Skip to content


Gidda Naga Malliah and ors. Vs. Kothuri Laxmayya and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAndhra Pradesh High Court
Decided On
Case NumberCivil Revn. Petn. Nos. 54 and 55 of 1968
Judge
Reported inAIR1970AP289
ActsProvincial Insolvency Act, 1920 - Sections 5, 59, 56, 57, 68, 75, 75(1) and 79(1); Limitation Act, 1963 - Sections 5
AppellantGidda Naga Malliah and ors.
RespondentKothuri Laxmayya and ors.
Appellant AdvocateSeetharamaiah, Adv.
Respondent AdvocateJ.V. Suryanarayana Rao, Adv. for ;A.V. Krishna Rao, Adv.
Excerpt:
.....duties - sheristadar sold property under litigation in irregular auction sale - as per routine duties sheristadar not entitled to sell off case property - held, auction sale by sheristadar is void, illegal and liable to be set aside. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not..........to whether a district court sheristadar, who was directed by the high court to be in charge of the routine duties of the office of an offcial receiver, which action was subsequently ratified by the state government is competent to sell the insolvent's estate.2. the material facts that gave rise to these revisions lie in a short compass. one aravapalli lakshmanaswamy, the second respondent herein, was adjudged insolvent by the sub court, narasaraopet in i. p. no. 40 of 1954 in the year 1955 and his properties vested in the official receiver, who did not take possession of the same as nothing material had happened till ist november. 1960 when he applied for leave preparatory to retirement and handled over charge pursuant to the orders of this court under ext. a-1 dated 25th october. 1960,.....
Judgment:
ORDER

1. These tow revisions by the creditors give rise to an interesting question of law as to whether a District Court Sheristadar, who was directed by the High Court to be in charge of the routine duties of the office of an Offcial Receiver, which action was subsequently ratified by the State Government is competent to sell the insolvent's estate.

2. The material facts that gave rise to these revisions lie in a short compass. One Aravapalli Lakshmanaswamy, the second respondent herein, was adjudged insolvent by the Sub Court, Narasaraopet in I. p. No. 40 of 1954 in the year 1955 and his properties vested in the Official Receiver, who did not take possession of the same as nothing material had happened till Ist November. 1960 when he applied for leave preparatory to retirement and handled over charge pursuant to the orders of this Court under Ext. A-1 dated 25th October. 1960, to the Sheristadar, District Court, Guntur, who was directed to be 'in charge of the routine duties of the office of the Official Receiver until a substitute assumes charge'. Under the original of Ex. B-1 dated November 1960, the State Government granted leave to the full-time Official Receiver preparatory to his retirement and ratified the action of this Court in directing the District Judge. Guntur to place the Sheristadar. District Court in additional charge of the routine duties of the office of the Official Receiver, Guntur.

On February 11, 19961, a house situated in Chilakaluripet belonging to the insolvent was sold in public auction subject to the life interest of the insolvent's mother, by the Sheristadar for a sum of Rs. 5,000/- to the Ist respondent herein. The petitioners herein, who are the creditors of the insolvent Lakshmanaswamy, filed I. A. No. 977 of 1961 for setting aside the sale held by the Sheristadar on 11-2-1961, contending inter alia that the Sheristadar was not empowered to conduct the sale and there was fraud and material irregularity in the publication and conduct of the sale resulting in gross under valuation, and deposited Rs. 10,000/- into the court. I. a. No. 978 of 1961 under Section 5 of the Limitation Act to condone the delay, if any, in filing I. A. No. 977/61 was also filed on the ground that there was no proper publication and that they had no knowledge about the sale. The learned Subordinate Judge allowed both the application. Aggrieved by the decision of the Sub-Court, the auction-purchaser preferred C. M. A. Nos. 3 and 33 of 1963 to the Dist. Court, Guntur against I. A. Nos. 977 and 978/61 respectively. The learned District Judge, holding that the Sheristadar-Receiver was competent to conduct the sale on 11-2-1961, remanded the application to the lower Court directing it to decide the applications on merits. hence these revision petitions.

3. Mr. Seetharamayya, learned Counsel for the petitioners, raised the following contentions; 910 that the appointment of the Sheristadar by the High Court being not to the post of Offcial Receiver but only to look after the routine duties of the office of the Official Receiver, he had no power to conduct the sale of the properties of the insolvent, and hence, the sale is void; (2) that there is no delay in failing I. A. No. 977 of 1961; and (3) that no appeal lies against the order of the Sub-Court condoning the delay, to the District Court.

4. Mr. Suryanarayanna Rao, learned counsel for the Ist respondent, contending contra and urged that the Sheristadar-Receiver in the present case was competent to conduct the sale on 11-2-1961 as it is a routine duty for the Receiver to conduct the sale and receiver payments as provided by clauses (a) and (b) of Section 59 of the Provincial Insolvency Act (hereinafter referred to as the Act), that the application I. A. No. 977 of 1961 being filed long after the lapse of 21 days provided by the provision to Section 68 of the Act, is barred by limitation, and that an appeal to the District Court lies from an order of the Sub Court.

5. The points that arise for consideration are;

(1) Whether the sale of the insolvent's estate vested in the Official Receiver, conducted by the Sheristadar who was directed by the High Court to be in additional charge of the routine duties of the Office of the Official Receiver which action was subsequently ratified by the State Government, is valid and binding on the parties?

(2) Whether I. A. No. 9777 of 1961 is barred by limitation on the application of the proviso to Section 68 of the Act, and if so, whether there are sufficient and justifiable grounds for condoning the delay in filing the same?

(3) Whether an appeal against the order of the Sub Court allowing an application to condone the delay in filing an application to set aside a sale, files to the District Court?

6. For a proper appreciation of the respective contentions of the parties on point No. 1, it is relevant and necessary to consider the material provisions of the Act having a bearing on this point. By Section 56, the Court is empowered to appoint a Receiver either at the time of the order of adjudication or subsequently for the property of the insolvent and such property shall thereupon, vest in such Receive. Under Section 57(1), it is only the State Government that is competent to appoint Official Receiver under the Act for any local areas, as it may prescribe. By virtue of sub-section 92) to Section 57, an Official Receiver appointed by the Government for the local limits of the jurisdiction of any Court under Section 57(1), shall be the Receiver for the purpose of every order appointing a Receiver or an interim Receiver issued by such Court unless the Court for any special reasons directs otherwise. In case no Receiver either under Section 56 or Section 57 has been appointed, the Court shall have all the rights and powers conferred on a Receiver under the Act.

Section 59 of the Act enumerates the duties and powers of a Receiver. The Receiver has to realise as early as possible the property of the debtor and distribute dividends among the creditors, and for that purpose, he may sell all or any of the property of the insolvent and give receipts for any monies received by him, and with the permission of the Court, he may do all or any of the things mentioned in clauses(c) to (i) of Section 59. An application to the Court under section 68 before the expire of 21 days from the date of the Act or decision of the Receiver, by an aggrieved party is provided. an appeal to the district Court against a decision or an order made by any Court subordinate to District Court in the exercise of insolvency jurisdiction, and a civil revision to the High Court against the order of the District Court, shall lie under Section 75. Under Section 79(1), the High Court, with the previous sanction of the Government, is empowered to make rules for carrying into effect the provisions of the Act and in particular, with regard to the appointment and remuneration of Receivers other than Official Receivers), the audit of the accounts of all Receivers, and the costs of such audit.

A combined reading of the provisions of Ss. 56, 57 and 79 (1) would make it abundantly clear that it is the State government that has got the power to appoint the Official Receivers for the local limits of the jurisdiction of any Court having jurisdiction under the Act, and the High Court is not competent either to appoint an Official Receiver or make any rule under Section 79(1) for the appointment as well as with regard to the remuneration of the Offcial Receivers, though under Section 56, the Insolvency Court may appoint a Receiver in appropriate cases for the management of the property of the insolvent.

7. The expressions 'Receiver' and 'Official Receiver' have not been defined under the Act. If an appointment by a Court is made under Section 56, it has to be construed that it was the appointment of a Receiver but not an Official Receive, as the State Government alone is competent to appoint under S. 57 (1) any Official Receiver. In the circumstances, the proceedings of the High Court under the original of Ex. A-1 directing the Sheristadar. District Court, Guntur, to be in charge of the routine duties of the office of the Official Receiver can, by no stretch of reasoning, be held to be an order appointing him as an Official Receiver either permanent or temporary. The very order, if construed property, would clearly show that the High Court never intended to appoint the Sheristadar as an Official Receiver even temporarily, as it has specifically directed him to be incharge of only routine duties of the office of the Official Receiver.

That apart, the order of the State Government under Ex. B-1 ratifying the orders of the High Court, does not in any way support the plea of Mr. Suryanarayana Rao the it should be construed as an order made by the Government appointing the Sheristadar as an Official Receiver. As mentioned above, the State Government has not independently appointed the Sheristadar even temporarily to the post of the Official Receiver, but it has only ratified the proceedings of the High Court directing him to be in additional charge of the routine duties of the office of the Official Receiver. Hence, on a careful reading of Exs. A-1 and B-1, and on the facts and in the circumstances of the case, I have no hesitation to hold that the Sheristadar has not been appointed to the post of the Official Receiver even temporarily to discharge the duties of the Official Receiver but he has been only directed to be in additional charge of the routine duties of the office of the Official Receiver until the substitute assumed charge.

8. The next question that arises for consideration is what is meant by 'routine' duties and whether the sale of the property of the insolvent is or is not a routine duty of the Receiver. The acts mentioned in clauses (a) and (b) of Section 59 of the Act, argued Sri Suryanarayana Rao, are only mechanical, unvarying and ministerial in nature whereas those provided under cls. (c) to (i) are regular duties. A distinction is sought to be made by the counsel for the respondent between the acts of the Receiver narrated in clauses (a) and (b) as 'routine' duties and those mentioned in clauses (c) to (i) of Section 59 of the Act as regular duties, on the ground that no leave of the Court is required in respect of the former category unlike the latter set of duties which could be performed only with the permission of the Court. Section 59 enumerates the duties and powers of the Receiver. There is no definition of 'Routine' duties distinguishable form the official or regular duties of a Receiver. Hence, it is just and property to consider the plaint grammatical meaning of the expression 'routine' duties given in the dictionaries.

9. 'Routine' s meant by the Oxford English Dictionary (Vol. VIII, page 840) thus:

'(1) A regular course of procedure; a more or less mechanical or unvarying performance of certain acts or duties.

(2) Regular, unvarying, or mechanical procedure, discharge of duties etc.

(3) of a mechanical or unvaried character, performed by rule.'

As per the Oxford English Dictionary, the 'routine' duties of a Receiver must be construed to be such duties which are mechanical, regular and unvarying, performed by him. The Receiver has ample discretion in each case whether to bring the properties of the insolvent to sale or not, and he is bound to take into consideration all the facts and circumstances in arriving at a correct conclusion. It cannot be said that in every case he has to exercise the discretion only in one way irrespective of the facts and circumstances. he has not apply his mind to the facts and surrounding circumstances and has to decide for himself as to whether or not it is in the interests of the body of creditors as well as the estate of the insolvent to bring the properties to sale and conclude the sale. I do not find any substance in the plea of Sri Suryanarayana Rao that the sale of the property of the insolvent by the Receiver is a mechanical or ministerial duty 'Ministerial duty' is meant by Black's law Dictionary (page 1148) as 'one regarding which nothing is left to discretion ---- a simple and definite duty, imposed by law, and arising under conditions admitted or proved to exist.' According to Ballentine's Law Dictionary with pronunciation (Page 820) 'Ministerial duty' means:

'A duty in regard to which no discretion is left in the officer on whim the duty is imposed; an act which is absolute, certain and imperative, involving the a mere execution of a set task, the law which imposes it prescribing the time, mode and occasion of its performance with such certainly that nothing remains for judgment or discretion.'

The routine duties of the office of a Receiver must be held to be only mechanical or ministerial acts or duties which can be performed with certainty, regularity, without variation and without the exercise of nay discretion by the person incharge of the same; but, by no stretch of reasoning, the sale of the insolvent's property by a Receiver can be termed as a 'routine' duty of the Receiver, as he has to exercise his discretion reasonably and judicially depending upon the facts of each case, to bring the properties of the insolvent to sale. The sale of the property of the insolvent and the receipt of money would certainly amount to an act or decision of the Receiver within the meaning of Section 68, and such a decision or act is liable to be questioned by an aggrieved party under Section 68 of the Act within 21 days thereafter, as per the proviso to that section. hence the sale of the property of the insolvent cannot, judged form any angle, be held to be a mere administrative, mechanical or ministerial duty or act, but it is a judicial or quasi-judicial act, the correctness of which can be canvassed by the aggrieved party before the court in appropriate cases, subject to a right of appeal under Section 75(1).

Therefore, the act of sale by the Receiver must be held to be not a 'routine' duty as urged by Sri Suryanaayan Rao, but a regular statutory duty to be performed by him exercising his discretion judicially, reasonably and fairly on an honest consideration of the facts of each case. Fro the reasons stated above. I have no hesitation to hold that the Sheristadar, district Court Guntur was not empowered to conduct the sale of the property of the third respondent insolvent on 11-2-1961 as he was not competent to do the same. hence, I must hold that the sale held by the Sheristadar on 11-2-1961 is void and illegal.

10. The contention of Sri Seetharamiah that no appeal lies against the order of the Sub Court in I. A. No. 978/61 condoning the delay in filing the application to set aside the sale, is not sustainable, in view of the decision of a Division Bench of the Madras High Court in In re Pedda Iswara Reddy, AIR 1948 Mad 520 which is an authority for the proposition that? Section 5 cannot override the provisions of Section 75 of the Act which provides for a right of appeal against 'a decision come to or an order made in the exercise of insolvency jurisdiction by a Court subordinate to a District Court' and that the provisions of Section 75 are not subject to the provisions of the Civil Procedure Code. hence, there is no merit in the contention of the petitioners that the appeal to the District Court against the order of the Sub Court condoning the delay in filing I. A. No. 977 of 1961 is not maintainable.

11. It is next urged by Sri Suryanarayana Rao that the application being filed beyond 21 days from the date of the act or decision of the Receiver, the I. A. No. 977/67 fro setting aside the sale is liable to be dismissed as barred by limitation. When once the Sheristadar is held to be a person incompetent to conduct the sale on February 11, 1961, the question of limitation provided under S. 68 does not apply, as the sale would be null and void. The act or decision that is sought o be complained of by the aggrieved party must be the act or decision of a competent Receiver who has been validly appointed under the provisions of the Act.

In other words, I am of the vies that it is only the erroneous and illegal decision or acts of such validly appointed Official Receivers that can be challenged in a Court of law by the aggrieved party. The Receiver mentioned in Section 68 must be construed as a Receiver validly appointed under the provisions of the Act and not any person who illegally assumes the position of a Receiver and conducts himself. This view of mine is supported by the decision of the Madras High Court in Sankara Rao v. Ramakrishnayya, AIR 1924 Mad 461. In that vase, it was held that the limitation provided under S. 63 would not apply to cases, where the sales were made by persons who were not authorised to sell, Krishnan, J., at page 462 observed thus:--

'We must take it that the sales in the present case were made by a person who was not authorised to sell and are thus invalid. In a case like that, it is impossible to hold that the limitation under section 68 will apply as section 68 presuppose that the decision is by a receiver properly appointed.'

Odgers, J., in a separate judgment, at page 464, ruled thus:

'As to limitation, section 68 prescribes a period of 21 days for an application by a person aggrieved by act or decision of the Receiver. It is quite clear that a Receiver means one legally appointed (under the provisions of the Act)'

As it has already been held that the Sheristadar of the District Court, who sold the house property of the insolvent, was not competent to sell the same, the sale I s void and illegal. In such a case, the application filed by the creditors to set aside the sale by the Sheristadar who was incompetent to do so, cannot be held to be not maintainable for the reason of its being filed beyond the period of 21 days prescribed by the proviso to section 68 of the Act.

12. Even assuming that there is some delay in filing the application to set aside the sale held on February 11, 1961, I shall now consider whether there are any valid and sufficient reasons for condoning the same. The preliminary objection of Sri Suryanarayana Rao that the provisions of Section 5 of the Limitation Act are not applicable to n application under Section 68 of the Act (Provincial Insolvency Act) cannot be given effect to in view of the decision of a Division Bench of this court in M. Durgaraju v. M./ Pallamraju and Brothers : AIR1964AP50 . In that case, it was held that the provisions of S. 5 of the Limitation Act are specifically made applicable to all appeals and application under the Provincial Insolvency Act by virtue of the provisions of Section 78(1) and that an application under Section 68 of the Act comes within the purview of section 78(1) and the delay in filling an application under Section 68 can be condoned, provided sufficient cause is shown therefore. There appears to be much force in the allegations of the creditors that there was no property publication in the conduct of sale held on February 11, 1961 and hence, they had no knowledge of the sale and that the sale price of Rs. 5,000/- fetched on that day is very low and that the sale would fetch about Rs. 15,000/- . The conduct of the creditors in depositing Rs. 10,000/- along with the application would show their bona fides and the merit of their allegations. Hence I feel that the creditors have made out valid and sufficient grounds for condoning the delay, if any, in filing the application to set aside the sale.

13. In the view which I have taken, I feel it unnecessary to decide the question raised by Sri Seetharamaiah on the strength of the decision of a Division Bench of the Madras high Court in Ramaswami Reddiar v. Official Receiver, South Arcot, AIR 1941 Mad 827 that the application is still within the period of 21 days contemplated under Section 69 , as the opportunity to the aggrieved party to file the application is available at three instances. i.e within 21 days from the date of the sale, confirmation of sale as well as the execution and registration of the deed of sale. Nor is it necessary to consider the decision of the Supreme Court in Hans Raj v. Rattan Chand, AIR 1967 Sc 1780, on which strong reliance has been placed by the respondent. In that case, it was held that the application complaining of the act of the Receiver attaching property in which insolvent has not interest, was one under S. 68 and not under Section 4 of the Act and the period of limitation for filing an application to set aside the attachment only 21 days form the date of attachment. We are now concerned with the case of sale but not a case of attachment.

14. In the circumstances and for all the reasons stated above, the sale held by the Sheristadar on 11-2-61 is void, illegal and liable to be set aside. Ion the result, the judgments and decrees of the court below are set aside and the revision petitions are allowed with costs in this Court and the Court below, restoring the orders of the trial Court.

15. Petitions allowed.


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