MAST RAM Vs. J K MENON

JUDGEMENT

(1.) Dewan Krishan Laxmi Narian was declared insolvent on 21st March, 1975 and after disposing of the assets of the firm and setting the account of the creditors and debtors, the proceedings were annulled on 27th February, 1982.

(2.) During the insolvency proceedings, the Official Receiver took charge of the assets of the insolvent firm and put the property in dispute to auction on 2nd October, 1981 in which J.K. Menon was the highest bidder. The auction sale was confirmed and the sale deed was executed in his favour on 7th January, 1982. Since Mast Ram was in possession of the property in dispute, J.K. Menon filed a suit for possession and for recovery of mesne profits against him and in that suit Mast Ram was served on 25th September, 1984. After receipt of notice on 2nd December, 1984 Mast Ram fled a suit for declaration to challenge the auction-sale made by the Official Receiver on 2nd October, 1981 and the subsequent steps concluding in the sale deed on the basis that he was approached by five persons, who were impleaded as defendants 2 to 6, to purchase the property in dispute from them who claimed to be the owners and by agreement dated 18th April, 1977 he agreed to purchase the same and paid Rs. 3000/- in part performance of the contract and the balance of Rs. 6000/- were payable at the time of registration. The Official Receiver and the insolvent firm were impleaded later on.

(3.) The auction purchaser and defendant No. 3 contested the suit on numerous grounds, out of which worth noticing are that if the plaintiff wanted to avoid the auction-sale, he had to apply under Section 68 of the Provincial Insolvency Act, (for short 'the Act), within 21 days of the act of the receiver complained of and for setting aside the same, which was not done by the plaintiff; that the suit was beyond three years of the auction-sale and was time barred, and that the plaintiff had not title in the suit property and hence has no cause of action.