Narayana Panicker vs Kunju Pennu and Others

George Vadakkel, J.—These are appeals from Sub Court''s orders in insolvency proceedings. Are these appeals to be filed here or in the concerned District Court is the question for consideration.

u/s 3 of the Insolvency Act, 1956 District Courts are the Courts vested with insolvency jurisdiction. The proviso to that section enables the Government to invest any Court subordinate to a District Court with such jurisdiction by issuing a gazette notification. It is by virtue of power conferred by such notification that the Sub Courts passed the orders under appeal. Any Court on whom insolvency jurisdiction is competently conferred by a notification issued under the proviso to Section 3 of the Act, is, for the purpose of exercising jurisdiction under the Act, a Court subordinate to a District Court. If so, u/s 79(1), appeals from orders passed by a Sub Court lie to the District Court to which that Sub Court is subordinate in matters of Insolvency jurisdiction, and not to this Court. The District Court, to which a Court (on whom insolvency jurisdiction is competently conferred by Government), would be subordinate, is that District Court, which, but for a gazette notification under the proviso, would have dealt with the insolvency case in question.

The above view is supported by the decisions in Chatturbhuj Mahesri Vs. Harlal Agarwalla and Others, in Madhorao Deorao v. Nago AIR 1923 Nag 80 and in In the matter of In Re: Kuppuswami Vanniar, . The Calcutta case concerned an order passed by the Deputy Commissioner of Darjeeling who had been invested with Subordinate Judge''s powers, and on that basis, with insolvency jurisdiction by a Government notification, and the other two cases, orders passed by Subordinate Judges. The same principle has been laid down even in respect of orders passed by Assistant District Judges and Additional District Judges who were invested with insolvency jurisdiction by notification issued under the proviso to Section 3 of the Act, See AIR 1934 155 (Rangoon) Rangoon 155 Bhagwanji Haridas Vs. Premji Parashotam and Another, Moolmal v. Lal Singh AIR 1939 Sind 221 and Chiragh Din v. Fateh Mohammed and Ors. AIR 1933 Lah 307 . The Allahabad High Court also has taken the same view in Gokul Chand and Others Vs. Babu Ram Ratan Lal, in respect of an order in an insolvency case passed by a Civil Judge who was invested with insolvency jurisdiction by a Government notification, though with respect to orders passed by Additional District Judges, a different note appears to have been struck by that Court in two earlier cases, Makhan Lal v. Sri Lal ILR 34 All 382 and Emperor v. Chiranji Lal ILR 36 All 576. These decisions have been commented upon by Subrahmany Sastri in his commentaries on Provincial Insolvency Act, 3rd Edition, revised by Madhavan Nair, who later was a Judge of this Court. At page 501 of the said commentaries it is pointed out as follows:

In the absence of a similar provision in the Civil Courts Act, it is conceived, an Additional District Judge cannot be assigned insolvency work without being invested with insolvency jurisdiction by a notification. It has been held that an appointment as an Additional District Judge u/s 26(1) of the Central Provinces Courts Act does not mean an appointment of an Insolvency Judge under the Act, and that an appeal from an order of such Court lies to the District Court and not to the High Court.

It is also necessary to advert to an argument advanced on behalf of the Appellants in these cases founded on the Kerala Civil Courts Act, 1957. Some reliance was sought to be placed on Section 13 of the Act as per which

Appeals from the decrees and orders of a Munsiff''s Court and where the amount or value of the subject-matter, of the suits does not exceed ten thousand rupees, from the original decrees and orders of a Subordinate Judge''s Court shall, when such appeals are allowed by law, lie to the District Court.

The submission made is that the provision as aforesaid read with Section 12 of that Act would enable the Appellants to prefer these appeals to this Court. Section 12 mentioned above reads:

Appeals from decrees and orders of District Court or Subordinate Judge''s Court: Save as provided in Section 13, regular and special appeals shall, when such appeals are allowed by law, lie from the decrees or orders of a District Court or a Subordinate Judge''s Court to the High Court.

The argument is that in so far as u/s 12 wherever appeals are allowed by law from a decision by a Subordinate Judge''s Court, be it a decree or an order, the same shall normally lie to the High Court, and that right of appeal to this Court is curtailed only by Section 13 whereunder, where the amount or value of the subject-matter, of the suits does not exceed ten thousand rupees the appeal has to be preferred to the District Court. It appears to me that in view of the Full Bench decision in Palakattumala Devaswom v. Pylee 1969 KLT 275 (F.B.) to the effect that Section 13 of the Kerala Civil Courts Act, 1957, will be attracted only to a decree or order in a suit and the word ''suit'' mentioned in Section 13 has to be understood as a proceeding ''instituted by the presentation of a plaint or in such other manner as may be prescribed'' there can be no scope to invoke that Section (section 13) to insolvency proceedings. Therefore, it follows that the appeal from orders in insolvency proceedings is not to depend upon valuation of total amount of debts scheduled to the insolvency petition. Section 12 of the Kerala Civil Courts Act, 1957 does not refer to any valuation.

That the total value of debts scheduled to the insolvency petition has no bearing so far as the forum of appeal is concerned is borne out by the decisions in Debi Prasad v. Jamna Das ILR 23 All 56. Therein it was pointed out as follows:

A further contention was raised by the learned vakil for the Appellant, who strongly urged that another test by which the forum of appeal should be decided is the amount of the debts entered in the schedule of debts filed by the applicant, and adjudicated upon by the Court hearing the application. It seems to us that the answer to this contention is very simple. Under the Code, Government is empowered, if it so choose, to invest even Munsiffs with jurisdiction in insolvency matters. According to the learned vakil, it would follow that if a decree had been passed in a Munsiff''s Court for, say, Rs. 50 and thereafter an application in insolvency were made to the Munsiff, if invested with insolvency jurisdiction, by a judgment-debtor imprisoned under that decree, and appended to the application was a schedule of debts amounting to some lakhs of rupees, the appeal would lie to the High Court, although the Munsiff is undoubtedly subordinate to the District Judge. The learned vakil did not go so far as to say that the appeal would lie to the High Court, but contended that it ought to. Against this contention the case of Shankar v. Vithal (1895) ILR 21 Bom. 45 was cited to us. That case was one in the Court of a second class Subordinate Judge who had jurisdiction as such to hear the application in insolvency. But as the debts in the schedule amounted to a sum much in excess of his ordinary pecuniary jurisdiction, it was contended that he had no power to hear the application.... In revision before the High Court it was held that as the Appellant had been arrested in execution of a decree passed by the second class Subordinate Judge, the application u/s 344 was rightly made to that Subordinate Judge and that Court had power to entertain the application, and make the declaration and orders referred to in Sections 344 and 359, notwithstanding the fact that the amount of the scheduled debts exceeded Rs. 5,000. In that decision we fully concur.

To the same effect is the decision of the Madras High Court in Alagirisubba v. Official Receiver AIR 1931 Mad 745. At page 751 of the reports it was pointed out that ''from the decisions passed by a Subordinate Judge exercising insolvency jurisdiction an appeal lies to the District Court though the value of the property affected might be more than Rs. 5,000/ -. It was held therein that the provisions of the Madras Civil Court Act have no relevance in determining the forum of an appeal in insolvency proceedings.

It was argued that once Section 13 is out, so far as orders in insolvency proceedings are concerned Section 12 of that Act would enable the Appellants to prefer these appeals to this Court irrespective of the question of valuation. But in my view Section 79 of the Insolvency Act, 1956 exhaustively and exclusively deals with right of appeal, forums of appeal and the subject-matter of appeal so far as decisions in insolvency proceedings are concerned. u/s 79(2) where insolvency jurisdiction is exercised on the original side of the District Court and the decision or order is one specified in Schedule I, an appeal therefrom lies to this Court. Under Sub-section (1) of that section where the insolvency jurisdiction is exercised by a Court subordinate to a District Court, an appeal lies to the concerned District Court irrespective of the nature of the decision or order and irrespective of the fact as to whether that is a matter specified in Schedule I. Note the appellate power of the District Court is wider than that of this Court, As an instance I may point out that in Srikantiah v. Honne Gowda AIR 1955 kar 97 an order relating to impleadment under Order XXII of the Code of Civil Procedure, 1908, passed in insolvency proceedings was held to be appealable to the District Court though such an order is not an appealable order under the provisions of the Code of Civil Procedure. This makes it clear that it is neither the Code of Civil Procedure, 1908, nor any other law but the provisions in the Insolvency Act alone that will govern the right of appeal and determine the forum thereof. Under the second proviso to Section 79(1) a second appeal lies to this Court from decisions of District Courts in appeals arising from decisions u/s 4 of the Act in insolvency proceedings on grounds mentioned in Section 100(1) of the Code of Civil Procedure, 1908. Further, the High Court may for the purposes of satisfying itself that an order made in any appeal decided by the District Court was according to law, call for the case and pass such order with respect thereto as it thinks fit. This, it appears to me, enables this Court to revise a decision come to or order passed by a District Court in appeal preferred u/s 79(1) even if it be that the said decision or order is not appealable to this Court on any of the grounds mentioned in Section 100(1) of the Code of Civil Procedure, 1908, or it does not arise out of proceedings u/s 4 of the Act. It was pointed out by Joseph, J., in Padmanabhan v. Harihara Iyer 1964 KLT 244 that u/s 75(1) of the Provincial Insolvency Act, 1920 corresponding to Section 79 of the Insolvency Act, 1956, a revision would lie to the High Court only from the appellate order of the District Court and not from the original order passed by the Insolvency Court. This means that Section 115 CPC has no application to the insolvency proceedings. Sub-section (3) of Section 79 enables a person aggrieved by any other order made by a District Court otherwise than in appeal from an order made by a subordinate Court to prefer an appeal to this Court by leave of the District Court or of the High Court. Note that this provision provides for an appeal only from an order passed by a District Court otherwise than in an appeal before it arising from insolvency proceedings. Lastly Sub-section (4) of Section 79 provides for the period of limitation for appeals to the District Court and to the High Court, the periods so fixed being 30 days in the former case and 90 days in the latter. Therefore, Section 79 is exhaustive as regards right of appeal, forum of appeal, the subject of appeal, and the period of limitation within which the appeal is to be preferred.

In view of what is stated above it is clear that these appeals are to be filed before the concerned District Court. There remains only one aspect more to be adverted to. Relying on the passage in paragraph 774 of the Law of Insolvency in India (Tagore Law Lectures 1929) by Mulla, Third Edition, to the effect that ''an appeal, therefore lies from an order u/s 25 of the Act'', a passage resting on the decision of the Bombay High Court in Mohomed Haji v. Abdul Rahman 31 Indian Cases 507 the learned Counsel for the Appellants submitted that these appeals preferred in this Court are competent. The decision aforesaid Mohomed Haji v. Abdul Rahman 31 Indian Cases 507 concerned the appealability of an order u/s 8 of the Presidency Towns Insolvency Act, 1909. It may be noticed that under the aforesaid Statute the High Courts of Calcutta, Madras and Bombay are the Courts having jurisdiction in insolvency under that Act (see Section 3 of that Act). Section 8 of that Act provides for appeals and the appealable orders and decisions have been divided into two classes, namely, orders passed by an officer of the Court empowered u/s 6 which are appealable to the Judge assigned u/s 4 of that Act for transaction and disposal of insolvency matters; and, orders made by a Judge in exercise of the jurisdiction conferred by that Act which are appealable ''in the same way'' and ''subject to the same provisions as an appeal from order made by a Judge in the exercise of the ordinary jurisdiction of the Court''. I need hardly say that that provision can have no application to the cases on hand and obviously, therefore, the decision relied on is of no assistance to the Appellants.

I cannot leave these cases without recording my deep appreciation of the able assistance rendered by Mr. P.K. Balasubramannyan, who, in accordance with the wishes expressed by me, placed before me all the aspects of the question, for and against, and the decisions thereon to which I have adverted to.

The result is, I hold that these appeals are not entertainable here. These appeals are to be preferred before the respective District Courts to which the Subordinate Judges Court which passed the concerned order is subordinate. I, therefore, direct that the Memorandum of Appeal and connected papers be returned to the Appellants for presentation to the proper Court. Ordered accordingly.