P L D 1962 (W (PLP)

6. While deciding issue No. 2, the learned trial Judge held that the sale in question was without consideration and fictitious. Issues Nos. 3, 4 and 5 were also decided against the defendants.

7. After having arrived at the above findings the learned trial Judge decreed the plaintiff's suit in toto. The defendants have come up in appeal.

8. At the very outset, the learned counsel for the appellants stated that in case issue No. 1 is decided against him then he has no further grounds to urge in support of his case. In fact, he confined his arguments solely to issue No.

1. Learned counsel for the appellants urged that the decision of the Insolvency Judge dated the 10th of December 1945, was on an application under section 53 of the Provincial Insolvency Act and was, therefore, not a final order. He further urged that the order in question not being final his clients are not barred from re‑agitating that the title of the suit land vests in them as bona fide vendees for consideration.

9. Learned counsel for the respondents urged that although the application was described to be one under section 53 of the Provincial Insolvency Act, the proceedings in fact were under section 4 of the Act. In order to appreciate the argument, it would be advantageous to reproduce the issue framed in the proceedings referred to above. The issue is: ‑ "Whether the sale, dated the 15th January` 1943, on behalf of the insolvent in favour of the respondents is fictitious, collusive and without consideration and whether it is liable to be set aside under section 53 of the Insolvency Act ? It would also be useful to reproduce the concluding portion of the order which is as follows: ‑ "I, therefore, hold that the sale of the squares of land by the insolvent in favour of the respondents is fictitious and without consideration and thus null and void as against the creditors and the Official Receiver."

10. A perusal of the issue and the concluding portion of the Insolvency Court's order given above would show that the question for determination before Mr. Sham Lal was whether the transfer in question was a mere paper transaction or a genuine one. The question being, one of title could be gone into only under section 4 of the Provincial Insolvency Act, which is wide enough to cover such questions. Padamsi Premchand and others v. Laxman Vishnu Deshpande and others (A I R 1949 Bom. 129) may be referred to in support of this view, wherein it was observed: ‑‑ "In this particular case the Receiver challenged these three deeds of transfer on the ground that they were nominal and fictitious transactions and that they were not intended to transfer the real interest of the insolvent in the properties. Therefore, on the allegation of the Receiver no title passed under these deeds of transfer to the transferee. These transac tions were not voidable but they were void. These transactions were not valid in their inception and at no time did they transfer any title to the transferee. In our opinion transactions which are challenged on the ground of their being fictitious or nominal do not fall within the ambit of section

53. If they do not fall within the ambit of section 53 then section 4 is wide enough to confer upon the Insolvency Court's jurisdic tion to decide whether these transactions were in fact nominal or fictitious."

11. It is an admitted fact that the defendant‑appellants filed an appeal against the order of the Insolvency Judge, dated the 10th of December 1945, in the Court of the District Judge Mianwali. Their appeal was dismissed. They then went up in second appeal to the High Court, which was also dismissed. A perusal of sections 4 and 75 of the Provincial Insolvency Act would show that a second appeal was competent only if the relevant application had been treated by the Insolvency Judge as an application under section 4 of the Insolvency Act. After carefully considering the material on the record, we are of the opinion that the application of the Receiver was treated by the Insolvency Judge as an application under section 4 of the Insolvency Act. The order of the Insolvency Judge, was, therefore, a final order. It is not open to the defendant‑appellants to re‑agitate the matter which had been finally decided by the Insolvency Judge. Section 11, C. P. C. would debar them from taking up this position. The following observation of Sulaiman, J. in Mst. Mahrana Kunwar v. E. V. David, Official Receiver (A I R 1924 All. 40) may be referred to in support of this view: - "In my opinion section 4 of the Act is an enabling section and confers full power on the Insolvency Court to decide all questions of title or priority or of an, nature whatsoever which arise before it, or which it may deem necessary to decide Sub-clause (2) makes "such" decision final and binding for all purposes on all claimants against him. In reality section 5 gives to the Insolvency Court the powers of a Civil Court is to be noted that prior to the passing of this Acts there was a conflict of opinion between this Court and the Calcutta High Court, the view prevailing in the latter Court being that questions of title could be disposed of by a regular suit only. Obviously the enactment of section 4 gives effect to the view which prevailed in this Court. I accept the contention of Dr. Katju that under the new Act if a question of title has been actually raised by a stranger to the Insolvency and decided by the Insolvency Court, the decision is final and the question cannot be re‑opened in a separate regular suit." Sulaiman, J.'s above view was accepted and followed by a Full Bench of the Allahabad High Court in Haji Anwar Khan v. Muhammad Khan and others (1929 All. 105). Dalal and King, JJ., concurred and held that if the matter is once decided even against a stranger by the Insolvency Court, the jurisdiction of the Civil Court would be barred under section 11, C. P. C., Sen, J., however, dissented from this view. The view of the Allahabad Full Bench referred to above was considered and followed by a Division Bench of the Lahore High Court in Ram Ditta Mat Bhalla v. Official Receiver, Lahore and others (A I R 1934 Lah. 365). Agreeing with Agha Haider, J., Tek Chand, J., observed: as follows: - "I agree in the order proposed by my learned brother. I have no doubt with the view of law taken by the majority in Anwar Khan v. Muhammad Khan 1929 All. 105 and by the Calcutta High Court in Badhakishan v. Official Receiver A I R 1932 Cal. 662."

12. If it be held for the sake of argument that the proceed ings in the Insolvency Court were under section 53 of the Provincial Insolvency Act, even then the defendant‑appellants cannot be allowed to re‑open in this suit the points decided by the Insolvency Judge. [See Chella Rangappa v. Yerravenkatagiri Rangappa and others (A I R 1933 Mad. 9)]. The facts of the case were that the Official Receiver challenged an alienation under section 54 of the Provincial Insolvency Act. His application was rejected by the Insolvency Judge. A creditor then applied under section 4 or the Provincial Insolvency Act and asked for a declaration that the sale was in fraud of other creditors. The Insolvency Judge dismissed the petition holding that the creditor was debarred from doing so. The creditor then went up in appeal. It was argued on his behalf in the High Court that section 11, Civil Procedure Code, does not apply to Insolvency proceedings which are not suits, Relying on Ram Kirpal Shukul v. Mst. Rup Kauri (11 I A 37), G. H. Hook v. Administrator‑General of Bengal and others (A I R1921 P C 11) and T. B. Ramchandra Rao and another v. A. N. S. Ramchandra Rao (A I R 1922 P C 80), Jackson and Mockett, JJ., held that section 11, C. P. C., is not exhaustive and the binding force of a previous judgment depends not upon section 11, C. P. C., but upon general principles of law, which apply to proceedings in Insolvency Courts. The appeal was dismissed.

13. After considering the entire material on the record we are of the opinion that the application of the Receiver was treated as one under section 4 of the Provincial Insolvency Act. The proceedings, therefore, were final. It is not open to the defendant‑appellants to re‑open the matter which had been finally adjudicated upon. The defendant‑appellants are debarred from doing so under section 11 of the C. P. C. They are also debarred from taking up this position under the general law, as held by Jackson and Mockett, JJ. in Chella Rangappa v. Yerravenkata giri Rangappa and others.

14. Let it be assumed for the sake of argument that the proceedings in the Court of the Insolvency Judge were under section 53 of the Provincial Insolvency Act. Even then the defendant‑appellants are debarred from re‑opening the question of the nature of the sale after it had been adjudicated upon by the Insolvency Judge. It is provided in section 41 of the Evidence Act, which deals with judgments in insolvency proceedings, that judgment, order, or decree of a competent Court in such matters has the effect of a judgment in rem. See the following authorities (1) Bansiram v. Firm Anandi Ram Mohan and others A I R 1935 Pat. 273. (2) Pita Ram v. Jujhar Singh I L R 39 All.

628. The following observations on pages 629 and 630 of the report deserve consideration: ‑ "The question for our determination is whether under such circumstances, when a claimant who alleges that his property has been wrongly seized under the jurisdiction conferred upon the Insolvency Courts, and who has two alternative remedies for litigating his grievance, can be allowed, after having adopted one alternative and having failed upon the merits, to begin again and to raise the same Issues in another Court. So stated, the proposition would seem to admit of but one answer. We have come to the conclusion that the decision of the Munsif was right and that it can be justified on several grounds. In the first place, we think the decision of the Insolvency Court amounts to conclusive proof as to the title fn respect of the specific things claimed by the applicant not merely as against him, but absolutely, within the meaning of section 41 of the Evidence Act." (3) Irshad Hussain v. Gopi Nath I L R 41 All.

378. The head note may be usefully reproduced: ‑ "Upon certain property, namely, a share in a house having been attached by a receiver in insolvency as the property of the insolvent a claim thereto was preferred by the son and nephew of the Insolvent, who filed an application under section 22 of the Provincial Insolvency Act 1920. Evidence of the title of the applicants was produced before the Insolvency Court; but the application was rejected, and an appeal from the order of rejection was dismissed on the merits. The applicants then filed a regular suit for a declaration of their title to the same property. "Held, that the suit was barred by reason of the previous order of the Insolvency Court." (4) Bhai Prasad v. Mr. S. P. Dass Vakil Receiver 51 I C 113.

15. After carefully considering the arguments of the parties, we are of the opinion that Mr. Sham Lal's order dated the Nth of December 1945, is final and the matter decided therein could not be re‑opened in the present suit. We, therefore, dismiss this appeal with costs. K.B.A Appeal dismissed.