Donthi Srihari Donthi Kailasam vs Ch.Devarajam
2022 Latest Caselaw 3143 Tel

     HON'BLE SMT. JUSTICE G. ANUPAMA CHAKRAVARTHY

         CIVIL REVISION PETITION No.3657 of 2011

ORDER :

This revision petition is arising out of the orders in

I.A.No.361 of 2010 dated 19th October 2010 in I.P.No.8 of 2003 on

the file of Senior Civil Judge, Jagtiyal.

2. The revision petitioner has filed insolvency petition before

the Senior Civil Judge's Court, Jagtiyal. His case before the trial

Court was that he used to run a retail wine shop under the name

and style of 'Himalaya Wines' at Mallapoor, which was taken on

lease from one Nagula Gangadhar by borrowing amounts from the

respondents to a tune of Rs.4,85,000/-. There were 17 respondents

arrayed in the insolvency petition. It is the further case of the

revision petitioner that he gave Rs.50,000/- to the original owner as

goodwill and paid Rs.3,00,000/- rentals to the Government. It is

the specific contention of the revision petitioner that the villagers

of Mallapoor Ikya Sangham demanded Rs.1,00,000/- from him for

development of the village and as he refused to pay the said

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amount, they passed a resolution not to purchase liquor from his

shop and for a period of one month, there was no business for him.

3. Later, the petitioner agreed to give Rs.50,000/- to the Ikya

Sangham and that the customers of the shop have not paid him the

amounts for the liquor purchased by them and were due to him in a

sum of Rs.1,00,000/-. It is his case that due to the downfall of the

business and also due to the pressure and threatenings by the

respondents to repay the debts, he was constrained to file the

insolvency petition showing the B-Schedule property as the sole

property available to repay the debts to all the 17 respondents. In

the A-Schedule, the petitioner has given the particulars of amounts

payable by him to each of the respondents, totalling to

Rs.4,85,000/-.

4. It is the contention of the revision petitioner that the I.P. was

dismissed for non-prosecution against R-3 to R-7. An

Interlocutory application was filed by the revision petitioner

praying the Court to appoint a Receiver to take possession of the

B-Schedule property and the trial Court accordingly appointed the

GAC, J CRP.No.3657 of 2011

Advocate-Receiver pending disposal of the Insolvency Petition.

The respondents filed a petition i.e. I.A.No.318 of 2005 praying to

direct the Receiver to sell the B-Schedule property and deposit the

sale proceeds in to the Court, for which, the petitioner filed counter

opposing the petition on 25.08.2005.

5. Heard learned counsel for petitioner and the counsel for the

respondents and also perused the record.

6. It is urged by the learned counsel for petitioner that the order

of the trial Court is arbitrary, since the same was passed after

dismissal of the insolvency petition itself for default on

14.07.2006. It is further urged that the petition filed by the

petitioner herein in I.A.No.361 of 2010 to restore the insolvency

petition by setting aside the order dated 14.07.2006, was dismissed

by the trial Court with an observation that "the petitioner failed to

explain how the petition is within limitation and which special

statute, if any, empowers him to seek the relief of setting aside the

sale dated 14.07.2006".

GAC, J CRP.No.3657 of 2011

7. On the other hand, it is urged by the learned counsel for

respondents that the trial Court has rightly dismissed the I.A. as the

petition was not filed within the period of limitation. It is further

contended that the specific provision of statute was also not

mentioned in the petition. Therefore, he prayed to dismiss the

present revision petition as it is devoid of merits.

8. The record reveals that I.P.No.8 of 2003 was dismissed for

default on 14.07.2006 and on the same day, the Court directed the

receiver to sell the B-Schedule property in public auction and

distribute the amount among the creditors. Accordingly, the

Advocate-Receiver had auctioned the property of the petitioner i.e.

the house, which was knocked down by the respondents herein for

Rs.50,000/-. The Receiver, after receiving the auction amount,

filed a report before the Court and another I.A.No.229 of 2003 (for

appointing Receiver) underwent several adjournments and the trial

Court has closed the said I.A. on 11.12.2009, ordering distribution

of an amount of Rs.26,190/- to Respondent No.1 and Rs.18,710/-

to Respondent No.2 out of the auction amount. The record further

reveals that I.A.Nos.32 and 33 of 2010 (cheque petitions) were

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filed by the respondents 1 and 2 for issuing cheques in their favour

for the said amounts. At that point of time, I.A.No.361 of 2010

was filed by the revision petitioner seeking to set aside the order

dated 14.07.2006.

9. Admittedly, the trial Court has dismissed the insolvency

petition i.e. I.P.No.8 of 2003 for default on 14.07.2006. Once the

main petition is dismissed for default or disposed of either way, all

the miscellaneous applications therein shall stand closed.

Therefore, in the present case, the trial Court ought not to have

passed orders in the miscellaneous applications when the main I.P.

itself was dismissed for default earlier. Miscellaneous applications

cannot be treated as separate applications after the main petition

itself is dismissed. The trial Court has erred in passing

independent orders in the miscellaneous application without there

being main petition pending before the Court. Further, if any

person approaches the Court under the provisions of the Insolvency

Act seeking to declare him as an insolvent, unless and until the

Court declares him as insolvent, the properties of such person shall

not be auctioned or distributed. In the present case, without

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declaring the petitioner as insolvent, the Court below has auctioned

and distributed his property by passing orders in the miscellaneous

application, much after the closure of the main petition, which is a

grave irregularity.

10. In this regard, a reference can be made to the judgment of

Madras High Court in the case of R. Chandra v. N.Allimuthu1,

wherein, it is held that the petitioners cannot be permitted to

withdraw the insolvency petitions filed by them and the Courts also

shall not dismiss such insolvency petitions for non-prosecution, if

rights are accrued to the creditors.

11. In view of the above discussion, this Court is of the

considered view that the trial Court has erred in dismissing the

insolvency petition for default and it further erred in passing orders

in miscellaneous applications without there being the main petition

pending before the Court, and as such, any orders passed by the

trial Court in I.P.No.8 of 2003 on the file of Senior Judge's Court,

Jagtiyal on or after 14.07.2006, are liable to be set aside.

CMSA.No.32/2018, dt.22.03.2022

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11. Accordingly, the revision petition is allowed. Consequently,

the impugned order dated 19.10.2010 passed in I.A.No.361 of

2010, is set aside. No order as to costs.

Pending miscellaneous applications, if any, shall stand

closed.

_________________________________ G.ANUPAMA CHAKRAVARTHY, J Date: 29.06.2022

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