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Misri Lal Vs. Pandit Kanhaia Lal Sharma - Court Judgment

LegalCrystal Citation
CourtAllahabad
Decided On
Judge
Reported inAIR1922All128; 66Ind.Cas.863
AppellantMisri Lal
RespondentPandit Kanhaia Lal Sharma
Excerpt:
.....act (v of 1920) section 4 - receiver--sale of property in possession of third persons--question of title--insolvency court, power of, to decide--decision, final. - - if my property is seized by a public official like an official receiver and i have a clear case to establish my title, there is no reason why i should not seek redress in the ordinary course. it has always been considered that if a person complains of the act of the receiver and asserts a title and goes so the insolvency court to redress his grievance, he cannot afterwards turn round and litigate the matter afresh in a civil court and sub section 2 of section 4 clearly provides that every such decision, that is to say, a decision of a question of title by the insolvency court shall be final and binding both as between the..........taking. we are quite satisfied in this case that sub-section 3 of section 4 never entered into the learned judge's contemplation when he disposed of this case. the question really is, and it has been fairly pressed upon us by mr. panna lal on behalf of the official receiver, whether the learned judge did decide and did purport to decide what was in substance a question of title which if it stood would be binding upon the present appellant. we are quite satisfied that he did. it is true that the matter came before him by way of an application in objection to the official receiver's conduct, and that he did not possibly realise that that was the only and the proper way in which a question of title by anybody outside the insolvency could be raised, but when you come to look at the.....
Judgment:

1. It is quite clear that in this case the learned Judge has overstepped the mark. When the Receiver has reason to believe that property in the possession of third persons is the property of the insolvent, be may treat it as such and attach it or put it up for sale. When the person who alleges that the property is his and not the involvement, objects and wishes to assert his title, he may appeal to the Insolvency Court against the ant of the Receiver, but he is not obliged to do so although it is the most effective remedy at any rate the most expeditions means of preventing a sale. He may, if be likes, sue the Receiver as a trespasser. If my property is seized by a public official like an Official Receiver and I have a clear case to establish my title, there is no reason why I should not seek redress in the ordinary course. On the other hand, I might prefer and I should probably prefer to apply in the Insolvency Court against the act of the Receiver. If I do so, I myself raise before the Insolvency Court the question of the title of my property. If I have no title, I have no case and by Section 4 of the new Provincial Insolvency Act, V of 1920, the Insolvency Court is given full power to decide all questions of title. It has always been considered that if a person complains of the act of the Receiver and asserts a title and goes so the Insolvency Court to redress his grievance, he cannot afterwards turn round and litigate the matter afresh in a Civil Court and sub Section 2 of Section 4 clearly provides that every such decision, that is to say, a decision of a question of title by the Insolvency Court shall be final and binding both as between the person averting it and the insolvent's estate.

2. There is a provision in Sub-section 3 of Section 4 which has been relied upon by the respondent, in this instance the Official Receiver, which we will refer to in passing. It is not necessary that we should commit ourselves to final opinion as to the scope and meaning of that section, but two things are clear, that is to say, if an Insolvency Court finds, for example, that serious and difficult questions of mortgages or other securities arise over the debtor's property which it does not deem expedient or necessary to decide itself, but prefers to leave to the contending creditors to fight out in an ordinary Civil Court, it may, if it has reason to believe that notwithstanding such securities the debtor has an interest, forthwith direct the sale of such interest which would not affect the right of the contending creditors; and secondly, if the Court decides to exercise its jurisdiction under Sub-section 3, it ought to make it clear beyond question that it is doing so and the reasons for the course it is taking. We are quite satisfied in this case that Sub-section 3 of Section 4 never entered into the learned Judge's contemplation when he disposed of this case. The question really is, and it has been fairly pressed upon us by Mr. Panna Lal on behalf of the Official Receiver, whether the learned Judge did decide and did purport to decide what was in substance a question of title which if it stood would be binding upon the present appellant. We are quite satisfied that he did. It is true that the matter came before him by way of an application in objection to the Official Receiver's conduct, and that he did not possibly realise that that was the only and the proper way in which a question of title by anybody outside the insolvency could be raised, but when you come to look at the application and the answer which was before him and the language of the judgment, it is quite clear what the Judge meant to do. The applicant in his petition complained that be was the purchaser of the, property in question, that he had been in possession and occupation, and that the effect of the Receiver's proceeding was to deprive the petitioner of his property without any cause. The late Kanhaiya Lal, who was then Receiver, objected in the Insolvency Court that the petitioner had no case and asked that the Court would prevent him from taking possession, When he said that the petitioner had no case, he meant that the petitioner had no title. The learned Judge v. as made aware at the hearing that three had been a good deal of legal proceedings which for the moment are irrelevant. He was disposed to think that the result of them brought into play Section 11 of the the Civil Procedure Code, and that the petitioner's claim to his property was barred by that section. He was not, however, prepared to decide that as a matter of law, and we are inclined to think that as a matter of law it would require careful consideration. He, therefore, passed it by, and went on to examine the petitioner's case as a matter of fast. He pointed out that presumably from the evidence and records of previous litigations, which were before him, the question had been fought out more than once to the bitter end and that the High Court itself had been pestered with similar cases. He then went on to say that if the present objector went over the old ground which had failed before, he had no prospect of, success, while if be produced new evidence be could not expect it to be believed, and that, therefore, there was no cause for refraining from petting the property to sale. In plain English this means, and we have no doubt that the learned Judge would agree with this, that the case was such a hopeless one, that it must fail and that the petitioner could never hope to make out a title. But it would be impossible to say that it was not a decision on the question of title if the matter was legally before the Judge in such form as he could decide. We think it undoubtedly was and that he has decided it without realising it, but has decided it adversely to the claimant without hearing him on the merits, being satisfied that it would be an idle ceremony to bear what his case consisted of. This is more than any Court can do, however reasonable it may appear in the special circumstances of the case. The case must go back to the learned Judge to hear the evidence and to decide it, on the merits after hearing the appellant and such evidence as the Official Receiver is able to produce. The learned Judge will, of course, in. hearing the case on the merits, dismiss from his mind any preconceived notions he may have formed as to the probabilities of success, but, on the other hand, be is entitled to take into account, independently altogether of any question under Section 11 of the Code, as to which we express no opinion except one of doubt, the result of previous proceedings and the evidence tendered thereon, It must be clearly understood that we definitely hold that the learned Judge being vested with jurisdiction in insolvency or the learned Judge who at present sits in that Court, whoever he may be, is the proper person to hear this application, and there must be no application for transfer of the proceedings from the learned Judge who disposed of this matter if it is the same Judge. Any application for transfer made to this Court mast be laid before this Bench. The learned Judge will, of course, keep his mind clear as to the difference between the party now suing and the parties, whoever they may have been, in the previous proceedings to which he refers. Costs of these proceedings and of the previous proceedings will abide the event.


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