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2021 Supreme(Ker) 809

IN THE HIGH COURT OF KERALA AT ERNAKULAM
P. Somarajan, J.
Pegadan Abdusalim- Petitioner
Versus
Kannanthodi Bushra, D/O. Hassan Haji and ors. – Respondents
EX. FA No. 30 of 2019
Decided On : 22-09-2021

Advocates:
Advocate Appeared:
For the Petitioner: P.B. Krishnan, P.B. Subramanyan, Sabu George, Manu Vyasan Peter, Advs.
For the Respondent: Sri. K.M. Sathyanatha Menon, Smt. Kavery S Thampi, Advs.

Point of Law: scope of jurisdiction under Rule 33 of Order XLI C.P.C. is so wide enough to do complete justice to the parties and it can be even extended based on any subsequent events.

Headnote:

Civil Procedure Code,1908 - Order XLI R.33 & Or. XXI R.58 - Insolvency Act - Section 14, 4, 25 ,10, 16 and 17 - Recovery of amount – Execution of Decree – Attachment of property - Wife of judgment debtor came up with a claim petition under Order XXI Rule 58 C.P.C. in E.A. in during course of execution of a decree in for recovery of an amount with interest, against attachment - Her claim is based on a decree of Family Court in renumbered as of Family Court, in her favour, for realization of gold ornaments alleged to have been given at time of her marriage and also claiming maintenance, in which, her husband remained ex parte - Above said property was sold in execution of said ex-parte decree in and bid property by her and obtained delivery on hence claim It was allowed by execution court, against which decree holder in came up – Whether Court can go into the legal validity of insolvency proceeding in an appeal preferred against the order in a claim petition under Rule 58 of Order XXI C.P.C., in the absence of an appeal against the said proceeding or any order passed thereof.

Finding of the Court:

Decree obtained by the wife of judgment debtor and the court sale are the result of collusion between husband and wife, that too, without a cause of action. It is a self-serving decree at the instance of both the husband and wife, wherein the husband remained absent and caused to pass a decree as claimed by the wife and brought the property on sale under the said decree -Insolvency Court on being non-est in eye of law, insolvency proceedings deemed to be continued in that court till it is concluded in terms of provisions of Insolvency Act and as such, it is not at all necessary for Court to resort to Rule 33 of Order XLI C.P.C., but can very well take notice of deemed continuation of insolvency proceedings before Insolvency Court in by virtue of provisions in said Act and its legal consequences - Court to resort to Rule 33 of Order XLI C.P.C., but can very well take notice of deemed continuation of insolvency proceedings before Insolvency Court in by virtue of provisions in said Act and its legal consequences on dispute involved in appeal - Wife of judgment debtor was respondent in insolvency proceedings - Hence, she is bound by of Insolvency Court in respect of decree she had obtained and court sale thereof result of collusion between husband and wife, that too, without a cause of action.- It is a self-serving decree at instance of both husband and wife, wherein husband remained absent and caused to pass a decree as claimed by the wife and brought the property on sale under the said decree - Court allowing the claim petition under Order XXI Rule 58 C.P.C. is hereby set aside and the claim petition will stand dismissed, without prejudice to the right of parties to agitate the issue under Section 4 of the Insolvency Act in insolvency proceedings in of Sub Court, - Insolvency Court shall proceed further with case by restoring case on file as if there were no order of dismissal for non- prosecution on by giving notice to all parties - Parties in appeal shall appear before Sub Court, and also before Execution Court on - Execution court shall keep execution proceedings in abeyance till completion of insolvency proceedings either under Section 10 or Section 25 of Act or by complete distribution of assets.

Result: Appeal Allowed

JUDGMENT :

The wife of judgment debtor came up with a claim petition under Order XXI Rule 58 C.P.C. in E.A.No.62/2018 in E.P.No.172/2013 during the course of execution of a decree dated 29/08/2013 in O.S.No.360/2012 for recovery of an amount of Rs.15 lakhs with interest, against the attachment of 50.5 cents by order dated 15/12/2012. Her claim is based on a decree of the Family Court in O.P.No.1042/2012 (renumbered as O.P.No.901/2013 of the Family Court, Malappuram) in her favour, for realization of gold ornaments alleged to have been given at the time of her marriage and also claiming maintenance, in which, her husband remained ex parte. The abovesaid property was sold in execution of the said ex-parte decree in E.P.No.39/2015 dated 14/07/2015 and bid the property by her and obtained delivery on 26/10/2015, hence the claim under Order XXI Rule 58 C.P.C.. It was allowed by the execution court, against which the decree holder in O.S.No.360/2012 came up.

2. Earlier, the husband/judgment debtor approached the Insolvency Court by maintaining a debtor petition, I.P.No.1/2013, but subsequently he remained absent and not proceeded with the insolvency petition. Consequently, the insolvency petition was dismissed for non-prosecution on 23/1/2018, after the passing of ex-parte decree in favour of his wife for recovery of gold ornaments and maintenance and the sale of the property in execution on 14/07/2015, confirmation of sale on 15/09/2015 and delivery effected on 26/10/2015, which according to the decree holder is a collusive decree obtained by the wife in collusion with her husband. It is submitted that the insolvency proceedings were initiated only to camouflage and facilitate the passing of the said collusive decree and to cause sale of the property in the name of his wife fraudulently and to defraud the creditor, the decree holder herein. It is further submitted that he was a party respondent in the insolvency proceedings and the wife of the judgment debtor was also a party respondent (37th respondent) in the said proceedings and hence, the execution court is not justified in allowing the claim petition overlooking the fraud actively played by the judgment debtor with his wife.

3. Indisputably, the marriage relationship between the judgment debtor and the claimant is still subsisting. None of them approached any competent court either to get a decree of divorce or judicial separation. Both of them are still living as husband and wife. If that be so, the wife has to explain what actually prompted her to institute a suit against her husband, that too, without a cause of action for recovery of gold ornaments, if any given at the time of marriage and also for maintenance. The husband remained ex parte so as to enable his wife to translate her claim into a decree. This would show the collusive nature of the suit by the wife of judgment debtor, wherein the husband/judgment debtor conveniently remained absent and caused to pass an ex parte decree. It was put in execution and the only immovable property belonged to him caused to be sold in court auction at the instance of his wife and got it in her name in court sale. By its very nature, it is clear that it is a collusive decree and the judgment debtor remained ex parte so as to facilitate passing of a decree in favour of his wife and under that decree, the property was sold in execution in favour of his wife. It appears that all these were done at the instance of husband, who remained ex parte all along till the property was transferred in court sale in the name of his wife. In order to facilitate all these fraudulent acts, he had adopted yet another device by way of an insolvency petition as against the decree holder and various creditors, wherein his wife was also made as a co-respondent/creditor. It was maintained before the Insolvency Court till the passing of a decree in the collusive suit and its after effect by way of sale of immovable property in favour of his wife and thereafter r

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