Borra Subba Rao (died) by LRs. vs S. Veerrabhadraiah and Others

L. Narasimha Reddy, J.—This is an unfortunate case, where the revision needs to be returned, for being presented in an appropriate Court after a lapse of about 16 years from the date of presentation.

Chandani Satyanarayana, the 2nd respondent herein, was declared insolvent in I.P. No. 7 of 1975 on the file of the Subordinate Judge, Machilipatnam. The properties of the 2nd respondent vested in the Official Receiver, the 3rd respondent herein. One of the items was brought to sale. The 1st respondent, who is one of the creditors, filed I.A. No. 1028 of 1980, raising objection to the validity of the sale effected by the 3rd respondent alleging that the property was sold away at threwaway price and that there was collusion between the 2nd respondent and auction purchaser. After hearing the parties, the Trial Court accepted the contentions of the 1st respondent, and through its order dated 16-3-1988, had set aside the sale. Aggrieved by that order, the auction purchaser, the petitioner herein, filed this revision-petition.

Several contentions are urged on behalf of the auction purchaser on the one hand, and the petitioner in I.A. No. 1028 of 1980, on the other, on merits as well as maintainability. A strong objection is raised on behalf of the 1st respondent that an appeal u/s 75 of the Provincial Insolvency Act (hereinafter referred to as the Act) and not a revision u/s 115 CPC is maintainable against the order of the trial Court in I.A. No. 1028 of 1980.

Sri Chittur Srinivas, learned Counsel for the auction purchaser-petitioner, submits that the order in the I.A. was passed u/s 68 of the Act, being an appeal against the decision of the receiver and further appeal against it u/s 75 of the Act does not arise. He places reliance upon the Judgment of Nagpur High Court reported in Kesheo Krishnaji v. Baliram Bakaramji AIR 1951 Nag 388.

Sri T.S. Anand, learned Counsel for the 1st respondent submits that the order in the I.A. passed u/s 68 of the Act, cannot be treated as the one in an appeal. He submits that Section 75 of the Act is clear in its terms and does not exclude from its purview, an order passed u/s 68 of the Act.

The Act, framed a typical scheme of adjudication of insolvency petitions. Insolvency jurisdiction, is basically conferred on the District Courts, u/s 3 of the Act. Proviso to Sub-section (1) of Section 3 of the Act enables conferment of insolvency jurisdiction on Courts subordinate to District Courts also. In the process of adjudication, various stages are provided for, which require orders to be passed. For example, an order can be passed u/s 20, appointing a receiver; u/s 25, dismissing the petition; u/s 27, adjudicating a person, as insolvent; u/s 31, according protection to an insolvent; u/s 32, directing arrest of an insolvent; u/s 35, annulling adjudication of insolvency; u/s 38, ordering composition and framing of schemes of arrangements; and u/s 42, discharging of insolvent. These are in addition, to the orders that are required to be passed in administration of the property under Part-in of the Act, such as, for levying of interest, ordering stay by taking into account antecedent transactions, appointment of receivers, overseeing the acts and omissions of receiver etc.

Section 75 of the Act provides for appeals against orders passed in exercise of insolvency jurisdiction. Under this Section, if the orders are passed by Courts subordinate to District Court, appeals are provided to the District Court. On the other hand, if the District Court itself exercises insolvency jurisdiction, an appeal is provided to the High Court under Sub-section (2) thereof. To this extent, there is no ambiguity.

Section 68 of the Act provides for an appeal to the Court by a party, aggrieved against the acts or omissions, on the part of receiver. The Court here, obviously refers to the one, which is exercising the insolvency jurisdiction. The Section reads as under:

"Appeal to Court against receiver :--If the insolvent or any of the creditors or any other person is aggrieved by any act or decision of the receiver, he may apply to the Court, and the Court may confirm, reverse or modify the act or decision complained of, and make such order as it thinks just:

Provided that no application under this section shall be entertained after the expiration of twenty-one days from the date of the act or decision complained of."

Employing the term "appeal" in the Section, appears to be rather inappropriate. Appeal presupposes the adjudication by a subordinate adjudicating authority. Receiver acts as an Officer of the Court and not as an authority. He is not conferred with any adjudicatory powers. The Court adjudicates upon the nature of acts and omissions of the receiver, in exercise of its insolvency jurisdiction itself, and not as an appellate authority or forum. If the District Court itself is exercising insolvency jurisdiction, the question of there being an appeal, being preferred u/s 75 of the Act against the order passed u/s 68 of the Act, does not arise. However, where the Court exercising jurisdiction is subordinate to District Court, a scope exists for a doubt, as to whether an appeal can be maintained to the District Court against the order passed u/s 68 of the Act. Similar nomenclature assigned in both the Sections, is prone to give rise to such doubt. The present case provides an example.

If the order is passed u/s 68 of the Act, in exercise of appellate jurisdiction, the question of there being a further appeal u/s 75 of the Act may not arise. However, as observed earlier, the powers u/s 68 of the Act, cannot be equated with those of appellate authority or forum. There is no dispute that the 1st respondent filed I.A. No. 1028 of 1980 u/s 68 of the Act and the Court which passed the order in it is subordinate to the District Court.

The same question fell for consideration before this Court, may be in a different context, in Gidda Naga Malliah and Others Vs. Kothuri Laxmayya and Others, . It was held therein, that an order passed u/s 68 of the Act is subject to appeal u/s 75(1) of the Act. A more elaborate and pointed discussion was undertaken by a Full Bench of the Allahabad High Court in Hamid Khan Vs. Official Receiver, . The questions were aptly framed as under:

"The basic question which needs consideration is as to whether after a receiver has been appointed of the property of the insolvents and it has come to vest in him, an objection against an act of the receiver is maintainable at the instance of the insolvents u/s 68 of the Act and if so whether on allegations such as those on which the applicants challenged the auction sale held by the receiver. The further question is as to whether if such an objection is maintainable before the Court u/s 68 of the Act at the instance of the insolvents, they have a right to carry the matter in appeal before the District Court u/s 75(1) of the Act and thereafter in revision to this Court under the proviso to that provision."

After discussing the other cases on the subject, the Full Bench held that an application u/s 68 of the Act is maintainable to the insolvency Court by a party aggrieved by the acts or omissions of the Official Receiver, and that an appeal u/s 75 of the Act can be preferred against the order passed u/s 68 of the Act to the District Court.

This Court did consider the possibility of undertaking adjudication of the CRP on merits, since much time has lapsed. However, it is impermissible to entertain a revision, if an appeal is provided for the situation. Whatever be the justification of the petitioner to approach this Court, entertaining revision, in a way would constitute negation of the principle underlying in Section 115 CPC.

Hence, the CRP is returned to be presented to the Court of the District Judge, Krishna, at Machilipatnam, as an appeal u/s 75(1) of the Act. Since the petitioner was prosecuting the remedy before this Court, he shall be entitled for the benefit of Section 14 of the Limitation Act. If the appeal is presented within four weeks from the date of return of the file, the same shall be received by the Court of the District Judge, Krishna, at Machilipatnam, as having been presented within limitation and proceed with the matter.

The civil revision petition is accordingly disposed of. No order as to costs.