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Sankaranarayana Aiyar Firm (insolvent) Now Represented by the Official Assignee, High Court Vs. Yegnalakshmi Ammal and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1939Mad196; (1938)2MLJ1001
AppellantSankaranarayana Aiyar Firm (insolvent) Now Represented by the Official Assignee, High Court
RespondentYegnalakshmi Ammal and ors.
Cases Referred and Sundaram v. Mamsa Mavuthar
Excerpt:
- - in view however of the real contention raised in this case it would not be only convenient but necessary to determine the question whether the lower court has failed to exercise jurisdiction vested in it by law or has committed any material irregularity in exercising the same. the assignment by the official assignee of the decree in the case under consideration makes it more difficult for the respondent to contend in a case like the present, which is free from that complication, that the insolvent had no right to make the application for execution or to ask for a rateable distribution. he has thus refused or failed to exercise the jurisdiction vested in him by law......assignee and the applicant for execution. as for the second contention it is true that the insolvent's application had been decided to have been validly presented for the purpose of section 182 of the limitation act. would that make any difference? the conclusion arrived at by the learned judges and the reasoning adopted by them in coming to that conclusion would show that the insolvent's right to make the application for execution was held to exist and his insolvency was not considered to be a bar in his way for making such an application. had the insolvent been held to be incompetent to make the application, the application for execution would have been found to be in fructuous or useless and the limitation would not have been saved. in a sense even in the case before me, the.....
Judgment:

Abdur Rahman, J.

1. I have been invited in this case to set aside the order passed by the District Munsiff of Ambasamudram dismissing an application made to him by the petitioner under Section 73, Civil Procedure Code.

2. The facts, so far as they are necessary to be stated for the disposal of the questions of law raised before me, lie within a narrow compass. The respondents had obtained a decree in O.S. No. 252 of 1932 against certain judgment-debtors and had applied for execution by attachment and sale of certain properties (E.A. No. 737 of 1935). The properties were sold and the sale proceeds were brought into Court on the 8th of November, 1935. Before this, however, the petitioners, who had a decree passed in their favour in October, 1934, against the same judgment-debtors (O.S. No. 156 of 1934) had made an application on the 7th of November, 1935, that is, a day before the sale proceeds were actually brought into Court, for rateable distribution. If this were all, no objection could be raised against the application, but it appears that they had been adjudicated insolvents on 6th September, 1935, that is, about a couple of months before the application for rateable distribution was presented by them, and the first question which falls to be determined is whether the application could have been validly made by them after they had been adjudicated. The question has been decided by the lower Court in favour of the respondent and this revision has consequently been filed to test the correctness of that order.

3. A preliminary objection has been raised on behalf of the respondents that inasmuch as another remedy would be available to the petitioners, a revision of the order passed by the District Munsiff does not lie and the Court should not in any case interfere in its revisional jurisdiction but leave the matter to be decided by a regular suit. In view however of the real contention raised in this case it would not be only convenient but necessary to determine the question whether the lower Court has failed to exercise jurisdiction vested in it by law or has committed any material irregularity in exercising the same. The revision has been fully argued on behalf of the parties and I would therefore proceed to deal with the main question involved in the case.

4. Before I go into the merits of the petition, it must be observed that the petition for rateable distribution was filed by the insolvents in the Court of the District Munsiff, Ambasamudram, a place situated in Tinnevelly District while the Official Assignee in whom their estate had vested was in Madras. There was a distance of some 300 miles between these two places and if the petitioners had delayed the presentation of their petition even by a day, they would have been debarred from claiming a rateable distribution under the provisions of Section 73, Civil Procedure Code. It must also be noticed that the fact of their insolvency was not kept back by the petitioners from the Court. Nor was there any contest between the Official Assignee of Madras and the insolvents as regards the right of making the application and the application appears to have been made in the interests of the estate which had vested in the Official Assignee. This would be apparent from the fact that the Official Assignee filed an application on 21st November, 1935, adopting the petition for rateable distribution and praying that he might be added as a party to the same. It might also be stated that the name of the Official Assignee had not been brought on the record, and so far as the decree was concerned, it could only have been executed by the petitioners. With these preliminary remarks, I will address myself on the main contention raised in the case.

5. Order 22, Rule 8, Civil Procedure Code, provides that the insolvency of a plaintiff in any suit would not cause a suit to abate unless the assignee or Receiver in whom the estate has vested either declines to continue the suit or fails to furnish security for costs in spite of an order passed by the Court to that effect. It is only then that the suit would be liable to a dismissal. This would show that the provisions contained in this rule only relate to a suit which was filed by the plaintiff at a time when he was competent to do so, but the disability to continue the suit arose while it was pending. It might also be observed here that this provision is, as I read it, in the nature of an exception and has only to be applied when certain conditions laid down in the rule are not complied with. I have been led to this conclusion as I feel that the general principle underlying the whole of Order 22, Civil Procedure Code, is that a person should not be ordinarily held to be disentitled to continue an action merely because his interest has pendente lite devolved on some other person either by his own act or by operation of law. Order 22, Rule 12 provides that nothing in Rule 8 would apply to proceedings in execution of a decree or order. Reading the two provisions together, the learned Counsel for the petitioners has argued that while a plaintiff after having been adjudicated an insolvent might not be in a position to continue a suit, he would not be debarred from making an application for execution of a decree in spite of his insolvency. It has been urged in reply that the real effect of the provisions contained in Rule 12 is that the insolvents in the present case would have been entitled to continue an application, if one had been filed by them or on their behalf before they had been adjudicated insolvents, but this would not entitle them to make an application for execution. It appears to me that in as much as Rule 8 does not provide for the institution of suits after an order of adjudication has been made, but for their continuance alone and as Rule 12 merely exempts the proceedings in execution of a decree or order from the operation of Rule 8, it would be correct to say that the provisions in Rule 12 would not apply to the presentation of an application for an execution of a decree by those who have been declared to be insolvents. There is no doubt that the whole of an insolvent's property would vest in a Receiver and he would not be entitled to institute a suit in regard to the property of which he has been divested by law see Ramaswami Aiyangar v. Pavadai Chetty (1913) 23 I.C. 813 Sayad Daud v. Mulna Mohammad : AIR1926Bom366 , Rozario v. Mohammad Ebrahim I.L.R.(1924) 48 Bom. 583 and Phani Bhushan Basu v. Shoghi Bhusan Maity (1935) 60 C.L.J. 581. It has therefore been urged on behalf of the respondent that an insolvent should not be similarly held entitled to present an application for execution of a decree which had been obtained by him when he was not declared to be such. It can be legitimately argued that the money which may be realised in an execution would vest in the Receiver but can the power or the right to make an application for execution be considered to be 'property' within the meaning of Section 28 of the Provincial Insolvency Act and should he be held to have been deprived of that power or stripped of that right in consequence of an order of his adjudication particularly when there is no contest between him and his receiver? Should he not in that case be regarded to be aiding in the realisation of the property and the distribution of the proceeds among his creditors? Is there any statutory bar contained in the Civil Procedure Code or under the Provincial Insolvency Act which would take away the right of an insolvent from making an application for execution of a decree obtained by him before he was declared to be one? None has been pointed out to me by the learned Counsel for the respondent, and I have not been able to discover it myself. The provisions contained in Section 28 of the Provincial Insolvency Act debar a creditor during the pendency of an insolvency proceeding from having any remedy against the property of an insolvent in respect of a debt due by him or from commencing any suit or other legal proceeding against him except with the leave of the Court, but they do not preclude an insolvent from presenting an application for execution of a decree obtained by him before he was declared to be an insolvent. It may not be possible for an insolvent to recover any money from Court or to receive any payment in execution of a decree for which terms may have to be imposed on him either by the executing or the insolvency Courts but this does not entitle one to assume that he has no power to make an application for execution. It appears to me therefore, without looking at the cases cited by the learned Counsel on behalf of the parties, that there is no warrant for the proposition that an insolvent is not entitled to make an application for execution of a decree obtained by him before an order for his adjudication was passed.

6. As for the cases cited by the Counsel for the parties I find that none of those relied upon by the learned Counsel for the respondent are of any help to me in coming to a conclusion on the point to be decided. Out of those cited on behalf of the petitioners there are two which may be noticed. It was held in Asa Nand v. Bishan Singh A.I.R. 1930 Lah. 205 that execution proceedings do not abate on a decree-holder's insolvency. Similarly in a Madras case reported in Jayanarayana v. Polayya (1934) 68 M.L.J. 392 an application for execution by an insolvent, even after the decree was sold by the Official Assignee, was held by a Division Bench of this Court to have been a proper application for the purpose of Section 182 of the Limitation Act, and the applicant's insolvency was considered to be immaterial. This case was attempted to be distinguished both here and in the Court below on the grounds (a) that the decree had been in that case sold or assigned by the Official Assignee to a third party and the estate was no longer interested in the matter and (b) that the only question before the Court was whether the application would prevent the decree from being barred by limitation under Article 182 and the present question whether a petition for rateable distribution could have been properly filed by an insolvent after adjudication was not decided. Having heard the counsel for the respondent I am of the opinion that there is no force in either of these contentions. The assignment by the Official Assignee of the decree in the case under consideration makes it more difficult for the respondent to contend in a case like the present, which is free from that complication, that the insolvent had no right to make the application for execution or to ask for a rateable distribution. The argument that after the assignment of the decree by the Official Assignee, the petitioner could not be said to have any right left in the decree to be able to execute it was more plausible in that case and yet he, that is, the insolvent was held entitled to make an application for execution. It must be remembered that, in that case as in this there was no contest between the Official Assignee and the applicant for execution. As for the second contention it is true that the insolvent's application had been decided to have been validly presented for the purpose of Section 182 of the Limitation Act. Would that make any difference? The conclusion arrived at by the learned Judges and the reasoning adopted by them in coming to that conclusion would show that the insolvent's right to make the application for execution was held to exist and his insolvency was not considered to be a bar in his way for making such an application. Had the insolvent been held to be incompetent to make the application, the application for execution would have been found to be in fructuous or useless and the limitation would not have been saved. In a sense even in the case before me, the question is really that of limitation, although not one provided by the Indian Limitation Act but by the Code of Civil Procedure in Section 73, Civil Procedure Code itself. An application for rateable distribution under Section 73 has to be made before the effects are realised by the Court and any application made beyond that day would be barred by the provisions of the section. The only two distinguishing features which were attempted to be relied upon by the learned Counsel for the respondent must be for the above reasons, taken to be of no avail to him in this case. If the ratio decidendi of this case were held to be correct and with which, if I may say so, I respectfully agree, the matter must be held to have been concluded by the authority of that case. Being a decision of a Division Bench of this Court, it is binding on me. I have therefore no hesitation in applying it to the present case.

7. The learned Counsel for the respondent cited Bhagwan Das v. Amritsar National Bank (1928) 111 I.C. 462 and Hari Rao v. Official Assignee of Madras : (1926)50MLJ358 , before me in support of the proposition that an insolvent had no right to file an appeal after his adjudication. The first of these is a single Bench decision of the Lahore High Court in which it was held that a judgment-debtor had no locus standi to file an appeal from an order in execution proceedings after he had been declared an insolvent and that the proper person to appeal would be the. Official Receiver in such a case. The decision in the second case cited is a Full Bench decision of this Court in which an insolvent was held not to be an 'aggrieved person' in the sense in which those words were held to have been used in Section 8(2) of the Presidency Towns Insolvency Act (III of 1909) and was therefore held to be incompetent to appeal. It could be noticed that in this case the contest was really between the Official Assignee and the insolvent in whom his estate had vested and a learned Judge of this Court had, while sitting on the Original Side, passed an order in the exercise of the insolvency jurisdiction rejecting his objection to a sale of a part of his estate by the former, that is, the Official Assignee on the ground that the sale was prejudicial to the latter, that, is, the insolvent. It would thus be seen that both these decisions were given under the Insolvency Acts (Provincial and Presidency Towns) and did not consider the insolvent's right to present an appeal under the Code of Civil Procedure. In fact in a later Full Bench decision of this Court reported in Subbaraya Goundan v. Virappa Chettiar Bank : AIR1933Mad851 , this distinction was pointed out by the learned Judges constituting that Bench who also decided that an insolvent would have a right to prefer an appeal under the Code of Civil Procedure against an order dismissing an application put in by him under Order 21, Rule 90, Civil Procedure Code, in course of an execution of a decree passed against him. There are other cases of this and the Bombay High Court out of which it would be sufficient to refer to Kondapalli Tatireddi v. Ramachandra Rao (1921) 13 L.W. 616 and Ramachandra v. Shripati A.I.R. 1929 Bom. 202 in which an insolvent's right to file an appeal was recognised under the Code of Civil Procedure. It is hardly necessary to pursue the matter any further. Suffice it to say that the difference in the decided cases is really based on the fact that a right of appeal has not been held to exist in an insolvent if attention has been confined by the learned Judges deciding them to the insolvency Acts while it has been held to exist by others who have taken the provisions of the Code of Civil Procedure into consideration. At all events these decisions are not directly in point in this case as the insolvents and the Official Assignee are both petitioners before me and the cases were mainly cited be way of an analogy in order to induce me to come to the conclusion that the insolvent had no right to make an application for execution and ask for rateable distribution.

8. For the above reasons, I am of the opinion that the judgment of the lower Court that the, petitioner was not entitled to make the application for execution after an order of adjudication had been passed was incorrect.

9. As to the question of the competency of this revision petition, it is obvious from what has been said, above, that the learned Munsiff declined to entertain the application as he was of the opinion that the insolvents were precluded from making it. This was due to a misapprehension of the rue effect of statutory rules contained in the Code of Civil Procedure. He has thus refused or failed to exercise the jurisdiction vested in him by law. At all events the exercise of jurisdiction by the lower Court was vitiated on account of material irregularity. In view of the authorities in Viraraghava v. Parasurama (1891) I.L.R. 15 Mad. 372 Subramaniam Chetty v. Ramaswami Chetty : AIR1926Mad179 , Sri Krishna Doss v. Chandook Chand (1908) 19 M.L.J. 307 : I.L.R. 1908 Mad. 334 and Sundaram v. Mamsa Mavuthar : AIR1921Mad157 . I am of the opinion that a revision is competent. It was in the end suggested that as a civil suit would be competent, this Court should not interfere in revision. It is true, that ordinarily the Courts would not do so and leave the parties to pursue their remedies in Civil Courts, but when multiplicity of proceedings has to be avoided and the circumstances of the case justify an interference, it should not desist from doing so simply because another remedy is available. In my opinion, there are circumstances in this case which would justify me in invoking my revisional jurisdiction arid to set aside the order passed by the lower Court. I would therefore accept the revision and set aside the order. The revision is accepted with costs. The case will now go back to the District Munsiff who will proceed with the application according to law.


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