SARODE VITHOBA AND Vs. MADANLAL LALCHAND AND CO

JUDGEMENT

(1.) One Bastimal filed a petition that Eswara Rao who is indebted to him should be declared an insolvent. In the course of the proceedings the Official Receiver was appointed an interim Receiver on 26-3-1949 in I. C. 19 of 48-49 on the file of the Subordinate Judge, Bangalore. He was directed to take charge of the properties of the first respondent (debtor). Accordingly the Receiver took possession of some machinery belonging to - the debtor kept in a rented house belonging to the appellant, locked it and sealed the premises on 29-3-1949. He was thus in possession of the premises from that date till the articles were sold.

(2.) It has to be observed that the order of adjudication was passed on 24-8-51. The first respondent in this Court claimed that the move-ables had been mortgaged to him under a registered document. He however agreed that they may be sold free of the encumbrance provided that the net proceeds were to be paid towards the adjustment of what was due to him as a secured creditor. He also agreed to take interest at 6 per cent though according to the mortgage deed he was entitled to interest at Rs. 1-4-0 per cent per mensem. The contention of the first respondent is that the appellant is not entitled to recover rent from the amount realised by the sale of these moveables, as according to the agreement his secured debt should first be discharged out of the proceeds of the sale. This contention found favour with the learned Judge of the first appellate Court. He has therefore set aside the order of the learned Subordinate Judge, who had directed that the rent should be paid to the appellant out of the sale proceeds and it is against this order of 1st appellate Court that this second appeal has been filed.

(3.) It is urged in this Court on the authority of the decision in -- 'Official Trustee of Bengal v. Kissen Gopal', AIR 1930 Cal 459 (A) that rent due to the appellant after the date of adjudication alone has to be deducted and not the rent due up to that date and for this the creditor should be treated as an ordinary creditor. A careful reading of the decision will show that the order of adjudication in that case was passed on 17-8-1926. But before that, an interim receiver had been appointed. The proceedings made it clear that the appointment of an interim receiver was more or less for purposes of doing certain preliminary investigations and that he was not directed to take possession of any property as he might have been under Section 20, Insolvency Act, as observed by the learned Judges. It was also clear from the proceedings in that case that from the date on which the order of adjudication was passed the interim receiver was ordered to continue as receiver, that the insolvent's property vested in him under Section 28(2) and that from the date of order of adjudication the Receiver was in possession in the eye of law. It is evidently so because the interim receiver had been appointed only for purpose of doing certain preliminary investigation and was not directed to take possession and could not be regarded to be in possession even in the eye of law, the rent due up to the date of order of adjudication was not regarded as expenses of administration and that he was treated as an ordinary debtor. In this case as already pointed out the interim receiver appointed even before the order of adjudication, was directed then alone to take possession of the property. The result is that the rent due from the date on which the interim receiver took possession of the moveables and; locked and sealed the premises, up to the date of sale of the moveables has to be treated as