GOPAL GUNAJI Vs. BALAJI

JUDGEMENT

(1.) MACNAIR , A.J.C. 1. The plaintiff-appellant held a mortgage over certain property. The mortgagor became insolvent. The insolvency Court at the request of the mortgagee, directed the mortgaged property to be sold separately, free from the mortgage rights, and gave the mortgagee the same rights in the sale proceeds as he had in the property. It seems probable that there was some misapprehension at the time of the auction. The property was sold for Rs. 50 to the son of the mortgagor and this son Gopal (D.W. 2) stated before the insolvency Court that he had purchased the property subject to, the mortgage. The mortgagee brought this suit for foreclosure of the property sold. The learned trial Judge held that what was put up for sale was the property free from the mortgage but that the insolvency Court though it purported to sell the property free from the plaintiff's mortgage, could not legally do so. The mortgagee was therefore given a decree for foreclosure. The purchaser Gopal appeals.

(2.) IT is urged that the insolvency Court had power to sell the property free from the plaintiff's mortgage. The learned trial Judge has correctly stated that Section 47, Provincial Insolvency Act, does not provide for the sale which was effected. But Section 47 gives power to a creditor to insist on certain procedure: there is nothing in the section which prohibits the adoption of some other procedure with his consent. The learned Judge has referred to Sant Prasad v. Sheodutt Singh A.I.R. 1924 Pat. 259. The decision in that case does not appear relevant. At p. 728 the learned Judges remark: It is of course open to the appellant to consent to the property being sold in the insolvency proceedings, but we do not find that the appellant, at any time, consented to the properties being sold by the insolvency Court.

(3.) SECTION 28(2) of the Act states that on the making of an order of adjudication the whole of the property of the insolvent shall vest in the Court or in a receiver. "Property" is defined in Section 2(1)(d): 'Property' includes any property over which or the profits of which any person has a disposing power which he may exercise for his own benefit.