KANISHK STEEL INDUSTRIAL LTD Vs. ANNIE SWEETY

JUDGEMENT

(1.) The Writ Petition is filed seeking the following reliefs:

(2.) Petitioner is the decree holder in OS No. 668/03 passed by the High Court of Madras. The above decree was passed in a suit for money against the respondents 2 to 5, for an amount of Rs.14,99,242/- with future interest and cost. The decree was transferred for execution to Sub Court, Thiruvalla and pursuant to such transfer, the petitioner filed EP No. 42/04 before that Court and got the properties, four items, of the judgment debtors attached. In the execution proceedings, it was noticed that a Bank, additional 7th respondent in the Writ Petition, is a secured creditor since the properties had already been mortgaged to it as security. When proceedings for sale subject to the claim of the Bank for first preference continued, the first respondent, the Official Receiver, filed an application as EA No. 22/06 stating that an Insolvency Proceeding (IP No. 1/03) against respondents 2 to 5 is in progress, with the receiver appointed by the Insolvency Court taking over possession of properties. That being so, stay of the execution in the case was applied for. The execution Court, after hearing all parties, passed Exts. P6 and P7 orders staying all further proceedings in the execution petition in view of the pendency of the insolvency proceedings against the judgment debtors 2 to 5 and the appointment of a receiver to their properties by the Insolvency Court. Ext. P6 order is passed on the application filed by the receiver as EA No. 22/06 and Ext. P7 on the application of the decree holder to settle the proclamation for sale of the properties attached. Separate orders are passed in such petitions in effect staying the execution proceedings in view of the insolvency proceedings initiated against respondents 2 to 5. Propriety and correctness of Exts. P6 and P7 orders are impeached by the decree holder invoking the supervisory jurisdiction vested with this Court under Art.227 of the Constitution of India.

(3.) I heard the learned counsel on both sides. Having heard the counsel appearing for the respective parties at length and taking note of the facts and circumstances presented, I find that Exts. P6 and P7 orders passed by the Court below staying the execution proceedings of the decree for recovery of money passed in favour of the petitioner in view of the admission of the insolvency petition against the judgment debtors / respondents 2 to 5 and appointing of a receiver to take over their properties, and continuance of such proceedings, cannot at all be assailed as not proper and correct. The grievance of the petitioner as espoused by the learned counsel is that he has not been made a party in the insolvency proceeding, and long before the admission of the insolvency petition steps had been taken for attachment of sale of the properties of the judgment debtors for realisation of the decree debt, cannot be given any unmerited consideration where the mandate under S.30 of the Insolvency Act commands any Court in which any suit or other proceeding is pending against the debtor to stay the suit or proceeding or allowed to continue on such terms as it may impose. No order of adjudication has been passed in the case, but only admission of the petition to declare the judgment debtors as insolvent at the instance of some creditors who, according to the learned counsel, are acting hand in glow with the judgment debtors to screen their properties from attachment and sale. The explanation under S.7 of the Insolvency Act makes it abundantly clear that presentation of a petition shall itself be deemed as an act of Insolvency and on such petition the Court may make an order of adjudication. Before adjudging as an insolvent where the Court proceeds further with the petition it has to be construed as an order of an adjudication which in the given facts of the case has to be taken so in the light of the appointment of a receiver by the insolvency Court to take over the assets of the judgment debtors. The non impleadment of the decree holder as one among the respondents in the insolvency proceedings commenced against the judgment debtors has no significance as being a creditor he is entitled and expected to get himself impleaded as a corespondent in that proceeding and put forward whatever contentions available to resist a declaration under the proceeding that the judgment debtors are not insolvent, if he has any such case.