R. Rathnam vs R. Kulandaivelu

S. Nainar Sundaram, J.—The plaintiff in O.S. No. 662 of 1976 on the file of the Additional District Munsif of Sankari at Salem, is the

petitioner in this revision. The respondent herein is the defendant in the said suit. The plaintiff laid the suit for a permanent injunction restraining the

defendant from preventing the plaintiff from taking water through the electric motor installed in the suit well in R.S. No. 48/2. Pending the suit, the

plaintiff filed I.A. No. 1733 of 1976 under Order 39, Rules 1 and 2 of the Code of Civil Procedure, for grant of a temporary injunction restraining

the defendant from preventing the plaintiff from taking water through the electric motor installed in the suit well. The suit as well as the petition have

been contested by the defendant. The first Court considered the contentions of the parties and found on merits of justification for passing an order

enabling the plaintiff to draw water from the suit well through the electric motor installed in the suit well by turns in alternative days and further

directing the plaintiff to take his turn on the date of the order and the defendant on the next day. The defendant appealed as against the orders in

I.A. No. 1733 of 1976 and the appeal, C.M.A. No. 11 of 1977 came to be heard and disposed of by the learned District Judge of Salem on 28th

October, 1978. The learned District Judge chose to reverse the decision of the first Court and dismissed the petition, thereby negativing the

plaintiff''s plea for grant of a temporary injunction pending the suit. The present revision is directed against the orders of the District Judge.

At the time when this revision was taken up for hearing, learned Counsel for the respondent took a preliminary objection that the revision is

incompetent on the ground that adjudication of the plaintiff as an insolvent has intervened after the orders of the first Court and the plaintiff who is

the petitioner herein and who is an undischarged insolvent, is incompetent to prefer the revision and prosecute it. Learned counsel for the petitioner

herein is not disputing the factual position that after the orders were passed by the first Court, the plaintiff/petitioner herein has been adjudged an

insolvent and in the appeal by the defendant before the District Judge, the Official Receiver, Salem, was made a party respondent and there has

been no order of discharge or annulment in the insolvency proceedings till date. To consider this preliminary objection, it would be pertinent to

refer to the relevant provisions of the Provincial Insolvency Act V of 1920, hereinafter referred to as the Act. Sections 28 and 28-A read as

follows:

28(1). On the making of an order of adjudication, the insolvent shall aid to the utmost of his power in the realisation of his property and the

distribution of the proceeds among his creditors.

(2) On the making of an order of adjudication, the whole of the property of the insolvent shall vest in the Court or in a receiver as hereinafter

provided, and shall become divisible among the creditors, and thereafter, except as provided by this Act, no creditor to whom the insolvent is

indebted in respect of any debt provable under this Act shall during the pendency of the insolvency proceedings have any remedy against the

property of the insolvent in respect of the debt, or commence any suit or other legal proceedings except with the leave of the Court and on such

terms as the Court may impose.

(3) For the purpose of Sub-section (2), all goods being at the date of presentation of the petition on which the order is made in the possession,

order or disposition of the insolvent in his trade or business, by the consent and permission of the true owner, under such circumstances that he is

the reputed owner thereof, shall be deemed to be the property of the insolvent.

(4) All property which is acquired by or devolves on the insolvent after the date of an order of adjudication and before his discharge shall forthwith

vest in the Court or receiver, and the provisions of Sub-section (2) shall apply in respect thereof.

(5) The property of the insolvent for the purposes of this section shall not include any property (not being books of account) which is exempted by

the Code of Civil Procedure, 1908, or by any other enactment for the time being in force from liability to attachment and sale in execution of the

decree.

(6) Nothing in this section shall affect the power of any secured creditor to realise or otherwise deal with his security, in the same manner as he

would have been entitled to realise or deal with it if this section had not been passed.

(7) An order of adjudication shall relate back to, and take effect from, the date of the presentation of the petition on which it is made.

28-A. The property of the insolvent shall comprise and shall always be deemed to have comprised also the capacity to exercise and to take

proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the insolvent for his own benefit at

the commencement of his insolvency or before his discharges:

Provided that nothing in this section shall affect any sale, mortgage or other transfer of the property of the insolvent by a Court or receiver or the

Collector acting u/s 60 made before the commencement of the Provincial Insolvency (Amendment) Act, 1948 which has been the subject of a final

decision by a competent Court:

Provided further that the property of the insolvent shall not be deemed by reason of anything contained in this section to comprise his capacity

referred to in this section in respect of any such sale, mortgage or other transfer of property made in the State of Tamil Nadu after the 28th day of

July, 1942 and before the commencement of the Provincial Insolvency (Amendment) Act, 1948.

Section 59(d) reads as follows:

Subject to the provisions of this Act, the receiver shall, with all convenient speed, (realise the property of the debtor and distribute dividends

among the creditors entitled thereto, and for that purpose may-

(d) institute, defend or continue any suit or other legal proceeding relating to the property of the insolvent.

Section 2(d) defines ''property'' in the following terms:

(d) ''property'' includes any property over which or the profits of which any person has a disposing power which he may exercise for his own

benefit.

It is a well laid down proposition that after the passing of an order of adjudication and the consequent vesting of the insolvent''s property in the

Official Receiver, the insolvent is ipso facto divested of the same and can have no vested interest in the property until after it is restored to him after

administration. The implications of Sections 28 and 59(d) of the Act bring out an interdict on the Insolvent against maintaining the suit in respect of

such property and equally so, he cannot be said to have a right of appeal against any decree passed in a suit instituted by him. The reason is, the

Official Receiver alone is competent to enforce the right possessed by the insolvent on the date of adjudication. This principle has been recognised

by Ayling and Phillips, JJ., in Subbaraya Chettiar v. Papathi Ammal (1918) 7 L.W. 516 : 45 I.C. 239 : AIR 1918 Mad. 294. In Sogmal

Chatrabhanjee Vs. Tharachand Chatrabhanjee and Another, , Horwill, J. countenanced the following principle:

A suit to set aside a partition of property belonging to the plaintiff and his brothers and to re-partition the property is one relating to the property of

the plaintiff, and if he becomes insolvent during the pendency of the suit and the suit is dismissed, an appeal by him against the decree dismissing the

suit is not maintainable since the appeal as well as the suit relate to the property of the insolvent.

The implication and force of the above principles with regard to the insolvent''s right to sue for or to be in management of his property have been

recognised by Natarajan, J., in V.A. Narayana Raja Vs. O.RM.M.SV.M. Meyyappa Chettiar (died) and Others, , and the learned Judge found

no exception to the rule pronounced by any authority.

With regard to acquisition of property after an order of adjudication, within the meaning of Section 28(4) of the Act, the same principle has been

held to be applicable Nadiminti Satyanarayanamurthi Vs. Malluri Papayya and Another, and Sumitra v. Lakshminarayana Rao (1976) 2 A.P.L.J.

119 : AIR 1977 A.P. 83.

It is true that there is no theory of total incapacity of the insolvent to prosecute proceedings except when they come within the ambit of Sections

28 and 59(d) of the Act. In this connection, we cannot also lose sight of the provisions of Order 22, Rules 8 and 11 of the Code of Civil

Procedure. There are authorities which have recognised that in matters involving property which does not come within the mischief of the above

provisions, an undischarged insolvent is competent to institute and prosecute proceedings in his own right. In Dhurvas J. Subbayyar and Bros. Vs.

J.K. Munuswami Aiyar and Sons, , Kumaraswami Sastri, O.CJ. and Curgenven, J., held that the expression ''relating to the property of the

insolvent'' occurring in Clause (d) of Section 59 of the Act must sot be taken to mean ''affecting'' the said property. The learned Judges further held

that Section 59 of the Act does not authorise the Official Receiver to appeal against a decree against an insolvent in a suit for damages. A Full

Bench of the Allahabad High Court, in Abdul Rahman Vs. Nihal Chand, , found that there may be cases where in a suit by an insolvent to recover

money, he is only a benamidar or the property involved in the suit may be one exempted u/s 28(5) of the Act, and the Full Bench held that in such

a case, prosecution of proceedings by the insolvent cannot be held to be incompetent. In Dandamudi Ramarayudu Vs. Dandamudi

Sitalakshmamma and Another, , Varadachariar and Pandrang Row, JJ., were concerned with a suit by a widowed daughter-in-law against her

father-in-law for maintenance, including arrears thereof, with a claim for a charge over the entire properties, and the defendant was adjudicated an

insolvent and the Official Receiver was impleaded as the second defendant in the suit, and the insolvent was, however, allowed to continue the

defence and a decree was passed against him with a charge over the entire family property. Against the decree, the insolvent/ defendant preferred

an appeal. The learned Judge held that the defendant/insolvent having been eo nomine a party to the decree and the decree being also a personal

one against the defendant, even though there was a charge created over the properties, the appeal by him was maintainable and neither Section 59

of the Act nor Order 22, Rules 8 and 10 of the CPC had any application to the case.

As to the implication of Order 22, Rule 8 of the Code of Civil Procedure, Shah, CJ. and Baxi, J., in Govindji v. Jadavji AIR 1953 Sau. 82,

approved the following dictum in Chandrakant v. Narottamdas AIR 1941 Bom. 293:

A suit relating to the property of the insolvent, in my opinion, means a suit which, if successful, will increase the assets distributable amongst the

creditors, or the defence of which may prevent the assets being diminished. A right to institute an appeal which merely relates to a money claim

against an insolvent, is not, in my view, a legal proceeding relating to the property of the insolvent, and does not fall within the powers given by

Section 68 to the Official Assignee.

In Mukti Lal Agarwala Vs. Trustees of The Provident Fund of The Tin Plate Co. of India Ltd. and Others, , the Supreme Court expatiated the

definition of ''property'' u/s 2(1)(d) of the Act in the following terms:

It cannot be said that the ''property'' mentioned in the Insolvency Act must be such that the insolvent has an absolute and unconditional present

disposing power over the same. The word ''property'' is used in the widest possible sense which includes even property which may belong to or is

vested in another but over which the insolvent has a disposing power which he may exercise for his own benefit.

In Thakar Dass Vs. Chief Regional Settlement Commissioner, New Delhi and Others, D.K. Mahajan, J., held that compensation determined under

the Displaced Persons (Compensation and Rehabilitation) Act, would be ''property'' within the meanig of Section 28 of the Act and, therefore, the

right to receive compensation is certainly property, as creditor''s right to recover a debt is property, and it will by operation of law vest in the

Official Receiver the moment the displaced person is declared as insolvent. In T. Kuppuswamy Vs. Meer Husafar Hussain and Another, , Obul

Reddy, CJ. and Madhusudan Rao, J., held that a mere claim for remuneration of payment in terms of a contract cannot be said to be ''property''

acquired as contemplated: under subsection (4) of Section 28 so as to divest the person of all his rights, and in this view, the learned Judges found

no legal bar to such a suit being filed by an undischarged insolvent.

In the instant case, the right claimed by the plaintiff is one relating to a well. Rights in a well are valuable rights and enhance the value of the lands

to which such rights are annexed. If the land to which the plaintiff is entitled to is to vest in the Official Receiver on the order of adjudication, the

rights in the well annexed to such land will also vest in the Official Receiver. It would be a right which cannot be dissociated from the lands and the

lands will definitely stand appreciated in value if such rights are annexed to them. In this view, the suit can be said to be one relating to the property

of the insolvent and if the suit succeeds, it will definitely increase the value of the assets distributable amongst the creditors and if the suit fails, it will

definitely diminish the value of such assets. Hence, the suit must be held to be one relating to the property of the insolvent.

As observed earlier, there is no theory of total incapacity of the insolvent to institute and prosecute proceedings, if they are permissible under

any other context, not offending the above recognised principles. One such exception has been made and recognised in respect of setting aside

execution sales under the Code of Civil Procedure. In relation to Order 21, Rule 72 or Rule 90 of the Code of Civil Procedure, a judgment-

debtor, who has been adjudged insolvent has been recognised within the meaning of Order 21, Rule 90 of the Code of Civil Procedure. This

principle of exception with regard to execution proceedings cannot be extended beyond its purpose.

Phillips and) Madhavan Nair, JJ., in Palaniandi Chettiar v. Kalyanarama Iyer (l926) 97 I.C. 486 : A.I:R. 1926 Mad. 1214, dealing with an

appeal in the context of Order 22, Rule 8 of the Code of Civil Procedure, met the argument put forth in the case as follows:

It is argued for the appellant that the appeal is merely a continuation of the original proceedings which had been properly instituted by the insolvent,

but it is clear from Order 22, Rule 8, that even when the proceedings have been properly instituted by the insolvent, he cannot himself continue

them, for if the Official Receiver refuses or neglects to continue those proceedings, the Court may make an order dismissing the suit on the

defendant''s application.

In Subbaraya Goundan and Another Vs. V.V.R. Virappa Chettiar Bank and its partners being Valliappa Chettiar and Others, , a Full Bench of this

Court was called upon to resolve the conflict, if any, between the decision in Kondaipalli Tatireddy v. Ramachandra Rao (1921) 13 L.W. 616 :

AIR 1921 Mad 402, and the decision in Palaniandi Chettiar v. Kalyanarama Iyer (l926) 97 I.C. 486 : AIR 1926 Mad. 1214. The Full Bench was

concerned with a case arising under Order 21, Rules 91 and 92 of the Code of Civil Procedure. It appears that the dictum in Palaniandi Chettiar v.

Kalyanarama Iyer (l926) 97 I.C. 486 : AIR 1926 Mad. 1214, was sought to be pressed into service, to negative the rights of the judgment-

debtor, adjudged insolvent, to seek the remedies under Order 21, Rule 90, and an appeal from an adverse order thereon. The Full Bench declined

to apply the dictum in Palaniandi ''Chettiar v. Kalyanarama Iyer (l926) 97 I.C. 486 : AIR 1926 Mad. 1214, which does not notice that Order 22,

Rule 12 of the Code makes Rule 8 inapplicable to proceedings in execution of a decree or order. The matter dealt with by the Full Bench being

one under Order 21, Rules 90 and 92 of the Code, it held that the decision in Kondaipalli Tatireddy v. Ramachandra Rao (1921) 13 L.W. 616 :

A.I.R 1921 Mad. 402, correctly laid down the law. It cannot be taken that the Full Bench overruled the dictum in Palaniandi Chettiar v.

Kalyanarama Iyer (1926) 97 I.C. 486 : AIR 1926 Mad. 1214, which was one rendered in the context of Order 22, Rule 8 of the Code. It is true

that the decision of the Full Bench in S. Hari Rao Vs. The Official Assignee, High Court, Madras and Others, , that an insolvent is not a person

aggrieved for the purpose of filing an appeal against an order confirming the sale of property by the Official Assignee, relied on in Palaniandi

Chettiar v. Kalyanarama Iyer (1926) 97 I.C. 486 : AIR 1926 Mad. 1214, has been overruled by a subsequent Full Bench of five judges in

Chalavadi Narasimham and Another Vs. Chalvadi Ramayya and Another, . This does not alter the position. As rightly pointed out by the Full

Bench in Subbaraya Goundan and Another Vs. V.V.R. Virappa Chettiar Bank and its partners being Valliappa Chettiar and Others, , the decision

under the Insolvency Act cannot be considered as a direct authority on the position of an insolvent preferring an appeal against an order in

execution of a decree passed against him under the Code of Civil Procedure. Since the insolvent can be recognised as a person whose interests

are affected by the Court sales in execution of decrees, he is permitted to take steps under the concerned provisions of the Code. Equally so, an

insolvent could be a person aggrieved within the meaning of and for the purpose of the relevant provisions of the Insolvency Act. But the earlier

authorities on the implications and impact of Sections 28 and 59(d) of the Act, with regard to institution and prosecution of proceedings relating to

the property of the insolvent and in the context of Order 22, Rules 8 and 11 of the Code, still hold good, and have not been shaken by any

subsequent authority. After referring to the earlier decisions, Natarajan, J., in V.A. Narayana Raja Vs. O.RM.M.SV.M. Meyyappa Chettiar

(died) and Others, , observed as follows:

When the properties had admittedly vested in the Official Receiver on account of the insolvency proceedings, it was only the Official Receiver,

who was entitled to institute a suit or appeal in respect of matters relating to the management of the insolvent''s property.

Coming to the present case, the right claimed being one relating to the property of the insolvent/plaintiff, it is not possible to clothe him with the right

to prefer the present revision and prosecute it. It is significant to note that before the lower appellate Court, the Official Receiver, Salem, was made

a party-second respondent-along with the petitioner herein who was arrayed as the first respondent therein. However, the petitioner herein has not

even chosen to implead the Official Receiver as a party to the revision. In view of the position in law, I am inclined to sustain the preliminary

objection taken by the learned Counsel for the respondent, and I hold that the present revision is incompetent. 9. Even otherwise, I do not find that

the case could come within the purview of Section 115 of the Code of Civil Procedure, so as to warrant an interference in revision. The plaintiff

claims that in an oral partition of the year 1946 between his father and the father of the defendant, the suit well in R.S. No. 48/2 was kept in

common and further in a subsequent oral partition in the year 1969 between the plaintiff and his father, the half right in the suit well was allotted to

the plaintiff. The plaintiff sought reliance on certain documents which may show that the plaintiff''s father had dealt with an undivided half share in

the suit well in R.S. No. 48/2. On the other hand, the defendant would rely upon two documents marked as Exhibit B-5 dated 7th November,

1975 and Exhibit B-4 dated 13th November, 1975. The earlier is an unregistered deed of release executed by the plaintiff''s father in favour of the

defendant, releasing his half right in the suit well to and in favour of the defendant. The latter is a deed of release executed by the father of the

defendant, releasing his right in the suit well to and in favour of the defendant. Under these documents, the defendant claims exclusive right to the

suit well. The lower appellate Court has taken these documents into consideration as well as Exhibits B-6 to B-12 with reference to the change of

service connection and payment of electricity consumption charges and has come to the conclusion that the claim of the defendant that he is the

exclusive owner of the suit well can be accepted. These findings can hold good for the purpose of consideration and disposal of the interlocutory

application. It cannot be stated that such considerations and decision would amount to exercise of jurisdiction not vested in the lower appellate

Court by law, or failure to exercise jurisdiction so vested, or exercise of jurisdiction illegally or with material irregularity. Hence, even on merits, this

Court cannot be called upon to interfere in revision. As a result, this revision fails and the same is accordingly dismissed. There will be no order as

to costs.