Full Judgment Text
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PETITIONER:
RAJ KUMAR & ANR.
Vs.
RESPONDENT:
OFFICIAL RECEIVER OF THE ESTATE OFM/S. CHIRANJI LAL RAM CHAN
DATE OF JUDGMENT14/12/1995
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
HANSARIA B.L. (J)
CITATION:
1996 AIR 941 1996 SCC (2) 288
JT 1995 (9) 558 1996 SCALE (1)64
ACT:
HEADNOTE:
JUDGMENT:
O R D E R
The only question in this appeal is whether Chiranji
Lal, declared insolvent, had 1/3rd share in the property
items 1 and 3 which was the subject matter before the High
Court.
This appeal by special leave arises from the order in
Second Appeal No.4/75 dated February 15, 1980. The
Insolvency Court initially declared all the three partners
and the partnership firm by name Chiranji Lal Nihal Chand as
insolvents. On appeal filed by Nihal Chand and Sarwan Kumar,
the District Court, by order dated August 29, 1955, declared
them to be not insolvents and set aside the order of the
Insolvent Court. The revision filed in the High Court was
dismissed on September 29, 1959. Thus as far as Chiranji Lal
is concerned, the order declaring him to be insolvent became
final.
The Official Receiver, after taking over the estate,
filed an application under Section 4 of the Provincial
Insolvency Act on August 16, 1966 for a declaration that the
insolvent had 1/3rd share in items mentioned in paras 4, 6
and 7; and 2/3rd share in property listed in para 5 of the
petition. The Insolvency Court declared that he had got
1/3rd share in some properties and 2/3rd share in some
other; but on appeal the District Court declared that
Chiranji Lal had 1/3rd share in Item No.317, 326 in Division
Number 3 in Ludhiana and 1000 sq. yds. in Civil Lines, which
the High Court identified as item number 1 and 3 and held
that Chiranji Lal had 1/3rd share in those properties. Thus,
this appeal by special leave.
Shri E.C. Agarwal, learned counsel for the appellants,
who are sons of Nihal Chand, contended that the alleged
admissions relied on by the High Court are not correct.
There is no such admission which was subsequently explained
in the evidence and the High Court had not bestowed due care
in scrutinising the evidence. He has contended that the
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petition itself is barred by limitation under Article 120 of
Schedule III to the Limitation Act, 1908 which is equivalent
to Article 113 of the Schedule to the Limitation Act, 1963,
which mentions limitations of six years; but as the
application was filed after 11 years, it is barred by
limitation.
The first question is whether the application is barred
by limitation. It is seen that declaration of insolvency was
made on February 22, 1955, when the estate was taken into
custody by the Official Receiver after the proceedings
became final. He sought a declaration as to which part of
the property, the insolvent had in several items of
properties. He rightly had taken that step since it was
difficult for him to decide as to in which part and to what
extent, he was insolvent in joint properties. The insolvent
Chiranji Lal claimed to have 1/3rd or 2/3rd share, as the
case may be. The limitation, therefore, would begin to run
when the appellants sought to create cloud over that right
setting up their entitlement or title to these properties.
It was done after the application under Section 4 was made
by the Official Receiver. The High Court has rightly
concluded that the cause of action, viz., the right to sue
in the present case had accrued to the Official Receiver
when some cloud was cast on the title of the Official
Receiver claiming 1/3rd share of the insolvent. Under these
circumstances, the learned Judge of the High Court rightly
concluded that "I do not find any force in this contention
of the learned counsel for the respondent". Consequently,
the suit regarding the property in item No.1 and 3 was held
to be within time. We agree with the learned Judge in this
conclusion. The creditors’ stand was that it was joint
property of the three partners and of the partnership firm
which was sought to be declared as insolvents. In the
proceedings for declaration of insolvency, the firm as well
as the appellants father and Chiranji Lal and another were
declared to be not insolvent. Since Chiranji Lal allowed the
declaration to become final and the property was jointly
property held by all of them, it would be difficult to
decide as to what extent and in which property, the
insolvent had interest or title to the property. When the
appellants claimed exclusive title to these properties, the
cloud on the title of the Official Receiver, who had taken
over the estate, was cast. Consequently, the limitation
began to run when the cloud was cast. Admittedly, that was
done when the application came to be filed. Thus, the
application was within limitation.
The question then is whether in items 1 and 3 as noted
by the High Court, the insolvent had 1/3rd share. The
question was considered in extension and it was held that
the insolvent had 1/3rd share in item 1 and 3. The High
Court noted in the order the admissions thus:
"Wherein admissions regarding property
at Item No.1 have been made, by the
respondent Nihal Chand, such as AW 1/4
evidence given by Nihal Chand:AW 5/7
written statement of Nihal Chand dated
26.8.57, AW 2/3 dated 8th October, 1965,
an application filed on behalf of Nihal
Chand claiming 1/3rd share in this
property; AS 5/6 application dated
29.7.54 by Nihal Chand, AW 4/1 the
desolation deed, AW 6/2 the copy from
the entries of the register of the
property-tax for the years 1956 to 1961;
AW 6/3 for the years 1960 to 1965;AW 6/9
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for the years 1965 to 1970, in which the
share of Chiranji Lal insolvent has been
shown as 1/3rd. All this evidence has
been relied upon by the trial Court and
the lower appellate Court has also
observed, that "from the perusal of
these documents, it is well likely
clear, that these documents are only
admissions of either Nihal Chand or
Chiranji Lal, insolvent. The admissions,
no doubt have got some evidentiary value
and they are presumed to be true unless
they are proved to be false and wrong".
But, subsequently, all this evidence has
been brushed aside on the ground that
the same is contrary to the sale-deeds
and the revenue record and hence has not
much evidentiary value.
it was conceded that there are five
sale-deeds regarding the property at
Item No.1. Out of these, three sale-
deeds, i.e. Ex. OC dated 2nd June, 1938,
Ex. OL dated 17th April, 1940 and Ex.OM,
dated 2nd June, 1935 are in favour of
all the three brother, including
Chiranji Lal, insolvent, and hence 1/3rd
share in the property, which is the
subject matter of these sale-deeds, does
not vest in the Official Receiver.
Once the admission is proved, the burden
is shifted on the maker thereof to
explain the circumstances under which
the same was made. What a party himself
admits to be true may reasonably be
presumed to be so and until the
presumption was rebutted the fact
admitted must be taken to be
established. In the present case, Nihal
Chand, respondent, who appeared in the
witness-box, tried to explain the said
admissions by saying that in order to
help him, i.e. the insolvent, Chiranji
Lal, he allowed him to have 1/3rd share
of the rent of this property. Various
admissions made in this case are
unambiguous and unequivocal. In the
written reply Ex.AW 5/7, filed by Nihal
Chand in these proceedings, it has been
clearly admitted that the insolvent has
1/3rd share in the property. Under these
circumstances, the burden of proof on
the Official Receiver, if any, is fully
discharged. Mere absence of entry in the
revenue record in favour of persons in
pursuance of the sale-deeds in their
favour is hardly of any consequence.
Consequently, the findings of the lower
appellate Court on this point is set
aside and that of the trial Court is
restored and it is held that the
Official Receiver has 1/3rd share in the
property at item No.1."
These considerations with equal force apply to item
No.3.
In view of the discussion of various items by the High
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Court and the conclusion reached on the basis thereof, we
entirely agree with the High Court that the admissions bind
the appellants. Therefore, it is clearly established from
the admission that the insolvent Chiranji Lal had 1/3rd
share in these properties. Consequently, they stood vested
in the Official Receiver and he is entitled to proceed
further in realising the amounts to distribute to the
creditors.
The appeal is accordingly dismissed but, in the
circumstances, without costs.