Law: Provincial Insolvency Act, 1920

Section: Ss. 4 & 53

(a) Provincial Insolvency Act (V of 1920), Ss. 4 & 53-Question of title to property-Can be gone into by Insolvency Court under S. 4 only-Application under S. 53 by Receiver challenging a deed of transfer-Can be treated as application under S. 4 Decislon of Insolvency Court on question of title-Final and binding even if decided against stranger-Decision, judgment in rem under S. 41, Evidence Act (I of 1872), and, therefore, res judicata under S. 11, Civil Procedure Code (V of 1908).   A creditor applied in the Court of an Insolvency Judge for the adjudication of his debtor as an insolvent on the ground that he had committed an act of insolvency by selling his land by a registered sale-deed to D a third person. The application was accepted and the debtor was declared an insolvent and a receiver was appointed for his estate. After taking over charge, the Receiver moved the Insolvency Judge by means of an applica tion under section 53 of the Provincial Insolvency Act, 1920, praying that the sale be set aside. The Insolvency Judge accepted the Receiver's application holding that the sale was fictitious, and without consideration and, therefore, null and void. The vendee filed an appeal, but the appeal was dismissed by the District Judge. A second appeal was filed in the High Court which was also dismiss ed. In spite of the order of the Insolvency Judge the Receiver did not take possession of the land which remained in the possession of D (vendee). Subsequently the insolvency of the debtor was annulled and thereafter the debtor filed a suit for the possession of land which was held, to have been transferred to D fictiti ously and without consideration. D the vendee resisted the suit. It was contended that the order of the Insolvency Court setting aside the sale in his favour was illegal and void and as such he was not bound by the order. It was urged that the decision of the Insolvency Judge was on an application under section 53 of the Provincial Insolvency Act, 1920, and was, therefore, not a final order. It was further urged that the order not being final he was not barred from re-agitating in the suit that the title of the suit land vested in him as…