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Lalji Sahay Singh Vs. Abdul Gani - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Judge
Reported in7Ind.Cas.765
AppellantLalji Sahay Singh
RespondentAbdul Gani
Cases ReferredCallender Sykes & Co. v. Colonial Secretary of Lagos
Excerpt:
provincial insolvency act (iii of 1907), section 36, 46 sub-section (2), 50 - 'aggrieved person', who is--appeal, right of--transferee's right of appeal when transfer annulled--jurisdiction of court under section 36 in respect of property situate outside jurisdiction--auxiliary court. - .....was made on the 2nd march following, and on the same day, the nazir of the court of the district judge of dacca was appointed receiver. on the 16th march 1909, the fourth and fifth creditors of the insolvent made an application for an order under section 36 in respect of the transfer by nilkamal in favour of the appellant. it is necessary to observe at this stage that while the proceedings upon the application of nilkamal were taken in the court of the district judge of dacca, the property in dispute was situated in the district of monghyr and the alleged transferee was the resident of a place in the interior of that district. there was apparently considerable difficulty in the service of notice upon the transferee. after several unsuccessful attempts, on the 18th may, the.....
Judgment:

1. We are invited in this appeal to set aside an order of the Court below under Section 36 of the Provincial Insolvency Act of 1907, by which a transfer made in favour of the appellant by one Nilkamal Bhattacharya, who has now been adjudged an insolvent has been annulled as not made in good faith and for valuable consideration. The circumstances, under which the order has been made, are not the subject of controversy between the parties. On the 29th July 1908,'Nilkamal Bhuttacharya transferred the disputed land and house to the appellant Lalji Sahai Singh for a consideration of Rs. 1,250. On the 22nd January 1909, Nilkamal made an application to be adjudged an insolvent under the Provincial Insolvency Act. The order of adjudication was made on the 2nd March following, and on the same day, the Nazir of the Court of the District Judge of Dacca was appointed Receiver. On the 16th March 1909, the fourth and fifth creditors of the insolvent made an application for an order under Section 36 in respect of the transfer by Nilkamal in favour of the appellant. It is necessary to observe at this stage that while the proceedings upon the application of Nilkamal were taken in the Court of the District Judge of Dacca, the property in dispute was situated in the District of Monghyr and the alleged transferee was the resident of a place in the interior of that district. There was apparently considerable difficulty in the service of notice upon the transferee. After several unsuccessful attempts, on the 18th May, the Court directed the issue of a fresh notice upon the transferee and fixed the 4th June for the disposal of the case under Section 36. On the 22nd May, Lalji sent a telegram upon which the Court directed that he might be informed about the adjourned day. On the 4th June a pleader appeared on behalf of the transferee. The Court fixed the 25th June 1909 for the hearing of the case, apparently because the creditors were not ready with their evidence and applied for summons upon these witnesses. The Court was closed on the 25th June 1909 and time to deal with the matter and accordingly the hearing was adjourned till the 23rd July. It appears that on the same date the purchaser applied for postponement for a month. The learned Judge refused this application as frivolous and at the same time directed him to pay the adjournment costs to the opposing creditors. He also directed the issue of a warrant against Lalji Sahai, the objector. This order, we regret to observe, exhibits inexplicable carelessness. In the first place, the case was adjourned for four weeks because the Court had no time to deal with the matter and consequently it was hardly necessary to deal with the application of the transferee for adjournment. In any event the order for payment of adjournment costs was wholly unjustifiable inasmuch as the adjournment was granted, not at the instance of the transferee but to suit the convenience of the Court. In the second place, the order for the issue of warrant against the transferee is entirely unintelligible and the learned Vakils on both sides have failed to suggest even a plausible explanation of the reasons for which an extraordinary order of this description was made. The case was then taken up for disposal on the 23rd July. Lalji applied for time on the allegation that he was ill and was unable to attend. The Court refused the application on the ground that the story of illness was not certified to be true. The opposing creditors then examined their witnesses, the insolvent Nilkamal was also examined, and the learned Judge took time to consider his judgment. On the 27th July he annulled the sale. The transferee has now appealed to this Court and, on his behalf, the decision of the District Judge has been challenged principally on two grounds, namely, first, that in view of the provisions of Section 16 of the Code of Civil Procedure, the Court had no jurisdiction to deal with the matter which ought to have been investigated by the Court which has jurisdiction over the disputed property, and, secondly, that the proceedings were irregular in as much as opportunity was not afforded to the transferee to establish his case, and that, in any event, the Court ought to have proceeded under Section 50 of the Provincial Insolvency Act. Both these points have been strenuously contested by the learned Vakil for the respondents, opposing creditors. It has further been urged on their behalf that the present appeal is incompetent on two grounds, first, because the transferee is not an aggrieved person within the meaning of Section 46, sub-section (1), of the Provincial Insolvency Act ; and, secondly, because the Receiver had not been made a party. Before we deal with the merits of the appeal, we must examine these preliminary objections.

2. In so far as the first ground is concerned, there is, in our opinion, no substance in it. Section 46, Sub-section (2), provides that any person aggrieved by an order made by the District Court under Section 36, may appeal to the High Court. The learned Vakil for the respondent has conceded that if the decision of the Court below had been adverse to the petitioning creditors, it would have been competent to them to prefer an appeal under sub-section (2) of Section 46. But it has been argued that the transferee, who cannot be treated as a party to the proceedings, ought not to be regarded as an aggrieved person within the meaning of Sub-section (2) of Section 46. This contention is clearly unfounded because it practically invites us to put upon the expression ' aggrieved person' a narrow construction not justified by the plain meaning of the language used by the Legislature. As was observed by Lord Justice James in Ex, parte Sidebotham 14 Ch. D. 458 : 49 L.J. Bk. 41 : 42 L.T. 783 : 28 W.R. 715, an aggrieved person is a person who has suffered a legal grievance--a man against whom a decision has been pronounced which has wrongfully deprived him of something or wrongfully refused him something or wrongfully affected his title to something. See also the oases of Revell v. Blake Ex parte Official Receiver 19 Q.B.D. 174 and Ex parte the Board of Trade (1894) 2 Q.B. 805. It is impossible to hold that a person, who claims to be the transferee of a property for valuable consideration and who alleged that he has acquired title in good faith, is not an aggrieved person, although the order has annulled the transfer made in his favour. It will be observed that the words used in Sub-section (2) are any person aggrieved' and not 'any party aggrieved'. But even if the latter collocation of words had been used, it would, in our opinion, have made no difference to the position of the appellant because the proceedings in the Court below show that for he purposes of the enquiry under Section 33, the appellant was party thereto. The decision, therefore, is not between the creditors on the one hand and a stranger on the other, but it is one between persons who are parties and are necessary parties to a proceeding under Section 36. The first ground, therefore, upon which the preliminary objection is sought to be sustained, must be overruled.

3. In so far as the second ground is concerned, there is more substance in it. The learned Vakil for the respondent has suggested that the Receiver is a necessary party to the appeal. This contention is supported by Section 36 which provides that a transfer of property not made in good faith and for valuable consideration shall be void against the Receiver and may be annulled by the Court. In fact, the language of Section 36 justifies the inference that the proper person to make an application under that section is the Receiver in whom all property belonging to the insolvent has vested by operation of law. That the Receiver is a proper party is clear from the decision, In re a Debtor (1901) 2 Q.B. 354 : 70 L.J.Q.B. 699 : 84 L.T. 666 : 17 T.L.R. 536 : 8 Manson 247., where it was ruled that a Receiver is a person aggrieved by an order of the kind which may be made under Section 36. But, though we think that the Receiver ought to have been joined as a party respondent to the appeal, we are of opinion that the appeal ought not to fail on that ground. It is clear, in the first place, that the Receiver was not made a party to the proceedings in the Court below. In the second place, the creditors at whose instance the proceedings were commenced under Section 36 are represented in the present appeal, and the learned Vakil who has appeared on their behalf has urged before us everything that might have been urged in sup-part of the order of the Court below by the Receiver if he had notice of the appeal. In the third place, the order we propose to make will not in any way finally affect the position of the Receiver. Consequently it is not necessary to delay the hearing of the appeal by adding the Receiver as a party respondent there to. The second ground, therefore, upon which the learned. Vakil for the respondent invites us to dismiss the appeal must be overruled. We must, therefore, proceed to consider the appeal on the merits.

4. In support of the first ground taken on behalf of the applicant, it has been urged that the District Judge had no jurisdiction to determine the question raised under Section 36 of the Provincial Insolvency Act. It has been urged in substance that a proceeding under Section 36 is in the nature of a suit to recover possession of property in the hands of the transferee, and that consequently in view of the provisions of Section 16 of the Code of Civil Procedure, the only Court competent to entertain such a suit is the Court which has jurisdiction over the subject-matter therein.' In our opinion this contention is entirely unfounded. A proceeding under Section 36 is not in the nature of a suit. It is only an incidental proceeding in the course of a more comprehensive one for adjudging the petitioner an insolvent. Much reliance was, however, placed by the learned Vakil for the appellant upon sub-section (1) of Section 47 of the Provincial Insolvency Act, which provides that subject to the other provisions of the Act, the Court in regard to proceedings under the Act shall have the same powers and shall follow the same procedure as it has and follows in the exercise of original Civil jurisdiction. We were invited to read this along with Section 16 of the Civil Procedure Code and to hold that as the Court has the same powers as it has in the exercise of original Civil jurisdiction, it cannot deal with the question of the validity of the transfer in respect of property situated outside the local jurisdiction. The argument, however, is obviously based upon the fallacious assumption that the term 'power' is equivalent to the term ' jurisdiction'. The jurisdiction of the Court to deal with a matter under Section 36 is created by Section 3 of the Act and Sub-section (1) of Section 47 merely defines the power which the Court can exercise when it possesses such jurisdiction. We may further observe that the first branch of the argument of the learned Vakil for the appellant contradicts the second branch of this argument, namely, that proceedings ought to have been taken under Section 50 of the Act. As has been observed by their Lordships of the Judicial Committee in the case of Callender Sykes & Co. v. Colonial Secretary of Lagos (1891) A.C. 460 : 60 L.J.P. C. 33 : 65 L.T. 297, a Court which has no jurisdiction cannot act as auxiliary to a Court which has jurisdiction. In other words, to make the provisions of Section 50 applicable, the Court in which the proceedings have been initiated as well as the Court which is invited to assist it must both have jurisdiction in insolvency matters. The first branch of the argument of the learned Vakil for the appellant must consequently fail.

5. In so far as the second ground urged by him is concerned, it must, in our opinion, succeed. The learned Vakil for the appellant has invited our attention to the circumstances that the proceedings were pending in the Court of the District Judge of Dacca, whereas the property was situated in the District of Monghyr and the transferee was the resident of a place in the interior of that district. When we bear in mind the distance between Dacca and Monghyr, it becomes impossible for us to hold that the transferee and his witnesses ought to have appeared in Dacca for examination in that place. In view of the provisions of Order XVI, Rule 9, of the Code of Civil Procedure, it would be impossible to insist upon the personal attendance of the transferee and of his witnesses at Dacca. Consequently if the case had to be tried at Dacca, the transferee as well as his witnesses would clearly have to be examined on Commission. But we are of opinion that this is a matter which ought not to have been tried at all at Dacca. This is precisely a, case in which the procedure contemplated in Section 50 of the Provincial Insolvency Act ought to have been followed. That section provides that all Courts having jurisdiction in insolvencies and the officers of Courts, respectively, shall severally act in aid of, and be auxiliary to, each other in all matters of insolvency, and an order of a Court seeking aid with a request to another of the said Courts, shall be deemed to enable the latter Court to exercise, in regard to the matters directed by the order, such jurisdiction as either of such Courts could exercise in regard to similar matters within their respective jurisdiction. In the case before us, it is manifest that the trial of the proceedings under Section 36 at Dacca could not be convenient to either party. No doubt, the insolvent Nilkamal lives at Dacca and was examined by the District Judge of that Court. The petitioner under Section 86, however, lives in Calcutta. Another witness who has been examined, namely, Satish Chandra Banerjee, lives in Bhagalpur. A third witness Babujan lives at Burdwan, while an Engineer who has been examined lives in Calcutta. In the proper trial of the case, it is clearly necessary that the transferee should be examined as also the attesting witnesses to the deed of transfer. All these reside within the District of Monghyr. Under such circumstances the inference is irresistible that the provisions of Section 50 should be applied.

6. The result, therefore, is that this appeal is allowed and the order of the Court below discharged. The records will be returned to the District Judge of Dacca with a direction that he will take action under Section 50 of the Provincial Insolvency Act. He will transmit the petition under Section 36 to the District Judge of Bhagalpur and ask him to deal with the matter upon evidence to be adduced before him. The District Judge of Bhagalpur will thus have cognizance over the matter, take such evidence as may be adduced and then determine the questions raised. He will transmit his finding to the District Judge of Dacca who will on the basis there of deal with the insolvency proceedings. The costs of this appeal will abide the result. We assess the hearing fee at two gold mohurs.


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