(Bala) Venkatarama Chetty vs Angathayammal and Another

Walsh, J.—The appellant is a creditor of an insolvent. The Official Receiver brought the property of the insolvent to sale and the insolvent''s

wife (respondent l) claimed a certain share in the house. The documents relating to this house show that the insolvent''s father Krishna Chetty sold it

under Ex. P on 26th February 1912 to one Tirumalammal, his sister. Krishna Chetty had three sons one of whom was the insolvent. The others

were Ramaswamy Chetty and Kandaswami Chetty. These latter two sons distinctly state in the sale-deed that the house was the self-acquired

property of their father in which they had been jointly living and which they had been enjoying. On 29th November 1913 there was a deed of

partition, Ex. E, between the father Krishna Chetty and the two brothers of the insolvent Ramaswami Chetty and Kandaswami Chetty. The

insolvent does not appear there. There is a statement in the deed that the persons dividing possess no immovable property. On the same day

Tirumalammal reconveyed under Ex. G the house to Krishna Chetty and on 9th June 1916 the latter sold a portion of it under Ex. H to his son

Kandaswami Chetty, who under Ex. B on 22nd March 1917 mortgaged his portion to Tirumalammal usufructuarily and by Ex. A he sold it to the

insolvent''s wife (respondent l) to clear off Tirumalammal''s mortgage.

The father Krishna Chetty having died, Kandasawmi Chetty succeeded to another portion of the house which he sold under Ex. C on 27th

October 1919 to the insolvent''s wife. When the insolvent''s wife made her claim, the Official Receiver proceeded to determine the same and her

claim was allowed by him. On appeal, preferred u/s 68, Insolvency Act, the matter was by consent of parties remanded to the Official Receiver

who on further inquiry found in favour of the insolvent''s possession. His order was dated 20th April 1927. On 17th July 1927 the insolvent''s wife

(respondent l) put in a petition u/s 4 and on this petition her claim was admitted by the learned District Munsif and on appeal his order was

confirmed by the learned District Judge. Against this order this second appeal is preferred. The question of fact involved in the case was whether a

portion of the house sold to the insolvent''s wife under Exs. A and C by Kandaswami Chetty belonged to him or to the insolvent. The allegation for

the insolvent''s wife was that the insolvent had been separated from the family before the partition of his brothers with his father under Ex. E, that

the house had been built by Krishna Chetty, the insolvent''s father, with his own funds and that the insolvent''s wife had purchased it with funds

provided by her mother. In the trial before the learned District Munsif respondent 1(insolvent''s wife) called certain witnesses and filed certain

documents'' but the appellant (the insolvent''s creditor) contented himself with marking certain depositions given before the Official Receiver in his

inquiry. It is sought to attack the finding of fact in second appeal by saying that both the Courts ignored the evidence (Exs. 4 to 8) given for the

appellant and said that he had adduced no evidence. That is not however correct. What the District Munsif says is:

There is no evidence on behalf of the counter-petitioner to show that the insolvent advanced money to the petitioner to purchase under Exs. A and

C.

This was the counter-petitioner''s case and it is correct that the counter-petitioner did not adduce any evidence on this point. The statement

relied on in the order of the District Judge is as follows:

As the learned District Munsif has properly pointed out, the burden lay upon the Official Receiver to prove that the property to which the

respondent laid claim was the property of the insolvent. He did not let in any evidence to prove that.

""He"" here evidently refers to the Official Receiver. The statement is perfectly correct and it is a matter of some importance. The Official Receiver

had himself come to the conclusion that the property belonged to the insolvent. He might therefore quite easily have himself put in a petition to annul

the sale-deeds in favour of the insolvent''s wife if he had been strongly convinced of the falsity of her claim. But he neither did this nor did he give or

produce any evidence leaving the whole matter to the present appellant. There is therefore nothing to show that the trial and appellate Courts did

not consider Exs. 4 to 8 which were filed as evidence by the present appellant. They had ample evidence for the findings of fact based on

documents, one of which goes back to 1912 long anterior to the insolvency proceedings. The documents bear out the respondent''s case. It is not

open to me in second appeal to disturb this finding of fact. As regards the question of onus the whole evidence was before the Court and, as

observed above while respondent 1 put in cogent documentary evidence the appellant contented himself merely by filing statements given by the

witnesses before the Official Receiver. The next point argued is that respondent 1 having failed to appeal against the order of the Official Receiver

could not bring a suit u/s 4. It is further argued that the consent of the parties to the matter being remanded to the Official Receiver validates the

proceedings and that at the best it is merely an irregular procedure on the part of the Official Receiver to have adjudicated the matter. It is not

denied that the Official Receiver had no jurisdiction to determine a claim of this sort. S.V.A.R. Vellayappa Chettiar Vs. M.L.M. Ramanathan

Chettiar, is clear authority on that point. That case also indicates that the remedy against an order on a claim petition passed by the Official

Receiver without jurisdiction is not by way of appeal u/s 68, Provincial Insolvency Act, but by moving u/s 4.

It is true that in that case it was held that the party who appealed u/s 68 was not really affected by the Official Receiver''s order. At the same

time it was held that if he had been aggrieved the remedy was by way of an application u/s 4. If that view is correct it follows that the argument that

no appeal having been filed under Sections 68, Section 4 cannot be invoked entirely vanishes. The meaning of the words in Section 4 ""subject to

the provisions of the Act"" has been considered in several cases, but none has been quoted in which it has been held that Section 4 would not be

applicable because an appeal had not been preferred u/s 68 against an order which the Official Receiver had no jurisdiction to pass. It is to be

noted that the relief which the respondent wanted u/s 4 was much larger than anything she could have got by an appeal u/s 68. An order in her

favour u/s 68 would only have set aside the Official Receiver''s order, but what she wanted was to have her claim to possession of the property

recognized. It would seem, prima facie, unreasonable that she should be barred from seeking the chief remedy she wanted u/s 4, because she had

not sought a lesser one by an appeal u/s 68. Taking the cases quoted for the appellant as to the meaning of the words ""subject to the provisions of

this Act:"" Radha Krishna Thakur and Another Vs. Official Receiver, Dinesh Chandra Roy Chowdhury, does not help us on the point. It merely

lays down that the words restrict the power conferred by the section only to this extent: that it may not be exercised in any such manner as would

be in conflict with any provision in the Act. The decision there was, that u/s 4 the insolvency Court can deal with and decide questions of title as

between the ""Official Receiver and a stranger to property which is claimed on the one hand as the insolvent''s and on the other as the stranger''s.

Alagiri Subba Naick v. Official Receiver, Tinnevelly AIR 1931 Mad 745, held that Section 4 was subject to Section 53. For instance, while the

insolvency Court must dispose of a matter falling u/s 53 it cannot by taking the same matter up u/s 4 refuse to deal with it. In that case it was held

that a decision u/s 53 is not one u/s 4 and so no second appeal lies against it.

For the appellant is quoted Chittammal and Another Vs. Ponnuswami Naicker and Another, . There a lessee under the Official Receiver applied

to be given possession and the District Judge made an order under 13. 56(3). It was held that this was not an order passed u/s 4 and did not finally

determine the rights of the parties. None of the cases quoted by either side are in my opinion of assistance except S.V.A.R. Vellayappa Chettiar

Vs. M.L.M. Ramanathan Chettiar, , where the implication would seem to be that, so far from the failure to appeal u/s 68 against an order of this

sort made by the Official Receiver being a bar to an application u/s 4 the correct procedure is u/s 4 and not by appeal u/s 68. Charu Chandra

Bhattarcharjee v. Hem Chandra Mukerjee (1915) 47 IC 62 quoted for the appellant was before Section 4 had been introduced and so is not an

authority on the present Act. The next argument is that the respondent having acquiesced in the order remanding the matter for enquiry to the

Official Receiver is barred from questioning his orders.

This is connected with the question whether consent of parties can give jurisdiction to a Court which it has not got. The law seems to be well

settled that it cannot. In Vishnu Sakharam Nagarkar v. Krishna Rao Malhar (1887) 11 Bom. 153, means otherwise, it must be taken to have been

overruled by Ledgard v. Bull (1887) 9 All 191, the leading case on the subject. The same thing was laid down again by the Privy Council in

Meenakshi v. Subramanaya (1888) 11 Mad 26 where their Lordships say that when a Judge has no jurisdiction over the subject-matter of a suit,

parties cannot by their mutual consent convert it into a proper judicial process: see also remarks in Kidri Prasad v. K.R. Khosalar AIR 1923 Lah

In this connexion it may be noted that the Official Receiver is not even a Court but a mere executive officer: Nilamony Chowdry v. Durga

Charan Chowdry AIR 1919 Cal 965. He is not entitled to take evidence in an enquiry u/s 53 though ordered to do so by the District Judge.

Krishna Iyer Vs. The Official Receiver of Trichinopoly, . It was held in that case that as the parties had consented to his taking evidence the

irregularity was cured. That is quite different from saying that an order by him in an enquiry which he has no power to make, such as the present,

will be validated by consent of parties.

So limited is the power of the Official Receiver and so subject to interference that any person can ask the Court to modify or reverse a decision

of the Official Receiver: Datta Ram v. Deoki Nardan AIR 1920 Lah 361 followed in Haveli Shah v. Mt. Zoharajan, AIR 1932 Lah 84. The

appellant relies on Panja Ramachandra Rao and Another Vs. Gurraju and Others, . There a father of a Hindu family with a son was adjudicated

insolvent on his own application. The Official Receiver proceeded to sell the family properties in spite of a protest by the son that he was not liable.

The Official Receiver did not decide the claim of the son, but simply ordered that the son''s objection should be notified to the bidders at the time

of the sale. In appeal it was held that the Official Receiver should have investigated the son''s liability before ordering sale, but that the son having

failed to appeal u/s 68 the objection could not be gone into. That case is clearly distinguishable from the present. The question of the power of the

Official Receiver to sell an undivided son''s property for the insolvent''s debts is a difficult one. According to that case the learned Judges held that

he could have gone into the question of the son''s liability and had he found him liable could have sold his share but that he should not have sold it

without first determining the question. His failure to determine this point first was clearly a mere irregularity in procedure and not a case of acting

without jurisdiction. Consequently the son having failed to appeal u/s 68, could not raise the point afterwards.

It was attempted to be argued before me that in the present case there was a mere irregularity in procedure. This cannot possibly be maintained.

We have to deal, not with the order of remand by the Court which was competent to decide the matter, but with the decision of the Official

Receiver who had no jurisdiction to decide the matter at all. Even as regards the remand order, to remand a matter for decision to a person who

has no jurisdiction at all to decide it, is not in my opinion a mere irregularity. However it is not necessary to determine that point. A faint suggestion

was made before me that the parties are to be regarded as having made the Official Receiver an arbitrator, and a remark in Ledgard v. Bull (1887)

9 All 191 is quoted where their Lordships after the sentence quoted above that when the Judge has no inherent jurisdiction over the subject-matter

of the suit the parties cannot by their mutual consent convert it into a proper judicial process say: ""although they may constitute the Judge their

arbiter and be bound by his decision on the merits when these are submitted to him.

This is not the case here, for the Court whose decision was sought u/s 4 was not the Official Receiver. Arbitration outside a suit is a fact to be

established like anything else and presumably, if proved in a case like the present, is then only useful if estoppel could be pleaded and there is no

estoppel unless the other party has changed his position on the faith of the representation. It is much too late to go into any question of that sort

now. It was the jurisdiction of the District Munsif that was challenged in the proceedings, and, in first appeal, to judge from the appellate order,

none of the present legal points raised as to want of jurisdiction to try the case u/s 4 on account of the failure to appeal u/s 68 were even urged in

arguing the appeal, let alone any theory of arbitration apart from Court. The appeal fails and is dismissed with costs.