Mangru vs Kishori and others

R.B. Mehrotra, J.—The present second appeal has been instituted by the plaintiffappellant.

For adjudication of the appeal, the essential facts are as under.

Mangru plaintiff filed suit No. 709 of 1965 in the Court of City Munsif Gorakhpur against the defendants and in that suit prayed for the relief that from field No. 44 area 47 decimal and field No. 71 area 50 decimal 7 Links situate at mohalla Hanspur, Tappa Qasba Pargana Haweli, Tahsil Sadar, District Gorakhpur indicated by the land marked as Ka Kha Ga Gha in the map annexed to the plaint, the defendants be ejected and the plaintiff be put in possession thereof.

The defendants contested the above suit.

The trial court decreed the suit by its judgment dated 25366. Aggrieved by that judgment the defendants preferred Civil Appeal No. 194 of 1966 before Additional Civil Judge Gorakhpur. The additional Civil Judge by his judgment dated 16274 allowed the appeal and set aside the judgment of trial Court and dismissed with cost the suit of plaintiff. Aggrieved by the aforesaid judgment the plaintiff preferred Second Appeal in this Court being Civil Appeal No. 1155 of 1974. This Court by its judgment dated 51079 allowed in part the plaintiff appeal and the case was remanded to lower court merely for deciding the point whether on the basis of the judgment of Insolvency Court, the stand of the defendants is barred by the principle of res Judicata? As per direction of this Court, the First Additional District Judge Gorakhpur by his judgment dated 19881 again allowed appeal of defendants and gave a finding that on the basis of the judgment of Insolvency court the stand of the defendant is not barred by the principle of Resjudicata. Aggrieved by the above decision, the plaintiff has filed the present Second appeal.

In the present appeal the sole substantial question of law that arises is whether in the present suit on the basis of the orders passed by Insolvency court the rights of the parties have been finally determined in respect of the disputed land and whether on the basis of the said judgment the stand of the respondents is barred by the principle of resjudicata?

For deciding the above question of law it is necessary to mention in small compass the facts of dispute between the parties for the adjudication of the appeal, the necessary facts are as under.

It is the admitted position between the parties that originally the land was owned by Bihari and Girdhari. Girdhari has executed gift deed of his share for his entire properties in favour of Smt. Gulabi. There is no dispute in the present appeal qua the share of Girdhari. The dispute is merely about the share of Bihari. The names of the heirs of Bihari, who were his grand sons (daughter''s son) are as under:

(1) Rameshwar (2) Dwarika (3) Kedar (4) Badri. Smt. Tulsa succeeds to interest of Dwarika, Kedar and Badri. In this way Rameshwar became owner of 1/4 share in the property of Bihari and 3/4th share was held by Smt. Tulsa.

Rameshwar initially mortgaged his share in Bihari''s whole property in favour of Mangru. However, lateron on 241256 Rameshwar sold his share in the property in favour of Mangru, In 1979 Mangru was declared insolvent. Accordingly, according to the provisions of Insolvency Act, the property of Rameshwar vested in the official receiver. In this connection a notice was published about the vesting of Rameshwar''s entire property in official receiver. In the said notice, treating the entire property of Bihari as that of Rameshwar, the entire property of Bihari was declared to have vested in official receiver, which continue included, the disputed property whereas in fact only 1/4 share of Bihari was inherited by Rameshwar. Beyond that the property could not be vested in the official receiver. It is necessary to make it clear, that entire property between Rameshwar and Tulsa was completely partitioned before Rameshwar was declared insolvent. Undisputably, according to the partition, the disputed property came to the share of Smt. Tulsa. Under the circumstances Smt. Tulsa applied before the Insolvency Court for releasing her 3/4 share in her favour. Smt. Tulsa in her application clearly gave details of both land and property for which she sought release. The true copy of the application is Ex. 12 which is part of the record of lower court. A perusal of that application indicates that initially the description of disputed property was not mentioned in the application, and by virtue of order dated 211159 the amendment was allowed in the application as a result of which the description of disputed property was recorded. In the aforesaid description ''A'' the boundary etc. of the disputed house was written and regarding disputed property No. 44.71 MINJUMLA and the area of the said numbers and the trees standing thereon was given.

Insolvency Court by order dated 4260 allowed the application of Smt. Tulsa, Misc. Case No. 85/59. The certifed copy of the said order is Ex. 11. I have myself made a close perusal of the said order. In that order Smt. Tulsa''s objection was allowed that the disputed house which has been vested in official receiver treating the same to be of Rameshar was owned by Smt. Tulsa and the Insolvency court released that house in favour of Smt. Tulsa holding the same to be the property of Smt. Tulsa. In that judgment it was clearly held that Bihari Kachchi on 5936 executed registered will in favour of Dwarka, Rameshar, Badri and Kedar and there is no reason to doubt the will and it was also decided that the original owner of the property was Bihari and on the strength of will Dwarka, Rameshar, Badri and Kedar became legal representative of aforesaid land. Thereafter the finding was recorded that the share of Rameshar in the disputed house is merely � and � share is of Smt. Tulsa, who is the legal representative of Dwarka, Badri and Kedar. The insolvency court did not make any mention about the disputed land in his judgment. After lapse of more than seven years in another suit the dispute cropped up that in respect of land of Bihari the insolvency Court has given no judgment in favour of Smt. Tulsa hence that land should be held to have vested in the official receiver treating it to be the property of Rameshar. After seven years Smt. Tulsa preferred review petition before insolvency Court in respect of order dated 2460, however, the insolvency court by its order dated 16781 rejected that petition merely on the ground that the same is barred by time. Aggrieved by the said judgment Smt. Tulsa filed appeal No. 81 of 1971. The appellate court rejected the appeal of Smt. Tulsa merely on the ground that the review petition was barred by time and by rejecting the review petition on the said ground the insolvency court has committed no error. The order of appellate court was passed on 15272. Aggrieved by that judgment Smt. Tulsa filed the second appeal No. 5 of 1972 in this Court. This Court also vide its order dated 19772 dismissed the appeal of Smt. Tulsa merely on the ground that the review petition filed by Smt. Tulsa was barred by time and there is no error of law in the judgment of the lower court. In this very sequence the appellant also gave application in insolvency Court for releasing the land in his favour on the ground that before the declaration of Ramesar as insolvent, Rameshar had transferred the property in favour of appellant Mangru and Mangru appellant was bonafide purchaser and on that basis in respect of Rameshar''s property being treated to be vested in receiver, is against law. Accordingly it was prayed that the disputed land be released in favour of appellant plaintiff. The insolvency court allowed the application of appellant by order dated 5964. The Certified copy of that order has been filed before trial court as paper No. 34 Ga. The plaintiff appellant''s application is Misc. Application registered as No. 42 of 1959 Mangru Teli v. Sukhdeo Kachhi etc. The orders passed in that Misc. application is paper No. 34 Ga on the file of trial court. That order is reproduced as under:

21864. Today case was put up. It was called. Sri Vishwanath Kumar Sinha appeared for Mangru applicant. Opposite party appeared and it was ordered.

�Application is allowed and the applicant is directed to deposit the amount in question with the Opposite party within a week release order will be passed after necessary report.

5964. Today the case was put up case was called. Official receiver is present filed the report. Sri Vishwanath Kumar present on behalf of applicant Mangru Teli. Ordered.

�The entire mortgage money has been now deposited by Mangru and so the property in question is ordered to be released from attachment.�

From the reading of the above order, it is clear that the insolvency Court while passing the above order did not consider any point in issue, nor decided anything about the rights of parties nor passed any reasoned order in this connection. It is not clear from the above order at to what was the controversy before the Insolvency Court? and who were the parties to that dispute? what issues had been framed? and what was decided in that connection? By the copy of the order only this much is indicated that the Insolvency judge at the initial stage of the appellants'' application without entering into merits of in respect of the disputed points without hearing any party has passed orders.

In the present appeal virtually the following two substantial questions of law arise for hearing.

(1) Whether on the basis of the dismissal of the review application Smt. Tulsa of her legal representatives are barred by principles of resjudicata, from of (sic) the said land raising any dispute against Mangru in any court in respect of said land?

(2) Whether on the strength of the order of Insolvency judge dated 6964 passed in favour of Mangru, Smt. Tulsa or her legal representatives are barred by principles of resjudicata from claiming any right over the land in dispute?

Before considering that point it is essential to clarify the position that the lower appellate court in its judgment dated 16274 had recorded a finding of fact that there had been a partition of disputed land between Rameshar and Tulsa and the disputed site for which the suit has been filed, is situate on the land which has come to the share of Smt. Tulsa by partition. It is thus clear from that finding of fact, that so far as the land in suit is concerned, as regards its ownership there is no dispute between the parties about that Smt. Tulsa and her legal representatives are owners of the site, and it is also not in dispute that Ramesar had no right of any sort, on the said site, nor the said site could according to law be vested in official receiver after the declaraition of Ramesar as insolvent. The vesting of the disputed site in official receiver on the basis of Ramesar being insolvent, was against the procedure and completely beyond the jurisdiction of the involvency court and the order for vesting of the said property in the official receiver was wholly against law. The said portion of the judgment has been confirmed by this court by its judgment dated 51079. This Second appeal was admitted merely on the ground as to what is the effect on their rights by virtue of the application of principles of Resjudicata?

From a discussion of the above facts, it is clear that the disputed land was not of Ramesar and on any ground the land on which the disputed site is situate could not be vested in the official receiver as a result of declaration of Ramesar as insolvent. Accordingly this conclusion also follows clearly that the vesting of the above land in official receiver is wholly against law and beyond the jurisdiction of official receiver.

I have heard at length the appellants'' learned counsel Sri A.K. Misra and respondents'' Counsel Sri V.B. Khare.

For attracting the principle of Res judicata it is essential that in respect of that concerned property, the dispute may have been decided on merits by competent court and that judgment has become final between the parties under that circumstance either of the parties or any party is barred from raising any argument or fact against that judgment in any other suit or legal proceeding and also the essential condition for attracting the principle of Resjudicate is that the previous judgment was within the jurisdiction of that court concerned.

At the outset the point for consideration is whether virtually, the insolvency court has given any judgment between the parties in respect of the disputed land? or in respect of the dispute between the parties, the Insolvency Judge has given any judgment on merits?

At first it is essential to consider the judgment of the insolvency court in respect of the release of land in her favour as prayed before the Insolvency court, because Sri A.K. Mishra learned counsel for the appellant has insisted in arguing that Smt. Tulsa had clearly applied before insolvency court that the disputed land where the disputed site is situate should be released in her favour, however, the insolvency judge by his judgment Ex. 11 which has been mentioned above did not express any opinion about the disputed land. It can not be said on the basis of Ex. 11 that the Insolvency judge on merits recorded the finding that Smt. Tulsa is not entitled to get the release of the said property in her favour. It is true that after seven years the review application given by Smt. Tulsa praying the insolvency judge to declare the rights of Smt. Tulsa over the disputed land which have escaped mention due to clerical error in the above judgment.

Insolvency judge rejected the application as time barred and the said judgment remained intact up to the High Court. It is an established principle of law that if any suit is dismissed on the ground of being barred by time then that judgment in another reference can not be said to be a judgment attracting the principle of Resjudicata. It is also essential to mention in this sequence that in respect of the disputed land the order passed by insolvency judge on 5964 releasing the disputed property in favour of the plaintiff, Smt. Tulsa was not a party nor any judgment has been given in respect of the property in dispute. The said order dated 5964 also does not attract the principle of Resjudicata between the parties.

Initially, the learned counsel for the appellant referred to Section 4 (2) + (5) of Insolvency Act (hereinafter referred to as ''Act'') in support of his argument. The aforesaid provisions are as under.

4 (2) Subject to the provisions of this Act, and notwithstanding anything contained in any other law for the time being in force, every such decision shall be final and binding for all purposes as between, on the one hand, the debtor and the debtor''s estate and, on the other hand, all claimants against him or it and all persons claiming through or under them or any of them.

General powers of Courts 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.

(2) Subject as aforesaid, High Courts and District Courts in regard to proceedings under this Act in Courts subordinate to them, shall have the same powers and shall follow the same procedure as they respectively have and follow in regard to civil suits.�

In the above context in view of the provisions of Section 4 (2) of the Act, the argument of the learned counsel for appellant is that under the aforesaid provision the order passed by the Insolvency Court will be final between the parties and that judgment will have the force of Res judicata. On this basis the contention of the learned counsel for the appellant is that the Insolvency court finally releasing the above property in favour of plaintiff and rejecting the release application of defendant in respect of that disputed land, the Insolvency court has finally decided the rights of the parties in respect of the disputed land, and on the basis of the said judgment in the present suit, the stand of the defendants is barred by the principles of Res judicata.

The learned counsel for the appellant in this very sequence referred to Section 41 of Evidence Act and contended that such a judgment is judgment in rem and even if any person is not a party in the proceeding under the Act the judgment will be binding on him. The argument of the learned counsel for the appellant is that the declaration made by insolvency court in respect of property of any body is declaration of his rights and that is judgment in rem, whether any one is party to that or not, the judgment of Insolvency Court will be binding on him. In support of this argument, the learned counsel for appellant has cited the following decision:

Sina Subba Godan v. M. Rangi Godan and others AIR 1946 Madras Page 141.

Hla Gyaw U v. Tun Kyaw Sen and another (AIR 1937 Rangoon page 369).

Pitaram v. Jujhar Singh and others (15 ALJ page 661).

Maharana Kunwar v. I.B. Daud (AIR 1924 Allahabad page40).

Replying to the above argument, the learned counsel for respondent Sri V.B. Khare submitted in his arguments that the judgment of Insolvency court can not held to be judgment in rem and in support of this contention cited the following decisions:

Hukmat Rai and others v. Padam Narain (38 Indian Cases page 151).

S. Subrammanya Iyer v. Official Receiver (AIR 1958 SC page 1).

R. Vishwanathan and others v. Abdul Wajid (AIR 1963 SC page 1).

I have perused and studied the said decisions.

In the aforesaid judgments the difference, between principles of resjudicata consider (sic) incorporated in Section 11 of CPC, and provisions of Section 40+41 of Evidence Act, creating presumption in respect of evidence has been discussed and the ratio has been laid down that be the effect of Section 11 Civil Procedure Code, can not be the effect of Section 40 and 41 of Evidence Act. In this very sequence it was held that merely on the presumption of Section 40, 41 of the Evidence Act, the principle of Res Judicata is not attracted. The relevant portion of the above judgment is as under:

�The provisions of Section 11 of the Code of Civil procedure, for example, go much further than Section 40 or Section 41 of the Indian Evidence Act. Section 40 touches only the fringe of the law of res judicata; but provision for that has been made more exhaustively in Section 11 of the Code of Civil Procedure. The difference between provisions in the law of Evidence and the law of procedure is that one deals with the question of proof and the other, with a bar of suit. A fact which can be proved from a judgment made conclusive for that purpose need not be proved fresh. The proof of the judgment is enough. But a second suit can only be barred on the principle of res judicata if the law says so; and this bar regarding the adjudication of a controversy decided before. It is not possible to add to the list of subjects mentioned in Section 41 of the Indian Evidence Act, except by Legislation.�

In this very sequence it is necessary to mention the judgment of the Hon''ble Supreme Court in the case of N. Subramaniam (supra). In that judgment the Hon''ble Supreme Court has propounded that on the strength of the judgment of Insolvency judge in respect of the right of the parties, the principle of Res Judicata is not attracted in all circumstances. The relevant portion of the above judgment is as under:

�Have the defendants committed acts of insolvency as alleged in the petition? and the finding of the Court was that those were acts of insolvency� with intent to defeat or delay their creditors.� It is said that these findings are res judicata between the Receiver and the appellant. Even so, there is no finding that the transferee was privy to such acts. It was not necessary to find at that stage, and it has not in terms been found that the transaction impugned in this case was not bona fide so far as the transferee is concerned or without considerationmatters which directly arise for determination in the annulment proceedings leading up to this appeal.

Hence, even assuming that the rule laid down by their Lordships of the Judicial Committee in 70 Ind App 93: (AIR 1943 PC 130) (A), in a case arising under the presidencytowns Insolvency Act, applies to a case like the present governed by the insolvency Regulation, which follows more closely the Provincial Insolvency Act and not the Presidencytowns Insolvency Act, the present controversy is not barred by any finding in the order of adjudication. In this appeal we are concerned with the bonafides of the transferee.''''

From the above discussion I am satisfied that against the defendantrespondent the principle of resjudicata is not attracted on account of the judgment of the insolvency judge.

There is another aspect to this appeal also which has not been referred in the impugned judgment of the lower appellate court that it has been decided finally between the parties that the disputed piece of land is situated on that land which was not of the share of Rameshar and that land could not have vested in the official receiver on the declaration of Rameshwar as insolvent. The entire proceeding conducted in this regard was against law and void and on that basis the right of the respondents in respect of the concerned land could not be deemed to be extinguished. As has been analysed above in this judgment, that in reality no Insolvency Judge has decided the case on merits between the parties in respect of the disputed land. It is clear from this, that on the basis of the judgment of the Insolvency Judge the claim of the respondent can not be held to be barred by principles of res judicata.

Appeal is accordingly dismissed.

(Appeal dismissed.)

Under the mandatory provision of Section 7 of the official Language Act the Registrar of the Court is directed to get English translation of a copy of the judgment done through a competent person within a month and after getting approval by the Court copies be issued as per rules, without annexing English translation copies shall not be furnished to parties nor a copy of this judgment be set down to Court below without such copy.