Ramdayal and another vs Shankarlal and others

Shripatrao, J.—This is an appeal against the order of the Sessions Judge at Aurangabad dated the 28th Azur 1356F (28-10-1946) in an insolvency matter. A Division Bench of this High Court referred to the Full Bench the whole appeal together with certain questions for our decision.

The facts out of which this appeal arises are that appellant No. 1 Ramdayai submitted an application in the Court of the Sub Judge at Akola under S, 9 of the Provincial Insolvency Act praying that the n on-applicants (respondents) be adjudged as insolvents. The original non-applicants were Shankarlal Murlidhar and Tejmal who were alleged to be members of a joint Hindu family carrying on business under the name and style of "Ganeshdas Gulabchand". The Akola Court framed certain issues, out of which issue No. 2 was "whether the non-applicants were co-parcenery members of a joint Hindu family trading under the name and style of "Ganeshdas Gulabchand". On 6th December 1939 the said Court allowed the petition and adjudged the non-applicants to have become insolvents. In pursuance of that order the Akola Court appointed on 7-12-1939 one V.R. Oak (present appellant No. 2) as official receiver.

On 2nd Bahman 1355 F (5-12-1945) the present appellant submitted a petition in the Court of the Sadar Adalat at Aurangabad stating that the receiver had taken possession and control of all the property within the Province of Berar and that he wished to have seizin of the property situate within the jurisdiction of the Aurangabad Court through a receiver appointed by that Court: that the judgment of the Akola Court was passed after due enquiry: that it may be recognized by the Aurangabad Court and for the purpose of facilitating the ends of justice the receiver appointed by the Akola Court may also be appointed receiver by the Aurangabad Court: that under the Insolvency Law, the property of the insolvents vests in the Court or its receiver from the date of the adjudication order as such the Court has power to appoint a receiver and sell the property and remit the sale proceeds to the Akola Court: and that under the principles of natural justice and private International Law, the application should be entertained. The nonapplicants, Tejmal and Murlidhar in their counter dated 29th Sherewar 1355 F (4-8-1946) stated that they had no concern with the said firm or its property: that the judgment of the Akola Court was ex parte: that the petition was not drafted properly and in consonance with Ss. 19 and 13 of the Hyderabad Insolvency Act: and that the same should, therefore, be dismissed. The respondent Shankarlal submitted a separate counter on 15th Dai 1355 F. He repeated some of the objections that were raised by the other two non-applicants Tejmal and Murlidar. He admitted the existence of the firm "Ganeshdas Gulabchand" and stated that the said firm had no property or business within the limits of the Hyderabad State. He further stated that the Akola Court, had no jurisdiction to pass any orders with regard to the immoveable property situate within the Hyderabad State. It is to be noted that the said Shankerlal had put in his appearance by a pleader in the Akola Court and filed a written statement there and yet he stated that under S 8, H. C. P.C. corresponding S. 13, I. C. P. C, the judgment of the Akola Court was not binding upon him. On 28th Azur 1356 F, the lower Court dismissed the petition of the applicant on the ground that the judgment of the Akola, Court was by a foreign Court, that it was not binding upon the Courts of this State and that the receiver appointed by the Akola Court cannot be given possession of the property of the insolvents situate within the Hyderabad State. The lower Court did not assign any reason for refusing to recognize the receiver appointed by the Akola Court.

4.Against this decision the appeal under consideration before us has been filed and the Division Bench on 1-3-1359 F" corresponding to 1-12-1950 referred the appeal for disposal to this Full Bench stating that the following questions may be decided together with the case. The three questions referred to are as follows:

(i) whether the sub-Judge''s Court at Akola was a Court established by the Hyderabad Government (Adalat-e-Sarkar-e-Ali)?

(ii) If the first question is answered in the negative, whether a receiver appointed by the Court at Akola can have any right or interest in the property of the insolvents?

(iii) Whether the appeal was tenable in view of the provisions of the Hyderabad Insolvency Act?

During the pendency of the appeal, Tejmal, respondent No. 3, died on 10-3-1950 and a controversy has arisen as to who is his legal representative and whether the appeal should abate. On the 16th of October 1950, appellant No. 2 the official receiver submitted a petition stating that the said Tejmal had died leaving his widow Dhapi Bai behind him, that he learnt that the said Dhapi Bai had adopted a son, that the name of the adopted boy and the date of his adoption are not known to him and that time be granted to him for finding out the same and for filing L.R. petition. Nothing happened on this petition and no further application was filed until this Court on 27-8-1951 suo motu took cognizance of that petition.

On 1-10-1951 the appellant filed a petition stating that he came to know that the widow of the said deceased Tejmal wanted to take a boy in adoption but that she subsequently changed her mind and had not taken any boy in adoption, that the respondents'' firm was a joint Hindu family firm and as such the remaining respondents already on record viz., Shankarlal and Murlidar sufficiently represented the deceased, that the question of abatement of appeal does not arise and that the name of the deceased Tejmal be permitted to be struck off from the record. A counter was filed on 5-11-1951 by the respondent Shankarlal. He admitted that the three brothers i.e., himself, Murlidhar and Tejmal formed a joint Hindu family, that they were carrying on business under the name and style of "Ganeshdas Gulabchand" and that they were declared insolvents by the Akola Court. He further stated that some 11 or 12 years back the brothers separated and the property was partitioned between them and that Dhapi Bai, the widow, took in adoption one Surajkaran (in Chait Sudd: Samwat 2007 roughly March 1951) who is the son of respondent Shankarlal. He, therefore, prayed that the appeal be declared to have abated in toto as the adopted son was not brought on record within the time prescribed by law for bringing the legal representatives on record the respondents as also the appellants at the outset thought that the question as to the bringing of legal representatives of the deceased Tejmal was to be decided under O. 22, C.P.C. But we are of the opinion that the matter is governed by the provisions of the Hyderabad Insolvency Act. S. 17 of the Act provides that if a debtor by or against whom an insolvency petition has been presented dies the proceedings in the matter shall unless the Court otherwise orders be continued so far as may be necessary for the realisation and distribution of the property of the debtor. In view of S. 5 of the Act, it is clear that the provisions of S. 17, should be given preference over the provisions of O. 22 Civil P.C., in the case of death of a debtor the aim of the Bankruptcy Law is to realize and distribute the property of the debtor among the creditors, & hence if a debtor died before adjudication S. 17, gives power to the Court to continue the proceedings for the benefit of the general body of the creditors the same rule applies if death of the debtor takes place after adjudication and the Court can continue all necessary proceedings subsequent to adjudication.

Under S. 17, the Court has been given discretion to continue the proceedings in the matter so far as may be necessary for the realisation and distribution of the property of the debtor while under O. 22 Civil P.C., the criterion is different. the criterion under O. 22, is laid down in R. 1 of the Order, which states that the death of the plaintiff or defendant shall not cause the suit to abate if the right to sue survives and then follow the remaining rules of the Order which lay down the procedure for bringing the legal representative of the deceased on record. Those proceedings are to he instituted either by the plaintiff or the appellant as the ease may be and the Court has no initiative in the matter. Such is not the case under S. 17 of the Hyderabad Insolvency Act, where the Court or the receiver (when appointed) has power to continue the proceedings in the matter and for that purpose bring such persons on record if necessary in place of the deceased for the purpose of collecting the assets of the insolvent for distribution. In such cases the question of limitation and the application of Art. 177 of the Limitation Act, would not arise as the provisions of O. 22 Civil P.C., do not apply. Thus, if we feel that in spite of the death of Tejmal the appeal can and should proceed against the remaining respondents, we can order accordingly and if we feel that some one else other than the remaining respondents should be brought on record in place of the deceased Tejmal, we can do so and the question of limitation will not arise.

We have, therefore, to decide whether the remaining respondents sufficiently represent the interests of the deceased Tejmal for the purposes of this appeal, or whether his widow Dhapi Bai or the alleged adopted son Suraj-karan, in case his adoption is proved, should be brought on record. In the application for the issue of an adjudication order the appellant stated that the non-applicants including Tejmal the deceased were members of a joint Hindu family carrying on business under the name and style of "Geneshdas Gulabchand" there was an issue framed by the Akola Court as to whether the family was coparcenary and the firm was a joint firm. That issue was decided in the affirmative by that Court. Hence it is clear that if one of the coparceners dies the remaining coparceners will and do sufficiently represent the interests of the deceased Tejmal in case of his death without leaving any son or grand-son. Thus, the question of bringing Dhapi Bai the widow of the deceased, on record for purposes of this appeal is out of consideration.

With regard to the allegation of adoption, Shankarlal has stated in his petition that it was after a year or more that his son Surajkaran was adopted by Dhapi Bai. This allegation is denied by the appellant. It is to be remembered that Tejmal the deceased has in his counter (paragraph 3) dated 29th Sherewar 1355 F (4-8-1946) before the lower Court stated that he has no concern whatsoever either with the joint family firm or with any property of the firm. Thus, prima faice, assuming (but without holding that it has been proved) that the adoption to be true the adopted son who will be the legal representative of Tejmal will be bound by the statement as above and he would not, therefore, be much interested in contesting these proceedings. In his counter before us Shankarlal alleged that about 11 or 12 years back the three brothers separated and partitioned their property the allegation is vague. It does not mention the exact date of the alleged partition nor does it mention as to what family property each of the three brothers got after partition. Moreover, the adjudication order of Akola Court is dated 6-12-1939 and the alleged partition by Shankarlal about 11 or 12 years from now would be sometime in 1940. Thus, even if there was a partition it would be subject to the vesting order of the Akola Court. Under the circumstances we are of the opinion that the appeal can be decided in the presence of the remaining respondents and no fresh person is necessary to be brought on record in place of the deceased Tejmal. We, therefore, order the name of Tejmal to be struck off from the memorandum of appeal. In ''Bhagat Ram v. Dhanpat Mal Jawala Dass'', 202 Ind Cas 140 (Lah), it was held that the adjudication of a person as an Insolvent is not a matter purely personal to him; it affects not only his person but also his property which but for the adjudication would, on his death, had devolved on his heirs; they have a material interest in the proceedings which have a very far reaching effect on their rights; the right to resist the creditors application for adjudication is, therefore, not a mere personal right which lapses on the death of the insolvent, it is a right which survives; hence, where during the pendency of an appeal by an insolvent against his adjudication as insolvent on the petition of a creditor, the insolvent dies, the appeal does not abate. It was also held that the same consideration will apply equally if the debtor had been adjudicated insolvent on his own application and the creditors had appealed making him a respondent and he had died. It was held that in such a case also the heirs have material interest in the decision of the appeal, and are entitled to be brought on record.

It was suggested on the basis of this ruling that Tejmals heirs have material interest in the decision of the appeal before us. But it is to be remembered that the only person resisting this appeal and also the insolvency matter before the Akola Court was Shankarlal. As already stated Tejmal the deceased was absent in the proceedings before the Akola Court and also before us. In the proceedings before the lower Court he had no interest in the matter. Thus it cannot be said that he or his heirs have any material interest in resisting this appeal. Moreover this ruling will have still lesser application to the facts before us when we come to the conclusion that the petition filed by the applicant before the Aurangabad Court was u/s 80 of the Hyderabad Insolvency Act corresponding to S. 77 of the Indian Insolvency Act and was submitted for the purposes of invoking the aid of the Aurangabad Court in the matter the facts before the Lahore High Court as cited in the ruling were that an appeal was filed by an insolvent against his adjudication as insolvent on the petition of a creditor. On the death of the insolvent the question arose whether his heirs should be brought on record to represent before the Court that the order under appeal was unjustified and liable to be set aside. Such are not the facts before us. No appeal was filed by any of the insolvents against the adjudication order of the Akola Court. As is clear from the facts, this appeal has arisen out of a petition subsequent to the adjudication order of the Akola Court. The question of the propriety or otherwise of the order by the Akola Court declaring the non-applicants as insolvents is not under discussion by way of appeal before us the petition before the lower Court was for giving effect to the order of adjudication so far as the property of the insolvents within the local limits of the lower Court was concerned and it was obviously u/s 27 and subsequent Sections of the Insolvency Act. Thus while deciding that the widow of the deceased or the alleged adopted son need not be brought on record for the purposes of this, appeal, we do not wish to fetter the discretion of the lower Court if that Court wishes to bring them on record and hear their representation under the provisions of Section 36 or similar provisions of the Insolvency Act for giving proper effect to the adjudication and for realisation and distribution of the assets of the insolvents among the creditors, but they will not be entitled to raise any objections against the order of adjudication passed by the Akola Court. In this appeal it is to be noted that neither the alleged adopted son nor Dhapi Bai the widow of Tejmal has submitted any application before us for their being brought on record and for their arguments being heard by us. It is Shankarlal and Shankarlal only who requests and insists that the appellants be compelled to bring those persons on record in place of Tejmal. In the circumstances of the case, we reject the said request as there are necessary parties before us for proceeding with the matter in dispute.

The next point to be decided is whether the appeal was tenable in view of the provisions of the Hyderabad Insolvency Act. This is question No. 3 in the order of reference. Section 78 of the Hyderabad Insolvency Act is very clear on this point. It provides that a debtor or a creditor or a receiver or any person feeling aggrieved by the order of insolvency Court can prefer an appeal against such an order. The words of the Section are very wide the petition in the lower Court was for invoking the insolvency jurisdiction of that Court. We are therefore of the opinion that this appeal is tenable and reject the contention of the respondents in this respect.

Having disposed, of the preliminary points, we shall now proceed to consider the appeal on its merits the first thing to be considered in this connection is that due to the accession of this State to the Indian Union there has been a change of status. This State is now an integral part of the Indian Union and it is no longer a foreign territory or State. Therefore the question referred to us viz., "Whether the Special Judge''s Court of Akola is a foreign Court or a Court of the Hyderabad State" need not be considered in detail as all the Courts of this State have become Courts of the Indian Union. As such, the Akola Court being a part of the Indian Union the contention that it is a foreign Court can no longer hold ground. In this respect Prof. Willis in his Treatise on Constitutional Law 1936 Edn. page 454 has stated as follows:

The full faith and credit clause has the effect of putting a sister State judgment or statute on a different basis from that of foreign judgment. In such cases the States are not left free to apply the rule of Conflict of Laws.

The provisions of Art. 261 are in many respects pari materia with the provisions of the American Constitution Art. 4, R. 1. In this connection Prof. Willis has further stated (455)'' that :

judgments recovered in the Courts of a State differ from judgments in that they are not re-examinable on the merits according to the rules of Conflict of Laws.

We cannot therefore now re-examine the Akola Court''s judgment treating the same as a foreign judgment. the result therefore is that the judiciary of this State is bound to take action on the jurisdiction order passed by the Akola Court though that is not an order passed by a domestic Court of this State subject of course to the provisions of local laws if any with respect to immoveable property. No objection has been raised before us that the order of the Akola Court was without jurisdiction. We need not therefore discuss that point as there is a presumption that the Akola Court had jurisdiction taking into consideration the facts stated by petitioner No. 1 before that Court - see ''Huntington v. Attrill'', (1892) 146 U S 657, in which it was held that where the Court of appeals of Maryland refused to enforce a judgment recovered in New York against the officers of Corporation by a creditor thereof for making a false certificate of the amount of its capital stock paid in, under a law of that State making such officers liable by reason of such false certificate for the debts of the corporation, which refusal was upon the ground that the judgment was one which the Court was not bound to enforce, it denied to the judgment the full faith, credit and effect to which it was entitled under the Constitution and laws of the United States.

Thus, it will be necessary to give the aid asked for by the Akola Court. It is evident that proceedings with respect to immoveable property situate within the jurisdiction of the Aurangabad Court must necessarily be brought in that Court and there is no reason why that Court should not assist the Akola Court in selling the lands so situate subject of course to the rights of third parties if any.

Even if it be held that the Akola Court was a foreign Court qua the Aurangabad Court (the Court of the State) at the time of the dismissal of the petition by the latter Court it has ceased to be so before the hearing of this appeal. This Court hag power to take notice of the subsequent change of status & to pass such orders as are deemed just and equitable. We are supported in our view by the ruling in '' Chunnilal Kasturchand Vs. Dundappa Damappa, . In that case a decree passed by the Belgaum Court was sought to be executed against a citizen of the Indian State of Jamkhandi the Jamkhandi Court dismissed the execution petition on the ground that as the decree was passed by a foreign Court it was not executable. In the meanwhile Jamkhandi State became a part of the Indian Union and it was held by their Lordships of the Bombay High Court that the Belgaum Court was no longer a foreign Court qua Jamkhandi Court nor the judgment-debtor a foreigner. In '' Bhagwan Shankar Vs. Rajaram Bapu Vithal, the same view was approved by the Full Bench of the Bombay High Court. It was held that due to integration of the Akkalkot State with Bombay, the status of Akkalkot had been altered as also the status of the defendant the defendant became the citizen of India and the Akkalkot Court became a municipal Court. Thus, it is clear that the Akola Court is not now a foreign Court and we must recognize its adjudication order subject to facts, if any, arising during the intermediate period of the passing of the said order and the accession of the Hyderabad State to the Indian Union. Under S. 80 of the Hyderabad Insolvency Act corresponding to Section 77 of the Provincial Insolvency Act it is provided that all Courts having jurisdiction in insolvency should severally act in aid of and be auxiliary to each other in matters of insolvency, and an order of a Court seeking aid with an other insolvency Court will be deemed sufficient to enable the latter Court to exercise its insolvency jurisdiction. A requisition was made by the Akola Court to the lower Court (Aurangabad Court) under the said Section on the 7th of September, 1946 and the same was rejected, but in view of the altered conditions now there is no reason why it should be rejected by us in appeal. Further, we must not forget that Art. 261 is in Part II of the Constitution of India which lays down the provisions with regard to the relations between the Union and the States. Chapter II of this Part deals with administrative relations in which Art. 261 is inserted. We must therefore give whatever aid is possible in response to the requisition of the Akola Court,

Mr. Ekbote on behalf of the respondents argued that the Provincial Insolvency Act of the Indian Union has not been made applicable to the State, that S. 80 of the Hyderabad Insolvency Act should be given a restricted meaning and that an Insolvency Court in Hyderabad State will exercise its insolvency jurisdiction u/s 80 only when some other insolvency Court within the Hyderabad State exercising jurisdiction under the Hyderabad Insovency Act seeks its aid. He argued that aft the Akola Court is not a Court having jurisdiction to hear insolvency matters under the Hyderabad Insolvency Act the Aurangabad Court cannot be regarded as an auxiliary Court under the Section. It is not necessary to deal with, the objection in detail as we have to give effect to the provisions of the Indian Constitution. Article 261, Clause (3) lays down that final judgments or orders delivered or passed by the Civil Courts in any part of the territory of India shall be capable of execution anywhere within the territory according to law the order of adjudication passed by the Akola Court therefore can be given effect to by the Aurangabad Court as it is now part of the territory of India. Article 372 (1) of the Constitution has the force of continuing the existing Hyderabad Insolvency Act but it is subject to the over-riding provisions of the Constitution. Thus, even assuming that the Akola Court is not an Insolvency Court established under the Hyderabad Insolvency Act, the order of the Akola Court has got to be recognized under Art. 261(3) of the Constitution. A Division Bench of this High Court expressed a similar view in an unreported case viz., ''J. H. Subbiah v. Revachand Daulatram'', decided on 24th of July, 1951 being appeal No. 6 of 1951, registered No. 5/2, and we agree with the same.

Moreover, the principle underlying S. 80 of the Hyderabad Insolvency Act is that one Insolvency Court should assist another Insolvency Court in dealing with matters within the jurisdiction of the latter Court there is no prohibition in S. 80 of the Hyderabad Insolvency Act laying down that an Insolvency Court under the said Act should not aid or act as an auxiliary Court if a request for the same is made by some other Insolvency Court. When there is no such prohibition, the underlying principle of the Section, in our opinion, should be acted upon subject to objections if any of a third party. Thus, we are of the opinion that the Aurangabad Court should act on the letter of request referred to above sent by the Akola Court. In ''IN RE MARQUIS OF HUNTLY'', (1917) 2 K B 729 it was held that the purpose of Section 122 of the Bankruptcy Act of England (corresponding to Section 80 of the Hyderabad Insolvency Act) was to enable one Court to assist another in dealing with matters which were within the jurisdiction of the Court asked to act. That being the purpose of the enactment it is necessary in our opinion that the Aurangabad Court should assist the Akola Court in the matter and there are no sufficient grounds for refusing the aid asked for. there are no difficulties in rendering the assistance asked for. But such difficulties may have arisen if the rights of a third party were involved in the property within the jurisdiction of the Aurangabad Court. Such was the state of facts in ''Galbraith v. Grim-Shaw, (1910) A C 508. In that case a debtor was declared insolvent by a Scottish Court. He had some money claims against a third party residing within the jurisdiction of the Courts in England. A creditor obtained a money decree against the debtor and served a garnishee order on a firm in England which owed money to that debtor. After the service of the said garnishee order the Court in Scotland became vested in the property of the debtor in the Insolvency Proceedings and the trustee in the Insolvency Proceedings appointed by the Scottish Court sought to recover the debt which was already attached by the garnishee order the question was as to which of the orders should be given effect to. It was held that the rights of a third party who had served the garnishee order should be given preference to as against the trustee in insolvency. No such questions have been raised by the respondents or by any third party in this appeal with regard to the immoveable property at Aurangabad. No one has instituted any claim before the Aurangabad Court alleging that he has any rights in the insolvent''s property at Aurangabad and that those rights should be given preference and precedence over the claims of the receiver at Akola Court. Thus, there is no difficulty what-so-ever in rendering assistance to the Akola Court.

The result is that the appeal is allowed and the order of the Sadar Adalat, Aurangabad (District & Sessions Court) is set aside. The appellants would be entitled to the costs of this appeal (one set). Advocate''s fee Rs. 100/-. the case will go back to the District and Sessions Judge, Aurangabad, with the direction that he should entertain the application of the appellants seeking the aid of the Court for taking over the estate of the insolvents within the jurisdiction of the District and Sessions Judge, Aurangabad, appoint the same receiver in order to facilitate the realisation of assets unless the Court thinks that there is any objection to his appointment, and pass such appropriate orders for the proper administration of the estate of the insolvents.

SRINIVASA CHARI J.: I have had the advantage of going through the judgment of my learned Brother Shripat Rao J., and I agree with him that this appeal should be allowed. The facts of this case have been set out in detail in the judgment of my learned brother.

The appellant No. 1 before us filed an application before the Sub-Judge at Akola (Berar-Madhya Pradesh) that Shankerlal, Murlidhar ana Tejmal, who according to him, were members of a joint Hindu family carrying on business under the name and style of Ganesh das Gulabchand be adjudged insolvent. The SubCourt at Akola adjudged Shankerlal, Murlidhar and Tejmal as insolvents on 6th December 1939 and appointed one Mr. Oak as the Official Receiver for the estate of the insolvents. The Properties of the insolvents therefore were taken charge of by the said Official Receiver.

A long time after, on the 2nd Bahman 1355F., 5th December 1945, the Receiver filed an application in the Court of the Sadar Adalat at Aurangabad praying that inasmuch as he had been appointed Official Receiver by the Akola Court in respect of the estate of the firm of Ganeshdas Gulabchand at Akola, the Aurangabad Court might be pleased to appoint him Receiver and permit him to take possession of the properties of the said insolvents situated within the jurisdiction of the Aurangabad Court. In the proceedings before the Sadar Adalat at Aurangabad notice was issued to Tejmal and Murlidhar who contended that they had no concern with the firm which was adjudged insolvent or its property. They further urged that the order passed by the Akola Court was ex parte and for the above reasons they prayed that the Petition filed by the Official Receiver in the Aurangabad Court be dismissed. Shankerlal, however, submitted a separate counter and he, while raising the objections that were raised by the other two non-applicants, admitted the existence of the firm of Ganeshdas Gulabchand and stated that that firm had no property or business within the limits of the Aurangabad Court. He also raised the plea that the Court at Akola had no jurisdiction to pass any order with regard to the immoveable property situated in the Hyderabad State.

On 28th Azur 1356 Fasli - 2nd November 1947, the Aurangabad Court dismissed the Petition of the Official Receiver (appointed by the Akola Court), on the ground that the order of the Akola Court was an order of a foreign Court and "therefore was not binding upon it and further that the Receiver appointed by the Court at Akola could not be given possession of the properties situated within the Hyderabad Slate. Against the above order Ramdayal and the Official Receiver have filed this appeal. This appeal came on before the Division Bench and the Division Bench after hearing the arguments referred the whole appeal to a Full Bench and also formulated the following questions for the consideration of the Full Bench.

(i) Whether the sub Court of Akola could be regarded as a Court of Sircar Ali;

(ii) If the first question is answered in the negative whether a Receiver appointed by the Court at Akola could have any right or interest in the property of the insolvent; and

(iii) Whether the appeal filed by the appellants was tenable in view of the provisions of the Hyderabad Insolvency Act.

When the appeal was being heard by the Full Bench it was pointed out that Tejmal, Respondent No. 3, died on 10th March 1950 and it was strongly urged by the learned Advocate for the Respondent No. 1, Shankerlal, that inasmuch as the legal representatives of the deceased Respondent No. 3 had not been brought on record the appeal abated wholly and. therefore should be dismissed. With regard to this matter the Official Receiver filed an application before this Court on the 16th October 1950, stating that the said Tejmal died leaving his widow Dhapi Bai and he also stated that his information was that the said Dhapi Bai had adopted a son and that he would, after ascertaining the name of the adopted son, file an application. No further steps were taken by the Official Receiver till 27th August 1951. When this Court had to take notice of it suo motu. On the 1st October 1951, the appellant filed an application stating that he has since come to know that the widow of the said Tejmal wanted to take a boy in adoption, but subsequently she changed her mind and did not take any boy in adoption. He, however, contended that as the Respondent''s firm was a joint Hindu family firm there was no necessity to bring on record the legal representatives of the deceased Tejmal, and Shankerlal and Murlidhar who were already on record sufficiently represented the deceased and therefore no question of abatement arose.

To this application a counter was filed by Respondent No. 1. He admitted that Shankerlal, Murlidhar and Tejmal formed a joint Hindu family, who were carrying on business under the name and style of Ganeshdas Gulabchand and that it was this firm that was adjudged insolvent by the Court at Akola. He however stated that about 11 years ago these brothers separated and after the separation Dhapi Bai took a boy in adoption by name Suraj Karan somewhere in March 1951. He, therefore, contended that the effect of not bringing the said Suraj Karan on record as the legal representative of Tejmal within the prescribed period was that that appeal abated.

We thought it desirable to deal with the first point as to whether under the circumstances of this case this appeal which had been filed by the Official Receiver and the Creditor abated.

It has to be said at the outset that among the Acts of the Indian Union which have been applied to the Hyderabad State by the Part B States Laws Act, Act III of 1951, the Provincial Insolvency Act of 1920 has not been applied to Hyderabad, and therefore, in so far as matters relating to insolvency are concerned we are governed by the Insolvency Act of the Hyderabad State Act No. 8 of 1351 Fasli. Most of the provisions of the said Act are analogous to the provisions of the Provincial Insolvency Act. It was argued by the learned Advocate for the Respondent No. 1 that in proceedings arising under Insolvency jurisdiction the Court would adopt the procedure laid down in the CPC as far as possible and on the basis of this the learned Advocate contended that where the legal representative of a deceased person was not brought on record the appeal would abate. It has to be borne in mind that immediately a person is adjudged an insolvent and a Receiver is appointed his property vests in the Receiver and the Receiver thereafter represents the estate of the insolvent. It, would, therefore, follow that where a debtor has been adjudged an insolvent notwithstanding his death pending the hearing of the insolvency petition his estate would be available for distribution amongst his creditors. In fact the Receiver is not divested of the property by the insolvent''s death. Section 17 of the Hyderabad Insolvency Act which corresponds to S. 17 of the Indian Act is clear on this point. Whether the adjudication has been at the instance of the creditor or at the instance of the debtor himself, the result would be the same and it does not matter at what stage of the proceedings the debtor dies. The Receiver can deal with the deceased insolvent''s estate as well as he could if the insolvent were alive. Therefore no question of abatement can ever arise if the insolvent dies.

There is no law that upon the death of an insolvent his legal representative should be brought on record in his place. This is on the principle that the receiver represents the estate of the insolvent & for the purposes of collecting the assets and distributing them among the creditors he can continue the proceedings and there will be no abeyance of the proceedings by reason of the death of the insolvent. Courts have gone to the length of holding that even if a debtor dies after filing the petition and before he is adjudged insolvent the proceedings would not abate, but could be continued by the receiver. This was what was decided in the case of ''Venkatrama Aiyer v. Official Receiver, TINNEVELLY'', 51 Mad 344. Likewise after a creditor has filed an application and before the debtor was adjudged insolvent the debtor died; the Calcutta High Court following the above Madras ruling held that the proceedings would not come to ah end, vide in this connection the case of Ramesh Chandra Sil and Another Vs. Charu Chandra Mohuri and Others, the idea underlying the principle that the proceedings in insolvency would not abate by reason of the death of the insolvent is that the policy of insolvency law is that proceedings started in insolvency should not invalidate further proceedings in regard to the administration of the estate of the insolvent which is for the benefit of the whole body of creditors. The aim and purpose of the insolvency law is to realise the assets of the debtor and distribute it amongst its creditors, and therefore, even if the debtor dies this process could not be stopped and the Court has the power to continue the proceedings for the benefit of the general body of creditors. I, therefore, hold that the objection that by reason of the legal representative of the deceased Tejmal not having been brought on record the appeal abates cannot hold good and therefore fails.

The next point that falls to be considered is the effect of the order of adjudication of the Court at Akola so far as the properties of the insolvent in Aurangabad are concerned. As I have stated above, among the Acts of the Indian Union that have been applied to Hyderabad under the Part B States Laws Act, Act III (3) of 1951. The Provincial Insolvency Act of 1920, has not been applied. The result is that we would be governed by the Insolvency Act of the Hyderabad Act 8 of 1351 Fasli. The provisions of this Act are exactly the same as the provisions of the Provincial Insolvency Act. Under S. 28, sub-section 2 of the Hyderabad Insolvency Act, on a person being adjudged insolvent the whole of his properties would vest in the Court or in a Receiver and shall become divisible among all the creditors and thereafter no creditor, to whom any debt is owing by the insolvent, could seek his remedy for the recovery of his debt by any legal proceedings except with the leave of the Court and on such terms as the Court may impose. Therefore the property of the insolvent whether moveable or immoveable situated within the territory to which the Hyderabad Insolvency Act applies, would vest in the receiver and the order of adjudication passed by the Court would operate as a statutory transfer of all such property of the insolvent to the Official Receiver. Where an adjudication order is made by one Court, in the Hyderabad State if the properties of the insolvent are situated within the jurisdiction of another Court, exercising insolvency jurisdiction, the former Court could seek the aid of the latter Court to exercise its powers in insolvency in order to facilitate the taking over of the assets of the insolvent for distribution among the creditors.

In the case under consideration the order of adjudication was passed by the District Court at Akola in Berar. The question arises as to whether the Akola Court could be regarded as a Domestic Court. If it is not a Domestic Court but should be regarded as a foreign Court we have to consider what legal consequences would follow. So far as the Akola Court is concerned, which is situated in Berar, it would be regarded as a foreign Court although Berar, was within the sovereignty of the Nizam. In a case which went up from the Madras High Court to the Privy Council (the case of Ananta Padmanabhaswami v. Official Receiver, SECUNDERABAD'', 142 Ind Cas 552 (P.C.), the Privy Council held that the District Court at Secunderabad was a foreign Court. Secunderabad was within the sovereignty of the Nizam but was administered by the Resident as a representative of the Governor General of India and the Privy Council regarded the Court situated at Secunderabad as a foreign Court for the purposes of the Insolvency Act.

In this case a certain person was adjudged insolvent by the District Court at Secunderabad. Against this person who was adjudged insolvent there was a decree passed by the Bombay High Court which was transferred to the Madras High Court for execution. the decree-holder sought to execute the decree by attaching a preliminary decree in favour of his judgment debtor and at this stage the Receiver appointed by the District Court at Secunderabad objected to the execution of the decree on the ground that the property of the insolvent in Madras vested in the Official Receiver appointed by the District Court of Secunderabad. On the facts of this case their Lordships of the Privy Council held:

(i) That Secunderabad remained part of the Hyderabad State and property of the Nizam. the fact that justice was being administered according to British enactments by the District Court did not render the order of that Court in so far as Courts of British India were concerned, of anything but the orders of a foreign Court;

(ii) A foreign adjudication operates under the rule of Private International Law and the adjudication order of a foreign Court cannot have the effect of vesting the property of the insolvent in British India in the Receiver. On the same analogy, Berar was under the suzerainty of the Nizam but subject to the laws passed by the Indian Legislature. Applying the test laid down by the Privy Council being part of the Nizam''s State, it could be regarded as a Domestic Court as far as the Hyderabad State was concerned but the trend of the derisions of this High Court has been to hold otherwise and I am bound to follow those decisions on the principle of Stare Decisis.

Therefore so far as the Hyderabad State was concerned the Berar Court would be regarded as a Foreign Court. If it is a foreign Court, the order of adjudication passed by the Akola Court would not operate to vest the immoveable properties of the insolvent situated in Aurangabad in the Receiver appointed by the Akola Court. the Law is clear on this point that so far as the immoveables of an insolvent in a foreign country are concerned the view of international law is that the statute under which the order of adjudication was passed would not operate unless it is shown that the foreign law will give effect to it. therefore until the bankrupt has conveyed his immoveables to the Receiver in the manner required by the law of the country where the property is situated, the Courts of that country will continue to regard the bankrupt as owner Ringwood in his book on ''Bankruptcy Law'', says:

The English Court concedes to universal assignment in foreign bankruptcies precisely the same effect as it claims for such assignments in English bankruptcies so that assignment under a foreign bankruptcy is effectual to pass all such property in England as would pass with English Trustee, ''subject, however, to the requirements of English Law as to the conveyance of immoveables.

In the case of ''Callander Sykes & Co., v. Colonial Secretary of Lagos and Davies'', (1891) A.C. 460, the Privy Council held that an order of adjudication made under the English Bankruptcy Act, would operate to vest in the trustee in bankruptcy, the bankrupt''s title to real estate situated in the colony of Lagos, subject to any requirements prescribed by the Local Law as to the conditions necessary to effect a transfer of real estate situated there. It has to be observed that although as a matter of law the immoveable property of an insolvent in a foreign jurisdiction does not automatically vest in the Official Receiver appointed by a Foreign Court still inasmuch as the policy of the Bankruptcy Law is to make available a the assets of the debtor available for the benefit of the body of creditors the Foreign Court would help to make such property available for the creditors by adjudging him insolvent.

With regard to the jurisdiction of Courts the relative position of the Courts in the Hyderabad State is very similar to those of the Courts in British India (now Indian Union). If the order of adjudication was one made by a Domestic Court there is provision in the Insolvency Act for transferring cases from one Court to another and to seek the assistance of another Court where the property is situated in order to be able to realise the assets of the insolvent in the jurisdiction of the transferee Court. If they are Courts of different countries administering different laws, where the foreign Court is asked to act upon an order made by another Court, it would doubtless listen to the request and aid in the carrying out of the administration of the estate of the insolvent. No doubt there is a discretion vested in the foreign Court. The presence of large assets within the jurisdiction of this Court is a strong circumstance in favour of making an order as to place the assets of the insolvent in the Receiver appointed by the Foreign Court. It is a question of convenience and one Court would yield to another as it may not be just or equitable to allow the proceedings in all the Courts to go on concurrently.

The learned Advocate for the Respondent strongly urged that by no means could the property of the insolvent within the jurisdiction of the Aurangabad Court vest in the Official Receiver appointed by the Akola Court. Dicey in his ''Conflict of Laws'', says: "That as assignment of a bankrupt''s property under the Bankruptcy Law of any foreign country does not operate as an assignment of his immoveables situated under the jurisdiction of the Domestic Court, but in a proper case the Domestic Court may authorise the sale of the immoveables by the Receiver appointed by the foreign Court." the learned Advocate relied upon certain decisions of this High Court, reported in 12 Deccan Law Report, page 579; 20 Deccan Law Report, page 568 and 38 Deccan Law Report, page 323. We can have no quarrel with these decisions because what has been decided in those decisions is that by reason of an adjudication in a foreign Court, the property of the insolvent in the Hyderabad State would not vest in 1he Official Receiver appointed by the foreign Court. I am of opinion that those decisions are not against the principle laid down in the series of cases in British India and about which I have dealt with in detail.

This application was filed by the appellants in the Sessions Court at Aurangabad under S. 80 of the Hyderabad Insolvency Act, corresponding to S. 77 of the Provincial Insolvency Act of 1920. For the operation of S. 80: 77 of the Insolvency Act, it is essential, firstly-that the Court whose aid is sought should possess jurisdiction in insolvency matters. In this case the Aurangabad Court does possess the necessary jurisdiction under the Hyderabad Insolvency Act as jurisdiction in insolvency matters was only conferred on Courts of Sessions (now District and Sessions Court) in the Hyderabad State. It could not therefore be said that the appellants did not choose the proper forum for invoking jurisdiction in insolvency. If the appellants had been adjudicated insolvents by a Court situated in the Hyderabad State and the aid of the Aurangabad Court was sought under the provisions of S. 80 of the Insolvency Act, there could be nothing to prevent the insolvency Court at Aurangabad to permit the Receiver appointed to take possession of the properties situated under the jurisdiction of the Aurangabad Court for under the provisions of S. 80 of the Hyderabad Insolvency Act, all Courts within the State having jurisdiction in insolvency are to act in aid of and be auxiliary to each other in all matters of insolvency and when any one of such Courts is moved in this regard it would readily assist the Receiver in his realising the assets of the insolvent within its jurisdiction.

The point of distinction that was made by the learned Advocate for the Respondent, was that these provisions could riot apply to this case for the reason that the District Court at Akola and the Sessions Court at Aurangabad were not within the same State and were not subject to the same laws. I must herein point out that in order to seek the aid of another Court for the realisation of the assets of the insolvent for an equitable distribution among the creditors, it is not essential that the Court whose aid is sought should be within the sovereignty of the same State or subject to the same laws. Such aid or assistance will nevertheless be rendered, but it will only be subject to this condition that the order that the Court whose aid is sought would be subject to the law to which that Court is subject. Subject to the above condition for all intents and purposes it would be an auxiliary Court.

When India was part of the British Empire, a Trustee in Bankruptcy appointed by a Court in England could very well seek the aid of a Court in British India for the realisation of the assets of the Bankrupt situated within the jurisdiction of the Indian Court and when such a request is made it would be acceded to, although both the Courts, one seeking the aid and the other whose aid is sought, were governed by different enactments, though purporting to be to the same effect. In this connection the decision of the Calcutta High Court reported in the matter of ''WILLIAIM WATSON'', 31 Cal 761, & also the decision in the case of ''IN RE NAOROJI SORABJI TALATI'', 33 Bom 462 are worthy of note. It might be urged that the principle may apply so long as both the Courts are within the British Empire there was no difficulty.

Whatever might have been the position prior to 26th January, 1950, the whole situation has changed subsequent to the coming into force of the Constitution and we, sitting in appellate jurisdiction, are entitled to take notice of events which happened subsequent to the date of the order passed by the District Court of Aurangabad against which this appeal is filed. That Courts can always take notice of subsequent events is well established. It is open to the appellants to claim relief in appeal in view of a change of law, see in this connection the case of ''K.C. Mukerjee v. Mt. Ram Ratan''t 15 Pat 268 (P. C.) and ''Shyamakant Lal v. Rambhajan Singh''. 1939 F.C.R 193. therefore it comes to this that even if the Akola Court was a foreign Court and not a Domestic Court for the purposes of the Hyderabad Insolvency Act, at the time when it passed the order of adjudication, after the coming into force of the Constitution when Aurangabad became part of the territory of India in which Akola (Berar -Madhya Pradesh) is also included, it should be regarded as a domestic Court and under the provisions of S. 80 of the Hyderabad Insolvency Act, the Aurangabad Court was bound to assist the Receiver appointed by the Akola Court. The provisions of S. 80 of the Insolvency Act, would certainly be attracted under the present situation. That we sitting in appeal would be justified to direct the Aurangabad Court to act in pursuance of S. 80 of the Hyderabad Insolvency Act, in view of the changed circumstances, is supported by the decisions of the Calcutta and the Bombay High Courts.

In a case decided by the Calcutta High Court a decree was obtained in the Court of the Munsiff Jamalpur and the decree-holder applied for the transfer of the decree to the Court of Small Causes at Calcutta and after the decree was transferred to the Court of Small Causes at Calcutta an application for the execution of the decree was filed by the decree-holder; objection was raised as to the maintainability of the execution proceedings and this objection was overruled by the executing Court; the matter came up in Revision before the High Court and the High Court allowed the Revision holding that on the date when the execution was sought the Jamalpur Court ceased to be a Court within the territory of India, but was only a foreign Court having become part of East-Pakistan and as Pakistan was not a reciprocating territory the Court of Small Causes at Calcutta could not entertain an application for execution as the decree would be regarded as a foreign decree. In this case, therefore, the Calcutta High Court took into consideration the state of affairs on the date when the proceedings came to be started. Dominion of India Vs. Hiralal Bothra, therefore on the same principle we have to take into consideration the position and the state of affairs to-day.

Another case which was decided by the Bombay High Court" was the case of ''Chunilal Kasturchand v. Dhundappa Damappa'', - 52 Bom L R 660. In this case a decree was passed by the Belgaum Court in British India in a personal action against a permanent resident in the Jamkhandi State. This was an ex parte decree. The decree was transferred to the Jamkhandi Court and at the time when the execution proceedings started the Jamkhandi State merged Tinto the State of Bombay. A question arose as to whether after the merger, the Jamkhandi Court could treat the Belgaum Court as a foreign Court and test the validity of the decree. It was held in that case that the subsequent merger prevented the Belgaum Court from being a foreign Court and therefore the decree passed by the Belgaum Court ceased to be a foreign decree.

These cases are illustrative of the principle that if there is a change of circumstances by reason of an act of State and any right that might have been possessed by the judgment debtor prior to the alteration in the status would be lost by reason of the changed circumstances resulting from the act of state. the same principle was followed by the Bombay High Court, in a Full Bench Case, reported in '' Bhagwan Shankar Vs. Rajaram Bapu Vithal, , wherein the Full Bench held that a judgment passed by a Court at Sholapur against a resident of Akalkot State was a foreign judgment prior to the merger of the Akalkot State in Bombay, but after the merger, the character of the Akalkot Court changed and the status of the defendant also altered, therefore, the impediment which was initially there in executing the decree of a British Indian Court in a native state was removed and there was nothing to prevent such a decree being executed in Akalkot both being under the State of Bombay within the territory of India. As I have already observed the Court at Akola ceased to be a foreign Court and therefore the application of the rules of Private International Law would not be invoked in this case but we would be governed by the Municipal Law. This Court has also adopted the same view in an unreported case, the case of ''J.H. Subbia v. Revachand Appeal No. 6 of 1351 F.

Article 261 (3) of the Constitution allows the execution of Official judgments or Orders in any one part of the territory of India in another part of the Indian Territory. This according to me also gives the power to the Aurangabad Court to render assistance where its aid is sought in the exercise of insolvency jurisdiction.

On all these grounds I am of opinion that the questions formulated for the consideration of the Full Bench should be answered as under:

(i) The Sub-Court of Akola and the District $Court at Aurangabad would be regarded as Courts within the territory of India, and the District Court at Aurangabad would be regarded as an auxiliary Court for purposes of S- 80 of the Hyderabad Insolvency Act.

(ii) The Receiver appointed by the Court at Akola could move the District Court at Aurangabad and seek the aid of that Court u/s 80 of the Hyderabad Insolvency Act and the District Court at Aurangabad having been requisitioned by the Court at Akola for aid, it is bound to render such assistance as would be necessary.

(iii) The appeal filed by the Appellant is competent. 30. The result is that the appeal is allowed and the Order of the Sadar Adalat, Aurangabad (District and Sessions Court) is set aside. The appellants would be entitled to the costs of this Appeal (one set). Advocate''s fees Rs. 100/-. the case will go back to the District Judge, Aurangabad with the direction that he should entertain the application of the appellants seeking the aid of the Court for taking over the estate of the insolvents within the jurisdiction of the District and Sessions Judge, Aurangabad, appoint the same Receiver in order to facilitate the realization of assets unless the Court thinks that there is any objection to his appointment, and pass such appropriate orders for the proper administration of the estate of the insolvents.

Qamar Hassan, J.: I have had the benefit of perusing beforehand the elaborate and exhaustive judgments prepared by my learned brothers. In view of the order which I propose to pass at present, I need not recapitulate the facts which are fully stated in the judgments of my learned colleagues.

The vital question upon which the decision of this appeal and opinion on other subsidiary points turns is whether the Civil and Sessions Judge of Aurangabad has now become seized of jurisdiction to act as an auxiliary Court to the Sub-Judge at Akola.

I agree with my learned brothers that in view of the statutory change in the political set up of the Hyderabad State the character of the Aurangabad Court and for the matter of that the character of all Courts in this State has changed. But the fact which distinguishes this case from Chunnilal Kasturchand Vs. Dundappa Damappa, and Bhagwan Shankar Vs. Rajaram Bapu Vithal, is that in these cases not only the character of Court and status of defendants had changed by reason of merger but the whole law which governed the cases before merger had been so to say repealed and the laws which were in force in the State of Bombay were made applicable by the Central and Provincial Governments. But in the case before us the law in respect of insolvency as it obtained before the accession of the Hyderabad State to the Indian Union has been left intact without any adaptation or modification. Therefore we will have to seek the law within the four corners of the Hyderabad Insolvency Act (VIII (8) of 1351F.), No doubt Sub-Article 3 of Art. 261 of the Constitution of India provides that final judgments or orders delivered or passed by Civil Courts in any part of the territory of India shall be capable of execution anywhere within that territory according to law. It is not disputed that the word "law" in the Sub-Article includes the law of the State where the order or decree is sought to be executed. It means that the excitability of the decree or order of any Civil Court in the territory of India is subject to the law of the State where it is desired to be put into effect. Section 80 of the Hyderabad Insolvency Act enacts that:

All Courts having jurisdictions to hear cases in insolvency and officers of such Courts shall severally act in aid of and be auxiliary to each other in all matters of insolvency and an order of a Court seeking aid with a request to another of the said Courts shall be deemed sufficient to enable the latter Courts to exercise, in regard to the matter directed by the order, such jurisdiction as either of such Courts could exercise in regard to similar matters within their respective jurisdictions.

These provisions are analogous to the provisions of S. 77 of the Provincial Insolvency Act. the only difference is that the expression " ''the Court'' has not been defined in the India Act while it has been defined in sub-sec. (1) of S. 2 of the Hyderabad Act to mean "the Court having jurisdiction to hear cases in insolvency under this Act." This definition in its turn is analogous to the definition of that term as given in S. 2, Presidency Towns Insolvency Act. It defines the expression as follows:

''the Court'' means the Court exercising jurisdiction under this Act.

The legitimate function of an interpretation clause is to declare that certain words and expressions used in the enactment shall have throughout the Statute the meaning given to them by the definition thereof. It is not intended to annex to such words or expressions every incident which may seem to be attached to them by any other Act of the Legislature. The meaning assigned to a word by an interpretation clause is the meaning of the word wherever it occurs in the enactment unless a different intention appears from the subject or context. It is an accepted canon of interpretation that a definition given in an Act must be substituted for the word defined wherever it occurs in the Act.

The first thing to be observed is that the definition of the expression "the Court" is restrictive and not inclusive. It has been defined by the use of word "means" and when it is intended to exhaust the signification of the word interpreted, the word "means" is used. I see no repugnancy in the subject or context of S. 80 of the Hyderabad Insolvency Act to induce me to hold that the definition does not -apply to words "the Court" used in the Section. In this view of the law, the conclusion to my mind is tentatively irresistible that the Court requesting and the Court requested u/s 80 of the Hyderabad Insolvency Act must be Courts exercising jurisdiction under the said Act. I am reinforced in my opinion by the fact that the effect of the restrictive definition was kept in view when in S. 126 of the Presidency Towns Insolvency Act the provision was made to the effect that "all Courts having jurisdiction under this Act'' shall make such orders and do such things as may be necessary to give effect to Sec. 118 of the Bankruptcy Act 1883 and to S. 50 of the Provincial Insolvency Act." It may be mentioned that S. 77 of the Provincial Insolvency Act is a reproduction of S. 50 of the Act of 1907 and Sec. 118 of the Bankruptcy Act, 1883 is now Section 122 of the Bankruptcy Act, 1914. It is significant that no such provisions found place in Section 80 of the Hyderabad Act.

This aspect of the case was not argued before us and in my opinion requires further scrutiny and more authoritative pronouncement by a larger Bench. Therefore exercising my powers under sub-section (2) of S. 10, Hyderabad High Court Act, I refer the following question to a fuller bench.

Whether the expression "the Court or Courts" occurring in Section 80, Hyderabad Provincial Act bears the meaning assigned to it by sub-section (2) of Section 2 of the Act or was there any repugnancy in the subject or context to give to that expression an inclusive or extended meaning.

The file be therefore placed before the Hon''ble the Chief Justice for the formation of a larger bench. I may humbly suggest that a bench of five Judges would be sufficient for an authoritative pronouncement.