Fire Accident - Insurance = Surveyor’s report has significant and evidentiary value = It is well settled law that a Surveyor’s report has significant and evidentiary value unless it is proved otherwise which the complainants have failed to do so in the instant case. This view finds support from the judgment of this Commission, in D.N.Badoni Vs. Oriental Insurance Co.Ltd, 1 (2012) CPJ 272 (NC). In United India Insurance Co. Ltd., & Ors. Vs. Roshan Lal Oil Mills Ltd. & Ors., (2000) 10 SCC 19, the Hon’ble Apex court was pleased to hold :- “The appellant had appointed joint surveyors in terms of Section 64-UM(2) of the Insurance Act, 1938. Their report has been placed on the record in which a detailed account of the factors on the basis of which the joint surveyors had come to the conclusion that there was no loss or damage caused on account of fire, was given and it was on this basis that the claim was not found entertainable. This is an important document which was placed before the Commission, but the Commission, curiously, has not considered the report. Since the claim of the respondent was repudiated by the appellant on the basis of the joint survey report, the Commission was not justified in awarding the insurance amount to the respondent without adverting itself to the contents of the joint survey report, specially the facts enumerated therein. In our opinion, non-consideration of this important document has resulted in serious miscarriage of justice and vitiates the judgment passed by the Commission. The case has, therefore, to be sent back to the Commission, for a fresh hearing”. He has placed reliance on ‘Panchanama’, prepared at the place of incident by the independent ‘Panchas’. He stated that ‘Panchas’ and Police, have stated that damage in the sum of Rs.76,39,090/- was accrued. It is noteworthy to see that no ‘Pancha’ was produced before this Commission. No affidavit of the ‘Pancha’ saw the light of the day. The said ‘Panchanama’ has an exiguous value. Moreover, in view of the Surveyor’s Report, the ‘Panchanamas’, prepared by self-appointed ‘Panchas’, pales into insignificance. It is, therefore, ordered that rest of the amount in the sum of Rs.2,10,000/-, with interest @ 9% p.a., be paid to the complainant, M/s. Keshav Trading Co., from the date of filing of the claim, till its realization. It may be mentioned here that there is inordinate delay in settling the claim of the complainant. Even if the complainant was not available, the claim should have been settled and the amount should have been sent at the given address. Keeping in view of these facts and circumstances, we also award compensation in the sum of Rs.50,000/-, which be paid within sixty days, by the insurance company, or else, it will carry interest @ 9% p.a. The Original Petition stands disposed of, in above terms.

published in http://164.100.72.12/ncdrcrep/judgement/00130807131226383OP6405.htm

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

           ORIGINAL PETITION NO. 64 OF 2005

 

                      

Keshav Trading Company

Bhilwada Circle, Talati Road

Palitana, District Bhavnagar

Gujarat

Through Attorney, Sh.Nasruddin Bhai

S/o Noor Muhammad

Sneh Milan, ‘A’ Wing, Ground Floor

Room No.1, Dewan Maan

Vasai, Mumbai                                                                      … Complainant

Versus

Divisional Manager

United India Insurance Co.Ltd

Nava Para, Kaveri Shopping Centre

2^nd Floor, Bhavnagar, Gujarat                                    … Opp. Party

BEFORE:

HON’BLE MR. JUSTICE J. M. MALIK, PRESIDING MEMBER

          HON’BLE DR. S. M. KANTIKAR, MEMBER

For the Complainant   : Mr. D.K.Thakur, Advocate

For the Opp. Party        : Mr. Vishnu Mehra,  Advocate

 

PRONOUNCED ON_1^st  AUGUST, 2013

                                                O R D E R

JUSTICE J.M. MALIK

1.      The instant complaint was filed by Keshav Trading Company, which at present, consists of  three Partners, wherein  they  have claimed Rs.60.00 lakhs, with interest @ 18% p.a., from the Divisional Manager, United India Insurance Co. Ltd., from the date of filing the claim for the  loss due to fire in their premises. The complainant has  also           claimed compensation in the sum of Rs.75.00 lakhs.

2.      The complainant transacts the business of manufacturing and trading of raw material, finished cotton, cotton seeds, seed cake, seed oil, Bajaro, etc. 

Other traders used  to keep their cotton in the premises of  the complainant  company.  

Three  other parties also kept  their goods in the premises of  the complainant.

(i) In Hall No.1, Loose finished cotton weighing 22302 kgs  belonging to Babbha Shivubha Neshiyain;

(ii) In hall No.2, Loose finished  cotton belonging to  Jayvantsinh Mangal Singh, weighing 13628 kgs ;

(iii) 29 Bales, 29 Bal loose weighing 10945 kgs belonging to Bhagabhai Mulabhai;

(iv) In the rest of the premises, i.e., Hall Nos. 3, 4, 5 & 6, cotton weighing 115544 kgs, worth Rs.52,65,340/- were kept,  which belonged to the complainant  company.  

The entire premises  was  insured by  the  opposite party.  The total sum insured  was  in the sum of  Rs.60,00,000/-, i.e., Rs.50,00,000/- for the goods and Rs.10,00,000/-  for the premises building, machinery.

3.      During the night falling between 26^th-27^th, March, 2002, the entire  State of Gujarat was burning in communal violence and at about 3.00AM, the cotton in the premises caught fire due to electric short circuit.  The  fire  brigade and police were called.  They tried to extinguish the fire, but the cotton could not be saved.  The entire cotton turned into ashes. The  building  also  got  major damage due to fire.  The ‘Panchas’, from the neighbourhood  were called. They and the police opined that damage in the sum of Rs.76,39,090/- was  accrued. 

4.      The Insurance Company was also informed immediately.  The Surveyor assessed the loss.  All the documents were furnished.  

The insurance company, undue delayed the matter and did not settle the claim.  

Due to riots in Gujarat,  the  complainants got scared and they left  Bhavnagar  and  took  shelter  in Vadi, in Karnataka, where they had  some  contacts.  

Subsequently, they shifted to Mumbai as they were on  the verge of  starvation. The three  other persons, named above, also made claim against their respective cotton.Their claims were paid, but nothing was paid to the complainant.  

Ultimately, this complaint was filed  before  this Commission, on 18.07.2005.  

5.      The Opposite Party  contested  this case.  

The complainant alleges that it is a Partnership firm, 

but no registration certificate  has been filed under Section 69 of the Indian Partnership Act, 1932. 

The insurance company, vide its letter dated 11.11.2003, has validly declared the complainant’s claim as “No claim”. 

After repeated reminders  to  the complainant  firm, the complainant firm did not provide the relevant documents and information, records, etc., to the Surveyor as well as to the Insurance Company, in order to enable the insurance company to finalise the claim.  

The Surveyor, in his report, gave 25 reasons for not giving any claim to the complainant.  

All these reasons have been detailed  in the written statement itself. 

         

6.      The complainant  has denied that the above said three persons had kept the cotton in Hall Nos. 2 & 3. 

7.      We  have  gone through the evidence and heard the counsel for the parties.  

The counsel for the complainant has invited our attention towards 

Form No.’3CB’, under the Heading 

“Statement of Particulars required to be furnished under  Section 44 AB of the Income Tax Act, 1961, in case of  a person carrying  business”.   

The name of  Assessee is mentioned as Keshav Trading Company.  

In Col. No.18 - “Particulars of payments made to persons specified under Section 40 A (2) (b),

it is stated that  “Interest  to Partner  Rs.8,21,951/-“.  

This is prepared by M/s. S.V.Pandya & Associates, Chartered Accountants, dated 25.07.2002.   

The  complainants  have  also  placed on record 

Annexure-1, 

wherein Quantitative Details of Items Traded or Manufactured (Forming Part of Clause No.28 of Form No.3CD), dated 25.07.2002 and other documents which were prepared by M/s.S.V.Pandya & Associates.

8.      The learned counsel for the complainant submitted that OP be directed to pay the said loss of  Rs.60,00,000/-, with interest and compensation.

9.      We find  force in his argument, in a measure.  

The survey report clearly goes to show  the reasons  for  not allowing the entire claim.  

Para No.12 of the report is very significant and the same is hereby reproduced:-

“Survey & Inspection :

          Pursuant  to the  instructions  received  from the Insurer, I had been to Palitana on 29.03.2002  and subsequently, on 13.04.2002.  Visits were paid to the ginning and pressing factory of M/s. Keshav Trading Co., at Palitana, duly accompanied with the concerned Development Officer, Sh.C.V.Shah.  It was observed, as under:-

          12(1)  There  appeared no balance stock of kapas stored  and/or staked anywhere in  the factory premises  awaiting ginning and/or that on the platform of gin house to gin/process.

          12(2) There  appeared  no balance of any FP bales of cotton stored and/or staked anywhere in the premises.

          12(3) The gin house and press house were silent during my/our said visits.

          12(4) Stock of loose cotton in all 5 halls and gang-way spread all over the floor not up to the full capacity of halls to store loose cotton (i.e. equal to 50-100FP bales lot in the case hall are or size to store loose cotton for 100FP bales lot) and found to have burnt and or suffered fire damage.

          12(5) Quantity burnt and/or suffered  damage in the halls and gang-way explained as above was not obvious looking to the normal practice  of storing  and processing of cotton press factories, pressing the loose cotton party-wise for specific quality, cotton stored in the hall equal to 50 or 100 FP bales, as may be the case, of size of hall and expected supply, turn-by-turn, and on very few occasions, all  halls were full of stock, except  stock  of cotton received  from  the outside parties in a form of dhokdas.

          12(6) Contrary to the above, stock of cotton in all five halls and gang-way found  spread  all over the floor having reached height in range between 1’ to 2, excess and residual stock in nature which is normally found in the hall/s  and or press house after completion of converting and or processing of stock stored in individual hall of specified lot and quality.

          12(7) In view of  above aggregate stock of loose cotton in all 5 halls and gang-way worked out on basis of its volume in the vicinity of 120 FP bales.

          12(8) The press installed at the far end of the gang-way of press house seemed  to  have  been out  of function/quite since long, as can be seen  from the photographs taken in course of survey.  The same was also explained to have been broken down at the time of occurrence.

          12(9)  The press house halls are normally built of size which can house and/or can store stock of loose cotton equal to 50 FP bales and or 100 FP bales, around 600 sq.ft. and 1200  sq.ft, respectively.  In the instant case, the halls are found to have been built  bigger-than-normal capacity to store loose cotton equal to 100 FP bales, being super cleaner and  process on  super  cleaner built-in with three halls and extra floor space of the hall  apprehended to have arranged for movement of super cleaned cotton manually in each communicated halls from super cleaner room continently.

          12(10) Self prepared and computer generated records of the factory showing arrivals of stock only by couple of trucks belonging to the Factory Authority/ies are furnished.

          12(11) The building of press house with attached halls, press and super cleaner  were  not found to have caused any apparent fire damage and/or  any damage of whatsoever nature except that of gradual taken place of operational and wear and tear kind.

          12(12) An extent of damage caused to the surroundings, and/or press  house  buildings  did not  seem in order  to the quantity claimed to have  burnt  and/or  suffered  as can be seen from the photographs taken in course of  survey and photographs of  damage submitted by the authority of  the  factory  and  one of the insured/ M/s.Keshav Trading Co.

          12(13) Fire damage stains  and fire flame marks in the halls and in gang-way are ranging from 1’ height to 1.5’ average except for few small staking in heap form giving indication of pre-damage condition of stock staked therein bit less in height of the stain mark.

          12(14) Halls at their full capacity can store stock of loose cotton equal to 50 FP bales and or 100 bales as may be the case, reach the height of around 10’, which in this case was not found to appear in whatsoever nature and/or in any hall as can be seen from the photographs.

          12(15) In this context, matter/s in connection with “Survey and Inspection” and “The Claim”, and extent of damages surveyed to have been caused,  were  discussed at  length and Insured Authority/ies of the factory were explained  at  length about  consequential damages that could have been resulted to the building, machineries and surroundings of press  house if  the entire quantity  as per the idea about authority of the factory would have  been engulfed and/or attacked by the fire.

          12(16) Authority of  the factory and one of the Insureds M/s.Keshav Trading Co., subsequently had furnished an estimate of damage caused to the building amounting to Rs.10,00,000/- as if entire building required major reinstatement  as a result of the occurrence, contrary to post  occurrence  condition of  the same  as can be seen from the photographs having  not  caused any apparent damages and/or distortion and/or collapsed.

          12(17)  The Authority  of the factory and one of the insureds as well,  failed to  substantiate  the  quantity  claimed to have been damaged  in  the occurrence, in following respect.  Only self-prepared and computer  generated stock statement of arrival, process and that balance, as on date of loss, were shown and/or made available to me to substantiate “The claim”.

          12 (18) Inward-outward gate passes with weigh-bridge, load chits for quantity arrived in the factory for process and dispatched after processing were/are not made available.

          12 (19) Copies  of bills issued for processing charges to the outsider parties issued and details of payments, received from them and/or outstanding as the case may be were/are not made available.

          12(20) Records showing the history of the factory having processed stock  belonging to the other  parties in  the  recent past  or in the previous years were/are not made available. 

          12(21) Copies of sales bills in respect of current crop season pertaining to stock belonging to themselves were/are not made available.

          12 (22) Copies of sales tax returns for current and previous financial  years  mandatory  to file with sales tax department were/are not made available.

          12 (23) Factory authority and/or one of the insured were communicated vide my letter dated 17.04.2002 to comply the requirements to process their claim and subsequently, vide my RAD letter dated 24.06.2002  to furnish the same within the 15 days on receipt of the letter informing that default in compliance would lead to believe that they were/are not  interested in pursuing the claim and that the matter would be informed accordingly to the insurer.

          12 (24) Till this date, Authority of the factory and one of the insureds, M/s.Keshav Trading Co., Palitana, have not responded in  any way to fulfill the requirements to process the claim/s as under, vide said communications.

a) certified copy of Forensic Science Laboratory Analysis report.

b) Copies of gate passes of stock taken inward for processing and outward for delivery after processing of stocks belonging to other parties.

c) Copies of bills issued for processing to   respective  parties in connection  with two 

above.

                    d) Copies of bills with statement/s of own                     goods sold.

          e) Party-wise as well quantity-wise detailed

reports on processing carried out in the

current crop season of FP bales with lot

numbers and press numbers.

                   f) Audited accounts of sales-purchase and

stocks for last two years.

                    g) Certified copies of sales tax returns for

current and previous years.

                    h) Affidavit/s of rest of insureds/outside

parties in respect of goods sent to

M/s.Keshav Trading Co. for processing and bills issued to them for processing.

                    i) Statement showing full details of ginning

and pressing for last fifteen days preceding the occurrence, including the occurrence.

                  

12(25) To avoid further delay and to keep the report and record in order,  I am releasing the report on basis of volumetric inventory of the stock surveyed to have been burnt and or suffered damaged, although the  reported  cause and/or occurrence did not seem obvious giving rise to doubt-free effect of insured peril/s and in absence of vital details regarding arrival, processing and sales of stocks,  as asked for,  to comply with”.

10.    In para 14 of the Survey Report, the Surveyor has mentioned the loss and damage, as follows:-

“14.    Loss and Damage

Entire Stock valued as above burnt and or suffered fire damages	Rs.9,00,000.00
Less : Salvage	Rs.50,000.00
	Rs.8,50,000.00
Less: Policy Excess	Rs.10,000.00
Net amount of damage	Rs.8,40,000.00 (Rupees Eight Lakhs Forty-Thousand only)

Issued without prejudice, subject to terms and conditions of the insurance/policy/ies.

                           Sd/-

                           Udayana Vora

                           Surveyor/Loss Assessor”.

11.    It is, thus, clear that the loss occurred in the sum  of Rs.8,40,000/- , in respect of the premises of the complainant, in respect of all the four claimants, including the complainant.  

The counsel for the complainant  admitted  that the Surveyor did not have ill-will, bad blood or enmity, against the complainant.  He could not give a single, cogent and plausible reason  why  the report of  the Surveyor should be discarded. 

 It is well settled  law  that a Surveyor’s report has significant and evidentiary value unless it is proved otherwise which the complainants have failed to do so in the instant case.  

This view finds support from the judgment of this Commission, in  D.N.Badoni Vs. Oriental Insurance Co.Ltd, 1 (2012) CPJ 272 (NC).  In United India Insurance Co. Ltd., & Ors.  Vs. Roshan Lal Oil Mills Ltd. & Ors., (2000) 10 SCC 19, the Hon’ble Apex court was pleased to hold :-

          “The  appellant had appointed joint surveyors in terms of Section 64-UM(2) of the Insurance Act, 1938.  Their report has been placed on the record in which a detailed account  of the factors on the basis of which the joint surveyors had come to the conclusion that there was no loss or damage caused on account of fire, was given and it was on this basis that the claim was not  found entertainable.  This is an important document which was  placed before the Commission, but the Commission, curiously, has not considered the report.  Since the claim of the respondent was repudiated by the appellant on the basis of the joint survey report, the Commission was not justified in awarding the insurance amount to the respondent without adverting itself to the contents of the joint survey report, specially the facts enumerated therein.  In our opinion, non-consideration of this important document has resulted in serious miscarriage of justice and vitiates the judgment passed by the Commission.  The case has, therefore, to be sent back to the Commission, for  a  fresh hearing”.

12.    For all these reasons, we place reliance on the report of the Surveyor.  The complainants have failed to bolster their case, with evidence.  They have not co-operated with the Surveyor/Insurance Company.  The Partners of the complainant  themselves  admit  that  they had left for Vadi, in Karnataka.  They should have furnished their address to the Insurance Company or extended co-operation to the Insurance Company so as to enable the Surveyor to winnow truth from the falsehood.  Absence is too feeble, an excuse to be taken seriously.  The complainant should have produced  the solid and unflappable  evidence  before the  Surveyor or in the proceedings before us.  Till now, the complainant has failed to lead any cogent, convincing and conclusive evidence  to bolster his entire claim.

13.    We have also  perused  the  Affidavit/Evidence  of Nasaruddin Bhai.  He has placed  reliance on ‘Panchanama’, prepared at the place of incident by  the independent  ‘Panchas’.  He stated that ‘Panchas’ and Police, have stated that damage in the sum of Rs.76,39,090/- was accrued.  It is noteworthy to see that no ‘Pancha’ was  produced  before this Commission.   No  affidavit  of  the ‘Pancha’  saw the  light of the day.  The   said ‘Panchanama’ has  an exiguous value. Moreover, in view of the Surveyor’s Report, the ‘Panchanamas’,  prepared by self-appointed ‘Panchas’,  pales into insignificance.

14.    He also  submitted  that  he has  placed on record the Audit of loss. It is stated that all the documents were handed over to the OP.  The complainant  has placed on record the statement of loss occurred to the aforesaid Halls.   Except these insignificant documents, no other document, mentioned by the Surveyor, was produced.

15.    The  learned  Counsel for the OP also brought to our notice that, as a matter of fact, three other complaints, by other three claimants,   were filed  before the District Forum, Bhavnagar.  M/s.  Keshav  Trading Co. was arrayed  as OP No.3. OP No.3 did not contest  these  complaint cases.  Consequently,  in these  three  cases,  the claim in the sum of Rs.2,10,000/-, was granted  to the other complainants, namely,  Babbha Shivubha Gohil, Bhagwanbhai Mulabhai and  Jayendrashi  Mangalshih Gohil.

16.    Counsel  for  the OP argued  that  the  opposite  party has no objection  if  the claim of  the complainant is allowed to pay rest of Rs.2,10,000/-. The amount  already  paid to the three other complainants goes to Rs.6,30,000/-. The amount assessed by the Assessor is Rs.8,40,000/-  It is, therefore, ordered that  rest of the amount in the sum of  Rs.2,10,000/-,  with interest @ 9% p.a., be paid  to the complainant, M/s. Keshav Trading Co., from the date of filing of the claim, till  its realization.  

It may be mentioned  here that  there  is  inordinate  delay in settling the claim of the complainant.  Even if the complainant  was  not available, the claim should have  been  settled and  the  amount  should  have  been sent at the given address.  Keeping in view of these facts and circumstances, we also award compensation  in the sum of Rs.50,000/-, which be paid within sixty days,  by the  insurance company, or else, it will carry interest @ 9% p.a.

          The Original Petition stands disposed of, in above terms.

....…………………………..

(J. M. MALIK, J)

                       PRESIDING MEMBER

                        .…..………………………..

(S. M. KANTIKAR)

                MEMBER

dd/29

SPECIFIC PERFORMANCE SUIT - LIMITATION = Whether the contention taken that the cause of action for filing the suit arises only, when the other suit questioning the title of his own wife and children, was over as per dictum of Lakshminarayana Reddiar v. Singaravelu Naicker & Anr. AIR 1963 Mad.24".= Article 54 of Limitation Act = "Description of suit Period of limitation Time from which period begins to run 54. For specific Three years The date fixed performance of a contract for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused." we feel it would be proper if this case is heard by a Bench of three Hon'ble Judges. We, therefore, refer the matter to a larger Bench. The records be placed before the Hon'ble Chief Justice of India for necessary directions.

CASE NO.:
Appeal (civil)  4190 of 2000

PETITIONER:
Ahmadasahab Abdul Mulla (D) by proposed LRs

RESPONDENT:
Bibijan & Ors

DATE OF JUDGMENT: 21/04/2008

BENCH:
Dr. ARIJIT PASAYAT & TARUN CHATTERJEE

JUDGMENT:
J U D G M E N T
REPORTABLE

CIVIL APPEAL NO. 4190  OF 2000

Dr. ARIJIT PASAYAT, J.



1. Challenge in this appeal is to the order passed by a
learned Single Judge of the Karnataka High Court allowing the
Second appeal filed by the respondents under Section 100 of
the Code of Civil Procedure, 1908 (in short the 'CPC'). The
present respondents are the plaintiffs.
They had filed the suit 
for specific performance of the contract on sale which was 
decreed by the trial court but was dismissed on the ground of 
limitation by the first Appellate Court and therefore the 
Second Appeal was filed.  

2. Background facts in a nutshell are as follows:


The plaintiff No.1's husband entered into an agreement of
sale of house property No.CTS 2565, Ward No.5, of Mudhol
corresponding Municipal No. 536, on 15-11-1974 for consi-
deration of Rs.6,000/-.
A sum of Rs.1000/- was paid and
subsequently two sums of Rs.300/- and Rs.600/- were paid
on 21-12-1974 and 13-8-1975.
But in the mean time, a suit
was filed by the defendant's wife and children in 0. S.
No.72/76, wherein the plaintiff's husband was made a party.
questioning the agreement of sale, and the suit came to be
dismissed on 4-8-1977.
The first appeal preferred in R.
A.84/77 subsequently numbered as R, A, 83/79 came to be
dismissed on 18-8-1979 and the second appeal preferred in
RSA No.385/80 also came to be dismissed on 5-6-1980.
Therefore the present suit is filed on 15.9.1981 for specific 
performance of agreement of sale.
The defendant contended that the suit house belonged to
his deceased father and his deceased father made an oral gift
of the suit, property in favour of himself and his wife, and
minor children by delivery of possession.
As he had no source 
of income to meet his family needs, the deceased husband of 
the plaintiff promised to lend him money and the defendant 
agreed to give the property as security. 
Under such 
circumstances he executed the suit agreement and received 
loan from Modinsaheb. 
He has not parted with the possession. 
He further contended that the suit is barred by limitation and 
the plaintiff was never ready and willing. 
Ultimately, he
resisted the suit by contending that the suit house is the only
shelter for him and his family members he cannot be directed
to comply with agreement of sale.
The trial Court accepted the agreement as to the payment 
made thereon as correct, and holding that the defendant is not 
a debtor within the meaning of the relevant Act, granted the 
decree for specific performance rejecting the plea of non-
joinder and loan raised by the defendant.
The appellate Court found that the trial court is right in
accepting the case of the plaintiff regarding the agreement and
parting with the possession by way of part performance and
also that no hardship would be caused to the defendant by
grant of specific performance as provided under Section 20 of
the Specific Relief Act, 1963 (in short 'the Act').  But on the 
ground of limitation, holding that the pendency of the other 
suit will not save the limitation within the meaning of section 
14 of the Limitation Act, 1963 (in short 'Limitation Act') 
dismissed the suit.

The second appeal was admitted on the following
questions of law:

"Whether the contention taken that the 
cause of action for filing the suit arises only, 
when the other suit questioning the title of his 
own wife and children, was over as per dictum 
of Lakshminarayana Reddiar v. Singaravelu  Naicker & Anr. AIR 1963 Mad.24".


The High Court noticed that as held by the Madras High
Court in Lakshminarayan's case (supra) the time taken for
redemption wherein the title deed was primarily involved has
to be excluded under Section 14 of the Limitation Act. It was
held that no contra decision was cited and, therefore, with
reference to Section 113 of the Limitation Act, 1908 (in short
the 'Old Act') this suit was within time.

3. Learned counsel for the appellant submitted that the true
import of Section 113 of the Limitation Act has not been kept
in view.

4. Learned counsel for the respondent on the other hand
supported the order of the High Court.

5. In S. Brahmanand v. K.R. Muthugopal (2005 12) SCC
764) after noticing the decisions rendered by various High
Courts, this Court inter alia observed as follows:

"16. It would be useful to set out the
provisions of Article 54 before critically
appraising the arguments presented to us on
both sides.


"Description of suit Period of limitation Time from 
which 
period 
begins to 
run


54. For specific Three years The date fixed 
performance of a 
contract
                                                                for the 
                                                                performance, or, 
                                                                if no such date 
                                                                is fixed, when 
                                                                the plaintiff has 
                                                                notice that 
                                                                performance is 
                                                                refused."

 
17. Though, at first blush, it may appear that the 
use of the expression "date" used in this article of 
the Limitation Act, 1963 is suggestive of a specific 
date in the calendar, we cannot forget the judicial 
interpretation of this expression over a long period 
of time. Different High Courts took different views of 
the matter, which has been a subject-matter of 
controversy. Some interpreted the expression 
strictly and literally, while others have taken an 
extended view.

18. In Kashi Prasad v. Chhabi Lal the High Court 
dealing with Article 113 of the Limitation Act, 1908,
which was in pari materia with Article 54 of the
Schedule to the Limitation Act, 1963, took the view
that the force of the word "fixed" implies that the 
date should be fixed definitely and should not be left 
to be gathered from the surrounding circumstances 
of the case. It must be a date clearly mentioned in 
the contract whether the said contract be oral or in 
writing.

19. In Alopi Parshad v. Court of Wards also the
Court was concerned with Article 113 of the
Limitation Act, 1908. A suit for specific performance
was brought on an agreement of sale where the time
for performance of the contract was "after passing of
a decree". Though no date for performance was fixed
for the agreement, the trial court had opined that
time must be held to have begun to run from the
date on which the decree was passed in view of the
maxim id certum est quod certum reddi potest ("That
is sufficiently certain which can be made certain".)
The Lahore High Court was of the view that statutes
of limitation must be strictly construed and that the
respondents before it had failed to bring a case
specifically within the purview of the first part of
Article 113 and that the case did not fall within the
first part but fell within the second part of Article
113. The judgment of the Allahabad High Court in
Kashi Prasad was approvingly referred to and
followed. This judgment was taken in appeal before
the Privy Council and approved by the Privy Council
in Lala Ram Sarup v. Court of Wards.

20. In Kruttiventi Mallikharjuna Rao v. Vemuri 
Pardhasaradhirao a contract was entered into on
18-7-1934 and the vendor promised to execute the
sale deed when both his brothers who were
studying elsewhere returned to the village for the
next vacation i.e. in May-June 1935. The High
Court held (AIR p. 218h) that this was "too
indefinite to be regarded as fixing a 'date' for the
performance of the contract and the period of
limitation must be computed from the date of
refusal to perform".

21. In R. Muniswami Goundar v. B.M. Shamanna 
Gouda interpreting the expression "date fixed" in
Article 113 of the Limitation Act, 1908 the doctrine 
of id certum est quod certum reddi potest was 
pressed into service along with its exposition in 
Broom's Legal Maxims and it was held that it was 
wide enough to include a date which though at the 
time when the contract was made was not known, 
but could be ascertained by an event which 
subsequently was certain of happening.

22. In Hutchegowda v. H.M. Basaviah upholding 
the view in Muniswami Goundar it was held that an
agreement to execute the sale deed after the
"Saguvali chit" is granted fell within the first part of
Article 113 of the Limitation Act, 1908.

23. In Purshottam Sava v. Kunverji Devji the 
judgment of the Madras High Court in R. 
Muniswami Goundar was followed and it was held
that the expression "date fixed" can be interpreted 
as meaning either the date fixed expressly or a date 
that can be fixed with reference to a future event 
which is certain to happen.

24. In Lakshminarayana Reddiar v. Singaravelu 
Naicker it was held that the phrase occurring in the
third column of Article 113 of the Limitation Act,
1908 "the date fixed for the performance" must not
only be a date which can be identified without any
doubt as a particular point of time, but it should
also be a date which the parties intended should be
the date when the contract could be performed.

25. In Shrikrishna Keshav Kulkarni v. Balaji 
Ganesh Kulkarni the agreement for sale of a
property stated that the sale was to be executed
after the attachment which the creditors had
brought, was raised. Noticing the fact that there was
absence of any indication as to when the
attachment would be raised, the Court treated it as
a case in which no date was fixed for performance of
the contract and, therefore, falling within the
second part of Article 54 of the Limitation Act, 1963.

26. P. Sivan Muthiah v. John Sathiavasagam 
arose from a suit for specific performance with an
alternative prayer for recovery of advance paid
under the agreement of sale. Referring to Article 54
of the Limitation Act, 1963 the Court took the view
that the expression "date fixed" could mean either
the date expressly fixed or the date that can be fixed
with reference to a future event, which is certain to
happen. If the date is to be ascertained depending
upon an event which is not certain to happen, the
first part of Article 54 would not be applicable, and
in such an eventuality, it is only the latter part of
Article 54 that could be invoked by treating it as a
case in which no date had been fixed for
performance and the limitation would be three years
from the date when the plaintiff had notice that
performance is refused. This was a case where
performance was due after the tenants in the
property had been vacated. The Court took the view
that since eviction of the tenants was an uncertain
event, the time must be deemed to have run only
from the date when the plaintiffs had notice that the
performance had been refused by the defendants.

27. In Ramzan v. Hussaini a suit was filed for
specific performance of a contract of sale in respect
of a house. The property was mortgaged and
according to the plaintiff, the defendant had agreed
to execute a deed of sale on the redemption of the
mortgage by the plaintiff herself, which she did in
1970. In spite of her repeated demands, the
defendant failed to perform his part, which resulted
in a suit being filed. The question that arose before
this Court was whether the agreement was one in 
which the date was "fixed" for the performance of 
the agreement or was one in which no such date 
was fixed. This Court answered the question in the 
affirmative by holding that, although a particular 
calendar date was not mentioned in the document 
and although the date was not ascertainable 
originally, as soon as the plaintiff redeemed the 
mortgage, it became an ascertained date. This Court 
also agreed with the view expressed in the Madras 
High Court in R. Muniswami Goundar and held that 
the doctrine id certum est quod certum reddi potest 
is clearly applicable. It also distinguished Kruttiventi 
Mallikharjuna Rao and Kashi Prasad as cases that 
arose out of their peculiar facts.

28. In Tarlok Singh v. Vijay Kumar Sabharwal the
parties by agreement determined the date for
performance of the contract, which was extended by
a subsequent agreement stipulating that the
appellants shall be required to execute a sale deed
within 15 days from the date of the order vacating
the injunction granted in a suit. The suit was
initially dismissed and, thereafter, a review
application was also dismissed as withdrawn on 22-
3-1986. On 23-12-1987 a suit was filed for
perpetual injunction. In that suit, an application
came to be made under Order 6 Rule 17 CPC for
converting it into a suit for specific performance of
an agreement dated 18-8-1984. This amendment
was allowed on 25-8-1989. It was held that since
the amendment was ordered on 25-8-1989, the
crucial date for examining whether the suit was
barred by limitation was 25-8-1989. Since the
injunction was vacated when the original suit was
initially dismissed and the review application came
to be dismissed on 22-3-1986, it was held that it
was a situation covered by the first part of Article 54
and, in any event, on 25-8-1989 the suit was barred
by limitation."


6. This court took the view that judgments of different High
Courts have taken different views and were at variance with
the decision of the Privy Council. However, in view of the
decisions in Ramzan v. Hussaini (1990(1) SCC 104)  and in 
Tarlok Singh v. Vijay Kumar Sabharwal (1996(8) SCC 367) 
there was no necessity to go into the larger issue as the
plaintiffs were entitled to succeed in that case in altogether on
different grounds.

7. It appears from the judgment in S.Brahmanand's case 
(supra) this court felt that there was a need for clarifying legal 
position. But declined to refer the matter to a larger Bench 
because of the different factual scenario and the fact that the 
decisions were holding field for long time and there were 
decisions of the co-ordinate Bench of two Hon'ble Judges 
taking a particular view.

8. In view of the importance of the issues involved, we feel it 
would be proper if this case is heard by a Bench of three 
Hon'ble Judges. We, therefore, refer the matter to a larger 
Bench.  The records be placed before the Hon'ble Chief Justice 
of India for necessary directions.

Sec. 53 of Insolvency Act = Whether the Courts can order adjudicating the transferor as insolvent and ordering to administer schedule property by the official receiver and distribute the sale proceeds among the petitioners is sustainable?

 Whether the Courts can order adjudicating the transferor as insolvent and ordering to administer schedule property by the official receiver and distribute the sale proceeds among the petitioners is sustainable?

        On Insolvency petition of the creditors/petitioners under Sections 7 to 9 of the Provincial Insolvency Act, 1920 (for short ‘the Act’) to adjudicate the transferor/debtor as an insolvent.  

         The Court allowed the petition adjudicating the first respondent as an insolvent and ordered to administer the schedule property by official receiver and distribute the sale proceeds rateably among the Creditors.  

Now the question  was 

Whether the Courts can order adjudicating the transferor as insolvent and ordering to administer schedule property by the official receiver and distribute the sale proceeds among the petitioners is sustainable?

Before going through this question.

 Let us view the relevant sections

“6. Acts of insolvency:--

 (1) A debtor commits an act of insolvency in each of the following cases, namely:

(a)      If, in India or elsewhere, he makes a transfer of all or substantially all his property to a third person for the benefit of his creditors generally;

(b)      If, in India or elsewhere, he makes a transfer of his property or of any part thereof, with intent to defeat or delay his creditors;

(c)      If in India or elsewhere, he makes any transfer of his property or of any part thereof, which would, under this or any other enactment for the time being in force, be void as a fraudulent preference if he were adjudged an insolvent.”

This section mainly deals with 3 types of transfers of

Properties by a debtor.

“7. Petition and adjudication:--

Subject to the conditions specified in this Act, if a debtor commits an act of insolvency, an insolvency petition may be presented either by a creditor or by the debtor, and the Court may on such petition make an order (hereinafter called an order of adjudication) adjudging him as insolvent.

Explanation:--The presentation of a petition by the debtor shall be deemed an act of insolvency within the meaning of this section, and on such petition the Court may make an order of adjudication.”

This section deals with the power of court to adjudge transferor/debtor as insolvent.

“9. Conditions on which creditor may petition:--
(1) A creditor shall not be entitled to present an insolvency petition against a debtor unless,--

(a)      the debt owing by the debtor to the creditor, or, if two or more creditors join in the petition, the aggregate amount of debts owing to such creditors, amounts to five hundred rupees; and

(b)      the debt is a liquidated sum payable either immediately or at some certain future time, and

(c)      the act of insolvency on which the petition is grounded has occurred within three months before the presentation of the petition:

         

Provided that where the said period of three months referred to in Clause (c) expires on a day when the Court is closed, the insolvency petition may be presented on the day on which the Court re-open.

          (2)      if the petitioning creditor is a secured creditor, he shall in his petition either state that he is willing to relinquish his security for the benefit of the creditors in the even of the debtor being adjudged insolvent, or give an estimate of the value of the security.  In the latter case, he may be admitted as a petitioning creditor to the extent of the balance of the debt due to him after deducting the value so estimated in the same way as if he were an unsecured creditor.” 

 This section mainly deals with debt of more than Rs.500/- and stipulated time of 3 months from the date of act of insolvency as per sec. 6. 

 

Section 28. Effect of an order of adjudication

(1) On the making of an order of adjudication, the insolvent shall aid to the utmost of his power in the realization of his property and the distribution of the Proceeds among his creditors.

(2) On the making of an order of, adjudication, the whole of the Property of the insolvent shall vest in the Court or in a receiver as hereinafter provided, and shall divisible among the creditors, and thereafter, except as provided by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable under this Act, shall during the pendency of the insolvency proceedings have any remedy against the property of the insolvent in respect of the debt, or commerce any suit or other legal proceedings, except with the leave of the Court and on such terms as the Court may impose.

(3) For the purposes of sub-section (2), all goods being at the date of the presentation of the petition on which the order is made, in the possession, order or disposition of the insolvent in his trade or business, by the consent and permission of the true owner, under such circumstances that he is the reputed owner thereof, shall be deemed to be the property of the insolvent.

(4) All property which is acquired by or devolves on the insolvent after the date of an order of adjudication and before his discharge shall forthwith vest in the Court of receiver, and the provisions of sub-section (2) shall apply in respect thereof.

(5) The property of the insolvent for the purposes of this section shall not include any property (not being books of account) which is exempted by the Code of Civil Procedure, 1908 (5 of 1908), or by any other enactment for the time being in force from liability to attachment and sale in execution of a decree.

(6) Nothing in this section shall affect the power of any secured creditor to realize or otherwise deal with his security, in the same manner as he would have been entitled to realize or deal with it if this section had not been passed.

(7) An order of adjudication shall relate back to, and take effect from the date of the presentation of the petition on which it is made.

This section deals with the property of transferor/debtor, on adjudication all properties automatically vests in the Official receiver / or court.

 “53. Avoidance of voluntary transfer:--

Any transfer of property not being a transfer made before and in consideration of marriage or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration shall, 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.”

This section anatomy comprises with the following items

1.     Any transfer of property

2.     Except exempted

3.     Shall be voidable as against the receiver and

4.     May be annulled by the court

5.     If the transferor is adjudged insolvent

6.      on a petition presented within two years after the date of the transfer

The word “transfer of property” mentioned in sec. 6 and in this section is one and same and conveys same meaning.

The word “if transferor adjudged insolvent” and the word mentioned in sec.28 “on making of an order of adjudication” – conveys same meaning and same sense

The word “presentation of insolvency petition within 3 months  from the date of the act of insolvency” mentioned in sec. 7 , 9 and the word “on a petition presented within two years after the date of the transfer” in this section  conveys same meaning .

Because no court took the creditor petition on file after expiry of 3 months from the date of act of insolvency as per sec.6.

Likewise no court may annul the sale deed as void under sec.53 after the expiry of two years.

No court shall dispose the insolvency case within two years so as to enabling the creditor to file another petition after adjudication under sec.53 for annulling the transfer of property done by transferor. Hence the very purpose of enactment or incorporation of that section would be defeated.

It is settled law - no interpretation  should defeat the very purpose of the section.

In my opinion, a court can while adjudging the transferor /debtor as insolvent can directly annul the sale deed and authorise the official receiver to sale the same because it is voidable against him.

But that does not prohibit from making an application later also under sec.54 A

Section 54 A. By whom petitions for annulment may be made

A petition for the annulment of any transfer under Section 53, or of any transfer, payment, obligation or judicial proceeding under Section 54, may be made by the receiver or, with the leave of the Court, by any creditor who has proved his debt and who satisfies, the Court that the receiver has been requested and this refused to make such petition.

                                                                                                 .....................Advocatemmmohan