BANK OF MAHARASHTRA LTD Vs. VASANT DATTATRAYA DATAR

JUDGEMENT

(1.) THIS is an appeal by the plaintiff -Bank challenging dismissal of the suit filed by it for the recovery of its dues on the basis of a cash credit account from defendant No. 1 and the surety -defendant No. 2, on the short ground that the entire suit was hit by the provisions of Section 28(2) of the Provincial Insolvency Act, 1920. In order to appreciate the question which arises in this appeal, it is necessary to state a few facts.

(2.) THE original defendant No. 1 Rao Bahadur D. D. Datar was indebted to the plaintiff -Bank to the extent of Rs. 60,862 -15 -6 on the basis of a cash credit account in the name of Nagpur Tobacco Works, which was owned by him. Ultimately, the Bank obtained from him a pro -note on February 17, 1955 for the said amount with a letter of hypothecation charging the amount on his liquid assets. The original defendant No. 1 died on December 6, 1960 during the pendency of the suit. Defendant No. 2 is his widow, who executed a mortgage deed on March, 25, 1955 for Rs. 25,000, by way of security, for repayment of the amount borrowed by her husband. On December 80, 1957, the pro -note executed by the deceased defendant No. 1 was renewed for Rs. 37,206.80 P. which was the debit balance of the cash credit account on that date. Defendant No. 4 is a Co -operative Housing Society and is the prior mortgagee of the property of defendant No. 2 which she mortgaged later in favour of the plaintiff. Defendant No. 3 is the subsequent mortgagee.

(3.) IT is not necessary to go into all the defences raised by the several defendants on merits. It may be stated that defendant No. 1 denied the plaintiff's claim and defendant No. 2 challenged the maintainability of the suit on the ground that leave of the Insolvency Court was not obtained by the plaintiff. Out of the several issues framed by the trial Court, three issues which are material for the decision of this appeal were as follows, as issues Nos. (iv), (vii) and (viii) : (iv) Is the plaintiff entitled to a mortgage -decree against the suit property when the debt was not proved in Insolvency and when defendant No. 1 could not have been personally liable for the debt (as contended) by the defendants (vii) Is the present suit maintainable in view of the fact that no permission of the Insolvency Court was obtained by the plaintiff wherein defendant No. 1 was adjudged an, insolvent prior to the filing of the suit ? (viii) Is the permission obtained on 28th July 1961 from the Insolvency Court, proper and valid as it was obtained behind the back of the defendants and receiver ? It appears that evidence of the Receiver was recorded in this case and he gave the details of the steps taken by him after he was appointed as Interim Receiver on September 22, 1955 in respect of the property of the deceased defendant No. 1. He deposed that he was not served with a copy of the application filed by the plaintiff in the Insolvency Court for permission to continue the suit. The Court came to the conclusion that the suit was not maintainable and was hit by the provisions of Section 28(2) of the Provincial Insolvency Act. The learned Judge also came to the conclusion that after adjudication, the Receiver was a necessary party, because all the property of the insolvent had vested in him and that the order dated July 28,1961 passed without the Receiver or other parties being made parties to the application for leave, was not binding on the Receiver. The learned Judge, relying on the decision in Davood Mohideen v. Sahabdeen A.I.R. [1937] Mad. 66728(6) of the Provincial Insolvency Act and found that it was not attracted to the facts of the case. The result was that the learned Judge dismissed the whole suit. There was no occasion to decide whether the plaintiff was entitled to a mortgage decree against defendant No. 2 as the whole suit had been dismissed. The plaintiff has filed this appeal challenging the dismissal of the suit.