The Madras High Court dismissed an application by secured creditors seeking to set aside a partial rejection of their insolvency claim. The court affirmed the Deputy Official Assignee's reading of an ex parte decree and rejection of unsubstantiated expense claims.
Application No.152 of 2019 was dismissed; no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
(IN INSOLVENCY)
THURSDAY, THE 5TH DAY OF AUGUST 2021
THE HON'BLE MR.JUSTICE R.SUBRAMANIAN
APPLN. No.152 of 2019
in
IP. No.91 of 1998
In the matter of the Presidency Towns Insolvency Act, III of 1909 and In the matter of 1. B.V. Saraswathy 2. Seenan 3. Dilli 4. Raja 5. K.S. Vijayalakshmi 6. Kesavan 7. Padma ...Debtors.
IP No. 91 of 1998
E. Balu S/o. Late Ellappa Nattar, residing at No.24, Ella Kandappan Street, Chennai – 600 003.
... Petitioning Creditor
-Vs-
2
APPLN.No. 152 of 2019
W/o.Mr.Ashok Kumar Mehta, D/o.Late Sha Bhawarlal, No.29-13-47, Flat No.403, Aiswarya Enclave, Kaleswara Rao Road, Suryaraopet, Vijayawada, Andhra Pradesh-520 004.
Park Town, Chennai-600 003.
No.210, Vidyasagar Oswal Garden Apartments, C.B.Road, Kourkkupet, Chennai-600 021.. (Applicant 3 to 6 are impleaded as per order dated 31.01.2020 passed in Application No.12/2020.)
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D/o. Late.Mr.Champalal, Residing at No.6-21-14, 2nd Floor, Arundelpet 6/2, Guntur, Andhra Pradesh-522 002.
W/o.Mr. Jayanthilal, D/o. Late Mr.Champalal, Thyagaraju Kaloni, Gauribidanur, Chikkaballapur, Karnataka-561 208.
10.Mrs. Lalitha Devi Bhansali, W/o.Mahendra Bhansali, D/o.Late. Mr. Champalal, Residing at, #18/10, 2nd Floor, 2nd Cross, K.V.Temple Street, Near Adarsh School, Sourashtrapet, Akkipet, Bangalore, Karnataka-560 053.
11.Mrs.Santosh Kothari, W/o.Tarun Kothari, D/o.Late.Mr.Champalal, Residing at, #14/14, 3rd Floor, Suraj Residency, 36th A Cross, 11th Main, Jayanagar, 4th T Block, Bangalore, Karnataka-560 041.
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13.Mrs.Tina, W/o.Kumar Pal, D/o.Late.Mr.Champalal, Residing at, No.35-5-35, Kaspa Street, MangalavarapuPeta, Rajamahendravaeam, East Godavari, Andhra Pradesh-533 101.
14.Mrs.Sangeetha Devi, W/o.Mr.Gouthamchand, D/o.Late Mr.Champalal, Residing at 32, 2nd Floor, 3rd Main Chamundi Vihar, Layout, Nazarbad, Mysore, Karnataka-570 010.
15.Mrs.Rakhi, W/o.Uttam Kumar, D/o.Late.Mr.Champalal Jain, Residing at Flat No.301, 15-2-294 Umraw Avenue, MaharajGunj, Gowliguda, Nampally, Hyderabad, Andhra Pradesh-500 012.
16.Mr.Praveen Kumar Jain, S/o.Late Mr.Champalal, Residing at No.21, Vinayaga Mesthri Street, Sowcarpet, Chennai-600 001. (Applicants 7 to 16 are impleaded as per order dated 05.07.2021 Passed in Application No.59 of 2021) ...Applicants/Claimants
VS
5
...Respondents/Respondents
Application praying that this Hon'ble court be pleased to set aside the order passed by the Learned Official Assignee in Claim Petition No.271 of 2005 in I.P.No.91 of 1998 and direct the 8th respondent to admit our claim of Rs.73,93,442.46/-(Rupees Seventy Three Lakhs Ninety Three Thousand Four Hundred Forty Two and Forty Six Paise Only) together with interest at 24% per annum till realisation.
The above application having been heard on 02.08.2021 in the presence of Mr.Vikram U.Jain, Advocate for the applicants/Claimants herein; and the Official Assignee, and the Deputy Official Assignee, for the 8th respondent herein; and upon reading the Judges Summons and affidavit of Bhawarlal filed herein; and having stood over for consideration till this date and coming on for hearing before this court for order in the presence of aforementioned advocate and this court do not find any reason to interfere with the order of the Deputy Official Assignee made in Claim No.271 of
2005 and
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It is ordered as follows
That the Application No.152 of 2019 in I.P.No.91 of 1998 be and is
hereby dismissed.
WITNESS THE HON'BLE MR. JUSTICE SANJIB BANERJEE, CHIEF JUSTICE, HIGH COURT AT MADRAS AFORESAID, THIS THE 5TH DAY OF AUGUST 2021.
Sd./-
ASSISTANT REGISTRAR Original Side-I
//CERTIFIED TO BE TRUE COPY//
DATED THIS THE DAY OF 2021.
MANAGER
INSOLVENCY OFFICE
From 25th Day of September 2008 the Registry is issuing certified copies of the Orders/Judgments/Decrees in this format.
7
VSP 17/08/2021
HIGH COURT , MADRAS APPLN.No.152 of 2019 IN I.P.No.91 of 1998
THE HON'BLE MR.JUSTICE R.SUBRAMANIAN
DECREE DATED:05/08/2021
FOR APPROVAL:17/08/2021
APPROVED ON :17/08/2021
COPY TO:
THE OFFICIAL ASSIGNEE, HIGH COURT, MADRAS.
8
IN THE HIGH COURT OF JUDICATURE AT MADRAS
(IN INSOLVENCY)
THURSDAY, THE 5TH DAY OF AUGUST 2021
THE HON'BLE MR.JUSTICE R.SUBRAMANIAN
APPLN. No.152 of 2019
in
IP. No.91 of 1998
In the matter of the Presidency Towns Insolvency Act, III of 1909 and In the matter of 1. B.V. Saraswathy 2. Seenan 3. Dilli 4. Raja 5. K.S. Vijayalakshmi 6. Kesavan 7. Padma ...Debtors.
IP No. 91 of 1998
E. Balu S/o. Late Ellappa Nattar, residing at No.24, Ella Kandappan Street, Chennai – 600 003.
... Petitioning Creditor -Vs-
9
APPLN.No. 152 of 2019
W/o.Mr.Ashok Kumar Mehta, D/o.Late Sha Bhawarlal, No.29-13-47, Flat No.403, Aiswarya Enclave, Kaleswara Rao Road, Suryaraopet, Vijayawada, Andhra Pradesh-520 004.
Park Town, Chennai-600 003.
No.210, Vidyasagar Oswal Garden Apartments, C.B.Road, Kourkkupet, Chennai-600 021.. (Applicant 3 to 6 are impleaded as per order dated 31.01.2020 passed in Application No.12/2020.)
10
D/o. Late.Mr.Champalal, Residing at No.6-21-14, 2nd Floor, Arundelpet 6/2, Guntur, Andhra Pradesh-522 002.
8. Mrs. Nirmala C.
W/o.Mr. Jayanthilal, D/o. Late Mr.Champalal, Thyagaraju Kaloni, Gauribidanur, Chikkaballapur, Karnataka-561 208.
10.Mrs. Lalitha Devi Bhansali, W/o.Mahendra Bhansali, D/o.Late. Mr. Champalal, Residing at, #18/10, 2nd Floor, 2nd Cross, K.V.Temple Street, Near Adarsh School, Sourashtrapet, Akkipet, Bangalore, Karnataka-560 053.
11.Mrs.Santosh Kothari, W/o.Tarun Kothari, D/o.Late.Mr.Champalal, Residing at, #14/14, 3rd Floor, Suraj Residency, 36th A Cross, 11th Main, Jayanagar, 4th T Block, Bangalore, Karnataka-560 041.
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13.Mrs.Tina, W/o.Kumar Pal, D/o.Late.Mr.Champalal, Residing at, No.35-5-35, Kaspa Street, MangalavarapuPeta, Rajamahendravaeam, East Godavari, Andhra Pradesh-533 101.
14.Mrs.Sangeetha Devi, W/o.Mr.Gouthamchand, D/o.Late Mr.Champalal, Residing at 32, 2nd Floor, 3rd Main Chamundi Vihar, Layout, Nazarbad, Mysore, Karnataka-570 010.
15.Mrs.Rakhi, W/o.Uttam Kumar, D/o.Late.Mr.Champalal Jain, Residing at Flat No.301, 15-2-294 Umraw Avenue, MaharajGunj, Gowliguda, Nampally, Hyderabad, Andhra Pradesh-500 012.
16.Mr.Praveen Kumar Jain, S/o.Late Mr.Champalal, Residing at No.21, Vinayaga Mesthri Street, Sowcarpet, Chennai-600 001. (Applicants 7 to 16 are impleaded as per order dated 05.07.2021 Passed in Application No.59 of 2021) ...Applicants/Claimants
VS
12
...Respondents/Respondents
Application praying that this Hon'ble court be pleased to set aside the order passed by the Learned Official Assignee in Claim Petition No.271 of 2005 in I.P.No.91 of 1998 and direct the 8th respondent to admit our claim of Rs.73,93,442.46/-(Rupees Seventy Three Lakhs Ninety Three Thousand Four Hundred Forty Two and Forty Six Paise Only) together with interest at 24% per annum till realisation.
The above application having been heard on 02.08.2021 in the presence of Mr.Vikram U.Jain, Advocate for the applicants/Claimants herein; and the Official Assignee, Deputy Official Assignee, for the 8th respondent herein; and upon reading the Judges Summon and affidavit of Bhawarlal filed herein; and having stood over for consideration till this day and coming on for hearing before this court for orders in the presence of the aforementioned advocate and
The court made the following order
This application taken out by claimants/secured creditors challenging
the order of the Deputy Official Assignee made in Claim No.271 of 2005,
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wherein the learned Deputy Official Assignee had partly allowed the claim
of the applicants while rejecting the major portion of it.
this Court seeking preliminary decree for sale of the hypotheca on the strength of the mortgage. The said suit was transferred to the City Civil Court and numbered as OS No.6766 of 1996 and an exparte decree came to be passed in the said suit on 17.10.2003. By the time, the decree came to be passed some of the defendants in the said suit were declared insolvents in IP No.91 of 1998. Therefore, it is the applicants have given up the security and have chosen to lodge their claim before the Official Assignee.
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of Rs.25,500/- as amounts spent on the receiver and the auctioner and a sum
of Rs.20,000/- spent for execution of the eviction orders passed by the Rent Controller. In all, the claim for about Rs.11,90,400/-. However, during the course of the proceedings a statement has been filed by the learned counsel for the applicants claiming a sum of Rs.68,48,494/- as the amount due and
payable to the applicants from and out of the estate.
Official Assignee which is self explanatory is reproduced hereunder:
STATEMENT OF ACCOUNT
In I.P.No.91/98 O.S.No.6766/96
VII ADDL. CITY CIVIL COURT
Rs. Rs. 1. Mortgage Amount @ 24% P.A. 2,00,000.00 2. Suit Valuable Amount as on 3,65,320.00 12/3/1990 Suit Claim amount as on 17/10/2003 8,00,666.66 3. Decreetal amount as on 17/10/2003 11,65,986.66 4. Interest calculated at 24@ P.A. on 29,81,039.25 41,47,025.91 Rs.11,65,986.66 from dt.17.3.2003 to 10.6.2014
Expenses on 21.2.1987 20,500.00 Interest from 21.1.87 – 20.5.2014 @ 1,34,480.00 1,54,980.00 24% p.m.
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Rs. Rs.
| Interest 24% P.A. For 25-1/2 years | 1,25,460.00 | 1,45,960.00 |
|---|---|---|
| 7. Dt. 1.4.1989 Rent Control | ||
| Proceedings against 21 Tenants in | ||
| petition property and expenditure |
||
| incurred as Advocate fees, Clerks | ||
| fees, publication, Regd. Postage etc. | 37,600.00 | |
| 25 years Int.@24/- P.A.. | 2,25,600.00 | |
| Dt.1.4.90 Expenditure incurred for | ||
| proceeding 21 R.C.O.P. Cases in | ||
| various S.C. Courts such as | ||
| Advocates fees, clerk, publication | 23,800.00 | |
| postage etc. | ||
| 24 years interest @ 24/- P.A. | 1,37,088.00 | 4,24,088.00 |
| FILING OF EXECUTION |
||
| PETITIONS | ||
| 8. 1.1.1992 E.Ps.14 Files in R.C.O.P.s | ||
| incurred Expenditure on Advocates | ||
| Fees, Court's Aminas, travelling, | ||
| pulications, postage etc. | 35,200.00 | |
| 22 years Int. @ 24% P.A. | 1,85,856.00 | 2,21,056.00 |
| 8a. Dt.1.6.1995 E.P.Proceedings |
||
| incurred by RECEIVER Mr.Abdul | ||
| Ghani in Hon'ble High Court, by | ||
| order from H.H.Court to take | ||
| possession of the entire mortgage | ||
| property from 21 tenants E.P. | ||
| executed with Assistant of Court | ||
| Aminas, Police security and labours | 1,46,600.00 | |
| 18-1/2 years Int.24% P.A. MISCELLANEOUS |
6,61,459.00 | 8,08,059.00 |
| 9. Dt.14.1.2001 cash paid to |
||
| Mortgagers to execute Power of | ||
| attorney | 20,000.00 | |
| 13 years Int.24% P.A. | 62,000.00 |
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Rs. Rs. Dt.1.3.2001 For purchase of stamp papers to purchase property as agreed by Insolvents & Mortgagers 1,64,800.00 13 years Interest @ 25% P.A. 5,14,175.00 7,61,375.00
REPAIRS & MAINTENANCE
LEGAL EXPENSES
Though a fanciful claim was made no documents were produced in support of the expenses incurred towards registration, brokerage etc. and towards Court expenses in prosecuting the Rent Control Original Petitions and the Execution proceedings.
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rejected the claim made under the heads: mortgage expenses, Court expenditure and amounts spent for maintenance of the hypotheca. While allowing the claim under the decree, the learned Deputy Official Assignee had granted simple interest at 24% on the sum of Rs.2,00,000/- viz., the principal money borrowed from the date of the decree till date of payment. Thus, the learned Deputy Official Assignee had admitted the claim for a sum of Rs.19,23,465/-. Aggrieved by the said partial rejection of the claim, the applicants have come up with the above application.
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towards such proceedings must be paid out of the estate of the insolvents.
He would further contend that the Deputy Official Assignee cannot go behind the decree and reject the claim. He would also rely upon the judgment of this Court in Narendra Kumar Vs. Sumathi , reported in 2012 (2) CTC 198 , in support of his contention that the Executing Court cannot go behind the decree and test the veracity of the decree in an application under Section 47 of the Code of Civil Procedure.
“for foreclosing the suit mortgage and passing a final
decree for Rs.3,48,000/- with interest at 24% per annum from
the date of plaint till date of realisation.”
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decree passed in the suit reads as follows:
“It is hereby declared that amount due to the plaintiff
on the mortgage mentioned in the plaint calculated up to 17th
day of October 2003, is the sum of Rs.3,18,200/- for principal together with interest at 24% for a sum of Rs.8,00,666.66 for interest on the said principal sum of Rs. ……….. for cost, charges and expenses (other than the costs of the suit) properly incurred by the plaintiff in respect of the mortgage security together with interest thereon and a sum of Rs.17,120/- for the costs of the suit awarded to the plaintiff,
making in all a sum of Rs.11,65,986.66.
2. And it is hereby ordered and decreed as follows:
That, the defendant do pay into court on or before the day of ---- 19---, or any later date up to which time for payment may be extended by the Court, the said sum of Rs.11,65,986.66 (Rs.Eleven lakhs sixty five thousand nine hundred eighty six and sixty six only) together with interest at 24% per annum
from the date of plaint till the date of realization.”
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interest on Rs.11,65,986.66 from the date of plaint till the date of realisation. I am afraid that such a calculation made would amount an erroneous interpretation of the decree granted by the Court. The very fact that the interest at 24% has been awarded from the date of plaint till date of realisation would only mean that the interest is not on the amount decreed, but it is on the principal amount due under the mortgage. Therefore, I do not see any error in the interpretation of the decree as placed by the learned Deputy Official Assignee.
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to show that the insolvents have borrowed a sum of Rs.20,000/- from the
applicants sometime in 2011, I find that there are over writings in the document and the date of the document itself is not very clear. Though it is stated to be a document that has emanated in the year 2001, it is written on a printed form which shows the year as 2009. I therefore do not think it would be safe to rely upon the said instrument as evidence of borrowing of
Rs.20,000/- by the insolvents from the applicants. Even otherwise that has emanated after the borrowers were adjudicated as insolvents and therefore the estate cannot be held liable to answer such claims.
WITNESS THE HON'BLE MR. JUSTICE SANJIB BANERJEE, CHIEF JUSTICE, HIGH COURT AT MADRAS AFORESAID, THIS THE 5TH DAY OF AUGUST 2021.
Sd./-
ASSISTANT REGISTRAR Original Side-I
//CERTIFIED TO BE TRUE COPY// DATED THIS THE DAY OF 2021.
MANAGER
INSOLVENCY OFFICE
From 25th Day of September 2008 the Registry is issuing certified copies of the Orders/Judgments/Decrees in this format.
23
VSP 17/08/2021
HIGH COURT , MADRAS APPLN.No.152 of 2019 IN I.P.No.91 of 1998
THE HON'BLE MR.JUSTICE R.SUBRAMANIAN
ORDER DATED:05/08/2021
FOR APPROVAL: 17/08/2021
APPROVED ON : 17/08/2021
COPY TO:
THE OFFICIAL ASSIGNEE, HIGH COURT, MADRAS.
3 issues framed by the court
Whether the Deputy Official Assignee's order partially admitting a secured creditor's claim under the Presidency Towns Insolvency Act should be set aside.
Whether a court decree entitles a claimant to compound interest on the decretal amount rather than simple interest on the principal.
Whether unvouched litigation expenses and interest claims on ancillary costs are admissible before the Official Assignee.
Colour shows how this judgement treated each authority
Narendra Kumar Vs. SumathiReferred¶172
Narendra Kumar Vs. Sumathi
1 provisions across 1 enactments
Sha Champalal (Deceased) or LRs
B.V. Saraswathy
Official Assignee, High Court, Madras
R.Subramanian
Sanjib Banerjee
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
