OFFICIAL RECEIVER Vs. NERELLA VENKIAH

JUDGEMENT

(1.) On the 9 August, 1929 an application was filed in the Court of the Subordinate Judge of Nellore for the adjudication in insolvency of one Lebakula Subba Reddi, the father of five sons. He died before the petition could be heard, but the petition was continued against his three elder sons and rightly or wrongly an order for adjudication was passed against them on the 24 November, 1930. On the 16 November, 1934 the second respondent in this appeal filed a suit against the five sons for the money owed by them on a promissory note, which was a renewal of an earlier promissory note made by the father. The second respondent did not implead the Official Receiver, although he knew of the adjudication of the three sons. The suit was not defended and in due course a decree was passed against the defendants, which resulted in the second respondent instituting execution proceedings, in the course of which he attached certain immovable property belonging to the family. On the 18 November, 1935 the property was sold by the order of the Court and purchased by the first respondent. On the 17 December, 1935 the two younger sons applied to the Court for an order setting aside the sale on the ground of material irregularity and fraud in the publication of the sale, and at the same time a similar application was filed by the Official Receiver, who is the appellant in this appeal. The appellant also relied on the provisions of Order 21, Rule 22 of the Civil P. C. by reason of which he ought to have received notice of the execution proceedings. It is common ground that no notice was served upon him. The District Munsif of Kavali, in whose Court the second respondent's suit had been decreed and the execution proceedings conducted, held that there were no grounds for setting aside the sale and accordingly dismissed the petition. The two younger sons did not question the District Munsif's decision, but the appellant did. He appealed to the District Judge of Nellore, who allowed the appeal. The District Judge considered that Section 47 of the Civil P. C. applied and that it gave the appellant the right of challenging the sale as the representative of the three insolvent judgment-debtors. He set aside the sale on the ground that the insolvent judgment-debtors had no interest in the property, because it had devolved upon the appellant. The first respondent then appealed to this Court and his appeal was allowed by Wadsworth, J. The main reason given by the learned Judge for allowing the appeal was that the appellant was not the representative of the insolvent judgment-debtors, but of their creditors and therefore he was not within the provisions of Section 47 of the Civil P. C..

(2.) We are of the opinion that the learned Judge erred in allowing the appeal. Order 21, Rule 22 makes it obligatory on a decree-holder to serve notice of an application for execution on the legal representative of a party to the decree, or where the party to the decree has been declared insolvent, on the Official Assignee or the Receiver in insolvency. A Full Bench of this Court held in Rajagopala Aiyar v. Ramanujachariar (1923) 46 M.L.J. 104 : I.L.R. 47 Mad. 288, (F B.) that a sale which has been held without the service of the notice required by Order 21, Rule 22 is void, and therefore if the appellant is to be regarded as a representative of a party to the decree he had the right to institute the petition which has given rise to this appeal and to have an order passed in his favour. It has been argued on behalf of the first respondent, the purchaser at the auction, that this is not a dispute between the representatives of the parties to the suit, but between the representatives of the insolvent judgment-debtors, that is to say, a dispute between the representatives of one side. We cannot accept this contention. The appellant as the Official Receiver represents the insolvent judgment-debtors. Their interest in the property with which these proceedings are concerned devolved upon him. We disagree with the learned Judge that the appellant must be regarded merely as the representative of the creditors and we are of the opinion that the fact that the first respondent claims through the judgment-debtors does not make the dispute one between the representatives of the judgment-debtors. It is obviously a dispute between the second respondent as the decree-holder and the Official Receiver who represents the interests of the insolvent judgment- debtors. What the appellant has complained of, and is complaining of, is not what the first respondent has done. He has throughout complained of the fact that the second respondent has brought this property to sale without notice to him. Therefore the dispute is clearly between the decree-holder and the representative of the insolvent judgment-debtors which means that Section 47 has full application. The mere fact that the first respondent as the auction purchaser is affected by the proceeding will not make it any the less a dispute between one of the parties and the representative of the other parties to the suit. The appellant having the right of recourse to the Court by virtue of the provisions of Section 47 he is entitled to have his petition granted by reason of the non-observance of Order 21, Rule 22.

(3.) The result is that the appeal will be allowed so far as the interest of the three insolvent judgment-debtors in the property is concerned. The District Judge set aside the sale with regard to the two non-insolvent judgment-debtors also, but here he erred.