Sambasiva Reddi vs The Official Receiver of South Arcot

Horace Owen Compton Beasley, Kt., C.J.—This Civil Miscellaneous Appeal arises from the following circumstances. The Official Receiver

of South Arcot presented to the District Court at Cuddalore a petition under Sections 53, 54 and 4 of the Provincial Insolvency Act to set aside

two mortgages. The learned District Judge transferred that petition to the file of the Subordinate Court of Cuddalore which dealt with the petition

and it was declared the two mortgages in question were fraudulent and void as against the Official Receiver under Sections 53 and 54 of the

Provincial Insolvency Act. Hence this Civil Miscellaneous Appeal. When the matter was first argued before us we took the point that the

Subordinate Judge of Cuddalore had no jurisdiction to entertain the petition at all and, as there seemed to be at that time some doubt regarding the

local limits of the jurisdiction of that Court and we wished to know how the petition came to be transferred by the District Court to that

Subordinate Court, we adjourned the matter requesting the District Judge to report the circumstances in which the Subordinate Judge came to try

and decide the petition and also what the insolvency jurisdictions of the District and Sub-Court are respectively and under what notification of the

Government the Sub-Court has been given insolvency jurisdiction. The matter now comes before us on the report of the District Judge at

Cuddalore. He reports that the Sub-Court, Cuddalore, was from the 1st November, 1913, invested with local jurisdiction over the whole of

Cuddalore, Chidambaram and Vriddhachalam Taluks of the South Arcot District and that this was by notification at page 1796 of Part II of the

Fort St. George Gazette dated 28th October, 1913. Then as regards the insolvency jurisdiction he reports as follows:

Under G.O. No. 1731 Law (General) dated Sth June, 1924, communicated in High Court''s Dis. No. 1254 of 1924 published at page 650, Part I

of the Fort St. George Gazette dated 10th June, 1924, all Subordinate Courts in the Presidency were invested with jurisdiction under the

Provincial Insolvency Act in respect of all petitions presented by creditors. Ever since then the District Court had been exercising insolvency

jurisdiction over the entire District while the Sub-Court was exercising concurrent jurisdiction over the three taluks of Chidambaram,

Vriddhachalam and Cuddalore over which it had territorial jurisdiction.

He adds that his predecessor in order to give work to the Additional Sub-Judge transferred the petition in question to him and that was how the

Sub-Court came to hear and decide the petition.

The question is whether the District Judge had any power to transfer this petition to the Subordinate Judge of Cuddalore. It is common ground

that this insolvency was outside the territorial jurisdiction of that Sub-Court, that is to say, it originated in some place outside the local limits of the

jurisdiction of that Court. The question therefore is whether the Provincial Insolvency Act gives any power to the Local Government by notification

to give jurisdiction to a Subordinate Court which otherwise and apart from the notification has no insolvency jurisdiction whatsoever, to deal with

and dispose of insolvency matters which originate in some place which is not within the local limits of the jurisdiction of that Court. The notification

in question was issued u/s 3 of the Provincial Insolvency Act which reads as follows:

The District Courts shall be the Courts having jurisdiction under this Act.

Provided that the Local Government may, by notification in the local Official Gazette, invest any Court Subordinate to a District Court with

jurisdiction in any class of cases and any Court so invested shall within the local limits of its jurisdiction have concurrent jurisdiction with the District

Court under this Act.

In pursuance of the powers given under that section the Local Government issued the notification in question. We have heard a full argument

upon this point and our attention ha$ been drawn to a decided case of this Court which seems to us to be directly in point. Quite apart from that

authority it seems to us to be quite clear from the words of the section itself that the Act does not invest a Subordinate Court with jurisdiction to try

any insolvency matter which originates outside the local limits of its jurisdiction. The words in the section:

Shall within the local limits of its jurisdiction have concurrent jurisdiction with the District Court under this Act

seem to us to be con elusive of this matter. Nevertheless it has been contended on the other side that the words ''the local limits of its jurisdiction''

apply only to original insolvency matters and that the District Court has power by reason of the CPC to transfer any matter including insolvency

matters to a Subordinate Court and Section 5(2) is invoked in support of this contention. In our view, that sub-section affords no assistance

because the words there, viz., ""subject to the provisions of the Insolvency Act"" qualify the whole section. It must be borne in mind that a

Subordinate Court has no jurisdiction whatsoever in insolvency and it is only by reason of Section 3 and notifications issued thereunder that it gets

any jurisdiction. If no notification had been issued by Local Government, then clearly the Subordinate Court of Cuddalore could not have dealt

with insolvency matters at all. This position was clearly indicated in Premchand Indoji Vs. Soleti Gopalappa, a decision by Spencer and Devadoss,

JJ. The head note of that case is as follows:

Under Section 3 of the Provincial Insolvency Act the District Court is the only Court having jurisdiction to deal with creditor''s petition in the

absence of any notification of the Local Government investing Subordinate Courts with jurisdiction over such class of cases. In a case in which

there was no such notification the District Judge''s order transferring a petition to the Sub-Court for disposal was ultra vires.

We consider this case to be directly in point although, in our view, having regard to the very clear words of Section 3 of the Act, no authority is

required. For these reasons we are clearly of the opinion that the order of transfer by the District Judge of this petition to the Sub-Court was ultra

vires and that the Sub-Court had no jurisdiction at all to deal with this matter. We have taken this objection ourselves which we consider to be

decisive of this appeal and therefore the order before us must be set aside and the District Judge must be directed to take the case on his file and

dispose of it according to law. In view of the fact that no objection was taken by the appellant to the jurisdiction of the Sub-Court to entertain the

petition and the objection was taken by ourselves, we direct the appellant to bear his costs of this appeal. The Official Receiver will get his costs

out of the estate.