1. Under Section 18 of the Provincial Insolvency Act the appointment of a Receiver vests the property of the insolvent in him, and under Section 20 it is the duty of the Receiver to realise that property and he has power to sell it. This power is exercised by virtue of the authority conferred by the Statute, and not of a decree or order of the Insolvent Court directing a sale. There was, therefore, no proceeding before the Court with respect, to such sale within the meaning of Section 47 and the rules of the Civil Procedure Code relating to the sale of property in execution of a decree or order do not apply.
2. It is argued that under Section 18(3) the Court had power to remove a person in possession of property of the insolvent from possession, but this power is evidently intended to enable the Receiver to obtain control of the insolvent's property and not to provide for the determination of questions of title as between the insolvent and third parties. This is indicated by the proviso to this sub-section, which limits this power to persons whom the insolvent has a present right so to remove.' I do not think that this provision was intended to confer jurisdiction over a person against whom the insolvent had merely a right enforceable by a suit.
3. The parties to this suit were not parties to the proceedings in insolvency pending before the District Court in which the order in question purported to be made, and that Court was, therefore, net competent to try the issue now raised between these parties and its finding is not binding upon them (Civil Procedure Code, Section 11).
4. I think, however, that the first prayer of the plaint is not correct in form in asking that the order of the District Court should be set aside; that is a matter within the jurisdiction of the High Court.
5. The cause of action is the threat of the defendant to obtain possession of property by means of irregular proceedings and the prayer of the plaint should be for a declaration of plaintiff's title and an injunction.
6. The appeal is allowed and the suit is remanded to the Court of first instance for trial on the merits. Costs, throughout will abide the result,
7. The facts of this case necessary for the disposal of this second appeal are these. The plaint property was sold by the Official Receiver as the property of the insolvent, the 1st defendant, and it was purchased by the 2nd defendant. In attempting to take possession, the 2nd defendant was obstructed by the plaintiff who claimed the property as his own. The 2nd defendant then applied to the Insolvency Court to order the removal of the obstruction and to put him in possession. This petition was filed under Order XXI, Rules 97 and 98 of the Civil Procedure Code, and the plaintiff and the 1st defendant were made counter-petitioners. After a summary enquiry the Court passed an order for the delivery of the property to the 2nd defendant. Plaintiff has brought the present suit for a declaration of his title and for an injunction retraining the 2nd defendant from taking possession under that order, and for possession if he is removed from possession pending suit.
8. Both the lower Courts have dismissed the suit on the preliminary ground that it is not maintainable, plaintiff's only remedy being, according to them, an appeal against the order of the Insolvency Court. Plaintiff contends before us that that order is no bar to his suit, as it was passed without jurisdiction. A copy of the order has been filed in this Court as it was not filed in the lower Courts, and both sides have consented to this course.
9. I agree with my learned brother in thinking that the order of the Insolvency Court was one passed without jurisdiction. It was sought to be supported as a competent order under Section 18, Clause (3) of the Provincial Insolvency Act, or under Section 47 of that Act read with Rules 97 and 88 of the Civil Procedure Code.
10. Section 18, Clause 3, is clearly intended, as pointed out by my learned brother, for the purpose of helping the Receiver to get possession of the insolvent's property under it the Receiver but no one else can apply to the Court to direct a third party who is in possession of the insolvent's property to deliver it up to him, if the insolvent has a 'present' or actual subsisting right to its possession. I consider that under that Section the Court has power, in a proper proceeding instituted before it by the Receiver, to enquire into and decide on the merits of an adverse claim to possession set up by a third party, adopting the proper procedure for it. But in my view this question does not arise in this case, as no application whatever was made by the Receiver under the section. He elected to sell the property as that of the insolvent leaving it to the purchaser to take such steps, as be thought fit, to get possession of it. The application to the Court was made by the purchaser under the Code of Civil Procedure and the Receiver was not even a party to it: such an application clearly does not lie under Section 18. The purchaser is a stranger to the insolvency proceedings and by his purchase ho got no more rights than the insolvent himself had, to get possession of the property from the third party. The rules of the Code of Civil Procedure can be availed of only if Section 47 of the Insolvency Act applies. To apply that section, it must be shown that there was some proper proceeding under the Act in the Insolvency Court; for Section 47 merely provides for the procedure to be adopted 'in regard to proceedings under the Act.' See Guntapalli Narasimhayya v. Malapati Veeraraghavulu 42 Ind. Cas. 525: (1917) M.W.N. 857. As that has not been shown, it is clear that the order of the Court on the application of the purchaser deciding in a summary way that plaintiff has no title to the property and that he should give up possession, was without jurisdiction.
11. That being so, I am of opinion that the order cannot be treated as a bar to the plaintiff's suit and that the suit is maintainable as an ordinary civil suit. Under Section 41 of the Evidence Act it is open to the plaintiff to show that the order pleaded against him was delivered by a Court not competent to do so, that is, not having jurisdiction to do so and he has done that in the present case. It may have been open to him to apply to the High Court to set aside the order as one without jurisdiction, but it cannot be said that he was bound to do so or that it was his only remedy, though he would have been well advised if he had adopted that course. He was entitled to choose his remedy and the fact that he did not choose to come to the High Court cannot affect his right of suit under the general law. I think, therefore, his suit is maintainable.
12. The case of Hajee Abdul Lateef Sahib v. Official Assignee of Madras 44 Ind. Cas. 847 and the case referred to in the foot-note to it, Official Assignee of Madras v. Mangayar Karasu Ammal 47 Ind. Cas. 398 (foot-note), were both cases which arose under the Indian Insolvency Act and were brought to contest orders passed by the Madras Insolvency Court between the Official Assignee on the one side and the third party claiming title on the other. The orders being with jurisdiction under Section 7 of the Act, the suits were held not maintainable. These oases are thus clearly distinguishable from the present case. The case of Pita Ram v. Jujhar Singh 43 Ind. Cas. 573 : is also distinguishable, as that was a case where the third party had himself elected to apply under Section 22 of the Provincial. Insolvency Act as he was entitled to do and though he had a right of suit as well, the learned Judges held that as he had elected to adopt one remedy and failed, he could not be allowed to fall back upon the other. Such a question does not arise at all in the present case. Here the plaintiff was brought into the Insolvency Court by the purchaser, that and in a proceeding which the Court was incompetent to adopt; the fact that he did not plead to the jurisdiction of that Court cannot give that Court jurisdiction, nor can it be treated as an election of his remedy by the plaintiff. The Allahabad case, therefore, does not apply.
13. No other authority has been cited before us, I am, for the reasons above stated, of opinion that the lower Courts were wrong1 in dismissing the plaintiff's suit as not maintainable. I would, therefore, set aside their decrees and remand the suit to the District Munsif for trial and disposal on the remaining issues. As pointed out by my learned brother, the prayer in the plaint to set aside the order of the District Judge is not correct in form; but it is not material to the plaintiff and will, therefore, be disallowed.
14. I agree to the order proposed by my learned brother as to costs also.