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Jogendra Nath Kundu and anr. Vs. Jogneswar Mandal and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1935Cal612,158Ind.Cas.574
AppellantJogendra Nath Kundu and anr.
RespondentJogneswar Mandal and ors.
Cases ReferredSahu Durga Saran v. Beni Pershad
Excerpt:
- .....who was thereafter appointed receiver sold the huts already purchased by the appellants at the auction sale for rs. 200 to respondent 4, the son of respondent 3, another creditor of the insolvent. the nazir receiver was subsequently discharged and respondent 2, a pleader, was appointed receiver. he applied to the insolvency court under section 4 for a declaration that the appellants acquired no title to the huts on the basis of the auction-purchase as against him and the purchaser to whom he had sold the huts. the learned judge has given judgment for him. hence the present appeal by the auction-purchaser.2. the point for determination in this appeal is whether the appellants have acquired any title to the disputed huts by the auction-purchase. now the mere admission of an insolvency.....
Judgment:

Nasim Ali, J.

1. This is an appeal against an order under Section 4, Provincial Insolvency Act. The appellants obtained a decree for money against one Jagat. On 6th January 1928 Jagat applied to the District Judge of Pabna for being adjudged an insolvent. On 11th January 1928 the appellants applied to execute their decree against Jagat in the Court of the Munsif at Pabna. On 16th January 1928 they received notice of Jagat's application for insolvency. On 11th February 1928 certain huts belonging to the debtor were attached by the executing Court. On 18th March 1928 the appellants appeared before the Insolvency Court and filed objections to the application for Insolvency. On 19th May 1928 the debtor informed the executing Court that his application for insolvency was admitted and prayed for stay of sale of the properties attached. This application however was dismissed for non-prosecution. The attached huts were sold on 23rd May 1928 and were purchased by the appellants for Rs. 200 paid in cash. Jagat was adjudged insolvent on 23rd August 1929. The Nazir of the Court who was thereafter appointed receiver sold the huts already purchased by the appellants at the auction sale for Rs. 200 to respondent 4, the son of respondent 3, another creditor of the insolvent. The Nazir receiver was subsequently discharged and respondent 2, a pleader, was appointed receiver. He applied to the Insolvency Court under Section 4 for a declaration that the appellants acquired no title to the huts on the basis of the auction-purchase as against him and the purchaser to whom he had sold the huts. The learned Judge has given judgment for him. Hence the present appeal by the auction-purchaser.

2. The point for determination in this appeal is whether the appellants have acquired any title to the disputed huts by the auction-purchase. Now the mere admission of an insolvency petition does not debar a creditor from executing his decree against the debtor. But where execution of a decree has issued against any property of a debtor and before sale thereof notice is given to the executing Court that an insolvency petition has been admitted the executing Court is bound under Section 52, Provincial Insolvency Act, on application, to direct the property attached to be delivered to the receiver, and the receiver can sell the property for satisfying the charge on the property for the costs incurred by the attaching creditor. There is divergence of opinion on the question whether the section contemplates an interim receiver. In some cases it has been held that as the section contemplates delivery of property to the receiver after the admission of the insolvency petition and not after the order of adjudication as laid down in Section 35, Provincial Insolvency Act of 1907 and Section 54, Presidency Towns Insolvency Act the legislature must have contemplated an interim receiver in Section 52 of the present Provincial Insolvency Act. On the other hand it has been held that the section cannot contemplate an interim receiver as an interim receiver has no power to sell and the section authorises the receiver to sell the property for satisfaction of the charge on the property for costs of the attaching creditor. Again the opinion on the question whether an application for delivery of the property to the receiver (if a receiver has already been appointed) is necessary does not appear to be uniform. The following observations were made by Mitter, J., in Mahendra v. Dinesh, 1933 Cal 561:

It has been argued that if this view (i.e. application to the executing Court is not necessary) is taken the words 'on application' become superfluous and redundant. There is no force in that contention. The underlying principle of the Provincial Insolvency Act as can be gathered from the provisions of Section 52 is that when the Court is apprised of the pendency of an application for insolvency in another Court and of the further fact that such application has been admitted it should stay its hands so far as the execution of the decree by the creditor of the insolvent are concerned:

3. In Mathuresh v. S.R. Mills Co. Ltd., 1935 Cal 150 Mukherji and S.K. Ghosh, JJ. have observed:

On reading Section 52, Provincial Insolvency Act, it seems to us to be perfectly clear that an application has got to be made to the Court which was executing the decree and it is that Court which on such an application being made can direct the property to be delivered to the Receiver in order that the sale may be held.

4. In the two cases cited above a Receiver was appointed before the sale. If the executing Court comes to know that the application for insolvency has been admitted and that there is a Receiver, the attached properties can be made over to him. In the present case however no Receiver was appointed before the sale in question.

The only order which the Court can pass under Section 52 is that the property be delivered to the Receiver, so that it follows that the order can only be made if the Receiver has already been appointed and clothed by the Insolvency Court with power to take possession of the insolvent's property: per Das, J., in Tirpits Thakur v. Ramprakash Das, 1930 Pat 406.

It cannot be denied that the Court executing the decree is to deliver possession to the Receiver and to no one else so far at any rate as the provisions of Section 52 are concerned. Having regard to the finding that there was no Receiver in existence till after the sale in execution, the Court executing the decree could not have acted under Section 52: Sahu Durga Saran v. Beni Pershad, 1933 All 559.

5. On reading the section I am of opinion that the executing Court is not bound to stay its hand if no Receiver to whom the attached property can be made over is in existence at the time of the sale. But the difficulty of the appellants does not end here. I have already pointed out that the auction sale in the present case took place on 23rd May 1928 and the order of adjudication was made on 23rd August 1929. The order of adjudication therefore related back to the date of the presentation of the insolvency petition by Section 28(7) of the Act. Now what is the effect of the operation of this doctrine of relation back on the auction-purchaser's title vis-a-vis the title of the Receiver appointed after the order of adjudication in whom the property of the insolvent vests by legal fiction from the date of the presentation of the insolvency petition? This point was raised in Sahu Durga Saran v. Beni Pershad, 1933 All 559 cited above. But the learned Judges did not express any opinion on that question as it was not raised before the lower Court. In the present case however the decision of the learned Judge is mainly baaed upon the doctrine of relation back. It seems to me that by the operation of Section 28(7) the title of the auction-purchaser who purchases the property of the debtor after the admission of the insolvency petition but before the order of adjudication is not absolute but contingent on the insolvency application being dismissed. If the insolvency application is dismissed he gets an indefeasible title. But if the order of adjudication is made he cannot claim any title as against the Receiver. An exception however has been made by the Legislature in favour of purchasers in good faith in all cases (see 8. 51, Clause 3). In the present case the learned Judge has found that the appellants are not purchasers in good faith. In view of the facts and circumstances of this case I find no reason to differ from the finding of the learned Judge on this point. I am therefore of opinion that the learned Judge was right in holding that the appellants have acquired no title to the disputed huts on the basis of the auction purchase. The appeal is accordingly dismissed with costs. Hearing fee two gold mohurs.

Henderson, J.

6. I agree. It was strenuously argued before us that the decision of Mitter and M.C. Ghose, JJ., to which my learned brother has referred in his judgment, is not correct and we were pressed to refer the question to a Pull Bench. But in the present case no Receiver was appointed. Section 52 has no application and this point does not require to be decided.


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