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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.