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Mallampati Kondayya And Others v. The Official Receiver, Nellore And Others.
Structured Summary of the Opinion (Delivered by Viswanatha Sastri J.)
Factual and Procedural Background
The appeals arise from interlocutory orders made in insolvency petition I.P. No. 3 of 1949 before the Subordinate Judge, Nellore. China Kondiah was adjudicated insolvent on 12 October 1949 on a creditors' petition. The Official Receiver filed two applications in 1950 (I.A. No. 208 and I.A. No. 209) seeking declarations and possession orders concerning rights under a timber contract and logs of timber allegedly belonging to the insolvent.
The Subordinate Judge appointed a Commissioner to take possession of the logs. Appellants in L.P.A. Nos. 58 and 59 applied by I.A. No. 276 to exclude certain logs (bearing marks "Coupe No. 36" and "Coupe No. 46") from seizure; the Subordinate Judge ordered seizure only of logs marked "Coupe No. 19" and directed release of other unmarked logs (order dated 6 April 1950).
While the Subordinate Court was closed for the midsummer vacation, the Official Receiver applied to this Court in C.M.P. Nos. 4393 and 4394 (1950) for transfer of I.P. No. 3 to the High Court's file and for orders requiring seizure of unnumbered logs; Basheer Ahmed Sayeed J. made ex parte orders on 3 May 1950 calling for the records and directing seizure of all unnumbered logs (in addition to Coupe No. 19), and ordered retransmission of the records to the Subordinate Court.
Further petitions (C.M.P. Nos. 5333–5335 of 1950) were filed by a person professing to be a creditor seeking the records and removal of the Commissioner; Basheer Ahmed Sayeed J. made an interim ex parte appointment of a Commissioner (C.M.P. No. 5334, 14 June 1950). On final hearing before Panchapagesa Sastri J. (27 July 1950), those petitions were dismissed on procedural grounds (failure to disclose prior applications), without going into merits. Several Letters Patent Appeals (L.P.A. Nos. 58–59 and 71–73, and a separate L.P.A. No. 74) were filed challenging the various orders described above.
Legal Issues Presented
- Whether, and to what extent, this High Court has power under Clause 13 of the Letters Patent or Section 24 of the Civil Procedure Code (CPC) to call for records or withdraw insolvency proceedings from a mofussil (subordinate) Court for the purpose of making interlocutory orders and then retransferring the proceedings to the subordinate Court.
- Whether the ex parte vacation orders made by a learned Judge of this Court (Basheer Ahmed Sayeed J.) directing seizure of logs and calling for records were within the jurisdiction of this Court.
- Whether an order refusing transfer of applications in an insolvency petition is a "judgment" appealable under Clause 15 of the Letters Patent (relevant to L.P.A. No. 74).
Arguments of the Parties
Official Receiver (as described in the opinion)
- Sought an order transferring I.P. No. 3 of 1949 to this Court's file (during the midsummer vacation) and directions to the Commissioner to seize logs alleged to belong to the insolvent that bore no coupe number.
- Requested that records be called for and that, after directions were given, the proceedings be retransmitted to the Subordinate Judge, Nellore.
Appellants (as described in the opinion)
- Appellants in L.P.A. Nos. 58 and 59 objected (preliminary objection) that the applications heard by Basheer Ahmed Sayeed J. during vacation were incompetent and that the orders passed by that learned Judge were without jurisdiction.
- A separate applicant (professing to be a creditor) sought orders calling for records and removal of the Commissioner; that applicant was criticized by Panchapagesa Sastri J. for failing to disclose prior applications made by the Official Receiver.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| V.S.A. Krishna Mudaliar v. V.S.A. Sabapathi Mudaliar (Full Bench) | Interpreted Clause 13 of the Letters Patent to permit removal of a case from a mofussil Court to the High Court's file for trial and determination, but not merely to enable the High Court to pass interlocutory orders and then re-transfer the case. | The Court relied on the Full Bench's limitation of Clause 13 to conclude that Clause 13 does not justify calling records merely to pass interlocutory orders and then retransferring the matter to the subordinate Court. |
| Jumna Bai v. S. Rm. M. Rm. Ramanathan Chettiar | Presented an earlier view (by Ramesam, J.) that was at variance with the Full Bench's holding on Clause 13 (the Full Bench dissented from Ramesam J.'s view). | The opinion records that the Full Bench dissented from the view in this case; the Full Bench interpretation controls the Court's conclusion regarding Clause 13. |
| Narasa Reddi v. Hajee Tar Mohamed Ayub Sail (decision of Curgenven, J.) | Held that under S. 24(1)(b) CPC the High Court does not have power to transfer an insolvency petition pending in a subordinate mofussil Court to the original side of the High Court to be tried in the High Court's original insolvency jurisdiction. | The Court expressed respectful agreement with Curgenven J.'s decision and applied the same principle to hold that the application to transfer I.P. No. 3 and the consequent orders were without jurisdiction. |
| C.T. Narasa Reddi v. Hajee Tar Mahomed Ayoob Sait | Stands for the proposition that an order refusing transfer is not a "judgment" and therefore not appealable under Clause 15 of the Letters Patent. | The Court applied this principle to dismiss L.P.A. No. 74 (appeal against an order refusing transfer), holding that the refusal of transfer was not a “judgment” appealable under Clause 15. |
Court's Reasoning and Analysis
The Court considered two possible bases for the High Court's actions: Clause 13 of the Letters Patent and Section 24 of the Civil Procedure Code.
On Clause 13, the Court observed that Clause 13 applies to suits and referred to a Full Bench decision (V.S.A. Krishna Mudaliar v. V.S.A. Sabapathi Mudaliar) which holds that Clause 13 permits the High Court to remove a case from a mofussil Court to its file for trial and determination, but does not authorize mere withdrawal of records solely to make interlocutory orders and then retransmit the case. The opinion emphasises that the applications before the Court sought only interlocutory directions (seizure orders) with retransmission to the Subordinate Court, and therefore Clause 13 could not properly be invoked to justify the course taken.
Turning to Section 24 CPC, the Court analyzed the statutory scheme: Section 24 permits withdrawal of suits or other original proceedings from subordinate Courts where the High Court is "competent to try or dispose of" such matters. The Court reasoned that S.24 presupposes the withdrawing Court has jurisdiction to try and dispose of the matter; the mere procedural power to call records would not vest substantive jurisdiction if other enactments exclude such jurisdiction.
The Court applied this to insolvency proceedings by reference to the limits set by the Presidency Towns Insolvency Act. It concluded that the High Court's original insolvency jurisdiction is constrained by that Act and that the High Court cannot, in its original insolvency jurisdiction, administer a scheme provided by the Provincial Insolvency Act applicable in the mofussil. Consequently, the High Court was not "competent to try or dispose of" the insolvency petition as required by S.24(1)(b)(i). The Court also noted that the Appellate Side cannot treat its Original Side as a subordinate Court for the purposes of S.24(1)(b)(ii).
The Court accepted and followed the reasoning of Curgenven, J. in Narasa Reddi v. Hajee Tar Mohamed Ayub Sail to the effect that S.24(1)(b) does not empower the High Court to withdraw an insolvency petition pending in a mofussil subordinate Court to the High Court's original side for trial. On that combined statutory and precedential basis the Court concluded that the applications to transfer I.P. No. 3 and the orders made by the learned Judge were without jurisdiction.
The Court also treated, as a separate procedural point, the established rule that an order refusing transfer is not a “judgment” appealable under Clause 15 of the Letters Patent, relying on the cited precedent to dismiss L.P.A. No. 74.
Holding and Implications
Core Rulings:
- L.P.A. Nos. 58 and 59 of 1950 — ALLOWED with costs.
- L.P.A. Nos. 71, 72 and 73 of 1950 — DISMISSED without costs.
- L.P.A. No. 74 of 1950 — DISMISSED (no order as to costs).
Implications:
- The Court held that the applications made to the High Court (during the midsummer vacation) seeking transfer of the insolvency proceedings for the purpose of making interlocutory orders, and the orders made on those applications, were without jurisdiction because neither Clause 13 of the Letters Patent nor S.24 of the Civil Procedure Code authorises such a course in the context of insolvency petitions pending in mofussil Courts.
- As a direct consequence, the appeals by the assignees (L.P.A. 58 & 59) succeeded; the appeals challenging the dismissal of the creditor's petitions (L.P.A. 71–73) failed. The appeal against refusal to transfer (L.P.A. 74) was held not to be maintainable as an appeal under Clause 15 and was dismissed.
- No new principle of law was declared beyond the Court's application and reaffirmation of existing authorities and statutory interpretation; the decision rests on the application of prior authorities and the statutory limitations on the High Court's original insolvency jurisdiction as described in the opinion.
This summary is confined strictly to information appearing in the provided opinion. No facts, holdings, or implications have been added beyond what is contained in that text.
(Delivered by Viswanatha Sastri J.)
These five appeals under Clause 15 of the Letters Patent arise out of orders passed in the course of an insolvency petition I.P No. 3 of 1949 on the file of the Court of the Subordinate Judge, Nellore. One China Kondiah was adjudicated an insolvent in I.P No. 3 of 1949 on 12th October 1949 on a creditors' petition. The Official Receiver of Nellore filed I.A No. 208 of 1950 in I.P No. 3 of 1949 for a declaration that an assignment of the insolvent's rights under a timber contract made by him in favour of his brothers-in-law was collusive, nominal and devoid of consideration and that the insolvent retained the benefit of the said contract. He also applied for an order setting aside the assignment and for being put in possession of the timber which was the subject matter of the contract. The Official Receiver also filed another application I.A No. 209 of 1950 for taking possession of logs of timber alleged to have been cut and transported by the assignees from the insolvent but which really belonged to the insolvent. The learned Subordinate Judge appointed an Advocate of Rajah, mundry as a Commissioner to take possession of the logs of timber claimed to belong to the insolvent. Thereupon the appellants in L.P.A No. 58 and 59 of 1950 applied in I.A No. 276 of 1950 for an order that the timber from coupes Nos. 46 and 36 belonged to them under contracts entered into by themselves and were therefore not liable to be seized by the Commissioner. The Court by its order directed the Commissioner to take charge only of those logs of timber bearing the mark “Coupe No. 19” without interfering with logs bearing mark “Coupe No. 36 and 46”. The learned Judge also directed that all other logs not bearing mark “Coupe No. 19” should be released by the Commissioner. This order was passed on 6th April 1950.
The Official Receiver of Nellore applied to this Court during the midsummer vacation in C.M.P No. 4393 and C.M.P No. 4394 of 1950 for a transfer of I.P No. 3 of 1949 from the Court of the Subordinate Judge of Nellore to this Court, for an order directing the commissioner who had already been appointed by the Subordinate Judge's Court of Nellore to seize the logs of timber which bore no number but which the Official Receiver alleged belonged to the insolvent, and for a further order for retransmission of the records to the Court of the Subordinate Judge of Nellore immediately this Court made an order giving directions to the Commissioner. The Court of the Subordinate Judge of Nellore happened to be closed for the midsummer holidays and there, fore those applications were filed in this Court and were dealt with by Basheer Ahmed Sayeed J. C.M.P No. 4393 of 1950 was ordered and the records of L.P No. 3 of 1949 were called for. C.M.P No. 4394 was also ordered and the Commissioner was directed to seize all logs which did not bear any coupe number in addition to the logs which bore coupe No. 19. The records in I.P No. 3 of 1949 were also directed to be retransmitted to the Sub Court, Nellore. These orders were made by the learned vacation Judge ex parte on 3rd May 1950. Against these two, order L.P.A Nos. 58 and 59 of 1950 have been filed by the assignees from the insolvent of his rights under the timber contract. A person professing to be a creditor of the insolvent filed C.M.P Nos. 5333 to 5335 of 1950 on the file of this Court for calling for the records in I.P No. 3 of 1949 to this Court for a direction that the Commissioner appointed in I.P No. 3 of 1949 should be directed to seize all logs except those bearing Nos. 36 and 46 for the removal of the Commissioner already appointed by the learned Subordinate Judge of Nellore and for the appointment of a fresh Commissioner in his stead. These petitions also came on for disposal before Basheer Ahmed Sayeed J. who passed an order ex parte in C.M.P No. 5334 of 1950 on 14th June 1950 appointing Mr. Yella Reddi, an Advocate of Rajah, mundry, as an interim Commissioner pending the disposal ef the main application (C.M.P No. 5335 of 1950) for removal of the Commissioner already appointed. C.M.P 5333 to 5335 of 1950 common for final hearing before Panchapagesa Sastri J. on 27th July 1950 and the learned Judge dismissed them on the ground that the applicant had not dealt fairly with the Court and had failed to disclose previous applications that had been made by the Official Receiver for the very same reliefs. The learned Judge did not go into the merits of these applications. L.P.A No. 71 of 1950 is filed against the order of Panchapagesa Sastri, J. dismissing C.M.P No. 5333 of 1950 an application for calling for the records of I.P No. 3 of 1949 to this Court. L.P.A No. 72 of 1950 is against the order in C.M.P No. 5334 dismissing the application for the appointment of an interim commissioner, L.P.A No. 73 of 1950 is directed against the order dismissing C.M.P No. 5335 of 1950 for removal of the commissioner appointed by the learned Subordinate Judge of Nellore. When these appeals came on for hearing, Mr. M.S Ramachandra Rao, the learned advocate for the appellants in L.P.A Nos. 58 and 59 of 1950 took a preliminary objection that the applications which had been made during vacation time to Basheer Ahmed Sayeed, J. were in competent and the orders passed by the learned Judge on those applications were without jurisdiction.
The power of this Court to remove to its own file insolvency proceedings pending in mofussil Courts and to pass interlocutory orders in respect of those proceedings is sought to be rested on Cl. 13 of the Letters Patent or S. 24 of Civil Procedure Code. Cl. 13 of the Letters Patent applies to suits and it has been held by the decision of a Full Bench of this Court in V.S.A. Krishna Mudaliar v. V.S.A. Sabapathi Mudaliar(1) that the clause empowers this Court to remove a case filed in a mofussil Court to its file for trial and determination but not merely to pass an interlocutory order and then to re-transfer it to the Court from which it was withdrawn. To this extent the Full Bench dissented from the view of of Ramesam, J. in Jumna Bai v. S. Rm. M. Rm. Ramanathan Chettiar (2). From the applications presented to this Court and the orders passed by the learned Judge, it is clear that this Court was not called upon to transfer to its own insolvency jurisdiction I.P No. 3 of 1949 and dispose of it—such a course is not permissible for other reasons as will be shown presently—but merely to call for the records in I.P No. 3 of 1949 for the purpose of passing certain interlocutory orders and then transfer the case to the file of the Court of the Subordinate Judge of Nellore in which the insolvency petition had been pending previously. In the view of the learned Judges of the Full Bench, Cl. 13 of the Letters Patent would not apply to such a case.
Under S. 24 Civil Procedure Code the High Court is empowered to withdraw any suit or other original proceeding pending in any Court subordinate to it and try or dispose of the same or transfer the same for trial or disposal to any Court subordinate to it and competent to try or dispose of the same. It is open to question whether S. 24 empowers this Court to withdraw to its file an interlocutory application in a suit or original proceeding pending in a subordinate Court keeping the suit or the original proceeding itself on the file of that Court. S. 24 Civil Procedure Code presupposes that the Court which withdraws a suit, appeal or other proceeding from a Court subordinate to it to its own file would have jurisdiction to try and dispose of the same. The mere fact that a power to withdraw a suit, appeal or other proceedings from a Subordinate Court is conferred by S. 24(1)(b) Civil Procedure Code would not invest the Court so empowered with jurisdiction to try the suit, appeal or other proceeding if the jurisdiction to try the case is excluded by other enactments. So far as insolvency is concerned, the original jurisdiction of this Court is limited by the provisions of the Presidency Towns Insolvency Act and this Court has no “original jurisdiction” over insolvency proceedings which are cognizable by Courts in the mofussil. It cannot transfer to its file an insolvency proceeding pending in a mofussil Court and dispose of it in the exercise of its original insolvency jurisdiction. Nor can the application for transfer be entertained on the Appellate Side of this Court, for the original side of the Court cannot be said to be a “Court Subordinate” to this Court within the meaning of S. 24(1)(b)(ii) Civil Procedure Code so as to attract the operation of that clause. This Court would not be “competent to try or dispose of” the insolvency proceedings sought to be transferred within the meaning of S. 24(1)(b)(i) Civil Procedure Code, because in the exercise of its original insolvency jurisdiction, it is bound by the provisions of the Presidency Town Insolvency Act and cannot administer the law as laid down in the Provincial Insolvency Act. For these reasons it was held by Curgenven, J. in the case in Narasa Reddi v. Hajee Tar Mohamed Ayub Sail that the High Court has no power under S. 24(1)(b) Civil Procedure Code to transfer an insolvency petition pending in a subordinate Court in the mofussil to the original side of this Court to be tried in its original insolvency jurisdiction. The decision rightly interprets the scope and meaning of S. 24(1)(b) Civil Procedure Code and we are in respectful agreement with the conclusions of the learned Judge. It follows therefore that the application for transfer of the proceedings in I.P No. 3 of 1949 made to this Court as well as the orders made by the learned Judge on those applications were both without jurisdiction.
The result is that L.P.A Nos. 58 and 59 are allowed with costs and L.P.A Nos. 71 to 73 of 1950 are dismissed, but without costs.
L.P.A No. 74 of 1950— This is an appeal filed against an order of the learned Judge of this Court refusing to transfer I.A Nos. 208 and 209 of 1950 in I.P No. 3 of 1949 pending on the file of the Court of the Subordinate Judge of Nellore to the Court of the Subordinate Judge of Rajahmundry for trial in the exercise of the insolvency jurisdiction of the latter Court. The objection to the appeal is that it is directed against an order refusing a transfer and such an order has been held to be not a “judgment” and therefore not open to appeal under Cl. 15 of the Letters Patent. See C.T. Narasa Reddi v. Hajee Tar Mahomed Ayoob Sait this reason this appeal has to be dismissed. There will be no order as to costs.
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