R APPACHI Vs. OFFICIAL RECEIVER PERIYAR DISTRICT ERODE

JUDGEMENT

(1.) THE appellant is the purchaser of a site situated in the village Nandagoundanpalayam, Gobi Taluk, Erode District, under a sale deed dated 25.3.1976. THE vendor was one M.P. Nachimuthu who was subsequently declared as insolvent on 14-9-1977. THE Official Receiver filed an application on 4-7-1981 for setting aside the sale. That application was support by an affidavit of one Velayudham who was the creditor who had instituted Insolvency Petition No. 43/76 to declare Nachimuthu as insolvent. In that affidavit, he has stated that the Insolvency Petition was based on the fact that the said Nachimuthu had sold the property to the appellant herein on 25-3-1976 for a sum of Rs. 1,000/- and that action of the said Nachimuthu was treated as an act of insolvency, for the purpose of the insolvency petition.

(2.) THE court of the first instance, namely Subordinate Judge's Court, Erode allowed the application so filed by the Receiver which was numbered as I.A. No. 229/81 in I.P. No. 43/76. THE appeal against the said order of the Subordinate Judge, Erode to the District Judge, Erode in C.M.A. No. 8/85 proved unsuccessful and the appellant now before this Court impugned the judgment of the courts below.

(3.) IN the trial court, the appellant had examined himself. The insolvent was not examined nor was the Official Receiver. The petitioning creditor was examined as a witness. The trial court as also the lower Appellate Court held that the petition of the Receiver was not barred by Limitation as Article 181 of the Limitation Act 1908 had been held to be inapplicable to such proceedings by the courts. The courts below also held that the sale was not a bona fide one. To reach that conclusion, the courts relied on the fact that the appellant/petitioning creditor as also the INsolvent were the residents of the same village and it was presumed that they were aware of each other's activities. The court also held that consideration had not passed because the scribe of the document and the witnesses had not been examined. This approach of the courts below was criticised by the counsel for the appellant as being one which sought to draw conclusion on surmises rather than on the basis of concrete evidence.