1. This is an appeal from an order passed by the learned District Judge, Farrukhabad, in circumstances which are somewhat peculiar. The order appealed from was passed in appeal from the order of the Sub' ordinate Judge sitting as an insolvency Judge. Murli and Shazade were adjudged insolvent by the insolvency Court at Cawnpore, and a receiver was appointed to take charge of their assets. The house, which is now in dispute, is situate in Farrukhabad, and was claimed by the receiver as the property of the insolvents. The appellants in this Court deny the title of the insolvents and claim to be the owners of the house in dispute. They preferred an objection in the insolvency Court at Cawnpore putting forward their claim and denying the right of the insolvents. The application and the order of the Court thereon could not be traced. The appellants allege that the only order which the Court passed was 'file without consideration.' The respondent, on the other hand, alleges that the objection was dismissed in default of appearance. The judgment of the lower appellate Court also assumes this fact. An application filed by the appellants at a certain stage of proceedings likewise mentioned that the objection bad been dismissed in default. It is safe to assume, for the purpose of this appeal, that the appellants' objection above referred to was dismissed for non-appearance.
2. The appellants then instituted a regular suit in the Court of the Munsif, Farrukhabad, within whose jurisdiction the house in dispute lies, for a declaration of their right. The receiver, among others, was impleaded as a party. The suit did not proceed to trial, as it was withdrawn with liberty to bring a fresh suit. No fresh suit however has since been instituted.
3. The receiver subsequently sold the house to the respondent, Mt. Sunder, who applied to the insolvency Court at Cawnpore for delivery of possession of the house to her. That Court sent a rubkar to the Judge of the insolvency Court at Farrukhabad for delivery of possession, as prayed by the purchaser. The appellants objected to any delivery of possession being1 made. In their objection they reiterated their title to the house and repudiated that of the insolvents, questioning the receiver's power to transfer it and the Court's power to award possession in that summary manner. They emphasised that they had all along: been in possession and could not be ousted in the manner desired by the purchaser. The insolvency Judge (Subordinate Judge) Farrukhabad summarily dismissed the objection on the ground that a similar objection had been previously dismissed. This refers to the appellants' objection in the insolvency Court at Cawnpore which, as above mentioned, was dismissed for non-appearance. From the order of the insolvency Judge, Farrukhahad, an appeal was preferred to the District Judge, Farrukhabad, who upheld it on grounds which, in my opinion, cannot be sustained. He assumed that the house in dispute was 'attached' property, that the objection to attachment was dismissed under Order 21, Rule 58, Civil P.C., and that the regular suit instituted by them in the Court of the Munsif, Kanauj, was one under Order 21, Rule 63, Civil P.C. The learned Judge expresses the opinion that the dismissal of objection for non-appearance became final, as it has not so far been set aside by a decree passed in a suit under Order 21, Rule 63, Civil P.C. The consequence, according to the learned Judge, is that the appellants must quietly submit to possession being delivered to the purchaser from the receiver. The learned Judge does not seem to have applied his mind to the further question whether it is open to an insolvency Court, without coming to a decision under Section 4 of the Act, to deliver possession of property sold by the receiver, which property is in possession of third persons. The Subordinate Judge and the District Judge of Farrukhabad have treated the case as if it were one of transfer of a decree for execution from a Court at Cawnpore to a Court at Farrukhabad and that they were Courts executing the decree.
4. The learned advocate for the respondent, who presented his case in such light as was possible, has not been able to draw my attention to any provision in. the Insolvency Act, which justifies it he adoption of this procedure by way of analogy which was quite fanciful. Section 4, Provincial Insolvency Act, undoubtedly empowers the insolvency Court to decide all questions of title which may arise in any case of insolvency or which the Court may deem it expedient or necessary to decide. Under Section 28 the property of the insolvent is vested in the receiver on the order of adjudication being passed: but in relation to third persons a receiver has no more right than the invent himself, nor can the insolvency Court allow the receiver to ride roughshod, over rights of persons who do not derive any right to the property in dispute from the receiver but adversely to him. Section 56, which provides for the appointment of receivers, empowers the Court to remove from possession any person in whose possession or custody the insolvent's property is but there is an important proviso appended to that section which lays down:
that nothing in this section shall be deemed to authorise the Court to remove from the possession or custody of property any person whom the insolvent has not a present right so to remove.
5. In my opinion the mere fact that the respondent purchased the house in dispute from the receiver does not entitle him to dispossess the appellants. She cannot have better right than that of the receiver himself in this respect. The receiver has no better right than the insolvents, as already stated. The Court has no authority to remove the appellants from possession of the property, as the insolvents, have not been shown to have a present right to remove them. It was open to the insolvency Court to decide the question of title between the receiver and the appellants under Section 4, Insolvency Act, and if in those proceedings the title had been found to be with the insolvents, now represented by the receiver, the proviso to Section 56 might have been applicable and the Court might then have the power to treat it as the property of the insolvents and remove the appellants from possession. The Court has not taken proceedings under Section 4, and the title is in controversy. The appellants arc in possession a fact which has not been disputed. Indeed, it is clear from the order of the In solvency Court at Cawnpore, which required the insolvency Court at Farrukhabad to deliver possession to the purchaser by removing the appellants.
6. The view that the appellants are precluded from asserting their title because their objection in the insolvency Court at Cawnpore was dismissed for non-appearance and they did not have it set aside cannot be sustained. It is based on Order 9, Rule 9, Civil P.C., under which if a suit is dismissed in the absence of the plaintiff but in the presence of the defendant, no further suit can lie, the only remedy of the plaintiff being to have the order of dismissal set aside. The lower Courts treat the appellants' objection as a plaint in a suit and the order of dismissal for non-appearance to have the same 'effect as the dismissal of a suit for non-appearance of the plaintiff. There is no warrant for such a view. The appellants were not bound to object in the insolvency Court. 'They could have retained possession of the house and ignored the insolvency proceedings and the action of the receiver. If they had taken up that attitude, it would have been incumbent on the purchaser from the receiver to vindicate her right and obtain a decree for possession against the appellants. On the latter taking the initiative in the matter, the insolvency Court should have taken action under Section 4 and decided the disputed question of title once for all. An opportunity for adopting that procedure occurred when the insolvency Court was apprised of the fact that a certain house, alleged to belong to the receiver, is claimed by third persons. It could then have taken proceedings under Section 4, even though the objection was not pressed or was allowed to be dismissed for non-appearance. In the absence of an authoritative adjudication of the rights of the contesting parties, the insolvency Court was not justified in treating the property as belonging to the insolvents only because the appellants had not pressed their objection on a certain occasion. It may even now be open to the insolvency Court at Cawnpore, subject to any objection which may be taken by the appellants, to take proceedings under Section 4. But before the question of title is decided by a decree in a separate suit or by an order under Section 4, Insolvency ,Act, the appellants cannot be dispossessed from the property which, to all appearance, they claim in perfect good faith to be their own.
7. In my opinion the objection of the appellants, made in the Court of the insolvency Judge, (Subordinate Judge), Farrukhabad, protesting against possession being delivered to the respondent and against their own ejectment was unanswerable and should have been allowed. Accordingly I allow this appeal, set aside the order of both the Courts below and allow the appellants' objection with costs. They shall not be disturbed, except in due course of law.