Venilal Chhaganlal Vs. Virchand Khumchand Shah - Court Judgment

Baker, J.

1. This is an appeal against the decision of the District Judge of Surat sitting in insolvency jurisdiction confirming the order of the Subordinate Judge of Surat appointing a temporary receiver in the case of the present appellant against whom the petition in insolvency has been presented.

2. A preliminary objection is taken by the learned advocate for the respondents that no appeal will lie under Section 75 of the Provincial Insolvency Act inasmuch as the order of the District Court is not an order under Section 4 of the Act. The section of the Act says:-

Subject to the provisions of this Act, the Court shall have full power to decide all questions whether of title or priority, or of any nature whatsoever, and whether involving matters of law or of fact, which may arise in any case of insolvency coming within the cognisance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case.

3. It is contended that Section 4 only applies to cases of question of title or priority and it cannot include all questions arising such as the present one, and in support of this proposition reference is made to the cases of Sambamurthi Ayyar v. Ramakrishna Ayyar ILR (1928) Mad. 337 and of Kalu Ram v. Gitwar Singh AIR (1930) Lab. 592. The case of Sambamurthi Ayyar v. Ramakrishna Ayyar expressly proceeds on Section 75, paragraph 2, and does not altogether apply to the facts before us. So also the case of Kalu Ram v. Gitwar Singh is a case on Section 58, but assuming, in view of the wide terms of Section 4 which gives the Court full power to decide all questions of any nature whatsoever, a second appeal to lie in a matter of this sort, a point we do not think it necessary to decide, it is quite clear that under the Provincial Insolvency Act a second appeal will not lie in this case and for this reason. Section 75 of the Provincial Insolvency Act, after directing in the first paragraph that the order of the District Court, upon such appeal, shall be final, provides that the High Court, for the purpose of satisfying itself that an order made in any appeal decided by the District Court was according to law, may call for the case and pass such order with respect thereto as it thinks fit, and, further, that any such person aggrieved by a decision of the District Court on appeal from a decision of a Subordinate Court under Section 4 may appeal to the High Court on any of the grounds mentioned in Sub-section (1) of Section 100 of the Civil Procedure Code of 1908.

4. It is clear, therefore, in order that a second appeal may lie to the High Court, it must be on a point of law or that the decision must be contrary to law or to some usage having the force of law, or the decision must have failed to determine some material issue of law or usage having the force of law, or there must be a substantial error or defect in the procedure provided by this Code or by any other law for the time being in force, which may possibly have produced an error or defect in the decision of the case upon the merits.

5. In the present case the power to appoint an interim receiver is contained in Section 20 of the Provincial Insolvency Act, The Court when making an order admitting the petition may, and where the debtor is the petitioner ordinarily shall, appoint an interim receiver of the property of the debtor or of any part thereof, and may direct him to take immediate possession thereof or of any part thereof, and the interim receiver shall thereupon have such of the powers conferrable on a receiver appointed under the Code of Civil Procedure, 1908, as the Court may direct. If an interim receiver is not so appointed, the Court may make such appointment at any subsequent time before adjudication, and the provisions of this Sub-section shall apply accordingly.

6. Therefore, under Section 20 the Court is given a discretion to appoint a receiver or not, and if he is appointed, to make him take possession or not. No question of jurisdiction arises, whereas in the present case the Court on evidence before it has thought fit to appoint a receiver, the matter which forms the subject of the second appeal.

7. The order of the first Court is contained on page 7 of the paper book and the reasons given are, it appears, that his debts are heavy; some cheques were returned and the account book of the last year was not forthcoming for some time: it is just and convenient to appoint an interim receiver.

8. On appeal, the learned District Judge considered the circumstances before the Court, namely, that the appellant had heavy debts to pay, that some of his cheques were returned and his accounts were not forthcoming, which were sufficient to justify the order made by the lower Court. The Court, therefore, had evidence before it on which it passed an order under Section 20, which gives it a wide discretion in the matter. No question of law or of an error of procedure arises which would be sufficient to allow the second appeal, and it has been held by this Court in Ranchodji v. Lallu ILR (1882) 6 Bom 304. that where the law leaves a matter within the discretion of a Court and the Court, after proper inquiry and due consideration, has exercised the discretion in a sound and reasonable manner, the High Court will not interfere with the conclusion arrived at, even though it would itself have arrived at a different conclusion.

9. Under these circumstances the appeal must obviously fail and will be dismissed with costs.