PANNAI ANANTHANARAYANA AIYAR Vs. PANNAI RAMASUBBA AIYAR

JUDGEMENT

(1.) The appellant is one of the two petitioning creditors who applied to the District Court of Tinnevelly in I.P. No.12 of 1919 to have the third respondent in this Court adjudicated an insolvent. One of-the allegations in the petition was that the hypothecation in favour of the second respondent was in fraud of creditors. The Official Receiver, Tinnevelly, who is the fourth respondent, sold the hypotheca free of encumbrance and paid the second respondent in full. The petitioning creditors applied to the District Court Tinnevelly, to have the hypothecation declared void under sections 53 and 54 of the Act of 1920. The District Judge held that the application was an appeal against the act of the Official Receiver under Section 68 of the Act and dismissed it with costs as being barred by limitation, it not having been presented within 21 days of the order of the Receiver. This appeal is against the judgment of the District Judge.

(2.) The appeal came on for hearing on 1 August 1923, when the appellant's Vakil Mr. P.V. Krishnaswsmy Aiyar asked for time to file an application for leave to appeal under Section 75 Cluse (3). Time was granted and the application for leave to appeal was filed on 6 August 1923. Mr. K.V. Krishnaswamy Aiyar objected to leave being granted as the affidavit on behalf of the appellant was not satisfactory and he further contended that, even if leave were granted, the appeal would be out of time as it was presented on 10 January 1922 without obtaining leave. As the new Provincial Insolvency Act came into force only in 1922 and as the Insolvency law is not well understood in the moffusil, we deemed it proper to grant leave under Section 75, Cluse (3) to file an appeal against the District Judge's order. The appeal as presented under Section 75 (2) having been presented in time, there is no substance in the objection that the appeal is under Section 75, (3) out of time. Even if it is, Section 78, which is a new provision not contained in the old Act, empowers the Court to execuse delay in the presentation of an appeal or application. This being a fit case for excusing delay the appeal was heard on the merits after excusing the delay.

(3.) Mr. K.V. Krishnaswamy Aiyar raised a preliminary objection that no appeal lay to this Court as the application to the lower Court was under Section 68 of the Provincial Insolvency Act of 1920 and as it was not open to a creditor to move the Court for an order under Section 53 or 54 of the Act against an alienee or a creditor, and he relied on Mariappa Pillai V/s. Raman Chettiar 52 Ind. Cas. 519 : 42 M. 322 : 10 L.W. 59. and Thabba, Lai V/s. Shib Charan Das 37 Ind. Cas. 76 : 39 A. 152 : 15 A. L.J. 1. The application to the District Court was not made under Section 68, as is clear from a perusal of the petition. It follows that the District Judge was wrong in treating it as out of time under that section. The question for consideration is, can a creditor move the Court under Section 53 or 54 of the Act? None of the decisions relied on by him go the length of holding that a creditor could not move the Court at all to set aside a voluntary transfer, or to avoid a fraudulent preference, whatever the circumstances might Be. The main point decided in Mariappa Pillai V/s. Raman Chettiar 52 Ind. Cas. 519 : 42 M. 322 : 10 L.W. 59. was, "No Court has the jurisdiction to annul, as such, a transfer amounting to a fraudulent preference, or a voluntary transfer made within two years of the adjudication, except a Court exercising insolvency jurisdiction in proceedings which have been instituted to declare the debtor, who made the transfer, an insolvent by a petition duly presented under the Act." In the course of the judgment there is an observation, "it is the Official Receiver who must set the Court in motion to annul a transfer under Section 36 or 37." This observation has to be read in connection with the feats of that case. It is neither laid down, nor intended to be laid down, in that case that, under no circumstances, could a creditor move the Court for an order Section 53 or 54 of the Provincial Insolvency Act of 1920.