HENRY MERIEU Vs. OFFICIAL RECEIVER

JUDGEMENT

(1.) This is an appeal from the order of the District Judge of Madura, dated 19 July 1932, on an application by the Official Receiver of Madura. The application purported to be made under Secs.4, 5 and 51, Provincial Insolvency Act, and Secs.47 and 151, Civil P.C., and the principal prayer therein was that the respondent who is the decree-holder purchaser in execution of the decree obtained by him in O.S. No. 820 of 1923 on the file of the High Court should be directed to pay to the petitioner, that is, the Official Receiver, the sale amount of Rs. 20,520 with interest thereon from the date of sale, namely 14 July 1930.

(2.) The respondent is a merchant residing in France and he purchased the property of the judgment-debtor after obtaining permission from the Court to bid and also to set-off the purchase price against the amount due to him under the decree. There can be no doubt that it was because he was given permission to set-off along with the permission to bid that he actually bid at the sale and purchased the properties. Unfortunately the actual sale took place at about 4 p.m. on 14 July 1930, while a little earlier in the day at about 11 a.m. a petition had been filed in another Court in Madura, namely, the Subordinate Judge's Court, to adjudicate the judgment-debtor as an insolvent, and that petition for adjudication was subsequently allowed and the judgment-debtor was adjudicated insolvent. The result of the adjudication under Section 28(7) was that it took effect from the date of the presentation of the petition itself. In other words, at the time when the sale actually took place the judgment- debtor whose property was being sold had already become an insolvent and adjudicated as such in the eye of the law.

(3.) The sale was held without notice of course to the Official Receiver in whom the property of the insolvent was vested by the order of adjudication with effect from the date of the sale. A sale of this kind ought to have been deemed to be a nullity in view of the decision of the Privy Council in Raghunath Das V/s. Sundar Das Khetri 1914 P.C. 129, which was followed in the subsequent decision reported in Anantarama Ayyar V/s. Kuttimalu Kovilamma 1917 Mad. 924. The learned District Judge however confirmed the sale on 15 March 1932, i.e., over 18 months after the sale, and recorded part satisfaction of the decree in spite of the decree- holder's attempt to resile from the sale. The respondent's main contentions were that the sale to him was expressly subject to the condition that he was to have the right to set-off the purchase price against the decree amount, that the confirmation of the sale was also subject to the same condition as could be seen by the Court's order recording part satisfaction of the decree, and that the Official Receiver was therefore not entitled to demand that the previous order of the Court allowing a set-off and recognizing it should be set aside or to require that the respondent should deposit the purchase-money into Court for payment to the Official Receiver. The learned District Judge was of opinion that the permission given by the Court to set-off was subject to the general provisions of the law, one of which is Section 51, Provincial Insolvency Act. He was further of opinion that There is no apparent injustice (though there may be much practical inconvenience) in requiring a purchaser to pay the price which lie has himself offered for property, merely because he has not been able to adjust the price as he had every reason, to expect.