IN THE HIGH COURT OF MADRAS
Ramesam
T. K. Kaliaperumal Naicker
Versus
O. S. Ramchandra Ayyar And Ors.
Decided On : 1 February, 1927
Limitation - Insolvency - Provincial Insolvency Act, Section 20, Section 22, Section 28 (7), Section 29 - Order 22 of the Civil P. C. - The court discussed the effect of the order of adjudication and the vesting order, the devolution of interest by the operation of law, and the appointment of an interim Receiver. It highlighted the provisions of Section 29 of the Insolvency Act and the leave of the Court for filing a suit under Section 28 (2). The court emphasized that the suit was properly filed before the order of adjudication and the bringing in of the Official Receiver was a matter of compliance with the orders of the Court under Section 29 of the Insolvency Act.
Fact of the Case:
The suit was filed for recovery of money due on a mortgage deed. The main point raised was whether the suit was barred by limitation due to the impleading of the 5th defendant after 12 years from the cause of action.
Finding of the Court:
The court found that the suit was properly filed before the order of adjudication and the bringing in of the Official Receiver was a matter of compliance with the orders of the Court under Section 29 of the Insolvency Act. The decision of the lower appellate Court was upheld, and the Second Appeal was dismissed with costs.
Issues: The main issue was whether the suit was barred by limitation due to the impleading of the 5th defendant after 12 years from the cause of action.
Ratio Decidendi: The suit was properly filed before the order of adjudication, and the bringing in of the Official Receiver was a matter of compliance with the orders of the Court under Section 29 of the Insolvency Act.
Final Decision: The Second Appeal was dismissed with costs.
Ramesam, J.
1. The facts of this Second Appeal may be stated as follows: The 1st defendant, Somu Asari, executed a deed of mortgage, Ex. A, on 27th October 1907, in favour of one Govinda Asari, for Rs. 100, payable in two years with interest at 12 per cent per annum and a higher interest in default. Govinda Asari, the mortgagee, died on 19th August 1914 leaving two sons, Amirthalinga Asari and Chinnasami Asari. In a partition between the sons the suit debt fell to the share of Amirthalinga Asari. He was declared an insolvent and his property vested in the Official Receiver of Tanjore who files this suit for recovery of money due on the mortgage deed. The suit was filed on 26th October 1921. The suit was originally filed against four defendants, and we may ignore the fourth defendant for the present. The second defendant purchased the property from 1st defendant. The 3rd defendant again parchased the property in execution of a decree against the 2nd defendant. The 3rd defendant filed an application for being declared an insolvent on 16th November 1920. Under Section 20 of the Provincial Insolvency Act, the Official Receiver was appointed interim Receiver on 17th January 1921. On 20th December 1921, an adjudication order was passed. On 25th April 1922 the plaintiff applied that the Official Receiver of Tanjore in the capacity of the Receiver of the estate of the 3rd defendant, should be made a defendant and he was accordingly made the 5th defendant.
2. The only point raised in the lower appellate Court and argued before me is whether the suit is barred by limitation by reason of the 5th defendant being impleaded in the suit on 25th April 1922, which was more than 12 years from the date when the cause of action arose. Mr. Watrap S. Subrahmania Ayyar, who appears for the appellant, relies on Section 28 (7) which says that an order of adjudication shall relate back and take effect from the date of the presentation of the petition on which it is made. He contends that the effect of the order of adjudication, and the vesting order which followed, is that it must be taken that the adjudication and the vesting were made on 16th November 1920, the date of the application; and if the suit was filed after that date, without the Official Receiver as a party, it was defective, and as the defect was cured by bringing him as a party on 25th April 1922, the suit is barred under Section 22 of the Limitation Act.
3. Order 22 of the Civil P. C. deals with the devolution of interest by the operation of law and not by act of parties. Though there is one rule dealing with the position of a plaintiff becoming an insolvent there is no rule dealing with a defendant becoming an insolvent. If there is no provision of law then the case of the defendant becoming an insolvent is strictly like any other case of devolution. The Official Receiver in insolvency may be regarded as a continuation of the original defendant. If the suit was filed prior to the order of adjudication, the only possible person who can be made defendant is the party himself, and all that can be done is that if he is declared an insolvent afterwards to bring as a party the Official Receiver on whom the interest has devolved, if one so chooses. But now, Act 5 of 1920, Section 29, provides for the case of a. defendant who has been adjudicated an insolvent. Section 29 says Any Court in which a suit or other proceeding is pending against a debtor shall, on proof that an order of adjudication has been made against him under this Act, either stay the proceeding: or allow it to continue on such terms as such Court may impose.
4. If the Court allowed the suit, imposing, some further terms it can proceed only on those terms being complied with. If the Court insisted on the Official Receiver being brought in as a defendant the Official Receiver will have to be brought in. But he will have to be brought in, not because he is an essential party to the suit in the sense that his absence is fatal
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