Skip to content


Pulla Subbaramiah Vs. Palagari Balarami Reddy and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported in(1948)1MLJ346
AppellantPulla Subbaramiah
RespondentPalagari Balarami Reddy and ors.
Cases ReferredSubramania Iyer v. Valliamma
Excerpt:
- - it is obvious, however, that the subordinate judge was clearly in error in stating that there is no prayer in the execution petition as against the second defendant......the adjudication was annulled on the 8th july, 1937, but the properties were vested in the official receiver, nellore, by an order under section 37 of the provincial insolvency act. the execution petition out of which this appeal has arisen was first filed against the three defendants. the official receiver was subsequently added as the fourth respondent. the prayer in the execution petition so far as the appellant was concerned was two-fold. one was that certainimmoveable property which belongs to the second defendant and which is vested in the fourth defendant under section 37 of the provincial insolvency act in i.p.no. 82 of 1932 on the file of the district courtbe caused to be attached and sold. the other was that a warrant should issue for the arrest of the second defendant.....
Judgment:

Govindarajachari, J.

1. This is an appeal by the second defendant in O.S. No. 72 of 1929 on the file of the Court of the Subordinate Judge of Nellore, against the order in E.P. No. 98 of 1943. The decree was a money decree against the appellant and two others who were defendants 1 and 3 in the suit. The appellant was adjudged an insolvent on 12th April, 1933, in I.P. No. 82 of 1932, on the file of the District Court of Nellore. The adjudication was annulled on the 8th July, 1937, but the properties were vested in the Official Receiver, Nellore, by an order under Section 37 of the Provincial Insolvency Act. The execution petition out of which this appeal has arisen was first filed against the three defendants. The Official Receiver was subsequently added as the fourth respondent. The prayer in the execution petition so far as the appellant was concerned was two-fold. One was that certain

immoveable property which belongs to the second defendant and which is vested in the fourth defendant under Section 37 of the Provincial Insolvency Act in I.P.No. 82 of 1932 on the file of the District Court

be caused to be attached and sold. The other was that a warrant should issue for the arrest of the second defendant under Section 55 of the Code of Civil Procedure. The appellant filed a counter-affidavit in which he objected to the execution inter alia on the ground that the execution of the decree was barred by limitation, and that the amount had, in any event, to be scaled down under Madras Act IV of 1938. The Subordinate Judge made a short order in the following terms:

Official Receiver in person says that he has no counter. Therefore execution will proceed. As it is, there is no prayer in the execution petition as against second defendant and hence the objections raised by second defendant need not be considered. The prayer is against Official Receiver alone, who is not contesting.

A preliminary objection is taken by the respondent's counsel that the appeal is not maintainable. It may at the outset be pointed out that so far at least as the prayer for the arrest of the appellant is concerned the appellant has undoubtedly a right of appeal. This is not contested by the respondent's counsel, but it is said that the question whether a warrant for the arrest of the appellant should issue or not does not arise at this stage and that all that has been decided by the order under appeal is that execution should proceed against the property of the appellant which is vested in the Official Receiver and that the other prayer or prayers in the execution petition must be taken to have been left over for future decision. There is no doubt some ambiguity in the judgment of the Subordinate Judge particularly when it is read in the light of the decretal order which was drawn up. It is obvious, however, that the Subordinate Judge was clearly in error in stating that there is no prayer in the execution petition as against the second defendant. It is on this ground that the Subordinate Judge held that the objections raised by the second defendant need not be considered. It will be noticed that the objections raised by the second defendant, if valid, will affect not only the execution of the decree by arrest but also the execution of the decree against his property vested in the Official Receiver. To say the least, we consider the order of the Subordinate Judge avoiding a consi-deration of the objections raised by the second defendant to be most inadvisable.

2. The question, however, on which there was considerable discussion before us was as to whether the appellant can maintain the appeal in respect of the order directing execution to issue against the property. Respondent's counsel relied upon the decision in Sakhawat Ali v. Radha Mohan I.L.R. (1918) All. 243, Hari Rao v. Official Assignee, Madras ( : (1926)50MLJ358 and Venkataramanayya v. Bangarayya (1934) 67 M.L.J. 942. The first of these arose under the Provincial Insolvency Act of 1907. In the course of certain proceedings in insolvency before a District Judge the insolvent filed an application in Court complaining of a sale of property which had been held by the Receiver and urging that it should hot be confirmed. The objection having been disallowed and the sale confirmed, the insolvent appealed to the High Court. It was held that he was not a ' person aggrieved ' within the meaning of Section 22 or Section 46 of the Provincial Insol-vency Act of 1907 and could not therefore maintain either the application or the appeal. It was observed that he could not be aggrieved in the legal sense of the word by the sale of property in which he had no interest. The leading English cases of Ex parte Sheffield4, and In re Leadbitter5, were referred to, and it was pointed out that the possibility of a surplus being left for the insolvent after distribution, does not clothe him with any legal interest and that he has merely a hope or expectation. It may incidentally be noted that Sections 68 and 75 of the Provincial Insolvency Act of 1920, corresponding to Sections 22 and 46 of the Provincial Insolvency Act of 1907, have expressly named the insolvent among the persons who have the right to make an application under the former section and the right to file an appeal under the latter.

3. Hari Rao v. Official Assignee, Madras : (1926)50MLJ358 , arose under Section 8(2) of the Presidency Towns Insolvency Act (III of 1909). The facts in that case were similar to those in Sakhawat Ali v. Radha Mohan I.L.R. (1918) All. 243. Following Ex parte Sheffield (1879) 10 Ch.D. 434, In re Leadbitter (1878) 10 Ch.D. 388, and Sakhawat Ali v. Radha Mohan I.L.R. (1918) All. 243, it was held that,

an insolvent whose estate has vested in the Official Assignee is not entitled to appeal as an ' aggrieved person ' within Section 8(2) of the Presidency Towns Insolvency Act against an order of a Judge rejecting his opposition to a sale of his estate by the Official Assignee.

It was. stated that the insolvent has no legal right to interfere with and embarrass the administration of the estate. It is of some significance that the Full Bench refrained from deciding whether an insolvent could maintain an appeal against an order admitting proof of a creditor to which he had objected.

4. In Venkataramayya v. Bangarayya (1934) 67 M.L.J. 942, it was held under the Provincial Insolvency Act of 1920, that,

an insolvent whose estate is vested in the Official Receiver is not entitled to appeal against an order of a Judge rejecting his opposition to a sale of his estate by the Official Receiver.

Sakhawat Ali v. Radha Mohan I.L.R. (1918) All. 243, Hari Rao v. Official Assignee, Madras : (1926)50MLJ358 , Ex parte Sheffield (1879) 10 Ch. D. 434, and In re Leadbitter (1878) 10 Ch. D. 388, were referred to and followed. It is curious, however, that no reference was made to the altered language of Sections 68 and 75 the object of which was evidently to enable the insolvent to make an application or file an appeal in the circumstances mentioned in those sections.

5. On behalf of the appellant it is first argued that the present case stands on a somewhat different footing because of the annulment of the order of adjudication and the vesting of the properties in the Official Receiver in pursuance merely of an order under Section 37, and reference is made to Veerayya v. Srinivasa Rao : (1935)69MLJ364 . When adjudication is annulled but the properties are vested in the Official Receiver, it cannot, no doubt, be said that the Insolvency proceedings continue for all purposes, and as pointed out in the decision cited, it cannot be said either, that the subsequent proceedings are not proceedings in Insolvency at all. It may be that an Official Receiver in whom the properties are vested by an order under Section 37 cannot initiate proceedings under Section 53 or Section 54 of the Provincial Insolvency Act, but with regard at any rate, to property the ostensible legal title to which continues to be, apart from the Insolvency, in the debtor, the vesting in the Official Receiver by an order under Section 37 must, for the present purpose, be taken to have the same effect as the vesting in him under Section 28.

6. The principal argument of the appellant's counsel is based on the decision in Kondapalli Tatireddi v. Ramachandra Rao (1921) 13 L.W. 616, Swaminatha Odayar v. Kalyanarama Aiyangar : AIR1933Mad694 , Subbaroya Goundan v. Virappa Chettiar Bank : AIR1933Mad851 and Manthiri Goundan v. Arunachalam Goundan : AIR1940Mad569 . In Kondapalli Tatireddi v. Ramachandra Rao (1921) 13 L.W. 616, the judgment-debtor applied to set aside a Court auction sale under Order 21, Rule 72 of the Code of Civil Procedure. The application was rejected and he filed an appeal. The question was whether he was competent to prosecute it though he had become an insolvent. It was held that the correct principle was that,

a person who is a party to a suit or other proceeding in his own right does not become disen-titled to continue to represent the interest merely because, in the course of the proceedings, his right has devolved on another by act of parties or by operation of law.

and that consequently no objection could be entertained against the validity or the prosecution of the appeal by the insolvent. In Swaminatha Odayar v. Kalyanarama Aiyangar : AIR1933Mad694 , Sundaram Chetti, J., held that a judgment debtor who is adjudge insolvent and whose property is vested in the Official Receiver is a person ' whose interests are affected 'by a Court auction sale within the meaning of Order 21, Rule 90 of the Civil Procedure Code and that he can therefore apply to set it aside. Hari Rao v. Official Assignee, Madras : (1926)50MLJ358 , was referred to and distinguished as a case which turned on the construction of the expression 'aggrieved.' Kondapalli Tatir-reddi v. Ramachandra Rao (1921) 13 L.W. 616, was referred to and followed.

7. In Subbaroya Goundan v. Virappa Chettiar Bank : AIR1933Mad851 , one of the questiosns referred to the Full Bench was,

Has the judgment-debtor who has been adjudicated an insolvent right to prefer an appeal against an order dismissing an application put in by him under Order 21, Rule 90 in the course of the execution of the decree passed against him?

8. The question was answered in the affirmative. Here again Kondapalli Tatireddi v. Ramachandra Rao (1921) 13 L.W. 616 was referred to with approval, and reference was made to Ramachandra v. Shripati A.I.R. 1929 Bom. 202, which followed it. How the Full Bench in Subbaraya Goundan v. Veerappa Chettiar Bank : AIR1933Mad851 , distinguished the earlier Full Bench decision in Hari Rao v. Official Assignee, Madras (1926) 50 M.L.J. 58 : I.L.R. 49 Mad. 461, is worthy of note. Referring to Hari Rao v. Official Assignee, Madras (1926) 50 M.L.J. 58 : I.L.R. 49 Mad. 461, they said:. In that case the Full Bench question arose under the Insolvency Act and the decision therefore cannot be considered, as observed in the order of reference, as a direct authority on the position of an insolvent preferring an appeal against an order in execution of a decree passed against him under the Civil Procedure Code.

Subbaraya Goundan v. Veerappa Chettiar Bank : AIR1933Mad851 , was followed in Manthri Goundan v. Arunachala Goundan : AIR1940Mad569 . After a review of the case-law it was held in the latter decision that the words,

9. 'Whose interests are affected by the sale'

in Order 21, Rule 90 must be construed in the ordinary sense and that,

It is too much to say that merely because a person is adjudicated insolvent his interests are not adversely affected by the sale of property that belonged to him before adjudication.

Hari Rao v. Official Assignee, Madras (1926) 50 M.L.J. 58 : I.L.R. 49 Mad. 461 and Venkataramayya v. Bangarayya (1934) 67 M.L.J. 942 were dis-tinguished as cases which were not concerned with the words found in Order 21, Rule 90 but with the word 'aggrieved' found in the Insolvency Acts.

10. It has been argued by the appellant's counsel with considerable plausibility that if an insolvent is a person whose interests are affected by the sale and could, therefore, maintain an application under Order 21, Rule 90 of the Civil Procedure Code it would follow that he has sufficient interest to object to the sale itself and to file an appeal against an order overruling his objection.

11. It cannot be denied that if the lines of reasoning in Subbaraya Goundan v. Veerappa Chettiar Bank : AIR1933Mad851 and Hari Rao v. Official Assignee, Madras (1926) 50 M.L.J. 58 : I.L.R. 49 Mad. 461 are pursued to their logical extent, they may not altogether be reconcilable.

12. There is, however, in our opinion, a shorter answer to the question that has; now been raised. Whether a person has a right of appeal or not will depend on the language of the statutory provision on which the appeal is based. As pointed out in Subramania Iyer v. Valliamma : AIR1945Mad287 , in dealing with Section 68 of the Provincial Insolvency Act, if a right to make an application or a right to file an appeal is conferred by the section on an insolvent, that right cannot be taken away because the property of the insolvent is vested in the Official Receiver or the Official Assignee.... Under Section 47 of the Civil Procedure Code,

all questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be deter-mined by the Court executing the decree.

13. In the present execution petition no doubt we have both the second defendant who was a party to the suit and the Official Receiver, who is ' his representative.' Under Section 2, Sub-section 2, an order under Section 47 is a decree, and Section 96(1). provides that an appeal shall lie from every decree passed by any Court,

save where otherwise expressly provided in the body of this Code or by any other law for the time being in force.

Section 96 does not refer to or enumerate the persons who can file the appeal; but there is no ground for depriving a person who is a party to the decree of his right to appeal therefrom. The decree-holder chose to make the insolvent a party to the execution petition not only in respect of the prayer for his arrest but also in relation to the prayer for the attachment and sale of his property which had vested in the Official Receiver. That being so, there is, in our opinion, no reason why the insolvent should not have a right to file an appeal against the order made in the execution petition. We therefore hold that the appeal by the insolvent is competent.

14. In the view we have taken, it cannot be denied that the second defendant who is a party to the execution petition must be heard in support of his objections. As they have not been dealt with, the order of the lower Court will be set aside and the execution petition remanded for disposal according to law. Costs of this appeal will abide and follow the result.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //