PANDIT CHEDA LAL Vs. LACHMAN PARSHAD

JUDGEMENT

(1.) This is an appeal against an order passed by the District Judge of Bareilly, in the exercise of insolvency jurisdiction. One Kanhai Lal had been adjudicated insolvent. He owned a shop in the town of Bareilly. This shop became vested in the Receiver appointed by the Court, one Babu Sri Ram. Under the direction of the Court the Receiver proceeded to sell the shop by auction. Cheda Lal, who is the appellant before us, bid up to Rs 8,700; but on being called upon to deposit one- fourth of the purchase-money failed immediately to do so. The Receiver then put up the property for sale again and it was purchased by another Person for Rs. 7,320. These matters having been reported to the Court, the learned District Judge has ordered execution to issue against Cheda Lal for the sum of Rs. 1,380. His order purports to have been passed under Order XXI, Rule 71 of the Code of Civil Procedure, read with Section 47 of the Provincial Insolvency Act. It is contended before us in appeal that the District Judge had no authority to pass the order complained of and that the Receiver s remedy if any for the tort alleged to have been committed by Cheda Lal is by a suit for damages. The question is whether Section 47 of the Provincial Insolvency Act operates so as to confer upon a District Judge all powers and to impose upon him all duties in connection with the sale of an insolvent s property by a Receiver, which are provided by Order XXI of the Code of Civil Procedure in connection with the execution of decrees of Civil Courts. So far as I am concerned, I have already expressed a contrary view in the case of Mool Chand v. Murarz Lal 21 Ind. Cas. 702 : 11 A. L.J. 979 : 36 A. 8. I have there held that the Provisions of Order XXI of the Code of Civil Procedure do not apply to sales by a Recover in bankruptcy. The point has been re-argued today with much keenness and ability by Mr. Agarwala on behalf of the respondents; but apart from the question of applying the principle of stare decisis, I am not satisfied that the view taken by me in the reported case is erroneous. I think that the powers conferred upon a Court and the duties imposed upon a Court by, Order XXI of the Code of Civil Procedure have to do with the execution of Civil Court decrees, the foundation of which is a decree for sale or an attachment duly effected in accordance with the provisions of the Order itself. The position of the Receiver is that of a man in whom certain property has become vested. It has no doubt vested in him as a trustee for other persons; but for all that he is in law the owner of the property. He has authority under the Provincial Insolvency Act, Section 20, to sell the same, and his power of sale cannot be limited by the provisions of Order XXI of the Code of Civil Procedure, as it would have to be if the contention for the respondents now before us were correct. Except that the Receiver is bound to act under the directions given him by the Court and that any person aggrieved by any act or decision of the Receiver has a right of appeal to the Court under Section 22 of the Provincial Insolvency Act, the position of the Receiver is simply that of a private person owning certain property who is under the necessity to convert the same into cash as readily as possible. I think the consequences which would follow from fettering the Receiver by all the details of procedure which Order XXI of Act V of 1908 provides for execution of Civil Court decrees would be undesirable, and that there is nothing in Section 47 of the Provincial Insolvency Act which compels us to take such a view. If, however, the Court, or the Receiver acting under orders of the Court, is not bound to follow all the procedure laid down by Order XXI aforesaid, including the necessity for attaching the property sought to be realized, for issuing a proclamation of sale, for hearing objections preferred as to ownership of the property or the like, neither can it be held that the Court becomes invested with special powers such as those conferred upon an execution Court by Order XXI, Rule 71, of the Code of Civil Procedure. I think, therefore, that this appeal must be allowed and I would decree it accordingly, setting aside, so much of the order of the Court below dated the 25th February 1916, which has directed that the deficiency in the sale proceeds to the extent of Rs. 1,380 be realized from Cheda Lal under Order XXI, Rule 71, of the Code of Civil Procedure. The appellant is entitled to his costs in this and in the lower Court. The costs in this Court will include fees on the higher scale. This may be paid by the Receiver oat of the insolvent s estate. Walsh, J.

(2.) I entirely agree. I think a sale by the Receiver is an act of the Receiver and not a proceeding at all. All the places where the word "proceeding" occurs in this Act indicate that a proceeding in Court is intended. I think that view is strengthened by comparing Sub-section (1) of Section 47 with Sub-section (2). Sub-section (1) clearly deals with a proceeding under this Act before the Court itself, and provides that the Court in regard to proceedings under this Act (that is, before itself) shall follow the same procedure as in the exercise of original civil jurisdiction. Sub-section (2) deals with High Courts and District Courts and in regard to proceedings under this Act, not before the Court itself but brought before it from a Court subordinate to it. From this, it is abundantly clear that a proceeding under Section 47 is a proceeding in the ordinary meaning of the word. There is no proceeding under the Provincial Insolvency Act to enable an Insolvency Court to call upon a stranger to the bankruptcy to show cause why he should pot pay a sum which may or may not be due from him. Our decision in no way prevents the Receiver from bringing an action for such loss as he has sustained owing to the breach of contract on the part of the appellant, if there was one. By the Court.

(3.) The appeal is allowed and so much of the order of the Court below dated the 25th of February 1916 as directed that the deficiency in the sale proceeds to the extent of Rs. 1,380 be realized from Cheda Lal appellant under Order XXI, Rule 71, of the Code of Civil Procedure is set aside. The appellant will have his costs here and in the Court below and the costs of this Court will include fees on the higher scale. It may be paid by the Receiver out of the insolvent s estate.