ORDER
1. The appellant is one of the creditors in the insolvency proceedings in respect of the first respondent. In I.P.No.5 of 1990 an interim receiver was appointed on 1.2.1990. At this stage an application was filed under Section 4 and 5 of the Provincial Insolvency Act for directions to the interim receiver toinspect the movables in the premises at No.29, Muthuranga Mudali Street, Erode, which was occupied by the insolvent, namely, the first respondent as a tenant and to take an inventory of the same. This application was ordered by the Additional Sub-Judge, Erode, who also gave a direction that after the inventory is taken the movables shall be sold and the proceeds should be deposited to the credit of the said I.P. and to handover vacant possession to the owners. This order was passed in view of the fact that the petition premises was a rented premises and the owner had filed R.C.O.P.No.62 of 1990 for willful default and the monthly rent was Rs. 1,250. Therefore, the continuance of the premises under lock and key without delivering possession to the owner would result in diminishment of the insolvent's property that is available for distribution. Against this an appeal was filed by the insolvent to the District Judge. The District Judge while confirming the order relating to taking an inventory of the movables, selling them and crediting the sale proceeds to the account of the I.P., set aside Clause 1 of the order of the learned Additional Sub-ordinate Judge with regard to delivery of possession of the property. Against this the creditor has filed the present C.M.S.A.
2. Mr. D. Rajagopal, the learned counsel for the appellant submitted that there was no error in the order of the Additional Subordinate Judge, since the interim receiver is bound in law to protect the property of the insolvent and to save it from deterioration or loss. He therefore questioned the correctness of the Appellate Judge reversing the Trial Court's order without assigning any reasons especially when Insolvency Court has power and jurisdiction to protect and preserve the property of the insolvent. He relied on The Official Receiver of Vizagapatnam Mandavilli Mohana Rao v. Villapati Peda Sutyanarayana and Ors., 1945 (2) MLJ 1 which is an order of a Division Bench of our Court where the learned Judges have held,
'There is nothing in the Provincial Insolvency Act which prevents the Insolvency Court from according sanction to an interim receiver to institute suits even against third parties for the vindication of the rights of the debtors in respect of whom an insolvency petition is pending. Hence, a suit by an interim receiver to recover possession of the property of the insolvents which has passed into the hands of third parties is maintainable.'
In that case, the property belonging to the insolvents had passed into the hands of third parties. The learned counsel would submit that there the receiver was permitted to recover properties so that both the insolvency's property is protected and also the body of creditors. Similarly, in this case, deterioration or loss to property is to be prevented. The petition premises was used by the insolvent for carrying on business and to store stocks. Now the business is closed and the stocks were also sold and to keep it under lock and key without any purpose would only result in reduction of the share that the creditors will be entitled to upon final adjudication. He also relied on Johrttal Soni v. Bhanwari Bai, wherein the Supreme Court construed Section 4 of the Provincial Insolvency Act, 1920 and came to the conclusion that the Section has been couched in the widest possible terms and conferscomplete and full powers on the Insolvency Court to decide all questions of title or priority, or of any nature whatsoever, which may arise in the case of insolvency.
3. There is no representation on behalf of the respondents thoughserved.
4. The order of the District Court does not spell out any reason as to why the direction for handing over right and possession has to be set aside. One of the grounds that was raised by the appellant herein before the District Judge was with regard to the right of the insolvent to file an appeal against the order passed by the learned Additional Sub-Judge. The learned District Judge, rightly came to the conclusion that the insolvent was also an aggrieved party and could maintain the appeal. The objection of insolvent to the impugned order was that a direction of this nature to the interim receiver ought not to be given. Apart from this no other reason has been given. The other objection that was raised by the first respondent was that the rents payable in respect of the petition premises was not the income of the first respondent and therefore, they cannot be brought into the insolvent's account. The objections are really unsustainable. The insolvent is the tenant of the premises. The learned Sub-Judge issued the directions since increase in the rental arrears diminishing the property was not in the interests of the body of creditors. The District Judge while coming to a conclusion contrary to this ought to have given reasons. He has not. In the decision reported in Vedamony Nadar Gnanaprakasam Nadar and Ors. v. Messrs. The Palai Central Bank Ltd., Kottayam, AIR 1953 Tra-co.95, the Division Bench held that
' it is incorrect to say that prior to adjudication the Court has no jurisdiction at all to get at the properties of the insolvent and to preserve them. Special provisions in that direction are contained in Sections 20 and 21. These powers are conferred on the Court to see that the property of the insolvent is not wasted or taken out of the reach of the Court during the pendency of the insolvency petition.'
The Supreme Court in Johrilal Soni v. Bhanwari Bai, had construed Section 4 of the Provincial Insolvency Act, which confers not only complete and full powers on the Insolvency Court to decide all questions of title or priority but also questions of any nature whatsoever, which may arise in case of insolvency. In this case, the learned Subordinate Judge had come to the conclusion that it was the interests of the creditors that the insolvent's property should be protected from further loss.
5. The Appellate Court had without any reason reversed the finding. The question raised by the appellant is answered in his favour. The loss to the property of the insolvent cannot be denied in view of the continued accrual of arrears of rent. The first Appellate Court's order must, therefore, be set aside. C.M.S.A. is allowed. No costs.