RAOJI BAPUCHAND PENDHARKAR Vs. K L BAVACHEKAR

JUDGEMENT

(1.) THE few facts which give rise to this Letters Patent appeal may be briefly stated. One Hirachand Gandhi was adjudicated insolvent on 25th June 1927. He had sold a property on 26th May 1923, to one Paraswar and Paraswar in his turn sold the property to the appellant on 27th July 1923. THE alienation by the insolvent in favour of the appellant was set aside by the Insolvency Court on 17th June 1931. An appeal was preferred to the District Court and the appeal was dismissed on 11th April 1932. THEre was a second appeal to the High Court which was also dismissed on 22nd February 1935. THE receiver obtained possession of the property on 29th October 1933, and on 23rd March 1936, he made an application for mesne profits. THE Insolvency Court awarded to him mesne profits from the date when the appellant was in possession, viz. , 27th July 1923, till the receiver went into possession, and that amount came to Rs. 3,155. From this order an appeal was preferred to the District Court and that appeal was dismissed. THE second appeal came before Bavdekar J. , who took the same view as the two Courts below, and thereupon he dismissed the appeal. THEn on an application made to him he gave a certificate for Letters Patent appeal, which appeal has now come before us.

(2.) THE main question that has been argued before us by Mr. Walawalkar on behalf of the appellant is that the application of the receives for mesne profits is barred except to the extent of about seven months, and the contention urged is that Article 109 applies to the facts of this case. Article 109 provides for limitation for a suit filed for the profits of the immovable property belonging to the plaintiff which have been wrongfully received by the defendant, and the limitation is three years and limitation begins to run from the date when the profits were received. This application of the receiver was made under Section 4, Provincial Insolvency Act. That section empowers the Insolvency Court to decide all questions, whether of title or priority, or of any nature whatsoever, and whether involving matters of law or of fact, which may arise in any case of insolvency coming within the cognizance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case. It is clear that the section is declaratory of the jurisdiction of the Insolvency Court. It does not in any way alter any law, nor does it deprive any party of any rights that it might have under the law. Section 5, Provincial Insolvency Act provides that subject to the provisions of this Act, the Court, in regard to proceedings under this Act, shall have the same powers and shall follow the same procedure as it has and follows in exercise of original civil jurisdiction. It is urged by Mr. Chitale that Article 109 only applies to suits which are filed for recovery of mesne profits, and inasmuch as the application of the receiver is not a suit, Article 103 cannot apply to such application. Mr. Chitale goes further and contends that the application of the receiver can never be barred by the law of limitation as there is no article in the Indian Limitation Act which applies to any application made by the receiver under Section 4, Provincial Insolvency Act. It is perfectly true that although in deciding this application the Court has got to follow the same procedure as it follows in exercise of original civil jurisdiction, the application by the receiver cannot be looked upon as a suit. It may be in the nature of a suit, the same procedure might be applied to it as might be applied if the receiver had filed a suit, but strictly the Limitation Act would not apply to such an application. But the difficulty in Mr. Chitale's way is this. If the receiver had filed a suit instead of making an application under Section 4, it cannot be disputed that it would have been open to the appellant to plead limitation and to plead it successfully. If the receiver had filed a suit for recovery of mesne profits, he could not have recovered more than for three years prior to the filing of the suit. Can it be contended that the right which the appellant had to plead the statute of limitation has been lost to him because an application is made by the receiver under Section 4 instead of a suit having been filed by him? It is also well settled that Section 4 merely empowers the Insolvency Court to try matters referred to in that section. It does not in any way oust the jurisdiction of the ordinary Court, and the Insolvency Court has always the discretion instead of trying a matter under Section 4 to refer the receiver to a suit. As I said before, if Section 4 is merely declaratory of the jurisdiction of the Insolvency Court, and does not in any way alter or amend the law nor deprives the party of its eights, then it cannot be said that merely by reason of the receiver adopting one procedure rather than the other making an application under Section 4, rather than filing a suit, the appellant could possibly be deprived of his right to plead the statute of limitation. In our opinion, when an application is made under Section 4 by the receiver, the Court is bound to consider all the defences that are open to the party against whom the application is made. Any defence that could be put forward by the party in a suit would be equally available to him in an application made by the receiver, THErefore, although the Limitation Act does not apply to the application made by the receiver inasmuch as the defence under the Limitation Act was open to the appellant if a suit had been filed by the receiver, that defence is equally available to him in this application of the receiver.

(3.) THEREFORE, what we have to find is as to when there was an infringement or at least an unequivocal threat to infringe by the appellant of the right of the receiver which he asserted in this application, viz. , to recover the profits made by the appellant by possession of the property. It appears that, as I have pointed out, the alienation was set aside on 17th June 1931, bat we cannot ascertain from the record as to when the receiver made an application for setting aside the alienation. Presumably, if the application was made, a written statement must have been filed by the appellant denying the right of the receiver to set aside the alienation and denying the title of the insolvent and claiming title in himself. That would be a clear infringement of the right of the insolvent and of the receiver, and therefore limitation would begin to run from that date. If that date is less than six years from the date when the receiver made the present application, viz. 23rd March 1936, then the receiver would be entitled to accounts and those accounts must be given by the appellant from 27th July 1923, If, on the other hand, this denial of the right by the appellant was beyond six years from the date of the filing of the application, then the right of the receiver to obtain accounts would be barred.