MATURI LAKSHMIKANTAMMA Vs. MOTILAL KESARIMAL FIRM

JUDGEMENT

(1.) The petitioner's husband made a number of alienations just before he was adjudicated insolvent; and with regard to some of them, the Official Receiver instituted proceedings under Secs.4, 5, 53 and 54-A of the Provincial Insolvency Act to have them set aside. With regard to the one with which we are concerned, however, he took no action. One of the creditors then applied to the Insolvency Court under Section 54-A of the Insolvency Act for permission to institute proceedings under Secs.4, 53, and 54; and the Court accorded that sanction. The application was heard; and the Court found that it was a genuine transaction fully supported by consideration and not made in fraud of creditors. An appeal filed by the aggrieved creditor was allowed. During the pendency of the appeal, however, the Insolvency Court annulled the adjudication, though it does not appear that the appellate Court was aware of this. The question is whether on account of the annulling of the adjudication, the appellate Court ceased to have jurisdiction to hear the appeal. If so, the order of the District Judge is void.

(2.) It has now been conclusively decided by Bhadramma V/s. Parvateesam Ayyavaru (1939) 63 M.L.J. 414, Jethaji Peraji Firm V/s. Krishnayya (1929) I.L.R. 57 M.L.J. 116 : 52 Mad. 908 (F.B.) 648. and Veerayya V/s. Srinivasa Rao , that upon the annulling of adjudication, the insolvency proceedings cease, except in so far as the Insolvency Court may order or Section 43 of the Act which says that " all acts theretofore done, by the Court or receiver, shall be valid," may permit.

(3.) If we were dealing merely with an application under Secs.53 and 54, the position of the respondent might be a little difficult. It is true that the Court accorded sanction to the creditor to institute proceedings under Secs.53 and 54; but the actual initiation of proceedings was not the act of the Court. It was the act of the creditor, for which he had obtained the sanction of the Court. It has been held that the institution of proceedings under Section 53 or any other section of the Act by the Receiver are acts of the Receiver and that therefore, the proceedings could be continued and disposed of by the Court. The application was, however, also one under Section 4; and the Court has found in appeal that the transaction was a sham and nominal one. Under Section 4, the Court shall have full power to decide all questions of any nature whatsoever which may arise in any case of insolvency coming within the cognizance of the Court.