RANJANI Vs. INDIAN BANK AND ANR.

JUDGEMENT

(1.) In a proceeding in insolvency I.P. No. 58 of 1986 P.K. Pattabiraman since deceased and his wife P. Kantha were adjudged insolvents. They filed schedules of their properties as required under Sec. 24 of the Presidency Towns INsolvency Act, 1909 (hereinafter referred to as the Act) and included therein a list of immovable properties, including schedules A to D to the Judge's Summons in Application No. 806 of 1993 in C.S. No. 760 of 1986 and the properties, accordingly, came out in the hands of the Official Assignee. C.S. No. 760 of 1986 has been filed, however by the plaintiff/applicant respondent against eight persons including Pattabiraman and P. Kantha and the appellant herein for recovery of Rs. 1 crore and odd and claiming that properties mentioned in the schedules A to D to the Judge's Summons were security for the advance made by them to a firm of which Pattabiraman and Kantha were partners. Summons have been issued in the suit. Some of the defendants have already been served and some of them are yet to be served with the summons. None of them, however, has opposed and filed the written statement in the suit. At such a stage of the suit, however, the plaintiff bank filed Application No. 806 of 1993 and brought into the proceeding the Official Assignee to represent the insolvents and stated that Kantha had deposited her title deeds with the bank in respect of the immovable properties and that it was entitled to realise its claims from the properties which were mortgaged to it by Kantha and accordingly appropriate the sale proceeds towards the suit claim. They sought a direction, accordingly for the sale of the properties described in the schedules A to D to the Judge's Summons. A learned single judge of this Court has disposed of the said Application by a summary order, which reads as follows:-

(2.) It is not stated however in the impugned order why when the plaintiff/applicant respondent desired the sale of the properties mentioned in the schedules A to D to the Judge's Summons, the learned single judge ordered for the sale of the properties mentioned in the schedules B and C only except that the Official Assignee raised no objection for the sale of the said properties. IT has, however, been brought to our notice by the learned Official Assignee that while he had clear information that properties mentioned in the Schedules B and C belonged to the insolvent P. Kantha it was not sure in respect of the properties mentioned in the Schedules A and D. IT was possible, therefore, that in the properties mentioned in the Schedules A and D some other defendant had interest and without notice to such other defendant, it was not possible to accept the case of the plaintiff/applicant/respondent that the charge of the debt of P. Kantha extended to the entire properties described in the Schedules A to D. Any properties consequent on order of adjudication of properties belonging to the insolvents vest in the Official Assignee and the Official Assignee accordingly is required to proceed with the division of such properties amongst the creditors. No creditors to whom the insolvent is indebted in respect of any debt provable in insolvency during the pendency of the insolvency proceedings have any remedy against the property of the insolvent in respect of the debt and Sec. 17 of the Act provides that no debtor shall commence any suit or other legal proceedings except with the leave of the court and on such terms as the Court may impose in respect of the debt. The Proviso therein, however, makes exception in favour of any secured creditor. According to this Proviso, vesting of the property of the insolvent in the Official Assignee does not affect the power of any secured creditor to realise or otherwise deal with his securities in the same manner as he would have been entitled to realise or deal with it.

(3.) Since the plaintiff/applicant/respondent has claimed a security for its debt and accordingly instituted a suit in C.S. No. 760 of 1986, it is obvious that it has preferred to realise or otherwise deal with its security in the same manner as if there is no adjudication under the Insolvency Act and as if the property of the insolvents covered by the security has thus not vested in the Official Assignee. Nonetheless, though outside the insolvency, it (the plaintiff/applicant/respondent added the Official Assignee as party defendant No. 9 in the suit. Since, thus C.S. No. 760 of 1986 is outside the insolvency proceedings any application therein can be dealt with only in accordance with such provisions of law which are attracted to a regular suit or suit based on security/mortgage. One of the settled principles of law has been that all orders pending adjudication in a suit are interlocutory and are subject to final adjudication. Provisions in this behalf that are invoked by the litigants besides the inherent powers of the Court are provisions as to temporary injunction/direction attachment of a property and or appointment of receiver, etc. How and in what circumstances arrest and attachments before judgment are ordered, how and in what circumstances temporary injunctions and other kind of interlocutory orders are passed and how and in what circumstances receivers are appointed are covered by Orders 38 to 40 of the Code of Civil Procedure. There is no power for interim sale contemplated under the law except one under Order 39, R. 6 of the Code of Civil Procedure, which provides as follows:-