The Official Receiver, Coimbatore vs Krishnaveni Ammal @ Lakshmi Ammal and 6 others

S.S. Subramani, J.—The Official Receiver, Coimbatore. representing the Estate of Insolvent Krishnaveni Ammal, is the revision petitioner before this Court. Brief facts that are necessary for disposal of this Revision Petition may be summarised as follows:

Late A.T. Char died on 20.6.1944. His first wife Anandha Thathachar died issueless in the year 1938. He married Krishnaveni Ammal, who at that time was aged 16, while A.T. Char was 70. On 29.3.1944, A.T. Char sold his ancestral land for Rs. 22,000/- and purchased some properties for Rs. 20,000/- in his name and in the name of his second wife Krishnaveni Ammal. A few days before his death, i.e., on 7.5.1944, A.T. Char adopted his brother''s son Rangarao alias Ramachar as his son. It is said mat Krishnaveni Animal eloped with a Muslim and the news of her elopement was published in some of the Dailies with a warning to public that nobody should deal with her in so far as the properties of late A.T. Char was concerned. It is seen that some debts were incurred by Krishnaveni Ammal, and before discharging those debts, she relinquished all her rights in the Estate of her husband in favour of her adopted son, for a consideration of Rs. 500/-. It was dated 25.5.1956, evidenced by Ex.A.1 in the case.

One of the creditors filed I.P. 71/1956 on the file of Subordinate Judge''s Court, Coimbatore, to adjudge Krishnaveni Ammal as insolvent. The act of insolvency was the release deed executed by Krishnaveni Ammal in favour of her adopted son. She was adjudged as such.

On the basis of the release deed, Rangarao executed various documents in favour of respondents 3 to 7 in these proceedings. The estate of Krishnaveni Ammal was taken over by the Official Receiver, who filed an application on 18.9.1979 u/s 53 of the Provincial Insolvency Act, for setting aside the alienation and also the consequent sale deeds and agreements. In between Ex.A.1 and the present application for setting aside the sale deed and the release deed, there were other proceedings which may not be relevant though considered in detail by the Courts below.

When such an application was filed, the purchasers took serious objection, mainly on the allegation that the same is barred by limitation, and also on the ground mat the present application is barred by res judicata, in view of the earlier judgment in which the Official Receiver is also a party.

Both the Courts below have held that the Application by the Official Receiver is barred by limitation and accordingly dismissed the same.

The question whether the same is barred by res judicata or not, may not be necessary for determination in this proceeding, if the finding on limitation is upheld.

u/s 53 of the Provincial Insolvency Act, ''Any transfer of property not being a transfer made before and in consideration of marriage or made in favour of a purchaser of encumbrancer in good faith and for valuable consideration shall, if the transferor is adjudged insolvent on a petition presented within two years after the date of the transfer, be voidable as against the receiver and may be annulled by the Court''.

In this case, the act of insolvency itself is Ex.A.1, and therefore, once an application is filed in time, the Court has no other option but to annul it.

In Shah Sukraj Vs. The Official Assignee, Madras, a Division Beach of this Court held thus:-

"Once a particular transfer has been found to be an act of insolvency and the adjudication is based on that transfer, though it is necessary for the Official Assignee to file a separate application to avoid the transfer, the moment such an application has been filed, the annulling of the transfer must follow as a matter of course on proof of the order of adjudication itself without anything more. In other words, an order of adjudication itself does not annul the transfer; a separate order on an application made by the Official Assignee is necessary for annulling the transfer, but once such an application is made, the order of annulling follows as a matter of course of proof of adjudication itself."

The above Division Bench judgment was followed by the Bombay High Court in the decision reported in Babubhai and Others Vs. Gangji Jesang Cheda, by Mrs. Sujatha Manohar, J., as the Honourable Judge then was.

Even though the annulment has to follow as a matter of course, in view of the decision of the Division Bench, an application is necessary. What is the period of limitation for filing such an application. In the decision of the Bombay High Court cited supra, in paragraph 19 of the judgment, the learned Judge considered this point, though it was not finally decided. Learned Judge observed that Article 181 of the old Limitation Act of 1908 did not apply to applications under the Insolvency Act, but under Article 137 of the new Limitation Act, 1963, all kinds of applications have to be filed within three years when the right so accrues. The learned Judge observed that Article 137 applies to applications by Official Assignee also.

In The Kerala State Electricity Board, Trivandrum Vs. T.P. Kunhaliumma, their Lordships said that ''Art 137 will apply to any petition or application filed under any Act to a Civil Court. It is not confined to applications contemplated by or under the Code of Civil Procedure''. The said decision was followed in the judgments reported in Major (Retd.) Inder Singh Rekhi Vs. Delhi Development Authority, and also in Union of India (UOI) and Another Vs. L.K. Ahuja and Co., . In the later decision, in paragraph 3 of the judgment, their Lordships said that ''mere was some doubt before, but now it is well settled in view of the decision of this Court in The Kerala State Electricity Board, Trivandrum Vs. T.P. Kunhaliumma, that Article 137 would apply to any petition or application filed under any Act to a Civil Court The words "any other application" this Court held under Article 137, cannot be read on the principle of ejusdem generis to be applications under the CPC other than those mentioned in Part I of the third division''. Both those decisions were followed in the decision reported in S. Rajan Vs. State of Kerala and another, a case under the Arbitration Act, and also in the decision reported in Union of India Vs. M/s. Momin Construction Company,

Under the Provincial Insolvency Act itself, a case came for consideration in the decision reported in Gajraj Singh Vs. Official Receiver and Others, wherein it was held thus:-

"An application to annul the transfer of property made by an insolvent by invoking Section 53 of (1920) Act shall be made within a period of three years prescribed in Article 137 of Limitation Act. Section 53 does not in itself provide a period of limitation within which the transfer may be sought to be annulled. But it does not mean that an application to annul a transfer can be made at any time Without any rule of limitation being observed.

Where the application for annulment of transfer was made by Official Receiver, the cause of action for the purposes of limitation should be taken to have accrued on the date of order when the transferor was adjudged insolvent and, hence, application must be filed within three years front the said date. In view of Section 28(2) of (1920) Act on passing of such an order the property of insolvent shall vest in Court or in receiver, as the case may be."

In this case, the Order of adjudication was made on 6.2.1957. The present application u/s 53 was filed only in 1979, long after the cause of action had accrued. The finding of the Courts below that the application is hopelessly barred by limitation is, therefore, correct and the same does not call for any interference.

In view of my finding on the ground of limitation, the other question whether the application itself is barred by res judicata is not considered since it has become unnecessary. In the result, the Civil Revision Petition is dismissed. No costs.