VOL. L I] CALCUTTA SERIES. 663 APPELLATE CIVIL. Before Walmsley and MuJterji JJ. RAM SUNDAR EAM V. 1024 RAM CHARIT BHAKAT*. H- Insolvency Receiver Who should conduct proceedings fa r annulling a conveyance executed by the inwlvent Provincial insolvency Act (V of 1920), s. i. Wiien a receiver has been appointed to an insolvent s estate, it is only the Receiver vrho 'shouid conduct proceedings in regard to a conveyance executed by the insolvent shortly before he sought the refuge of the Court. Section 4 o f the Provincial Insolvency Act of 1920 does not authorize a creditor to prosecute an enquiry o f this kind. Joy Chandra Das v. Mahomed Am ir (1 ) referred to. A p p e a l by Ram Sundar Ram, a transferee of the insolvent. One Ganpafc Ram was declared an insolyent by the District Judge of Dinajpur on the 12th January, 1920. Previous to the adjudication and within two years thereof, Ganpat Ram had executed two conveyances on the 23rd June, 1918 (corresponding to 9th Asarh, 1325 B. S.) in respect of some of his immoveable properties in favour of one Earn Sundar Ram. On the 30th January, 1920, Syed Muhammad Musa Choudhuri, one of the creditors, applied before the Receiver, under section 36 of the old Provincial Insolvency Act of 1907, praying for annulment of the aforesaid conveyances, which he alleged were mere benami transactions * Appeal from Order, No. 201 o f 1922, against the order o f 3. Koxburgh, Additional District Judge o f Dinajpur, dated March 8, 1922. (1)(1917) 22 0. W. N. 702.
664 INDIAN LA.W REPORTS. [VOL.. LI. 1924 ill favour of the iiisolyciit's cousin., the aforesaid E am~su n d aii vsiincler Ram. Objecuoii was taiien on behalf of Ram the transferee to the effect that th e Receiver had d o Eam CHAniT jnrisdictioii to deal with the matter. Thereupon the 2akat. Keceiver reported the matter to the then District Judge, who, by his order, dated the Uth August, 1920, held that section 36 of the (old) Act applied and d.irected the parties to adduce evidence before him. 1 hereafter two other creditors, Ramcharit Bhakat and Radhaprasad Bhakat, who had. been all along supporting the creditor, Syed Muhammad Musa Choudhuri, made a separate application on the 29th January, 1921, under section 36 of the old Act, making allegations similar to those contained in the petition of the said Musa Choudhuri. The matter then came on for liearing before the Additional Distiicfc Judge of Dinajpur who, being of opinion that the Receiver was a necessary party to a proceeding under section 36 of the old Act, proceeded to deal witli the matter under section 18 of the old. Act and held, on the 8th March, 1922, on the evidence, that the conveyances were benami transactious in favour of the insolvent s cousin and had been resorted to for the purpose of d.efrauding his creditors. He accordingly directed the Receiver to take possession of the prox^erties covered. by the two conveyances as being properties in the possession of the insolvent. The transferee preferred the present appeal against the aforesaid order of the 8th March, 1922, making the abovenamed objecting creditors respondents. BahII Girija Prascmna SamjaU for the appellant. I shall contend in limine that a proceeding to set aside a sale, as being a henami transaction, could be entertained by the Insolvency Court only at the instance of the Receiver, and the present proceeding is
YOL. LL] 'CALCUTTA SERIES. 665 misconceived as having been initiated by a creditor. 1924 The esect of a receiving order is to vest the estate in l asiscsdab the Receiver, who therefore fully represents it and as such can alone realise all debts due to it. See Pro- ilisi Ci u e i t vincial Insolvency Act, 1907, section 18 and section Bhakat. 56 of the amended Act of 1920. Farther, a transfer as contemplated in section 53 of the amended Act is not void ah initio, but is voidable and the Receiver must seek to avoid it if so advised. 'Mt\ Chakravarti. Look at section 4 of the amended A ct: it is a new section introduced in order to set at rest questions like the one now argued." Section 4 does not toiicb the present point. It enlarges the scope of an enquiry and deepens the le^al effect of an order made by the Insolvency Court. But it must be read subject to the other provisions of the Act. It does not, in any way, lay down as to w'ho is competeiit under the Act to initiate proceedings. The question was specifically raised in the case, Joy Chandra Das v. Mahomed Amir (1). The decision was agains^t the creditor, who wanted to set the proceedings on foot. See also Sayiyasi Charan Mandal V. Krishnadhan Baiierji (2). All the High Courts in India are in agreement, but as regards Bombay^and Lahore no decision can be traced directly on the point. See Hemraj Champa LaU v. Bamkishen Ram (3), Ohunnoo Lai v. Lachman Sonar (4) and Mariappa Pillai V. Raman Ghettiyar (o). The position is, not much different under the English Bankruptcy Law, See In re a Debtor (6). Babii Dwarkanath ChUkravarti (with him Babu Bimal Chandra Das Gupta), for the respondent. Under ( n (1917) 22 G. W. N. 702. (3 ) (1916) 2 Pat. L. J. 101. (2 ) (1922) I L. B 49 Calc. 560 ; (4) (1917) I. L, R. 39 AH. 591. L. li. 49 I. A. 108. (.5) (1918) I. L R. 42 Mad. 3 22. - (6 ) [1901] 2 Q. B.354.
666 INDIAN LAW REPORTS. [YOL. LI. 1924 the old law, there was divergence of judicial opinion as Eam"^dae ^0 whether, nnder section 18, the Insolvency Court Bam could determine a question of title as between the in- Ram c h a b it solvent and a third party, the case of Joy Chandra Bh a k a t. j)cls. (1), cited by my friend holding that it could not, the Madras and Allahabad High Courts holding all along that the Insolvency Courts could do so. But in the present Act which is the Act which applies in this case a new section, viz., section 4, has been introduced to lay that conflict at rest and it has been enacted that the Insolvency Court can decide a question of title. So there is no substance in the first objection of the appellant. In so far as section 36 is concerned, none of the cases cited by the appellant goes so far as to lay down that it is the Receiver and the Receiver alone who can initiate proceedings under section 36. Those cases only lay down that primarily the Receiver would be the proper person to do so. The section does not say who is to initiate the proceedings. It is the creditors who are vitally interested in the matter and ordinarily they would be in a better position to know about the real nature of the insolvent s dealings with his properties» There are several reported cases which shew that proceedings both under sections 18 and 36 were initiated by creditors and no objection was taken in any of the Courts on this ground. See Satya Kumar Mukherjee v. Manager, Benares Bank, Ltd, (2), Nilmoni Ohoudhury v. Diirga Gharan Ghoudhury (3) and Basiruddin Thanadar v. Mokima Bibi (4). There is one case where, in a matter under section 36 initiated by the creditors, objection was taken in appeal before this Court about the absence of the Receiver and it was argued that the absence of the (1 ) (1917) 22 C. W. N. 702. (3) (1918) 22 G. W. N. 704. (2) (1917) n C. W.N. 700. (4) (1918) 22 0. \V. N. 709.
YOL. LL] CALCUTTA SERIES. 66" Receiver rendered the appeal liicoinpetent. This 1924 contention was overruled, the learned Judges holding lun Sp^das that the Receiver, though a proper party, was not indispensable: Lalji Sahai Sing \\ Ahcliil Gcmi (1). RamCsabit This case supports my contention that the absence of ^hakat.» the Receiver does not go to the root of the jurisdiction of the Court. [ WALMSLEy J. But in this case the objection taken was that the Receiver had not been joined in the appeal before this Court.* The principle is the same. Moreover, here the objection which is one relating to jurisdiction was not taken at the earliest opportunity. ^Mb. Sanyal. The point was urged in the very first petition filed by the transferee in the present proceedings. The objection was heard and overruled.' Cu7\ adv. villi. W a l m s l e y J. One Ganpat Ram was adjudicated insolvent by an order of the District Judge of Dinajpur on January li, 1920. The nazir of the Court was then appointed Receiver of the insolvent s estate. In April, a creditor, Syed Mnhammad Musa Chondhuri (No. 8), and in the following January, another creditor, Rani Charit, now respondent, asked the Judge to take proceedings in regard to a conveyance execnted by the insolvent in favour of the appellant, Ram Sundar Ram, shortly before the insolvent sought the refuge of the Oonrt. The Judge held an enquiry and annulled the conveyance. The transferee prefers this appeal and his principal contention is that the proceedings were incompetent because they were conducted by a creditor or creditors and not by the Receiver. It appears to me beyond ( I ) (1910) 15 0. W. N. 253.
C6S INDIAN-LAW REPORTS. [VOL. LI. 19-24 doubt that it is blie Receiver and only the Receiver who should conducfc sach proceedings. The course that is to be taken is clearly described in the case liamc'liabit of Joy Ghandra Das v. Mahomed Am ir (1). It is argued that since that decision a new Act lias been VvAi.MSLEY passed and that the terms of section 4 are wide J. enough to justify the procedure followed in this case. I do not thinlv that this argument is correct because the words subject to the provisions of this Act appear in that section and as under the Act fciie property of the insolvent vests in the Receiver, the provisions of section i cannot be taken to authorize a creditor to prosecute an enquiry of this kind. It is true that in substance the result may be much the same, whether the creditor carries on the enquiry in person or uses the Receiver as a figure head, but that is not a sufficient reason for countenancing a procedure not warranted by law, particularly where, as in this case, the objection was taken, though perhaps, rather obscurely in the lower Court. I think that the appeal should be allowed and the order annulling the conveyance set aside, with costs : the hearing fee in this Court being assessed afc two gold mohurs. We expres.s no opinion on the merits and this order will not prevent the Receiver taking action if thought advisable, MukbRJI J. I agree. S. M. Appeal allowed, (1) (1917) 22 a W. N. 702.