Ayyasami Chetty vs The Official Receiver

Anantakrishna Aiyar, J.—This is an application filed u/s 75 of the Provincial Insolvency Act (V of 1920) and also u/s 107 of the

Government of India Act tasking the High Court to revise the order passed by the District Judge of Coimbatore in C.M.A. No. 51 of 1927. One

Vedam Chetty was declared insolvent in I.P. No. 6 of 1923 on the file of the Subordinate Judge''s Court of Coimbatore. Time for applying for

discharge was extended from time to time and it was finally extended to 9th January, 1927. The petitioner before me, who is the father of the

insolvent and who also was an alienee from the insolvent, applied on 21st December, 1926, to have the adjudication of the insolvent annulled u/s

43 of the Provincial Insolvency Act. Notice of this application (I.A. No. 121 of 1927) was served upon the Official Receiver. On the 14th March,

1927, the Official Receiver applied to the Court to have time for discharge extended till 9th January, 1928. Evidently expecting that the Court

would not pass final orders on the 17th March, 1927, the date to which the alienee''s application was posted for hearing, the Official Receiver did

not appear before the Court on the 17th March, 1927. Under the idea that the application was not contested by any creditor nor by the Official

Receiver, the Court passed orders (annulling the adjudication on 17th March, 1927. Immediately after, the Court was made aware of the fact that

the Official Receiver had already applied to have the time extended and that he was really contesting the application by the insolvent''s father. The

Official Receiver, on becoming aware of the orders passed on 17th March, immediately applied (on the 23rd March, 1927) u/s 5 of the Provincial

Insolvency Act read with Order 9, Rule 13 and Order 47, Rule 1, Civil Procedure Code, for setting aside the ex parte order passed on the 17th

March. The learned Subordinate Judge came to the conclusion that he had jurisdiction to entertain the application of the Official Receiver and that

on the merits the case before him was one in which orders should be passed in favour of the Official Receiver. The result was that the order of the

17th March, 1927, was set aside and I.A. No. 121 of 1927 was restored to file. Against the order an appeal was preferred by the alienee, the

father of the insolvent, to the District Court of Coimbatore. The District Judge confirmed that order and dismissed the appeal. The present revision

petition has been filed by Ayyasami Chetty, the father of the insolvent and alienee of his property, to this Court.

On behalf of the petitioner the learned advocate who appeared for him raised before me two points, (1) that the Lower Court had no

jurisdiction to entertain an application for review of the order passed on the 17th March, 1927; and (2) that in any case on the merits the Receiver

had made out no case for orders being passed in his favour.

On the question of jurisdiction of the Court to entertain such an application the learned advocate referred me to a decision of a bench of this

Court reported in C. Venugopalachariar Vs. K. Chinnulal Sowcar and Others, . There the learned Judges had to consider whether, having regard

to the provisions of Section 5 of the Provincial Insolvency Act read with Section 10 (2) of the same Act, an insolvent whose application had been

dismissed for his absence was entitled to apply for review or to apply under Order 9, Civil Procedure Code. The learned Judges held that Section

5 has to be read along with Section 10 (2), and as the insolvent had a right to apply afresh he was not entitled to make the application. An earlier

decision of another bench of this Court in the case reported in Abbireddi v. Venkatareddi (1925) 51 M.L.J. 60 was brought to their notice; but, as

I understand the judgment in the case reported at page 209, the learned Judges, though not agreeing with the reasoning of the decision in the case

reported at page 60, proceeded to dispose of the case before them on the ground that the petitioner in that case being the insolvent had other

remedies open to him and that being so the remedy sought by him in that case was not available to him under Order 9, Civil Procedure Code.

Naturally the learned advocate for the petitioner laid great emphasis on this decision, and invited me to hold that under the Insolvency Act there is

no power of review open either to the Official Receiver or to the creditors, or any right to apply under Order 9, Civil Procedure Code. I regret I

am unable to agree with this extreme contention. Section 5 of the Provincial Insolvency Act enacts that

Subject to the provisions of this Act, the Court, in regard to proceedings under this Act, shall have the same powers and shall follow the same

procedure as it has and follows in the exercise of original civil jurisdiction.

In my view, in cases relating to insolvency tried by mofussil Courts, the mofusisil Courts have, by virtue of this Section 5, the same powers as

they have got under the CPC governing their powers and procedure in the exercise of matters that come before them in their original civil

jurisdiction; I am not satisfied that there is anything in the provisions of the Act to which my attention has been drawn which takes away the right of

review, or the right to apply under Order 9 (subject to any other provisions of the Act) so far as the case before me is concerned. Creditors are

sure to be seriously prejudiced in several cases if adjudications in insolvency be annulled, and having regard to the limit of time prescribed by

sections 53 and 54 of the Act, their right would be seriously prejudiced in various cases if they be confined to enforcing them by filing fresh

applications in insolvency to adjudicate the same man as insolvent. The case before the learned Judges in C. Venugopalachariar Vs. K. Chinnulal

Sowcar and Others, was a case of the insolvent himself applying to the Court for fresh orders. The case before me is not the case of an insolvent

but the case of an Official Receiver who represents the creditors of the insolvent. There is probably substantial difference between the two classes

of persons who seek the assistance of the Court. In any event, my attention was drawn to a case which seems to be more directly in point, namely,

that reported in Abbireddi v. Venkatareddi (1925) 51 M.L.J. 60, which was a case where a similar application was made by a creditor of the

insolvent. The learned Judges there held that such an application at the instance of a creditor did lie and that their rights were not confined to filing a

fresh application for adjudication. With respect, I agree with that decision. No doubt the learned advocate for the petitioner drew my attention to

one sentence appearing at page 61 of the report where the learned Judges say, ""The power of review is inherent in the Civil Court"". He

emphasised the position that rights of appeal and rights of review should be expressly conferred on Courts by statutes, and that there is no such

thing as inherent right of review possessed by Civil Courts. But having regard to the context of the judgment, I understand the reasoning of the

learned Judges to be the following: Mofussil Courts, which are governed by the provisions of the Civil Procedure Code, possess the power of

review expressly conferred upon them by the Code, and reading those provisions along with Section 5 of the Provincial Insolvency Act, the power

of review is inherent in the mofussil Courts exercising powers of insolvency under the Provincial Insolvency Act. It therefore seems to me that the

plea of want of jurisdiction raised by the learned advocate for the petitioner is against the decision in Abbireddi v. Venkatareddi (1925) 51 M.L.J.

The learned Judges there further point out that Spencer, J., in an earlier case reported in The Official Receiver, Tunjore v. Nataraja Sastrigal

ILR (1922) 46 M. 405 : 44 M.L.J. 251 and the Allahabad High Court in the case reported in Munnu Lal v. Kunj Bihari Lal ILR (1922) 44 A.

605 have held the same view. Before I conclude this portion of my judgment I think it is proper to draw attention to the recent Full Bench decision

reported in Palani Goundan v. The Official Receiver, Coimbutore ILR (1928) 53 M. 288 : 58 M.L.J. 369, which is relevant for this purpose,

namely, that the presence of the word ""shall"" in Section 43 which was taken to create much difficulty and which was understood as a mandatory -

provision of law, has been explained by the Full Bench in the case in Palani Goundan v. The Official Receiver, Coimbatore ILR (1928) 53 M. 288

: 58 M.L.J. 369 and of course the learned Judges who decided the case in C. Venugopalachariar Vs. K. Chinnulal Sowcar and Others, decided it

before they had the benefit of the Full Bench decision. A decision of another bench of this Court, Ramesam and Madhavan Nair, JJ., in Govinda

Rao Vs. Official Receiver, , has also been brought to my notice and it would also seem to support the contention that the Court has jurisdiction in

such cases. The decision in Tirumala Reddi Chinnappa Reddi v. Kolakula Thomasu Reddi (1927) 54 M.L.J. 344 was also referred to, and though

the learned Judges Kumaraswami Sastri and Wallace, JJ., referred to the decision in Abbireddi v. Venkatareddi (1925) 51 M.L.J. 60 and

apparently agreed to the view relating to the right of review in such cases, it cannot be said to be a decision on the point that has arisen before me.

The learned advocate for the petitioner also drew my attention to the fact that in the Presidency Towns Insolvency Act, Section 8 (1) specifically

confers on such Courts in the Presidency Towns, the power of review. As far as I am able to understand the position, that argument is not against

the view I am inclined to adopt. The Civil Procedure Code, as such, does not apply to the proceedings before the Original Side of the High Court,

whereas the CPC as such is made applicable u/s 5 of the Provincial Insolvency Act to proceedings before the mofussil Courts. That probably is

the reason why we have not got any such specific provision in the Provincial Insolvency Act corresponding to Section 8 (1) that occurs in the

Presidency Towns Insolvency Act.

For the above reasons, I am not able to uphold the contention raised by the learned advocate for the petitioner that it was incompetent to the

Lower Court to entertain the application presented by the Official Receiver. I accordingly overrule his first contention.

On the merits, I do not think that I need say much. The two Lower Courts have considered the question on the merits and have come to the

conclusion that the Official Receiver had made out ""sufficient cause"". In fact, the Official Receiver said that he committed a bona fide mistake, and

it is clear that the general body of creditors should not be made to suffer owing to a bona fide mistake committed by the Official Receiver. I am not

inclined to interfere with the finding of both the Lower Courts on this point, namely, that the Official Receiver has made out a sufficient case on the

merits.

I accordingly overrule both the contentions raised by the learned advocate for the petitioner and dismiss the Revision Petition; but I think that the

present is a case where I should not give costs to the respondent here of the Revision Petition.