A V BALAKRISHNA MENON, OFFICIAL RECEIVER Vs. THIRUNILAI GRAMA VEERARAGHAVAN PATTER S CHILDREN RANGAN PATTAR (FAMILY MANAGER)

JUDGEMENT

(1.) The first question in this case is whether an application by an Official Receiver to a court which had attached the property of an insolvent at the instance of a creditor, praying that the property may be treated as property vested in the Official Receiver and as therefore not available to the attaching creditor to satisfy exclusively his claim under the decree, whether such an application is a claim petition which falls within the class of claims and objections dealt with by Order 21, Rule 58 to 63, and under Order 38 Rule 8 (Claim preferred to property attached before judgment) or is an application sui juris not governed by those sections. In the case before us, the property was attached before judgment and the adjudicationvas after the attachment. It has now been settled in this Court by the Full Bench decision in Prasada Nayudu V/s. Virayya (1918) I.L.R. 41 Mad. 849 overruling the decision in Ramanamma v. Kamaraju (1917) I.L.R. 41 Mad. 23, that, notwithstanding the very vague and wide terms of Order 38, Rule 8 and notwithstanding that Order 21, Rule 63 has not been expressly extended to orders made on claim petitions perferred to properties attached before judgment, all the provisions of Order 21, Rules 58 to 63 (old Secs.278 to 283) must be held to have been impliedly incorporated in the rules in Order 38 relating to attachment before judgment. If therefore the claim by the Offieia) Receiver, in whom the insolvent's property has become vested after the attachment, does not fall within the class of claims governed by Order 21. Rules 58 to 63, it may be taken that it is not also a claim falling to be dealt with under Order 38, Rule 8 where the attachment was before judgment.

(2.) If the property has vested in the official Receiver before the attachment, I have no doubt that the claim made by him for the release of that property falls within Order 21, Rule 58, but if the adjudication is after the attachment, he cannot attack the attachment itself as having been invalid or improper on the date when it was affected. All that he could do is to contend on the strength of Section 34 Clause I of Act 3 of 1907 ( Section 51 of the Provincial Insolvency Act of 1920) and Section 16, Clause 2(a) of Act 3 of 1907 that the decree holder's right to proceed in execution against the attached property had come to an end on the date of the order of adjudication with effect from which date the property vests in the Official Receiver. As stated in Govinda Das V/s. Karan Singh (1917) I.L.R. 40 All. 197 "Upon the adjudication in insolvency, the attachment ceased to have any effect. All the property of the insolvent vested in the Receiver." Order 21, Rule 58 applies to a claim made on the ground that the property is not liable to attachment. Order 21, Rule 59 says: "The claimant must adduce evidence to show that at the date of the attachment he had some interest in, or was possessed of, the property attached." Order 21, Rule 60 says that " Where the court is satisfied that the property was not, when attached, in the possession of the judgment-debtor etc. the court shall make an order releasing the property etc." Order 21, Rule 61 says: "Where the court is satisfied that the property was, at the time it was attached, in the possession of the judgment-debtor etc., it shall disallow the claim." Then Order 21, Rule 63, is enacted making it necessary that a suit by the unsucessful party has to be brought to nullify the order passed on a claim to which the previous rules apply as that order is conclusive subject to the result of the suit. We have then Art. 11 of the Limitation Act which prescribes a period of one year for the suit contemplated in Order 21 Rule 63.

(3.) The Official Receiver in whom the property vested only after attachment cannot make a claim on the ground that the property was not liable to attachment-on the date it was attached. He cannot adduce evidence to show, that at the date of the attachment, he had an interest in, or was possessed of, the property attached, and the court cannot in the language of Order 21, Rules 60 and 61 decide in favour of the Official Receiver on the ground that the " property was not, when attached" the judgment debtor's property, or decide against him on the ground that "at the time it was attached," it belonged to the judgment debtor. In fact the Official Receiver's claim (when the vesting in him was after attachment is a statutory claim which he is entitled to make under Section 34 of the Provincial Insolvency Act (III of 1907) and not a claim based on the circumstances contemplated in Order 21, Rules 53 to 63. The claim of the Official receiver should be dealt with therefore by the court under its inherent powers under Section 151 of the Civil Procedure Code and not under Order 21. In Ganga Din V/s. Khushali (1885) I.L.R. 7 All. 702 and in the other cases cited, th; question whether a claim by an official receiver in whom the property became vested after the date of attachment fell under Secs.278 to 283 was not. directly raised ; the official receiver himself seems to have filed his petition as one falling under those special sections of the Civil Procedure Code and the Court dealt with the cases on that footing and decided in favour of the official receiver even on that footing. But in this case, the official receiver is sought to be defeated by holding up Art. 11 of the Limitation Act as a defence against the suit brought by him on failure of his claim petition. I am clear, for the reasons above given that his claim would not fall under the claim chapters of the Civil Procedure Code. The order dismissing his claim was not, therefore, one passed under the provisions of Rule 60 or 61 and Order 21 Rule 63 therefore does not make the order passed against him, conclusive". It follows that Art. 11 also does not apply. It was held by this Court in this very case on an appeal from the order dismissing the official receiver's claim that no appeal lay from the said order and that his remedy lay in a suit "to obtain the moneyiwhich remained in the attaching court and which had become vested in him. If, in the meanwhile, the money has been paid over to the attaching decree-holder, the official receiver has got his Common Law remedy of covering that money as money had and received by the decree-holder for the use of the Official Receiver, and the limitation for the suit is three years. As the money was paid to the decree-holder (1 defendant) only in December 1915 and the present suit was brought in November 1918, the suit is clearly within time under Art. 62. It was, however, argued that though the one year's limitation under Art. 11 may not apply, the one year's limitation under Art. 13 might apply. Art. 13 relates to a suit to alter or set aside a decision or order of a Civil Court in any proceeding other than a suit. Assuming that the order of December 1915 against the Official Receiver has to be set aside, it was not an order in a proceeding other than a suit. The decision in Shanker Sarup V/s. Mejo Mal (1901) I.L.R. 23 All. 313 (P.C.) clearly says that Art. 13 does not apply to proceedings in suits, in other words, it relates to orders passed in disputes which did not begin with the filing of a pLalnt in a suit, such as disputes initiated by applications under Guardian and Wards Act, the Succession Certificate Act and so on, such applications and the proceedings connected with such applications being not proceedings in suits. Their Lordships therefore held that orders passed in miscellaneous applications in the course of execution proceedings (which are proceedings in suits) are not governed by Art. 13. I respectfully dissent fora the observations in Kishori Lal V/s. Kuber Singh (1910) I.L.R. 33 All. 93 holding that Art. 13 applies to orders made in proceedings in execution in a suit. The learned judges of the Allahabad High Court construed the Privy Council decision in Sankar Sanip V/s. Mejo Mal (1901) I.L.R. 23 All 313 (P.C.) as based on the ground that an order for rateable distribution need not be set aside by a suit and therefore Art. 13 did not apply to a suit brought to enforce rights in contravention of that order. Their Lordships of the Privy Councial however clearly say at page 323 that they " concur in the further observation made by the learned judge in that case" (that is the case Vishnu Bhikaji Phadke V/s. Achut Jagannath Ghata (1890) I.L.R. 15 Bom. 438, "that the application of the 13 Art. is also precluded by the fact that the order for distribution was a step in an execution proceeding and was therefore made in the suit in which the decree was made which was in process of execution. The order for distribution was thus an order in a suit. " To set aside that order, therefore, a suit can be brought within 6 years under the general Art. 120 as it is not governed by Art. 13.