KANAYALAL DIED Vs. OFFICIAL RECEIVER APPOINTED

JUDGEMENT

(1.) The C. M. A. 110/3/55 and the cross appeal arise out of a petition filed by the appellant as creditor No. 15 for recovery of Rs. 1,405-6-0 due from the Official Receiver in respect of rent for his malgi claiming priority over other creditors. The application of the creditor No. 15 was partly allowed by the court below and partly rejected. It is against the rejection of his claim for the rents of the period prior to the date of adjudication that the creditor No. 15 has now come up in appeal. The Official Receiver has filed cross-appeal challenging the order of the court below holding that the creditor No. 15 will get priority over other creditors in respect of rents that accrued after the date of adjudication.

(2.) The sole point that falls for determination in this appeal is whether the appellant is entitled to priority over other creditors. In order to appreciate this point it is necessary at this stage to consider the facts of the case. One Nathalal was occupying the malgi of creditor No. 15 as his tenant on a monthly rent of Rs. 50. He submitted an insolvency petition in the month of January, 1953, and an i an interim Receiver was appointed, who took possession of the said malgi and sealed it by the order of the court. Nathalal was adjudged an insolvent on 6-4-54 and on the representation of the appellant, who was the creditor No. 15 in the lower court, the possession of the malgi was restored to him in October, 1954. On 12-5-1955 he filed an application stating that a sum of Rs. 1,405-6-0 was due from the Official Receiver in respect of rent for his malgi for the period it remained under Courts supervision and claiming priority for the said amount over other creditors of the insolvent. This application was dismissed by the District Judge on 10-6-1955 on the objection of the Official Receiver, On 11-6-1955 Creditor No. 15, that is, the appellant herein, filed a petition for setting aside the ex parte order dated 10-6-1955. In this petition he also stated that the was entitled to priority over other creditors. This petition was resisted by the Official Receiver. The learned District Judge after hearing the arguments of the parties held that the petition for setting aside the previous order was maintainable. Adverting to the claim for preference the learned District Judge held that the appellant was entitled to preference over other creditors in respect of rents that accrued after the date of adjudication. As regards the rents for the period prior to the date of adjudication he found that the appellant was entitled to rateble distribution and not to any priority. Hence this appeal and the cross-appeal.

(3.) Sri Deshmukh, the learned counsel for the appellant, contends that the appellant is entitled to priority under Section 61(3) of the Provincial Insolvency Act. Section 61(3) reads: