BHANWARLAL Vs. BABULAL

JUDGEMENT

(1.) This appeal is by the auction purchasers, under S. 75 of the Provincial Insolvency Act, 1920 (hereinafter referred to as 'the Act'). They are aggrieved by the action of the receiver - forfeiting their one-fourth deposit of the bid money for alleged breach of the terms of the auction in not depositing remaining sum of the bid within thirty days of the auction.

(2.) The applicants first approached the Insolvency Court by an application under S. 68 of the Act which was allowed and the forfeiture was set aside with directions to the receiver to return the one-fourth deposit. The receiver preferred an appeal under S. 75 of the Act to the Court of the District Judge, Raipur, who by order dated 4-3-1982 allowed the appeal by setting aside the order of the Insolvency Court and upholding the action of the receiver of forfeiture of one-fourth deposit. The auction purchasers have, therefore, approached this Court in this appeal.

(3.) By order passed on 25-3-1974, the partners of firm Jawerchand Thakarsi, Sadar Bazar, Raipur were adjudged insolvent under S. 9 of the Act with effect from 4-10-1972. That was the date of presentation of the petition in the Insolvency Court for the purpose. By order dated 11-1-1975, one Shri R. M. Agarwal, Advocate, was appointed receiver under S. 56 of the Act to take possession of the property and assets of the insolvents and for exercising statutory powers of sale and realization of the debts under S. 59 of the Act. On 31-12-1975, in place of Shri R. M. Agarwal, Advocate Shri N. K. Pandey, Advocate, respondent No. 4 was appointed receiver. On 10-1-1977, the Insolvency Court directed the newly appointed receiver to take charge of the property of the insolvent on 19-4-1978. The receiver sought permission of the Court to sell some properties of the insolvents. On 25-1-1979, however, there were objections filed to the proposed sale. Hence the Court directed the receiver not to finalise the sale till the objections were decided. The receiver was directed to conduct the sale by auction and submit its report. The receiver advertised the date of sale and held auction of house Nos. 11/109 to 113 of Sadar Bazar, Raipur on 29-1-1979. The highest bid of Rs. 2,81,000 /- offered by the appellants was accepted and they deposited a sum of Rs. 1,38,000 /- immediately on acceptance of the bid. It is not disputed that the remaining 3/4th amount of bid was not deposited within thirty days of the date of the auction. The appellants' case is that the receiver failed to produce title deeds of the houses and backed out of his assurance to deliver vacant possession of the properties auctioned which was the main cause of rising of the bid. The appellants, therefore, had withheld their 3/4th deposits. It is also not in dispute, as is clear from the report of the receiver and the contents of the written reply submitted by him to the Court, after the auction on 17-10-1981, that the terms of the auction were neither advertised before auction nor were they reduced in writing for supply to the intending bidders present on the date of auction. The case of the receiver is that the terms of the auction required deposit of one-fourth amount immediately on acceptance of highest bid and liability to deposit the remaining 3 /4th within thirty days as a condition was orally informed to the bidders present.