Karnataka High Court
Elluru Basavaraj Setty vs Arundhathamma on 15 December, 2021
Bench: M.G.Umapresided Bymguj
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 15TH DAY OF DECEMBER, 2021
BEFORE
THE HON'BLE MRS.JUSTICE M.G.UMA
M.F.A.NO.21287/2010 (IC)
BETWEEN :
ELLURU BASAVARAJ SETTY,
71 YEARS, S/O ELLURU SUBBANNA SETTY,
R/O KAMPLI, BELLARY DISTRICT.
PIN-583 132.
... APPELLANT
(BY SRI SANTOSH MALLIGWAD ADV. FOR
SRI HARSH DESAI, ADV.)
AND :
1. ARUNDHATHAMMA
W/O VEERABHADRAPPA,
60 YEARS,
R/O KANDRA SIDDAPPA STREET,
BELLARY, PIN-583 101.
2. M.PUSHPAVATHI
W/O PADMANABHA SETTY,
58 YEARS,
R/O CHURCH ROAD, MCCA BLOCK,
BENAKA NILAYA, DAVANAGERE,
PIN-577 001.
3. NAGALAKSHMI
W/O SANNA VENKAPPA SETTY,
56 YEARS,
R/O VISHALAKSHI TRADERS,
MAIN ROAD, KOTTUR, KUDLIGI TALUK,
BELLARY DISTRICT, PIN-583 134.
2
4. PADMAVATHI W/O PANDURANGA,
54 YEARS, R/O NO.184,
FLAT NO. G/3,
DAFFODILS APARTMENTS,
GRUHALAKSHMI LAYOUT,
1ST MAIN ROAD, KAMALANAGR,
BANGALORE, PIN-560 079.
5. J.S.BHAGYALAKSHMI ,
W/O J.SUDHAKAR, 51 YEARS,
R/O GURAPPA SWAMY TRADERS,
CAR STREET,
BELLARY PIN-583 101.
6. A.SHANTHA,
W/O AGADI SRINIVASULU,
48 YEARS,
R/O ING VYSYA BANK MANAGER,
HOSUR BRANCH,
BANGALORE-560 001.
7. SAVITHRAMMA
W/O MANJUNATH SETTY,
AGE 46 YEARS, R/O GENERAL STORES,
BELOW TUNGBHADRA GRAMIN BANK,
MAIN ROAD, HB HALLI,
BELLARY DISTRICT-583 212.
8. BHUPAL RAMAKRUSHNA,
S/O BHUPAL RAMACHANDR SETTY, MAJOR,
R/O NEAR SAHAKARI KALYANA MANTAPA,
HOSPET,
BELLAY DIST, PIN-583 201.
9. BHUPAL RAGHAVENDRA,
S/O BHUPAL RAMACHANDR SETTY, MAJOR,
R/O NEAR SAHAKARI KALYANA MANTAPA,
HOSPET,
BELLAY DIST, PIN-583201
10. THE MANGER, SYNDICATE BANK,
KAMPLI, BELLARY DIST-583132
11. GUTTI VEERABASAPPA SETTY,
S/O BASAPPA SETTY MAJOR,
R/O KANDRA SIDDAPPA STREET
3
NEAR VALANJINEYA TEMPLE,
BELLARY PIN-583101.
12. GUTTI VENKATESH,
S/O GUTTI VEERABHADRAPPA SETTY,
MAJOR,
R/O KANDRA SIDDAPA STRTEET,
BELLARY PIN 583101.
13. MANGANAHALLI MANJUNATHA SETTY
FATHERS NAME NOT KNOWN, MAJOR,
R/O BASAVESGHWARA BAZAAR,
H.B.HALLI,
BELLARY DISTRICT, PIN-583 212.
14. B.VEERABHADRAIAH
S/O BADRAIAH, MAJOR,
R/O CAR STREET,
BELLARY, PIN 583101.
15. JUTURU RAMESH,
FATHER'S NAME NOT KNOW,
MAJOR, R/O CAR STREET,
BELLARY DIST-PIN 583101
16. P.KRISHNA RAO,
S/O LATE SUBBAIAH, MAJOR,
R/O D.NO.98/2, WARD-X,
OPP. DR.KATARIA FLOWER STREET,
BELLARY DIST-PIN 583101.
17. AGADI KESHAVA SETTY,
FATHER'S NAME NOT KNOW, MAJOR,
R/O MAIN ROAD, GULLEDGUDA,
BAGALKOT PIN-587203.
18. JANADRI SATHYANARAYAN SETTY,
S/O JANADRI VENKANNA SETTY,
MAJOR , BASAVESWARI NAGAR,
H.B.HALLI,
BELLARY PIN-583212.
19. GULIDALA HANUMANTHA SETTY,
S/O GULIDAL VENKANNA SETTY, MAJOR,
R/O BESIDES SRUTHI PRINTING PRESS,
BASAVESWARA BAZAAR,
4
H.B.HALLI,
BELLARY DISTRICT, PIN-583212.
20. C.MALLANA GOUDA
S/O BASAVANA GOUDA,
AGE 46 YEARS,
R/O VELAGODHAL VILLAGE,
HOSPET TQ,
BELLARY DISTRICT, PIN-583132.
21. VIRUPAKSHA GOUDA
S/O BASAVANA GOUDA,
AGE 44 YEARS, R/O BELAGODHAL VILLAGE,
HOSPET TQ,
BELLARY DISTRICT, PIN-583132.
22. CHANNANA BOUDA
S/O BASAVANA GOUDA,
AGE 42 YEARS,
R/O BELAGODHAL VILLAGE ,
HOSPET TQ,
BELLARY DISTRICT, PIN-583132.
23. DHARASHI HANUMANTHASETTY
S/O ANJANEYALU, AGE MAJOR,
R/O D.NO6/77 DAILRY MARKET,
MAIN ROAD KAMPLI,
BELLARY DISTRIT, PIN-583132
24. CHALAGALLA VENKATASUBBA RAO
S/O VENKATA SUBBAIAH
R/O BHARATH TALKIES, KAMPLI,
BELLARY DISTRICT, PIN-583132.
25. DOROJI SRILATHA
W/O DOROJI SRIDHAR SETTY ,
MAJOR, R/O NEAR NAGARESHWAR TEMPLE,
KAMPLI,
BELLARY DISTRICT, PIN-583132.
26. BASAVAIAH SETTY,
R/O SYNDICATE BANK KAMPLI,
MAJOR, BELLARY DISTRICT, PIN-583132.
27. MEERA BAI W/O PUNDALIK,
C/O VENKATESHWARA JEWELLY MART,
5
MAIN BAZAAR KAMPLI,
BELLARY DISTRICT, PIN-583132.
28. VENKASUBBA RAO,
S/O DHARASI VENKATAPPA
MAJOR,
C/O VENKATA KRISHNA TRADING COMPANY,
R/O NERS NAGARESHWAR TEMPLE,
KAMPLI,
BELLARY DISTRICT, PIN-583132.
29. G.KRISTAIAH SETTY,
S/O G.NARASAIAH, MAJOR,
C/O VENKATA KRISHNA TRADING COMPANY,
R/O NERS NAGARESHWAR TEMPLE,
KAMPLI,
BELLARY DISTRICT, PIN-583132.
30. BYASANI KOTESHWARA RAO,
S/O BYASANI KOTAIAH, MAJOR,
C/O VENKATA KRISHNA TRADING COMPANY,
R/O NERS NAGARESHWAR TEMPLE,
KAMPLI,
BELLARY DISTRICT, PIN-583132.
... RESPONDENTS
(BY SRI J.S.SHETTY ADV. FOR R.1, R.2, R.4, R.6.
SRI SHARAD MAGADUM ADV. FOR R.5.
NOTICE TO R.3 AND R.7 TO R.30 : SERVED)
THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER
SECTION 75(2) OF THE PROVINCIAL INSOLVENCY ACT, 1920,
PRAYING THIS COURT TO SET ASIDE THE JUDGMENT & ORDER
DATED 19.11.2009 IN I.C.NO.1/1996 PASSED BY THE COURT
OF THE ADDITIONAL DISTRICT JUDGE AT BELLARY, BY
ALLOWING THIS MISCELLANEOUS FIRST APPEAL, IN THE
INTEREST OF JUSTICE.
THIS APPEAL COMING ON FOR FINAL HEARING THIS
DAY, THE COURT DELIVERED THE FOLLOWING:
6
: JUDGMENT :
The appellant is before this Court impugning the
judgment and decree dated 19.11.2009 passed in
insolvency case No.1/1996 on the file of the
Additional District Court at Ballary ("the Trial Court"
for short).
2. Brief facts of the case are that one Elluru
Subbanna Setty filed insolvency case No.1/1996
before the Trial Court seeking declaration that he is
the insolvent. It is stated that he has given the details
of property owned by him in Schedule-A and list of
creditors in Schedule-B, appended to the petition. The
Schedule properties morefully described in Schedule-
A appended to the petition consist of a house
property, a medical shop and an agricultural land
measuring 7.53 acres. During the pendency of the
insolvency petition, the original petitioner Sri.Elluru
Subbanna Setty died on 13.06.2007 and his legal
representatives were brought on record as petitioner
Nos.1(a) to 1(h). It is stated that an official receiver
was appointed by the Trial Court with a direction to
take possession of the schedule properties and
accordingly, on 10.09.2007, the official receiver has
taken possession of the schedule properties to deal
with it in accordance with the direction of the Trial
Court.
3. It is stated that during the pendency of the
insolvency petition, petitioner No.1(b) to 1(h) who are
daughters of deceased Elluru Subbanna Setty
colluding with the creditors who are named in
schedule-B, filed application I.A.No.20 before the Trial
Court reporting that the daughters have paid the
amount that was due to the creditors and similarly the
creditors have admitted that they have received the
dues from the daughters. I.A.No.21 was filed by the
present appellant seeking direction to the creditor
Nos.1 to 12 and 16 to 23 to produce the documents
to substantiate their claim on the ground that they
are the bogus creditors who are not due any amount
to be paid from out of the properties left behind by
the deceased Elluru Subbanna Setty.
4. The trial Court considering the rival
contentions allowed I.A.No.20 and directed the
receiver not to take possession of the property
and I.A.No.21 was came to be dismissed.
However, liberty is reserved with petitioner
No.1(a), who is appellant herein to file a suit for
partition for his share in the petition schedule
property keeping open the objections regarding
respondent Nos.1 to 12 and 16 to 23 as they are
bogus creditors. The trial Court also directed the
receiver to deliver back the property from whom
he had taken its possession.
5. Being aggrieved by the said judgment
and decree passed by the insolvency Court, the
appellant is before this Court, seeking to set-aside
the same in the interest of justice.
6. Heard learned counsel Sri.Santosh
Malligwad., for Sri.Harsh Desai., for the appellant,
learned counsel Sri.J.S.Shetty., for respondent
Nos.1, 2, 4 to 6 and learned counsel Sri.Sharad
Magadum., for respondent No.5.
7. Learned counsel for the appellant
submitted that the appellant is the son of
deceased Elluru Subbanna Setty and he was
arrayed as petitioner No.1(a) before the trial
Court. The petitioner Nos.1(b) to 1(h) are the
daughters of said deceased Elluru Subbanna
Setty, who have concocted the Will said to have
been executed by the Elluru Subbanna Setty. The
appellant filed the suit O.S.No.148/1999 against
his sisters, seeking declaration that the Will said
to have been executed by deceased Elluru
Subbanna Setty is null and void. Accordingly, the
said suit was came to be decreed on 17.12.2005.
R.A.Nos.21/2006 and 12/2016 were filed by the
sisters, challenging the judgment and decree
passed by the trial Court. Those appeals were
dismissed. R.S.A No.866/2007 preferred before
this Court was also dismissed vide judgment
dated 21.06.2012. Therefore, the Will put forth by
petitioner Nos.1(b) to 1(h) before the trial Court
is held to be a null and void and they cannot rely
upon the same.
8. Learned counsel further submitted that
during the pendency of the insolvency petition
before the trial Court, the son-in-laws of deceased
Elluru Subbanna Setty have sold the schedule
properties in favour of 3rd parties under registered
sale deeds. Since, the sale was during the
pendency of the insolvency petition, the appellant
is entitled to ignore the same. He further
submitted that the official receiver had handed
over the possession of the properties in favour of
the sisters as per the directions issued by the trial
Court, which is not in accordance with law. The
finding given by the trial Court that, the appellant
has to workout his remedy by filing a separate
suit for partition and separate possession is also
not in accordance with law.
9. Learned counsel placed reliance on
Section 53 of the Provincial Insolvency Act, 1920
to contend that transfer of the property under the
registered sale deed are void. He also contended
as per Section 67 of the Act, the appellant is
entitled to the schedule properties, which remains
after satisfying the creditors. Therefore, learned
counsel for the appellant prays for allowing the
appeal by setting aside the impugned order
passed by the trial Court in the interest of justice.
10. Per contra, learned counsel for
respondent Nos.1, 2, 4, 5 and 6 opposing the
submissions made by the learned counsel for the
appellant submitted that the impugned order
passed by the trial Court is just and proper under
the facts and circumstances of the case. During
the lifetime of deceased Elluru Subbanna Setty,
he had executed a registered Will in favour of his
son-in-law and on the basis of the same, the
beneficiaries have sold the properties in favour of
3rd parties. The purchasers of the properties are
not the parties before this Court. The petitioner
cannot seek share in the properties in the
insolvency proceedings and hence, he prays for
dismissal of the appeal.
11. Learned counsel for respondent No.5
has not addressed his argument. The other
respondents have remained absent in spite of
service of notice.
12. Perused the materials on record.
13. The point that would arise for
consideration of this Court is as follows:
"Whether the impugned order
dated 19.11.2009 passed in IC
No.1/1996 by the trial Court, is liable to
be set-aside ?"
14. My answer to the above point is in the
'negative' for the following:
: REASONS :
15. The appellant is the son of late Elluru
Subbanna Setty. Respondent Nos.1 to 7 are the
daughters of said Elluru Subbanna Setty, who are
arrayed as petitioner Nos.1(b) to 1(h) before the
trial Court. Respondent No.8 to 13 are said to be
the creditors, who are named by the original
petitioner-Elluru Subbanna Setty in the insolvency
petition. These respondent Nos.1 to 7 and 8 to 13
said to have filed I.A.No.20 before the trial Court
reporting that the amount that was due in favour
of the creditors were paid by the daughters of
deceased Elluru Subbanna Setty, which was
accepted by the trial Court. Therefore, respondent
Nos.8 to 30 have not appeared before the Court
as they are no more interested in the claim made
in the insolvency petition.
16. Now it is the contention of the appellant
that the creditors set up by his father-Elluru
Subbanna Setty in the insolvency petition are all
bogus creditors and nothing was due to them by
the petitioner Elluru Subbanna Setty. The said
Elluru Subbanna Setty is none other than the
father of the appellant herein who stepped into
the shoes of his father to claim the property in
question. Under such circumstances, the appellant
cannot contend that they are bogus creditors, who
are named by his own father as creditors.
Moreover, respondent Nos.1 to 7, who are the
daughters of the deceased Elluru Subbanna Setty
claim that they have repaid the amount that was
due to the said creditors, which was admitted by
the creditors. Under such circumstances, the
insolvency petition filed originally by Elluru
Subbanna Setty was came to be dismissed by
allowing the I.A.No.20 filed by the daughters.
17. The appellants herein have filed
I.A.No.21 seeking direction to the creditors to
produce the documents to substantiate their
claim, which was rejected by the trial Court while
reserving liberty to the appellant to file a suit for
partition for his share in the petition schedule
properties by keeping open the objections
regarding respondent Nos.1 to 12 and 16 to 23 as
bogus creditors. Admittedly, no such suit for
partition and separate possession is filed by the
appellant herein till today. On the other hand, the
facts narrated above disclose that the appellant
had filed suit O.S.No.148/1999 seeking
declaration that the Will said to have been
executed by late Elluru Subbanna Setty is null and
void and it is stated that the said suit was came to
be decreed by the trial Court vide judgment and
decree dated 17.12.2005. The Regular Appeal and
Regular Second Appeal were came to be
dismissed by the first and second appellate
Courts. However, the fact remains that the
beneficiaries under the Will said to have sold the
schedule 'A' properties in favour of the 3rd parties
under different registered sale deeds. Admittedly,
those persons, who purchased the properties
under the registered sale deeds are not the
parties either in the insolvency case before the
trial Court or before this Court in this appeal.
18. Learned counsel for the appellant has
relied on Section 53 of the Provincial Insolvency
Act, 1920 which deals with avoidance of voluntary
transfer. Section 53 found in part 3 of the Act
deals with effect of insolvency on antecedent
transactions. As per this provision any transfer of
property not been transfer made before and
inconsideration of marriage or made in favour of a
purchaser or encumbrancer in good faith and for
valuable consideration, if the transferor is
adjudged insolvent [on a petition presented],
within two years after the date of the transfer, be
voidable as against the receiver and may be
annulled by the Court. But in the present case
admittedly, original petitioner-Elluru Subbanna
Setty is never declared as insolvent and he has
not transferred the properties in question under
the sale deeds in favour of 3rd parties. Under such
circumstances, the appellant cannot rely on 53 of
the Act.
19. Similarly learned counsel for the
appellant placed reliance on Section 67 of the Act
to contend that the properties in question, which
were in possession of the receiver should have
been reverted back in his favour. Section 67 of
the Act deals with rights of insolvent to any
surplus property, after payment of the creditors in
full along with the interest and expenses of the
proceedings. In the present case, the creditors
have admitted that they have received entire
amount that was due in their favour. Respondent
Nos.1 to 7, who are petitioner Nos.1(b) to 1(h)
before the trial Court have filed a
memo/application stating that they have paid the
amount to the creditors and therefore, they are
entitled for possession of the properties. The said
memos were accepted by the trial Court and
I.A.No.20 was came to be allowed. Under such
circumstances, the appellant cannot also place
reliance on Section 67 to claim right over the
property as this Section 67 deals with the right of
the insolvent to the surplus property. Again the
trial Court has not declared either Elluru
Subbanna Setty or the appellant herein as
insolvent. But before adjudication of the matter
on merits, the creditors were paid by the
daughters of Elluru Subbanna Setty and the same
was acknowledged by the Court. Under such
circumstances, neither Section 53 nor Section 67
of the Act will come to the rescue of the appellant
in any manner.
20. The next contention raised by the
appellant that since the properties were left
behind by his father Elluru Subbanna Setty and
even the said Will said to have been executed by
him is declared as null and void, the appellant is
entitled for a share over the schedule properties.
The said claim made by the appellant is entirely
outside the scope of the petition filed by the
original petitioner seeking to declare him as
insolvent. Moreover, admittedly, the properties
were sold by the beneficiaries under the
registered Will and the purchasers are not the
parties before this Court. Strangely, the appellant
has not taken any step to seek declaration that
the said sale deeds, which were executed on the
basis of registered Will are not binding on him for
the reasons best known to him. However, learned
counsel for the appellant submits that a suit for
partition and separate possession is already filed
and pending before the trial Court and he will take
appropriate defence in the said suit. Filing and
pendency of the partition suit before the trial
Court was never highlighted even while filing the
appeal and also while addressing the argument.
However when the suit for partition and separate
possession of the schedule properties is pending
before the trial Court the parties are at liberty to
take necessary defence in the said suit. The claim
of the appellant that the impugned order passed
by the trial Court in the present case is to be set-
aside cannot be accepted, as there are no merits
in the same. Hence, I answer the above point in
the negative and proceeded to pass the following;
ORDER
The appeal is dismissed as divide of merits.
Sd/-
JUDGE
EM/AM
