A.L.A. Alagappa Chettiar vs Chockalingam Chetty and Others

Section 47(1) of the Provincial Insolvency Act provides that, subject to the provisions of the Act, the Provincial Insolvency Court in regard to

proceedings under the Act shall have the same powers and follow the same procedure as it has and follows in the exercise of Original Civil

jurisdiction, thus making the provisions of the CPC clearly applicable as far as may be to original proceedings under the Act. This Sub-section

applies to District Courts in the exercise of original jurisdiction in insolvency. Sub-section (2) then applies exactly the same provisions in the same

language to the High Courts and District Courts "" in regard to proceedings under this Act in Courts subordinate to them "" and the first question is,

what is the effect of these words. Though not very happily expressed they are in my opinion wide enough to cover cases in the Subordinate Courts

which come before the High Court or District Court on appeal or revision as well as on applications for transfer, etc., and there are sufficient

indications that they were used by the legislature in this sense. The procedure prescribed in the CPC is the standard procedure, and no reason has

been suggested why it should have been made applicable in insolvency cases only in original court and not also to cases of appeal and revision

provided for in the Act. There must be some procedure or other governing such proceedings, and if it had been intended that it should be

prescribed by rules made u/s 51, it would have been specifically mentioned in Sub-section 2 among the other important matters as to which rules

were to be made under that section. So far as appeals to the High Court are concerned, the sub-section so construed may in my opinion be

regarded as superfluous, because, u/s 590 of the Code of 1882, now Section 108, the procedure prescribed in Chapter XLI, which deals with

appeals from original decrees Was made applicable as far as might be to appeals from orders under any special or local law in which a different

procedure is not provided. No different procedure is provided in the Provincial Insolvency Act as it was in the Insolvent Act II and 12 Viet. Ch.

21 to which for that reason the provisions of Section 590 were held inapplicable in In the matter of R. Brown ILR (1886) Cal. 629.

Clearly, therefore, in either view the procedure prescribed by the Code is appliacable to appeals to the High Court under the Provincial

Insolvency Act, and it is unnecessary to refer to Section 117 and Sections 3 and 4 of the Code which were also relied on.

The next question depends on the construction of Order XLI, Rule 22 (formerly Section 561) C.P.C. which has given rise to much difference of

opinion. In Calcutta it was held that Section 531 did not generally entitle one respondent in an appeal to present a memorandum of objection

against another respondent, and this was followed in Banke Lal v. Jagat Narain (1900) L R 23 All 93. On the other hand it was held by this Court

to be permissible in Timmayya v. Lakshmana ILR (1883) Mad. 215 approved in Kulaikada Pillai v. Visvanatha Pillai ILR (1904) Mad. 229. In

these circumstances the section was amended in 1908 by substituting in Sub-section (1) "" cross objection"" for "" objection "" and in Sub-section (3)

the party who may be affected by such objection "" for "" appellant "", while the new Sub-section (4) speaks of "" such notice to the other parties as

the Court thinks fit."" The interpretation put upon these amendments has not been uniform. A Full Bench of this Court in Munisami Mudaly v. Abbu

Reddy ILR (1913) Mad. 705 has relied mainly on the previous practice of this Court, but that consideration has less weight in a case like this

where the legislature in making the amendments must be presumed to have intended to introduce uniformity of practice in place of the diversity

prevailing in the different High Courts. While the Bombay High Court adheres to the view that cross-objections must be aimed at the appellant in

Nursey Virji v. Alfred H. Harrison I.L.R, (1913) Bom 511 it has been held in Jadunandan Prosad Singh v. Koer Kallyan Singh (1911) 15 Cal.

L.J. 61 : 16 C.W.N. 612 that Rule 22(3) introduces a modification of the old rule in Section 561; that the effect of the alteration is to leave no

doubt that a respondent may prefer a cross-objection against a correspondent, but to at the limits of the rule are not attempted to be defined. The

Allahabad Court takes a similar view, Balgobinda v. Ram, Sarup ILR (1914) All. 505

In none of these cases has the effect of the substitution of ""cross-objection"" for "" objection "" in Rule 22(1) been dealt with. Prima facie the

intention would appear to have been only to allow objections which arose in some way out of the appeal whether aimed at the appellant or at

another respondent. This discussion is not irrelevant to the present question, as the more widely Rule 22 is interpreted, the more serious would be

the consequences of answering the second question referred to us in the affirmative. At the time when the present Code was enacted in 1908 that

question had been expressly decided in Ramjivan Mal v. Chand Mal ILR (1888) All. 587 with reference to the terms of Section 561 of the old

Code, where the Court held that, when the appeal was dismissed as out of time, the objection could not be heard, as the entertainment of the

objections was contingent and dependent upon the hearing of the appeal. In the course of the judgment Mahmood, J., observed that to decide

otherwise would "" be practically holding that an appellant who prefers an appeal long after the prescribed psriod of limitation may confer upon the

respondent the right of having the appeal of his own heard in the shape of objections u/s 561, Civil Procedure Code, although, if the original appeal

was barred by limitation, afortiuri such objections Ought to be barred also"". The legislature of 1908 must be taken to have known of this decision,

and it is exceedingly unlikely that they intended to over rule it by implication. The decision no doubt proceeded on the ground that the case fell

within the ratio decidendi of the earlier cases in which it had been held that the objections could not be heard when the appeal had been withdrawn

or dismissed for default. Those decisions were based on the language of Section 348 at the Code of 1859 and Section 561 of the Code of 1882

by which a respondent, although he'' had not appealed against any part of the decree, was entitled ""upon the hearing"" to take any objection to the

decree which he could have taken by way of appeal. The view taken by the Courts when the section was so worded was, as explained by Sir

Charles Sargent, C.J., in Dhondi Jagannath v. Collector of Salt Revenue ILR (1884) Bom. 28 that when once the hearing of the appeal had

commenced, the respondent''s right to take his objections, which up to the time of hearing was an inchoate right, became perfected. The legislature

has now remoyed from this section the words ""upon the hearing"" upon which these decisions rested, and has expressly overruled the decisions

themselves in the case of withdrawal or dismissal of the appeal by enacting in Sub-section (4). "" Where in any case in which any respondent'' has

under this rule filed a memorandum of objection, the original appeal is withdrawn or dismissed for default, the objection is so filed may nevertheless

be heard and determined after such notice to the other parties as the Court thinks fit."" It does not however follow that Ramjivan Mal v. Chand Mal

ILR (1886) , All. 587 was also intended to be overruled. If that had been the intention of the legislature, it would probably have added some such

words as "" or is dismissed as hiving been filed out of time.''''

There are moreover strong reasons for not attributing any such intention to the legislature. The right of parties to a suit to treat the decree as final

when no appeal has been filed within the prescribed period of limitation is a substantive right of great value as pointed out by the Privy Council in

Colonial Sugar Rejining Co. v. Irving L.R 1905 A,C. 369 and in Saudagdr Singh v. Pardip Singh (1917) L.R. 15 IndAp 21 and there is a strong

presumption against any intention on the part of the legislature to interfere with it unnecessarily. It is no doubt impaired to some extent by Rule 22

which may have the effect of extending the respondent''s time for appealing or even giving a fresh starting point. Provided however the original

appeal is required to be filed in time, the interference is a very limited one, and may be defended as necessary to enable the Court to do full justice

in disposing of the case on appeal and as goverend by the same considerations as have led to the enactment of the new Rule 33 which gives the

Court a discretionary power to interfere in appeal even as regards parties who have not been made respondents, and respondents who have not

filed any memorandum of objection. It would however largely and unnecessarily impair this valuable right to hold that the filing of an appeal by one

party even though out of time has the effect of enabling the respondents to file appeals not only against the appellant but as against one another.

The objections urged by Mahmood, J., in Ramjivan Mal v. Chand Mal ILR (1888) All. 587 against such a course have lost none of their force,

and there is no reason to suppose that tike legislature intended to disregard them. Even greater difficulties arise if the present rule is treated as

giving respondent an unrestricted right of filing memoranda of objection, because the decision on a question raised by a respondent in the same

interest as the appellant may give occasion under Rule 33 for the modification of the decree in favour of the appellant himself whoss appeal is ex

hypothesi barred.

The true rule would appear to be that the right of respondents to proceed by way of memorandum of objection is strictly incident to the filing the

original appeal in time, and that it is open to a party against whom a memorandum of objection has been filed to set up the bar that the original

appeal was filed out of time. It is no doubt true that a respondent who is served with a notice of appeal cannot always be sure whether the appeal

was filed in time or not and if so whether or not the delay will be excused and that he may therefore feel bound to file a memorandum of objection

and incur the cost of Court-fees and briefing counsel in support of the memorandum. That in my opinion is not a sufficient reason for taking the

other view. Moreover in a proper case the hardship may be met by ordering the appellant to pay the costs of the memorandum. I answer the

second question in the negative.

Sadasiva Aiyar, J.

In the order of reference, I indicated my inclination to answer the first question referred in the affirmative. In other words, while expressing no

final opinion, I gave some reasons for holding that a respondent was entitled to file a memorandum of objections in an appeal against a decision

under the provisions of the Insolvency Act. My Lord, in the opinion just now pronounced by him, has come to the conclusion that that question

should be answered in the affirmative and I agree entirely therewith and have nothing to add to what I have said already.

The second question referred has caused me more difficulty. I expressed no opinion whatever upon that question in the order of reference. The

right to prefer an appeal cannot be claimed by a litigant as a matter of course but should be given by statute law. The right to prefer an appeal by

way of memorandum of objections is an extension of the right of appeal which must therefore also be given by statute. Statutory provisions relating

to such rights should be strictly construed. Order 41, Rule 22, corresponding to old Section 561, must if possible, therefore not be extended in

favour of the right of a respondent to file a memorandum of objections so as to prejudice parties who have obtained a decree in their favour in the

lower Court and who might reasonably entertain the belief that as the time for preferring an appeal has expired the rights which have been

established in their favour under the decision of the Court of first instance had become finally secure. This Court has no doubt in Munisami Mudaly

v. Ahbu Reddy ILR (1913) M. 705 allowed one respondent to file cross-objections against another and this is a further reason for strictly

confining the right to file such objections. Supposing the plaintiff is the appellant and the defendants 1 and 2 are the respondents in an appeal and

the plaintiff and the 2nd defendant are in collusion and the suit was dismissed by the District Munsif, upholding the 1st defendant''s contentions. The

plaintiff appeals out of time to the District Court. The Sheristadar''s office does not discover that the appeal is out of time and sends notice to both

the respondents. The colluding 2nd defendant files his memorandum of objections ''within one month of the receipt of the notice of appeal on the

same grounds on which the plaintiff filed his appeal, the 2nd defendant''s objections and the plaintiff''s appeal being both thus directed against the

1st defendant. The result of answering the second question in the affirmative would be that while the plaintiff''s appeal at the final hearing of the

appeal is dismissed as barred by limitation, his friend the 2nd defendant, by having his memorandum of objections heard, compels the Court to

hear the appeal also, and the 1st defendant who thought that the decision of the District Munsif was safe owing to no appeal having been filed in

time finds that he was living in a fool''s paradise.

I do not see that the omission in Order 41, Rule 22(1) of the words ""upon the hearing"" which found a place in the old Section 561 is of much

importance though some of the decisions under the old Section 561(which decisions denied the right of the respondent to have his memorandum of

objection heard where the appeal itself was dismissed as out of time) attached importance to those words. I think that much weight attaches to the

argument based on the new Sub-rule 4 of Order 41, Rule 22, which makes an express provision for hearing the memorandum of objections only in

cases where the original appeal is withdrawn or is dismissed for default and does not expressly allow the hearing of the objections where the

appeal is dismissed as barred by limitation or dismissed on other preliminary grounds. Another consideration which has weighed with me is that the

right of a respondent to file an objection depends, if the second question is answered in the affirmative, on what I may call the accident of the Court

or the Sheristadar discovering at once whether the appeal is barred. If the bar is discovered at once and the appeal rejected, then no notice is

issued to any respondent and hence no respondent is entitled to file a memorandum of objections but if it is not so discovered and notice is issued

then he gets valuable rights.

I therefore agree with my Lord in the answer to the second question also.

Spencer, J.

I agree that the first question referred to us should be answered in the affirmative and the second question in the negative.

The fact that Rule 22, which confers upon respondents the right of taking cross objections falls under that portion of Order XLI which is

headed ""Procedure on hearing"", supports the latter view and justifies, if I may say so, the observation of Sir Charles Sargent, C.J., in Dhondi

Jagannath v. Collector of Salt Revenue ILR (1884) Bom., 28 where he speaks of ""the respondent''s right to take his objections, which up to the

time of the hearing was an inchoate right"" becoming perfected at the commencement of the hearing of the appeal. ''Hearing'' would then mean

hearing on the merits. The words ""upon the hearing"" in Section 561 of the old Code were probably omitted from the present Code as being

redundant, seeing that in both Codes the heading "" Procedure on hearing"" preceded this provision, and in order that Clause 1 of Rule 22 should be

consistent with the newly introduced Clause 4 of the same Rule. The retention of the words ''upon hearing'' in the side note to the section indicates

that this change was not intended to have any legal significance. Dwibashyam Venkanna v. Peddenti Venkatramiah (1915) 19 M.L.T. 86 should

be treated as now overruled.