Ranjani v. The Indian Bank, R. A. Puram Branch (East) Madras
1993-08-05
MISHRA, S.M.ALI MOHAMED
body1993
DigiLaw.ai
Judgment :- MISHRA, J. 1. In a proceeding in insolvency I.P. No. 58 of 1986 P.K. Pattabiraman since deceased and his wife P. Kantha were adjudged insolvents. They filed schedules of their properties as required under S. 24 of the Presidency Towns Insolvency Act, 1909 (hereinafter referred to as the Act) and included therein a list of immovable properties, including schedules A to D to the Judges Summons in Application No. 806 of 1993 in C.S. No. 760 of 1986 and the properties, accordingly, came out in the hands of the Official Assignee. C.S. No. 760 of 1986 has been filed, however by the plaintiff/applicant respondent against eight persons including Pattabiraman and P. Kantha and the appellant herein for recovery of Rs. 1 crore and odd and claiming that properties mentioned in the schedules A to D to the Judges Summons were security for the advance made by them to a firm of which Pattabiraman and Kantha were partners. Summons have been issued in the suit. Some of the defendants have already been served and some of them are yet to be served with the summons. None of them, however, has opposed and filed the written statement in the suit. At such a stage of the suit, however, the plaintiff bank filed Application No. 806 of 1993 and brought into the proceeding the Official Assignee to represent the insolvents and stated that Kantha had deposited her title deeds with the bank in respect of the immovable properties and that it was entitled to realise its claims from the properties which were mortgaged to it by Kantha and accordingly appropriate the sale proceeds towards the suit claim. They sought a direction, accordingly for the sale of the properties described in the schedules A to D to the Judges Summons. A learned single judge of this Court has disposed of the said Application by a summary order, which reads as follows:— “The Official Assignee has been added as party-defendant No. 9 in the suit. The entire estate is under his control and management. The Official Assignee has no objection for the sale of the schedule B and C properties which is standing in the name of the 1st respondent Mrs. P. Kantha in this application. Hence, the Official Assignee is permitted to sell the B and C schedule items through Alwin and Company, Madras Auctioneers, as per the usual procedure.
The Official Assignee has no objection for the sale of the schedule B and C properties which is standing in the name of the 1st respondent Mrs. P. Kantha in this application. Hence, the Official Assignee is permitted to sell the B and C schedule items through Alwin and Company, Madras Auctioneers, as per the usual procedure. The auctioneers are directed to sell the properties, after following the formalities within six weeks from today.” The above order has been passed without notice to the appellant, who has been one of the defendants in the suit. 2. It is not stated however in the impugned order why when the plaintiff/applicant respondent desired the sale of the properties mentioned in the schedules A to D to the Judges Summons, the learned single judge ordered for the sale of the properties mentioned in the schedules B and C only except that the Official Assignee raised no objection for the sale of the said properties. It has, however, been brought to our notice by the learned Official Assignee that while he had clear information that properties mentioned in the Schedules B and C belonged to the insolvent P. Kantha it was not sure in respect of the properties mentioned in the Schedules A and D. It was possible, therefore, that in the properties mentioned in the Schedules A and D some other defendant had interest and without notice to such other defendant, it was not possible to accept the case of the plaintiff/applicant/respondent that the charge of the debt of P. Kantha extended to the entire properties described in the Schedules A to D. Any properties consequent on order of adjudication of properties belonging to the insolvents vest in the Official Assignee and the Official Assignee accordingly is required to proceed with the division of such properties amongst the creditors. No creditors to whom the insolvent is indebted in respect of any debt provable in insolvency during the pendency of the insolvency proceedings have any remedy against the property of the insolvent in respect of the debt and S. 17 of the Act provides that no debtor shall commence any suit or other legal proceedings except with the leave of the court and on such terms as the Court may impose in respect of the debt. The Proviso therein, however, makes exception in favour of any secured creditor.
The Proviso therein, however, makes exception in favour of any secured creditor. According to this Proviso, vesting of the property of the insolvent in the Official Assignee does not affect the power of any secured creditor to realise or otherwise deal with his securities in the same manner as he would have been entitled to realise or deal with it. 3. Since the plaintiff/applicant/respondent has claimed a security for its debt and accordingly instituted a suit in C.S. No. 760 of 1986, it is obvious that it has preferred to realise or otherwise deal with its security in the same manner as if there is no adjudication under the Insolvency Act and as if the property of the insolvents covered by the security has thus not vested in the Official Assignee. Nonetheless, though outside the insolvency, it (the plaintiff/applicant/respondent added the Official Assignee as party defendant No. 9 in the suit. Since, thus C.S. No. 760 of 1986 is outside the insolvency proceedings any application therein can be dealt with only in accordance with such provisions of law which are attracted to a regular suit or suit based on security/mortgage. One of the settled principles of law has been that all orders pending adjudication in a suit are interlocutory and are subject to final adjudication. Provisions in this behalf that are invoked by the litigants besides the inherent powers of the Court are provisions as to temporary injunction/direction attachment of a property and or appointment of receiver, etc. How and in what circumstances arrest and attachments before judgment are ordered, how and in what circumstances temporary injunctions and other kind of interlocutory orders are passed and how and in what circumstances receivers are appointed are covered by Orders 38 to 40 of the Code of Civil Procedure. There is no power for interim sale contemplated under the law except one under Order 39, R. 6 of the Code of Civil Procedure, which provides as follows: “Power to order interim sale.
There is no power for interim sale contemplated under the law except one under Order 39, R. 6 of the Code of Civil Procedure, which provides as follows: “Power to order interim sale. The Court, may on the application of any party to a suit, order the sale by any person named in such order and in such manner and on such terms as it thinks fit, of any movable property, being the subject matter of such suit, or attached before Judgment in such suit, which is subject to speedy and natural decay, or which, for any other just and sufficient cause, it may be desirable to have sold at once.” A learned single judge of this Court in Krishtam Neni Krishnayya v. Karmedhan Kothari AIR 1930 Mad. 224 read this provision as merely giving power to a court to sell a perishable article and certainly not authorising it to send a Commissioner to sell any property and observed that in a case where the lower court had ordered and accordingly directed a Commissioner to sell a standing crop, it was not a matter in which S. 151 was attracted and observed “the proper course for the respondent would be to apply for a Receiver, if he has right to apply and if he has no right to apply for a Receiver, he has no right to apply for a Commissioner.” In Muthuswami Gounder v. A.P. Kaithamalai Gounder 1976 T.N.L.J. 191 = 89 L.W. 652 a learned single judge of this court was called upon to decide whether the Court has the inherent power of sale of the property which is not capable of division apart from the provisions of the Partition Act and whether the plaintiff invoked only such inherent power of court and not the power under S. 2 of the Partition Act. He has answered the said question in these words: “9. Learned counsel appearing for the petitioner cited the decision rendered in O.S.A. No. 108 of 1966 dated 21.12.70 ( V. Rajeshwara Rao v. Maheswara Rao (died) and another to support his contention.
He has answered the said question in these words: “9. Learned counsel appearing for the petitioner cited the decision rendered in O.S.A. No. 108 of 1966 dated 21.12.70 ( V. Rajeshwara Rao v. Maheswara Rao (died) and another to support his contention. The principal questions that arose for determination in the said appeal are (1) whether the Court has an inherent power of sale of the property which is not capable of division apart, from the provisions of the Partition Act and whether the plaintiff invoked only such inherent power of court and not the power under S. 2 of the Partition Act. On these questions the Bench of our High Court definitely held that no general power of sale can be spelt out from the provisions of the Act. On the other hand, the implication is that the Legislation did not intend to confer on the court a power of sale, apart from the power conferred under the provisions of the Partition Act. In propounding this principle, the Bench of our High Court respectfully agreed with the view expressed in AIR 1952 Cal. 893 which was later followed in AIR 1960 Cal. 59. While doing so, the Beach also dissented from the view expressed by a Bench of The Andhra Pradesh High Court in AIR 1958 And. Pra. 647. 10. The Judgment in O.S.A. No. 108 of 1966 was confirmed by the Supreme Court in AIR 1973 S.C. 643 . The Supreme Court has also made a specific mention to the effect that the Bench of our High Court considered as to whether the Court has inherent power of sale of the property which is not capable of division apart from the provisions of the Partition Act and whether the plaintiff invoked only such an inherent power and not the power under S. 2 of the aforesaid Act. No doubt the main discussion by the Sup reme Court is on the validity of the withdrawal of the suit under O. 23, R. 1 C.P.C. But the Supreme Court discussing the scheme of Ss. 2 and 3 held: “At the same time in order to prevent any oppressive exercise of this privilege those shareholders who did not desire a sale were given a right to buy the others out at a valuation to be determined by the Court.
2 and 3 held: “At the same time in order to prevent any oppressive exercise of this privilege those shareholders who did not desire a sale were given a right to buy the others out at a valuation to be determined by the Court. Thus it is clear that the Supreme Court has confirmed the view taken by the Bench of our High Court as regards the points dated above. Apart from this decision the learned counsel cited 86 L.W. 500. 11. The learned counsel appearing for the respondents tried to distinguish the judgment in O.S.A. No. 108 of 1966 and also the decision reported in AIR 1973 S.C. 643 . The learned counsel submitted that the respondent herein did not invoke the jurisdiction of the Court under the Partition Act and as such the provisions of the Partition Act will not apply to the facts of this case. The learned counsel also stated that when a Court has no suo motu jurisdiction to apply the Partition Act and when neither party has invoked the procedure laid down under the Partition Act, it cannot be said that the Court is powerless to effect a division of the property in the manner which it considers equitable in the circumstances of the particular case. The learned counsel further submitted that the Partition Act of 1893 is only to amend the existing law and that does not mean the power of the Court is only within the four corners of the Act. To substantiate his contention, the learned counsel cited AIR 1973 SC 643 and AIR 1958 A.P. 647. The learned counsel also submitted that the main questions that loomed large in O.S.A. No. 108 of 1966 and AIR. 1973 S.C. 643 are with reference to the withdrawal of the suit under O. 23 R. 1, C.P.C. and as such any finding on the inherent powers of the High Court in respect of a partition suit is only obiter and the same need not be taken as binding upon this Court. According to the learned counsel this Court can independently view the matter and give a decision as to whether the Court has inherent jurisdiction, apart from the Partition Act, to pass orders which it considers equitable in the circumstances in the particular case. 11.
According to the learned counsel this Court can independently view the matter and give a decision as to whether the Court has inherent jurisdiction, apart from the Partition Act, to pass orders which it considers equitable in the circumstances in the particular case. 11. The learned counsel appearing for the respondents tried to distinguish the judgment in O.S.A. No. 108 of 1966 and also the decision reported in AIR 1973 S.C. 643 . The learned counsel submitted that the respondent herein did not invoke the jurisdiction of the Court under the Partition Act and as such the provisions of the Partition Act will not apply to the facts of this case. The learned counsel also stated that when a Court has no suo motu jurisdiction to apply the Partition Act and when neither party has invoked the procedure laid down under the Partition Act, it cannot be said that the Court is powerless to effect a division of the property in the manner which it considers equitable in the circumstances of the particular case. The learned counsel further submitted that the Partition Act of 1893 is only to amend the existing law and that does not mean the power of the Court is only within the four corners of the Act. To substantiate his contention, the learned counsel cited AIR 1973 SC 643 and AIR 1958 A.P. 647. The learned counsel also submitted that the main questions that loomed large in O.S.A. No. 108 of 1966 and AIR. 1973 S.C. 643 are with reference to the withdrawal of the suit under O. 23 R. 1, C.P.C. and as such any finding on the inherent powers of the High Court in respect of a partition suit is only obiter and the same need not be taken as binding upon this Court. According to the learned counsel this Court can independently view the matter and give a decision as to whether the Court has inherent jurisdiction, apart from the Partition Act, to pass orders which it considers equitable in the circumstances in the particular case. 12. 61 MLJ 552 = AIR 1932 Mad. is a judgment of a single judge of this Court and as such the same cannot prevail over the Bench decision of the High Court rendered in O.S.A. No. 108 of 1966. 83 L.W. 100 is prior to the decision rendered in O.S.A. No. 108 of 1966.
12. 61 MLJ 552 = AIR 1932 Mad. is a judgment of a single judge of this Court and as such the same cannot prevail over the Bench decision of the High Court rendered in O.S.A. No. 108 of 1966. 83 L.W. 100 is prior to the decision rendered in O.S.A. No. 108 of 1966. 1975 TLNJ 411 rendered by a single judge of this Court cannot have any effect in the light of the judgment rendered in O.S.A. No. 108 of 1966. The Bench decision of the Andhra Pradesh High Court reported in AIR 1958 A.P. 647 has been dissented by our Bench in O.S.A. No. 108 of 1966. The various other decisions cited by the learned counsel appearing for the respondent such as AIR 1964 Rajasthan 229, ILR 1966 Guj. 143, AIR 1929 All. 443 cannot have any binding effect over this Court when especially a Bench of this Court is O.S.A. No. 108 of 1966 has decided this point. 13. It is clear from the discussion and the decision rendered in O.S.A. No. 108 of 1966 that the Court will not have inherent powers, apart from the Partition Act to pass orders in respect of a partition suit. I am in complete agreement with the arguments advanced by the petitioners counsel to the effect that O.S.A. No. 108 of 1966 is the authority for the proposition that the Court will not have any inherent powers apart from the Partition Act, in respect a partition suit. It is clear the Court below has exercised jurisdiction not vested in it by law. The lower court ought to have decided the case as per the provisions of S. 2 of the Partition Act and should not nave ordered auction of the suit property in between the sharers.” In a recent Bench decision of this Court in the case of PL.ST.OP. Subramanian Chettiar v. Nasamani Achi & 7 others , 1992-1-L.W. 423 it has been observed as follows: “14, There are certain specific provisions in the Code as respects the sale of movable and immovable properties.
Subramanian Chettiar v. Nasamani Achi & 7 others , 1992-1-L.W. 423 it has been observed as follows: “14, There are certain specific provisions in the Code as respects the sale of movable and immovable properties. O. 39, R. 6 invests the power to the Court to order interim sale of movable property and the said Rule reads as follows: “The Court may, on the application of any party to a suit order the sale by any person named in such order and in such a manner and on such terms as it thinks fit of any movable property, being the subject matter of such suit or attachment before judgment in such suit which is subject to speedy and natural decay, or which for any other just and sufficient cause it may be desirable to have sold at once.” 15. There are also other provisions with regard to sale of movable property found traceable to O. 21, Rr. 74 to 81 and the details of the provisions need not at all be required to be elaborated here for the purpose of the instant case. The sale of immovable property, in execution of the decree is legally permissible and to this effect there is a provision under O. 21, R. 62 which prescribes: “Sale of Immovable property in execution of decrees may be ordered by any court other than a Court of Small Causes”. 16 O. 21, R. 83 to 96 prescribe the procedure to be followed in such sales. “Barring those provisions, there is no other provision except the provision as adumbrated in S. 151 of the Code dealing with the inherent powers of the Court but makes a statutory recognition of the inherent power of the Court to do certain things ex debito justicia. Such a power is not to be exercised casually, and if at all, exercised with circumspection and not to violate any rule of law or equity. There can be no justification in applying the powers of the inherent jurisdiction to introduce a new form of procedure for which no provision is made by law.” It is indeed necessary to bear in mind that a plaint by which a suit is instituted is not a proof of the claim in itself.
There can be no justification in applying the powers of the inherent jurisdiction to introduce a new form of procedure for which no provision is made by law.” It is indeed necessary to bear in mind that a plaint by which a suit is instituted is not a proof of the claim in itself. A plaintiff is required to annex a list of the documents, if any, or produce the same if not annexed to the plaint within such time as fixed, by the Court or extended by it from time to time. A plaint can be rejected before summons are issued calling upon the defendant to file his written statement where it does not disclose a cause of action or there are certain other types of infirmity, and if it is not rejected, then only summons notices are issued upon the defendants and they are called upon to present a written statement of their defence. In a suit for recovery of money the defendants can claim set of any ascertained sum of money legally recoverable from the plaintiff not exceeding the pecuniary limits of the jurisdiction of the Court and in such a case the written statement has the same effect as the plaint in a cross suit. Besides the set-off plea, a defendant in any suit may make a counterclaim against the claim of the plaintiff in respect of a cause of action accruing to the defendant against the plaintiff either before or after the filing of the suit, but before the defendant has delivered his defence or before the time limited for delivering his defence has expired whether such counterclaim is in the nature of a plaint for damages or not. Where a defendant claims to be entitled to contribution from or indemnity against any person not already a party to the suit, he may by leave of the Court, issue a notice to that effect to that third party and such notice shall be served on the third party according to the rules relating to the, service of summons. These and such other provisions are intended to provide to the defendant sufficient safeguards and intended to ensure that there is no uneven or unfair advantage derived by the plaintiff for the reason that he has brought an action in a Court of law.
These and such other provisions are intended to provide to the defendant sufficient safeguards and intended to ensure that there is no uneven or unfair advantage derived by the plaintiff for the reason that he has brought an action in a Court of law. When, however the written statement is filed by the defendant the Court at the first hearing of the suit is required to ascertain from each party or his Pleader whether he admits or denies such allegation of fact as are made in the plaint or in the written statement, if any, of the opposite party and as are not expressly or by necessary implication admitted or denied by the party against whom they are made and to record such admissions and denials. There can be a decree in favour of either party on such admission, and if there is no such decree, the suit has to proceed in accordance with law first by framing of issues and thereafter, providing opportunity to the parties to lead evidence. If, however, at the first hearing of a suit it is found that the parties are not at issue on any question of law or of fact the Court may, at once pronounce judgment. If otherwise the Court will try to settle all issues of fact and law and pronounce the judgment accordingly on all issues except when the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only it may try that issue first, if that issue relates to, (a) The jurisdiction of the court; or (b) A bar to the suit created by any law for the time being in force and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined and may deal with the suit in accordance with the decision on that issue. 4. All assurances created by specific and clear provisions of law to safeguard the interests of all parties to a suit and to ensure that no party is subjected to any arbitrary, harsh or unfair order, however, is ignored when what has been a claim in the plaint is allowed to be achieved by way of an interlocutory application and by a summary order without any adjudication of the issues of fact and law.
The judgments of this court aforecited have recognised the legally permissible extent of sale of any movable or immovable property which is the subject matter of the suit and also held what is intended to be a provision recognising the inherent power of the Court to do certain things ex debito justice is controlled by such express and implied restrictions on its exercise which shall reaffirm the assurance aforementioned and not impinge. We reiterate, what has been said in the earlier Bench decision of this Court in the case of PL.CT.SP. Subramanian Chettiar (1992-1-L.W. 423) supra that O. 21, Rr. 83 to 96 of the Code of Civil Procedure are alone available for sale of immovable properties in execution of decrees except the provision as in O. 39, R. 6, C.P.C.S. 151 of the Code does not confer a newpower in the Court but makes a statutory recognition of the inherent power of the Court to do certain things ex debito justiciae. Such a power is not to be exercised casually, and if at all, exercised with circumspection and not to violate any rule of law of equity. There can be no justification in applying the powers of the inherent jurisdiction to introduce a new form of procedure, for which no provision is made by law. 5. Learned counsel for the plaintiff/applicant/respondent has not been able to bring to our notice any provision of law under which such a special procedure is sanctioned that enables a plaintiff before issues are framed and even before written statement are filed to make an application for the sale of immovable property, which property according to him, is a security for moneys advanced by him to the defendant. The plaintiff/applicant/respondent asked for the relief which he can obtain only after the decree at the initiation of the suit and has got it at the concession of the Official Assignees. The Official Assignee was expected to ascertain from the insolvent before making any such concession that the suit claim against the insolvent was true and correct, that the plaintiff was a secured creditor and the properties as claimed by him were in security and that the plaintiffs case was one of the exceptions to the provisions under S. 17 of the Presidency Act before making any such concession.
He had no reason for such a haste when the insolvent was/is a party defendant in the suit and he/she was yet to disclose his/her defence against the claim of the plaintiff. True the insolvent has submitted the schedule of the properties and included Schedules B and C of Judges Summons in the schedule under S. 24 of the Presidency Act and on adjudication as above these properties had vested in the Official Assignee but he has to perform a statutory duty of division of the properties of the insolvent amongst the creditors and administer the properties for the said purpose until the creditors claims are satisfied in accordance with law. Since the appellant, herein, however, was not given any notice before the impugned order was passed, and it is not known whether the appellant is in a position to claim any independent interest in the properties which have been ordered to be sold because, the insolvent included the properties in the schedule which he/she submitted under S. 24 of the Presidency Act, and accordingly, the Official Assignee conceded before the learned single judge, we are not in a position to accept as concluded as a fact that the properties ordered to be sold belonged to the insolvent only. 6. We have no hesitation, in the instant case, in deprecating the application that the plaintiff in the suit filed and regretting that such application has been granted because, true and correct picture of the tact and law was not brought to the notice of the learned single judge. For the reasons aforementioned, we allow and set aside the impugned judgment. Application No. 806 of 1993 is rejected with costs. Hearing fees Rs. 500/-.