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The Official Receiver, East Tanjore, representing the estate of the Inslvt., O.R's Court Vs. Sait Jessasingh Chathurbhujadas and Anr. (23.11.1950 - MADHC) - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberA.A.O. No. 322 of 1950
Judge
Reported inAIR1951Mad687; (1951)IMLJ200
ActsProvincial Insolvency Act, 1920 - Sections 28, 28(2) and 28(7); Transfer of Property Act, 1882 - Sections 52; Code of Civil Procedure (CPC) - Order 22, Rule 10
AppellantThe Official Receiver, East Tanjore, representing the estate of the Inslvt., O.R's Court
RespondentSait Jessasingh Chathurbhujadas and Anr.
Appellant AdvocateS.V. Venkatasubramaniam and ;T.S. Kuppuswami Aiyar, Advs.
Respondent AdvocateS. Ramachandra Aiyar, Adv.
DispositionAppeal allowed
Cases ReferredNainar Rowthen v. Kuppai Pichai Rowthen
Excerpt:
civil - execution proceedings - sections 28, 28 (2) and 28 (7) of provincial insolvency act, 1920, section 52 of transfer of property act, 1882 and order 22 rule 10 of code of civil procedure, 1908 - official receiver challenged order directing his impleadment in execution proceedings - official receiver representing estate of insolvent - in view of section 28 (7) insolvency related back to date of filing application - official receiver was not made party to suit - decree obtained in that suit would not be binding against official receiver - official receiver cannot be impleaded in execution of that decree - no relief can be claimed against official receiver - held, appeal allowed. - - 3. whether the leave of the insolvency court is necessary in a matter like this depends upon the.....govinda menon, j. 1. the official receiverof east tanjore, representing the estate of the insolvent in i. p. no. 14 of 1949 on the file of the district court of east tanjore, appeals against the order of the subordinate judge of tiruchirapalli directing that he should be added as respondent 2 in e. p. no. 679 of 1949 in o. s. no. 80 of 1948 on the file of the said subordinate judge, and that execution should proceed after the official eeceiver is added as respondent 2. 2. on 17-12-1947, respondent 1 before the lower court executed an agreement in favour of the decree-holder, who is respondent 1 in this appeal, promising to execute a mortgage over certain properties for the discharge of a sum of rs. 22,000 and odd due by him to respondent 1 in this court, o. s. no. 80 of 1948 in the.....
Judgment:

Govinda Menon, J.

1. The Official Receiverof East Tanjore, representing the estate of the insolvent in I. P. No. 14 of 1949 on the file of the District Court of East Tanjore, appeals against the order of the Subordinate Judge of Tiruchirapalli directing that he should be added as respondent 2 in E. p. No. 679 of 1949 in O. S. No. 80 of 1948 on the file of the said Subordinate Judge, and that execution should proceed after the Official Eeceiver is added as respondent 2.

2. On 17-12-1947, respondent 1 before the lower Court executed an agreement in favour of the decree-holder, who is respondent 1 in this appeal, promising to execute a mortgage over certain properties for the discharge of a sum of Rs. 22,000 and odd due by him to respondent 1 in this Court, O. S. no. 80 of 1948 in the Sub-Court of Tirucbirapalli was filed on 20-4-1948 for specific performance of the con-tract to execute the mortgage in which the present respondent l was the plaintiff and the present respondent 2, Subbarama Nadar was the defendant. While that suit was pending, on 30-9-1948 an application to adjudge Subbarama Nadar as an insolvent was filed by a creditor of his in the District Court of East Tanjore and pending disposal of that application, the Official Receiver of East Tanjore was appointed interim receiver to take possession of the estate of Subbarama Nadar on 4-10-1948. The appointment of interim receiver was notified on 19-10-1948 in the Fort St. George Gazette, and in the Tanjore District Gazette on 11-11-1948. Subbarama Nadar did not contest the suit filed against him for specific performance and an ex parte decree was passed against him on 13-12-1948. After tbis the application to adjudicate him as an insolvent came up for final hearing before the District Court of East Tanjore and he was adjudicated an insolvent on 9-7-1949 and all his estate vested in the Official Eeceiver of East Tanjore. It may be mentioned at this stage that though the Official Receiver was appointed interim receiver for Subbarama Nadar's estate on 4-10-1948, he was not impleaded as a party in O. S. no. 80 of 1948 with the result that when the ex parte decree-was passed on 13-12-1948, the Official Eeceiver was not a party to o. s. No. 80 of 1948. The decree-holder Sait Jessasingh Chathurbhujdas, thereafter filed E. P. No. 579 of 1949 on l6-9-1949 to execute the decree for specific performance and the prayer was that the Official Receiver in whom the estate of Subbarama Nadar has vested should be added as a party in the execution application and that he and the insolvent should together be directed to execute the mortgage in favour of the plaintiff. Objection was taken by the Official Eeceiver to the prayer for impleading him as a party to the execution petition on two grounds : Firstly that leave of the Insolvency Court was not obtained to implead him as a party; and secondly that even if no leave is necessary, still, since the Official Eeceiver was not a party to 0. s. No. 80 of 1948, the ex parte decree passed against the insolvent would not bind him and if tbe decree is not binding on the Official Receiver, it is illegal to implead him as a party in the execution petition with the object of compelling him to execute a mortgage in favour of tbe decree-holder. Tbe learned Subordinate Judge disallowed both these contentions. Hence this appeal.

3. Whether the leave of the insolvency Court is necessary in a matter like this depends upon the correct interpretation of Section 28(2), Provincial Insolvency Act, which lays downthat on the making of an order of adjudication, the whole of the property of the insolvent shall vest in the Court or in a receiver and shall become divisible among the creditors, and therefore, except as provided by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable under this Act shall, during the pendency of the insolvency proceedings have any remedy against the property of the insolvent in respect of the debt, or commence any suit or other legal proceeding, except with the leave of the Coart and on such terms as the Court may impose. There is no dispute that the execution proceedings in question are legal proceedings against the insolvent and his estate; but the difficulty is whether a decree for specific performance to execute a mortgage can be considered to be a debt provable under the Provincial Insolvency Act. The learned Subordinate Judge thinks that the decree-holder is not enforcing any debt. In the suit brought by him he was not seeking any remedy in the property of the insolvent in respect of any debt.

4. Mr. T. S. Kuppuswami Iyer for the appellant relied on certain observations in Atchutaramayya v. Official Receiver, East Godavari, 58 Mad. 1032 : A.I.R. 1935 Mad, 817, where Cornish J.. referring to a suit for specific performance filed against an insolvent after the adjudication, states that the suit was in respect of a debt, viz., to enforce performance of an agreement by the debtor to execute a mortgage to the creditor as security for his debt. In the view of the learned Judge a suit for specific performance of an agreement was a suit to enforce a debt and therefore since in the case he was considering the suit was filed after the application for adjudication was filed, Section 28(2), Provincial Insolvency Act, prevented the plaintiff from proceeding with the suit. Can it be said that an execution application for a relief that the judgment-debtor and a person claiming as his representative should be directed to execute a mortgage in favour of the decree-holder be termed a 'legal proceeding' in respect of a 'debt'? The decree does not provide for the payment of any damages to the plaintiff in case the mortgage is not executed. Nor is there any provision for a reciprocal execution of a decree as is sometimes found in decrees for specific performance. Whatever might be said regarding the view that a suit to enforce an agreement to execute a mortgage, for which the plaintiff has to pay a sum of money to the defendant, may be termed a 'proceeding' in respect of a debt, in our opinion it cannot be said that when once the agreement has become fructified in a decree, by which one of theparties is directed to do a certain thing, there is any question of a proceeding regarding a debt. The inclusive definition of the word 'debt' in Section 2(a) of the Act would, if at all, lead to the conclusion that a decree compelling one of the parties to perform a certain act, cannot be called a judgment debt. As the decree for specific performance stands there is nothing which the decree-holder has to get in terms of money or other equivalent from the judgment-debtor. On the other hand, the decree-holder, on paying a sum of money to the judgment-debtor, can demand the execution of a conveyance, here a mortgage, in his favour, and get it registered. That being so, can it be contended that the execution of such a directory decree, compelling the judgment-debtor to execute a document, can under any stretch of language be termed as execution for a 'debt' within the meaning of the term in Section 28(2) of the Act? We think not. Therefore, if the Official Receiver is otherwise bound to honour the decree and execute the mortgage deed, then the fact that for the application to which he is sought to be made a party no previous leave of the insolvency Court was applied for, or obtained, cannot have any force.

5. The second of the controversies raises a point of some difficulty, viz., whether a decree obtained in a suit filed at a time when no insolvency application was pending, but before the suit was decreed an insolvency petition had been filed which culminated in the final order of adjudication only after the decree in the suit was passed, can be said to be binding on the Official Receiver. Sections 51 and 55, Provincial Insolvency Act relate to restriction of rights of creditor under execution and protection of bona fide transactions respectively. It is conceded that Section 51 can have no application here and so far as Section 55 is concerned there has been no payment by the insolvent to any of his creditors; nor any payment or delivery to the insolvent; nor any transfer by the insolvent for valuable consideration; nor any contract or dealing by or with, the insolvent for valuable consideration in the present case. We may, therefore, rule out the possible application of Sections 51 and 55 from consideration. Section 28(7) dealing with relation back of an order of adjudication is the one provision of law which requires consideration in dealing with the question now before us. What that section says is that an order of adjudication shall relate back to, and take effect from, the date of the presentation of the petition on which it is made. The result in this case, therefore, is that though the final adjudication was made only on 9-7-1949, by the principle of relation back enacted in Sub-section (7) ofSection 28, it should be deemed as if the insolvency took place on the date of the filing of the insolvency petition, viz., 30-9-1948. Unlike the provisions of the Presidency Towns Insolvency Act which have followed Section 37 (1), English Bankruptcy Act in laying down that an orderof adjudication shall relate back to the date on which the act of bankruptcy has taken place, the Provinoial Insolvency Act makes the relation back a more restricted one and says that such a relation back would take effect only from the date of presentation of the petition and not from the date of the commission of the Act of bankruptcy. If Sub-section (7) has to be applied to the present case, the insolvency must be deemed to have taken place on 4-10-1948 and therefore the person who could have validly represented the estate was not a party to the suit at the time the decree was passedon 30-2-1948 (sic). Such being the case, it is argued that a decree obtained for specific performance of a contract in a suit to which the iperaon who is entitled to represent the estate was not a party is a nullity and, in execution of a null and void decree, an alleged representative of the judgment-debtor cannot bo added as a party. Here again, the learned advocate for the appellant referred to a passage at pp. 1038 and 1039 of the report in Achutaramayya, v. Official Receiver, East Godavari, 53 Mad. 1032 : A. I. R. 1935 Mad. 817. As already stated in that case, the insolvency petition was filed prior to the filing of the suit for specific performance and therefore if the principle of relation back has to be applied, at the time the suit was filed tbe Official Receiver, who was the owner of the property not merely from the date when the order of adjudication was made but from the commencement of the insolvency proceedings, was not on record. But the facts of the present case are different. Here, when the suit was filed, there was no insolvency petition and the suit was properly filed against the owner of the property. Thedevolution took place during the pendency of the suit and if the principle of Section 52, T. P. Act, can be applied, the person in whom the estate has devolved pendente lite must be bound by the result of the decree as if he was a party to the suit.

6. Under the provisions of the Provincial Insolvency Act (III [3] of 1907), the Privy Council bad to consider a case where mortgaged property had vested in the receiver and their Lordships held that Section 16, Sub-section (4) and the proviso to Sub-section (5) does not entitle the mortgagee to bring or continue a suit for foreclosure without making the receiver a defendant. A decree obtained in his absence is not res judi-caia against him so as to affect his right to redeem, even if the Court, in rejecting an application by him to be made a party has heard and rejected his objections to the decree beingpassed : vide Kalachand v. Jagannath . Here again it was a case where, before the suit, there was an insolvency and if at the time the suit was filed, the estate was represented by an Official Receiver and he was not made a party to the suit, it should be deemed that the suit was proceeded with without the necessary party, as contemplated by Order 34, Rule 1, Civil P. C. and a decree as such would not be binding on the Official Receiver.

7. The three cases on which the learned advocate for the appellant relies for his contention that there is a distinction between a devolution pending suit by act of parties and a devolution by operation of law are : Puninthavelu Mudaliar v. Bhashyam Aiyangar, 25 Mad. 406 : 12 M.L.J. 282; Subramania Iyer v. Ramakrishna Aiyar, 42 M.L.J. 426 ; A.I.R. 1922 Mad. 335 and Indian Cotton Co. v. Ramacharan Lal, A.I.R. 1939 Nag. 128 : I.L.R. (1948) Nag. 559. At p. 413 of the report in Puninthavelu Mudaliar v. (sic) Aiyangar, 25 Mad. 406 : 12 M. L. J. 282, Sir Arnold White C. J. states as follows :

'It has been argued on behalf of the appellant that the Official Assignee is bound by the decree, though not a party to the suit, inasmuch as the devolution of interest took place pendents lite. This, in my opinion, is clearly not so. In the first place, the subject-matter of the suit was not real property. In the second place, the interest devolved by operation of law, and so far as the Official Assignee is concerned the devolution was in invitum.'

At p. 423 of the same report Bhashyam Aiyangar J. expresses the same view in strongerterms thus :

'The principle of the decision in Wood v. Surr, (1854) 19 Beav. 551 : 63 E. E. 465 is that the Official Assignee being one appointed 'in invitum' and not a 'voluntary purchaser' as in the case of a transfer by act of parties or by an 'involuntary sale' in execution of a decree, the doctrine of lis pendens cannot affect him and the party seeking to bind him (the Official Assignee) by the result of the suit, pending which the interest of its subject matter has devolved on him by operation of law, ought to take proceedings to join him as a party to the suit (under 8, 372, C. P.C.) and obtain the decree against him,'

It has to be noted that in the aforesaid case, the insolvency petition must have been filed after the filing of the suit for we find from the statement of facts at p. 409 that the suit against the insolvent was filed on 25th July 1899 and the adjudication of the defendant as an insolvent took place on 18-9-1899. In August 1899, the plaintiff decree-holder, upon an ex parte application, got an order of injunction restraining the mortgagor from disposing of thestock-in-trade and out standings and debts payable to him. It, therefore, seems to be clear that at the time the injunction order was obtained, there was no insolvency. From the facts as stated in the judgment of Spencer J. in Subramania Iyer v. Ramakrishna Aiyar, 42 M. L. J. 426 : A. I. R. 1922 Mad. 335, it is seen that the adjudication of the insolvent had been made on the 29th February 1916 whereas the suit was filed on the 22nd March 1916 and decree obtained on the 11th July 1916. On these facts, both the learned Judges held that the decree obtained was in a suit in which a person was impleaded as defendant who had no right whatever in the property ordered to be sold and it was therefore a nullity so far as the true owner (not made a party to that suit) was concerned. The principle of lis pendens cannot affect the Court or t be receiver. Spencer J. relied upon Puninthavelu Mudaliar v. Bhashyam Aiyangar, 25 Mad. 406 : 2 M. L. J. 282 in holding that a party seeking to bind another by the result of the suit must apply to have that person joined as a party to the suit under Order 22, Rule 10, C. P. C.

8. In the Nagpur case, Pollock J. considered both the Madras cases. The facts of the case do not show that the application for adjudging the mortgagors as insolvents was prior to the filing of the suit. It is stated that the suit was filed in 1929 and a preliminary decree for sale was obtained on the 15th January 1930 whereas the application on which the two mortgagors were adjudicated insolvents was made on 18th December 1929. The Receiver was admittedly not impleaded in the proceedings. Pollock J. rejected the contention that the doctrine of lis pendens applied because he held that if the Receiver stands in the same position as a transferee pendente lite, he will be bound, for it is not obligatory on a plaintiff to implead a transferee pendente lite, because Section 52 of the Transfer of Property Act provides that during the pendency of any suit, in which the right to immoveable property is in question, the property cannot be transferred or otherwise dealt with by any party to the suit so as to affect the rights of any other party thereto. Then the learned Judge considered the question as to whether lis pendens applies in the case of a devolution by operation of law in these words :

'The question is whether property can be said 'transferred or otherwise dealt with' when its owner files an insolvency application and IB adjudged insolvent so that his property vests in the Court or the receiver appointed by the Court. In such a case it cannot, in my opinion, be said that the former owner of the property has transferred it or otherwise dealt with it. His whole estate has devolved on the receiver just as, in case of his death, it would devolve on his hair. This is the view- taken by Sir Dinshah Mulla inhis Transfer of Property Act, Edn. 2 at page 234, and in Puninthavelu Mudaliar v. Bhashyam Aiyangar, 25 Mad. 406 : 12 M. L. J. 282 and Subramania Iyer v. Ramakrishna Aiyar, 42 M. L. J. 426 : A. I. R. 1922 Mad. 335. See also Mulla's Transfer of Property Act, 3rd Edn, page 254 under the heading 'insolvency'. It seems to us that the decision in Puninthavelu Mudaliar v. Bhashyam Aiyangar, 25 Mad. 406 : 12 M. L. J. 282 and Indian Cotton Co. v. Ramacharan Lal, A. I. R. 1939 Nag. 128 : I. L. R. (1948) Nag. 559 apply to the facts of the present case.'

9. The decision in Kalachand v. Jagannath has been followed subsequently by this Court in Ponnuthayee Ammal v. Official Receiver Coimbatore, 65 M. L. J. 833 :A. I. R.1938 Mad. 858 and Ammanna v. Ramakrishna Rao : (1949)1MLJ249 . In both these cases, the adjudication was subsequent to the filing of the suit, the decree in which was sought to be executed against the Official Receiver; but the insolvency petition had been filed earlier than the filing of the suit and, as had already been decided by the Privy Council, the decree cannot bind the Official Receiver because it was passed in his absence though the equity of redemption had become assigned, by operation of law, in him.

10. A somewhat different view is deducible from the decision of Ramesam J. in Katiaperumal Naicker v. Ramachandra Aiyar : AIR1927Mad693 where the learned Judge held that Order 22, Civil Procedure Code, deals with the devolution of interest by operation of law and not by act of parties and that though there is a rule dealing with the position of a plaintiff becoming on insolvent there is no rule dealing with a defendant becoming an insolvent, and that Section 29 of the Provincial Insolvency Act of 1920 provides for such a case. He further held that the filing of a suit prior to the adjudication must be regarded outside the purpose of the Insolvency Act with reference to the provisions of Section 28(2) of the Act and the bringing in of the Official Receiver as a party to the suit is merely a matter of compliance with such orders as the Court may pass under Section 29 of the Act. It was also held by him that the order of appointment of interim receiver has not got the same effect as the vesting order or the order of adjudication. The suit in that case was for enforcement of a mortgage and therefore was practically outside the scope of Section 28 of the Provincial Insolvency Act and further the Official Receiver was added as a defendant at a certain stage of the suit. The only question that had to be considered. was whether at the time the Official Receiver was sought to be impleaded the suit was barred by limitation against him. This cannotbe said to be a case where a decree was passed in the absence of the proper owner in whom the property has become vested and as such null and void. Though there are certain observations of the learned Judge tending to take a somewhat different view from those expressed in some of the other cases, we feel that this oase does not help the contention of the respondent. On the other hand, Pandrang Row J. in Henry Merieu v. Official Receiver, Madura, : AIR1935Mad907 , following Raghunathdas v. Sundardas, 42 Cal. 72 : A.I.R 1914 P. C. 129 and Anantarama Aiyer v. K. Kovilamma, 30 M. L. J. 611 :A. I. r. 1917 Mad. 924, laid down that where the property of the judgment-debtor is sold by the decree-holder after the judgment-debtor has applied for insolvency, without notice to the Official Receiver, the sale is a nullity as the adjudication of the insolvent relates back to the date of his petition and the Official Eeceiver is entitled to all the properties of the judgment-debtor from that date. It is not necessary to multiply authorities on the question of relation back though we may find useful observations in Kandasami Pillai v. Kandasami Pillai, : AIR1947Mad372 and Venkatapayya v. Official Eeceiver, Guntur : AIR1944Mad278 . The passages in Mullah's Insolvency Act at pages 411 and 414 and a summary of the discussions at page 415 may also be referred to for guidance. If therefore the principle of relation back applies, then the insolvency must be deemed to have taken place on 30-9-1948 when the application to adjudicate Subbarama Nadar was made and if the doctrine laid down in Puninthavelu Mudaliar v. Bhashyam Aiyaugar, 25 Mad. 406 : 12 M. L. J. 282 that devolution in favour of the Official Receiver is a devolution by law and not a devolution by act of parties in which the doctrine of lis pendens does not affect is applied, it should be deemed as if the decree nas passed without the necessary person being made a party to the suit.

11. But it is urged for the first respondent that in a decree for specific performance no right to property is involved and therefore it is not a case as if any property of the insolvent was concerned in the suit which vested in the Official Receiver. What is urged is that though not a right in property, when the Official Receiver takes the property, he takes it with all the liabilities, equities and duties and the same obligations as the insolvent and he is bound to discharge those obligations and duties as the insolvent himself has to do. Sir W. M. James L. J. makes the following observation in Ex parte Holthausen; In re Schetbler, (1874) 9 Ch.A. 722 : 44 L. J. Bk. 26 of the report :

'The taw of England is, that, with certain exceptions the trustee in bankruptcy is bound by all the equities which affect a bankrupt or a liquidating debtor; that is to say, if a bankrupt or a liquidator debtor, under circumstances which are not Impeachable under any particular provision connected with his bankruptcy or insolvency, enters into a contract with respect to his real estate for a valuable consideration, that contract binds his trustee in bankruptcy as much as it binds himself.'

12. Cozens-Hardy J. in Pearce v. Bastable's Trustee in Bankruptcy, (1901)2-Ch. 122 : 70 L. J. Ch. 446 has made strong observations regarding the binding nature of the contracts entered into by the insolvent on the trustee in Bankruptcy. See also Nandgopal v. Batuk Prasad : AIR1932All78 where the discussion centred round the point as to the binding nature of the equities and liabilities of the insolvent on the Official Receiver. That an Official Receiver would, in such matters, have the same position as that contemplated by Sections 40 and 91 of the Transfer of Property Act, does not require such discussion. All these decisions only show that the Official Receiver, under such circumstances, is bound by the equities and the liabilities of the insolvent. But that does not show that if he is not made a party the decree would be binding on him.

13. While a suit for specific performance was pending one of the defendants sold the property to another and was later on adjudged an insolvent and on an application to bring the Official Assignee as a party to the suit it was held that it should be allowed because on insolvency, the legal estate vested in the Official Assignee subject to the equities of third parties and the proper person to execute a deed in pursuance of a decree for specific performance against the insolvent is the Official Assignee: vide Purushotham Naidu v. Ponnuranga Naidu, 21 I. C. 576 : 1913 M. W. N. 897. We may also refer to the observations of the Judicial Committee in Sheobaran Singh v. Kulsum Unnissa , where it was stated that the Official Assignee takes the property of an insolvent exactly as it stood in his person with all its advantages and all its burdens. The case considered there was one of pre-emption Our attention was also invited to the observations contained in Volliappa, Chettiar v. Govinda Doss, 52 Mad. 809 : A. i. R. 329 Mad. 721 , where in discussing the meaning of the word 'land' in clause 12 of the Letters Patent of the High Court, there are certain dicta about the nature of the right involved in a suit for specific performance. At page 822, Rame-sam J. observes that in a suit for specific performance, the decree is primarily addressed to the defendant, i, e., the Court acts in personam which a Court of Equity is of course entitled to do. Though the land may be described in the conveyance, it is not going to be touched even in the execution of a decree as in the case of a decree for sale on mortgage; nor does any issue as to title to the land arise in such a suit,and therefore the learned Judge held that asuit for specific performance is not a suit for laud. It is not necessary for us to discuss the correctness of these observations because the whole question is whether any property of the insolvent vested in the Official Receiver or not. It cannot be said that in a suit for specific performance the Court acts solely in personam and moreover those observations are not shared by the other learned Judges and are not necessary for the discussion.

14. The case in Ponnuthayee Ammal v.Official Receiver, Coimbatore, 65 M. l. J. 833: A. I. R. 1933 Mad. 858 was a case where, pending a suit for maintenance by a widow against the members of the joint family of her husband, and claiming a charge on the properties, one of the defendants was adjudicated an insolvent, but without adding the Official Receiver as a party, the matter proceeded and a decree was passed as prayed for making her future maintenance a charge on certain properties belonging to the joint family; and the widow, when executing the decree, tried to bring the properties to sale, the Official Receiver objected to it on the ground that the decree is invalid. It was held by this Court that such execution proceedings are invalid because, pending the suit, the property had vested in the insolvent and the Official Receiver was anecessary party.

15. That the Official Receiver cannot be said bo be a legal representative of the insolvent and so the decree where he was not made a party cannot be executed against him is also deducible from the observations contained in Nainar Rowthen v. Kuppai Pichai Rowthen : AIR1929Mad609 and Kaharjarmessa v Saradindu Narayan : AIR1935Cal130 . The learned advocate for the appellant posed the question whether, if the point raised by the first respondent that the Official Receiver takes the property subject to all the equities against the insolvent and a decree passed without the Official Receiver is binding on him is accepted, a decree for specific performance against a person who has assigned the property, which was the subject-matter of the agreement, would be binding on such assignee even if he was not aparty to the government. What he contends is that if, after a valid agreement to sell a property was entered into, the offerer sells the property to a third party, and a suit for specific performance is brought without making the third party a defendant, is it possible for the decree-holder to execute the decree for specific performance? Section 27(b), Specific Relief Act, only contemplates cases where a person who has taken as assignment of the property with notice of the agreement to sell will be bound by a decree for specific performance if he is made a party. Instances can be multiplied like the case of a suit against a father for a pre-partition debt and a decree obtained against him after the sons have become divided. It needs not much argument to show that such a decree cannot be executed against the divided sons who were not parties to the suit.

16. The preponderance of authority is to the effect that even if tbe Official Receiver is bound by the equities, since he should be made a party to the suit, the decree cannot be executed against him. Whether the decree-holder can prove his claim in insolvency or whether a separate suit will lie by making the Official Receiver a defendant, we are not concerned with at this juncture. Weare, therefore decidedly of opinion that by the operation of Sub-section (7) of Section 28 of the Provincial Insolvency Act, the insolvency of Subbarama Nadar related back to the date of the filing of the application and thereafter, since the Official Receiver was not made a party to the suit, the decree obtained would not bo binding against him.

17. In the counter affidavit filed by theOfficial Receiver, it is stated that the petitionerin the lower Court appeared to be a friend ofthe insolvent and ho had knowledge of the insolvency proceedings and yet he did not implead the Official Receiver as a party. This isnot denied in any reply affidavit; nor was thereany evidence let in to show that the contention of the Official Receiver is unjustified. Nooral or documentary evidence was let in onbehalf of the petitioner in the lower Court toshow that he was not aware of the filing of theapplication for adjudicating Subbarama Nadaras an insolvent. Under these conditions wehave to hold that the decree in O. S. No. 80 of1948 is not binding on the Official Receiver andtherefore he cannot be impleaded in executionof that decree and no relief can be claimedagainst him. The appeal is therefore allowedand the order of the Subordinate Judge addingthe Official Receiver as second respondent is setaside with coats here and in the Court below.


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