RAJ KUMAR AND ANR. versus OFFICIAL RECEIVER OF THE ESTATE OF M/S. CHIRANJILAL RAMCHAND, LUDHIANA AND ORS.

Citation: [1995] SUPP. 6 S.C.R. 679 · Decided: 14-12-1995 · Supreme Court of India · Bench: K. RAMASWAMY, B.L. HANSARIA · Disposal: Dismissed

Judgment (excerpt)

RAJ KUMAR AND ANR. 
v. 
OFFICIAL RECEIVER OF THE ESTATE OF M/S. CHIRANJILAL 
RAMCHAND, LUDHIANA AND ORS. 
DECEMBER 14, 1995 
[K. RAMASWAMY AND B.L. HANSARIA, JJ.] 
A 
B 
Limitation Act, 1908-Anicle 120 of Schedule III-Limitation Act, 
1963-Article 113 of the Schedule-Provincial Insolvency Act-Section, 4 
-Suit for declaration as regards certain properties of insolvent-Limitation C 
begins to nm when cloud on the title of Official Receiver is cast and not 
earlier. 
The estate of C who was one of the three partners in a firm was taken 
over by the Ollicial Receiver after C was declared insolvent in 1955. The 
Ollicial Receiver, filed an application under section 4 of the Provincial D 
Insolency Act in 1966 and the Insolvency Court passed a declaration that 
the insolvent had l/3rd share in certain items and 2/3rd share in certain 
other items. On appeal, the District Court declared that C had l/3rd share 
in two items and the finding was also upheld by the High Court. 
On Appeal, it was contended by the sons of another partner that the E 
petition was 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, and that the High Court had not bestowed due care 
in scrutinising the evidence and that alleged admissions relied on by the 
High Court are not correct. 
F 
Dismissing the appeal, this Court 
HELD : 1. The application was filed within limitation. When the 
appellants claimed exclnsive title to the properties of the insolvent, the 
cloud on the title of the ollicial receiver, who bad taken over the estate, is G 
cast. Consequently, the limitation began to run when the cloud was cast. 
[681-G] 
2. In view of the discussion of various items by the High Court and 
the conclusion reached on the basis thereof, the finding of the High Court 
that the admissions bind the appellants is upheld. [683-D] 
H 
679 
680 
SUPREME COURT REPORTS [1995] SUPP. 6 S.C.R. 
1 
A 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1985 of 
1980. 
From the Judgment and Order dated 15.2.80 of the Punjab & 
Haryana High Court Second Appeal from Order No. 4 of 1975. 
B 
E.C. Agarwala for the Appellants. 
S.L. Aneja for the Respondents. 
The following Order of the Court was delivered : 
C 
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 th~ 
subject matter before the High Court. 
The appeal by special leave arises from the order in Second Appeal 
No. 4/75 dated February 15, 1980. The Insolvency Court initially declared 
D 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 
E 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 
F 
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 in some others; but on appeal the District Court declared that 
Chiranji Lal had l/3rd share in Item No. 317, 326 in Division Number 3 in 
Ludhina and 1000 sq. Y ds. in Civil Lines, which the High Court identified 
G 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. Agarwala, 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 sub-
H sequently explained in the evidence and the High Court had not bestowed 
RAJ.KR. v. OFFICIAL RECEIVER OF THE CHIRANJILALRAMCHfu'<D 
681 
due care in scrutinising the evidence. He has contended that the petition A 
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 limitation of six years; but as the 
application was filed af

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