The Court made the following

Order:-

This Civil Miscellaneous Appeal arises out of certain proceedings initiated by the respondent (petitioning creditor) in I.P. No. 4 of 1958 for a declaration that certain properties formed part of the estate of the insolvent, and that the Official Receiver should be directed to take possession of the same. The petitioning creditor’s case was that the insolvent had put certain properties fictitiously in the names of his wife, and mother, the appellants herein, that they were not genuine transactions, and that the properties put in their names still continued to form part of the insolvent’s estate. The appellants resisted the same, claiming title in themselves.

The learned Subordinate Judge, Nagercoil, dismissed the application but on appeal, the learned District Judge modified the order of the trial Court, and upheld the claim of the petitioning creditor in respect of a portion of properties The appellants aggrieved by that portion of the learned District Judges’s order have preferred the present appeal.

Learned Counsel for the appellants raised the objection that the proceedings initiated by the petitioning creditor in his own name are incompetent and misconceived, and that it was not open to any individual creditor to initiate such proceedings. He urged that, when a person has been adjudged insolvent his entire estate would vest in the Official Receiver who alone would be competent to take any such proceedings. If the Official Receiver wrongfully declines to take the nessessary proceeding, it will be open to any creditor, who had proved the debt in insolvency, to apply for appropriate directions from the Insolvency Court. He can move the insolvency Court for an order directing the Official Receiver to take the requisite proceeding for recovery of the properties of the insolvent on conditions that either he provides the costs of such proceedings or indemnifies the Official Receiver in respect of such costs. He can also obtain appropriate directions from the Insolvency Court to initiate and prosecute such proceedings in the name of the Official Receiver. Learned Counsel contended that, if no such order is passed no individual creditor has any right to move the insolvency Court under section 4 in his own individual capacity.

There is considerable substance in this point and the reason is obvious If the creditor initiates any such proceeding, any decision rendered therein would not bind or affect the rights of the Official Receiver in any manner. Such a decision would not operate as res judicate, as the Official Receiver, in whom the properties have vested, had not been made a party thereto. It is because of this utter futility of any proceeding prosecuted by the individual creditor that the law enjoins that the Official Receiver alone can prosecute such proceedings. It is a matter of great surprise that this objection which goes to the root of the matter was not raised in the Courts below.

Till 1926, there was divergence of opinion among the various Courts regarding the right of an individual creditor to take proceeding for the annulment of transfer under section 53 or section 54 of the Provincial Insolvency Act. By the Amending (Act XXXIX of 1926) section 54-A was enacted to the effect that, with the leave of the Court, any creditor may take judicial proceeding for the annulment of transfer under section 53 or section 54, provided he satisfied the Court that the Receiver has been requested and has refused to take proceeding. Section 4 of the Provincial Insolvency Act of 1920 is a new provision conferring very wide jurisdiction on the Insolvency Court to decide questions of title, priority or of any nature whatsoever arising in the course of insolvency. Under the Insolvency Act, 1907, there was no such provision and the Official Receiver had to invoke the jurisdiction of the Civil Courts for obtaining relief. But so far as the individual creditor was concerned he suffered under the same disability

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