Ram Sunder Rai vs Ram Dheyan Ram

This is an appeal preferred by an objector in an insolvency proceeding in consequence of an order made by the District Judge of Shahabad, on the 11th of June 1917, directing the District Board of Arrah to refrain from paying over to the appellant, Ram Sunder Rai, the sum of Rs. 1,673-15-2, which was due to the petitioner in the insolvency proceedings from the District Board.

It appears that the appellant instituted a suit against the respondent in August 1916 and on the 25th of September 1916 attached the amount in the hands of the District Board in anticipation of judgment. On the 12th of April 1917 the respondent filed an insolvency petition before the District Judge, On the 2nd of June 1917 the appellant got his decree and on the 6th of June 1917 a precept was issued by the Subordinate Judge executing the said decree directing the District Board to pay over to the decree-holder the amount in deposit at the credit of the debtor. The precept was received by the District Board on the 6th of June 1917. On the 7th of June 1917 the debtor made an application to the District Judge asking that an injunction might issue directing the District Board to stop payment. On the 11th of June 1917 the learned District Judge, disallowing the objection of the decree-holder, issued an injunction as prayed for. The present appeal has been filed after leave in accordance with the provisions of the Insolvency Act.

The first question is whether u/s 47 of the Provincial Insolvency Act the Insolvency Court could have in the present case issued an injunction. Section 47 enacts that the Court "shall have the same powers and shall follow the same procedure as it has and follows in the exercise of original civil jurisdiction." The question then arises as to whether under the CPC the Court was competent to issue the injunction. Now it is quite clear that under Order XXXIX of the CPC the Court had no jurisdiction to issue an injunction upon the District Board which was not a party before it. It could only issue an injunction upon the debtor and the creditors who were parties to the insolvency proceeding. Therefore, the order upon the District Board was without jurisdiction. Even accepting the contention of the learned Vakil for the respondent that this was merely a technical error and that the Court''s real intention was to issue an injunction upon the appellant Ram Sunder Rai who was one of the creditors before it, it does not seem that the order was one which the learned Judge was competent to make under Rule 1 of Order XXXIX of the Civil Procedure Code. In order to justify such an order it must be shown that the property in dispute was in danger of being wasted, damaged or alienated by any party to the suit or wrongfully sold in execution of a decree or that the defendant threatened or intended to remove or dispose of his property with a view to defraud his creditors. In this case, upon the finding of the learned Judge himself it does not appear that any of these conditions existed. The Provincial Insolvency Act does not authorise the Insolvency Court to stay every pending litigation and the Court can only issue an injunction if the circumstances enumerated in Rule 1, Order XXXIX, of the CPC or any of them are proved to exist. Reference has been made to a decision of their Lordships of the Calcutta High Court in Abdul Razab v. Basiruddin Ahmed 6 Ind. Cas. 95 : 1911 Cri.L.J. 435 : 14 C.W.N. 586, where the learned Judges acting u/s 151 of the CPC issued an ad interim stay pending the hearing of the appeal against an order under the Insolvency Act. Now that decision is not material to the case before us. In the present case even if the order of the District Judge restraining the creditor from taking the money from the district Board was made u/s 151 of the Civil Procedure Code, it must be shown that the making of that order was in accordance with the principles of justice, equity and good conscience. I am unable to see that there are any facts in the present case which indicate that justice, equity and good conscience require that the decree-holder, who instituted his suit long before the insolvency petition was filed, should be kept out of his money. The decision of their Lordships of the Allahabad High Court in Anurudh Kunwar v. Kesho Das 39 Ind. Cas. 783 : 15 A.L.J. 473 : 39 A. 547 is very much to the point and Sections 34 and 35 of the Insolvency Act really have nothing to do with the present case, where no adjudication of insolvency has been made nor a Receiver appointed.

In the view that we take it becomes unnecessary to discuss the meaning of the phrase "assets realised" in Section 34 of the Provincial Insolvency Act, but if it were necessary to do so we think that in this case the assets were realised. There was no order of the Civil Court upon the District Board to send the money to the Court and, therefore, the authorities which hold that where money has been ordered to be deposited as assets it cannot be considered to have been realised till it reaches the Court, do not apply. In this case the District Board were directed on the 2nd of June to pay the money to the decree-holder and from that time the money became the decree-holder''s money and the District Board mere trustees on behalf of the decree-holder. The assets, so far as the judgment-debtor was concerned, became assets realised by the decree-holder in the possession of the District Board on behalf of the decree-holder. This case is, therefore, distinguishable from the case of Debt Prasad v. Chiene 16 Ind. Cas. 84 : 9 A.L.J. 707, where the money was ordered to be paid to an officer of the Civil Court and it was held that till it had reached the officer, it could not be considered to be an asset realised within the meaning of the Provincial Insolvency Act. But as I have said before, it is not necessary to determine for the purposes of the present case whether the assets were or were not realised within the meaning of Section 34 of the Provincial Insolvency Act. In our opinion that section does not apply to the present case. We are of opinion that the order of the Insolvency Court was made without any authority in law and must, on that ground, be set aside.

We direct that the money in the hands of the District Board be paid to the appellant upon his applying for the same to the District Board.

The appeal succeeds and is decreed with costs--hearing fee Rs. 32.