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Nidhan Singh Vs. Sadha Lal - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtPunjab and Haryana High Court
Decided On
Case NumberLetters Patent Appeal No. 73 of 1948
Judge
Reported inAIR1952P& H222
ActsProvincial Insolvency Act, 1920 - Sections 4, 60, 75 and 75(1); Code of Civil Procedure (CPC) - Sections 68 - Order 21
AppellantNidhan Singh
RespondentSadha Lal
Appellant Advocate I.D. Dua and; J.N. Sethi, Advs.
Respondent Advocate D.N. Aggarwal, Adv.
Cases ReferredMahomad v. Official Receiver
Excerpt:
.....under article 227 of the constitution. - 9. from the order passed by the insolvency judge on the 27th of november 1946, the insolvent appealed in the court of the additional district judge at ferozepur but the appeal failed and was dismissed with costs......auction for rs. 4,625/- to 'shri' sadda lal respondent. nidhan singh filed objections to the auction-sale before the assistant collector at fazilka. on the 16th of july 1940, the provincial government made rules under section 70 of the code, hereinafter referred to as the rules, where-under collector, commissioner and financial commissioner were empowered to decide objections to auction-sales made in proceedings transferred to the collector under section 68 of the code. dealing with the objections of the insolvent under the rules the collector dismissed those objections, but on an appeal by the insolvent from the order of the collector the commissioner set aside the auction-sale.4. in setting aside the auction-sale the commissioner found that the sale contravened the provisions of.....
Judgment:

Harnam Singh, J.

1. In order to appreciate the point of law arising in Letters Patent Appeal No. 73 of 1943 it is necessary to set out the facts of the case in some detail.

2. Nidhan Singh appellant was adjudicated insolvent on the 29th of October 1936. On the 13th of December 1939, the Insolvency Judge transferred to the Collector under Section 68 of the Code of Civil Procedure, hereinafter referred to as the Code, proceedings for the sale by public auction of the land of Nidhan Singh insolvent.

3. On the 13th of February 1940, land of the insolvent measuring 58 'Bighas' 1 'Biswa', was sold by public auction for Rs. 4,625/- to 'Shri' Sadda Lal respondent. Nidhan Singh filed objections to the auction-sale before the Assistant Collector at Fazilka. On the 16th of July 1940, the Provincial Government made Rules under Section 70 of the Code, hereinafter referred to as the Rules, where-under Collector, Commissioner and Financial Commissioner were empowered to decide objections to auction-sales made in proceedings transferred to the Collector under Section 68 of the Code. Dealing With the objections of the insolvent under the Rules the Collector dismissed those objections, but on an appeal by the insolvent from the order of the Collector the Commissioner set aside the auction-sale.

4. In setting aside the auction-sale the Commissioner found that the sale contravened the provisions of Order XXI, Rules 66, 72 and 90 of the Code and Section 60 of the Provincial Insolvency Act, 1920 as amended by Punjab Act No. 111 of 1939, hereinafter referred to as the Act.

5. Prom the order passed by the Commissioner on the 27th of May 1943 'Shri' Sadda Lal went to the Financial Commissioner in revision but the petition for revision was dismissed on the 6th of May 1944 and the Collector was ordered to re-sell the property. In the meantime the insolvent raised money for the discharge of the debt due-to 'Shri' Sadda Lal and depositing the money in the Insolvency Court applied for the release of the land.

6. On the 24th of October 1944, the Insolvency Judge passed an order for the return to the insolvent of the land sold by public-auction on the 12th of February 1940. From that order 'Shri' Sadda Lal appealed to the District Judge who set aside the order holding that the Revenue authorities had no jurisdiction to set aside the sale.

7. From the order passed by the District Judge the insolvent filed an appeal in the High Court. In deciding that appeal the High Court hold that the Rules were not retrospective and could not apply to proceedings pending when the Rules came into force In the result, the Court allowed the appeal, set aside the order of the Court below finding that the proceedings subsequent to the 12th February 1940, the date on which the auction sale was held, were void and of no effect. By the order passed by the High Court, the Insolvency Judge was directed to deal with the case in accordance with. law.

8. On the 4th of March 1946, Nidhan Singh insolvent applied under Sections 47, 144 and 151 of the Code, that he may be put in possession of the land sold by public-auction on the 12th of February 1940. In deciding that application the Insolvency Judge held that Sections 47 and 144 of the Code did not apply to the facts of the case and inasmuch as the objections put in by the insolvent were before the Collector and not before the Insolvency Court the order that remained to be passed was the confirmation of the auction-sale. In this view of the matter the Insolvency Judge dismissed the application of the insolvent and confirmed the sale.

9. From the order passed by the Insolvency Judge on the 27th of November 1946, the insolvent appealed in the Court of the Additional District Judge at Ferozepur but the appeal failed and was dismissed with costs.

10. From the order passed by the Additional District Judge, Ferozepur, on the 29th of May 1947, the Insolvent appealed in the High Court, but that appeal was dismissed with costs.

11. In these circumstances Nidhan Singh insolvent appeals under Clause 19 of the Letters Patent from the judgment of Mr. Justice Falshaw passed on the 11th of August 1948.

12. Mr. Dwarka Nath Aggarwal appearing for 'Shri' Sadda Lal respondent objects to the competency of the Letters Patent Appeal. The objection proceeds on the argument that the order passed by the Additional District Judge on the 29th of May 1947, does not come within Section 4 of the Act and that being so S. A. O. No. 6/E of 1947 was not competent under Section 75 of the Act. The final step in the argument is that if S. A. O. No. 6/E. of 1947 was not competent the case does not fall under Clause 10 of the Letters Patent. I do not accept the validity of the objection raised.

13. Section 4 of the Act reads:

'Subject to the provisions of this Act, the Court shall have full power to decide all questions whether of title or priority, or of any nature whatsoever, and whether involving matters oflaw or of fact, which may arise in any case of insolvency coming within the cognisance of the Court, or which the Court may deem it 'expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case.'

14. Now, the question raised in the application of the insolvent arose in the insolvency proceedings and related to the validity of the sale made by the Collector. That being so, the Insolvency Judge had ample power to decide that question within Section 4 of the Act for the purpose of doing complete justice. If so, on appeal the case fell within the second proviso to Section 75(1) of the Act. That being so, I am of the opinion that S. A. O. No. 6/E of 1947, was competent and the case having been certified to be a fit one for appeal under Clause 10 of the Letters Patent the objection as to the competency of Letters Patent Appeal No. 73 of 1948 is without any force.

15. Mr. Dwarka Nath Aggarwal contends that in the case of auction-sales by the Collector the procedure for the setting aside of those sales is that outlined in Order XXI of the Code. In this connection reliance is placed upon 'Manakchand v. Ibrahim' AIR 1921 Nag 25 and 'Balaji v. Gopal Mali', AIR 1927 Nag 262. In the cases cited it was held that the provisions of Order XXI of the Code are applicable to insolvency proceedings, and the limitation applicable to a petition for setting aside a sale in insolvency proceedings is thirty days under Article 166 of the Indian Limitation Act. Prom a perusal of the judgment in AIR 1921 Nag 25, it appears that in that case the Court was considering the effect of Section 47 of the Provincial Insolvency Act, 1907 which corresponded to Section 5 of the Act. In the Provincial Insolvency Act, 1907, there was no provision corresponding to Section 4 of the Act. 'AIR 1937 Nag 262' follows 'AIR 1921 Nag 25', without noticing the provisions of Section 4 of the Act. That being so, 'AIR 1921 Nag 25' and 'AIR 1927 Nag 262', afford no assistance in the decision of the point arising in these proceedings.

16. In cases arising under the Act the provisions of order XXI of the Code have to be applied subject to what is contained 'inter alia' in Section 4 of the Act which provides that the Court shall have full power to decide all questions which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice. That being so, it cannot be maintained that an Insolvency Court has no power, to set aside an auction-sale on grounds not falling within Order XXI of the Code. Section 4 of the Act empowers the Court to set aside an auction-sale if the Court deems it expedient or necessary for the purpose of doing complete justice. In this opinion I receive support from what was said in 'Mahomad v. Official Receiver', AIR 1931 Lah 133. In that case land of the insolvent was sold by the Official Receiver and the proceedings of sale were submitted to the District Judge for confirmation or otherwise. In the meantime, the insolvent presented an application objecting to the sale of his land on the ground that the land could not be sold under the provisions of the Punjab Alienation of Land Act. The District Judge refused to confirm the sale thus upholding the objection of the insolvent. In the High Court, Mohammad, appellant maintained that the application by the in-solvent objecting to the sale was made more than 21 days from the date of the sale and consequently the District Judge acted illegally in entertaining the objection of the insolvent after the expiry of 21 days. On those facts Jai Lal, J.. said:

'It is not necessary for me to decide whether the action of the District Judge in entertaining the application of the insolvent after 21 days was or was not legal or that it could be attacked on appeal before me, because, in my opinion, the District Judge was competent to refuse to confirm the sale on the ground that the land could not be sold under the provisions of the Punjab Alienation of Land Act as the proceedings were before him on a report submitted by the Official Receiver. It was open to the. District Judge to decline to confirm the action of the Official Receiver. No question of Limitation governing ah application to contest an order or decision of the Official Receiver therefore arises in the present case.'

17. In the present case it is said that the auction-sale contravenes 'inter alia' the provisions of Section 60 of the Act as amended by Punjab Act No. III of 1939. If so, the Insolvency Judge was wrong in thinking that inasmuch as no objections had been preferred in the Court of the Insolvency Judge the Insolvency Judge could not consider objections that may arise under Section 60 of the Act or under Order XXI of the Code. Section 4 of the Act gives ample powers to the Insolvency Judge to decide all questions whether involving matters of law or of fact which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice. That being so, it was open to the Insolvency Judge to consider on the facts and circumstances of the case the question of the legality of the auction-sale before confirming that sale.

18. For the foregoing reasons I set aside the orders passed on the 27th of November 1946, 29th of May 1947 and 11th of August 1948, in Insolvency Case No. 5 of 1943, Miscellaneous Appeal No. 1 of 1947 and S. A. O. No. 6/E of 1947, respectively and remit the case to the Insolvency Judge, Ferozepur to decide whether the auction-sale made on the 12th of February 1940, can be upheld 'on the facts of the case.

19. Having regard to the circumstances of the case I leave the parties to bear their own costs throughout,

Weston, J.

20. I agree.


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