V.N.P. Kumaraswami Nadar vs Venkatasami Koundan and Another

This appeal arises from an application made by the 7th creditor in the Insolvency proceedings of one Thirumula Goundan. The seventh creditor

claimed to prove for Rs. 7,000. The Official Receiver allowed the claim in part but disallowed it in respect of the amount claimed under the

promissory note Ex. B. The creditor then applied to the District Judge u/s 68 of the Insolvency Act against the order of the Official Receiver and

prayed that the whole of his claim may be allowed. The learned District Judge, after considering the circumstances of the case and the evidence,

has granted him his prayer; and the present appeal is by the 15th respondent, one of the other creditors.

Two points have been taken before us as vitiating the order of the District Judge altogether. The first is that the order was passed without

making the Official Receiver a formal party to the application before the District Judge. The creditors apparently were all made parties and notice

had been given to all the creditors including the 15th respondent, the appellant now before us. He appeared before the District Judge and opposed

the claim of the 7th creditor. Apparently the Official Receiver was not made a formal party respondent to the application before the District Judge,

but we do not think that that can be treated as in any way materially affecting the order of the District Judge. It was open to any of the creditors

either to appeal themselves as the 15th creditor did to oppose the proof tendered by the 7th creditor before the District Court or to have moved

the Official Receiver to represent the whole party of creditors before that Court and to state their objections to the proof tendered. The Official

Receiver is after all an officer of the Court and there is no provision in the Insolvency Act, so far as we can see, which makes it obligatory on the

District Court to have the Official Receiver made a formal party to these proceedings. If the Official Receiver wanted to be heard, there would

have been no difficulty whatsoever in the matter as we have no doubt that the District Judge would have heard him. The Official Receiver has been

made a party to this appeal before us, but he has not come here, and complained that he has been prejudiced in any way by his not being heard on

this matter in the lower Court. Reliance has been placed on Mangalur Sivaramayya v. Singumahanli Bhujanga Rao 18 MLT 200 by the appellant''s

vakil in favour of his contention but there we notice that the Official Receiver was directed to execute a document in favour of the creditor who

required that the whole of the assets of the insolvent should be transferred to him in accordance with an agreement which he entered into with the

insolvent before the insolvency. Whether in such a case as that the Official Receiver should be formally made a party and his objections heard or

not we need not consider here, for, in the present case we see no reason why the Official Receiver should have been made a formal party as, in the

circumstances of this ease, it was, as already stated, open to him to have come up and slated any objections that he might have had to the proof

tendered. We may state that he knew of the proceedings that were going on in the Insolvency Court itself. In these circumstances the first objection

is not a valid one and is overruled.

The next objection is that the District Judge acted upon some statements made by the parties before the Official Receiver. Here again the

District Judge was considering the propriety of the action of the Official Receiver which he had taken, as the evidence that was laid before him and

the question which the District Judge had to decide was whether, on that evidence, the order of the Official Receiver was a right one and should be

supported.. The case cited by the appellant''s vakil, Chinna Meera Rowthan v. Kumarachakravathy Iyengar (1916) 36 IC 906 had reference to an

application u/s 36 of the old Insolvency Act and related to the annulment of a document which the Official Receiver had applied to the Court to

annul. The Official Receiver was himself the applicant and it was held that any statement taken by him could not be treated as evidence because the

matter itself was being tried before the District Court as a matter between the alienee on the one side and the Official Receiver on the other. Such

is not the position here at all. Here the District Judge is merely considering the correctness of the order of the Official Receiver, and in such a case

as this we do not see any objection to the District Judge acting on the evidence given before the Official Receiver. Nor is there any provision in the

act itself for necessitating the District Court to take fresh evidence in such matters. We do not say that it would not have been open to the District

Court to take such evidence, if it thought desirable to do so, but there is no provision laying down any obligations on the District Court to do so. .

In these circumstances, the two objections that have been raised to the order of the lower ''Court fail.

On the merits the only argument addressed to us is that, as in a previous annulment proceeding this creditor had given up his interest in the land

so far as his mortgage was concerned and agreed to treat himself as an unsecured creditor for the amount of consideration which, he should prove

like any other creditor his claim must be looked upon with suspicion. What the exact reason for his doing so was we do not know; but the fact that

he did so cannot be taken as conclusive on the question that the money was not due as a personal debt.

No other ground has been alleged against the order of the District Judge. We therefore confirm that order and dismiss this appeal with costs of

the 7th creditor to be paid by the appellant, the 15th creditor.