Baji Narayan Rao Ananth Rao vs P.K.V. Sunder Raj

This is an appeal u/s 78, Clause (1) of the Hyderabad Insolvency Act on behalf of the Official Receiver.

The brief facts of the case are that one Kishenlal made an application in the lower Court to be adjudged as an insolvent. The Official Receiver was appointed as an interim receiver in the case. After necessary proceedings and trial the lower Court adjudged Kishenlal as an insolvent and specified a period of five years within which he should apply for the discharge. Having ordered as above, the learned Judge of the lower Court removed the Official Receiver stating that the creditors had complained against him that he is not acting with diligence.

Aggrieved by that order, the learned Official Receiver Shri B. Narayan Rao appealed before us. He relies upon Section 58(2), Hyderabad Insolvency Act corresponding to Section 57, Indian Insolvency Act and argues that the lower Court could not have removed him unless it be for special reasons. He argues that no special reasons have been shown by the lower Court in its judgment. It is contended that the statement that the creditors have complained against him is very vague as no application or affidavit has been submitted against him by any of the creditors. Shri Sunder Raj, the proposed receiver of the lower Court has argued on his own behalf. The creditors are absent. Shri Sunder Raj argues that the statement of the lower Court that the Appellant is not acting with diligence is enough. On a reading of Section 58(2), Hyderabad Insolvency Act, we are not satisfied with the order of the lower Court. No special reasons have been made out as to why the usual provisions of that section should not be carried out and the Official Receiver should not be allowed to work.

In The Official Receiver Vs. B.S. Nataraja Sastrigal and Others, (A) it was held that it was of general importance that all insolvencies should be kept within the control of the Official Receiver, unless very exceptional reasons such as reasons connected with the personality of the Official Receiver are put forward to deprive him of the control. No such personal reasons have been made out in this case against the present Appellant. No application has been made to remove the Appellant assigning any special reasons there was therefore no ground whatever for the lower Court to have removed the Appellant. We set aside the order of the lower Court allowing this appeal; and direct that the Appellant should continue to work as the Official Receivers in the case.