R S K CHANDRASEKARAN Vs. OFFICIAL RECEIVER MADURAI

JUDGEMENT

(1.) This is an appeal against the order of N. S. Ramaswami J. dated 6th October, 1975 made in A. A0. No. 182 of 1975. 0. S. No. 145 of 1968 on the file of the Court of the Subordinate Judge of Madurai was a suit to enforce a mortgage and in that suit a decree was passed. E. P. No. 232 of 1970 was filed in that suit to execute the decree and the property was sold in auction on 1-111971, and the appellant herein was the auction-purchaser. The judgment-debtors filed E. A. No. 207 of 1972 under 0. 21, Rule 90. C. P. C. to set aside the sale, and that application was dismissed on 5-1-1974. The appeal preferred by the judgment-debtors. in A. A. 0. No. 51 of 1974, to this Court also failed, as the same was dismissed on 13-8-1974. In the meanwhile, a petition to adjudge the judgment-debtors insolvents was filed on 30-10-1971, and the order of adjudication itself was made on 17-12-1971. The Official Receiver, representing the estate of the insolvents, filed E. A. 2 of 1975 to set aside the sale on the ground that no notice was given to him and that the permission of the court was also not obtained. The learned Subordinate Judge of Madurai passed an order on 1-3-1975 dismissing the application, holding that the. adjudication took place only on 17-12-1971,that on the date when the sale took place, namely, 1-11-1971, the Official Receiver was not in the picture, and that therefore, there was no question Of giving notice to him or obtaining the Permission of the Court for the sale of the property. It was against this order of the learned Subordinate Judge that the Official Receiver filed A. A. 0. No. 182 of 1975, before this Court. The learned Judge (N. S. Ram swami J.) by his order dated 6th Oct., 1975, reversed the order of the learned Subordinate Judge, Madurai, and allowed the appeal, A. A. 0. 182 of 1975 allowing E. A. No. 2 of 1975 and set aside the sale. It is against this order the present appeal has been filed by the auction-purchaser.

(2.) The ground on which N. S. Ram swami J. reversed the order of the learned Subordinate Judge, is that by opera tion of S. 28(7) of the Provincial In solvency Act, the vesting of the property in the Official Receiver on the adjudication of the debtors as insolvents dated back to the presentation of the petition for adjudication, that in the present case it dated back to 30-10-1971, that by virtue of this statutory provision the equity of redemption vested in the Official Receiver and that consequently the decree-holders could not have brought the property to sale without notice to the Official Rece iver. The learned Judge further held that S. 51(3) of the Provincial Insolvency Act which corresponded to S. 53(3) of the Presidency Towns Insolvency Act, saved only those persons who had purchased the property in good faith, that in this case the auction- purchaser, namely, the appllantherein, had not even filed a counter contending that he had purchased the property in good faith and for consideration, and that therefore that question did not arise. It is the correct ness of this conclusion of the learned Judge that is canvassed in the present Letters Patent Appeal.

(3.) Section 38(2) of the Provincial In solvency Act provides for the vesting of the property in the Official Receiver on the making of an order of adjudication, and it reads as follows qq28. (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 become 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 commence any suit or other legal proceeding, except with the leave of the Court and on such terms as the Court may impose." Section 28(7) states