Madras High Court
Nalli Textiles By Proprietor N.C. ... vs Minor Krishnan, By Next Friend V. Sekar ... on 8 June, 2001
Equivalent citations: (2001)3MLJ512
Author: C. Nagappan
Bench: C. Nagappan
JUDGMENT C. Nagappan, J.
1. This appeal is preferred against the judgment of the learned Principal Subordinate Judge, Salem, passed in O.S.No. 613 of 1986 on 5.9.1988. The defendant is the appellant herein.
2. The averments in the plaint are summarised as follows.
The suit property originally belonged to Venkatarama Chettiar, the grand-father of the plaintiff, who sold it to T.R. Sundaram, who in turn sold the same to M.R. Radha for valuable consideration on 2.4.1962. M.R. Radha, who was acting in a number of Tamil films, purchased the property from and out of his own earning. M.R. Radha conveyed the property to his son Minor Ravi by means of a registered deed of gift on 15.6.1962. Subsequently, Ravi sold the suit property to Rangaiah Chettiar for Rs. 40,000 by registered sale deed, dated 9.2.1972. After the purchase, Rangaiah Chettiar was enjoying the suit property and he had no male issue. His wife Padmalochani had left him and living separately. They had a daughter Hamsaveni, who is a lunatic.
Rangaiah Chettiar executed a Will on 14.1.1980, which was registered on 19.1.1980, bequeathing the suit property and other properties in favour of the plaintiff with father as his guardian. Rangiah chettiar has also adopted the plaintiff as his son by a registered deed, dated 30.1.1980. Rangaiah Chettiar died on 28.12.1982 at Salem. The patta for the suit property has been changed in the name of the plaintiff and plaintiff is paying taxes to the Government and he is in possession of the suit property and his father, as his next friend, managing the same.
The defendant filed a suit in C.S.No. 104 of 1966 in the original side of the High Court to recover a sum of Rs. 27,290.84 being the sale price of textile goods supplied to M.R. Radha between 5.10.1964 and 21.1.1966 at Madras. The High Court passed a personal decree against M.R. Radha and a decree against the assets of joint family properties in the hands of Minor Ravi for the suit claim. The High Court in the judgment, while vacating the attachment ordered before judgment, held specifically that the Executing Court shall decide as to whether the suit property was a joint family property or not and that matter was left open for the defendant to take appropriate proceedings. Long prior to the debit incurred by M.R. Radha, he had executed a gift settlement deed in favour of his then minor son Ravi, who later sold the property to Rangiah Chettiar in the year 1972. The defendant filed an Execution Petition, on the decree obtained by him, in the Court of District Munsif at Salem in R.E.P.No. 744 of 1970 and during the pendency of execution petition, Rangaiah Chettiar died and the defendant did not choose to bring the plaintiff on record. The second wife of Rangiah Chettiar, namely, Padmalochani, and their lunatic daughter Hamsaveni were added as the legal representations of Rangaiah Chettiar on their application in R.E.A. No. 504 of 1983 on 28.7.1983. Earlier, a claim application filed by Rangaiah Chettiar and Ravi in R.E.A. No. 2929 of 1970 for raising the attachment made over the suit property in execution on the ground that the judgment-debtor M.R. Radha was not the owner of the suit property was enquired into by the District Munsif and was dismissed on 10.11.1986. Consequently, the Executing Court ordered Sale of the suit property on 8.1.1987 fixing the upset price of Rs. 1,00,000 and the sale proclamation was affixed in the suit building and only then the plaintiff's next friend came to know about the execution proceedings. He rushed to the Court and obtained certified copies and found that fraud had been perpetrated by the defendant in bringing the suit property for sale. On regular enquiries, it is found that M.R. Radha was declared insolvent in I.P.No. 33 of 1967, dated 15.11.1968 by the High Court, Madras, and the defendant was arrayed as one of the creditors in the petition. The defendant did not file any claim before the Official Assignee, Madras and the Administration was closed on 30.1.1984 consequent to the death of M.R. Radha. Thus, it is clear that the defendant without filing his proof of debt before the Official Assignee had fraudulently filed the execution petition in the Munsif Court at Salem and the execution proceedings in R.E.P. No. 744 of 1970 are void in law. The suit property absolutely belongs to the plaintiff and it cannot be brought up for sale. The execution proceedings are not binding on the plaintiff as he was not a party thereof. The gift settlement deed was effected by M.R. Radha long prior to the purchase of textile goods from the defendant. During the pendency of the suit, the suit property was brought to sale on 8.1.1987 inspite of interim injunction order passed in I.A.No. 1263 of 1986 and was pending. The defendant's Manager and the other bidders at the auction had full knowledge about the order of injunction in force and the fact that M.R. Radha was declared as insolvent and the fact that the suit property which was brought to sale does not belong to judgment-debtor or Ravi. In fact, notices were also issued by the plaintiff to the persons concerned on 9.1.1987 itself. The insolvency proceedings against M.R. Radha have not been terminated yet. The order passed by the District Munsif in R.E.A. No. 2929 of 1970, dated 10.11.1986, is without jurisdiction, void and contrary to the direction given by the High Court in its decree in C.S.No. 104 of 1966 and it is liable to be set aside. The plaintiff prayed for a decree declaring his title to the suit property, interdicting the defendant from proceeding against the suit property in pursuance of the decree passed in C.S.No. 104 of 1966 on the file of High Court, Madras and for setting aside the summary order passed in R.E.A. No. 2929 of 1970 in R.E.P. No. 744 of 1970 on the file of District Munsif, Salem, dated 10.11.1986.
3. The defendant in its written statement has contended as follows:
It is not admitted that the suit property originally belonged to Venkatarama Chettiar, the grand-father of the plaintiff, who sold it to T.R. Sundaram, who in turn sold the same to M.R. Radha on 2.4.1962. It is further not admitted that by means of a registered deed of gift M.R. Radha conveyed the property to his son Ravi on 15.6.1962. The alleged settlement deed was never acted upon and M.R. Radha was dealing with the property as his own by mortgaging it by deposit of title deeds. Another settlement deed executed on the same day by M.R. Radha in favour of his another son Raja was also not acted upon and M.R. Radha dealt with the same as his own. The title and possession of the suit property never passed on to the minor Ravi on 15.6.1962. from M.R. Radha.
The defendant field a suit in C.S.No. 104 of 1966 in the High Court, Madras against M.R. Radha and his minor son M.R. Ravi for recovery of Rs. 28,000 representing the balance of the value of the textile goods supplied by the defendant to M.R. Radha. The minor Ravi was represented by his mother as guardian in that suit. The suit was decreed against M.R. Radha personally and also against his minor son M.R. Ravi in respect of joint family properties in his hands. While passing the decree on 29.6.1967, the High Court raised the attachment observing that the question as to whether the suit property could be regarded as assets of the joint family in the hands of minor and whether they would be liable for the claim under the decree will have to be decided in the execution. No appeal was filed against that decree and the decree was transmitted to District Munsif Court, Salem for execution.
The defendant filed an Execution Petition in R.E.P.No. 744 of 1970 on the file of District Munsif, Salem and the suit property was attached in execution, on 8.8.1970. In the said execution petition, Ravi, S/o. M.R. Radha filed a petition under Section 47 of C.P.C. on 28.11.1970 to raise the attachment in R.E.A. No. 2929 of 1970 in R.E.P. No. 744 of 1970. During the pendency of execution petition, when the attachment was in force, one Rangaiah Chettiar published an advertisement in The Hindu, dated 25.12.1971, alleging that he entered into an agreement for the purchase of the suit property from M.R. Ravi and if anybody has any right over the said property to inform him within a week. Mr. D.K. Sampath, Advocate, Chingleput issued a publication notice, dated 31.12.1971, to Rangaiah Chettiar alleging that M.R. Radha has borrowed a sum of Rs. 25,000 on 25.5.1965 by depositing the original deed, dated 2.4.1962, in relation to 2.20 acres in Survey No. 77 in Mundagampadi, Yercaud from his clients M/s. Rajendra Finance Corporation at 554, B.R. Road, Alandur, Madras-16 and it was further stated that Ravi has no title or possession and any agreement by the said Rangaiah Chetty will be invalid and will not be binding on the creditors. The defendant also issued a notice, dated 23.12.1971, through its advocate to Rangaiah Chettiar alleging that the suit property has already been attached in R.E.P. No. 744 of 1970 and his agreement to purchase the property will be hit by lis pendens. Inspite of the above notice, Rangaiah Chetty purchased the suit property by registered sale deed, dated 9.2.1972 with notice of all encumbrances. In fact, the sale deed contains the recital that the defendant has filed a petition for execution of the decree and the attachment made over the suit property will be cleared by M.R. Ravi. It is false to allege that Rangaiah Chettiar purchased the property in pursuance of an agreement of sale entered into by him with M.R. Ravi on 8.11.1971. The alleged agreement, dated 8.11.1971, is a fraudulent document created for the purpose of filing a petition under Section 47 of C.P.C. at the time of purchase by Rangaiah Chettiar. Rangaiah Chettiar, after his purchase, added himself as second petitioner in R.E.A.NO. 2929 of 1879 and conducted the proceedings. During the pendency of the claim petition, M.R. Radha died on 17.9.1979 and his legal representatives were added as parties. Rangaiah Chettiar also died on 28.12.1982 during the pendency of the claim petition and his wife and daughter impleaded themselves as petitioners 3 and 4 in the above petition and continued the proceedings. It is not admitted that since the date of purchase Rangaiah Chettiar was enjoying the suit property as full owner. It is not admitted that Rangaiah Chettiar executed a Will in favour of the plaintiff with his father as guardian on 14.1.1980 which was registered on 19.1.1980, bequeathing the suit property and other properties to him. The alleged Will has not been probated after the death of Rangaiah Chetty. It is not further admitted that subsequently Rangaiah Chetty also executed a gift settlement deed in favour of the plaintiff on 28.1.1980. Nothing prevented the plaintiff from impleading himself as third petitioner in R.E.A. No. 2929 of 1970 in R.E.R. No. 744 of 1970 which petition was contested by Rangaiah Chettiar, plaintiff knows that the attachment as well as the claim petition is pending on the date of death of Rangaiah Chettiar. The plaintiff is estopped from claiming the suit property on account of lis pendens. The plaintiff would not get better title than Rangaiah Chettiar. The alleged Will, settlement and adoption deed are all fabricated documents. The plaintiff is not the natural son born to Rangaiah Chettiar and he cannot be impleaded as legal representative of im. No appeal has been filed against the order passed in the petition under Section 47 of C.P.C., namely, R.E.A. No. 2929 of 1970 and the order is conclusive. The plaintiff is not entitled to question the execution proceedings in R.E.R No. 744 of 1970 when Rangaiah Chettiar has not raised any objection and in view of the fact that M.R. Radha was declared as insolvent in LP. No. 33 of 1967. The plaintiff is not a party to the execution proceedings or a party to the alleged insolvency proceedings and he is estopped from questioning the correctness and validity of those proceedings. The suit is barred by principle of res judicata in view of the order passed in R.E.A. No. 2929 of 1970 in R.E.R No. 744 of 1970 on the file of District Munsif, Salem. The suit is hit by Section 11 read with Explanation 7 of C.P.C. and the suit is not maintainable in law. The order passed by the District Munsif in R.E.A. No. 2929 of 1970 was not a summary order, but the order was passed on merits. The plaintiff is not entitled to the relief asked for in the plaint.
4. The trial Court framed ten issued and on a consideration of the matter came to the conclusion that the plaintiff is entitled to the reliefs claimed and decreed the suit with costs. Aggrieved by the same, the defendant has preferred the present appeal. For the sake of convenience, the parties are described in this judgment as arrayed in the suit.
5. The points for determination in this appeal are:
(1) Whether the order passed in R.E.A. No. 2929 of 1970 in R.E.R No. 744 of 1970 is void in law and liable to be set aside.
(2) Whether the sale deed, dated 9.2.1972, executed by M.R. Ravi in favour of Rangaiah Chettiar is hit by doctrine of lis pendens and by provisions of Section 64 of Civil Procedure Code.
(3) Whether the plaintiff is estopped from questioning the correctness or validity of the execution proceedings pertaining to R.E.A. No. 2929 of 1970 by the principle of res judicata.
(4) Whether the plaintiff is entitled to the reliefs of declaration and injunction as prayed for.
6. Point No. 1: The suit property is land and building comprised in Survey No. 77 in Mundagampadi Village of Yercaud Sub-Division, Salem District. According to the plaintiff, the suit property originally belonged to Venkatarama Chettiar, the grand father of the plaintiff, who sold it to T.R. Sundaram, who in turn sold the same to M.R. Radha on 2.4.1962. The further case of the plaintiff is that M.R. Radha, by a deed of gift deed 15.6.1962, conveyed the property to his son minor Ravi and subsequently Ravi sold the property to Rangaiah Chettiar by sale deed, dated 9.2.1972, and Rangaiah Chettiar had no male issue and he executed a Will in favour of the plaintiff on 14.1.1980 bequeathing the suit property and other properties to him and Rangaiah Chettiar subsequently executed a settlement deed in favour of the plaintiff on 28.1.1980 settling the properties including the suit property on him and he also adopted the plaintiff as his son on 30.1.1980. According to the plaintiff, Rangaiah Chettiar died on 28.12.1982 and the patta for the suit property has been changed in his name and he is the lawful owner of the suit property and it is managed by his father as his next friend. Ex.A-1 is the sale deed, dated 2.4.1962, pertaining to suit property executed by T.R. Sundaram in favour of M.R. Radha. Ex.A-2 is the sale deed, dated 9.2.1972, executed by M.R. Ravi conveying the suit property in favour of Rangaiah Chettiar. Ex.A-3 is the Will, dated 14.1.1980, executed by Rangaiah Chettiar. Ex.A-4 is the gift settlement deed, dated 28.1.1980, executed by Rangaiah Chettiar in favour of the plaintiff. Ex.A-5 is the adoption deed, dated 30.1.1980.
7. The defendant filed a suit in C.S.No. 104 of 1966 on the file of this Court against M.R. Radha and his minor son Ravi to recover a sum of Rs. 27,290.84 being the sale price of textile goods supplied to them and obtained a personal decree against M.R. Radha and this Court observed that the question as to whether the suit property could be regarded as asset of the joint family in the hands of minor Ravi and whether they would be liable for the claim under the decree will have to be decided in the execution. The decree was transmitted to the District Munsif Court, Salem for execution and the defendant filed execution petition in R.E.P. No. 744 of 1970 and the suit property was attached in execution on 8.8.1970. In the said execution petition, M.R. Ravi filed a petition in R.E.A. 2929 of 1970 under Section 47 of C.P.C. on 28.11.1970 to raise the attachment. When the attachment was in force, Rangaiah Chettiar purchased the suit property by sale deed, dated 9.2.1972, with notice and knowledge of attachment and he added himself as second petitioner in R.E.A. No. 2929 of 1970. M.R. Radha, who was second respondent in that petition, died on 17.9.1979 and his legal representatives were added as parties. Rangaiah Chettiar died on 28.12.1982 during the pendency of claim petition and his wife and daughter were impleaded as petitioners 3 and 4 in the claim petition. The learned District Munsif, after enquiry, by order dated 10.11.1986 dismissed the claim petition in R.E.A. No. 2929 of 1970. Ex.A-15 is the certified copy of the fair order and Ex.A-16 is the certified copy of the decretal order. It appears that no revision was preferred against that order.
8. The plaintiff, who claims to be the adopted son of Rangaiah Chettiar, claims title to the suit property by virtue of Ex.A-3 will and Ex.A-4 settlement deed and in this suit, he seeks for declaring his title to the suit property, interdicting the defendant from proceeding against the suit property in pursuance of the decree obtained by him in C.S.No. 104 of 1966 and he also prays for setting aside the summary order passed in R.E.A. No. 2929 of 1970, dated 10.11.1986. The contention of the plaintiff in the suit is that M.R. Radha was declared insolvent in I.P. No. 33 of 1967, dated 15.11.1968, by the High Court, Madras and the defendant was arrayed as one of the creditors in that petition and the defendant did not file any claim before the Official Assignee and he had fraudulently filed the execution petition in the District Munsif Court, Salem suppressing the insolvency proceedings and the execution proceedings are therefore void in law. Ex.A-8 is the copy of the Insolvency Petition in LP. No. 53 of 1967 filed by creditors against M.R. Radha. Ex.A-9 is the copy of the decretal order passed in it on 15.11.1968 in which M.R. Radha was adjudged insolvent. Ex.A-10 is the order, dated 30.10.1970, in which the order of adjudication, dated 15.11.1968, was annulled and the assets were ordered to vest in the Official Assignee himself. Ex.A-12 is the copy of the order, dated 30.1.1984, in which the insolvency Court ordered that the administration of the estate of M.R. Radha was closed and the proceeding terminated. According to the plaintiff averments, the defendant himself was arrayed as one of the creditors in the petition in I.P. 33 of 1967. Ex.A-8 is the copy of the petition in I.P. No. 33 of 1967, and a perusal of it reveals that the defendant was not arrayed as a creditor as alleged by the plaintiff. In the written statement, the defendant had averred that no insolvency petition was pending on the date of sale and neither M.R. Radha or M.R. Ravi nor Rangaiah Chettiar took any objection for the execution proceedings in E.P.No. 744 of 1970 as void in law. The defendant has further averred that the plaintiff is estopped in questioning the correctness or validity of the execution proceedings since his predecessor in interest Rangaiah Chettiar himself has not added the Official Assignee as a party in the claim petition under Section 47 of C.P.C. and in the claim petition, M.R. Radha was not shown as an insolvent. D.W.1 is the clerk of the defendant firm and according to him, they did not know about the filing of Insolvency Petition against M.R. Radha and he had also denied the suggestion that they were aware of it. There is nothing on record in the suit to show that the defendant had knowledge about the Insolvency Proceedings in I.P.No. 33 of 1967.
9. Mr. Mohan Parasaran, the learned Counsel appearing for the respondent, contended that the very execution petition instituted by the defendant is not maintainable in law and it is a fraud upon Court in not impleading the Official Assignee with whom the property was vested. He further contended that the order passed in R.E.A. No. 2929 of 1970 was obtained by committing fraud before the Court by the defendant and it is to be treated as nullity and can be challenged even in collateral proceedings and he relied on the decisions of the Apex Court in S.P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and Ors. and Indian Bank v. Satyam Fibres (India) Pvt. Ltd. (1966) 5 S.C.C. 550. The Supreme Court in the above decisions has held that a judgment or decree obtained by fraud on the Court is a nullity. Fraud has been described as follows:
A fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. A litigant, who approaches the Court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the Court as well as on the opposite party.
The question is whether the defendant is guilty of playing fraud on the Court in instituting the execution proceedings. As already seen, there is nothing on record to show that the defendant had knowledge about the insolvency proceedings of M.R. Radha in I.P.No. 33 of 1967. The defendant was not arrayed a one of the creditors in the insolvency petition as alleged by the plaintiff in the plaint. In such circumstance, it cannot be said that the defendant withheld the vital information with regard to the insolvency of M.R. Radha. Equally, it cannot be said that the defendant committed an act of deliberate deception with a design by taking unfair advantage of another. It is relevant to note that the claim petition under Section 47, C.P.C, namely, R.E.A. No. 2929 of 1970 was filed by M.R. Ravi, S/o. M.R. Radha, on 28.11.1970 to raise the attachment in R.E.P.No. 744 of 1970. In that petition, M.R. Ravi did not state anything about the insolvency of his father in I.P.No. 33 of 1967 and he did not take any objection for the execution proceeding in E.P.No. 744 of 1970 as void in law. Rangaiah Chettiar, after his purchase of the suit property, got himself impleaded as second petitioner in the claim petition and he also did not raise any objection for the execution proceedings as void in law in view of not obtaining the leave of the insolvency Court for instituting the execution proceedings. Neither M.R. Ravi nor Rangaiah Chettiar impleaded the Official Assignee as a party in their claim petition. The present plaintiff claims right to the suit property as the adopted son of Rangaiah Chettiar and still he did not get himself impleaded in the claim petition after the death of Rangaiah Chettiar. It is relevant to note that the wife and daughter of Rangaiah Chettiar got themselves impleaded as L.Rs. of Rangaiah Chettiar in R.E.A.No. 2929 of 1970. After the death of M.R. Radha, his L.Rs. also got impleaded as respondents in the above claim petition. The fact remains that no objection was taken to the execution petition on the ground of want of leave of insolvency Court. It is also to be borne in mind that the predecessors in interest of the present plaintiff, namely, Rangaiah Chettiar and M.R. Ravi, only contended that the suit property belonged to M.R. Ravi by virtue of settlement deed executed by M.R. Radha on 15.6.1962. for the first time, only in this suit, the plaintiff has raised this contention which was not raised by his predecessors in interest in the earlier proceedings. In such circumstances, the contention that the defendant played fraud on Court in instituting the execution proceedings cannot be accepted.
10. It is true that M.R. Radha was adjudged insolvent under the Presidency Towns Insolvency Act on 15.11.1968 as evident by Ex.A-9 order. The decree obtained by the defendant in C.S.No. 104 of 1966 was transmitted to the District Munsif Court, Salem and the decree holder, namely the defendant herein, instituted the execution petition in R.E.R No. 744 of 1970 on the file of District Munsif Court, Salem against judgment-debtors, namely, M.R. Radha and M.R. Ravi and the suit property was attached in execution on 8.8.1970. Admittedly the leave of the insolvency Court was not obtained by the decree holder and the Official Assignee was not added as a party in it. Mr. Mohan Parasaran, the learned Counsel appearing for the respondent, contended that the provisions of Presidency Towns Insolvency Act are mandatory and after an order of adjudication is made, no suit or other proceeding can be instituted against the insolvent or his property without the leave of the insolvency Court and the want of previous sanction is a defect fatal to the execution proceedings and he mainly relied on the following decisions of this Court.
(1) Jagadisan Pillai v. Narayana Chettiar and Ors. 71 M.L.J. 150 : A.I.R. 1936 Mad. 284; (2) Dawood Mohideen Rowther v. Sahabdeen Sahib (1937) 2 M.L.J. 223 : A.I.R. 1937 Mad. 667; (3) E.N.A.S. Narayana Iyer v. Moorthi Kendan and Ors. .
In the above decisions, this Court has held that an insolvent cannot be sued in a Court of law in respect of a claim against him or his property except with the leave of the insolvency Court and such a leave is condition precedent to the right of action.
Per contra, Mr. K. Saravabhauman, the learned senior counsel appearing for the appellant contended that the decree-holder, namely, the defendant herein, was not aware of the adjudication of M.R. Radha as insolvent and he cannot be said to have knowingly commenced the execution proceedings without leave and he ought not therefore be treated as if was in default and the plea as to the jurisdiction of the Court on the ground of want of leave was not raised by the judgment-debtors and hence it has to be concluded that the objection has been waived and the absence of leave did not render the order in R.E.A. No. 2929 of 1970 a nullity and he relies on the following judgments of this Court in this regard. The first decision cited is. Donepudi Subramaniyam v. Nune Narsimham and Ors. 56 M.L.J. 489 : A.I.R. 1929 Mad. 323. A Division Bench of this Court has held as follows.
....I would say this, however, on this point that the prohibition in Section 16 is directed and not to the Court but to the party, and that therefore when the party was wholly ignorant of the adjudication it is difficult to penalize him for not bring to notice a matter of which he was wholly ignorant. It surely has not be laid down that every person suing in the capacity of a creditor must add to his plaint a verification that his debtor has not yet been adjudged an insolvent. What is required is that a defence by way of a plea of want of leave shall not be denied to the debtor in the suit if he really has been adjudicated insolvent, and, if he does raise the defence of want of leave, then the Court shall dismiss the suit or permit it to proceed upon terms; but if he does not raise the defence, it appears to me the proper order would be to rule that the objection has been waived and cannot be later pressed...
The question whether leave of the insolvency Court for the institution of the suit is necessary is not a question which arises on the face of the plaint itself if the insolvency is not referred to therein. It depends on extraneous circumstances of which neither the plaintiff nor the Court may be aware. Suppose the plaintiff, for no fault of his, is not aware of the adjudication and therefore, files his suit without getting leave of the insolvency Court. Is his suit liable to be dismissed on the ground that he has commenced it without leave of the Court? Such a conclusion will be obviously unjust and I can see nothing in the wording of the section to justify such a conclusion. The material words are: "No creditor shall commence his suit without leave of the Insolvency Court". It is clear that the leave of the insolvency Court has to be obtained for the commencement of the suit. I think that the direction given to the creditors of an adjudged insolvent by those words proceeds on the assumption that the creditor is aware of the adjudication. If, being aware of it, he fails to obtain leave, he is penalized and properly so; but if for no fault of his, he is not aware of the adjudication, and of the consequent necessity for obtaining leave of the Court he cannot be said to have commenced, i.e., knowingly commenced the suit without leave and he ought not therefore to be treated as if he were in default. That is the correct view to take, seems to be supported by the decisions in the analogous cases arising out of Section 43, old Civil P.C., corresponding to Order 2, Rule 2 of the present Code.
The second decision cited is Nidamanuri Satyamma v. Official Receiver, Masulipatnam and Anr. A.I.R. 1933 Mad. 917, in which, the learned judge of this Court has held that where an objection that the suit has been brought without obtaining leave under Section 28(2) of Provincial Insolvency Act is not taken in the Court of first instance, it should be deemed to have been waived and cannot be raised in appeal.
The third decision relied on is Alagappa Chettiar v. Muthukaruppan Chettiar (1947) 1 M.L.J. 110 : A.I.R. 1947 Mad. 305. A Division Bench of this Court has held that where a judgment-debtor objects to the execution petition on the ground of want of leave of insolvency Court, the objection should be taken on the application for transmission of the decree and if not so taken, cannot be raised subsequently on an application for execution. The head-note in the above decision is extracted as follows:
On an application to transmit, a judgment-debtor must raise any objections he has to the general executability of the decree (e.g.) discharge, failure to bring on record the official Receiver (where he is a necessary party), etc. Where a judgment-debtor objects to the execution petition on the ground of want of leave of the insolvency Court and that the liability had become extinguished by reason of the discharge order, these objections should be taken on the application for transmission of the decree and if not so taken cannot be raised subsequently, on an application for execution. But on an application for transmission it is not necessary for the judgment-debtor to object to the executability of the decree against a particular item of property.
In all the above three decisions, this Court declared that a defence by way of plea of want of leave must be taken by the judgment-debtor if really he had been adjudicated insolvent at the earliest point of time and if he does not raise the defence, the proper order would be to rule that the objection has been waived and it cannot be raised subsequently. So far as the present case is concerned, as already seen, the judgment-debtors, namely, M.R. Radha and M.R. Ravi did not raise the plea of want of leave of the insolvency Court either in the application to transmit the decree to the District Munsif Court, Salem, for execution or in the main execution proceeding in the Court at Salem and hence it has to be concluded that the objection has been waived. In such circumstance, their successor in interest, namely, the present plaintiff, cannot raise the plea of want of leave of insolvency Court for execution proceedings in this suit.
11. The learned Senior Counsel for the appellant contended that R.E.A. No. 2929 of 1970 was filed by M.R. Ravi under Section 47 of C.P.C. and all questions arising between the parties shall be determined by the Court executing the decree and not by separate suit. The learned Counsel appearing for the respondent does not dispute the above proposition, but, only contends that the above order was obtained by the defendant herein by playing fraud on the Court and it was discussed earlier. It appears that no revision was filed against the order in R.E.A. No. 2929 of 1970 and it had become final, and in the circumstances of the case, that order cannot be said to be void in law and it is not liable to be set aside.
12. Point No. 2: Mr. Sarvabhauman, the learned senior counsel appearing for the appellant, contended that Ex.A-2 Sale deed, dated 9.2.1972, in favour of Rangaiah Chettiar was effected by M.R. Ravi during the subsistence of attachment of the suit property and it was hit by doctrine of lis pendens and also by provisions of Section 64, C.P.C. The decree holder in C.S.No. 104 of 1966, namely, the defendant herein, filed execution petition in R.E.P. No. 744 of 1970 on the file of District Munsif, Salem and the suit property was attached in execution on 8.8.1970. Rangaiah Chettiar purchased the suit property by registered sale deed, Ex.A-2, dated 9.2.1972 and in the sale deed itself it has been recited that the property was attached in R.E.P. No. 744 of 1970 and it will be cleared by vendor M.R. Ravi. Hence, with notice and full knowledge of attachment over the suit property, Rangaiah Chettiar had purchased it from the judgment-debtor M.R. Ravi. The effect of Section 64, C.P.C. is to declare private alienations of property after attachment to be void as against all claims enforceable under the attachment. It is intended to benefit the decree holder so that he may not be impeded by any alienation in executing the decree. In the present case, the predecessor in interest of the plaintiff, namely, judgment-debtor M.R. Ravi has sold the property to Rangaiah Chettiar when the attachment was in force over the suit property. The learned Counsel for the respondent contended that the defendant did not raise the plea of Ex.A-2 sale being hit by the provisions of Section 64 of C.P.C, in the written Statement. It is no doubt true that the plea with regard to Section 64 was not specifically raised by the defendant in his written statement, but, he has averred in the written statement that the sale was struck by the doctrine of lis pendens. Section 64, C.P.C. in fact constitutes an application of the doctrine of lis pendens in the circumstance specified there as held by the Apex Court in the decision in Supreme General Films Exchange Ltd. v. His Highness Maharaja Sir Brijnath Singhji Deo of Mathar and Ors. , which is extracted below:
We are therefore unable to hold that the concurrent findings of the trial Court and the High Court, that the Plaza Talkies was attached in execution of decree in suit No. 3-B of 1952 on 4.5.1955 and that this attachment was in existence when the impugned lease was executed on 30.3.1956, are erroneous. On these findings the lease of 1956 was certainly struck by the provisions of Section 64, Civil Procedure Code also. Section 64 of Civil Procedure Code, in fact, constitutes an application of the doctrine lis pendens in the circumstances specified there.
Applying the above principle, Ex.A-2 sale is not only struck by the doctrine of lis pendens but also by the provisions of Section 64 of Civil Procedure Code.
13. Point No. 3: The learned senior counsel for the appellant contended that the plaintiff is estopped from questioning the correctness or validity of the execution proceedings pertaining to R.E.A. No. 2929 of 1970 on the principle of constructive res judicata, since his predecessor in interest, namely, judgment-debtor M.R. Ravi did not raise any objection to execution being proceed with and he relies on the decision of the Apex Court in Mohanlal Goenka v. Benoy Kishna Mukherjee and Ors. . The Apex Court in the above decision has held as follows:
That the principle of constructive res judicata' is applicable to execution proceedings is not longer open to doubt...
Thus where neither at the time when the execution application was made and a notice served upon the judgment-debtor, nor in the applications for setting aside the two sales made by him does the judgment-debtor raise any objection to execution being proceeded with on the ground that the Execution Court has no jurisdiction to execute the decree, the failure to raise such an objection which goes to the root of the matter precludes him from raising the plea of jurisdiction on the principle of constructive 'res judicata' after the property has been sold to the auction-purchaser who has entered into possession...
Even an erroneous decision on a question of law operates as 'res judicata' between the parties to it. The correctness or otherwise of a judicial decision has no bearing upon the question whether or not it operates as 'res judicata'. A decision in the previous execution case between the parties that the matter was not within the competence of the executing Court even though erroneous, is binding on the parties.
As already seen, the predecessors in interest of the present plaintiff, namely, M.R. Ravi, the judgment-debtor in the execution proceedings, did not raise any objection to execution on the ground that the Execution Court had no jurisdiction to execute the decree and the failure to raise such an objection precludes him as well as his successors in interest from raising the plea of jurisdiction on the principle of constructive 'res judicata'. The decision in R.E.A. No. 2929 of 1970 has become final and it will operate as 'res judicata' between the parties to it.
14. Point No. 4: The plaintiff claims title to the suit property through the Will and settlement deed executed by Rangaiah Chettiar in his favour. As already seen, the sale in favour of Rangaiah Chettiar in Ex.A-2 is hit by the doctrine of lis pendens and also by the provisions of Section 64 of Civil Procedure Code. In such circumstance, no title with regard to the suit property would have passed from Rangaiah Chettiar to the plaintiff and the plaintiff is not entitled to the declaration and injunction as prayed for.
15. For the above reasons, the appeal is allowed and the judgment and decree of trial Court are set aside and the suit is dismissed with costs. There shall be no order as to costs in the appeal.