INDERSAIN ETC. Vs. INSOLVENCY JUDGE ETC.

JUDGEMENT

(1.) This is a petition by Indersain and seven other creditors, in an insolvency case, under Article 227 of the Constitution, with a prayer that the sale sanctioned by the Insolvency Judge, Simla (Respondent No. 1) at the instance of the Official Receiver (Respondent No. 2) which was held on 10th January, 1973, be set aside and cancelled, being arbitrary, unwarranted and vitiated by fraud and collusion.

(2.) The facts giving rise to the petition are these. Insolvency case No. 1 of 1967 was instituted for adjudication of the Respondents 4 to 6 as insolvents on 23rd March, 1967. The order regarding adjudication was made by the Insolvency Judge on 8th March, 1968. The insolvents owned land measuring 98 kanals jointly in Tikka Dhanot, village Ghengesh, Chak Balihar, Tehsil Dehra Gopipur (District Kangra). After the order of adjudication, this landed property vested in the Respondent No. 2 who was appointed Official Receiver. Besides the aforesaid landed property, the insolvents also possessed a shop in the bazar area of Jawalamukhi and that too vested in the Official Receiver. The Respondent No. 3 Amar Chand Sood who is a step brother to insolvent -Respondents 4 and 5, made an application before the Official Receiver (Respondent No. 2) that they being step -brothers of the applicant, he was eager to retain the property in the family. As such he offered to purchase the said landed property along with the shop at a price of Rs. 18,000/ - (Rs. 16,000/ - for the landed property and Rs. 2,000/ - for the shop). This application was moved on 3rd January, 1973. The Official Receiver (Respondent No. 2) forwarded the application to the Respondent No. 1 the Insolvency Judge on 9th January, 1973, and the order was made on 10th January, 1973, that the two properties should be sold to Respondent No. 3 at a cost of Rs. 21,000/ - (Rs. 19,000/ - for the landed property and Rs. 2,000/ - for the shop). According to the Petitioner -creditors, the order regarding sale is vitiated being illegal, void and without jurisdiction. It is also vitiated by fraud and collusion between the insolvents and the Official Receiver. The usual method of sale was by public auction. The creditors were deliberately avoided to participate in the sale. No publicity was at all given and the properties were surreptitiously purchased by Amar Chand Sood. The whole procedure was to defraud the creditors. On 8th May, 1973, one Prem Chand offered Rs. 35,000/ -for the same property. Similarly one Dr. Kirpa Ram Sood offered to purchase them at a cost of Rs. 40,000/ - and even more. These creditors, however, contended that the sale was sanctioned without their knowledge and as no public auction took place, the bidders could not be attracted. In fact the Petitioners came to know about the sale on 26th of April, 1973, when it was much too late to take any proceeding in the court, and accordingly they filed the present petition to set aside the sale.

(3.) The Official Receiver gave his affidavit in reply to the petition. He denied that any fraud or collusion existed between him and the insolvents. According to him, the property was sold in pursuance of the order of the Insolvency Judge and the price was also fixed by him. Thus, according to him, the petition is not maintainable.