BACHU MALLIKARJUNA RAO Vs. OFFICIAL RECEIVER

JUDGEMENT

(1.) The facts in this case are quite simple. The appellant is the purchaser at a sale held in execution on the 10 December, 1935. The decree was passed on the I6 April, 1935, and the execution petition was put in on the next day. An order for sale was passed on the 21st October, 1935, but four days before that, namely, on the 17 October, 1935, one of the judgment-debtors (third defendant in the suit) had been adjudicated insolvent in I.P. No. 15 of 1935. It was the property of the third defendant that had been attached in E.P. No. 87 of 1935 and proclaimed for sale in the order passed on the 21 October, iy35. On the 19 November, 1935, one of the creditors of the insolvent judgment-debtor put in an application in which he informed the executing Court of the adjudication of the third defendant, but the learned Subordinate Judge refused to stay the sale. On the 4 December, 1935, the Official Receiver was impleaded in the execution petition. He did not appear on the 9 December, the date fixed for sale, but in response to the notice served upon him on the 4 December, he replied to the executing Court that the property of the third judgment-debtor had vested in him upon adjudication, and he requested that the property of the third judgment-debtor might be handed over to him. The learned Subordinate Judge allowed the sale to proceed, and the present appellant purchased what was put up for sale as the property of the third judgment- debtor for Rs. 5,000 odd. The Official Receiver applied under Section 47 and Order 21, Rule 90, Civil Procedure Code, to have the sale set aside, alleging that after the adjudication of the third judgment-debtor the Court had no jurisdiction to sell his properties in execution, and that the sale after the adjudication was a material irregularity in the conduct of the sale. The learned Subordinate Judge who disposed of this application was the successor of the Subordinate Judge who ordered the sale to proceed. He held that the sale was invalid on the ground that the property of the third judgment-debtor had vested in the Official Receiver under Section 28(2) of the Provincial Insolvency Act, and that therefore no Court had power to proceed to sell the property. The purchaser in execution has-preferred this appeal.

(2.) The question for consideration, therefore, is whether a Court executing a decree has power to sell a judgment-debtor's property after the judgment-debtor has been adjudicated insolvent. The case of the Official Receiver (respondent) is, as stated by the learned Subordinate Judge, that upon adjudication the judgment-debtor's property vested at once in the-Official Receiver, and that therefore the executing Court had no power to sell. The case of the appellant is based upon Section 51(3) of the Provincial Insolvency Act which declares that: A person who in good faith purchases the property of a debtor under a sale in execution shall in all cases acquire a good title to it against the receiver.

(3.) Mr. Satyanarayana Rao who argued the case for the appellant points to the wide terms of Section 51(3) and relies very strongly upon the case of Muthan Chettiar V/s. Venkituswami Naicken . He relies also upon the case of Ramanatha Mudaliar V/s. Vijayaraghavalu Naidu , Dineshchandra Ray Chaudhuri V/s. Jahanali Biswas (1934) I.L.R. 62 Cal. 457, Madhu Sudan Pal V/s. Parbati Sundari Dasya (1916) 35 I.C. 643, Sankaralinga Mudaliar V/s. Official Receiver of Tinnevelly and Rajagopala Aiyar V/s. Ramanujachariar (1923) 46 M.L.J. 104 : I.L.R. 47 Mad. 288 (F.B.). Mr. Govindarajachari, who appears for the Official Receiver, contends that since immediately upon adjudication the property of the third judgment-debtor vested in the Official Receiver there was nothing left for the executing Court to sell in execution and he relies upon the Privy Council case of Raghunath Das V/s. Sundar Das Khetri (1914) 27 M.L.J. 150 : L.R. 41 I.A. 251 : I.L.R. 42 Cal. 72 (P.C.), followed in this Court in Anantharama Aiyar V/s. Kuttimalu Kovilamma , some observations of Odgers, J., in Nainar Rowthen V/s. Kuppu Pichai Rowthen and certain observations of Waller, J., in Sivaswami Odayar V/s. Subramania Aiyar (1931) 62 M.L.J. 68 : I.L.R. 55 Mad. 316.