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A.V. Balakrishna Menon, Official Receiver Vs. Thirunilai Grama Veeraraghavan Patter's children Rangan Pattar (family Manager) and Ors. (11.05.1921 - MADHC) - Court Judgment

LegalCrystal Citation
SubjectLimitation;Civil
CourtChennai
Decided On
Reported inAIR1922Mad189; (1921)41MLJ334
AppellantA.V. Balakrishna Menon, Official Receiver
RespondentThirunilai Grama Veeraraghavan Patter's children Rangan Pattar (family Manager) and Ors.
Cases ReferredMudaliar v. Official Assignee of Madras I.L.R.
Excerpt:
.....at the time it was attached, in the possession of the judgment-debtor etc. but in this case, the official receiver is sought to be defeated by holding up article 11 of the limitation act as a defence against the suit brought by him on failure of his claim petition. as the money was paid to the decree-holder (1st defendant) only in december 1915 and the present suit was brought in november 1918, the suit is clearly within time under article 62. it was, however, argued that though the one year's limitation under article 11 may not apply, the one year's limitation under article 13 might apply. ) clearly says that article 13 does not apply to proceedings in suits, in other words, it relates to orders passed in disputes which did not begin with the filing of a plalnt in a suit, such as..........the class of claims and objections dealt with by order 21, rule 58 to 63, and under order 38 rule 8 (claim preferred to property attached before judgment) or is an application sui juris not governed by those sections. in the case before us, the property was attached before judgment and the adjudicationvas after the attachment. it has now been settled in this court by the full bench decision in prasada nayudu v. virayya i.l.r. (1918) mad. 849 overruling the decision in ramanamma v. kamaraju i.l.r. (1917) mad. 23 , that, notwithstanding the very vague and wide'terms of order 38, rule 8 and notwithstanding that order 21, rule 63 has not been expressly extended to orders made on claim petitions perferred to properties attached before judgment, all the provisions of order 21, rules 58.....
Judgment:

Sadasiva Aiyar, J.

1. The first question in this case is whether an application by an Official Receiver to a court which had attached the property of an insolvent at the instance of a creditor, praying that the property may be treated as property vested in the Official Receiver and as therefore not available to the attaching creditor to satisfy exclusively his claim under the decree, whether such an application is a claim petition which falls within the class of claims and objections dealt with by Order 21, Rule 58 to 63, and under Order 38 Rule 8 (Claim preferred to property attached before judgment) or is an application sui juris not governed by those sections. In the case before us, the property was attached before judgment and the adjudicationvas after the attachment. It has now been settled in this Court by the Full Bench decision in Prasada Nayudu v. Virayya I.L.R. (1918) Mad. 849 overruling the decision in Ramanamma v. Kamaraju I.L.R. (1917) Mad. 23 , that, notwithstanding the very vague and wide'terms of Order 38, Rule 8 and notwithstanding that Order 21, Rule 63 has not been expressly extended to orders made on claim petitions perferred to properties attached before judgment, all the provisions of Order 21, Rules 58 to 63 (old Sections 278 to 283) must be held to have been impliedly incorporated in the rules in Order 38 relating to attachment before judgment. If therefore the claim by the Offieia) Receiver, in whom the insolvent's property has become vested after the attachment, does not fall within the class of claims governed by Order 21. Rules 58 to 63, it may be taken that it is not also a claim falling to be dealt with under Order 38, Rule 8 where the attachment was before judgment.

2. If the property has vested in the official Receiver before the attachment, I have no doubt that the claim made by him for the release of that property falls within Order 21, Rule 58, but if the adjudication is after' the attachment, he cannot attack the attachment itself as having been invalid or improper on the date when it was affected. All that he could do is to contend on the strength of Section 34 Clause I of Act 3 of 1907 (Section 51 of the Provincial Insolvency Act of 1920) and Section 16, Clause 2(a) of Act 3 of 1907 that the decree holder's right to proceed in execution against the attached property had come to an end on the date of the order of adjudication with effect from which date the property vests in the Official Receiver. As stated in Govinda Das v. Karan Singh I.L.R.(1917) All. 197 'Upon the adjudication in insolvency, the attachment ceased to have any effect. All the property of the insolvent vested in the Receiver.' Order 21, Rule 58 applies to a claim made on the ground that the property is not liable to attachment. Order 21, Rule 59 says: 'The claimant must adduce evidence to show that at the date of the attachment he had some interest in, or was possessed of, the property attached.' Order 21, Rule 60 says that ' Where the court is satisfied that the property was not, when attached, in the possession of the judgment-debtor etc. the court shall make an order releasing the property etc.' Order 21, Rule 61 says: 'Where the court is satisfied that the property was, at the time it was attached, in the possession of the judgment-debtor etc., it shall disallow the claim.' Then Order 21, Rule 63, is enacted making it necessary that a suit by the unsucessful party has to be brought to nullify the order passed on a claim to which the previous rules apply as that order is conclusive subject to the result of the suit. We have then Article 11 of the Limitation Act which prescribes a period of one year for the suit contemplated in Order 21 Rule 63.

3. The Official Receiver in whom the property vested only after attachment cannot make a claim on the ground that the property was not liable to attachment-on the date it was attached. He cannot adduce evidence to show, that at the date of the attachment, he had an interest in, or was possessed of, the property attached, and the court cannot in the language of Order 21, Rules 60 and 61 decide in favour of the Official Receiver on the ground that the ' property was not, when attached' the judgment debtor's property, or decide against him on the ground that 'at the time it was attached,' it belonged to the judgment debtor. In fact the Official Receiver's claim (when the vesting in him was after attachment is a statutory claim which he is entitled to make under Section 34 of the Provincial Insolvency Act (III of 1907) and not a claim based on the circumstances contemplated in Order 21, Rules 53 to 63. The claim of the Official receiver should be dealt with therefore by the court under its inherent powers under Section 151 of the Civil Procedure Code and not under Order 21. In Ganga Din v. Khushali I.L.R.(1885) All. 702 and in the other cases cited, th; question whether a claim by an official receiver in whom the property became vested after the date of attachment fell under Sections 278 to 283 was not. directly raised ; the official receiver himself seems to have filed his petition as one falling under those special sections of the Civil Procedure Code and the Court dealt with the cases on that footing and decided in favour of the official receiver even on that footing. But in this case, the official receiver is sought to be defeated by holding up Article 11 of the Limitation Act as a defence against the suit brought by him on failure of his claim petition. I am clear, for the reasons above given that his claim would not fall under the claim chapters of the Civil Procedure Code. The order dismissing his claim was not, therefore, one passed under the provisions of Rule 60 or 61 and Order 21 Rule 63 therefore does not make the order passed against him, ''conclusive'. It follows that Article 11 also does not apply. It was held by this Court in this very case on an appeal from the order dismissing the official receiver's claim that no appeal lay from the said order and that his remedy lay in a suit 'to obtain the moneyiwhich remained in the attaching court and which had become vested in him. If, in the meanwhile, the money has been paid over to the attaching decree-holder, the official receiver has got his Common Law remedy of covering that money as money had and received by the decree-holder for the use of the Official Receiver, and the limitation for the suit is three years. As the money was paid to the decree-holder (1st defendant) only in December 1915 and the present suit was brought in November 1918, the suit is clearly within time under Article 62. It was, however, argued that though the one year's limitation under Article 11 may not apply, the one year's limitation under Article 13 might apply. Article 13 relates to a suit to alter or set aside a decision or order of a Civil Court in any proceeding other than a suit. Assuming that the order of December 1915 against the Official Receiver has to be set aside, it was not an order in a proceeding other than a suit. The decision in Shanker Sarup v. Mejo Mal I.L.R. (1901) All. 313 (P.C.) clearly says that Article 13 does not apply to proceedings in suits, in other words, it relates to orders passed in disputes which did not begin with the filing of a pLalnt in a suit, such as disputes initiated by applications under Guardian and Wards Act, the Succession Certificate Act and so on, such applications and the proceedings connected with such applications being not proceedings in suits. Their Lordships therefore held that orders passed in miscellaneous applications in the course of execution proceedings (which are proceedings in suits) are not governed by Article 13. I respectfully dissent fora the observations in Kishori Lal v. Kuber Singh I.L.R. (1910) All. 93 holding that Article 13 applies to orders made in proceedings in execution in a suit. The learned judges of the Allahabad High Court construed the Privy Council decision in Sankar Sanip v. Mejo Mal (1901) I.L.R. 23 All 313 (P.C.) as based on the ground that an order for rateable distribution need not be set aside by a suit and therefore Article 13 did not apply to a suit brought to enforce rights in contravention of that order. Their Lordships of the Privy Councial however clearly say at page 323 that they ' concur in the further observation made by the learned judge in that case' (that is the case Vishnu Bhikaji Phadke v. Achut Jagannath Ghata I.L.R(1890) . 15 Bom. 438, 'that the application of the 13th Article is also precluded by the fact that the order for distribution was a step in an execution proceeding and was therefore made in the suit in which the decree was made which was in process of execution. The order for distribution was thus an order in a suit. ' To set aside that order, therefore, a suit can be brought within 6 years under the general Article 120 as it is not governed by Article 13.

4. In the result, I would reverse the lower court's judgment and give a decree for the plaintiff for Rs. 7,310 (claimed) with interest at 6 per cent, per annum from the 21st December 1915, 1 till recovery and proportionate costs throughout on Rs. 8,600 in both courts against the defendants. The memorandum of objections is dismissed.

Spencer, J

5. The plaintiff is the Official Receiver of South Malabar, and his suit having been dismissed as time barred he appeals. The lower court held that Article 11 of the 1st schedule to the Indian Limitation Act applied to this suit and that as it was not instituted within one year of the Sub-Judge's order of December 21st, 1915, it was out of time. There is no limitation for a receiver in insolvency obtaining possession of the Insolvent's property, which vests in him by Section 18(1) of the Provincial Insolvency Act, at any time between the date of the making of an order of adjudication and the date of its being annulled.

6. Although the Bombay and Allahabad High Court have treated applications to take possession of estates when made by Official Assignees and Administrators General as being in substance claims under Section 278 of the Civii Procedure Code of 1882 even though started by a judge's summons or an ordinary motion, vide Kashi Prasad v. Miller (1885) 7 All.752 Charles Agnew Turner v. Pestonji Fardungi I.L.R. (1895) 20 Bom. 403 Sardarrnal v. Aranvoyal Sabapathy I.L.R(1896) . 21 Bom. 205 and Bhabaji Bhimji v. The Administrator-General, Bombay I.L.R(1898) . 23 Bom. 428 and although in this Court where the money was under attachment the Official Assignee's application has been termed in the note to the judgment a 'claim petition' (Krishna-swami Mudaliar v. Official Assignee of Madras I.L.R. (1903) Mad. 673 yet as an Official Receiver is an officer of the court, the semi official act of this receiver in asking the court to issue a cheque for the money of the insolvent in court deposit bears little or no resemblance to the act of a stranger who prefers a claim to property attached in execution of a decree on the ground that such property is not liable to attachment. Ordinarily the intervention of the court in aiding an Official Receiver to obtain delivery of the insolvent's property would be undertaken in exercise of its powers under Section 18(3) or Section 35 of the Provincial Insolvency Act (III of 1907). But the Official Receiver's application in this case was not made to a court exercising jurisdiction but to the sub-court which had jurisdiction to deal with application to execute the decree in C. Section 23 of 1912 passed by the Temporary Sub-Court of Palghat. There was also an application by Rangan Pattar (1st respondent here and receiver in C.S. 23 of 1912) to pay the money out to the plaintiffs In that suit and it came on for disposal simultaneously with the Official Receiver' application. Both applications were treated by the sub-Judge of Palghaut and by this Court in appeal as miscellaneous petitions in execution and dealt with under Section 47, C.P.C. In the lower Court it seems to have been contended in this suit that the Official Receiver's petition was an application for rateable distribution under Section 73.

7. I am of opinion that it was neither a claim to property attached under Order 21 Rule 58 nor an application for rateable distribution under Section 73. The Official Receiver was therefore not bound to institute a suit within one year, and his suit is not barred under Article 11 of the Limitation Act. Neither it is barred under Article 13 seeing that the Subordinate judge's order of December 21st, 1915 was a proceeding in a suit.

8. This is the only point arising in the appeal. As it must be found in fhe appellant's favour, the decree of the lower court is set aside and the plaintiff will get a decree for the amount of Rs. 7,310 with interest at 6 percent, from 21st December 1.915, the date when the cause of action arose till realisation and costs as stated in my learned brother's judgment in this and the lower court.


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