J V VENKATAKRISHNA AYYAR Vs. OFFICIAL RECEIVER

JUDGEMENT

(1.) This revision petition is filed by a successful bidder at an auction sale held by the Official Receiver, Salem, against the order of the District Judge, Salem, dismissing his appeal which was prefered against the judgment of the Subordinate Judge of Salem, setting aside the sale in his favour. A brief reference may be made to the facts of the case which are not in dispute.

(2.) The Official Receiver, Salem, held an auction sale of the property of an insolvent in I. P. No. 15 of 1941 on 20th December 1946. In a proclamation of sale, he notified that the properties of the insolvent were subject to an encumbrance of Rs. 7000 due to the insolvent's brother. In a partition suit between the insolvent and his brother items 1 and 3 which were valued at Rs. 11,000 and which form the subject matter of the present litigation, were allotted to the insolvent, while item 2 which was valued at Rs. 4000 fell to the share of his brother. To equalise the value the insolvent had to pay a sum of Rs. 3600. But in the judgment in the final decree proceedings in the partition suit, the insolvent was directed to pay to his brother, evidently by mistake, the difference in value between items 1 and 3 that fell to the share of the insolvent and item 2 that was allotted to his brother, and a charge was created for that amount over items 1 and 3. Misled by this direction, the Official Receiver notified in the proclamation of sale that the properties were subject to an encumbrance of Rs. 7000. At the auction sale on 20th December 1946 the petitioner who happened to be the only bidder purchased this property for a sum of Rs. 253 subject to the encumbrance. It is obvious that if it was notified in the proclamation of sale that it was subject to an encumbrance of only Rs. 3500 it would not have fetched such a low price as Rs. 255.

(3.) When the mistake was discovered by the Official Receiver, he moved the Court for setting aside the auction sale and thereby rectify the error committed by him. Thereupon notice was issued to the successful bidder who raised an objection that the insolvency Court had no jurisdiction to set aside, at the instance of the Official Receiver, the sale held by him, as Section 68 of the Provincial Insolvency Act is not applicable to a case like this. Overruling this objection, the Subordinate Judge set aside the sale relying on two decisions of this Court, one reported in Ramabadra Chetti v. Ramaswami Chetti, 44 M. l. J. 284 : (A. I. R. (10) 1923 Mad. 350) and the other in Kasim Sahib v. Official Receiver, Guntur, 1945-2 M. L. J. 553 : (A. I. R. (33) 1946 Mad. 89). The successful bidder who was aggrieved by that order preferred an appeal to the District Judge who upheld the order of the Subordinate Judge setting aside the sale. It is against that judgment of the District Judge that the present revision petition has been preferred.