1. This is a rule calling upon an interim receiver appointed by the Additional District Judge at Howrah in connexion with certain Insolvency proceedings to show cause why an order directing him to enter upon certain property and make an inventory should not be set aside. The relevant facts are these: Certain members of firm applied to be adjudicated insolvents. The petition was admitted and the opposite party was appointed interim receiver and directed to take possession of the property of the applicants. Accordingly he attempted to take possession of a Mill in the District of Balasore. This Mill had been purchased by the present petitioner on 4th January 1934. He accordingly objected to the action of the receiver and the learned Judge upheld his objection. About five months later on 24th May 1935 the receiver applied to the Court with a prayer that 'a case may be started under Section 4, Provincial Insolvency Act.' Next day he asked that an inventory might be made. It appears that the contention of the receiver is that the transfer to the petitioner was a mere sham transaction, the applicants for insolvency being still the real owners, and he desired the Court to determine the matter under Section 4. The Judge had already come to the conclusion that prima facie the conveyance to the petitioner was a real one. He refused to alter his opinion on this point, but he held that the proceedings under Section 4 should be maintained and directed the receiver to enter on the property and make an inventory.
2. In support of the rule Dr. Basak has contended that order was passed without any legal justification and that the proceedings taken under Section 4 were premature. On behalf of the receiver Mr. Bose argued that it is open to a Court to take proceedings under Section 4 even before an order of adjudication is made and that the order of the Judge is one properly made under Order 39, Rule 7, Civil P.C. There can be no question that if the view taken by the learned Judge is correct, the proper procedure would be an application for annulment under Section 53. On the other hand it would no doubt be open to the Court to determine under Section 4 whether the Mill is still the property of the insolvents. But we are not at all clear how such a question would be entered into before an order of adjudication is made. At any rate this much is clear: that such proceeding would be entirely futile in the event of the petition being dismissed, and yet under Section 4(2) the decision in such futile proceedings would be binding. In our opinion the intention of the legislature was to enable the Court to determine all questions necessary for the proper settlement of claims of the various creditors of the insolvent's estate. Before an order of adjudication is made, it is not necessary to inquire whether transfers made in favour of third persons are genuine or not
3. Mr. Bose relied on two cases, viz., Laxmi Industrial Bank Ltd., v. Dinesh Chandra Roy, 1928 Cal 609 and Wazir Singh v. Janki Das, 1926 Lah 679. In the former the point at issue here was not even discussed. In the latter the point for decision was whether the alleged act of insolvency had been committed by one Wazir Singh and whether the property, in connexion with which the alleged act of insolvency was said to have been committed was his property. Neither of these authorities throw any light on the present case and in our opinion the application of the receiver to start proceedings under Section 4 was misconceived. Then in the second place the Judge has not in fact determined any question under Section 4; on the contrary he has come to conclusion that prima facie title is with the petitioner, and it does not appear that he is going to carry the investigation any further. An order to an interim receiver to enter upon the property of third person is clearly not one within the scope of Section 4.
4. With regard to Mr. Bose's contention that the order was one properly passed under Order 39, Rule 7, Civil P. C, it is only necessary to say that there was no application before the learned Judge, which would have given him jurisdiction to proceed under that rule. This rule must therefore be made absolute and the order of the District Judge directing the interim receiver to enter on the Mill and make an inventory must be set aside. The petitioner will get his costs from the receiver, hearing fee one gold mohur. It is clearly desirable that the question, whether an adjudication order should be made be determined without any further delay.
R.C. Mitter, J.
5. I agree.