CHUNNILAL BHAWANIDAS Vs. VITHAL BALAJI KASAR

JUDGEMENT

(1.) 1. The appellant Chunnilal, who is one of the creditors of an insolvent, applies to have a transfer made to another creditor Vithoba set aside. The facts are these: Vithoba filed a suit on a simple money claim against one Ganpat and attached the property now in suit before judgment. On 18th August 1927 he obtained his decree, and on 11th October 1927 applied for execution. After this on 28th July 1928 Ganpat was declared insolvent on the strength of a petition dated 17th November 1927. Notice of the insolvency was served on Vithoba on 20th December 1927, and he filed an affidavit of debts on 20th October 1928. In this affidavit he mentioned his decree against Ganpat, the attachment before judgment and the impending execution, but the insolvency Court took no steps in the matter. Vithoba did not tell the executing Court about the insolvency of his judgment-debtor.

(2.) IN due course the property was brought to sale and purchased at the auction on 12th February 1924 by Vithoba himself. Nobody challenged the sale and it was confirmed on 5th April 1929. The appellant Chunnilal now wants the insolvency Court to annul the sale on the ground that it was void and utilize the property for the benefit of the creditors. Vithoba claims that he purchased in good faith, so the question now is whether he is protected under Section 51(3), Provincial Insolvency Act of 1920, as a purchaser in good faith under a sale in execution. I am of opinion the position contemplated there does not arise in this case. Their Lordships of the Privy Council have decided in Raghunath Das v. Sundar Das Khetri AIR 1914 PC 129 (of 42. Cal.) that an order of adjudication vests the insolvent's property either in the Court or the Official Assignee, and there by denudes the insolvent of any saleable interest in it. The attachment avails nothing 'for' as their Lordships point out: "an attachment prevents and avoids any private alienation, but does not invalidate an alienation by operation of law such as is effected by a vesting order .... and an order for sale though it binds the parties does not confer title."

(3.) THAT is what has happened here. Sir Dinshah Mulla is of the same opinion in his Law of Insolvency at p. 178, though he says there is a doubt about the matter. It was certainly the law under the previous Insolvency Acts, as is shown by Dambarsing v. Munawar Ali Khan (1918) 40 All 86 Gobind Das v. Karan Singh (1918) 40 All 197 and The Official Receiver, Tinnevelly v. Sankaralinga Mudaliar AIR 1921 Mad 204. I agree with Sir Dinshah that it is still the law. Therefore the question of good faith is irrelevant because the execution proceedings were a nullity after the order of adjudication which dated back to the petition. But even if Section 51(3) is not to be read subject to the ruling of their Lordships in Raghunath Das v. Sundar Das Khetri AIR 1914 PC 129, I think the result would be the same in this particular case, for Vithoba deliberately purchased a defective title with his eyes open. Consequently he cannot claim the protection given to those who believe they are getting a sound title and later on find some hidden flaw of which they were unaware.