OFFICIAL RECEIVER Vs. KSAMBASIVA AYYAR

JUDGEMENT

(1.) In these appeals the Court is concerned largely with the effect of Section 51(1) of the Provincial Insolvency Act and several interesting questions of law are involved.

(2.) In O.S. No. 4 of 1933 on the file of the Court of the Subordinate Judge of West Tanjore the 4 respondent in L.P.A. No. 38 of 1940 obtained a money decree against one Kasinatha Aiyar, who in that year was adjudicated insolvent. In execution of the decree he attached immovable properties belonging to the judgment-debtor. There were three lots of properties, two of them being situate in the village of Anakkudi and the third in the village of Manikandi. The Court ordered all the properties to be sold on the same date, but in separate lots. The sales took place on the 30 June, 1933. The two lots in Anakkudi village were sold for an aggregate sum of Rs. 7,500, which was paid into Court by the purchasers on the day of the sale. The lot in Manikandi village was sold for Rs. 4,520, of which 25 per cent, was paid into Court immediately and the balance on the 4 July, 1933. On the 3 July, 1933 a petition was filed in the Subordinate Judge's Court asking for the adjudication of Kasinatha Aiyar and in due course he was adjudicated on this petition. The proceeds of the sale of the insolvent's properties in the -execution proceedings were rateably distributed between the decree-holder and five other creditors, who had also obtained decrees against Kasinatha Aiyar. On the 7th October, 1936 the Official Receiver of West Tanjore filed an application asking the Court to direct the six creditors who had participated in the sale proceeds to refund the sums which they had received, but the Subordinate Judge dismissed it on the ground that the properties had been sold before the admission of the insolvency petition. The Official Receiver appealed to the District Judge of West Tanjore, who reversed the decision of the Subordinate Judge. The District Judge considered that the properties had been sold after the admission of the petition.

(3.) Against the order of the District Judge allowing the Official Receiver's application two appeals were filed, one by respondents 1, 2, 4 and 6 in L.P.A. No. 38 of 1940 and the other by the third respondent in that appeal. The appeals were heard by King, J., who held that the insolvency petition had been admitted on the 3 July, 1933, that is, three days after the Rs. 7,500 had been paid into Court and one day before the balance of the Rs. 4,250 realized for the Manikandi property was paid into Court and that by reason of Section 51 of the Provincial Insolvency Act the creditors were entitled to keep the Rs. 7,500, but they were bound to refund the Rs. 4,520, although the decree-holder was entitled to deduct from what he had received out of the Rs. 4,250 the costs incurred by him in the execution proceedings. The learned Judge also held that the Official Receiver was entitled to interest on the moneys which the creditors had wrongly withdrawn from the Court. These Letters Patent Appeals have been filed by the Official Receiver. The respondents have filed . memoranda of cross objections. So far as the Official Receiver is concerned, he only challenges the finding of King, J., that the creditors were entitled to retain the Rs. 7,500. Read together, the memoranda of cross- objections raise all the questions decided against the creditors by the learned judge.