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1962 DIGILAW 255 (KER)

Sankaran Nair v. Gouri Amma

1962-09-05

P.GOVINDAN NAIR

body1962
JUDGMENT : This Appeal arises from a suit instituted by the appellant at a time when he was an undischarged insolvent. He was adjudicated an insolvent on 20-5-1105. The suit was instituted on 20-3-1952. The appellant alleged in the plaint that his brother one Narayanan Nair had acquired a mortgage interest in a property in the name of his sister, who is the 1st defendant in the case. Narayanan Nair continued to be in possession of that property and started constructing a building, but died before the building was completed. It is the appellant's case that he spent money and completed the building in 1121-1122 M. E. and the first defendant agreed that till the amount spent by the appellant is returned to him he may continue in possession of the building and also collect the rent from the building if it was let out. It is alleged that at the time of the institution of the suit the second defendant was the lessee. Before that some other persons were the tenants and according to the appellant, he had collected the rent from them. The relief claimed in the plaint is a declaration that the plaintiff is entitled to a charge on the plaint property, which is the building, for the amounts expended by him for constructing it and a further declaration that he is entitled to continue in possession of the building and collect the rent of the building. He has also claimed the arrears of the rent from the 2nd defendant. I do not think that the other reliefs' for injunction etc. prayed for in the plaint are material for the disposal of this appeal. The 1st defendant raised an objection that the suit is not maintainable because the plaintiff was at the time of the institution of the suit an undischarged insolvent. This contention has been accepted by the court below in disposing of a petition that was moved before the court by the first defendant on 28-6-1957. There was an earlier petition for raising an additional issue. This was allowed and an issue was framed as issue 12 which reads "Is the plaintiff competent to file the suit? Is the suit maintainable?" The petition dated 28-6-1957 referred to above prayed that the suit may be dismissed. There was an earlier petition for raising an additional issue. This was allowed and an issue was framed as issue 12 which reads "Is the plaintiff competent to file the suit? Is the suit maintainable?" The petition dated 28-6-1957 referred to above prayed that the suit may be dismissed. The court below dealt with the additional issue and found that issue in favour of the 1st defendant and proceeded to dismiss the suit apparently by the order passed on that petition. That is the order which is produced along with this appeal memorandum. On the face of it, it does not purport to be a judgment, though a decree has been drawn up as if it is a judgment in the case. 2. Appellant's counsel raised the preliminary objection before me that the disposal of the suit in the manner mentioned above is not warranted by the specific provisions of the Code of Civil Procedure. He said that the decree in this case stands unsupported by a judgment. This contention is not without substance, though perhaps a little technical. In the view that I am taking in this case, I do not think it necessary to deal with this preliminary objection. 3. The main question to be considered is whether the suit instituted, as it was, by an undischarged insolvent is maintainable. The judicial decisions' on this question are not uniform. The Travancore High Court, as far as the decisions cited before me indicate, has taken the view that such a suit is maintainable - Thommi Avira v. Thommi Chacko XV TLJ. 373 and Usman Pillai v. Official Receiver, XXIII TLJ. 879. No case of that Court where a different view had been taken has been brought to my notice. But the Madras High Court in Venkatasubba Rao v. Venkateswaralu (AIR 1937 Madras 165) and the Nagpur High Court in Nathmal v. Kisan ( AIR 1953 Nagpur 227 ) have taken a different view and there are two decisions one of the Allahabad High Court in Sakhamat Ali v. Radha Mohan (AIR. 1919 All. 284) and another of the Bombay High Court in Sidram v. Mahaliya (AIR. 1941 Bombay 415) which have also adopted the principle of the decisions in the Madras and the Nagpur cases. It has been held by the Allahabad and Bombay courts that an appeal by the insolvent is not maintainable. 4. 1919 All. 284) and another of the Bombay High Court in Sidram v. Mahaliya (AIR. 1941 Bombay 415) which have also adopted the principle of the decisions in the Madras and the Nagpur cases. It has been held by the Allahabad and Bombay courts that an appeal by the insolvent is not maintainable. 4. The Travancore-Cochin High Court in a fairly elaborate judgment in Alleppey Ananthaparayanapuram Thuravoor Thirumala Devaswom v. Ponnu Ninar Pillai Kannu Pillai (AIR 1957 T.C. 241) appears to adhere to the view that was taken by the Travancore High Court. Counsel for the respondent is correct in his submission that the question did not specifically arise in that case. However the matter was elaborately discussed. 5. I do not think it is necessary to decide in this appeal whether a suit by an undischarged insolvent would be maintainable in all circumstances. The property of an insolvent, whether acquired before or after the order of adjudication, according to the law applicable in the area from which this case arose as also in the territories governed by the Provincial Insolvency Act, will undoubtedly vest in the receiver. But there are certain exemptions. For instance it is provided in S. 28 (4) of Act VIII of 1108 of fee Travancore Insolvency Act which must govern the rights of the parties in this appeal that, "The property of the insolvent for the purposes of this section shall not include any property (not being books of account which is exempted by the Code of Civil Procedure, 1100, or by any other enactment for the time being in force from liability to attachment and sale in execution of a decree." This shows that there can be at least some items of property which are unaffected by the order of adjudication an 1 in relation to which therefore there can be no question of the receiver stepping in or of such property vesting in him in view of the provision in sub-section 2 of S. 28 of the Act. The enquiry in cases of this nature, I think, therefore, must be as to whether it can be said definitely that the action related to a property which had vested in the Official Receiver. The enquiry in cases of this nature, I think, therefore, must be as to whether it can be said definitely that the action related to a property which had vested in the Official Receiver. The case of the appellant, which I have dealt with at some length at the beginning of this Judgment, clearly shows that the claim originated from certain amounts expended by the insolvent for the construction of part of the plaint building. It is difficult to presume that this money that has been expended for the construction of this building was also property which had vested in the Official Receiver. It is quite possible that this was property which fell within the exemption provided in S. 28 (4) and was the accumulation of such of the moneys that have come into the hands of the appellant which were free from attachment and therefore exempt from the vesting provided for in sub-section (2) of S. 28. If any inference is possible it can only be that it is the appellant's own funds because the Official Receiver who had apparently been administering the estate for more than two decades had not laid any claim to this and had not cared to intervene in this suit which was pending in the trial court for more than half-a-dozen years. I must confess that I have adopted the reasoning of the learned Chief Justice, Sulaiman, in the decision reported in Abdul Rahman v. Nanal Chand (AIR 1935 All. 675 FB). The reasoning appeals to me and to use the words of the learned Chief Justice:- "But where a loan was advanced by the insolvent after his adjudication to the defendant it does not necessarily follow that the sum of money given by the insolvent was property which had vested in the receiver. The insolvent might he a mere benamidar on behalf of an undisclosed principal, in which cases he would be entitled to sue even though an insolvent and the suit would, of course, be for the benefit of the real owner. Again, under S. 28(5), properties exempted by the Civil Procedure Code, or other enactments from liability to attachment and sale in execution of a decree do not vest in the receiver. Again, under S. 28(5), properties exempted by the Civil Procedure Code, or other enactments from liability to attachment and sale in execution of a decree do not vest in the receiver. Such moneys as are exempted remain the property of the insolvent and if he has lent the money out of such accumulated saving, there would be no bar either to his lending the money to the defendant or to his bringing a suit to recover the amount." That was a suit where the claim was for a specific sum of money. I do not think that there could be any distinction if the money which belonged to the insolvent and which would not vest in the receiver had been utilised for the purpose of purchasing a property. That property too will not vest in the receiver. It appears to me that the principle of the decision in the Allahabad case can be applied for disposing of this appeal. 6. The learned Chief Justice upheld the decrees of the courts below in that case but ordered notice to be issued to the receiver so that if he had any claim he may take appropriate steps for safeguarding the interests of the body of creditors. I also direct that notice be issued to the receiver concerned after the plaint is taken on its file again by the trial court. 7. For the reasons stated above, I set aside the decree of the trial court and direct that court to take back the plaint on its file. That court will issue notice to the receiver as indicated above. Thereafter the suit will be disposed of on the merits. The appellant will be entitled to a refund of the court fee paid on this appeal memorandum. As the point raised in this appeal involves, perhaps an important, and certainly a difficult question of law, I think the parties must be directed to suffer their costs throughout till now and I order accordingly. Allowed.