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Selvam Chettiar Vs. Y.P.N. Venkatachalam Chettiar Through His Authorised Agent, M. Subramania Nadar and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1931Mad10; (1930)59MLJ710
AppellantSelvam Chettiar
RespondentY.P.N. Venkatachalam Chettiar Through His Authorised Agent, M. Subramania Nadar and ors.
Cases ReferredPalani Goundan v. The Official Receiver of Coimbatore I.L.R.
Excerpt:
- - 4. there is another part of the order which is complained of before me, namely, the order vesting the properties in dispute in m. 5. but in the present case until the alienation to the petitioner is found bad the properties belonged to the petitioner and nothing in section 37 justifies an order vesting these properties in the creditor. whenever the effect of the insolvent's failure to apply for discharge within the time prescribed is to prevent any enquiry into an allegation of fraudulent conduct, the court can take hold of the fact and extend the time for applying for discharge......adjudication. this is m.p. no. 447 of 1927 in i.p. no. 1 of 1926. on this petition the subordinate judge passed an order modifying the order of annulment and ordering that the right, title and interest of the insolvents in the properties in dispute in m.p. no. 229 of 1926 shall yest in the petitioner before the subordinate judge. the alienee filed an appeal before the district judge. a preliminary objection was taken before the district judge that he was not a party aggrieved by the order of the subordinate judge. the district judge upheld the objection and observed:it is true that one consequence of the order of the learned subordinate judge will be that the appellant will have to defend m.p. no. 229 of 1926 on the file of the sub-court, dindigul, but that is merely an incidental.....
Judgment:

Ramesam, J.

1. The facts of this Civil Revision Petition may shortly be stated. Certain persons were declared insolvents. They were adjudicated in 1926 on an application filed in 1925. M.P. No. 229 of 1926 was filed for the purpose of setting aside the alienation made by the insolvents in favour of Selvam Chettiar, who is the petitioner before me, under Sections 53 and 54 of the Act. While the petition was pending, the period given to the insolvents for applying for an order of discharge expired and on the expiry of the period the Court passed swo motu an order annulling the adjudication. No notice was given either to the insolvents or to the creditors or to one of them specially authorised to conduct the proceedings in respect of the alienations. The particular creditor who was so authorised then filed an application for review of the order annulling adjudication. This is M.P. No. 447 of 1927 in I.P. No. 1 of 1926. On this petition the Subordinate Judge passed an order modifying the order of annulment and ordering that the right, title and interest of the insolvents in the properties in dispute in M.P. No. 229 of 1926 shall yest in the petitioner before the Subordinate Judge. The alienee filed an appeal before the District Judge. A preliminary objection was taken before the District Judge that he was not a party aggrieved by the order of the Subordinate Judge. The District Judge upheld the objection and observed:

It is true that one consequence of the order of the learned Subordinate Judge will be that the appellant will have to defend M.P. No. 229 of 1926 on the file of the Sub-Court, Dindigul, but that is merely an incidental consequence.

2. The alienee files this revision petition before me against the order of the District Judge.

3. The first question is whether the appeal to the District Judge lay. I agree with the petitioner in thinking that the petitioner was a party aggrieved by the order of the Subordinate Judge. The whole object of the modification of the annulment of the adjudication and the specific terms of the order of the Subordinate Judge are all aimed at the petitioner. The District Judge concedes that one consequence of the order of the Subordinate Judge is that the petitioner will have to defend his title. It is difficult to say that this is merely an incidental consequence. The whole order of the Subordinate Judge was aimed at him and was intended to produce this particular result. I, therefore, think that the petitioner before me was a party aggrieved by the order of the Subordinate Judge and his appeal before the District Judge ought not to have been dismissed.

4. There is another part of the order which is complained of before me, namely, the order vesting the properties in dispute in M.P. No. 229 of 1926 in the creditor who is carrying on these proceedings. I do not think this is an order contemplated by Section 37. Section 37 was intended to vest the insolvent debtor's admitted properties in some third person for the purpose of making them available to the creditors while in the meanwhile avoiding the debtor being called an insolvent.

5. But in the present case until the alienation to the petitioner is found bad the properties belonged to the petitioner and nothing in Section 37 justifies an order vesting these properties in the creditor. The order, therefore, is irregular.

6. The only question that now arises before me is what order I should pass. One alternative is that I should set aside the order of the District Judge and of the Subordinate Judge and direct the review petition to be re-heard and disposed of according to law. But I think there is another alternative. The Subordinate Judge was certainly inclined to review the order of annulment, at any rate to the extent of permitting an enquiry into M.P. No. 229 of 1926. Apparently the District Judge also agrees with this. But both the Lower Courts--certainly the Subordinate Judge--felt compelled to pass the order which they have actually passed, because at that time the law was supposed to be that if an insolvent did not apply for discharge within the time prescribed, the adjudication ought to be automatically annulled. This matter has been the subject of consideration by a recent Full Bench decision reported in Palani Goundan v. The Official Receiver of Coimbatore I.L.R. (1929) M. 288 : 58 M.L.J. 369. There the Full Bench has held that a Court is not bound to annul the adjudication automatically and if there are circumstances justifying an extension of time for applying for discharge, it may be done. The effect of the law as laid down formerly, that is, before the Full Bench decision, was that insolvents were deliberately avoiding to apply for discharge within the time prescribed, with the result that adjudications got annulled and fraudulent alienations became valid to the advantage of the alienees. The result of the Full Bench decision, however, is that it need not be. Whenever the effect of the insolvent's failure to apply for discharge within the time prescribed is to prevent any enquiry into an allegation of fraudulent conduct, the Court can take hold of the fact and extend the time for applying for discharge. In the present case the object of the Lower Courts was that M.P. No. 229 of 1926 should be heard and for that purpose and to that extent they are willing to review. I do not see why 1 should interfere with the discretion of the Lower Courts in permitting such review. The only thing I wish to say is that the order is not properly framed. I, therefore, substitute the following for the order passed by the Subordinate Judge:

The order of annulment is set aside and the time for applying for discharge is extended up to such time as is necessary for disposing of M.P. No. 229 of 1926. M.P. No. 229 of 1926 will be inquired into and heard.

7. My object in passing this order is not to invalidate any enquiry into M.P. No. 229 of 1926 that has been made as a result of the order of the Subordinate Judge. I am told that some order has been passed on that miscellaneous petition and it is the subject of an appeal. Those proceedings will take their own course. An order will issue in the modified form. Cost of the appeal before the District Judge will abide the result. Each party will bear his own costs in this Civil Revision Petition.


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