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Kavali Sankara Rao Garu Vs. Turlapati Ramakrishnayya and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtChennai
Decided On
Reported inAIR1924Mad461; (1924)46MLJ184
AppellantKavali Sankara Rao Garu
RespondentTurlapati Ramakrishnayya and ors.
Cases ReferredIn Vythilinga Padayachi v. Ponnuswami Padayachi
Excerpt:
- - in a case like that, it is impossible to hold that the limitation under section 68 will apply as section 68 presupposes that the decision is by a receiver properly appointed. ponnuswami padayachi air1921mad642 which held that the property of an insolvent does not ipso facto vest in the official receiver but an order must be passed in every case appointing a receiver and that failure to do this entails as a consequence failure of title in those purchasing from an official receiver not so appointed......one ramakrishnayya, an insolvent, who sought to get set aside by the lower court two sales by the official receiver of kistna, of two items of properties belonging to the insolvent. their applications were dismissed by the learned district judge on the ground that it was out of time under section 68 of the provincial insolvency act, the applications having been filed more than 21 days from the date of the two sales.2. in appeal it is argued before us by the learned vakil for the creditors that section 68 does not apply to this case as the sales cannot be considered to have been made by a properly authorised receiver, but by some one who had no power to deal with the properties. the argument is that, after the adjudication of the insolvent in this case, no order vesting the property of.....
Judgment:

Krishnan, J.

1. These are three appeals by two creditors of one Ramakrishnayya, an insolvent, who sought to get set aside by the lower Court two sales by the Official Receiver of Kistna, of two items of properties belonging to the insolvent. Their applications were dismissed by the learned District Judge on the ground that it was out of time under Section 68 of the Provincial Insolvency Act, the applications having been filed more than 21 days from the date of the two sales.

2. In appeal it is argued before us by the learned Vakil for the creditors that Section 68 does not apply to this case as the sales cannot be considered to have been made by a properly authorised Receiver, but by some one who had no power to deal with the properties. The argument is that, after the adjudication of the insolvent in this case, no order vesting the property of the insolvent in the Official Receiver was made, and without such an order the Official Receiver gets no right to deal with the insolvent's properties. What happened in this case was, when the insolvency petition was filed by the insolvent in the District Court, the District Judge made an endorsement on that petition that it was ' transferred for disposal to the Official Receiver. ' It is not denied by the other side that the District Court made no further orders in the case. The Official Receiver has been authorised under Section 80 to hear an insolvency petition and make the order of adjudication but under that section, the power to make the vesting order is not delegated to the Official Receiver; and it is clear from the authorities which have been cited before us, Vythilinga Padayachi v. Ponnnswami Padayachi : AIR1921Mad642 , Muthuswami Swamiar v. Somoo-Kandiar 39 MLJ 438 and Official Receiver of Trichinopoly v. Somasundaram Chettiar : (1916)30MLJ415 , that the Official Receiver does not get a right to deal with the properties of the insolvent without an express vesting order by the District Judge. Such an order has to be made under the Act by the District Judge after the adjudication of the insolvent. It is, therefore, quite clear that the argument that the endorsement made by the Judge on the insolvency petition is tantamount to vesting the property of the insolvent in the Official Receiver cannot be accepted. I agree with my learned brother that the wording of the order itself does not convey the idea of any vesting at all. The order in the case cannot be taken to include a vesting order made in anticipation of the adjudication of the insolvent; for even if we suppose that the District Judge meant, when he transferred the insolvency application to the Official Receiver. to make him the receiver of the properties it would be illegal. There is thus a difficulty in the way of the respondents. We must take it that the sales in the present case were made by a person who was not authorised to sell and are thus invalid. In a case like that, it is impossible to hold that the limitation under Section 68 will apply as Section 68 presupposes that the decision is by a receiver properly appointed. It follows, therefore, that the three appeals must be allowed, the two sales must be set aside, and the cases sent back to the District Judge for a proper vesting order being made and further proceedings in insolvency conducted thereafter. The petitioners-appellants are entitled to their costs in this Court and in the Courts below to be paid from the insolvent's estate.

Odgers, J.

3. These are appeals against the order of the District Judge of Kistna on an application by two creditors of an insolvent called Thurlapati Ramakrishnayya praying to set aside two sales by the Official Receiver held on 27th August, 1919 and 26th February, 1920. The District Judge held the application out of time as having been made more than 21 days alter the sales. The Court on the application of Thurlapati Ramakrishnayya to be adjudicated an insolvent passed the following Order:

Transferred to the Official Receiver, Kistna, for disposal,' and it is contended by the respondent that this has the effect of transferring the whole matter to the Official Receiver and thus of incidentally appointing him Receiver of the insolvent's property. This contention is necessary in face of the following decisions Vythilinga Padayachi v. Ponnuswami Padayachi : AIR1921Mad642 which held that the property of an insolvent does not ipso facto vest in the Official Receiver but an order must be passed in every case appointing a Receiver and that failure to do this entails as a consequence failure of title in those purchasing from an Official Receiver not so appointed. In the present case there was no special appointment unless the order above set out can be so construed. Vythilinga Padayachi v. Ponnuswami Padayachi : AIR1921Mad642 , followed earlier authorities Muthu-swami Swamiar v. Somoo Kandiar : (1920)39MLJ438 and Official Receiver of Trichinopoly v. Somasundaram Chettiar : (1916)30MLJ415 . Muthuswami Swamiar v. Somoo Kandiar : (1920)39MLJ438 is also an authority to the same effect. 1 was a party to the decision in Vythilinga Padayachi v. Ponnuswami Padayachi : AIR1921Mad642 adhere to my decision there. Therefore 1 must hold that unless the order appointed the Official Receiver, Receiver of the insolvent's property, there was no Receiver appointed in this case and the sales by a person purporting to act as such would be void. Now it is said that the Court by its order set out above practically made a vesting order under the Act. What the Court did was to transfer the petition to the Official Receiver ' for disposal. ' I do not think that the fact that the petitioner (debtor) asked that his immoveable property should be sold and his debts settled can give any other or wider meaning to the order of transfer. The Court has certain, powers of delegation--Section 20 of the Act V of 1920 provides that the High Courts may delegate to Official Receivers certain specified powers, inter alia, the hearing of insolvency petitions, examination of debtors and the making of orders of adjudication. The Official Receiver has no delegated power to appoint a Receiver. The respondent contends that the procedure prescribed for the Court and for Official Receivers when acting under their delegated powers are different and that the latter are in fact under such circumstances Courts in themselves. Subba Aiyar v. Ramaswami Aiyangar 40 MLJ 209 is cited as an authority for this proposition. There the order was ' The petition is transferred to the Official Receiver for adjudication and for the administration of the estate. ' The learned Judges held that the combined effect of Section 20 (c) and (e) and Section 23 of the Act of 1907 [S. 59 (c) and (e) and Section 58 of the present Act] was that the order to administer enabled the Official Receiver to sell the insolvent's estate. They distinguished the case in I.L.R. 43 Mad 869, while deploring the deficiency in the Act which does not provide that immediately on adjudication the estate shall vest in the Official Receiver. Their decision was that the Official Receiver was the agent of the Court and as under Section 23 (S. 58) the latter has all the powers of a Receiver, it was capable [Section 20 (e) : Section 59 (e)] of appointing an agent to take any proceedings sanctioned by the Court and that the Court might under Section 20 (a) [ : Section 59 (a)] sell the property of the insolvent through such agent. The difficulty as to appointment of a receiver was thus obviated in this case. The learned Judges did not give an opinion on the other argument advanced in that case, viz., that the order of transfer may be construed as an order under Section 18 ( : Section 56) vesting the property in the Receiver to take effect if and when adjudication took place. It will be observed that the order of transfer in the present case did not contain the words ' for the administration of the estates ' and this in my opinion is sufficient to distinguish it from the case in Subba Aiyar v. Ramaswami Aiyangar 40 MLJ 209. The present petition was not even transferred for adjudication but merely for disposal. I am unable to agree that the transfer in the present case had any further operation than to transfer to the Official Receiver for disposal of the petition for adjudication and I think the Official Receiver under his delegated powers under Section 80 was functus officio when he has carried out the duties delegated to him, in this case the disposal of the petition. The next contention by petitioner is that Section 68 applies to this case--and that the Official Receiver was certainly a receiver in this case though one of his acts is impugned. If he was never legally appointed a Receiver, he is a mere intermeddler with the property and if so, it is said the District Judge had no power to set aside the sales under the Act [cf. Avanashi Chetti v. Muthu Karuppan Chetti (1918) 23 MLT 319], there being no ' person aggrieved by any act or decision of the Receiver. ' The answer to this appears to me to be that in Muthuswami Swamiar v. Somoo Kandiar 39 MLJ 438 the sale was either set aside or declared to be void--it is not clear which In Vythilinga Padayachi v. Ponnuswami Padayachi : AIR1921Mad642 it was held that defendant had no title to the property. Both cases were under the Insolvency Act and both were cases of sales by Official Receivers not legally appointed Receivers in the respective insolvencies. This seems to me to conclude the respondent's contention on this point. As to limitation, Section 68 prescribes a period of 21 days for an application by a person aggrieved by act or decision of the Receiver. It is quite clear that a Receiver means one legally appointed, i. e., one appointed under the provisions of Section 56 of the Act. I am, therefore, of opinion that the Official Receiver not having been appointed Receiver in this insolvency, the sales by him are void and ineffective to pass any title to the purchasers and these Civil Miscellaneous Appeals must be allowed with costs.

4. I agree with my learned brother in the Order he proposes.


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