SARDAR Vs. BNAVIN CHANDRA

JUDGEMENT

(1.) This is an appeal arising, out of insolvency proceedings. The appellants are two brothers, who were adjudged insolvents. On 31 March 1935, the Official Receiver attached their house and sold it on 26 May 1935. The appellants objected on 31 May 1935, alleging that they were agriculturists and occupied the-house as such, which was exempt from, sale in insolvency proceedings. They also objected on the ground that there were material irregularities in the sale. The insolvency Court so far allowed the objection as to set aside the sale but directed that it should be re. sold. The appellants preferred an appeal to the District Judge under Section 75, Insolvency Act, impugning, the correctness of the order of the insolvency Court. The District Judge held that on the merits the appellants appeal was entitled to succeed, but their objection, to the insolvency Court, which should be considered to be an appeal under Section 68 from an order or action of the Official Receiver, was barred by limitation. Accordingly he dismissed their objection (or appeal) to the insolvency Court from the order or act of the Official Receiver, on the ground that it had been preferred beyond time. The reason on which this view is based, is that the objection (or appeal) should have been preferred within 21 days, from the act of the Official Receiver complained of and that, as it had been preferred more than 21 days from the date of attachment, though within 21 days from the date of sale, it was beyond time. The learned Judge observed: It was a wrongful act on the part of the Official Receiver to attach this house. The insolvents could apply to the Court to release the house. The sale took place in continuation of the same act of the Official Receiver and no new right of objection was acquired by the insolvents when the property was put up for sale, as unlike Civil Procedure Code no separate order for sale of property is called for or is necessary in the insolvency proceedings.

(2.) It seems to me that the learned Judge is under a misapprehension as regards the nature of the sale proceedings which can be taken by an Official Receiver. An Official Receiver sells the property of the insolvent, because it is vested in him (the Official Receiver). I have not been referred to any provision in the Insolvency Act which requires or empowers the Official Receiver to attach the property as a necessary preliminary to sale as in the case of execution of decrees under the Civil P. C.. The Official Receiver may sell the insolvent's property as any other private individual, having disposing power cover certain property vested in him, can sell. He may advertise for sale of the property in any manner he likes and can (sell it to the highest bidder. The sale is not, in any sense, "in continuation" of attachment. It is a distinct act of the receiver which can be objected to by the insolvent before the insolvency Court by an application under Section 68, Provincial Insolvency Act. It is open to the insolvent to apply within 21 days after the receiver decides to sell the property which the insolvent alleges cannot be sold. In most cases the insolvent will be well advised if he objects or appeals at that stage, because if a sale actually takes place and rights of third persons come into existence, complications may be introduced. There is, however, nothing to prevent him from applying to the insolvency Court within 21 days after the sale itself, complaining that the Official Receiver had sold property which he had no right to sell. Whatever may be the proper order of the insolvency Court on the merits of such objection, there can be no doubt that it is not barred by limitation only because an earliar decision or act of the receiver was left unchallenged.

(3.) In the present case the insolvency (Court set aside the sale, and the only question which the learned District Judge had to decide was whether a release could be ordered by that Court; and as the learned District Judge has clearly held that the house is not liable to attachment and sale under Section 60, Civil P.C., it follows that it was not vested in the receiver. In this view, the receiver had no power to sell it, and the order of re-sale was illegal. In these circumstances, this appeal is allowed. The order of the lower appellate Court and that of the insolvency Court directing re-sale of the house in dispute are set aside. The appellants shall have their costs of these proceedings in all the Courts.