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P.S. Ar. Ar. Arunachalam Chettiar by Agent Sivaraman Chettiar Vs. Official Receiver - Court Judgment

LegalCrystal Citation
Subject Civil
CourtChennai
Decided On
Reported inAIR1940Mad733
AppellantP.S. Ar. Ar. Arunachalam Chettiar by Agent Sivaraman Chettiar
RespondentOfficial Receiver
Cases ReferredCoimbatore v. Arunachalam Ohettiar
Excerpt:
.....to 25th september, then to the 30th, heard arguments and reserved orders. it will be seen that the district munsif was acting perfectly within his jurisdiction when he was executing his decree in o. it will be noticed that on receiving this letter which the official receiver sent when notice of this application went to him, the district munsif was not satisfied with the position urged by the official receiver and therefore posted the matter for arguments. so far as suits in the ordinary courts are concerned, he is in no better position than an ordinary suitor. if the official receiver was not made a party, it was only a ground for dismissing the execution petition against defendant 1 or against official receiver as representing defendant 1, but not for dismissing the entire execution..........1st july 1929. by that date the father was dead and the sons alone were added as parties; and the official receiver who had been appointed in i.p. no. 157 of 1927 was not made a party. before this execution application came on for final orders, the official receiver sold the entire property including the son's shares on 6th february 1930 and there was a sum of rs. 2510 representing the net sale proceeds of those properties. on 17th june 1930, the official receiver wrote to the district munsif of tirupur who was executing the decree passed by him in o.s. no. 1375 of 1926 informing him that the father had been adjudicated insolvent and requesting that the sale which was to be held the next day or the day after be stopped under section 52, provincial insolvency act. there was also an.....
Judgment:

Somayya, J.

1. The appellant in this second appeal is a creditor who filed O.S. No. 1375 of 1926 on the file of the District Munsif of Tirupur against one Konappa Naicken and his four sons. Konappa Naicken was defendant 1 and his sons were defendants 2 to 5. An application for attachment before judgment was ordered on 14th October 1926 and the attachment was duly effected. The suit was decreed on 7th June 1927. Thereafter the father, defendant 1, filed I.P. No. 157 of 1927 on 14th July 1927 and he was adjudicated on 24th September 1927. The decree-holder applied for execution of his decree in E.P. No. 2226 of 1929 on 1st July 1929. By that date the father was dead and the sons alone were added as parties; and the Official Receiver who had been appointed in I.P. No. 157 of 1927 was not made a party. Before this execution application came on for final orders, the Official Receiver sold the entire property including the son's shares on 6th February 1930 and there was a sum of Rs. 2510 representing the net sale proceeds of those properties. On 17th June 1930, the Official Receiver wrote to the District Munsif of Tirupur who was executing the decree passed by him in O.S. No. 1375 of 1926 informing him that the father had been adjudicated insolvent and requesting that the sale which was to be held the next day or the day after be stopped under Section 52, Provincial Insolvency Act. There was also an application filed by the Official Receiver for that purpose in E.A. No. 814 of 1930. On this an order was passed : 'Sale stopped. Receiver will take possession.' On 20th June 1930 the District Munsif passed an order on the execution Application No. 2226 of 1929. The order was:

Sale stopped as per order on E.A. No. 814 of 1930, a petition by the Official Receiver, Coimbatore, under Section 52 of Act 5 of 1920. This petition is struck off.

2. Then the decree-holder filed Application No. 1743 of 1931 in the District Munsif's Court requesting the Court to direct the Official Receiver to send four-fifths of the amounts realized by him representing the four shares of the sons of Konappa on the ground that they were not adjudicated insolvents, that their share of the sale proceeds cannot be dealt with by the Official Receiver and that the decree-holder was entitled to proceed against the same and have it credited towards his decree. Notice of this application was issued to the Official Receiver. He sent a letter which may be treated as a counter affidavit, which according to the respondent contained information that the proceeds had already been distributed by him under orders of the Insolvency Court and that therefore the amount cannot be sent over. Not being satisfied with this statement the District Munsif adjourned the matter for arguments first to 25th September, then to the 30th, heard arguments and reserved orders. On 8th October he made an order that the Official Receiver was not entitled to deal with the shares of the four sons in the amount realized by him by sale of the properties that it was only the father's share that could be so dealt with by the Official Receiver and made an order directing the Official Receiver to send amount representing the four-fifths share of the sons to his Court. The District Munsif referred to a decision of this Court reported in Official Receiver, Coimbatore v. Arunachalam Ohettiar : AIR1931Mad118 in support of his order. After this order was passed the Official Receiver approached the Insolvency Court for directions as to what he should do and it is said that the Insolvency Court asked him to write to the District Munsif requesting him to direct the decree-holder to go to the Insolvency Court to have it decided by that Court whether he was entitled to the amount in question. The decree-holder evidently did not respect this advice. He took the course of moving the District Munsif to commit the Official Receiver for contempt for disobedience of the order of 8th October 1931 and filed E.A. No. 1748 of 1932. Having come to know of this the application out of which this appeal arises was filed in the Insolvency Court on 15th March 1933 under Sections 4 and 5, Provincial Insolvency Act. In this application the Official Receiver asked the Court to adjudicate upon the question whether the decree-holder is entitled to the sum representing the four-fifths share of the insolvent's sons. The creditor filed a counter affidavit stating amongst other things:

Further, the Official Receiver being a party to the execution proceedings is bound by the orders passed in execution. If the Official Receiver felt aggrieved his remedy was by way of appeal. It is respectfully submitted that the Insolvency Court is not entitled to vary or modify orders duly passed against the Official Receiver as a party.

3. It should be mentioned here that the Official Receiver in para. 7 of his petition referred to the Application No. 1743 of 1931 and to the order of the District Munsif's Court that the money should be sent to that Court. It is this order that he complains about in his petition and in answer to this the decree-holder replied in para. 8 of the counter affidavit. The learned Subordinate Judge held that the Official Receiver is entitled to the declaration that the sale proceeds of the sons shares of the insolvent are liable to be distributed among the creditors and granted the application of the Official Receiver. On appeal the District Judge confirmed this order. Hence this appeal by the creditor.

4. It is urged by learned Counsel for the respondent that when the father's properties were sold on 6th February 1930 the Official Receiver took the permission of the Insolvency Court and distributed the amount among the creditors, that the decree-holder approached the Insolvency Court at a later stage with a request that he should be paid a sum of Rs. 500 and odd which represented the costs of his suit and execution and that on that application the Insolvency Court made an order as prayed for by the decree-holder. It is said that at the time the decree-holder did not tell the Insolvency Court that he was entitled to four-fifths share of the sons and that there was an implied representation in the petition and in the affidavit that the balance after deducting Rs. 500 and odd claimed by him may be distributed by the Official Receiver among all the creditors. It is therefore urged that the creditor is now estopped from claiming the four-fifths share he not having put forward this objection in the Insolvency Court at the time when he wanted preferential payment in respect of Rs. 500 and odd which represented the costs of his suit and execution as provided by Section 52, Provincial Insolvency Act.

5. I propose to deal first with the question whether the order of the District Munsif in E.P. No. 1743 of 1931, dated 8th October 1931 is liable to be called in question in the insolvency Court as was done in this case. Though the Subordinate Judge raised the question of the Insolvency Court's jurisdiction to entertain this application as point No. 5 he simply referred to Section 4 of the Act but did not deal with the question whether the order on I.A. No. 1743 of 1931 of the District Munsif's Court, Tirupur, had not become final and conclusive. The District Judge did not deal with this question at all. It will be seen that the District Munsif was acting perfectly within his jurisdiction when he was executing his decree in O.S. No. 1375 of 1926. In the course of that execution an application was made to him in E.P. No. 1743 of 1931 to send for certain moneys representing four-fifths share of the sons who were defendants 2 to 5 from the Official Receiver. The prayer was that the Official Receiver should be directed to deposit to the credit of that suit the sum representing the shares of the four sons, defendants 2 to 5. Notice of this application was ordered to the Official Receiver who was made a party to that application. Presumably as the learned Advocate for the respondent tells me, the Official Receiver mentioned all that had taken place before in the letter which he sent to the District Munsif and urged that the conduct of the creditor was such that he was not entitled to an order that the four-fifths share of the sale proceeds should be paid to the credit of his suit by the Official Receiver. It will be noticed that on receiving this letter which the Official Receiver sent when notice of this application went to him, the District Munsif was not satisfied with the position urged by the Official Receiver and therefore posted the matter for arguments. It was adjourned two or three times, arguments were heard and orders were reserved and the order was passed on 8th October 1931. The Official Receiver in the first place had no right to write a letter to the District Munsif when he got the notice on E.P. No. 1743 of 1931 asking him to show cause why he should not be directed to pay the four-fifths share of defendants 2 to 5 into Court.

6. The Official Receiver so far as the ordinary Civil Courts are concerned is a suitor and a suitor only. He is not entitled to send reports as he does to the Insolvency Court and if he wants to either file a plaint or a written statement or a counter-affidavit he ought to do it in the proper form. So far as suits in the ordinary Courts are concerned, he is in no better position than an ordinary suitor. We may take it that in this case he probably thought that the letter would take the place of the counter affidavit. When after arguments were heard and the District Munsif passed the order on 8th October 1931 it was his duty to take up the matter in appeal in the regular course if he was dissatisfied with the order. He did not do it, there was no appeal and the order became final. I do not see what right he had to go to the insolvency Court for directions; if he sought advice and such advice was given and that advice turns out to be wrong, he has himself to thank. In this case the application was filed under Sections 4 and 5, Provincial Insolvency Act. The procedure under Section 4 of the Act is only a substitute for a regular suit. When the Insolvency Court feels that the matter might be speedily adjudicated upon by the Insolvency Court itself, the Court has jurisdiction to deal with the matter relating to title and other questions referred to in Section 4 of the Act. It is obvious that it is left to the discretion of the Court to entertain a petition under Section 4 of the Act, which is a substitute for the ordinary proceeding in a Civil Court. The party who is bound by a decree or order of a Civil Court is not entitled to re-agitate the same question by another suit and what cannot be done by another suit cannot be achieved by means of proceedings under 8. 4, Provincial Insolvency Act. In that proceeding he would be bound by the same rules and by the same conditions by which he would be bound if he had agitated the matter in a regular suit. If in this case the Official Receiver had filed an ordinary suit in Civil Court objecting to the order of the District Munsif in E.P. No. 1743 of 1931 he would have been immediately met with the plea that his remedy was to take up the matter in appeal and not to file a separate suit. I do not see how he can escape that effect by approaching the Insolvency Court under Section 4 of the Act.

7. My attention has been drawn by learned Counsel for the respondent to the fact that prior judgments against an insolvent are liable to be reopened in the insolvency Court at the instance of the Official Receiver in certain circumstances. That is no doubt true, but they are cases in which before insolvency, judgments were obtained against debtor and they are sought to be reopened on the debtor's adjudication to see whether they were binding on the Official Receiver as representing the general body of creditors. But where the Official Receiver is a party to a proceeding in his capacity as the representative of the estate, he is not entitled to reopen an adverse decision in an application under Section 4, Provincial Insolvency Act. His remedy is only to appeal as any other party to the proceeding against the order of the Civil Court if he is dissatisfied with it. I therefore hold that the order on E.P. No. 1743 of 1931, dated 8th October 1931, was conclusive and that the Insolvency Court cannot go behind that order and entertain an application of this kind.

8. As regards the conduct of the decree-holder in approaching the Insolvency Court on which much stress was placed by the respondent it will be noticed that in the application which he filed for being paid the sum of Rs. 500 odd in the first instance, there is no express mention made that the rest of it may be distributed among the creditors. He only said that until the sum of Rs. 500 was paid the distribution should be held up. He did not receive any dividend in the Insolvency Court. He only got Rs. 500 odd which the Court adjudged he was entitled to in preference to other creditors. So far as the initial order of the Insolvency Court to distribute the moneys to the various creditors is concerned, I do not see how it is binding on the creditor because it is not alleged that it was passed after notice to him.

9. Then as regards 'the order that was passed on the creditor's application for preferential payment of Rs. 500 odd, which is I.A. No. 372 of 1931, the order says:

I therefore direct the Official Receiver to pay the petitioner the amount of his charges and declare a dividend on the balance alone and distribute the same.

10. This order does not mean that he was authorized to distribute in any manner which is not warranted by law. No adjudication was made that the creditor was not entitled to any portion of the balance. Further, all these questions ought to have been brought before the District Munsif in E.P. No. 1743 of 1931 and Mr. K.V. Ramachandra Ayyar, the learned advocate for the respondent, tells me that they were brought to the notice of the District Munsif in the letter which the Official Receiver wrote in reply to the notice of the said application. It is presumably after being appraised of this situation that the District Munsif felt some difficulty and posted the matter for arguments. The District Munsif's attention was evidently directed to the decision of this Court in Official Receiver, Coimbatore v. Arunachalam Ohettiar : AIR1931Mad118 and the District Munsif rightly or wrongly passed the order that he did on 8th October 1931. If the District Munsif's order was wrong that should have been corrected in appeal. The Subordinate Judge and the District Judge say that the attachment effected in execution of the appellant's decree ceased when on 20th June 1930, the District Munsif struck off the execution petition. What happened was that on the Official Receiver's letter appraising the executing Court that defendant 1 had been adjudged an insolvent and that the sale advertised should be stopped as per Section 52, Provincial Insolvency Act, the District Munsif passed the order on 17th June 1930, 'Letter of Official Receiver. Sale stopped. Receiver will take possession.' This was passed on Official Receiver's application I.A. No. 814 of 1930. Then the execution petition was taken up on 20th June 1930. On that day the Court said:

Sale stopped as per order on E.A. No. 814 of 1930, a petition by the Official Receiver, Coimbatore, under Section 82 of Act 5 of 1920. This petition is struck off.

11. This is held to be a dismissal of the execution petition for default of the decree-holder on the ground that the decree-holder did not implead the Official Receiver as representing defendant 1 and that the attachment ceased. If the Official Receiver was not made a party, it was only a ground for dismissing the execution petition against defendant 1 or against Official Receiver as representing defendant 1, but not for dismissing the entire execution petition against defendants 2 to 4 as well. The District Munsif himself did not purport to dismiss or to strike off the execution petition on that ground. He did so on the stated ground that on E.A. No. 814 of 1930, the sale had been stopped. It is not open to the Courts now to find that the execution petition was dismissed for default of the decree-holder when in fact the executing Court gave another reason in its order striking off the execution petition. As pointed above there was no default of the decree-holder as regards defendants 2 to 5; and the execution petition might well have proceeded against them. Further, this again is a point that should have been urged in E.A. No. 1743 of 1931 before the executing Court. Whether the Official Receiver's sale was a valid sale of the sons' interest as well, whether the creditor was bound by prior orders of the Insolvency Court or of the executing Court and whether he was estopped from claiming the relief which he sought in E.A. No. 1743 of 1931 are all matters which should have been urged in that application. And if the executing Court passed an order adverse to the Official Receiver, the matter should have been rectified on appeal.

12. The question was expressly raised in the counter-affidavit of the appellant and he urged that in view of the District Munsif's order on E.A. No. 1743 of 1931 which had become final, the Insolvency Court had no jurisdiction to entertain the petition. The Subordinate Judge raised the question of jurisdiction, presumably on para. 8 of the appellant's counter-affidavit. Having raised the question, he did not at all deal with this question whether the Official Receiver was not bound by the order on E.A. No. 1743 of 1931. The District Judge also does not deal with this question. I reverse the decisions of both the lower Courts and dismiss the petition with costs throughout.


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