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2000 DIGILAW 252 (CAL)

New Toyo Soa Foods Company Ltd. v. MMC Exports Ltd.

2000-05-16

Amitava Lala

body2000
Judgment Amitava Lala, J. This application is very short and made under peculiar circumstances. 2. In fact, this is an appeal arising out of Chapter-VI Rule 15 of the Original Side Rules of this Court. By making this application, in effect, the petitioner being the plaintiff in the suit challenged an order passed by the Registrar of this Court. 3. A little background of the case will help the readers. Initially, an order was passed by a Single Bench of this Court on 19th May, 1999 to the extent that the defendant shall furnish by way of immovable property or any other security to the satisfaction of the Registrar, Original Side of this Court for a sum of Rs.10,75,000/- within a period of 4 weeks after summer vacation in default there will be decree for the said sum. 4. An appeal was preferred by one of the parties to a Division Bench of this court and from the judgment and order dated 27th July, 1999, an appeal was preferred to the Supreme Court of India when in a Civil Appeal No. 6722/1999 arising out of S.L.P. No. C-16134/1999 when the Supreme Court of India was pleased to set aside and order of the Appeal Court restored the order of the Single Bench by granting 8 weeks time to the respondent to furnish the security in terms of the order of the Single Judge. However, such time was extended for another 4 weeks by an order dated 24th January, 2000. 5. It appears from the Reference No. 5/2000 before the Registrar of this court that pursuant to such direction made by the Supreme Court of India, security bond in terms of order dated 22nd November, 1999 for a sum of Rs.10,75,000/- was furnished by charging the Flat being No. 101 of the 1st Floor, South Side, measuring 710 sq.ft. super built up area more or less together with the undivided proportionate one/twelveth share of land measuring 5 cottahs 8 chittacks within Mauza Dhakuria, at present number and reputed as the premises No. 132A, Sarart Ghosh Garden Road, Calcutta - 700 031 and the said security bond has been registered on 18th February, 2000. 6. It appears to this court that the plaintiff put an objection by an affidavit dated 7th February, 2000 before the Registrar in respect of insufficiency of the security. 6. It appears to this court that the plaintiff put an objection by an affidavit dated 7th February, 2000 before the Registrar in respect of insufficiency of the security. According to the petitioner herein and as per the affidavit filed before the Registrar, the following parts are relevant for the purpose of consideration in merit: "I say that the 'security' is meant to protect the interest of the plaintiff. Therefore, the plaintiff has a right to be as cautious as a purchaser or mortgagee of the property and to have a foolproof evidence of title and valuation of the property. The plaintiff, therefore, initiated an enquiry of its own and ascertained the following particulars: (i) The property offered by the defendant covers a super built area of approximately 600 sq.ft. (ii) The maximum price of property in the locality where the property offered is situate is Rs.800 per sq.ft. depending on the quality of material used in the construction; (iii) The value of the property offered can be best Rs.1,80,000/-, approximately. I say and submit that the 'security' offered by the defendant is hopelessly inadequate to serve the purpose and for the object and requirement of the order of the court. The offer of the defendant cannot be accepted. I say and submit that the defendant is required to furnish positive proof of (i) the valuation of the property, (ii) the title of the defendant to the property and (iii) that the property is free from any encumbrance, attachment, lis, charges, tenancy etc. A bare statement without the backing of definite proof of all the said particulars cannot be accepted." 7. However, in the application herein, a further representation to the Registrar in respect of the insufficiency of the security being dated 18th February, 2000 as well as a valuation report made by an approved valuer of High Court at Calcutta are also annexed to the petition. From such valuation report, it appears that the security can fetch a value of Rs.6,05,000/- as on 19th February, 2000. 8. Apart from the aforesaid ground, the plaintiff/petitioner is taken a point before the court that the security so furnished was accepted by the Registrar-in-Insolvency but not by the Registrar of Original Side who was directed to do so under the original order. Therefore, there is a jurisdictional error on the part of the department of this court in carrying out the order. Therefore, there is a jurisdictional error on the part of the department of this court in carrying out the order. 9. According to the petitioner, the Registrar-in-Insolvency is 'Registrar' in so far as the proceedings under the Presidency Town Insolvency Act as transpired in Chapter-VIA Rule 10 of the Original Side Rules of this Court. Therefore, such power cannot be extended other than the insolvency proceeding. 10. Under Chapter XXXVIII Rule 54 of the Original Side Rules of this Court, the security is to be given to the Registrar unless otherwise provided by law. The provision is quoted hereunder: "Where security is required to be taken, it shall, unless other provided by law or prescribed by these rules by given to the Registrar or to such other officer of the court as the court or a Judge may specially direct, and the court or a Judge may permit or order him to assign the same to any person for the purpose of suing on the same on such terms as it may think fit." 11. Thus, Registrar-in-Insolvency is not the Registrar to pass such order for the purpose of satisfaction of the security. 12. Moreover, valuation has to be Jade in accordance with section 2(16B) of the Indian Stamp (West Bengal Amendment) Act, 1990 which speaks that: "'Market value' means, in relation to any property which is the subject matter of an instrument, the price which such property would have fetched or would fetch if sold in open market on the date of execution of such instrument as determined in such manner and by such authority as may be prescribed by rules made under the Act or the consideration stated in the instrument, whichever is higher." 13. Hence, the security bond as furnished and accepted by the said Registrar is inadequate. Therefore, since the valuation inadequate in other words not in accordance with the appropriate satisfaction of the appropriate Registrar other Original Side of this Court. The petitioner being plaintiff will be entitled for a decree for said sum by following the default clause as per the order dated 19th May, 1999 as passed in an application under Chapter XIIIA of the Original Side Rules of this court. 14. The respondent has taken a point that Registrar-in-Insolvency is the Registrar so far the part of furnishing security is concerned not only by judicial pronouncement but also by the administrative order. 14. The respondent has taken a point that Registrar-in-Insolvency is the Registrar so far the part of furnishing security is concerned not only by judicial pronouncement but also by the administrative order. 15. The learned Counsel appearing in support of his contention, cited a judgment reported in 38 CWN 433: 1934(61) ILR Calcutta series 429 in Re: Madan Theatres Ltd. From a paragraph in the internal page 434 of the judgment, I find as follows: "The reason for this is an order made by Sir Lancelot Sanderson on February 11th, 1924, whereby he directed that all references with regard to security should be transferred from the Registrar to the Registrar-in-Insolvency. Though it is not so stated, I take it that the order was made under Chapter IV, Rule 18. In my judgment the Court must be assumed to have had Sir Lancelot Sanderson's Authorisation in mind, when ,the order for security was made, or in other words that the Registrar-in-Insolvency is as much a person designated, as if the order specifically provided that the security was to be to his satisfaction." 16. Under the circumstances, such Single Bench of this Court held that established practice of the court ought not to be interfered with. 17. Learned Counsel had shown to this court that an administrative order was also passed on 21st February, 1990. According to the respondent, the note was put up by the Registrar Original Side to the Hon'ble Chief Justice on 24th February, 1990 and the particular portion of the note is as follows: "I(C) The Registrar-in-Insolvency failing him the master and Official Referee may be directed to deal with all matters connected with security reference." 18. Therefore, when all matters connected with security reference was directed to be dealt with by Registrar-in-Insolvency, there can not be any embargo of such officer in performing such duty. 19. Next point he has taken that in view of the aforesaid judgment as cited above, the court has no power to interfere with the decision of the Registrar with regard to the sufficiency of the security tendered. The relevant part of the judgment is at page 434 as follows. "I have no right to review his order, because to do so would be to substitute another condition, security to my own satisfaction, for that imposed by the court." 20. The relevant part of the judgment is at page 434 as follows. "I have no right to review his order, because to do so would be to substitute another condition, security to my own satisfaction, for that imposed by the court." 20. I have carefully considered the submissions as made by the respective Counsels appearing for the parties herein. 21. Registrar-in-Insolvency is a sub-ordinate post to the Registrar Original Side and created for the specific purpose as per the Original Side Rules of this court. It is true that the work load of the Registrar-in-Insolvency is much less than the workload of the Registrar Original Side. It is also true that there should be devision of labour. He can be entrusted to do certain work in the field of winding up proceedings which is comparable in nature and also can be extended upto the extent of estate arising out of will or trust but that too can be done only by way of amendment of the Rules. Without amendment of Rules to the extent, if the department of this court follow only practice inspite of the order of the court, the same is definitely an irregular act on the part of themselves. Practice can not supersede the Codified Rules of the Court. 22. It is very clear from Chapter VIA Rule 10 of the Original Side Rules that the word 'Registrar' in these Rules will mean the 'Registrar-in-Insolvency' in so far as the proceedings under Presidency Town Insolvency Act are concerned. Chapter VIA was introduced by way of gazette notification as on 1st August, 1974, therefore even the ratio of the earlier judgment as aforesaid become non est in the eye of law. On the other hand Chapter XXXVIII Rule 54, as aforesaid, clearly prescribed that the security is to be given to the Registrar unless otherwise provided by law. Security may be furnished to the satisfaction of other officer provided when a Judge specifically directs so. Therefore, under no stretch of imagination, it can be construed that security to be given under an order of the Court to the satisfaction of the Registrar Original Side means Registrar-in-Insolvency automatically by following the practice ignoring the order of Judge and Rules of this Court. 23. Therefore, under no stretch of imagination, it can be construed that security to be given under an order of the Court to the satisfaction of the Registrar Original Side means Registrar-in-Insolvency automatically by following the practice ignoring the order of Judge and Rules of this Court. 23. I also find from the preceding paragraph of the quoted part of the judgment as cited by the respondent as follows: "I thought at one stage that difficulty might arise from the fact that it was the Registrar-in-Insolvency who accepted the security, although the order specified, or 'designated', the Registrar, by which must be meant the Registrar, Original Side." 24. Therefore, it implies that if the aforesaid position was available before the Single Bench, as in this case, could have thought otherwise. 25. Under the circumstances, I feel that the order passed by the Registrar-in-Insolvency on the basis of the power of delegation to act on behalf of the Registrar Original Side for the purpose of obtaining security is without jurisdiction. 26. So far as the appealability of the order is concerned, this court has jurisdiction to entertain try and determine any order or decision of the Registrar or Master under Chapter VI Rule 15 of the Original Side Rules and when Registrar-in-Insolvency acted on behalf of the Registrar. Jurisdiction of the appeal to a Judge has rightly invoked by the aggrieved party and appeal lies from such order. 27. Moreover the administrative order, if any, in this respect, cannot supersede the judicial pronouncement. Therefore, unless fresh administrative order is passed in due compliance with the judicial pronouncement, the same is also non est in the eye of law. 28. In any event I do not find laches on the part of the contesting defendant/respondent in complying with the order by furnishing security within the prescribed period as given by the court. Under the circumstances, if I pass a decree for default it will be too harsh to a party who has proceeded on the basis of the practice of this court obviously with a direction of any departmental authority. 29. Hence all cause papers in respect of furnishing security is to be placed before the Registrar Original Side to pass a fresh order in respect of his satisfaction. It is expected that at the time of satisfaction Registrar Original Side will follow the appropriate norms applicable for such satisfaction. 30. 29. Hence all cause papers in respect of furnishing security is to be placed before the Registrar Original Side to pass a fresh order in respect of his satisfaction. It is expected that at the time of satisfaction Registrar Original Side will follow the appropriate norms applicable for such satisfaction. 30. Thus, the application being G.A. No. 1167/2000 is allowed on context. However, no order is passed as to costs. The process will be completed within a period of fortnight from the date of communication of the order after the Summer Vacation. Suit is treated as heard in part. Let the suit appear in the monthly list of June, 2000. Liberty is granted to mention. 31. Xerox certified copies of this judgment will be supplied to the parties by the department within 7 days from the date of putting requisition for drawing up and completion of the judgment as well as the certified copy. 32. All parties are to act on a signed copy minute of this operative part of the judgment on the usual undertaking and subject to satisfaction of the officer of the court in respect as above. Application allowed.