Pasumarti Satyanarayana Rao and Another vs The Official Receiver of West Godavari and Another

Govindarajachari, J.—These civil miscellaneous appeals are against the orders of the District Judge of West Godavari dismissing two

petitions filed by the appellants, two creditors of an insolvent, for review of an order which had been made by the District Judge on the 18th

November, 1944, whereby he annulled the insolvency u/s 43 of the Provincial Insolvency Act. The insolvent was one Chakka Rangayya who was

adjudged an insolvent on his own petition on the 17th November, 1927, in I.P. No. 8 of 1927 on the file of the District Judge of West Godavari. It

would appear that the insolvent had obtained a decree for about Rs.10,000 against one Appaia Raju. There was a doubt whether that decree

created a charge and there was litigation for the purpose of enforcing the charge, if any. The two appellants and certain other creditors financed

that litigation and advanced about Rs. 2,000. The litigation was, however, unsuccessful and it was ultimately established that there was no charge in

respect of the decree against Appala Raju. On the 25th September, 1944, the Official Receiver wrote to the District Judge asking that the

adjudication should be annulled. On the 24th October following, the District Judge directed that notice of the Official Receiver''s letter be given to

the concerned vakils. He also called for a report from the Official Receiver as to whether the administration of the estate was completed and

whether there was any amount in deposit to cover the charges of publication of the notice of annulment. The matter was "" called on "" the 4th

November by which time notice was given only to one Vakil. Notices were therefore directed to be served on three other vakils who had

appeared for some of the creditors in the course of the insolvency proceedings and the matter was adjourned to the 18th November to await the

objections of the creditors and the report of the Official Receiver. Nobody appeared on the date. Meanwhile the Official Receiver submitted his

report in which he stated that there was one decree in favour of the insolvent which he could not execute as none of the creditors was taking any

interest in the matter of the execution of that decree. He recommended that the adjudication should be annulled and that an order should be made

revesting the property in the insolvent. This recommendation was accepted by the District Judge who annulled the insolvency u/s 43 of the

Provincial Insolvency Act. Two of the creditors thereupon filed applications under Order 47, Rule 2 of the CPC read with Section 5 of the

Provincial Insolvency Act for reviewing the order which the District Judge had made on the 18th November, 1944. The applications were

dismissed by the District Judge and the present appeals are against those orders of dismissal. In the supporting affidavits the creditors referred to

the fact that the insolvent died on or about 13th November, 1941, and that they and certain other creditors had advanced a sum of Rs. 2,000 for

the litigation already referred to and that the proper course for the receiver would have been to auction the decree in the insolvent''s favour and to

realise there by as much as could be realised and distribute the same amongst the creditors. Reading the letter of the Official Receiver and the

affidavit together it is obvious that the Official Receiver was unaware of the death of the insolvent so early as 1941 and that he failed to recommend

what he ought to have recommended, viz, the sale of the decree in favour of the insolvent. He no doubt says that none of the creditore co-operated

with him in the matter of execution of the decree, but it does not appeals whether he issued any notice to the creditors asking them for assistance in

the matter of execution and whether on such notice they refused or neglected to cooperate with him. Thus matters of which the Court should have

been apprised by the Official Receiver were not brought to its notice. The District Judge was therefore not justified in refusing to review his

previous order when his attention was drawn to facts which were not placed before him by the Official Receiver and which justified his re-

considering his previous order and Setting aside the annulment which he had directed.

It has been argued by Mr. Viyyanna on behalf of the second respondent in these appeals who is said to be the legal representative of the

deceased insolvent that the lower Court had no power to review its previous order. He relied on C. Venugopalachariar Vs. K. Chinnulal Sowcar

and Others, in support of his, argument. In that case there was an application under Order 9 of the CPC read with Section 5 of the Provincial

Insolvency Act for setting aside an order of annulment which had been passed in the absence of the insolvent. It was pointed out that u/s 10 of the

Provincial Insolvency Act the insolvent could apply for a fresh adjudication, since Section 5 of the Provincial Insolvency Act provides that the

provisions of the CPC shall apply subject to the provisions of the Act. Phillips and Madhavan Nair, JJ., held in the case under discussion that the

special procedure prescribed by Section 10 excluded the procedure laid down in Order 9 of the Code of Civil Procedure. , It is not suggested that

theft is any special procedure prescribed by the Provincial Insolvency Act of which the creditors could have availed themselves, in the

circumstances of the present case. There is abundant authority in support of the proposition that orders passed under the Provincial Insolvency Act

are reviewable as Order 47 Rule 2 is rendered applicable to proceedings in insolvency by Section 5 of the Provincial Insolvency Act see Official

Receiver Tanjore v. Nataraja Sastrial (1922) 44 M.L.J. 251 : ILR Mad. 405. Crl. Appeal No. 86 of 1947. 28th May, 1947. 55 Crl. Appeal No.

86 of 1947 and Abbireddi v. Venkatareddi (1925) 51 M.L.J. 60. We therefore hold that there was jurisdiction in the Court to entertain the

application for review filed by the creditors. In view of what we have stated above as regards the merits of these applications, we allow the

appeals and grant the -review asked for. The second respondent will pay the costs of these appeals, but there will be only one counsel''s fee.