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Sri Ram and anr. Vs. Harbans Lal and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Case NumberEx. F.A. Nos. 573 of 1945 and 480 of 1946
Judge
Reported inAIR1952All399
ActsCode of Civil Procedure (CPC) , 1908 - Sections 51; Provincial Insolvency Act, 1920 - Sections 59
AppellantSri Ram and anr.
RespondentHarbans Lal and ors.
Appellant AdvocateK.C. Mital, Adv.
Respondent AdvocateS.N. Varma, Adv.
DispositionAppeals dismissed
Excerpt:
civil - execution of decree against official receiver - section 51 and 59 of code of civil procedure, 1908 - purchaser of insolvent's property - defect in title - decree against receiver - impeadment of insolvent not alter position - property vests with receiver - receiver not liable for costs. - - , the two appellants, as well as by the official receiver. the objections filed by the two insolvents were to this effect :(i) that they could not be made parties to the decree as judgment-debtors at the stage of execution and (ii) that in execution of a decree like the present to which they were not parties their property could not be attached and sold. , nau chandi) bad already been held by the collector in other execution proceedings as coming within the description of 'protected land' and..........and triloki prasad, the appellants in the two appeals, were adjudged insolvents on 28-1-1927. the official receiver was appointed the receiver-in-insolvency of the property of the insolvents, while insolvency proceedings were continuing, one raghubir saran entered into a contract with the receiver for the purchase of two shops which belonged to the insolvents for a sum of rs. 6,000. subsequently, in pursuance of the agreement, raghubir saran made a deposit of this amount in court. later it was discovered that the title of the insolvents to the two shops in question was defective. in consequence, the sale transaction fell through. raghubir saran, or his legal representatives then endeavoured to recover the deposit of the sum of rs. 6,000 from court. objections were made by the receiver.....
Judgment:

Waliullah, J.

1. These are two connected appeals by the judgment-debtors arising out of two orders passed by the Court below dismissing certain objections tiled by the judgment-debtors under Section 47, Civil P. C. Appeal No. 573 of 1945 is directed against an order passed on 6-9-1945, by which the Court below dismissed the objections filed by the appellants in regard to the attachment and sale of certain trees standing in what is described as the Nau Chandi grove. Subsequently the decree-holders respondents put in another application praying that the execution of the decree might be effected by attachment and sale of the proprietary rights of the judgment-debtors in the plot described as Nau Chandi plot where the Nau Chandi grove stands.

2. The objections filed in both these cases virtually raise the same points in regard to the sale of the property attached. We, therefore, propose to dispose of both these appeals by one and a common judgment.

3. It appears that Sri Ram and Triloki Prasad, the appellants in the two appeals, were adjudged insolvents on 28-1-1927. The official receiver was appointed the receiver-in-insolvency of the property of the insolvents, While insolvency proceedings were continuing, one Raghubir Saran entered into a contract with the receiver for the purchase of two shops which belonged to the insolvents for a sum of Rs. 6,000. Subsequently, in pursuance of the agreement, Raghubir Saran made a deposit of this amount in Court. Later it was discovered that the title of the insolvents to the two shops in question was defective. In consequence, the sale transaction fell through. Raghubir Saran, or his legal representatives then endeavoured to recover the deposit of the sum of Rs. 6,000 from Court. Objections were made by the receiver insolvency and Raghabir Saran or his legal representatives, were not able to get back the deposit. Thereupon a suit was filed against the receiver, substantially for recovery of the amount together with interest on that amount. This suit was eventually decreed by the High Court on 19-10-1941. Before the decision of the High Court, however, it so happened What on 16-5-1941, the Insolvency Judge passed a conditional order of discharge of the two insolvents, viz., Sri Ram and Triloki Prasad the appellants, before us. Some time later, the legal representatives of the decree holder applied for execution of the decree by sale of certain immovable property which under the conditional order of discharge dated 16-5-1941 had been directed by the Insolvency Judge to remain vested in the official receiver for the benefit of the creditors. It may be mentioned in passing that the immovable property ordered by the Insolvency Judge to remain vested in the official receiver, even after the date of the conditional order of discharge, included the grove at Nau Chandi ground which has been mentioned above. In the execution Court it appears, the decree-holders thought it necessary to apply to the Court for impleading the two insolvents, Sri Ram and Triloki Prasad, as parties to the proceedings. This was done. Objections were filed to the execution of the decree by the two insolvents, i.e., the two appellants, as well as by the official receiver. The objections filed by the two insolvents were to this effect : (i) that they could not be made parties to the decree as judgment-debtors at the stage of execution and (ii) that in execution of a decree like the present to which they were not parties their property could not be attached and sold. On behalf of the official receiver the objection filed was to this effect. The land and the grove (i.e., Nau Chandi) bad already been held by the Collector in other execution proceedings as coming within the description of 'protected land' and they were thus not saleable in execution of the present decree. We may add here that out of the amount due under the decree a sum of Rs. 6,000 which was in deposit in the insolvency Court has already been realised by the decree-holders. The balance, which has yet to be realised mainly consists of the interest and costs of the suit awarded eventually by the High Court: 4. The learned Civil Judge has overruled these objections. He has held on the strength of a decision of this Court, Ram Shankar v. Secretary of State, 1932 ALL. l. J. 842, that the receiver when he entered into a contract with Raghubir Saran for the sale of two shops belonging to the insolvents was acting in the course of his duty and with the permission of the Court. Under these circumstances, any claim which could be established by Raghubir Saran or his representatives against the receiver in connection with the contract or failure of the contract could be made good out of the property of the insolvents in the hands of the receiver. The official receiver himself would not be personally liable and he must be deemed to have represented the estate of the insolvents both at the time of his entering into the contract and at later stages when he defended the suit instituted by Raghubir Saran. In this view of the matter, the objections filed by the appellants were dismissed.

5. Wish regard to the objection raised by the official receiver, the learned Civil Judge held that the question whether the property could actually be sold or not, did not actually arise at the present stage. He has observed that the question whether the property can be sold or not will be determined at the proper time when such objection was actually raised in the course of execution proceedings. The learned Judge further observed that the decree passed in the present case was not one passed on the basis of a 'loan' as defined in the Debt Redemption Act as well as in the Regularisation of Agricultural Credit Act, 1940. In this view, the learned Judge has dismissed these objections and has ordered execution proceedings to continue.

6. Learned counsel for the appellants has contended, in the first place, that the judgment debtor-insolvents not being parties to the decree the decree could not be executed against their property. In the next place, it has been contended that the Collector, having held, in the proceedings in connection with the execution of another decree against the zamindari property including the Nau Chandi grove, that the land was 'protected land' that very property could not be proceeded against in the present execution proceedings. In this connection reliance has been placed on para. 11 (1) of Schedule III, Civil P. C. Lastly, it has been contended that even if the judgment debtors be held liable, their property, even if it be vested in the official receiver, cannot be attached and sold in so far as the costs of the litigation which resulted in the decree under execution are concerned.

7. It seems to us, however, that none of these contentions has any force. The position, to our mind, is quite simple. The decree under execution was obtained, as mentioned above, in consequence of the fact that a contract for sale entered into by the official receiver in respect of the sale of two shops to one Raghubir Saran fell through. The receiver was undoubtedly acting in the course of his duty as a receiver and with the sanction of the Insolvenay Court. On 16-5-1941, when a conditional order of discharge was passed in favour of the insolvents, the Insolvency Judge took care to direct that certain items of property including the immovable property comprising the Nau Chandi grove would remain vested in the official receiver for the benefit of the creditors. After the passing of this conditional order of discharge the property which is now sought to be attached and sold in execution of the decree remains vested in the official receiver. The official receiver haa undoubtedly heen a party to the decree from the very beginning. As a matter of fact, the suit itself was filed against him. The mere fact that the two insolvents have been impleaded in the course of the execution proceedings as parties to the proceedings does not really make any difference. The execution of decree is sought not against the person of any of the two insolvents but is directed against certain property of the judgment-debtors which remains vested in the official receiver. We do not see how it can be legitimately urged that this decree cannot be executed against such property.

8. The contention of the learned counsel, as mentioned above, is that para. 11 (1) of Schedule III, Civil P. C. stands in the way of the decree-holders inasmuch as the civil Court is prohibited from issuing any process in respect of property which is being dealt with by the Collector in exercise of the powers given to him in paras. 1 to 10. This is a point which was not raised by the appellants at any stage of the proceedings in the Court below. We, have, therefore, not the advantage of the opinion of the Court below on this question. Moreover, the learned counsel for the appellants, who has raised this point before us, has not been able to give us any definite information as to what proceedings, if any, the Collector is taking in respect of this property. All that we know of is that the Collector, at some stage or other, declared the zamindari property comprising even the Nau Chandi grove to be protected property. Obviously this fact alone cannot enable us to give effect to the contention of the learned counsel that para. 11 (1) of Schedule III, Civil P. C. helps him in any way.

9. In support of his contention, that at any rate, the portion of the decree under execution which relates to the costs of the earlier litigation should not be executed against the property of the insolvents, be it in the hands of the receiver or in those of the insolvents, learned counsel has relied upon the case of Lachman Das v. Lakshmi Narain, 1932 ALL. L.j. 226, a decision by two learned Judges of this Court. That case, however, in our opinion, does not support the contention urged by the learned counsel. In that case, it appears that the decree under execution was one which was passed upon the dismissal of an appeal filed by the receiver and with regard to costs, the following words were mentioned in the decree :

' And it is further ordered that the appellant aforesaid do pay to the respondent 1 aforesaid a sum of . ...'

The appellant being the receiver at the stage of execution of that decree, the Court interpreted that decree to mean that it directed the receiver personally to pay the costs of the respondent. The learned Judges observed:

' If he (the receiver) wanted to safeguard his personal interest he should have obtained an indemnity from the creditor or other person in whose interest he was starting the litigation. '

It is clear, therefore, that no principle of general application has been laid down in that case. On the contrary, in the case of Ram Shankar v. Secretary of State, 1932 ALL L.J. 842, a Bench of this Court has held that the receiver-in-insolvency is not liable personally if a liability is incurred in connection with a contract made with the sanction of the Court.

10. In the present case, we are satisfied that the decree passed as the result of the litigation between Raghubir Saran on the one band and the receiver on the other was a decree passed by the High Court in connection with a transaction which the receiver had entered into with the sanction of the insolvency Court.

11. For the reasons given above, we are satisfied that there is no force in these appeals. They are accordingly dismissed with costs.


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