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The Official Receiver of Ramanathapuram, Representing the Estate of the Insolvent P.L.S.L.P. Palaniappa Chettiar and P.L.M.L. Chellappa Chettiar Vs. P.L.S.L. Chellappa Chettiar - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberCivil Revn Petn. No. 932 of 1947
Judge
Reported inAIR1951Mad935; (1951)2MLJ200
ActsProvincial Insolvency Act, 1920 - Sections 69, 70 and 75(1)
AppellantThe Official Receiver of Ramanathapuram, Representing the Estate of the Insolvent P.L.S.L.P. Palania
RespondentP.L.S.L. Chellappa Chettiar
Appellant AdvocateT. Krishna Rao, Adv.
Respondent AdvocateK. Veerasami and ;G. Ramanujam, Advs.
DispositionRevision dismissed
Cases ReferredKaruthan Chettiar v. Raman Chetti
Excerpt:
.....- it is upto court to decide whether to initiate proceedings against debtor or not - once complaint filed by receiver matter is between debtor and court - receiver not entitled to appeal under section 75 (1) against decision of district court. - - whether the official receiver, who unsuccessfully applied for prosecuting the insolvent under sections 69 & 70, provincial insolvency act, is a person aggrieved by the decision of the learned subordinate judge. 470 of 1946 which clearly indicate that this court was inclined to adopt the test laid down in ex parte official receiver; he may be indirectly interested like the rest of the public in the purity & efficiency of insolvencyadministration. it may be that the decision of the court not to make a complaint has failed to satisfy..........applied for prosecuting the insolvent under sections 69 & 70, provincial insolvency act, is a person aggrieved by the decision of the learned subordinate judge. if the test laid down in ex parte official receiver; in re reed bowen & co., (1887) 19 q. b. d. 174 & in re lamb; ex parte board of trade, (1894) 2 q. b. d. 805, were to be applied which considered similar language under the english bankruptcy act, the receiver would be a person aggrieved by the order & would be entitled to prefer an appeal against the decision of the learned subordinate judge. but iyappa nayanar v. manicka asari, 40 mad. 630 & palaniappa chetti v. subramanian chetti, 38 m. l j. 338, which were decisions under the provincial insolvency act of 1907 took a different view & if the principles of those decisions.....
Judgment:
ORDER

Satyanarayana Rao, J.

1. This case was referred to a Division Bench by my Lord the Chief Justice for an authoritative decision on the question whether the qualification 'aggrieved by a decision' in Section 75(1), Provincial Insolvency Act necessarily applies to the debtor, creditor & the Receiver expressly named in that sub-section. That question has since been authoritatively decided by a Full Bench of five Judges in Narasimha v. C. Ramayya. C. M. A. No. 470 of 1946; but there is another question which, in our opinion, requires consideration by a Full Bench, viz. whether the Official Receiver, who unsuccessfully applied for prosecuting the insolvent under Sections 69 & 70, Provincial Insolvency Act, is a person aggrieved by the decision of the learned Subordinate Judge. If the test laid down in Ex parte Official Receiver; In re Reed Bowen & Co., (1887) 19 Q. B. D. 174 & In re Lamb; Ex parte Board of Trade, (1894) 2 Q. B. D. 805, were to be applied which considered similar language under the English Bankruptcy Act, the Receiver would be a person aggrieved by the order & would be entitled to prefer an appeal against the decision of the learned Subordinate Judge. But Iyappa Nayanar v. Manicka Asari, 40 Mad. 630 & Palaniappa Chetti v. Subramanian Chetti, 38 M. L J. 338, which were decisions under the Provincial Insolvency Act of 1907 took a different view & if the principles of those decisions were to be applied the Official Receiver would not be entitled to prefer an appeal. A similar view was taken by the other High Courts, vide Laduram v. Mahabir Prasad, 39 ALL. 171, Digendra Chandra v. Ramani Mohan, 22 C.W.N. 958 ; Lalchand Hirachand v. Tuljaram Raoji, I.L.R. (1942) Bom. 67 and Achruram v. Padan Pershad, I. L. R. (1941) Lah. 779. There are no doubt observations in the judgment of the Full Bench in G. M. A. No. 470 of 1946 which clearly indicate that this Court was inclined to adopt the test laid down in Ex parte Official Receiver; In re Reed Bowen &Co.;, (1987) 19 Q. B.D. 174. We think that this is a matter which requires an authoritative decision on the point & we, therefore, direct the papers to be placed before my Lord the Honourable the Chief Justice for constituting a Pull Bench.

Judgment.

2.The Official Receiver of Ramnad, here petitioner, moved the Insolvency Court of Devakottah to make a complaint under Section 70, Provincial Insolvency Act, (hereinafter referred to as 'the Act') against the insolvent debtor, here respondent, of offences under Section 69 of the Act alleged to have been committed by the latter. The insolvency Court held an enquiry after notice to the respondent but declined to make a complaint. An appeal against the decision of the Insolvency Court preferred by the Receiver to the District Court of Ramnad was rejected on the ground that the Receiver had no right of appeal. The only question in the civil revision petition is whether the decision of the insolvency Court was appealable at the instance of the receiver, & the answer depends upon a proper interpretation of Section 75, Sub-section (1) of the Act which runs thus :

'the debtor, any creditor, the Receiver, or any other person aggrieved by a decision oome to or an order made in the exercise of insolvency jurisdiction by a Court subordinate to a District Court may appeal to the District Court.'

In view of the decision of a Full Bench of this Court in Narasimha v. Ramayya 1950 1 M. L. J. 484, it was conceded, & we think rightly, by the learned advocate for the petitioner that a debtor, creditor or Receiver had not an unqualified right of appeal from any decision or order of an insolvency Court, but a right of appeal only if he was aggrieved by that decision or order. Under Section 75(1) of the Act the only person entitled to appeal is 'a person aggrieved' by the decision or order and there is no difference in this respect between the provisions of Section 46 of the Act of 1907 & Section 75(1) of the Act of 1920. Can the Receiver be said to be 'a person aggrieved' by the decision of the insolvency Court not to make a complaint against the debtor of offences under Section 69 of the Act. The English decisions expounding the meaning of the phrase 'aggrieved person' occurring in the corresponding provisions of the English Bankruptcy Acts had been considered in Narasimha v. Ramayya, 1950 l M. L. J. 484 & it is unnecessary to go over the same ground. Suffice it to refer to a few landmarks.

3. In Ex parte Sidebotham, (1880) 14 Ch. D. 458 James L. J. said,

'A 'person aggrieved' must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongly deprived him of something or wrongfully refused him something, or wrongfully affected his title to something.'

This however, was not a definition of the expression 'person aggrieved' or even an exhaustivestatement of its meaning. The grievance may not be personal or pecuniary & may yet be a legal grievance. A person against whom a decision has been pronounced which has wrongfully refused him something which he had a right to demand, would be an 'aggrieved person.' A creditor or receiver who is under the provisions of the Act empowered to make & who makes an application to the insolvency Court for a relief or who is brought before the Court to submit to its decision is, if the decision goes against him, thereby an 'aggrieved person.' This is the effect of the decisions of the Court of appeal in Ex Parte Official Receiver: In re Reed Bowen and Co. (1887) 19 Q. B. D. 174 & In re Lamb; Ex Parte the Board of Trade, (1894) 2 Q. B. d. 805. Not every person who has suffered some disappointment or whose expectations have not been realised as a result of the decision or order of an insolvency Court can claim to be an aggrieved person.

4. Judged by this test, can it be said that the Receiver was a person aggrieved by the decision of the insolvency Court in this case The Official Receiver has the right & duty to get in & realise all the assets of the debtor & distribute them among his creditors. He has the right to apply to the Court for an order to set aside the fraudulent dealings of the debtor with his property &recover; the same for the benefit of the creditors. He has to scrutinise the claims of creditors, admit proof of debts & distribute the assets of the insolvent as dividend among the creditors. A creditor too has rights given to him under the Act. He can apply to the Court under Section 21 for interim security to be furnished by the debtor & for attachment of his property. He can alsoapply to the Court under s. 54A for avoiding fraudulent transfers of his property by the debtor. He can apply to the Court to expunge the name of a creditor from the list of creditors on proof that the debt is unreal. He has a right to oppose the discharge of the insolvent. In matters relating to the administration of the estate of the debtor, the realisation & the distribution of his assets, the Receiver & the creditors are directly interested. A decision or order adverse to the receiver or the creditor in connection with matters of the kind above specified on an application presented by or as against the Receiver or the creditor would be appealable at his instance, for, he thereby suffers a legal grievance. But neither a creditor nor the Receiver has a direct interest in sending a debtor to jail for offences under Section 69 of the Act. He may be indirectly interested like the rest of the public in the purity & efficiency of insolvencyadministration. But he has no further or other interest in the matter. The act does not specifically provide for an application under Section 70 either fey a Receiver or a creditor praying for action to be taken against the debtor. Neither fee Receiver nor a creditor has any right to demand the prosecution of the debtor for anoffence under Section 69 & they cannot be said to be 'aggrieved' by a refusal of the insolvency Court to make a complaint under Section 70 of the Act. The matter is left to the Court's discretion. This is not to say that the Receiver or creditor cannot file an application in the insolvency Court for action being taken against a debtor under Section 70 of the Act or that he cannot place before the Court materials in support of the application. Such assistance to the Court is legitimate & is rightly given. But then there is no dispute to which the applicant is a party or by the decision of which the applicant suffers a legal grievance. Whether the application succeeds or fails, he has no further concern in the matter. He has done his duty & the responsibility for the decision rest? with the insolvency Court which hears his application. The decision or order of the Court does not in any way affect directly or indirectly the rights of the creditors or the Receiver. The creditors or the Receiver is no more 'aggrieved' than any other member of the public by the Court's decision not to make a complaint against a debtor, & there is no reason why he should have a right of appeal against the decision of the insolvency Court under Section 75(1).

5. Section 476 Cri. P. C. providing for an application to the Court to make a complaint in respect of offences against public justice, & Section 476B providing for a right of appeal against an order refusing to make a complaint may be usefully contrasted with the provisions of Sections 70 & 75 of the Act, which neither contemplate a formal application to the Court nor expressly provide a right of appeal from a decision of the Court refusing to make a complaint. The marked difference between these two sets of provisions shows that the Legislature in enacting Section 70 of the Act merely allowed the receiver or creditor to bring to the notice of the Court the fraudulent dealings of the insolvent with his property & affairs in order that the Court might take disciplinary action against the erring debtor. If the Court declines to make a complaint it cannot be, said that it has refused the applicant, the receiver or creditor, something which he had a right to demand. Nor has it deprived him of anything or affected his right or title to any property. He is not therefore ''aggrieved' in the relevant sense of that expression. It may be that the decision of the Court not to make a complaint has failed to satisfy the thirst for 'retributive justice' on the part of the applicant; but this is not a legal grievance. The Receiver or the creditor is no more aggrieved than any other member of the public by a judicial decision of which he does not approve. The offence created by Section 69 of the Act is a special one relating to & arising out of the insolvency of a debtor & is not part of the general criminal law, & the Legislature has not thought fit to enact provisions on the lines of Sections 476 & 476B, Cri. P. C. with referenceto offences under Section 69 of the Act. For these reasons it must be held that the Receiver in the present case was not a 'person aggrieved' by the decision of the Insolvency Court declining to make a complaint against a debtor under Section 70 of the Act.

6. This view is in accord with the conclusion reached by this Court in Iyappa Nainar v. Manicka Assari, 40 Mad. 630 and Palaniappa Chetti v. Subramania Chetti, 88 M. L. J. 338 under the corresponding provisions of Sections 43 & 46 of the Act of 1907. It is true, as pointed out by the petitioner, that all the reasons given in the former case have not been accepted in the latter. It is also true that the procedure for the trial of an offence under the insolvency law was different under Section 43 of the Act of 1907 from what is now under Section 70 of the Act of 1920, as amended & that much of the reasoning in Iyappa Nayanar v. Manicka Asari, 40 Mad. 630 may not hold good in the present state of the law. The decision in Palaniappa Chetti v. Subramania Chetti, 38 M. L. J. 338 however is not open to such criticism. The other High Courts have taken the same view as this Court in cases decided under the Act of 1907. Laduram v. Mahabir Prasad, 39 ALL. 171, Gujarsaha v. Barkat Ali, 1 Lah. 213 and Bisendra Chandra Basak v. Ramani Mohan, 22 C. W. N. 958. As already observed, there is no difference between the Act of 1907 & the present Act with reference to the right of appeal & under both the enactments, only a 'person aggrieved' by a decision or order of an insolvency Court could appeal therefrom. In cases decided after the enactment of Sections 70 & 75 of the Act V [5] of 1920, in their present form the Bombay & Lahore High Courts have held that neither a creditor nor the Official Receiver is a 'person aggrieved' by a decision of the insolvency Court refusing to make a complaint under Section 70. Lalchand Hirachand v. Tuljaram, I. L. R. (1942) Bom. 67 and Lachruram v. Padam Pershad, I. L. R. (1941) Lah. 779. We respectfully agree with these decisions.

7. The petitioner relied on Karuthan Chettiar v. Ramachettiar, 45 M. L. J. 804. There the insolvency Court refused even to entertain or consider an application by a creditor to take action against the debtor under Section 43 of the Act of 1907 in respect of offences under the insolvency law. On an appeal by the creditor it was held that the insolvency Court erred in dismissing his application in limine & in declining to go into the matter. It was, however, observed that if the Court had made an enquiry & then decided not to make a complaint, the creditor would not have been entitled to prefer an appeal as an aggrieved person' on the authority of Iyappa Nainar v. Manicka Assari, 40 Mad. 630. There was a full enquiry in the present case, & it was only after such enquiry that the insolvency Court declined to make a complaint against the debtor.The decision in Karuthan Chettiar v. Raman Chetti, 45 M. L. J. 804 must be confined to its own facts & cannot be relied upon as an authority for the proposition that a creditor or Receiver is a person aggrieved by the decision of the insolvency Court not to make a complaint against a debtor under Section 70 of the Act. Reference was also made to the decision in In re Dunn; Ex parte Senior Official Receiver, (1902) 1 K. B. 107 but there the Court in bankruptcy refused to consider the report of the Receiver & decided one way or the other whether an order should be made for the prosecution of the bankrupt. Romer L. J. observed as follows:

'The duty ultimately determining whether a prosecution shall be instituted rests with the Court & not with the Official Receiver. It appears to me, therefore that the Court cannot refuse to consider the report merely because the Official Receiver has not made up his mind whether there ought or ought not to be a prosecution, or will not make a substantive application for an order to prosecute. The report having been made, it must at some time or other be considered by the Court, & the Court itself must, under Section 16 of the Debtors Act 1869,' make up its mind whether the bankrupt is to be prosecuted.'

This decision is not an authority for the position that if the Bankruptcy Court after considering the report, representation or application of the Receiver & after making such enquiry as it thinks fit, decides not to prosecute the bankrupt, the Receiver is a 'person aggrieved' by that decision. The observations above quoted tend to show that the Receiver discharges his duty or responsibility by filing his report, that thereafter it is a matter between the debtor & the Court & that it is for the insolvency Judge to decide whether he will make an order for the prosecution of the bankrupt or not.

7. For the reasons above stated we hold that the Receiver had no right of appeal to the District Court under Section 75(1) of the Act & that the appeal was rightly dismissed by the Court on this ground The case of a debtor against whom a complaint is made under Section 70 of the Act might stand on a different footing. The civil revision petition is dismissed with costs.


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