. It is contended by the respondent's Counsel that the interim Receiver cannot be permitted to come on record years after the application under Order 21, Rule 90. Civil Procedure Code has been filed by the debtors and that his application to come on record cannot be allowed, as the same would be wholly barred by limitation. The argument, I think, is founded on a fallacy. There is no question of any substitution or adding of a party so as to attract the first part of Section 21(1) of the Limitation Act. The interim Receiver in this case is a statutory representative of the debtors and it is not strictly a case of either an addition or substitution of a party, when only the objection raised by the respondents had relevance. I should think that Order 22. Rule 10 of the Code of Civil Procedure, which provides that

'in other cases of an assignment, creation or devolution of any interest during the pendency of a suit, the suit may by leave of the Court be continued bv or against the person to or upon whom such interest has come or devolved'

is applicable to the present proceeding, because it is only Rules 3. 4 and 8 of Order 22, Civil Procedure Code that are not made applicable to proceedings in execution of a decree or order. No question of limitation arises in the present) context.

9. As a result of my above discussion, I allow the revision by setting aside the order of the court below. I allow E. A. No 369/70 in E. P. No. 697/73 in M. T. M. O. S. 66 of 1963. The petitioner will be entitled to his costs here and in the courts below.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //