AI Structured Summary
Not yet generated for this judgment
Judgment
Govindarajachari, J.—u/s 9 of the Provincial Insolvency Act a creditor filed I.P. No. 11 of 1935 in the Court of the Subordinate Judge of
Vellore to adjudge two brothers, Govindaraju Nadar and Duraiswami Nadar, as insolvents, naming as the act of insolvency a mortgage given by
them to Nawab Abdul Hakim on 27th December, 1934. The mortgagee, however, was not impleaded. The insolvency petition passed through
several vicissitudes but finally an order of adjudication was made in 1938. The Official Receiver of North Arcot in whom were vested the estates
of the insolvents filed I.A. No. 1163 of 1942 under Sections 53 and 54 of the Act for setting aside the mortgage. After enquiry the application was
dismissed and the Official Receiver appealed from that order to the District Court of North Arcot in C.M.A. No. 40 of 1943.
Meanwhile Nawab Abdul Hakim died in January, 1938. In a suit for partition on the file of this Court, C.S. No. 36 of 1938, the mortgage was
allotted to Abdul Salam, a lunatic son of Nawab Abdul Hakim, Abdul Salam being represented in that suit and in fact in all subsequent proceedings
by the Official Trustee of Madras, who was appointed manager under the Indian Lunacy Act.
By the time C.M.A. No. 40 of 1943 came on for hearing the decision of the Privy Council in AIR 1943 130 (Privy Council) had been reported.
Reliving on that decision it was argued on behalf of the Official Receiver that since the mortgage had been found to be an act of insolvency in the
order of adjudication as a transfer made with intent to prefer a creditor, the order of adjudication was conclusive and that the appeal had
consequently to be allowed and the mortgage set aside. As the mortgagee was not a party to the insolvency petition the learned District Judge
remanded I.A. No. 1163 of 1942 for further enquiry giving the mortgagee one month''s time to prefer an appeal from the order in T.P. No. 11 of
1935 and certain other consequential directions. The Official Trustee accordingly filed. C.M.A. No. 94 of 1943 in the District Court of North
Arcot against the order of adjudication in T.P. No. 11 of 1935. In that appeal the learned District Judge set aside the order of adjudication and
remanded the insolvency petition for disposal after allowing the Official Trustee as representative of the mortgagee to add himself as the third
respondent in the insolvency petition. He allowed the parties to adduce further oral and documentary evidence. Tn. pursuance of that order the
Official Trustee got himself impleaded as the third respondent in T.P. No. 11 of 1935 by order, dated 3rd February, 1944.
T.P. No. 11 of 1935 and I.A. No. 1163 of 1942 were thereafter enquired into by the learned Subordinate Judge of Vellore who maintained the
order of adjudication and declared the mortgage to be a void and fraudulent preference. There was no appeal against T.A. No. 1163 of 1942, but
the order of adjudication was appealed against by the Official Trustee in C.M.A. No. 50 of 1945 on the file of the District Court of North Arcot.
Objection was taken to the maintainability of the appeal, on the ground that the mortgagee was neither a, creditor nor a person aggrieved within the
meaning of Section 75 of the Provincial Insolvency Act. The objection was upheld and the appeal was dismissed. The present civil revision petition
is against that order of dismissal. It was, filed by the Official Trustee of Madras as representing the estate of the lunatic. During the pendency of the
civil revision petition the lunatic died and in C.S. No. 147 of 1947 on the file of this Court filed for partition of his estate among his heirs the Official
Trustee was appointed receiver inter alia for continuing the civil revision petition. An order was made on the 1.5th September. 1947, bringing on
record in the place of the original petitioner the Official Trustee in his capacity as receiver in C.S. No. 147 of 1947. It is said that notice of the civil
miscellaneous petition on which this order was made was not given to the creditors-respondents in the civil revision petition.
The principal point which now arises is whether the Official Trustee of Madras had locus standi to file an appeal against the order of
adjudication.
Before dealing with that, however, two subsidiary points may first be dealt with. Belying on Harihar Mukherjee v. Harendranath Ji Mukherjee
ILR (1910) Cal. 754 it was contended by Mr. S. Ramachandra Aiyar the learned Advocate for one of the creditors-respondents, that the order of
15th September, 1947, bringing on record the Official. Trustee of Madras in his capacity as receiver in C.S. No. 147 of 1947 in the place of the
deceased lunatic whose estate was being previously represented by the Official Trustee as manager was invalid. Harihar Mukherjee v.
Harendranath Mukherjee ILR (1910) Cal. 754 only decided that a receiver is not a person who ""claims to be entitled to the effects of the
deceased person"" within the meaning of Section 4 of the Succession Certificate Act (VII of 1889) and that a receiver appointed by Court is
competent to take possession of the securities and moneys belonging to an intestate without producing a succession certificate. It cannot be and
has not been denied that the heirs of the deceased lunatic could come on record in the civil revision petition and continue it. I do not see why a
receiver who represents the interests of those heirs and who has been authorised as receiver to institute and continue all suits and proceedings
which they could themselves institute or continue cannot come on record in the civil revision petition.
The objection that the appeal to the lower appellate Court is not maintainable since no appeal had been filed against the order in I.A. No. 1163
of 1942 must also be overruled as the effect of setting aside the order of adjudication, if it should be set aside in C.M.A. No. 50 of 1945 would be
to bring the insolvency proceedings to an end and thereby render ineffective the order made in I.A. No. 1163 of 1942. It is not suggested that the
lower appellate Court is precluded by any doctrine of res judicata from deciding C.M.A. No. 50 of 1945 by reason of the fact that no appeal had
been filed against the order in I.A. No. 1163 of 1942.
Reverting to the main question, Mr. Krishnan, the learned advocate for the Official Trustee, petitioner in the above civil revision petition, did not
challenge the finding of the learned District Judge that his client, whom I shall hereafter describe as the mortgagee, is not entitled to maintain the
appeal as ""a creditor"". The learned District Judge held that having regard to the definition of ""creditor"" and ""secured creditor"" in the Act and having
regard also to the fact that the petitioner has not put forward any claim or contention common to himself and the other creditors of the insolvent he
is not entitled to avail himself of the provision in Section 75 of the Act enabling a creditor to file an appeal. Mr. Krishnan contended himself by
saying that his client is a person aggrieved by the order of adjudication.
The locus classicus so far as this question is concerned is the judgment of James, L.J., in In re Sidebotham (1879) 14 Ch. D. 458. In a well-
known passage in that judgment, the Lord Justice defined who is and who is not a person aggrieved within the meaning of the Bankruptcy Act,
1869 (32-33 Vict., Ch. 71) and that definition has been applied in all subsequent decisions in England and in India as governing the connotation of
that expression wherever it may occur.
The words ''person aggrieved'' he said do not really mean a man who is disappointed of a benefit which he might have received if some other order
had been made. A ''person aggrieved'' must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced
which has wrongfully deprived him of something, or wrongfully refused him something, or wrongfully affected his title to something.
In illustration of the definition, he then went on to refer to Ex parte Ellis (1876) 2 Ch.D. 797 wherein it was held,
that where an adjudication of bankruptcy had been made, founded upon the execution of a bill of sale, as an act of bankruptcy, the holder of the
bill of sale was a ''person aggrieved'' by the adjudication, and was entitled to appeal from it because it affected his property.
In Ex parte Ellis (1876) 2 Ch.D. 797 the argument of the counsel who maintained that the holder of the bill of sale was not entitled to appeal
from the adjudication was that his right to enforce his bill of sale was not affected by the fact that it had been treated by the Court of bankruptcy as
an act of bankruptcy and that if the trustee attempted to set it aside he would have an opportunity of trying the question. In dealing with this
argument James, L.J., with whom Baggallay and Bramwell, L.Js. concurred, held that he had no doubt that the appellant was entitled to appeal and
that though he may not be bound by the order of adjudication, still it may so embarrass him that he may properly be said to be aggrieved by it.
The matter was taken a step further by the Court of Appeal in Ex parte Official Receiver: In re Reed Bowen & Go. (1887) 19 Q.B.D. 174
where Lord Esher Master of the Rolls set out the definition from Ex parte Sidebotham (1879) 14 Ch.D. 458 already quoted and pointed out that it
is not an exhaustive definition but is an affirmative definition of a person who may appeal and at all events it includes a person who has asked for a
decision for which he had a right to ask and has been wrongfully refused. Lord Esher then quoted from the judgment of Bramwell, L.J., in In re
Sidebotham (1879) 14 Ch.D. 458 that ""the general rule is that an appeal must be by the party"" (that means one of the parties to the dispute which
is brought before the Court for its decision) ""who has endeavoured to maintain the contrary of that which has taken place"". This, in Lord Esher''s
opinion, was to the same effect as part of the definition of James, L.J. Lord Esher then gave in his own words the effect of the judgments of James,
L.J. and Bramwell, L.J.
It means ""he said"" that, where there are two parties to the application-the one applying, the other asking that the application, may be refused-one
of them has endeavoured to maintain the contrary of that which has taken place, and according to this definition he is a party against whom a
decision has been green, and according to both definitions, he has a right to appeal on the ground that he is legally ""a person aggrieved"" by the
decision, being in the same position as a party to a litigation.
In a still later judgment of the Court of Appeal, In re Lamb : Ex parte The Board of Trade (1894) 2 Q.B.D. 805 Lord Esher interpreted the
decision in Ex parte Official Receiver: In re Reed Bowen and Co. (1887) 19 Q.B.D. 174 in the following passage which may usefully be quoted,
Any person who makes an application to a Court for a decision, or any person who is brought before a Court to submit to a decision, is, if the
decision goes against him, thereby ''a person aggrieved'' by that decision.
This last definition was quoted with approval by Mookerjee, J., in Ketokey Churan Banerjee v. Sreemutty Sarat Kumari Dabee (1916) 20
C.W.N. 995 the facts of which however are somewhat obscure. The last case cited by Mr. Krishnan was that in Banaker Basappa v. Hmsaji
Gulabchand Firm (1935) 71 M.L.J. 333 : ILR 59 Mad. 1049 in which Wadsworth, J., held that an alienee whose alienation was one of the
transactions challenged in an insolvency had a right to maintain an application for the setting aside of an ex parte order of adjudication. The learned
Judge observed incidentally that the alienee might have a right appeal as the matter came u/s 4 of the Provincial Insolvency Act. The decision does
not directly bear on the question which now arises as the words of Section 75 had not to be construed in it.
On behalf of the respondents-creditors, Mr. S. Ramachandra Aiyar cited S. Hari Rao Vs. The Official Assignee, High Court, Madras and
Others, Al. A. Algappa Chettiar Vs. Vellachami Servai, and Venkataramanayya v. Bangarayya (1934) 67 M.L.J. 942. But these cases are clearly
distinguishable. S. Hari Rao Vs. The Official Assignee, High Court, Madras and Others, only held that an insolvent is not entitled to appeal as an
aggrieved person"" within Section 8(2) of the Presidency Towns Insolvency Act against an order of a Judge rejecting his opposition to a sale of his
estate by the Official Assignee, the reason given being that the insolvent has no legal interest but has only a hope of an expectation. The mere fact
that, if all the claims of the creditors who have proved, were set aside or discharged by payment he would have an interest in the surplus which
might be left over, gave him no right to interfere with or embarrass the administration of the estate. He had nothing more than a contingent chance.
Venkataramanayya v. Bangarayya (1934) 67 M.L.J. 942 was similar on its facts and applied the rule laid down in S. Hari Rao Vs. The Official
Assignee, High Court, Madras and Others, to a case which arose under the Provincial Insolvency Act. In Al. A. Algappa Chettiar Vs. Vellachami
Servai, an alienee of an insolvent''s property was held not to be a ""person aggrieved"" by an order admitting proof in a creditor''s favour. It is
difficult to see how the validity or otherwise of the alienation would depend on the acceptance or rejection of proof of one of the several debts of
the insolvent and it is not therefore surprising that the alienee was held to be very remotely affected, if affected at all, by the decision in favour of the
creditor.
The learned District Judge relied principally on the decision of the Pull Bench in the Official Receiver, Guntur v. Gopalakrishnidh (1945) l
M.L.J. 17 which held that the ruling of the Privy Council in AIR 1943 130 (Privy Council) does not apply to an order of adjudication under the
Provincial Insolvency Act. From this the learned District Judge concluded that the mortgagee would, in no way, be affected by the order of
adjudication being maintained.
In exactly similar circumstances, however, as already pointed out, the Court held in Ex parte Ellis (1876) 2 Ch.D. 797 that the embarrassment
which may result from the order of adjudication provides the alienee with a sufficient grievance and clothes him with the necessary status to
question the order of adjudication in an appeal. The principle of In re Lamb : Ex parte The Board of Trade (1894) 2 Q.B. 805 would also seem to
apply as the mortgagee was brought before the Court to submit to the decision in the insolvency petition and he had as a party to that petition a
right to ask that it may be refused and this is, according to Ex parte Official Receiver : In re Reed Bowen & Co. (1887) 19 Q.B.D. 174 sufficient
to give him. a right of appeal.
Holding that the mortgagee had. sufficient locus standi to maintain the appeal, I set aside the order of dismissal passed by the lower appellate
Court and direct that the appeal should be restored to file and disposed of according to law.
The mortgagee brought all this trouble on himself by not filing an appeal against the order in I.A. No. 1.163 of 1942 and I therefore disallow
his costs in the civil revision petition. The Official Trustee may however take his costs from out of the estate.