CHERUKURI VENKATESWARLU Vs. OFFICIAL RECEIVER GUNTUR

JUDGEMENT

(1.) 1. The petitioner is the decree-holder in O,S. 77/60 Sub-Court, Bapatla wherein be obtained a decree for money against respondents 2 and 3 herein, In E. P, 31/68 he applied for execution of the decree by attachment and sale of their properties. The sale was ordered and was about to be held on 24-6-68. In the meanwhile a petition I. P. 7/68 was filed by a creditor, Munnangi Adireddi to declare the respondents as insolvents. In that petition an interim Receiver was appointed on 28-3-1968 in I. A. 566/68. He filed a petition, E.A: 431/68 dt. 20-6-68 stating that if the sale was held jn the executing court all other creditors of the insolvent would suffer huge loss and therefore in the interests of the general body of creditors as well as insolvents the sale should not be held by courti He therefore, requested that the Court may be pleased to stay the sale to be held on 24-6-68. This application was dismissed by tie learned Subordinate Judge. The Official Receiver filed C. M. A. 4/58 to the district Court, Guntur. Before the appeal came up for hearing, the application for a stay having been dismissed by the executing Court, the properties were brought to sale and purchased by the decree-holder and the E.P. was posted for confirmation of sale to 20-7-68. The decree-bolder applied for stay of confirmation of sale in I. A, 450/68 in C. M A. 42/68 and the appellate Court ordered stay of confirmation pending disposal of the appeal, The learned Additional District Judge, who heard the appeal set aside the order of the lower Court. HP also directed that the property should be transferred to the interim Receiver to be dealt with according to law in view of the mandatory provisions of Section 52 of the Insolvency Act. The appeal was allowed and the sale of the property was also set aside. The petitioner herein has preferred this revision as against the said order.

(2.) The only point that arises for consideration in the revision petition is whether the lower appellate court was right in setting aside the sale and in directing the property to be transferred to the Receiver. The lower appellate Court observed that though the Receiver had not asked for transfer of the property to him in E.A.3 431/68 and bad merely applied for stay of the sale it must be deemed that be bad impliedly asked for such a transfer. He proceeded to hold that as the provisions of Sec. 52 of the Act were mandatory and the Court had to direct the property to be delivered to the Receiver, if it does not do so but proceeds to sell the property in execution of the decree, the sale has to be set aside: If the auction purchaser was a third party and a stranger he would not bave set aside the sale, but would have directed the sale proceeds to be transferred to the Receiver, but as in this case the Decree-holder was the auction-purchaser he would direct the sale to be set aside and the auction-purchaser he would direct tne sale to be set aside and the property to be transferred to the Receiver to be dealt with according to law.

(3.) It is argued by Mr. Krishna Murthy, the learned counsel for the petitioner that the lower appellate court erred in holding that in E.A. 431/68 the official Receiver had impliedly asked for delivery of the property. Even assuming that the application should be considered as one for delivery of the property under Section 52 of the Act, he argued that if the executing court fails to do so but proceeds to sell the property the sale would not be a nullity and under section 51 (3) of the Act a person who purchases the property in good faith acquires good title to it against the receiver. He contended that the decree-holder in this case was a purchaser in good faith and therefore the Court below erred in setting aside the sale in his favour. The relevant provisions of the PROVINCIAL INSOLVENCY ACT, 1920 are sections 51 and 52 which are in the following terms ;-