PULAGAM CHANTI REDDY Vs. OFFICIAL RECEIVER EAST GODAVARI

JUDGEMENT

(1.) The above appeal is filed under section 75 of the Provincial Insolvency Act under the following circumstances: The firm of Sri Lakshmi Tile Works, Dwarapudl, East Gcdavari District, obtained a sum of Rs. 22,000 op, I7th October, 1960 from Government by way of loan on the security of the properties, namely, the machinery and the structures belonging to the firm, under the, provisions of the Madras State Aid to Industries Act (V of 1923). On 31st October. 1962, two of the partners were adjudicated as insolvents. Thereafter as the firm failed to repay the loan, the Government took proceedings under the Madras Revenue Recovery Act and sold the machinery belonging to the firm on 6th January, 1963 for a sum of Rs. 16,500 and the appellant herein became the purchaser at the said revenue sale. The Government received the purchase money as a secured creditor and the purchaser was given a Sale certificate. Thereafter,the Official Receiver filed an application I. A.No. 25/63 in I. P. No.3/62 on 20th April. 1963 in the Court of the District Judge, East Godavari at Rajahmundry to set aside the said sale on the ground that no notice was given to him and that the sale fetched a very low price thereby resulting in a loss to the unsecured creditors. The Court below set aside the sale holding, firstly, that the Official Receiver had no notice of the saie proceedings and secondly, that the sale feched a very low price. In the Court below it was also represented by the Official Receiver that all the creditors were prepared to discharge the debt of the Government if some time were to be granted. But though they had enough time before the disposal of the application, no creditor came forth to discharge the debt of the Government.

(2.) In this appeal filed by the purchaser who was impleaded as respondent No. 1 in the Court below, the learned Counsel Sri Rajeswara Rao raised three points : (1) That the application by the Official Receiver under section 4 to set aside the sale is not maintainable and that his remedy was only to have the sale set aside under the Revenue Recovery Act under which he has to deposit the sale price as a condition for having the sale set aside. (2) The properly sold was one of the assets of the firm and not the property of the insolvent and hence the machinery did not vest in the insolvent and that therefore the Official Receiver had no locvs standi to have the sale set aside. (3) Eves assuming that the Official Receiver has an interest in havirg the sale set aside there was absolutely no proof that the sale was effected for a low price.

(3.) I am unable to agree with the first contention raised by the appellant's learned Counstl. Section 4 of the Provincial Insolvency Act is very wide in its terms and in the absence of any other specific provisions in the Act, the Receiver is entitled to invoke the provisions of section 4 for relief under the Act. Section 4 provides that the Insolvency Court shall have powers to decide all questions whether of title or priority or of any nature whatsoever, and whether involving law or fact, which may arise in any case of insolvency or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case. Tre object of the Receiver in having a resale js to realise as much money as possible, so that if there is any surplus left after discharging the secured debt in favour of the Government it may be available for distribution to the simple creditors. I therefore hold that the application is maintainable under section 4 of the Act.