HAMID KHAN Vs. OFFICIAL RECEIVER

JUDGEMENT

(1.) The applicants were adjudged insolvents under the provisions of the Provincial Insolvency Act, 1920 (hereinafter referred to as the Act). The Official Receiver was appointed as receiver for the property of the applicants-insolvents. Their property, inter alia, consisted of certain Bhumidhari plots. On 24th October, 1971 the receiver (opposite party No. 1) held a public auction for sale of 12 1/2 bighas of Bhumidhari land that had vested in him as a result of his appointment as such. Counsel for none of the parties claimed that the land in question had been put to auction sale as a consequence of any order previously obtained from the court. The insolvents applied to the court for staying confirmation of the sale on the allegations, inter alia, that the market price of the property sold was more than Rs. 50,000/- but the receiver acting quite illegally and in collusion with the purchaser was selling it for the grossly inadequate amount of Rs. 21,000/- only. The court held that since the applicants had already been declared insolvents and the properety in dispute was in the custody of the re-ceiver, they had no locus standi to get confirmation of sale stayed. In this view of the matter the Court vacated the ex parte interim order that had earlier been passed by it and confirmed the sale. Against the order of the Insolvency Court, the insolvents preferred an appeal purporting to be under Section 75 of the Act. The learned District Judge held that "it is well settled law that the Official Receiver appointed under Section 56 is the person on whom have devolved, by virtue of the appointment, the sum total of the rights and liabilities of the insolvent. From that moment it is he and not the insolvent that represents the estate. He is the legal owner of the property having power to sell it. On the basis of this well settled proposition of law it could be only the Official Receiver who could have filed an appeal for the insolvents, if he felt that any injustice was being done to the insolvents, but the insolvents could not have any locus standi to have done so." The appeal was considered to be misconceived and was summarily rejected. The view taken by the learned District Judge was in consonance with the Division Bench decision of this Court in Sakhawat Ali v. Radha Mohan (AIR 1919 All 284).

(2.) The insolvents preferred the instant revision in this Court and when it came up for hearing before one of us (Hon'ble the Chief Justice) reliance was placed before him by learned counsel for the applicants on the Full Bench decision of the Madras High Court in C. Narsimham v. Ramayya (AIR 1950 Mad 492) in which, after considering the decision of this Court in Sakhawat Ali's case and various other cases of other Courts as well as one of its own earlier Full Bench decision, a contrary view was taken. It was also contended that a learned single Judge of this Court in Dwarika Prasad v. Damodar Swarup (AIR 1967 All 520) had taken a view which is at variance with the aforesaid Division Bench decision of this Court. In the opinion of the learned Chief Justice the decision rendered in Sakhawat Ali's case needed reconsideration and accordingly this case was referred to a Full Bench and that is how it happens to be before us.

(3.) The basic question which needs consideration is as to whether after a receiver has been appointed of the property of the insolvents and it has come to vest in him, an objection against an act of the receiver is maintainable at the instance of the insolvents under Section 68 of the Act and if so whether on allegations such as those on which the applicants challenged the auction sale held by the receiver. The further question is as to whether if such an objection is maintainable before the Court under Section 68 of the Act at the instance of the insolvents, they have a right to carry the matter in appeal before the District Court under Section 75 (1) of the Act and thereafter in, revision to this Court under the proviso to that provision. Strong reliance was placed before the learned Chief Justice as well as before us by the learned counsel for the opposite parties on Sakhawat Ali's case wherein it was held that,