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Sankari Debi and ors. Vs. Co-operative Urban Bank and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1942Cal584
AppellantSankari Debi and ors.
RespondentCo-operative Urban Bank and ors.
Cases ReferredKala Chand v. Jagannath Marwari
Excerpt:
- .....of the district judge of pabna passed on 26th november 1940, in a proceeding under section 4, provincial insolvency act. the material facts lie within a short compass and may be stated as follows : one annada gobinda chakravarty a medical practitioner at serajganj in the district of pabna was adjudicated an insolvent on his own application by the district judge of pabna on 7th january 1939; and respondent 6 was appointed a receiver on the same day. on 6th october 1939, the co-operative urban bank of serajganj, who is respondent 1 in this appeal, and was the principal creditor of the insolvent, filed an application before the receiver, stating inter alia that a house property within the serajganj municipality was owned and possessed by the insolvent, though the deed of purchase stood.....
Judgment:

B.K. Mukherjea, J.

1. This appeal is directed against a judgment of the District Judge of Pabna passed on 26th November 1940, in a proceeding under Section 4, Provincial Insolvency Act. The material facts lie within a short compass and may be stated as follows : One Annada Gobinda Chakravarty a medical practitioner at Serajganj in the district of Pabna was adjudicated an insolvent on his own application by the District Judge of Pabna on 7th January 1939; and respondent 6 was appointed a receiver on the same day. On 6th October 1939, the Co-operative Urban Bank of Serajganj, who is respondent 1 in this appeal, and was the principal creditor of the insolvent, filed an application before the receiver, stating inter alia that a house property within the Serajganj Municipality was owned and possessed by the insolvent, though the deed of purchase stood in the name of his first wife Labanya Probba Debi. The receiver was asked to take steps with regard to that property under Section 4, Provincial Insolvency Act. The receiver after making enquiries submitted a report on 16th February 1940, in which he said, that on the evidence adduced on both sides he was satisfied that the property really belonged to the predeceased wife of the insolvent and not to the insolvent himself; and he declined to start proceedings under Section 4, Provincial Insolvency Act. The matter then came up before the Insolvency Court, and it appears from the order sheet, that on 6th March 1940, the District Judge made an order directing that a case might be started under Section 4, Provincial Insolvency Act, and notices served on all interested parties. The present appellants who are the three daughters of the insolvent by his first wife and succeeded to the property of their mother after her death appeared as opposite parties in the proceeding, while the respondent bank figured as the petitioner. The insolvency Court on taking evidence came to the conclusion, that the property in dispute really belonged to the insolvent and not to his wife. It is against this decision that the present appeal has been preferred.

2. Mr. Krishna K. Maitra, who appears on behalf of the appellant, has contended at the outset, that the proceedings before the Court below were wholly without jurisdiction, inasmuch as it was not the receiver but a creditor of the insolvent who made the application under Section 4, Provincial Insolvency Act. It is argued that the only person competent to start a proceeding under Section 4, Provincial Insolvency Act is the receiver, and as the receiver declined to take any action in the present case, the Court has no jurisdiction to decide the question of title at the instance of a creditor.

3. This point, it seems, was raised specifically in the written objection of the appellant, though the learned Judge has not dealt with it in his judgment. The Provincial Insolvency Act of 1907 had no provision corresponding to Section 4 of the present Act, and there was a conflict of authorities as to whether the Insolvency Court had any power to decide questions of title between the receiver and a stranger to the insolvency, or whether such questions could only be decided by a suit filed in the ordinary tribunal. To avoid this conflict, Section 4 was introduced in the Act of 1920, and the insolvency Court has now adequate powers under this section to decide all questions of title or priority, both on facts as well as on law, and such decision is final and conclusive between the debtor or debtor's estate on the one hand and the claimant against him on the other. The section itself does not lay down as to who is to initiate a proceeding under it; all that it says is that the Court will exercise its powers subject to the provisions of the Act.

4. If a question of title arises between the insolvent's estate on the one hand, and a stranger to the insolvency on the other, it goes without saying that the debtor's estate can be effectually represented by the receiver and by no one else. Under Section 28(2), Provincial Insolvency Act, the whole of the property of the insolvent vests in the receiver; and if a claim is to be laid to a particular property on the ground that it forms a part of the insolvent's estate, it is the receiver and the receiver alone, who is entitled to put forward that claim. Such powers to institute suits in respect to the insolvent's property are expressly conferred on the receiver by Section 59(d), Provincial Insolvency Act. It was held expressly by a Division Bench of the Court in Ram Sundar Ram v. Ram Charit : AIR1924Cal827 that a proceeding under Section 4, Insolvency Act, can be conducted by the receiver alone, and not by a creditor, and the view was approved of by Biswas and Roxburgh JJ. in F.M.A. No. 30 of Mt. Gariba Bibi v. Mathura Prosad Reported in : AIR1941Cal298 , decided on 20th December 1940. In our opinion, these decisions are quite correct, It has been argued by Mr. Chandra Sekhar Sen, who appears for the respondent that in this case the records would show that the creditor was authorized by the Court to conduct the proceeding under Section 4 and at any rate the Insolvency Court is entitled to start an enquiry suo motu under that section.

5. From, the order sheet of this case, it appears to us, that after the receiver declined to move in the matter, the application of the creditor and the report of the receiver were placed before the Court and the Court on 6th March 1940, ordered a miscellaneous case to be started under Section 4, Provincial Insolvency Act, on giving notice to all interested persons. Apparently, the action was taken on the application of the creditor, and in spite of the adverse report of the receiver. The records do not show that the creditor sought for permission of the Court to proceed in the matter, as the receiver was not willing to act, or that any permission was given by the Court in this respect. Hence, it is not necessary for us to consider whether it is a matter which at all pomes within Section 28(ii), Provincial Insolvency Act, and the creditor can take legal proceedings with the leave of the Court. It cannot also be suggested that the Court itself could initiate a proceeding under Section 4, Provincial Insolvency Act, and decide a question of title without being moved by anybody to do so. It is true that under Section 28(ii), Provincial Insolvency Act, the property of the insolvent vests in the Court or in the receiver. But as was pointed by the Judicial Committee in Kala Chand v. Jagannath Marwari with reference to Section 16(4) of the old Act 'the alternative in the section applicable to vesting in the Court was no doubt inserted to provide for the case of a receiver not being appointed at the same time as the adjudication of insolvency was made and to foreclose an argument that vesting was suspended until the actual appointment of a receiver. . . The Court only acts through a receiver.'

6. The procedure to be followed in such cases is for the creditor to apply to the Court to direct the receiver to institute proceedings under Section 4, Provincial Insolvency Act, and the Court can pass a conditional order making it a condition precedent, that the creditor so applying should put the receiver in funds and properly indemnify him against the costs of the action. We hold that the procedure that has been followed in this case is not one in conformity with law, and consequently the order made in this case should be set aside. We express no opinion on the merits of this case, and our order will not stand in the way of the receiver's taking any further action in the matter if he is so advised, The appeal is accordingly allowed and the judgment of the District Judge set aside. There will be no order as to costs.

Blank, J.

7. I agree.


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