ORDER
1. This revision petition is filed against the orders passed by the learned senior Civil Judge, Guntur in EA No.1 161 of 1997 in OS No.306 of 1995.
2. The petitioner is the decree holder. He filed a suit in OS No.306 of 1995 for recovery of certain amounts from the defendant viz., Suit. G. Durga Sesharatnam. The said suit was filed on 15-11-1995. Immediately thereafter, the defendant filed insolvency petition in IP No.2 of 1996 on the file of the Additional Sub-Court, Guntur on 29-11-1995. In the said petition, the Court also ordered appointment of official receiver on 8-9-1996. It is stated before this Court that the said IP is still pending adjudication. In the meanwhile, the suit was decreed on 17-3-1997 and the properties of the judgment debtor were brought to sale and they fetched a sum of Rs.2,80,179/-which was deposited in the lower Court to the credit of the suit OS No.306 of 1995. It is to be noted that in the Insolvency petition, number of creditors were made parties including the plaintiff in OS No.306 of 1995. However, it is stated that for non payment of process fee, the IP was dismissed as against the plaintiff in OS No.306 of 1995.
3. The decree holder in OS No.306 of 1995 filed an application in EA No.1 161 of 1997 under Rules 231 to 235 of Civil Rules of Practice read with Section 151 CPC praying the Court to issue a cheque for a sum of Rs.2,80,179/-. The said application was resisted by the judgment debtor. The learned Judge after considering the
matter, dismissed the application by an order dated 21-7-1998 against which the present revision petition has been filed.
4. Since the respondent was not represented and the matter is of considerable importance, this Court requested Mr. Vilas V. Afzalpurkar, a learned senior Counsel of this Court to assist the Court in the mailer as amicus curiae, which he has kindly accepted and made elaborate submissions on the subject.
5. The learned Counsel for the petitioner Mr. Dharma Rao submits that the suit was decreed on 17-3-1997 and subsequently, the properties of the judgment debtor were brought to sale and the amounts realised consequent on the sale of the said properties were deposited in the Court to the credit of the suit OS No.306 of 1995 and therefore the decree holder is entitled to get release of the said amounts towards the satisfaction of the decree in OS No.306 of 1995 de hors the insolvency proceedings which are pending in IP No.2 of 1996. He submits that the adjudication in the insolvency petition is still pending and until such time he is declared insolvent by the Court, it is always open for the creditor to realise the amount, which was kept in deposit in pursuance of the execution of the decree in OS No.306 of 1995. He makes an effort to convince this Court that the admission of the insolvency petition cannot be construed as passing of an order of affirmation of insolvency and therefore till the adjudication takes place one way or the other in the insolvency proceedings, the creditor can always receive the amounts which were realised by him prior to the adjudication of the suit.
6. On the other hand, Sri Vilas V, Afzalpurkar, the learned amicus curiae submits that the IP was filed on 29-11 -1995 and the official receiver was appointed by the Court on 8-9-1996 and the IP is still
pending. He firstly submits that since there is no provision for admission of the plaint in the Code of Civil Procedure, assistance has to be taken from the provisions of Order 4, Rule 2 CPC according to which once the suit papers are registered and entered in the concerned register of the suits, it amounts to admission of the plaint. He further submits that the fact of the official receiver was appointed on 8-9-1996 would confirm that the plaint has been admitted and the proceedings were instituted for adjudication of the matter in IP No.2 of 1996. The learned Counsel refers to the judgments of the Bombay and Lahore High Courts in Union Bank of India v. Sunpac Corporation and Ors., , and Agar Chand v. Prithvi Singh, AIR 1936 Lah. 885, respectively in support of his contention.
7. A similar issue arose for consideration before the Lahore High Court with regard to the date of admission of the plaint under the Insolvency proceedings. It was a case where the assets of judgment debtor were realised in execution of a decree on 2-5-1934. He filed insolvency petition on 17-3-1934. On the said petition, the Court passed an order that after the application had been entered in the register, the petitioner should deposit certain amounts by 12-5-1934, which was complied with. The question arose as to which is the date of admission of insolvency petition. The learned Judge after considering Section 51 of the Provincial Insolvency Act with reference to Order 4, Rule 2 CPC held that the date on which the suit was directed to be registered is to be treated as the date of admission as it indicates the intention of the Court to admit the petition. The learned Judge drew the support from the decision of Madras High Court which is reported in Ramanadham Chettiar v. Subrahmanyam Chettiar, AIR 1925 Mad. 248, wherein it was held that the date on which the order appointing ad-interim receiver was passed could be taken as the date of admission of the plaint. In the
instant case, we can even go a little further as the official receiver was admittedly appointed on 8-9-1996 i.e., much prior to the decree in the suit OS No.306 of 1995. Before the Bombay High Court, interpretation of Order 4, Rules 1 and 2 CPC came up for consideration wherein the learned single Judge held that the Code of Civil Procedure envisages two stages – first is the presentation of the plaint and next is the admission of the plaint. There is no automatic admission of the plaint as there can be certain requirements which are not complied with by the plaintiff while filing the suit and therefore it is only after all the defects are removed, the suit gets eligibility to be entered in the register as contemplated under Order 4, Rule 2 CPC and so long as the plaint is not admitted and entered in the register of suits, all defects including that of the absence of leave under the said clause can be removed without returning the plaint. Therefore, there is no question of returning the plaint which is not admitted. It simply remains under objection till it is admitted. The learned Judge therefore held that it is only when the suit is entered in the appropriate register, it has to be construed as it is numbered and that is the starting point of admission of the plaint.
8. Admittedly, neither in the Insolvency Act nor in the Code of Civil Procedure, procedure for admission of the plaint is contemplated. As per Order 4, Rule 2 CPC, the plaints are only presented to the Court and they are registered after they are found to be correct in all respects. That is what the learned single Judges of the Bombay and Lahore High Courts have considered and held that when once the suit is entered in the register, it has to be construed as having been admitted.
9. The learned Counsel for the petitioner Mr. Dharma Rao however relies on the judgment of the Madras High Court in Doraisami Naicken v. Periakaruppan
‘Chettiar, (28) AIR 1941 Mad. 475. But, that case has no relevancy to the facts of the present case, as admittedly, the properties, were sold prior to the admission of the suit. Here, we are concerned with the interpretation as to at what point the insolvency petition gets admitted and the consequences of admission of such petition.
10. Under Section 51 of the Provincial Insolvency Act, 1920 (for short ‘the Act’) there is a restriction on the rights of the creditor under execution. Once the petition is admitted, alt the properties of the insolvent gets pooled up so that if ultimately he is declared as insolvent, further proceedings will be taken up in accordance with the provisions of the Act. The intention of the provision is obvious to kept the assets of the insolvent intact. Section 51 of the Act reads as under :
“(1) Where execution of a decree has issued against the property of a debtor, no person shall be entitled to the benefit of the execution against the receiver except in respect of assets realised in the course of the execution by sale or otherwise before the date of the admission of petition.
(2) Nothing in this section shall affect the rights of a secured creditor in respect of the property against which the decree is executed.
(3) A person who in good faith purchases the property of a debtor under sale in execution shall in all cases acquire a good title to it against the receiver.”
11. Even though the teamed Counsel
for the petitioner takes recourse to Section 28 of the Act, that has no bearing on the facts of the present case as the adjudication has not yet been completed. It is only after the adjudication proceedings are completed, the procedure as contemplated under Section 28 of the Act will be taken recourse to. Therefore, we have to only
consider the effect of admission of the plaint on the properties of the insolvent. As per the facts furnished by the learned Counsel for the petitioner, the decree was passed on 17-3-1997. Even before the decree was passed, the IP was admitted having been duly numbered on 29-11-1995 and the official receiver was also appointed prior to the date of the decree i.e., on 8-9-1996. Even assuming that the date of presentation cannot be the criteria, still cognizance can be taken of the fact that the official receiver was appointed on 8-9-1996, and at least by that date, it should be deemed that the Court has admitted the petition. Since these events had occurred prior to the decree, Section 51 of the Act will apply in all its fours to the present case and thus I find that the order passed by the Court below cannot be said to be illegal or improper.
12. Under the circumstances, I find no merit in the revision petition. It is accordingly dismissed. No costs.
13. This Court greatly appreciates the assistance rendered by Sri Vilas V, Afzalpurkar, Amicus Curiae which enabled this Court to dispose of this case without much difficulty and this Court accordingly records its appreciation for his valuable assistance.