MUTHAN CHETTIAR Vs. VENKITUSWAMI NAICKEN

JUDGEMENT

(1.) These appeals raise a question of some importance as to the scope and effect of Sections 51 and 52 of the Provincial Insolvency Act. The facts may be briefly stated. The decree in question was obtained on 7 March, 1933, and the property was attached in due course. Subsequently on 1 lth August, 1934, the judgment-debtors presented a petition for being adjudicated insolvents. An interim receiver was appointed and on 3 September, 1934, he was directed to take possession of the insolvents property. In the meantime the executing Court had directed the attached property to be sold. The date fixed for sale was 26th September, 1934. On that date the interim receiver and one of the insolvent judgment- debtors presented to the executing Court an application under Section 52, which, though strictly not in conformity with that section, we are prepared to treat as falling within it. On the 26 September, 1934, the learned Subordinate Judge (Mr. Krishna Nambiyar) made an order refusing to stop the sale but directing that the sale proceeds should be paid to the Official Receiver. A sale was accordingly held and a third party that is a stranger to the suit purchased the property. On the 25 October, 1934, the same two persons (the receiver and the insolvent judgment-debtor) applied to the executing Court that the sale should be set aside. The application purports to be under Section 151 and Order 21, Rule 90, Civil Procedure Code. That was heard by Mr. R. Rangaswami Aiyangar who, holding that his predecessor had acted in violation of Section 52, set aside the sale, declaring it to be null and void. In the view he took, he considered it unnecessary to go into the question of material irregularity under Order 21, Rule 90.

(2.) There are various sections in the Provincial Insolvency Act which affect or control the legal remedies of a creditor against the property or person of the debtor. An insolvency proceeding, it is hardly necessary to observe, commences with the presentation of a petition ( Section 7). The second stage is reached when the petition is admitted, although from its presentation to its admission it is but a short step ( Section 18). After the admission a date is fixed for the hearing of the petition Section 19(1) and the Court may on such hearing either dismiss the petition or make an order of adjudication, which marks the third stage. ( Section 27).

(3.) When the Court makes an order admitting the petition an interim receiver may be appointed, in whom, however, the property does not vest but whose powers are those conferred on a receiver under the Civil Procedure Code, ( Section 20). But when an order of adjudication is made, the insolvent's property immediately vests in the Court or in a receiver ( Section 28). The Court may appoint a receiver either at the time of the order of adjudication or at any time afterwards. ( Section 56). If there is an interval between the order of adjudication and the appointment of receiver, the property first vests in the Court and when a receiver is appointed, it thereupon vests in him. ( Section 56).