The Official Receiver of Vizagapatam (Mandavilli Mohana Rao) vs Billapati Peda Suryanarayana and Others

Rajamannar, J.—These four appeals are from four decrees and a common judgment of the Subordinate Judge of Vizagapatam dismissing

four suits, O.S. Nos. 65 of 1941., 3 of 1942, 46 of 1943 and 47 of 1943 instituted by the Official Receiver, Vizagapatam, as the interim receiver

appointed in I.P. No. 5 of 1937 in the Court of the Subordinate Judge of Chicacole, for declarations that certain sales of bags of paddy to the

contesting defendant in each case are invalid and not binding on the plaintiff and for the recovery of the bags of paddy alleged to have been sold,

or, in the alternative, for payment of the price of such bags. Several pleas were raised in defence by the contesting defendants, but the suits did not

proceed to trial on the merits. The Subordinate Judge took up for hearing a preliminary issue to the effect "" whether the plaintiff as interim receiver

can sue third parties who dispute his right"" and held against the plaintiff on the issue and as a result dismissed all the suits without going into the

merits. The plaintiff is the appellant in each of the appeals.

Two brothers, Kotha Muthyan Gari Sanyasi Chetti and Kotha Sanyasiraju were sought to be adjudicated insolvents by their creditors in I.P.

No. 5 of 1937 already mentioned. Before final orders could be passed on the petition, the Subordinate Judge passed an order u/s 20 of the

Provincial Insolvency Act appointing the then Official Receiver, one Mr. Jagannadha Rao, as interim receiver for the property of the debtors. Mr.

Jagannadha Rao was subsequently removed from office and the present plaintiff was appointed as Official Receiver and he also functioned as the

interim receiver in I.P. No. 5 of 1937. On 10th November, 1941, the Subordinate Judge, Chicacole, accorded sanction to the interim receiver to

file suits against such people as he may be advised to recover certain paddy bags or their value, to engage a vakil on his behalf and to incur the

necessary expenditure. In accordance with this order the present suits were filed on various dates in 1941 and 1942.

The ground on which the Subordinate Judge has dismissed all the suits was that an interim receiver appointed u/s 20 of the Provincial Insolvency

Act cannot maintain a suit to recover possession of property of the insolvents which has passed into the hands of third parties. He has referred to

Section 56 of the Act, which obviously has no application to a case where suits are instituted in the interests of the body of creditors by a receiver.

Section 56 provides for a summary remedy in insolvency for the recovery of the assets of the insolvent. Section 20 of the Act clearly says that an

interim receiver shall have such of the powers conferrable on a receiver appointed under the Civil Procedure Code, 1908, as the Court may direct.

It cannot be denied that a receiver appointed pending a suit can institute a suit in respect of the property which is the subject-matter of litigation or

in respect of the rights of any of the parties thereto under orders of Court. This is exactly what ha happened here. The Subordinate Judge has

permitted the interim receiver to take proceedings to recover either the goods or their value to which according to the allegation in the plaint the

insolvents and their creditors would be entitled. It is not at this stage that the Court should embark on a consideration of the merits of the several

defences raised by the defendants. It would suffice for the present to say that there is nothing in the Act which prevents, the Insolvency Court from

according sanction to an interim receiver to institute suits even against third parties for the vindication of the rights of the debtors in respect of

whom an insolvency petition is pending.

The decision of the Subordinate Judge is obviously erroneous and is set aside. The suits will be restored to the file of the Subordinate Judge and

disposed of according to law. The contesting respondents will pay the costs of these appeals, Advocate''s fee being allowed only in Appeal Nos.

55 and 265 of 1944. Costs in the lower Court will abide the result. Court-fee paid for the appeals will be refunded to the appellant.