Andhra HC (Pre-Telangana)
Pothuganti Venkateshwarulu vs Yangala Mallaiah on 18 January, 2000
Equivalent citations: 2001(2)ALD61, 2001(1)ALT354
ORDER
1. The civil revision petition is filed against the order dated 17-11-2000 in EP No.115 of 2000 in OS No.24 of 2000 passed by the Senior Civil Judge, Miryalaguda ordering proclamation of sale of the schedule properties of the petitioners/ judgment debtors which were attached before judgment vide order dated 8-6-2000 in IA No.256 of 2000 in OS No.24 of 2000 for realisation of the decretal amount of Rs.2,37,962/-.
2. It is contended by the learned Counsel for the petitioners that since the petitioners could not discharge their debts, IP No.11 of 2000 on the file of the Principal Senior Civil Judge, Rangareddi was filed and in the said insolvency petition the petitioners were also shown as parties and inspite of the said fact of filing the insolvency petition the respondent/decree holder filed the present EP No.115 of 2000 and obtained an attachment order in respect of some of the properties mentioned in B schedule. It is further submitted that the insolvecy petition was filed even before the impunged order by the Court below was passed. Therefore it is contended that the respondent/decree holder with the knowledge that IP No.11 of 2000 was already filed got attached the above properties and obtained ex parte decree. It is further submitted that the fact that the EP schedule properties are the subject-matter of the said insolvency petition was also brought to the notice of the Court below and inspite of which the impugned order for proclamation of the sale of the properties was passed against which the present civil revision petition is filed.
3. On the other hand, the learned Counsel appearing for the respondent/decree holder submitted that no doubt IP No.11 of 2000 was filed but there was no order passed by the Court before which the insolvent proceedings are pending exercising power under Section 52 of the Provincial Insolvency Act, 1920. Therefore the properties are still covered by the order of attachment passed by the Court below. He further submitted that merely because IP No.11 of 2000 was filed the right of the creditor would not wither away. In support of his contention he placed reliance on the judgment rendered in Kuppu Boyan and another v. Sengottaiyan, , wherein it was held as follows:
"Just because the judgment debtor has filed an insolvency petition before the insolvency Court it cannot be said that the execution proceedings should be stayed. In this case it was not stated that the properties of the petitioners were taken by the official liquidator in pursuance of the order of the insolvency Court nor the order of the insolvency Court was brought to the notice of the executing Court."
The said judgment was rendered relying upon a decision rendered in Ponnudurai v. Kumaraswami Mudaliar, 1971 (2) MLJ 252, wherein it was held as:
"Section 52 will have no application when a Receiver had not been appointed in respect of the insolvent's properties. So an executing Court while executing a decree passed against the insolvent need not stay its hands merely on the admission of an insolvency petition."
4. In another judgment in Mamidi Chinna Venkata Sivayya v. Nekkanti Suryanarayana, AIR 1938 Madras 906, it was observed as follows:
"Under Section 28(2) of the Provincial Insolvency Act, on the making of an order of adjudication, the whole of the property of the insolvent vests in the Court or in an Official Receiver appointed by the Court but until then the property of the insolvent is not divested from him and every creditor is free to have recourse to all available remedies against the debtor for realisation of his debt. The section clearly provides that the disability of the minor to have any remedy against the property of the insolvent is only after the order of adjudication."
In the said judgment it was further held as follows:
"There is nothing in the provisions of the Insolvency Act to preclude a decree holder from proceeding with the sale with the knowledge of the insolvency .....Neither in principle nor in reason does it seem to me that notice of insolvency should operate as a bar to a decree holder proceeding with the sale of the property."
5. From the above judgments, the following would emerge: (1) the mere knowledge of filing of the insolvency petition does not preclude the decree holder from getting the decree executed; (2) the mere notice of the insolvency shall not operate as a bar to decree holder from proceeding with the sale of the property; (3) Until the Court passes an order under Section 52 of the Provincial Insolvency Act, appointing Receiver exercising the jurisdiction under Section 52 of the Provincial Insolvency Act, the property of the insolvent is not divested from him and every creditor has a right of realisation of the debt; and (4) Section 28(2) of the Provincial Insolvency Act, disables the creditor to have remedy only after the order of adjudication by such Court.
6. In the instant case, it is admitted by the learned Counsel for the petitioners that no order under Section 52 of the Provincial Insolvency Act appointing Receiver was passed and hence the properties of the petitioners/insolvents vest with them only and further there is no adjudication of the said IP No.11 of 2000. Until and unless there is adjudication and consequential order is passed, the petitioners cannot raise the plea that the respondent/decree holder cannot execute the ex parte decree. For the same reason even though the decree holder has the knowledge of filing the insolvency petition before competent Court that by itself does not take away his remedy of getting the ex parte decree executed.
7. For the above reason and in the light of the judgments cited, I do not find any merit in the civil revision petition and the same is liable to be dismissed and is dismissed accordingly but with no costs.