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Dinesh Chandra Roy Choudhury Vs. Jahan Ali Biswas and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1935Cal503,157Ind.Cas.862
AppellantDinesh Chandra Roy Choudhury
RespondentJahan Ali Biswas and ors.
Cases ReferredMadhu Sudan Pal v. Parbati Sundari Dasya
Excerpt:
- .....insolvency act, on 19th september 1932. the application made by the receiver was to have a sale in execution of a decree declared null and void; and there was a prayer in the application that the aforesaid sale held on 22nd september 1932, in execution might not be confirmed. the decree-holders purchasers at the sale held in execution of their decree, opposed the application of the receiver, on the ground that they were bona fide purchasers in good faith at the sale in execution, who were not aware of the insolvency proceedings; and their title could not be called in question by the receiver.2. the courts below have concurrently held, on materials before them, that the decree-holders purchasers were not at all aware of the insolvency proceedings, or of the order of adjudication......
Judgment:

1. This is an appeal by a Receiver in insolvency, arising out of an application made by him as the legal representative of the judgment-debtors in whose favour an order of adjudication had been passed under the Provincial Insolvency Act, on 19th September 1932. The application made by the Receiver was to have a sale in execution of a decree declared null and void; and there was a prayer in the application that the aforesaid sale held on 22nd September 1932, in execution might not be confirmed. The decree-holders purchasers at the sale held in execution of their decree, opposed the application of the Receiver, on the ground that they were bona fide purchasers in good faith at the sale in execution, who were not aware of the insolvency proceedings; and their title could not be called in question by the Receiver.

2. The Courts below have concurrently held, on materials before them, that the decree-holders purchasers were not at all aware of the insolvency proceedings, or of the order of adjudication. It was also held by the Courts below that the decree-holders were purchasers at the sale in execution of decree in good faith. On the above conclusion on facts, the decision given by the Courts below was that the sale held in execution of decree could not be vacated and the confirmation of the sale could not be withheld for the reason that the properties of the insolvent judgment-debtors had vested in the Receiver in insolvency under Section 28, Sub-section (2), Provincial Insolvency Act. The learned District Judge in the Court of appeal below had further come to the conclusion that in view of the provision contained in Section 51, Sub-section (3), Provincial Insolvency Act, 1920, the operation of Section 28, Sub-section (2) of the Act will be suspended in the case of bona fide purchasers, and protection given to such purchasers.

3. A preliminary objection was raised on behalf of the respondents in this appeal, relating to the maintainability of a second appeal to this Court, as preferred by the Receiver in insolvency, on the ground that the application before the Court of execution could not be treated as one under Section 47, Civil P.C., and there could not be any second appeal in a case arising out of an application for setting aside a sale, on an application praying that a sale held in execution of a decree, might not be confirmed. The question for consideration on the preliminary objection as raised, is whether or not the application in which the appeal has arisen was one under Section 47, Civil P. C, there being no question that a second appeal would otherwise be barred under the law. For determination of that question, the position of the Receiver in insolvency making the application before the Court has to be taken into account. Was the Receiver a 'representative' of the judgment-debtors, and could he be treated as such, in the matter of the application before the Court? and on this point the observation of Sir George Rankin, C.J., in Mohitosh Dutta v, Rai Satish Chandra, 1932 Cal 203, is entitled to great weight. As observed by the learned Chief Justice:

Any general statement to the effect that a Receiver is or is not representative for the purposes of Section 47 of the Code is merely misleading. It all depends on the purpose and nature of the application made by the Receiver, whether he is a representative of the judgment-debtor or not. For some purposes, he would be entitled as representing the judgment-debtor to litigate matters under Section 47 of the Code.

4. The most important factor to be considered in this connexion is whether the Receiver in the matter of the application before the Court, represented the judgment-debtor, for the purpose of having the property escape execution. The Receiver in whom the property of the insolvent vested after the passing of the order of adjudication under Section 28, Sub-section (2), Provincial Insolvency Act, does represent both the insolvent and the creditors of the insolvent; and if any application is made to the Court which on the face of it was an application made in the interest of the insolvent judgment-debtor, the application, could, under the law, be treated as an application under Section 47, Civil P. C, made by the Receiver in Insolvency, as representative of the insolvent judgment-debtor. The creditors of the insolvent were no doubt interested in the application; but that did not take away anything from the legal position of the Receiver representing both the insolvent judgment-debtor whose property has vested in him, and the creditors.

5. In the case before us, as it appears from the order recorded by the Munsif, on 22nd December 1933, the Receiver had made the application under Section 47, Civil P. C, purporting to act as the legal representative of the judgment-debtors declared insolvents; and on the application before the Court as made, we have no hesitation in coming to the conclusion that in the matter of that application, the Receiver in Insolvency took the attitude that he would represent the judgment-debtors for the purpose of having the property escape execution, was well within Section 47, Civil P. C; and a second appeal in the case before us was therefore maintainable under the law. In support of the appeal to this Court it was urged that the sale sought to be avoided by the Receiver was a nullity in view of the non-compliance with the provision of Order 21, Rule 22, Civil P.C.; it was contended that the property having been sold on 22nd September 1932, after the judgment-debtor was adjudicated insolvent, and no notices having been served on the legal representative of the judgment-debtor as required by Order 21, Rule 22, Civil P. C, the sale was void ab initio. It was also urged in support of the appeal that the provision contained in Section 51, Sub-section (3), Provincial Insolvency Act, was controlled by Order 21, Rule 22 of the Code, and that the fact that the purchasers purchased the property in good faith could not give them protection seeing that the sale itself was a nullity. There can be no doubt that the property of the judgment-debtor vested in the Receiver in Insolvency before it was sold in execution; but the fact remains as it has been found by the Courts below, that the decree-holders were not at all aware of the insolvency proceedings. In the circumstances of the case therefore it could not be said that proper steps had not been taken to bring the Receiver before the Court to enable him to take up the position that he was not bound by anything that was done in the course of the execution proceedings culminating in the sale of the judgment-debtor's property on 22nd September 1932. The decree-holders having no notice of the insolvency proceedings, and having been wholly unaware of the same, were not responsible for the irregularities of procedure adopted in the matter of non-service of notice under Order 21, Rule 22, Civil P.C. The sale of the property in the present case cannot be held to be a nullity as it was contended before us, on the ground that the Court had no jurisdiction to sell, in view of the non-service of notice under Order 21, Rule 22 of the Code, as such non-service was attributable to the fact that the decree-holders had not been notified about the insolvency proceedings at any time before the application out of which this appeal has arisen, was made by the Receiver in Insolvency, on 16th November 1932.

6. In our judgment therefore the decision of the Judicial Committee and the observations of Lord Parker in Raghunath Das v. Sundar Das, 1914 PC 129 on which very strong reliance was placed on the side of the appellant, have no application on the facts and in the circumstances of the case before us; and we are unable to hold that the sale in the present case was a nullity, and that Order 21, Rule 22, Civil P. C, controlled the provisions of Section 51, Sub-section (3), Provincial Insolvency Act, even in a case in which the decree-holder purchaser at the sale in execution of his decree purchased the property of an insolvent at a sale in execution, in good faith, after an order of adjudication has been passed by the Insolvency Court, and after the property of the insolvent has vested in the Receiver in Insolvency. The purchase was made in good faith, without any knowledge whatsoever of the insolvency proceedings and the sale was not a nullity on account of the fact that no notice under Order 21, Rule 22, Civil P. C, was served, seeing that the decree-holder purchaser was not aware of the insolvency proceedings, the order of adjudication passed in those proceedings, and of the vesting of the insolvent's property in the Receiver in Insolvency.

7. On the scope and operation of Section 51, Sub-section (3), Provincial Insolvency Act, the decision of this Court in Madhu Sudan Pal v. Parbati Sundari Dasya 1917 Cal 606 is an authority in support of the position apparent on the face of the statutory provision, that a purchaser of an insolvent's property, at a sale in execution of a decree, even with notice of the insolvency, who purchased the property in good faith, acquires a good title to it, against the Receiver, in whom the insolvent's property had vested under Section 28, Sub-section (2), Provincial Insolvency Act. In the case before us, we do not see any difficulty in the application of the rule laid down in the above case, on the definite finding arrived at by the Courts below, that the purchase at the sale in execution of the decree made by the decree-holders themselves was made in good faith. In our judgment, the provision contained in Section 28, Sub-section (2), Provincial Insolvency Act, is controlled by the later provision contained in Section 51, Sub-section (3) of the Act and effectively secures the title of a purchaser of an insolvent's property at a sale in execution in case of good faith being established on the part of the purchaser. On the finding arrived at by them, the Courts below were right in the conclusion that the Receiver in Insolvency could not be allowed to have the sale held in Execution Case No. 390 of 1932 in the 2nd Court of the Munsif at Bagerhat, to be declared null and void, so as to defeat the title of the decree-holder purchasers, the respondents in this appeal. The result of the conclusions we have arrived at as mentioned above is that this appeal is dismissed with costs. The hearing fee in this Court is assessed at two gold mohurs.


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