K.V. Narayanaswami Aiyar vs Sevadappa Goundar

Alfred Henry Lionel Leach, C.J.—The question in this appeal is whether the case falls within the Full Bench decision of this Court in

Panchanada Velan v. Vaithinatha Sastrial (1905) 16 M.L.J. 63 : ILR 29 Mad. 333 . The appeal is under Clause 15 of the Letters Patent from a

judgment of King, J. The learned Judge considered that the case did not fall within that decision, but gave a certificate permitting the filing of this

appeal. After a careful consideration of the facts and the judgment in Panchanada Velan v. Vaithinatha Sastrial (1905) 16 M.L.J. 63 : ILR 29

Mad. 333 , we are of the opinion that this appeal should be allowed.

The facts are these. On the 25th October, 1930, one Sengoda Mudaliar was adjudicated an insolvent in the Court of the Subordinate Judge of

Coimbalore. On the 9th December, 1927 the insolvent mortgaged certain Immovable property belonging to him to the respondent to secure a sum

of Rs, 7,000. On the 23rd June, 1931, the mortgagee instituted a suit in the same Court to enforce the mortgage and made the appellant who is the

Special Receiver in the insolvency a party. On the 20th August, 1931 the appellant applied to the Subordinate Judge in the insolvency proceedings

for an order setting aside the mortgage under the provisions of Sections 4 and 53 of the Provincial Insolvency Act. The respondent''s suit and the

appellant''s application were heard together and by a judgment dated the 9th October, 1934, the Subordinate Judge held that the mortgage was

valid. The consequence was, he granted the respondent a preliminary decree and dismissed the appellant''s application under Sections 4 and 53 of

the Provincial Insolvency Act. The appellant appealed to the District Judge of Coimbatore against the order dismissing his application, but filed no

appeal against the preliminary decree. The District Judge reversed the decision of the Subordinate Judge and this resulted in the respondent

appealing to this Court. His contention was that inasmuch as the appellant had not appealed against the mortgage decree the judgment of the

Subordinate Judge in the suit operated as res judicata and King, J., held that it did.

In Panchanada Velan v. Vaithinatha Sastrial (1905) 16 M.L.J. 63: ILR 29 Mad. 333 , the facts were as follows: A tenant filed a suit under the

Madras Rent Recovery Act to compel the tender of a patta by the land-holder. The land-holder filed a cross-suit to compel the tenant to accept

the patta offered by him. The suits were tried together and were disposed of in the same judgment. The result was that the tenant''s suit was

dismissed and the landholder''s suit decreed. The tenant then filed an appeal in his. suit, but not in the land-holder''s suit and the question was

whether the decision in the land-holder''s suit operated as res judicata and prevented the tenant proceeding with his appeal. This Court was of the

opinion that the case did not fall within the contemplation of Section 13 of the Code of 1882, which corresponds to Section 11 of the present

Code. The Court said that it would lead to startling results if it were to hold that an appellate tribunal was precluded from dealing with a question

which comes before it because an inferior Court on the same facts in a case other than that under appeal had given a decision which had not been

appealed against at the same time as the decision under appeal.

This principle was followed in Ramasami Chetty v. Karuppan Chetty (1915) 29 M.L.J. 551, and in Lakshmi Ammal v. The Official Receiver,

Tinnevelly (1934) 67 M.L.J. 364. The latter case is on all fours with the present case. There was a suit and an original petition in insolvency

proceedings in which the same question arose for decision between the same parties. Both matters came up for hearing before the Additional

Subordinate Judge of Tinnevelly and were heard together. A creditor who was affected by the decision appealed, but only against the order on the

petition, not against the decree. Beasley, C.J., had no hesitation in holding that the case fell within the four corners of Panchanada Velan v.

Vaithinatha Sastrial (1905) 16 M.L.J. 63: ILR 29 Mad. 333 .

In the present case King, J., has held that the decision in Panchanada Velan v. Vaithinatha Sastrial (1905) 16 M.L.J. 63: ILR 29 Mad. 333 ,

does not apply because the appeal in the mortgage suit was directly to the High Court and in the insolvency proceedings to the District Judge in the

first instance. That is shortly the effect of his decision. We fail to see what difference this makes. There was an appeal to this Court in both the

cases. We are not called upon to say whether Panchanada Velan v. Vaithinatha Sastrial (1905) 16 M.L.J. 63: ILR 29 Mad. 333 was rightly

decided. That decision is binding upon us and the reasons for holding that the doctrine of res judicata did not operate in that case apply equally in

the present case, and the appeal must be allowed.

The learned Judge did not decide a second objection taken by the respondent to the decision of the District Judge. The respondent''s second

contention was that the Insolvency Court had no jurisdiction to set aside the mortgage because it did not fall within Section 53 of the Provincial

Insolvency Act and the Special Receiver could not in such an application call in aid Section 53 of the Transfer of Property Act. The respondent''s

objections in this connection are set out in paragraphs 6, 7, 8 and 9 of his memorandum of appeal. This question remains open and the case will be

remanded to King, J., to decide it.

The appellant having succeeded in this Court, he is entitled to his costs.