Kumaraswami Nadar vs Venkataswamy Koundan and Another

This appeal arises from an application, made by the 7th creditor, in the Insolvency proceedings, of one Thirumula Gounden. The seventh

creditor claimed to prove for Rs. 7,000. The Official Receiver allowed the claim in part but disallowed it in respect of the amount claimed under

the promissory note Ex. B. The creditor then applied to the District Judge, u/s 68 of the Insolvency Act, against the order of the Official Receiver

and prayed that the whole of his claim may be allowed. The learned District Judge, after considering the circumstances of the case and the

evidence, has granted him his prayer and the present appeal is by the 15th respondent, another of the creditors.

Two points have been taken before us, as vitiating the order of the District Judge altogether. The first is that the order was passed with out

making the Official Receiver & formal party to the application before the District Judge. The creditors apparently were all made parti and notice

had been given to all the creditors; including the 15th respondent, the appellant now before us. He appeared before this District Judge and

opposed the claim of the 7th creditor Apparently the Official Receiver was riot made a formal party respondent to the application before the

District Judge, but we do not think that that can be treated as in any way materially affecting the order of the District Judge. It was open to any of

the creditors, either to appear themselves as the 15th creditor did, to oppose the proof tendered by the 7th creditor before the District Court, or to

have moved the Official Receiver to represent the whole party of creditors before that, Court and to state their objection to the proof tendered.

The Official Receiver is after all an officer of the Court and there is no provision in the Insolvency Act, so far a we can see, which makes it

obligatory on the District Court to have the Official Receiver made a formal party to these proceedings. If the Official Receiver wanted to be

heard, there would have been no difficulty whatsoever in the matter, as we have no doubt that the District Judge would have heard him. The

Official Receiver has been made a party to this appeal before us, but he has not come here, and complained that he has been prejudiced in any

way by his not being heard on this matter in the lower Court. Reliance has been placed on Manglury Sivaramiah v. Singumahanti Bhujanga Rao

[1916] 39 Mad. 593, by the Appellant''s Vakil in favour of his contention; but there we notice that the Official Receiver was directed to execute a

document in favour of the creditor who required that the whole of the assets of the insolvent should be transferred to him, in accordance with an

agreement, which he entered into with the insolvent before insolvency. Whether, in such a case as that, the Official Receiver should be formally

made a party and his objection heard or not, we need not consider it here; for, in the present case, we see no reason why the Official Receiver

should have been made a formal party as, in the circumstances of this case, it was as already stated, open to him to have come up and stated any

objections that he might have had to the proof tendered. We may state that he knew of the proceedings that were going on in the Insolvency Court

itself. In these circumstances, the first objection is not a valid one and is overruled.

The next objection is that District Judge acted upon some statements, made by the party before Official Receiver. Here again, the District Jugde

was considering the propriety of the action of the Official Receiver, who had taken the evidence that was laid before him and the question which

the District Judge had to decide was whether, on that evidence, the Order of the Official Receiver was a right one and should be supported. The

case cited by the Appellant''s vakil, Chinna Meera Rowther v. Kumarachakravarthi Aiyangar 36 Ind.Cas. 906, had reference to an application u/s

36 of the old Insolvency Act and related to the annulment of a document, which the Official Receiver had applied to the Court to annul. The

Official Receiver was himself the applicant and it was held that any statement taken by him could not be treated as evidence, because the matter

itself was being tried before the District Court, as a matter between the alienee on the one side and the Official Receiver on the other. Such is not

the position here at all. Here the District Judge is merely considering the correctness of the order of the Official Receiver; and in such a case as this,

we do not see any objection to the District; Judge acting on the evidence given before the Official Receiver. Nor is there any provision in the Act

itself for necessitating the District Court to take fresh evidence in such matters. We do not say that it would not have been open to the District

Court to take such evidence, if it thought it desirable to do so; but there is no provision laying down any obligation on the District Court to do so.

In these circumstances, the two abjections that have been raised to the order of the Lower Court fail.

On the merits, the only argument addressed to us is that, as in a previous amendment proceeding, this creditor has given up his interest in the

land, so far as his mortgage was concerned and agreed to treat himself as an unsecured creditor, for the amount of consideration, which, he should

prove, like any other creditor, his claim must be looked upon with suspicion. What the exact reason for his doing so was we do not know; but the

fact that he did so cannot be taken as conclusive on the question that the money was not due as a personal debt.

No other ground has been alleged against the order of the District Judge. We therefore confirm that order and dismiss this appeal with costs of

the 7th creditor to be paid by the 15th creditor.