Batchu Mallikarjana Rao vs The Official Receiver, Kistna and Another

King, J.—The appellant was the purchaser in December, 1935 of certain properties sold in execution of a decree in O.S. No. 79 of 1932.

At that time the judgment-debtor had been adjudicated an insolvent and the sale was held in spite of a protest by the Official Receiver against it.

The purchase price and poundage were deposited in accordance with rules by the appellant at the conclusion of the sale. In 1936, upon an

application by the Official Receiver, the sale was set aside, and this order was confirmed on appeal by the High Court. Accordingly in 1938 the

appellant whose title to the property purchased had now gone applied for the refund of the poundage and for the award of interest upon the

purchase money for the period during which it was in deposit. Notice of this application was given to the Official Receiver in February, 1938. -But

the Official Receiver, for reasons which it is not necessary now to investigate, remained ex parte; and in July, 1938 the executing Court passed an

order in favour of the appellant that the poundage should be refunded and that interest on the purchase money deposited should be paid at the rate

of six per cent. When this order was passed against him, the Official Receiver applied to the executing Court itself to have it reviewed or set aside.

But the executing Court refused to accede to either of these requests. Thereupon the Official Receiver applied to the District Court u/s 4 of the

Provincial Insolvency Act for a declaration that the order of ''the executing Court was not binding upon him in respect of the question of interest.

The District Judge passed an order upon this application in favour of the Official Receiver holding that the executing Court had no power to grant

interest in the circumstances, and that even if it had the power there were no circumstances which could justify imposing any liability to pay interest

upon the Official Receiver or the insolvent''s estate. Against this order of the learned District Judge the purchaser has filed the present appeal.

Two points have been taken in the appeal. The first is that the District Judge had no jurisdiction to pass any order u/s 4, and the second is that

the orders which he has passed are incorrect as he has overlooked the provisions of Order 21, Rule 93, which gave the executing Court full

discretion to order interest or refrain from doing so as it pleases. We are inclined to agree with both these arguments. It seems to us contrary to all

judicial principle that when an Official Receiver has allowed an order to be passed against him ex parte and has applied unsuccessfully to have that

order set aside or reviewed, and fails to avail himself of his remedy by way of appeal or revision he should be permitted to make use of the

provision of Section 4 of the Provincial Insolvency Act to re-agitate a question which has been finally decided against him. Of course, the language

of Section 4 is very wide and comprehensive. But we do not think that it is comprehensive enough to cover the case of a dispute between the

Official Receiver as representing the insolvent''s estate and a person who has no real connection whatever with the insolvency, like the present

appellant when the subject-matter of that dispute is an order passed by an ordinary Civil Court under Order 21, Rule 93, where the jurisdiction of

that Court cannot be questioned. We have been referred to a judgment reported in P.S. AR. AR. Arunachalam Chettiar by agent Sivaraman

Chettiar Vs. Official Receiver, , by Somayya, J., in which the identical question now before us has been considered. The learned Judge has pointed

out that in a matter of this kind the Official Receiver is in precisely the same position as an ordinary suitor, and that he would be prevented in those

circumstances from filing a fresh suit to re-agitate the question which had been decided in execution. If he is prohibited from filing a suit, he is

equally prohibited from making any application u/s 4 of the Provincial Insolvency Act. Learned Counsel who has appeared for the Official

Receiver has not seriously attempted to challenge the reasoning of our learned brother in this case and with respect we adopt that reasoning. We

have indeed been referred by learned Counsel for the Official Receiver to another case reported in Konjeti Seshayya and Another Vs. V. Rangiah,

Official Receiver and Others, in which an order in favour of certain appellants at a Court auction has been set aside at the instance of the Official

Receiver u/s 4 of the Provincial Insolvency Act. But to that order the Official Receiver was not himself a party, and therefore that case can easily

be distinguished from the case now before us. Following the decision to which we have referred, viz., P.S. AR. AR. Arunachalam Chettiar by

agent Sivaraman Chettiar Vs. Official Receiver, , we hold that in the circumstances of this case the learned Judge had no jurisdiction to interfere at

the instance of the Official Receiver u/s 4 with the order passed by the executing Court.

On the question of the discretion of the executing Court to order payment of interest, no argument is possible in favour of the respondent, unless

it be argued that the appellate Court can interfere with the exercise of that discretion. The wording of Rule 93 is perfectly explicit. The learned

District Judge was wrong therefore in saying that the executing Court had no power to order payment of interest. On the question whether the

executing Court made a wise use of its discretion, or not, we of course need now say nothing, because we have already held ""that the learned

District Judge had no jurisdiction to entertain the application u/s 4 in the circumstances of the case. The result is that this appeal must be allowed

and the order of the learned District Judge set aside and the application of the Official Receiver u/s 4 dismissed with costs of this appeal payable

out of the insolvent''s estate.