# HANS RAJ v. RATIAN CHAND, ETC

- **Citation:** [1967] 3 S.C.R. 365
- **Court:** Supreme Court of India
- **Decided:** 1967-04-03
- **Case number:** ; CIVIL APPEAL No. 1000 -Of 1964
- **Bench:** K. N. Wanchoo, V. Bhargava, G. K. Mitter
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/hans-raj-v-ratian-chand-etc-4056
- **Pages:** 12

## Headnote

Provincial Insolvency Act (Punjab Act 5 of 1920) ss. 4 & 6S-appli-
<'<ltion against act of rcctiver alleging property taken over by '1in1 not oj
insolvent-whether an applical'ion under s. 4 or s. 68-Wltether lilnitatio11
of 21 days in s. 68 appli'S.
The appellant's brother was adjudicated insolvent by the
Insolvency
Judge, Barnala, Punjnb on the 23rd November,. 1954. Two days later
a Receiver in insolvency wao appointed by the Court and was directed to
take possession of the property of the insolvent
On the 26th and 27th
November, 1954 the receive took possession of various properties and on
the 21st December, 1954, the appellant filed
an object.ion
application
alleging that oome of the property belonged to him and was exclusively
in his possession. He therefore prayed for its release. and restoration to
him. 'The insolvency Judge rejected a contention that the application wa<
time-barred under s. 68 of the Act but held that the property did not
belong to the appellant. After first and second appeals to the District
Judge. and a s'ngle Bench of the High Court, a division Bench allow'd
a Letters Patent Appeal on the ground that the appellant's application was
incompetent as barred by limitation.
In appeal to this Court the question for de~rmination was whether
the. appellant's application was one under s. 68 of the Provincial Insolvency
Act, and as such having been made beyond the period of 21 days from the
date of the a.ct of the receiver complained of, was covered bv the provil'o
to that section. It was contended on behalf of the appeliant that the
application was one under s. 4 of the Act in which there is no mention
of any period of limitation.
HELD : The application. was one under s. 68 and was incompeteut
on the groun<l of limitation after the lapse of 21 days from Nowmber
25, 1954.
A person complaining of the act of the receiver may either apply un<lcr
s. 68 or proceed under the ordinary law of the land. Section 4 docs aot
prescribe any opplication for relief under that section.
Its object is to
define the limits of juri~<l:ction of the courts exercising powers in insolvency.
A question as to whether an insolvent has any interest in the property attached by the receiver would fall within the purview of s. 4, but
the application for the adjudication of such a question when the receiver
acts otherwise than under the order of a court would be covered by
s. 68 and as such the period of limitation of twenty-one days woul<l
be attracted to any such application.
Sub-s. (1) and sub-s. (2) of s. 4
both start with the phrase "subject to the provisions of this Act" and even
if it was possible to cons-true that s. 4 envisaged the making of an application for relief, such application v.<>uld be subject to s. 68 of the Act.
[370F; 372E-0]
Daulat Ram v. Bansla A.LR. 1937 Lahore page 2. approved; Venk"""
ruma v. An11athayamma/ A.LR. 1933 Madras 471, Heerabai v.
Official'
Receiver A.1.R. 1963 A.P. 296; disapproved.
Vel/ayappa Chettiar v. Ramanathan Cite/liar 1.L.R. 47 Madras 446.
G. N. Godbole v. Mr. Nani Bai A.LR. 1938 Nagpur 546, M11tluipa/mriapp<C
366
SUPREME COURT REPORTS
(1967] 3 S.C.R.
v. Raman C/iettiar A.LR. 1941 Marlras 75; Mui Ra; v. Official Recci>'er
A.I.R 1937 Lahore. 297, Ganda Ram v. Shiv Nand Ganesh Das A.LR.
1937 Lahore 757; and Ma, Sein Nu v. U. Mg. Mg. A.LR. 1934 Rangoon
97; Bhairo Prasad v. S. P. C. Dass, A.LR. 1919 Allahabad 274, Hussaini v.
Muhammad Zamir Abdi A.LR. 1924 Oudh. 294 and Mui Chand v. Murari
Lal, I.L.R. 36 Allahabad 8; referred to.
Nat/Ju Ram v. Madan Gopal, A.LR. Allahabad 408; distinguished.

## Text

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HANS RAJ
v.
RATIAN CHAND, ETC.
April 3, 1967
[K. N. WANCHOO, V. BHARGAVA AND G. K. MITTER, JJ.]
Provincial Insolvency Act (Punjab Act 5 of 1920) ss. 4 & 6S-appli-
<'<ltion against act of rcctiver alleging property taken over by '1in1 not oj
insolvent-whether an applical'ion under s. 4 or s. 68-Wltether lilnitatio11
of 21 days in s. 68 appli'S.
The appellant's brother was adjudicated insolvent by the
Insolvency
Judge, Barnala, Punjnb on the 23rd November,. 1954. Two days later
a Receiver in insolvency wao appointed by the Court and was directed to
take possession of the property of the insolvent
On the 26th and 27th
November, 1954 the receive took possession of various properties and on
the 21st December, 1954, the appellant filed
an object.ion
application
alleging that oome of the property belonged to him and was exclusively
in his possession. He therefore prayed for its release. and restoration to
him. 'The insolvency Judge rejected a contention that the application wa<
time-barred under s. 68 of the Act but held that the property did not
belong to the appellant. After first and second appeals to the District
Judge. and a s'ngle Bench of the High Court, a division Bench allow'd
a Letters Patent Appeal on the ground that the appellant's application was
incompetent as barred by limitation.
In appeal to this Court the question for de~rmination was whether
the. appellant's application was one under s. 68 of the Provincial Insolvency
Act, and as such having been made beyond the period of 21 days from the
date of the a.ct of the receiver complained of, was covered bv the provil'o
to that section. It was contended on behalf of the appeliant that the
application was one under s. 4 of the Act in which there is no mention
of any period of limitation.
HELD : The application. was one under s. 68 and was incompeteut
on the groun<l of limitation after the lapse of 21 days from Nowmber
25, 1954.
A person complaining of the act of the receiver may either apply un<lcr
s. 68 or proceed under the ordinary law of the land. Section 4 docs aot
prescribe any opplication for relief under that section.
Its object is to
define the limits of juri~<l:ction of the courts exercising powers in insolvency.
A question as to whether an insolvent has any interest in the property attached by the receiver would fall within the purview of s. 4, but
the application for the adjudication of such a question when the receiver
acts otherwise than under the order of a court would be covered by
s. 68 and as such the period of limitation of twenty-one days woul<l
be attracted to any such application.
Sub-s. (1) and sub-s. (2) of s. 4
both start with the phrase "subject to the provisions of this Act" and even
if it was possible to cons-true that s. 4 envisaged the making of an application for relief, such application v.<>uld be subject to s. 68 of the Act.
[370F; 372E-0]
Daulat Ram v. Bansla A.LR. 1937 Lahore page 2. approved; Venk"""
ruma v. An11athayamma/ A.LR. 1933 Madras 471, Heerabai v.
Official'
Receiver A.1.R. 1963 A.P. 296; disapproved.
Vel/ayappa Chettiar v. Ramanathan Cite/liar 1.L.R. 47 Madras 446.
G. N. Godbole v. Mr. Nani Bai A.LR. 1938 Nagpur 546, M11tluipa/mriapp<C
366
SUPREME COURT REPORTS
(1967] 3 S.C.R.
v. Raman C/iettiar A.LR. 1941 Marlras 75; Mui Ra; v. Official Recci>'er
A.I.R 1937 Lahore. 297, Ganda Ram v. Shiv Nand Ganesh Das A.LR.
1937 Lahore 757; and Ma, Sein Nu v. U. Mg. Mg. A.LR. 1934 Rangoon
97; Bhairo Prasad v. S. P. C. Dass, A.LR. 1919 Allahabad 274, Hussaini v.
Muhammad Zamir Abdi A.LR. 1924 Oudh. 294 and Mui Chand v. Murari
Lal, I.L.R. 36 Allahabad 8; referred to.
Nat/Ju Ram v. Madan Gopal, A.LR. Allahabad 408; distinguished.
CIVIL APPELLATE JURISDICTION ;
CIVIL APPEAL No. 1000
-Of 1964.
Appeal from the judgment and order dated November 28,
1962 of lhe Punjab High Court in Letters Patent Appeal No. 212
of 1961.
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Bishan Narain and B. P. Maheshwari, for the appellant.
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Naunit Lal, for respondent Nos. 1 to 3.
The Judgment of the Court was delivered by
Mitter, J. This is an appeal by a certificate against a judgment
of a Division Bench of the High Court at Chandigarh in Letters
Patent Appeal No. 212 of 1961. The High Court allowed the apD
peal on the ground that the application out of which it arose was
incompetent as barred by limitation and, in our opinion, it did so·
correctly.
The short question before us is, whether application
leading to this appeal was one under s. 68 of the Provincial Insolvency Act, and as such having been made beyond the period of
21 days from the date of the act of the receiver complained of,
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was covered by the proviso to that section 7 In substance, the
argument on behalf of the appellant was that the application was
one under s. 4 of the Act in which there is no mention of any period
-Of limitation.
The facts necessary for the disposal of this appeal are as follows :-Brij Lal and Hans Raj were brothers.
On an applica·
tion having been made by the creditors of Brij Lal in .the year
1949, the insolvency Judge, Bamala adjudicated hiin as an insolvent, on
23rd November,
1954.
Two days thereafter,
one
Mohinder Lal was appointed as a receiver in insolvency by the
order of the Court and he was directed to take possession of. the
property of the· insolvent. en 26th and 27th November, 1954
tlie receiver took possession of various properties of the insolvent
and at.tached some urban property and agricultural land which are
the subject-matter of the present litigation.
Hans Raj filed an
objection application on 21st December, 1954 alleging that the
property. detailed therein belonged to him and was exclusively in
his possession. He prayed for release of the property from .attachment and restoration of possession to him. Tiie receiver pleaded
that he had taken possession thereafter at the instance of two creditors~ The insolvency Judge framed two issues, namely, (1) Is
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HANS RAJ v. RATTAN CHAND (Mitter, J.)
367
the objector owner of the suit property and in possession thereof
and is it accordingly not liable to be attached by the receiver ?
and (2) whether the objection petition was time-barred ? The
learned Judge decided the first issue against the objector but held
that the application was not covered by s. 68 of the Act. In appeal, the District Judge differed from both the findings. He held
that there had been no partition of the joint Hindu family of the
insolvent and bis brother, but, on the point of limitation he found
against the objector. In the result, he accepted the appeal and dismissed the objection petition. Hans Raj went up in Second Appeal
to the Punjab High Court. The learned single Judge of the High
Court came to the conclusion that the property in dispute must be
deemed to be the separate property of Hans Raj and held that the
application was within time.
Rattan Lal who replaced the original receiver on the latter's death filed a Letters Patent Appeal
to the High Court. The High Court, as already noted, held that
the application of Hans Raj was not within time resulting in the
dismissal of the objection petition.
We must first consider the nature of the application made by
the objector and then find out whether it is covered by s. 68 of
the Act. Section 4 of the Act on which great reliance was placed by
learned counsel for the appellant is one of the three sectio~. in
Part I of the Act i.e. ss. 3, 4 and 5. Section 3 lays down that the
District Courts shall be the courts having jurisdiction under the
Act. Section 4 defines the jurisdiction of the Court and runs as
follows :-
"(1) Subject to the provisions of this Act, the Court
shall have full power to decide all questions whether of
title or priority, or of any nature whatsoever, and whether involving matters of Jaw or of fact, which may
arise in any case of insolvency coming within the cognizance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing
complete justice or making a complete distribution of
property in any such case.
(2) Subject to the provisions of this Act and notwithstanding anything contained in any other law for the
time being in force, every such decision shall be final and
binding for ail purposes as between, on the one hand, the
debtor and the debtor's est;ite and, on the other hand,
all claimants against him or it and all persons claiming
through or under them or any of them.
(3) Where the Court does not deein it expedient or
necessary to decide any question of the nature referred to
in sub-section (I), but has reason to believe that the
debtor has a saleable interest in any property, the Court
368
SUPREME COURT REPORTS
[1967] 3 S.C.R
may without further inquiry sell such interest in such
manner and subject to such conditions as it may think
_fit."
·Section 5 lays down the general powers of courts under the Act.
Part II which has the heading "Proceedings from the act of insolvency to discharge" deals generally with the course of the proceedings in insolvency beginning from the acts of insolvency to the order
for discharge of insolvency. Part III is headed "administration of
property" and deals with different subjects like method of proof
of debts, effect of insolvency on antecedent transactions, realisation of property, distribution of propeny" and lastly "appeals to
court against receiver". The last topic is covered by s. 68 which
provides as follows :-
"If the insolvent or any of the creditors or any other
person is aggrieved by any act or decision of the receiver,
he may apply to the Court, and the Court may coafirm,
reverse or modify the act or decision complained of, and
make such order as it thinks just:
Provided that no application under this section shall
be entertained after the expiration of twenty-one days
from the date of the act or decision complained of."
Part IV deals with penalties, Part V with summary administration,
Part VI with appeals and Part VII with topies like costs, power to
make rules, etc.
Under s. 20 (contained in Part II) the court when making an
order admitting the petition may, and where the debtor is the
petitioner ordinarily shall appoint an interim receiver of the property of the debtor or of any part thereof and the interim receiver
shall theroopon have such of the powers conferable on a receiver
appointed under the Code of Civil Procedure as the court may
direct. If an interim receiver is not so appointed, the court may
make such appointment at any subsequent time before adjudication. Under s. 21, at the time of making an order admitting the
petition or at any subsequent time before adjudication the court
may either of its own motion or on the application of any creditor
make orders to s.uit the occasion, namely, direct the attachment by
actual seizure of the whole or any part of the property in the possession or under the control of the debtor, order a warrant to issue
with or without bail for his arrest, or order the debtor to give
reasonable security for his appearance until final orders are niade
on the petition. Under s. 28(2) on the making of an order of adjudication, the whole of the property of the insolvent is to vest in
the court or in a receiver as provided in the Act and become divisible among the creditors in terms of the Act. Under s. 56(1) the
court may at the time of the order of adjudication or at any time
~1fterwards, appoint a receiver for the property of the insolvent, and
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HANS RAJ v. RATTAN CHAND tMitter, ]. )
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such property shall thereupon vest in such receiver.
Under subs. (3) of the section, where the court appoints a receiver, it may
remove the person in whose possession or custody any such proi}erty as aforesaid is from the possession or custody thereof but
nothing in this section is to be deemed to authorise the court to
remove from the possession or custody of property any person
whom the insolvent has not a present right so to remove. Under
sub-s. (5) the provisions of this section shall apply so far as may
be to interim receivers appointed under s. 20.
It will be noted from the above that s. 4, sub-s. (1) lays down
the ambit of the powers of the court exercising insolvency jurisdiction.
Its primary object is to empower such courts to decide all
questions whether of title or priority or of any nature whatsoever
and whether involving matters of law or fact which may arise in
any case of insolvency coming within the cognizance of the court.
In other words, the aim of this provision is that all questions of title
or priority arising in insolvency should primarily be disposed of by
the insolvency courts so as to achieve expedition. It will be noted
at once that resort to ordinary courts of law is not proscribed and
at the same time the legislature provided that a person could resort
to the insolvency court if the matter arose in insolvency proceedings. Under sub-s. (2) however every such decision arrived at by
the insolvency court was to be final and binding for all purposes as
between on the one hand, the debtor and the debtor's estate, and,
on the other hand, all claimants against him or it and all persons
~!aiming throu~h or under them or. a.ny of them. This provision
1s however sub.1ect to the other prov1s1ons of the Act and notwithstanding anything contained in any other law for the time being
in force. It is also to be noted that this section does not lay down
~hat p:ocedure or what steps should be taken by any person who
1s agg:1e.ved by any ?rder of the insolvency court or of any act
or om1ss1on or commission of the receiver.
~ection 20 of the Act empowers the court to appoint an interim
rece1.ve.r of the pro.P_Crty of the debtor as soon as an order is made
adm1ttmg the pet1t1on.
F.or the pr~ervation of the insolvent's
pro~erty, the c?urt may direct such mterim receiver to take immediate possession of the whole or any part thereof.
A duty ·
therefore c~st on the interim receiver to see that the property ~~
the .d:btor 1s n?t lost an.d for that purpose he must act quicklf.
As It is not possible tor him e~cept on the application of the debtor
lo know all the ?etads of the 1~solvent's property, he may take the
help ?f the cred1to~s to ascertam what they are. In this case, on
the ~ay ~f the ma~mg of th.e order for adjudication, the court did
not appomt a r:ce1ver but did so two days afterwards directina him
to take poss~ss1on of the ~roperty of the insolvent.
It is po~sible
that the 1ece1ver may be n11sled hy the creditors and he may attach
370
SUPREME COURT REPORTS
(1967] 3 S.C.R·
properties in which as a matter of fact, the insolvent has no interest.
In such Ii case, the stranger to the insolvency proceedings is not
without a remedy. He need not resort to the ordinary and dilatory
proceedings by filing a suit and getting an adjudication of title to
his property, removal of the attachment, etc. Section 68 is aimed at
giving him speedy relief by enabling him to make an application to
the court straightway against any act or decision of the receiver
and asking for appropriate relief. If however the party aggrieved
seeks to benefit by this provision, he must also bring his case within
the four corners of the section and prefer his application within 21
days irom the date of the act or decision of the receiver complained
'lf. When the receiver does an act .under the express directions or
orders of the court, an application by a third party complaining
thereof does not fall within s. 68 because the receiver's act is a
ministerial one. The aggrieved person is however not without a
remedy. He can inter alia apply to the insolvency court for und<>-·
ing the wrong complained of and the court can give such relief as
the circumstanceS may call for. The jurisdiction of the court and
the ambit of its powers are as contained in s. 4 which however
does not lay down any procedure for obtaining such relief. It is
not therefore correct to 'describe an application for relief as one
under s. 4.
Leaving aside the decisions which were cited at the Bar, it
appears to us, on a plain reading of the sections mentioned above
and in particular, ss. 4 and 68, that there can be no doubt that a
person (like the appellant before us) complaining of tbe receiver
taking possession of or attaching property in which the insolvent
has no interest, must apply for relief within 21 days of the wrongful act of the receiver. He cannot be heard to say .that his application is not under s. 68 bμt under s. 4 and thus seek to avoid the
short period of limitation prescribed under s. 68. Moreover, subs. (1) and sub-s. (2) of s. 4 both start with the phrase "subject to
the provisions of this Act" and even if it was possible to construe
that s. 4 envisaged the making of an application for relief, such
application would be subject to s. 68 of the Act.
We may now consider some of the decisions cited at the Bar for
or against the proposition put forward on behalf of the appellant.
The sheet anchor of the appellant's case is the decision of thl
Allallabad High Court in Nathu Ram v.
Madan Gopal(').
There the Official Receiver, in pursuance of an order of the insolvency court attached a property on 8th June 1929. On 2nd
July following; the son. of the insolvent appli~ to the insolv~cy
eourt alleging that the property belonged to him and not the msolvent. The court decided in favour of the son but wa;i ~
caHed upon to go into the question as to whether the application
was within time.
(I) A.1.R. 1932 Allahabad 408
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This question of limitation was raised before the District Judge
and the objection was over-ruled by him.
It was observed by a
Division Bench of the Allahabad High Court :
"The house was attached under an order of the Insolvency Court, and not by any independent decision of the
Official Receiver.
The actual attachment was a mere
ministerial act done in pursuance of the order of the
Court. The objector was not challenging the act of the
receiver, who had no voice in the matter, but the order of
attachment passed by the Court ex parte.
It seems to
us that it was not an act or decision of the receiver
within the meaning of s. 68. On the other hand, it was
a claim put forward by a stranger to the insolvency proceedings setting up his own independent title, and it
fell within the scope of s. 4, Provincial Insolvency Act."
The learned Judges distinguished the cases of Bhairo Prasad v.
S. P. C. Dass(') and Hussaini v. Muhammad Zamir Abdi(2 ) on
the ground that in those cases there was no order of the court
directing attachment but the act complained of was an act of the
receiver himself. ; .. ,
In Bhairo Prfila'd's case(') the Provincial Insolvency Act,
1907 was in operation and there a stranger to the insolvency
complained of an act of attachment after the lapse of 21 days. A
Division Bench of the Allahabad High Court held that the application was barred by limitation observing at the same time :
"A stranger to the insolvency is not bound to go to
the Insolvency Court at all. He has the ordinary right,
which every individual has, to seek redress in the ordinary
civil courts·for any grievance or trespass to his property,
whether committed by an Official Receiver or anybody
else, but he can, if he pleases, if he complains against the
act of the receiver, apply under s. 22 to the insolvency
court itself. . . .
But similarly if he applies under
s. 22, he must comply with the terms of s. 22."
In Mt. Husaini Bibi's case(') certain houses were proclaimed for
'"le on 14th June 1922 and on !st July the appellant, the wife of
the imolvent. put in a claim that the properties belonged to ber.
The insolvency court referred the appellant to the civil court and a
;uit was filed on 4th July 1922. The properties were sold by the
receiver on 5th July before an injunction of the ,civil court restraining-a sale could be served on the receiver. On 3rd August
1922 the appellant applied to the District Judge for the cancellation
of the sale. This was dismissed. The subject of appeal before the
(I) A.1.R. 19t9 Allaho~od 274.
(2) Al R. 1924 Oudh 294.
(I) A.LR. 19.'4 Oudh 29'
l5Sui'. Cl/67-11
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SUPREME COURT REPORTS
(1967) 3 S.C.R.
High Court was the order of dismissal. The learned single Judge
relied upon Bhairo Prasad's case(1 ) and observing that the appli·
cation presented on 3rd of August was apparently one under s. 68
of the Act held that it was barred before the 3rd of August. It
was further pointed out that a stranger to _the insolvency may seek
his redress in ordinary civil court w!J.en -aggrieved by any act of
the Official Receiver, or he may apply under s. 68 of the Act (corresponding to s. 22 of the previous Act). Reference may also be
made to an earlier decision of the Allahabad High Court in Mui
Chand v. Murari Lal(2 ). There the receiver in insolvency seized
certain m0vable property on the information laid by one of the
creditors as property of the insolvents. The appellant before the
High Court claimed that the property was his and presented an
objecting purporting to be one under 0. XXl r. 58 of the Code
of Civil Procedure. This was dealt with by the Second Additional
Judge of Meerut on the merits who after taking evidence came to
the conclusion that the property_ seized belonged to the insolvents
and dismissed the appellant's application. The Allahabad High
Court pointed out that the appellant's position was that of a person
aggrieved by an act of the receiver and his remedy was by an
application under s. 22 of Act IIl of 1907.
These decisions, in our opinion, do not assist the appellant on
whose behalf it was argued that an application mightbe made either
under-s. 68 or under s. 4 of the Act. It is clear from the above deCi·
sions that a person complaining of the act of the receiver may either
apply under s. 68 or proceed under the ordinary law of the land.
Section 4 does not prescribe any application for relief under that
section. Its object is to define the limits of jurisdiction of the courts
exercising powers in insolvency. It is not correct to say that a
person aggrieved by an act of the receiver has the choice of mak •
ing an application under s. 4 or under s. 68. Section 4 comes into
operation whenever any question of the nature mentioned therein
is sought to . be canvassed before a court exercising insolvency
jurisdiction.
Such. questions may arise because of a9ts or deci·
sions of the receiver complained of. A question as to whether an
insolvent has any interest in the property attached by the receiver
would fall within the purview of s. 4, but the application for the
adjudication of such a question when tlie receiver acts otherwise
than under the order of a court would be covered by s. 68 and
as such the period of limtiation of twenty-one days would be
attracted to any such application.
Mr. Bishan Narain referred us to a few decisions of different
High Courts as illustrating his proposition that applications are permissible under s. 4-of the Provincial Insolvency Act. In Vellayappa Chettiar v. Ramanathan Chettiar(2) cited on behalf of the
(I) A.I.R. 1919 All. 274.
(2) I.L.R. 36 Allahabad 8.
(3) I.L.R. 47 Madras 446.
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appellant, the facts were as follows.
The respondent obtained a
mortgage decree against a person who was subsequently adjudicated an insolvent and the Official Receiver assumed jurisdiction
over his properties.
While the latter was taking steps to realise
the assets, the appellant asserted that some of the properties covered by the mortgage decree were his and denied the right of the
insolvent to such properties, at the same time, preferring a claim
petition before the Official Receiver. The Receiver enquired into
the same and allowed it. Against that order, the mortgagee-decrecholder filed a petition before the District Judge under s. 68 who
set aside the order of the Official Receiver and further directed
that the claim petition also do stand dismissed. The claimant went
up in appeal to the Madras High Court. The learned Judges of
the Madras High Court said that the whole of the proceedings was
misconceived observing that the Official Receiver had no power
to make any order in a claim petition as this was not a power
delegated to him under s. 80 of the Provincial Insolvency Act of
1920. According to the High Court, if the claimant wanted to
prevent the sale of the property as belonging to the insolvent, he
should have applied to the District Judge direct to take action under
s. 4 of the Act. He did not however do so. In the result, the
High Court set aside all the proceedings in the lower court and
left the parties in status quo ante, commenting at the same time,
that if the claimant found that the Official Receiver proposed to
sell the properties he might apply to the District Judge under s. 4
of the ~ct. The last portion of the above paragraph was quoted as
supporting the proposition that an application lay under s. 4 of
the Act. That is not what the learned Judges of the Madras High
Court meant. In our view, what was meant was that the claimant
might make an application to the District Judge who would under
s. 4 of the Act have jurisdiction to pass a proper order thereon.
Our attentit!>n was also drawn to the case of Venkatarama v.
Angathayamma!(') where the above Madras decision was cited
a.nd a~. more ~an .one place, the learned Judge used the express1~ns an application under s. 4" and "an appeal under s 68"
With. all respect to the learned Judge, it seems to us that th~ ex:
press10ns we~e not accurate for s. 68 although headed "a
al
to court agamst receiver" does not as a matter of fact
ppeths
word "appeal" in th bod
f th
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, use
e
s. 68 howeyer in re~li r;oun e section. The application under
decision of the receive7 but th ts to .an ~ppeal to a court from a
party aggneved must "a 1
e section itself tays down that the
ing in which 1· risdi' · PP Y to the court". Similarly a proceed
.
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u
ctton under s 4
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appl1catton under s 4
Th
· . may e exercised is not an
of an application ~h~nevere proceeding has to be started by way
tion by the court of the uatur:de~~~t~~~ss t~ have an adjudica-
(1} A. l.R. 1933 Madras 471.
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[1967] 3 S.C.R.
In this connection, our attention was drawn to several other
decisions; it is not necessary to go into the facts of these cases.
In G. N .. Godbole v. Mt. Nani Bai(') and Muthupalaniappa v.
Raman Chettiar('), the expression "proceedings under s. 4" had
been used while in Heeri:.bai v. Official Receiver(•) the petitioner
before the High Court, mother of the two insolvents, laid a claim
to I/3rd share in the properties which the Official Receiver sold
on 16th April, 1960 purporting to be those of the insolvents.
According to the judgment "the petitioner filed I.A. No. 1900 of
1960 on 28-6-1960 purporting to be under ss. 4 and 68 of the
Provincial Insolvency Act." She also filed I.A. No. 1899 of 1960
for condoning the delay in filing this application as ordinarily "the
appeal under s. 68 should have been filed by her ori or before
5-7-1960". Tne insolvency court held in the proceedings under
s. 68 that there could be no condonation of delay but failed to
ascertain with reference to the nature of I.A. No. 1900 of 1960
whether it fell under s. 4 of the Provincial Insolvency Act. The
learned Judge found that the petitioner had not made any claim
before the Official Receiver and even if she chose to make any
such claim, the Official. Receiver had no power whatever to decide upon such claim petitions. It was observed :
"Therefore, an application such as I.A. No. 1900 of
1960 cannot be taken in any sense to be an appeal against
the act of the Official Receiver as such. On the other
hand, when the petitioner herein wanted that her share
should be untouched, it is certainly a case where the
petitioner approached the court to determine the question of her title, which it is competent to do only under
s. 4 of the Provincial Insolvency Act. Therefore, in my
·view, it is idle to contend that I.A. No. 1900 falls within
the purview of s. 68, and that it should be taken to be an
appeal and not an application which is contemplated and
competent under s. 4 of the Provincial Insolvency Act."
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It is difficult to accept the soundness of some of the dicta in the
above judgment. The Official Receiver's act in selling the property
on 16-4-1960 may have been wholly wrong, but if the petitioner
wanted the same to be set aside, she could either have made an
G
application under s. 68 to the court or she could have filed a suit
for relief under the ordinary law of the land. She could not, after
a period of 21 days, start a proceeding in the insolvency court
describing it as one under s. 4 so as to get out of. the ~ar of
limitation imposed by s. 68.
She need not have waited till the
sale of property. She might have appl!ed to the court as soon as
H
the receiver took the first step by attaching the property.
(I) A.l.R. 1938 Nagpur S46. -
(2} A.T.R. 1941 Madras 75.
(3} A.l.R. 1963 A.P. 296.
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HANS RAJ v. RATTAN CHAND (Mitter, !.)
375
In our opinion, Jai Lal, J. correctly pointed out the correlation
between ss. 4 and 68 in Dau/at Ram v, Bansilal( 1). The appellant
had a money decree against the insolvents which he executed by
attachment of a moiety of a share in a house which he alleged
belonged to the judgment-debtors. This was before the order of
adjudication. An objection was raised by the respondent, Bansi·
Jal, that he was a purchaser for consideration of the attached property. The objection having been allowed, a suit was filed under
0. 21, r. 63 C.P.C. by the attaching decree-holder and ultimately
decreed, it having been held that the sale by the judgment-debtors
was fraudulent as against the creditors.
The receivers in insolvency then took possession of the property attached by the appel·
lant and sold the same in the insolvency proceedings. Bansilal
thereupon made an application under s. 68 on the ground that the
action of the receivers was illegal.
The District Judge allowed
the application holding. that the decree passed in the suit under 0.
21 r. 63 was operative only so far as the execution proceedings
were concerned and that it did not enure for the benefit of the other
creditors. He therefore set aside the sale by the receivers. The
creditors including the appellant came up in appeal from the
order of the District Judge. An objection was raised by the respondents that no appeal lay without the leave either of the District Judge or of the High Court. In disposing of this, Jai Lal, J.
observed:
"I am inclined to think that though the District Judge
was moved under s. 68 which is not one of the sections
mentioned in Sch. I, the investigation, which he is expected to make in a case like the present, should be under
s. 4, Provincial Insolvency Act, and any order passed
by him under s. 4 is appealable as of right to this Court."
An observation similar to the above was made by the same learned
Judge in Mui Raj v. Official Receiver('). This point was also
brought out in Ganda Ram v. Shiv Nand Ganesh Das(8 ). The
scope of the two sections was brought out even more clearly in a
judgment of the Rangoon High Court in Ma Sein Nu v. U Mg.
Mg.(') where it was said :
"Now, s. 4 defines the powers of the Insolvency Court
to decide questions of law and fact arising in insolvepcy
proceedings, but it does not lay down how the court is to
be moved to exercise those powers. . . . . Of course,
the powers of the court in deciding such an application are defined in s. 4, but this does not mean that the
application itself is made under s. 4, and clearly it cannot
be for s. 4 contains no provision as to how the court is
(I) A.l.R. 1937 Lahore page 2.
(3) A.l.R. 1937 Lahore 757.
\2) A.l.R. 1937 Lahore 297.
(4) A.1.R. 1934 Rangoon 97.
376
SUPREME COURT REPORTS
[f967J 3 s.c.R.
to be moved to exercise its powers, and for the mode of
invoking the authority of the Court other provisions of
the Act, such as ss. 53, 54 and 68, have to be consulted."
In the result, we hold that the application being one under
s. 68 was incompetent on ihe ground of limitation after the lapse of
21 days from November 25, 1954. The appeal is therefore dismissed with costs.
R.K.P.S.
Appeal dismissed.
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