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N.M.S.N.S. Kannappa Chettiar Alias Lakshmanan Chettiar Vs. N.M.L. Subramanian Chettiar - Court Judgment

LegalCrystal Citation
Subjectcivil
CourtChennai
Decided On
Reported inAIR1944Mad184
AppellantN.M.S.N.S. Kannappa Chettiar Alias Lakshmanan Chettiar
RespondentN.M.L. Subramanian Chettiar
Cases ReferredHarirao v. Official Assignee
Excerpt:
.....circumstances, i find that the learned subordinate judge was perfectly justified in finding on the allegations in the petitions filed by the insolvents that the insolvent could not be said to be a person aggrieved by the act of the official receiver entitling him to file the petitions under section 68. 5. the lahore high court has taken a different view from the decision of the full bench in harirao v......on the file of the subordinate judge's court of devakottai for setting aside the sales held by the official receiver of ramnad in respect of a house in karaikudi and of a village in palni taluq by name kallakadu. c. m. a. no. 120 of 1943 and c.r. p. no. 450 of 1943 relate to the sale of the house in karaikudi, while the other two relate to the sale of the village of kallakadu. the parties have-chosen to file both the civil revision petition and the civil miscellaneous appeal as they were not sure whether an appeal would lie or not. the insolvent's case was that the house in karaikudi which was a big double storied house with a garden situated in the central place in karaikudi was worth about rs. 3000 and that it had been sold for a low price of rs. 1820. his complaint was that the.....
Judgment:

Kuppuswami Ayyar, J.

1. These arise out of two petitions filed by the insolvent in I. P. No. 33 of 1936 on the file of the Subordinate Judge's Court of Devakottai for setting aside the sales held by the Official Receiver of Ramnad in respect of a house in Karaikudi and of a village in Palni Taluq by name Kallakadu. C. M. A. NO. 120 of 1943 and C.R. P. NO. 450 of 1943 relate to the sale of the house in Karaikudi, while the other two relate to the sale of the village of Kallakadu. The parties have-chosen to file both the civil revision petition and the civil miscellaneous appeal as they were not sure whether an appeal would lie or not. The insolvent's case was that the house in Karaikudi which was a big double storied house with a garden situated in the central place in Karaikudi was worth about Rs. 3000 and that it had been sold for a low price of Rs. 1820. His complaint was that the property had not been properly described in the sale proclamation, that the municipal tax and several particulars were not given, that there was no due and proper proclamation and that sufficient time was not given between the date of the proclamation and the date of the sale. He further complained that the sale was originally fixed for 9th April 1941, that there were no other bidders except respondent 2; it was advertised for sale in the 'Swadesamitran' paper of 11th April 1941, that the sale was extended by a week and that the sale will be concluded by 8 p. M. on 16th April 1941, but on that day the Official Receiver was not present. Though several bidders had come to bid at the sale without giving any information as to whether the sale was adjourned the sale was concluded in favour of respondent 2 on 17th April 1941. Though the original upset price was fixed at Rs. 5000, the sale was concluded only for Rs. 1820. With regard to the village of Kallakadu, it belonged to the family of the insolvent. The property was burdened with a trust, namely, an annadanam charity, and was according to an arrangement entered into by the members of the family of the insolvent managed by the three divided branches by turns. It is his further case that the village would yield an income of about Rs. 5000 per year out of which Rs. 3000 only would be utilised in the conduct of annadanam charity and the balance could be utilised by the insolvent. It had been held in prior proceedings of this Court that the insolvent had a saleable interest in the village and that was why the Official Receiver brought it for sale. The insolvent's complaint was that without ascertaining what the nature of the interest of the insolvent was, the property had been sold for an inadequately low price. With regard to the sale, he has got the same complaint as in respect of the sale of the house. The sale was originally posted for the 16th but was not taken up on that day and was adjourned to the 17th. It was further stated that there was no correct description of the properties and of the exact nature of the interest possessed by the insolvent.

2. A preliminary objection was raised in both the petitions that they were not maintainable under Section 68, Provincial Insolvency Act. The learned Subordinate Judge relying on the decisions in Harirao v. Official Assignee, Madras : AIR1926Mad556 which referred to that in Sakbawat Ali v. Radhamohan : AIR1919All284 with approval, and the decision in Venkataramayya v. Bangarayya (1934) 67 M.L.J. 942, came to the conclusion that an insolvent was not a person aggrieved so as to entitle him to file an application under Section 68, Provincial Insolvency Act. On appeal, the learned District Judge, observing that the decisions of this Court relied on by the learned Subordinate Judge related to appeals against orders made by insolvency Courts and not to applications to set aside acts, such as sales held by the Official Receiver, and after referring to the ruling in Kunda Singh v. Official Receiver A.I.R. 1939 Lah. 499 which the learned Subordinate Judge refused to follow in view of the fact that he was bound by the decisions of this Court, found that the petitions were maintainable and remanded them to the lower Court for fresh disposal on merits. Hence these petitions and appeals.

3. The two decisions of this Court relied on by the learned Subordinate Judge referred to above were no doubt not with reference to Section 68, Provincial Insolvency Act. The decision in Harirao v. Official Assignee, Madras : AIR1926Mad556 was a decision on a petition filed under Section 82, Presidency Towns Insolvency Act, which corresponds to Section 75, Provincial . Insolvency Act. The decision in Venkataramayya v. Bangarayya (1934) 67 M.L.J. 942 is also a decision on an application filed under Section 75, though it is wrongly stated in the head-note as one relating to Section 68. But then the relevant words in both Sections 68 and 75 are the same. Section 68 runs thus:

If the insolvent or any of the creditors or any other person is aggrieved by any act or decision of the receiver, he may apply to the Court, and the Court may confirm, reverse or modify the act or decision complained of, and make such order as it thinks just.

4. Section 75 runs thus:

(1) The debtor, any creditor, the receiver or any other person aggrieved by a decision come to or an order made in the exercise of insolvency jurisdiction by a Court subordinate to a District Court may appeal . . . .

Subsequent to the filing of these proceedings in Chennabasavappa v. Official Receiver, Bellary A.I.R. 1943 Mad. 266 Horwill J. sitting singly held, following the observations in Harirao v. Official Assignee, Madras : AIR1926Mad556 that the insolvent had nothing more than a hope that something might be left over if the estate was administered and he was not a person aggrieved and that therefore the petition under Section 68, Provincial Insolvency Act, was not maintainable by the insolvent. It was urged before me for the insolvent that the decision in Sakbawat Ali v. Radhamohan : AIR1919All284 , which was followed with approval in Harirao v. Official Assignee, Madras : AIR1926Mad556 proceeded on the basis that the insolvent had no legal interest in the property as it was vested in the receiver and that his interest in the surplus was not a legal interest but a mere hope or expectation and that for this position reliance was placed on the observations of James L. J. in Ex parte Sheffield; In re Austin (1878) and In re Leadbitter & Harvey (1878) 10 Ch.D. 388. In Venkataramayya v. Bangarayya (1934) 67 M.L.J. 942 also, there is the following observation:

It is quite clear that both Pull Bench decision of this High Court in Harirao v. Official Assignee, Madras : AIR1926Mad556 ` and the Allahabad decision in Sakbawat Ali v. Radhamohan : AIR1919All284 are based upon the view taken by the English Courts with regard to whether or not an insolvent person is under certain circumstances an 'aggrieved ' person and reliance is placed in both those cases upon the observations of James L. J. in Ex parte Sheffield; In re Austin (1878) and on the case in In re Leadbitter & Harvey (1878) 10 Ch. D. 388. It was stated by James L. J. in the .former case that the insolvent has no legal interest in the surplus which may be left over as a result of his insolvency but has merely a hope or expectation and that the mischief of allowing a bankrupt on the contingent chance of his ultimately acquiring title to some surplus which might never be realised, to interfere with and embarrass the administration of the estate would be immeasurable.

Horwill J. in Chennabasavappa v. Official Receiver, Bellary A.I.R. 1943 Mad. 266 points out that:

Coutts-Trotter C.J. in Harirao v. Official Assignee, Madras : AIR1926Mad556 discussed certain English cases on the subject and pointed out that the insolvent had nothing more than a mere hope that something might be left over if the estate was administered, and that that would not make him a person aggrieved.

In Ahmed Mohammed Paruh v. Issur Mohan Gopal Jew 44 C.W.N. 665 Lort-Williams J. pointed out that the statements in the English decisions referred to above on which Harirao v. Official Assignee, Madras : AIR1926Mad556 and the other cases referred to above were based cannot be taken to mean that the insolvent in every case of sale of his property by the Official Assignee has no right to make an application to the Court under Section 86, Presidency Towns Insolvency Act, (corresponding to Section 68, Provincial Insolvency Act). He also quotes the following observations of Farwell J. in Bird v. Phillpot (1900) 1 Ch. 822:

It has been said that Ex parte Sheffield; In re Austin (1878) and In re Leadbitter & Harvey (1878) 10 Ch. D. 388 decided that a bankrupt cannot deal with the possibility of surplus until all the debts in the first bankruptcy have been paid and the surplus has been ascertained. I do not think that these decisions decided anything to that effect at all. If they did, they would have overruled prior decisions-of the Lord Chancellor amongst others-which were not referred to and they would be, in my opinion, contrary to the whole spirit and principles on which the Bankruptcy Act is now built. As I read the Bankruptcy Act, the trustee takes all the bankrupt's property for an absolute estate in law, but for limited purposes, namely, for the payment of the creditors under that bankruptcy and that bankruptcy only-the payment of principal and interest, and all the costs of the bankruptcy. Subject to that, he is a trustee for the bankrupt of the surplus.

The decision in In re Leadbitter & Harvey (1878) 10 Ch.D. 388 and in Ex parte Sheffield; In re Austin (1878)have been understood as stating that an undischarged bankrupt cannot have a right to interfere with the administration of the estate by the trustee in bankruptcy. Mukherjee J. pointed out that an insolvent is one of the persons included in the category of persons entitled to move the Court under Section 86 and that as the sale of the insolvent's property is an act on the part of the Official Assignee he would be entitled to invoke the provisions of the section. The word 'insolvent' finds a place in Section 68, Provincial Insolvency Act. It was also pointed out that the 'question as to whether the bankrupt has a legal grievance or not would depend upon the nature of the case he succeeds in making.' It was further pointed out that

if he cannot impute fraud to the assignee or assail the legality of his action and his only grievance is as regards the manner in which the work of administration is carried on, the grievance would not be a legal grievance, and he would have no right to invoke the provision of Section 86, Presidency Towns Insolvency Act.

Derbyshire C.J. points out that the sales could be set aside by the insolvent only

if it were proved that there had been fraud on the part of the Official Assignee, some illegality in the sale which went to the root of it, or some mutual mistake on the part of those selling and those buying.

In this case, none of the charges against the Official Receiver amount to fraud or illegality nor is there any allegation of mutual mistake on. the part of buyer and seller. Learned Counsel for the respondent wants me to refer the matter to a Full Bench in view of the observations of the Calcutta High Court with reference to the decision in Harirao v. Official Assignee, Madras : AIR1926Mad556 , but I do not think in this ease it is necessary to do so, because it is pointed out even by the Judges of the Calcutta High Court that in cases of this kind, where the objection of the insolvent is only as regards the manner in which the estate is administered and no fraud or illegality or mutual mistake is alleged he could not be said to be a person who is aggrieved by the order. In these circumstances, I find that the learned Subordinate Judge was perfectly justified in finding on the allegations in the petitions filed by the insolvents that the insolvent could not be said to be a person aggrieved by the act of the Official Receiver entitling him to file the petitions under section 68.

5. The Lahore High Court has taken a different view from the decision of the Full Bench in Harirao v. Official Assignee, Madras : AIR1926Mad556 referred to above, but I do not think I will be justified in acting on this decision. Learned Counsel for the respondent also cited a number of decisions which I do not think it is necessary to refer to, because they relate to the right of the insolvent after adjudication to take steps under Order 21, Rule 90 as also under the Agriculturists' Belief Act. The language used in those enactments is different, and have therefore no bearing on the question at issue in this case.

6. In the result, both the petitions and the appeals are allowed and the order of the learned District Judge allowing the appeal is set aside, with costs in all the three Courts in the appeals. I make no order as to costs in the petitions as there was no necessity to file those petitions in view of the fact that an appeal lies.


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