IN THE HIGH COURT OF JUDICATURE AT MADRAS
Mr. Justice Govinda Menon and Mr. Justice Basheer Ahmed Sayeed, JJ.
The Official Receiver, East Tanjore, representing the estate of the insolvent, the first respondent in I.P.No. 14 of 1949, Official Receiver’s Court, East Tanjore.
Versus
Sait Jessasingh Chathurbujadas.
A.A.O.No. 322 of 1950.
Decided On : 23 November 1950
On 17th December, 1947, the 1st respondent before the lower Court executed an agreement in favour of the decree-holder, who is the 1st respondent in this appeal, promising to execute a mortgage over certain properties for the discharge of a sum of Rs. 22,000 and odd due by him to the 1st respondent in this Court. O.S.No. 80 of 1948 in the Sub-Court of Tiruchirapalli was filed on 20th April, 1948, for specific performance of the contract to execute the mortgage in which the present 1st respondent was the plaintiff and the present 2nd respondent, Subbarama Nadar was the defendant. While that suit was pending, on 30th September, 1948, an application to adjudge Subbarama Nadar as an insolvent was filed by a creditor of his in the District Court of East Tanjore and pending disposal of that application, the Official Receiver of East Tanjore was appointed interim receiver to take possession of the estate of Subbarama Nadar on 4th October, 1948. The appointment of interim receiver was notified on 19th October, 1948, in the Fort St. George Gazette, and in the Tanjore District Gazette on 11th November, 1948. Subbarama Nadar did not contest the suit filed against him for specific performance and an ex parte decree was passed against him on 13th December, 1948. After this the application to adjudicate him as an insolvent came up for final hearing before the District Court of East Tanjore and he was adjudicated an insolvent on 9th July, 1949, and all his estate vested in the Official Receiver of East Tanjore. It may be mentioned at this stage that though the Official Receiver was appointed interim receiver for Subbarama Nadar’s estate on 4th October, 1948, he was not impleaded as a party in O.S.No. 80 of 1948 with the result that when the ex parte decree was passed on 13th December, 1948, the Official Receiver was not a party to O.S.No. 80 of 1948. The decree-holder Sait Jessasingh Chathurbhujdas thereafter filed E.P.No. 579 of 1949 on 16th September, 1949, to execute the decree for specific performance and the prayer was that the Official Receiver in whom the estate of Subbarama Nadar has vested should be added as a party in the execution application and that he and the insolvent should together be directed to execute the mortgage in favour of the plaintiff. Objection was taken by the Official Receiver to the prayer for impleading him as a party to the execution petition on two grounds: Firstly that leave of the Insolvency Court was not obtained to implead him as a party; and secondly that even if no leave is necessary, still, since the Official Receiver was not a party to O.S.No. 80 of 1948, the ex parte decree passed against the insolvent would not bind him and if the decree is not binding on the Official Receiver, it is illegal to implead him as a party in the execution petition with the object of compelling him to execute a mortgage in favour of the decree-holder. The learned Subordinate Judge disallowed both these contentions. Hence this appeal.
Whether the leave of the Insolvency Court is necessary in a matter like this depends upon the correct interpretation of section 28(2) of the Provincial Insolvency Act, which lays down that on the making of an order of adjudication, the whole of the property of the insolvent shall vest in the Court or in a receiver and shall become divisible among the creditors, and therefore, except as provided by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable under this Act shall, during the pendency
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