Rajkali v. official Receiver — 1985 DIGILAW 49 (ALL)

JUDGMENT A. Banerji, J. - This appeal was originally filed as a revision under S. 75 Ist proviso of the Provincial Insolvency Act, hereinafter referred to as the Act, but subsequently an application was filed for conversion of the revision into the Second Appeal from Order and this was allowed by an order dated 18-4-1979. The appeal is directed against an order dated 10-2-1977 passed by the 6th Additional District and Sessions Judge, Meerut allowing the appeal of Rattan Lal and setting aside the order of the Insolvency Judge and dismissing the objections of Smt. Rajkali, respondent. The Insolvency Judge had allowed the appeal of Smt. Rajkali against the attachment and intended auction sale of the property and had directed the Receiver to proceed with the estate of the insolvent in accordance with law. The lower appellate court held that the application was one under S. 68 of the Act and not a proceeding under S. 4 of the Act. Further, in view of the fact that the objector had not filed any appeal against the order of the Receiver within a period of twentyone days, the objection was time-barred. 2. In this appeal learned counsel for the objector Smt. Rajkali has raised four contentions. Firstly, that the court below had completely ignored the evidence on record which had vitiated its findings. Secondly, the provisions of S. 4 of the Act applied and not S. 68. Consequently, the objection was barred by limitation. Thirdly, the principles laid down by their Lordships of the Supreme Court in the case of Hansraj v. Rattan Chand, AIR 1967 SC 1780 were distinguishable and inapplicable. Learned counsel for the respondent urged that the court below was right in holding that the proceedings were under S. 68 of the Act and not under S. 4 of the Act. The objection was time-barred and the law laid down by their Lordships of the Supreme Court in the case of Hansraj v. Rattan Chand (supra) was fully applicable. The lower appellate court had also considered, the relevant facts on record. Lastly, he urged that since S. 4 of the Act was not attracted, no Second Appeal From Order would lie but only a revision under the proviso 1 to S. 75 of the Act. 3. First, the relevant facts. 4. One Abdul Rab was indebted to Rattan Lal, the respondent, to the extent of Rs. 11,000/-. Lastly, he urged that since S. 4 of the Act was not attracted, no Second Appeal From Order would lie but only a revision under the proviso 1 to S. 75 of the Act. 3. First, the relevant facts. 4. One Abdul Rab was indebted to Rattan Lal, the respondent, to the extent of Rs. 11,000/-. The respondent obtained a decree in 1958 against the heirs of Abdul Rab who had died meanwhile. The respondent moved an application under S. 9 of the Act and the heirs of Abdul Rab were adjudged insolvents by an order dated 18-1-1960. The Official Receiver attached plots Nos. 5151 and 5152 of Khewat No. 16 on 27-4-1960 which were said to be the property of Abdul Rab. The record mentions that there was a kachcha Kotha of Khaprail and Phoos. Some of the transferees filed objections against attachment and for annulment of adjudication under S. 35 of the Act. The adjudication order dated 18-1-1960 was annulled on 17-2-1963 by the Insolvency Judge and then an appeal against the order was also dismissed by an order dated 20-7-1965. A revision came up before this Court which was allowed on 4-4-1969 and the order of the Insolvency Judge annulling the adjudication order was set aside. The case was remanded with the direction that the Insolvency Court should decide as to what were the assets left by Abdul Rab. The Official Receiver, however, intended to sell the disputed property, which had been attached earlier by him. It was only after this on 2-6-1975 that Smt. Raj Kali the appellant moved the objection for the release of the property from attachment and sale and for a declaration that she was the owner thereof. 5. In her objection she stated that she was the owner of plot No. 5151 measuring 700 square yards and was in possession of it and the deceased Abdul Rab had no concern with it. Her plea was that she had obtained possession upon trespass about 35 years earlier and had put up a Jhopari and used it for tying cattle and thereafter had constructed a kachcha ahata. The owners had objected to it and served a notice on her husband. Subsequently, there was a compromise and the owners had accepted nazrana and she had remained in possession over since. The owners had objected to it and served a notice on her husband. Subsequently, there was a compromise and the owners had accepted nazrana and she had remained in possession over since. She also pleaded that she had no knowledge of attachment and in any event the attachment was collusive. She further claimed that no notice of attachment was ever served on her. She had invested some money further in the property and was paying Municipal tax also. She claimed that the auction was illegal and no information of it had been sent to her. She also challenged the existence of any loan of Rattan Lal to Abdul Rab. She also alleged that Abdul Rab was not the sole owner of the Khewat and there were other co-sharers and they had also accepted Raj Kali as the owner. Since Abdul Rab was not the sole owner of the entire property the property could not be sold by the Receiver. In any event, she urged that there is no demarcation on the spot nor had there been any partition amongst the co-sharers. She, therefore, prayed for it declaration of the ownership rights and the release of the property from attachment and sale. 6. Rattan Lal, respondent contested the claim. He stated that the appellant had no locus standi to object to the attachment and sale and in any event the objections were time-barred. A perusal of the record confirms that the official Receiver had attached plots No. 5151 and 5152 of Khewat No. 16 on 27-4-1960. The heirs of Abdul Rub were adjudged insolvents on 18-1-1960 and that order had been annulled by the Insolvency Judge on 27-2-1963 which had been set aside by the High Court on 14-4-1969 with the consequence that the original order dated 18-1-1960 revived and held sway. Consequently the attachment of plot No. 5151 of 27-4-1960 is an established fact. If the appellant Rajkali was aggrieved by that order she should have filed an appeal against that order under S. 68 of the Act within 21 days of the date of the Act or decision complained of, i.e. of the attachment of the property by the Receiver. Admittedly, this has not been done. The consequence is that the objection was not maintainable as it was barred by limitation. Admittedly, this has not been done. The consequence is that the objection was not maintainable as it was barred by limitation. This is the view that has been taken by the court below and it appears that on the above facts the conclusion arrived at by the court below is correct. The court below relied on a decision of their Lordships of the Supreme Court in the case of Hansraj v. Rattan Chand, AIR 1967 SC 1780 (supra) in taking the above view. In the above case their Lordships held : "................ at person complaining of the receiver taking possession of or attaching property in which the insolvent has no interest. must apply for relief within 21 days of the wrongful act of the receiver. He cannot be heard to say that his application is not under S. 68 but under Section 4 and thus seek to avoid the short period of limitation prescribed under S. 68. Maya Moreover sub-section (1) and sub-s. (2) of Sec. 4 both start with the phrase "subject to the provisions of this Act" and even if it was possible to construe that Sec. 4 envisaged the making of an application for relief, such application would be subject to 'S. 68 of the Act. The law laid down by their Lordships, in my opinion, applies fully to the facts and circumstances of the present case. 7. Smt. Rajkali's grievance is that she was not aware of the attachment nor was she served with a notice of attachment so that she could move an application within the period prescribed under Sec. 68 of the Act. If she was in adverse possession. as she claims, for 35 years prior to 1975. it means she was there since 1940 and the attachment having taken place in 1960 she could not remain unaware of the same. In any event the Receiver's report shows that the husband of Smt. Rajkali obstructed the Receiver on the spot on 10-1-1975. The Receiver again went to the spot on 1-6-1975 and the present objection by Smt. Rajkali was filed only on 2-6-1975. It is obvious from the above that although the Receiver had attached the property on 27-4-1960. no objection within 21 days had been filed by Smt. Rajkali. Further the husband of Stilt. Rajkali had obstructed the Receiver on 10-1-1975. This means she had knowledge of the Receiver's action on 10-1-1975. It is obvious from the above that although the Receiver had attached the property on 27-4-1960. no objection within 21 days had been filed by Smt. Rajkali. Further the husband of Stilt. Rajkali had obstructed the Receiver on 10-1-1975. This means she had knowledge of the Receiver's action on 10-1-1975. Even then no objection was filed within 21 days. The objection was filed on 2-6-1975 i.e after at lapse of almost about 5 months from the alleged obstruction by the husband of Smt. Rajkali. It is obvious from the above that the objection filed by Smt. Rajkali was beyond 21 days and barred by limitation. The view taken by the court below in this regard is perfectly correct and sound. 8. Learned counsel for the appellant contended that the aforementioned decision of the Supreme Court was in a case of attachment by the Receiver and not for sale. This will hardly make any difference. It is the action of the Receiver which is appealable under S. 68. The Receiver had attached the property and then proceeded to sell the property after several years. The Receiver had gone to the spot on the 10th Jan. 1975 and was obstructed. The Receiver had gone for arranging for the sale of the property attached. 9. Learned counsel then contended that the Receiver could not sell the property unless he had taken possession thereof. It was further urged that since the Receiver met with obstruction on 10-1-1975 the Receiver should have first obtained possession of the property before proceeding to sell the same. This contention loses sight of the law that once a person is declared insolvent his property vests in the Receiver and the latter can sell the property like any other private individual. Although the case of Sardar v. Navin Chandra, AIR 1937 All 226 was cited by the learned counsel for the appellant I find that it supports the stand taken by the respondent rather than the appellant. Although the case of Sardar v. Navin Chandra, AIR 1937 All 226 was cited by the learned counsel for the appellant I find that it supports the stand taken by the respondent rather than the appellant. It is laid down in that case by Niamatullah, J. that there is no provision in the Insolvency Act which requires or empowers the official Receiver to attach the property as a necessary preliminary to sale as in the case of execution of decrees under the Civil P.C. It was further laid down that the Receiver may advertise for sale of the property in any manner he likes and can sell it to the highest bidder. The sale is not, in any sense, in continuation of attachment. It is a distinct act of the Receiver which can be objected to by the insolvent before an Insolvency Court by an application under S. 68 but this has to he done within 21 days. Niamatullah. J. further laid down : "There is, however, nothing to prevent him from applying in Insolvency Court within 21 days after the sale itself, complaining that the Official Receiver had sold property which he had no right to sell." 10. It is, therefore, apparent that the attachment can be objected to, the intended sale can be objected to and where objection had not been made earlier to apply to the Insolvency Court within 21 days to the sale to raise the plea that the Receiver had sold the property over which he had no right to sell. However, in the present case an objection had been raised and the objection had been disposed of as barred by time. The proper forum is the Insolvency court where an objection must have been specifically raised and within a period of 21 days from the date of the act of the Receiver complained of. 11. Reference may now be made to the case of Dwarika Prasad v. Damoder Swarup, AIR 1967 All 520 . In this case the insolvent filed an objection before the Insolvency Court that certain properties were not liable to be sold by the Receiver. This was rejected as time barred. The lower appellate court affirmed that order. A second appeal came up before the learned single Judge. The learned single Judge held that the claim was one which arose in the insolvency and the Court had power to decide it. This was rejected as time barred. The lower appellate court affirmed that order. A second appeal came up before the learned single Judge. The learned single Judge held that the claim was one which arose in the insolvency and the Court had power to decide it. In my opinion, the principles laid down in this case are not applicable in the present case. In the present case an objection under Sec. 68 of the Act had been filed. That objection had been held to be time-barred. It did not purport to be an application under S. 4 of the Act and it is too late in the day to urge that the objection purported to he an application under S. 4 of the Act. Further in view of the law laid down by their Lordships of the Supreme Court in the case of Hansraj v. Rattan Chand, ( AIR 1967 SC 1780 ) (supra) the point is fully settled. 12. For the reasons indicated above I find no merits in the last two contentions. 13. That leaves us with the first contention. The argument was that the court below had ignored the evidence. It appears to me that since the application purports to be under S. 68 of the Act and is barred by time. I see no point in going into the above question. Ignoring of evidence is mainly directed towards the question as to whether plot No. 5151 was saleable or not. This is a question which could have been gone into provided the application appeal was within time and maintainable. In this view of the matter I am not inclined to go into this question in this appeal. 14. For the reasons indicated above. I find no merits in this appeal and it is accordingly dismissed. Costs easy.