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

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

                          DECEMBER 14, 1995
                                                                                 B
            [K. RAMASWAMY AND B.L. HANSARIA, JJ.]

       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. Yds. 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 after 11 years, it is barred by limitation.

        The first question is whether the application is barred by limitation.   B
 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    C
 and to what extent, he was insolvent in joint properties. The insolvent
 Chiranji Lal claimed to have l/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        D
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".         E
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    F
father and Chiranji Lal and another were declared to be insolvent. Since
Chiranji Lal allowed the declaration to become final and the property was
joint 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          G
estate, was cast. Consequently, the limitation began to run when the cloud
was cast. Admittedly, that was done when the application came to the filed.
Thus, the application was within limitation.

      The question then is whether in items 1 and 3 as noted by the High H
    682                  SUPREME COURT REPORTS (1995] SUPP. 6 S.C.R.

A Court, the insolvent had 1)3rd share. The question was considered in
    extenso 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
B           given by Nihal Chand : AW     5n    written statement of Nihal Chand
            dated 26.8.57 AW 2/3 dated 8th October, 1965, an application filed
            c,,1 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 desola-
            tion deed, AW 6/2 the copy from the entries of the register of the
c           property-tax for the years 1956 to 1961; AW 6/3 for the years 1960
            to 1965; AW 6/9 for the years 1965 to 1970, in which the share of
            Charanji Lal insolvent has been shown as l/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
D           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
E           record and hence has not much evidentiary value.

             it was. conceded that there are five sale-deeds regarding the
             property at Item No. l Out of these, three sale- deeds, i.e. Ex. OC
             dated 2nd June, 1938, Ex. OL dated 17th April, 1940 and Ex. OM,
F            dated 2nd June, 1935 are in favour of all the three brothers,
             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
G            thereof to explain the circumstances under which the same was
             made. What a party himself admits to be tme 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
H            explain the said admissions by saying that in order to help him, i.e.
       RAJ. KR v. OFFICIAL RECEIVER OF THE CHIRANJILAL RAM CHAND       683

         the insolvent, Chiranji Lal, he allowed him to have 1/3rd share of A
         the rent of this property. Various admissions made in this case are
         unambiguous and unequivocal. In the written reply Ex. AW 517,
         filed by Nihal Chand in these proceedings, it has been clearly
         admitted that the insolvent has l/3rd share in the property. Under
         these circumstances, the burden of proof on the Official Receiver, B
         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
         l/3rd share in the property at item No. l."                          c
       These considerations with equal force apply to item No. 3.

       In view of the discussion of various items by the High Court and the
conclusion reached on the basis therefore, we entirely agree with the High
Court that the admissions bind the appellants. Therefore, it is clearly       D
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,           E
without costs.

V.M.                                                    Appeal dismissed.