MT KANIZ FATIMA Vs. NARAIN SINGH

JUDGEMENT

(1.) These two appeals arise out of certain insolvency proceedings which commenced on the 28 of January 1922, against two brothers, Ehsan Husain and Abdul Majid. It is common ground between the appellants, the wives of the insolvents, and the principal respondent (the Receiver) in the two appeals that about a year before the insolvency proceedings commenced, the two brothers had executed sale-deeds of the property now in question in favour of their respective wives. We have not got the insolvency proceedings before us, but it appears that there must have been some application on the part of the Receiver that these properties should be treated as properties of the insolvent. Thereupon the learned District Judge took proceedings under Section 53 of the Provincial Insolvency Act 5 of 1920. Notices were served on the ladies and they failed to appear. Thereupon the learned District Judge, on the 12 of May 1922, passed an order by which he found the transfers voidable against the Receiver and annulled them. Subsequently it appears that the ladies filed an application to have these ex-parte orders set aside. The learned Judge, on the 30 of October 1922, held that the service" of summonses on the ladies were sufficient and that they having failed to appear, he declined to restore the proceedings. He further remarked that though the ladies were pardanashin ladies, both their husbands had been present in Court on the day of the hearing.

(2.) Subsequently on the 25 of January 1923, the two ladies instituted the suits, out of which these appeals arise, asking for a declaration of their respective ownership of the properties in question. The learned Subordinate Judge held in both cases that they were bound by the provisions of Section 4, 01. 2 of the Provincial insolvency Act and held that by the order in the insolvency proceedings the claim of the ladies in each case was res judicata. We have to consider this point and it is the only point that has been argued before us in the appeals, with the exception of a minor matter, namely Whether notice Was necessary to the Receiver before he could be sued under Section 80 of the Civil P. C.. The point that we really have to decide is whether strangers to the insolvency proceedings, as these two ladies are came within the phrase "claimants against the debtor and the debtor's estate" in Sub-section 2 of Clause 4. If they do come within those terms, then there can be no doubt that the Judge's order in the insolvency proceedings was final against them. The first consideration that occurs is that if strangers to the insolvency proceedings do not come within the phrase "claimants" it is difficult to understand what class of persons it was intended to cover. So far as I understand the matter, there are only three classes of persons who can possibly be interested in the result of insolvency proceedings, They are the debtor, secondly, his creditors, thirdly, strangers, whose property is in danger of being mistaken for property of the debtor in the proceedings and sold or distributed to creditors. The first is clearly excluded. It is not possible to conceive a case in which a debtor could be a claimant against his own estate. The second class, creditors, are specially provided for in many other sections of the Act, more particularly, under Section 28 where, after the adjudication order is passed, schedule of creditors has to be prepared and provision is made for hearing evidence in regard thereto. There remains, therefore, only the third class to come Within the scope of the claimants, namely, strangers, whose property is in danger.

(3.) Further, even if the word "claimant" includes "creditors," a point which I have not to decide in the present matter the language is clearly wide enough to include a "stranger" claimant who has become a party to the proceedings. The next question for consideration is how can a stranger to the insolvency proceedings come before the Court. There are several sections which give the Court power to take action in regard to property, by which action the interest of a stranger may be in danger. There is Section 21 by which property may be attached and in the course of that attachment a mistake might be made. There is Section 28 which vests in the Receiver property which is in,the ostensible ownership and control of the debtor, and there is Section 53 by which the Court is given power to annul transfers with certain, exceptions which have been made by the debtor within two years of the adjudication.