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Judgment
Krishnaswumi Ayyangar, J.—This appeal arises out of an interpleader suit instituted by one S. Ramaswami Aiyar who has since been
discharged from the suit by the judgment under appeal. This Ramaswami Aiyar purchased the joint family properties belonging to the respondent
Ganesa Aiyar and his father Swaminatha Aiyar under a sale deed, dated 17th April, 1920, for a consideration of Rs. 23,000. Ramaswami Aiyar
agreed to discharge the debts of the family to the extent of Rs. 18,000. He was allowed to retain the balance of the consideration, namely, Rs.
5,000 in view of the fact that the respondent was at the time a minor. The arrangement was that the money should be paid to the father on his
furnishing security in the sum of Rs. 7,500 within one year but if he failed to do so, the money could only be claimed after the minor attained
majority and executed a release deed in favour of the purchaser. This sum of Rs. 5,000 remaining in the hands of the purchaser as the unpaid
balance of the purchase money was the subject-matter of the interpleader suit in the Court below. The learned Subordinate Judge has held that the
money in Court belonged to the respondent and his father in equal shares and while giving a decree in favour of the respondent for a moiety has
directed the other moiety to remain in Court till the expiry of nine months from the date of the decree so that the decree-holder in O.S. No. 121 of
1923 on the file of the District Munsif''s Court, Tiruvarur, might have sufficient time to put his decree into execution and obtain orders thereon.
Certain other facts have to be referred to in order to understand how the matter came into Court. In O.S. No. 121 of 1923 on the file of the
District Munsif''s Court, Tiruvarur, a creditor, of the first respondent''s father instituted a suit for the recovery of a certain sum of money from him.
The suit was dismissed by the District Munsif but on appeal his judgment was reversed and a decree was passed in favour of the creditor for Rs.
1,389. Execution was taken out for the recovery of the money and the first respondent''s father was arrested. He was released on 3rd November,
1928, on furnishing security and undertaking to obtain an order from the High Court staying the execution of the decree. He made the application
for stay but it was dismissed. On 22nd November, 1928, he came to Madras and filed his own petition for being adjudicated an insolvent in this
Court. The next day, namely, 23rd November, 1928, he was adjudicated. Thereafter the Official Assignee took out an application for payment to
him of the unpaid purchase money remaining in the hands of the purchaser, namely, Rs. 5,000, but the application was dismissed by the order of
the Court, dated 27th March, 1930, as one not properly falling within the purview of Section 7. This order was confirmed by the appellate Court
on 26th February, 1932. The obvious course for the Official Assignee was to take steps to realise the money but for reasons which are not known,
he chose to sell the outstanding. At the sale held by the Official Assignee the decree-holder in O.S. No. 121 of 1923 purchased the outstanding in
the name of his son Ramaswami Aiyar under Ex. XI. This sale was on 20th December, 1932. Ramaswami Aiyar in his turn assigned his right to
recover the money to the appellant Nageswara Aiyar on 2nd February, 1939. There were thus conflicting claims to this sum of money both by the
assignee and by the respondent. The purchaser was obliged to file the interpleader suit so that the title to the money may be decided in the
presence of the two contesting parties. The money was deposited in the Court below pending the suit.
Several contentions were raised in the Court below and they are covered by Issues 16 in number which have been framed by the Subordinate
Judge. On one point alone the learned Subordinate Judge''s finding is in favour of the respondent. That point is covered by Issue No. 5 and raised
the question whether the order of adjudication made by this Court adjudging the respondent''s father as an insolvent was a nullity being an order
passed by a Court not competent to pass it. It may be mentioned before proceeding further that the findings on Issues Nos. 7 and 8 which are also
in favour of the respondent are merely consequential on the finding on Issue No. 5 The other issues were all decided in favour of the appellant.
The ground on which the order of adjudication is attacked as a nullity is this: that whereas the debtor was really residing in the Tanjore District
he falsely stated in his petition and affidavit in this Court that he was residing within the territorial limits of this Court''s Original Civil Jurisdiction and
it was by making this false statement that he induced the Court to entertain the petition and make the order of adjudication. The learned Judge has
found that this allegation in the insolvency application was falsely made in order to give jurisdiction to the High Court but that on the real facts the
High Court could have had no jurisdiction to entertain the insolvency petition or adjudicate the respondent''s father insolvent. This finding so far as
it involves a question of fact, not having been challenged, the only question for the Court to consider is whether the High Court which passed the
order of adjudication was a Court not competent to pass it. A distinction has always to be made between competency or jurisdiction to make an
order and the correctness of the order on the merits where the Court had the jurisdiction to decide the question. We are of opinion that the High
Court was a Court of competent jurisdiction for the present purpose and notwithstanding the fact that the debtor made a deliberately false
allegation that he was a resident within the jurisdiction, the order is not rendered a nullity. The question has been considered by a decision of the
Exchequer Chamber in Revell v. Blake (1873) L.R. 8 C.P. 533. The case arose under the Bankruptcy Act, 1869 (32 and 33 Vic., c. 71). Section
59 of that Act provided that if the person sought to be adjudged a bankrupt resided or carried on business in the London Bankruptcy District, the
expression ''Court'' in that Act should mean the Court of Bankruptcy in London but that if the person sought to be adjudged a bankrupt did not
reside or carry on business within the London Bankruptcy District, the expression should mean the County Court of the District within which he
resided or carried on business. In other words, a debtor could not be adjudicated a bankrupt in the County Court even if he resided within the
jurisdiction of that Court if he also resided in London or carried on business there. In the case before the Exchequer Chamber which arose out of a
creditor''s petition, the debtor did in point of fact carry on business within the London District but the creditor''s petition contained a statement that
he did not reside or carry on business there and was presented to the County Court of the District in which the debtor resided. The County Court
made an order of adjudication ex parte in the usual form. On an appeal being filed, the Court of Exchequer Chamber held that the adjudication
was not void, notwithstanding the fact that the bankrupt did in fact carry on business in London and could only be questioned at proceedings in the
way of application or appeal to the Court of Bankruptcy. The ground of the decision is set out by Kelly C.B. in the following passage:
The language of the 59th. section might, at first sight, appear to make it a condition precedent to the jurisdiction of the County Court that the party
petitioned against did not in fact reside or carry on business in the London District. But it appears to me impossible to hold, when a petition,
perfectly good on the face of it, is presented, containing allegations that, if proved to the satisfaction of the Judge would tender it imperative upon
him to pronounce an adjudication, and such allegations are so proved, that the jurisdiction of the Judge should depend upon whether or not the
bankrupt did actually reside or carry on business in the London district, a fact , which the County Court can have no means of knowing or
ascertaining. Looking therefore to all the provisions of the Act, as a whole--to the fact that it is absolutely imperative on the Judge to entertain a
petition which is good on the face of it, and that it is obviously necessary that he should determine for himself, to the best of his judgment, in the first
instance, on the truth of the allegations of the petition, and among them, where the fact is disputed, whether a debtor carries on business in London
or not, and that from a wrong decision on any such question there is a remedy provided by way of appeal--I am clearly of opinion that there was
no absence of jurisdiction in this case, and the Judge was bound, if satisfied with the proof before him, to pronounce the debtor a bankrupt.
It is conceded by the respondent''s learned Counsel that the question whether the petitioner was residing within the jurisdiction so as to clothe the
Court with jurisdiction is one which the Court was entitled to decide for itself before making the order. If the question which is alleged to create the
want of jurisdiction is one which the Court itself is bound to decide, surely, the matter is not one relating to jurisdiction. It is a fact like any other
fact which the Court has to decide and if there is an error in the decision, it can only be remedied by an appeal or any other procedure known to
law.
It was also attempted to be argued that the order of the learned Judge can be supported on the ground that the order of adjudication is liable to
be impeached on the ground that it was procured by the fraud of the debtor. We are not satisfied that this aspect of the case is sufficiently indicated
in the written statement of the respondent or has been dealt with by the learned Subordinate Judge. We, however, consider it unnecessary to shut
out the respondent from raising this contention. But we are constrained to observe that there is no substance in this point. We have already referred
to the concession made by the learned advocate for the respondent that it was competent to the Court to decide whether the debtor was residing
within the jurisdiction. If that is so, the mere fact that a false allegation was made in the petition and affidavit is no ground for holding that the order
was procured by fraud or treating it as a nullity. In Logadapathi Chinnayya Vs. Kotla Ramanna, , a Bench of this Court consisting of Benson and
Sundara Aiyar, JJ., examined the law bearing upon the point and laid down the following proposition:
In order that fraud may be a ground for vacating a judgment, it must be a fraud that is extrinsic or collateral to everything that has been adjudicated
upon but not one that has been or must be deemed to have been dealt with by the Court.
We are clearly of opinion that the truth of the allegation about the residence of the debtor was a matter which must be deemed to have been dealt
with by the order. We are therefore of opinion that the learned Judge was in error in coming to the conclusion that the order of adjudication is void,
and would accordingly set aside his judgment on this point.
The result is that there will be a decree in favour of the appellant for the sum originally deposited by the plaintiff into Court less the costs decreed
to the original plaintiff. The appellant is entitled to his costs of the appeal against the respondent.
The memorandum of cross-objections is not pressed and it is dismissed but without costs.