SITARAM Vs. MT. NATHIBAI

JUDGEMENT

(1.) 1. The facts leading to this appeal are shortly these: One Vithoba was adjudged an insolvent on 22nd September 1928 upon an application presented by one of his creditors, Balkrishna, on 3rd April 1928. As the insolvent was not actually in possession of any property no receiver has been appointed in the case. Within two years of his insolvency the insolvent had effected two transfers by sale of his properties : one in favour of Sitaram and Atmaram on 21st February 1927 and the other in favour of Shrawan and Gannoo on 22nd February 1927. Prior to the adjudication, in execution of their decrees, five creditors of Vithoba had attached the property purchased by Shrawan and Gannoo, and on an objection being preferred by the latter the property was released from attachment. As these unsuccessful creditors did not file any suit under Order 21, Rule 63, Civil P. C., against the said purchasers, the order of release passed against these creditors in the execution proceedings became conclusive.

(2.) LIKEWISE , prior to the adjudication of Vithoba as an insolvent, soma other creditors of his, in execution of their money decrees against him, had separately attached the property which was purchased by Sitaram and Atmaram, and the objections preferred by the latter in the execution proceedings ware dismissed. These purchasers therefore brought separate suits under Order 21, Rule 63, Civil P. C., against the attaching creditors for declarations that the property purchased by them was not liable to attachment and sale in execution of their decrees against Vithoba. These suits were dismissed in the trial Court but? on appeal to this Court were decreed, the finding being that the sale in favour of the plaintiffs purchasers was for consideration and not mala fide and was thus binding upon the attaching creditors. In the course of the insolvency proceedings some of the creditors who were parties to the aforementioned previous litigations and some who were not parties to them applied to the insolvency Court praying that the sales effected by Vithoba in favour of Sitaram and Atmaram and Shrawan and Ganuoo be sat aside under the provisions of Section 53, Provincial Insolvency Act. The contention of both the sets of purchasers was that the creditors of Vithoba had no right to present the application, as their rights to challenge the transfers were already concluded by the orders passed in the previous execution proceedings and in the civil suits.

(3.) RELIANCE was placed by the appellants' counsel on Kauleshar Ram v. Bhawan Prasad (1917) 42 IC 845 and Gontu Appireddi v. Gontu Chinna Appireddi AIR 1922 Mad 246 in support of his contention. In these cases it is undoubtedly laid down that until a receiver is appointed in an insolvency case a creditor has no locus standi to apply for annulment of any transfer by the insolvent under Section 53 of the Act. But these cases, which were moreover decided prior to the enactment of Section 54-A, do not go further and hold that even in cases where the Insolvency Court may see no reason to appoint a receiver but take upon itself the administration of the estate of the insolvent, the wholesome provisions of Section 53 or Section 54 of the Act would remain inoperative. On the contrary the view of this Court has consistently been that in a case, where no receiver is appointed, the Insolvency Court can itself move under Section 53 of the Act to sat aside a transfer made by the insolvent on the fact of the transfer being brought to its notice by any of the creditors : Bansilal v. Ranglal AIR 1923 Nag 97, Sheolal v. Girdharilal, A. I. R. 1924 Nag. 361 and Gopal Rao v. Hiralal, A. I. R. 1925 Nag. 225. The contention of the learned advocate for the appellants as also the cases of the Madras and the Allahabad High Courts relied on by him completely ignore from consideration the provisions of Section 58, Provincial Insolvency Act, which declares that : "where no receiver is appointed, the Court shall have all the rights of, and may exercise all the powers conferred on, a receiver under this Act."