CHIDAMBARAM CHETTIAR (DIED) Vs. SELLAKUMARA GOUNDAN

JUDGEMENT

(1.) The question which has been referred is this: Is a suit by a creditor under S. S3 of the Transfer of Property Act to set aside an alienation made by the debtor before he is adjudged an insolvent maintainable without the leave of the Insolvency Court?

(2.) In Vasudeva Kamath V/s. Lakshminarayana Rao (1918) 36 M.L.J. 453 : I.L.R. 42 Mad. 684, a Bench of this Court (Wallis, C.J., and Ayling, J.,) held that such a suit could not be instituted without the leave of the Insolvency Court and this decision was accepted as being correct by the Rangoon High Court in Mohamed Adjim Nacoda V/s. E.M. Chettyar Firm (1930) I.L.R. 9 Rang. 7, and by the Lahore High Court in Din Mohammad V/s. Mt. Walait Begum A.I.R. 1938 Lah. 856. The decision was, however, strongly criticised by another Bench of this Court (Wallace and Thiruvenkatachariar, JJ.,) in Subramanyam V/s. Narasimham (1928) 56 M.L.J. 489. We consider that there is full justification for the criticism.

(3.) Section 53 of the Transfer of Property Act states that every transfer of immoveable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of a creditor defeated or delayed. Before 1929 a creditor could bring a suit under this section in his individual capacity, but in that year the section was amended and there is now a specific direction that the suit shall be instituted on behalf of, or for the benefit of, all the creditors. Section 17 of the Presidency Towns Insolvency Act and Section 28 of the Provincial Insolvency Act vest the property of the insolvent in the Official Assignee or the Official Receiver as the case may be and these sections prohibit, without the leave of the Insolvency Court a creditor of the insolvent filing a suit against the insolvent during the pendency of the insolvency proceedings. All matters regarding the insolvent's estate have to be decided by the Insolvency Court in proceedings contemplated by the Act.