SADANALA NARAYANA RAO Vs. OFFICIAL RECEIVER, RAJAHMUNDRY

JUDGEMENT

(1.) This revision petition filed under Section 115, Civil Procedure Code, should, as the following facts will show, have been more properly filed as an appeal under Section 75(2) of the Insolvency Act. I do not, however, propose to attach any importance to this technicality in disposing of it on its merits.

(2.) The short facts are these,. The petitioners are minors by their mother as guardian who took a conveyance of about 11 acres of land from-an insolvent in 1940 prior, of course, to his adjudication. It is common ground that the Official Receiver got this alienation set aside under Section 53 of the Insolvency Act. The petitioners filed an appeal in the District Court, East Godavari, the first Court of insolvency being the Subordinate Judge of Amalapuram. In the District Court, the Official Receiver entered into a compromise with the petitioners by which they undertook to deposit Rs. 1,000 in Court in one month to " meet the claims of the creditors and the necessary expenses in the insolvency." They also agreed to deposit any further sum required for this purpose within a month of the Official Receiver giving them notice; and that their appeal would stand dismissed with costs if this deposit of Rs. 1,000 was not made within one month. Another term of the compromise was that the Official Receiver should at once address the Subordinate fudge of Amalapuram for sanctioning the proposed settlement. It is common ground that this sanction was obtained, that the Rs. 1,000 was deposited in the District Court, East Godavari, that the Official Receiver paid all the creditors in full and that after incurring all expenses in the administration a balance of Rs. 879 remained to the credit of the administration. As the deposit of Rs. 1,000 was made in the District Court, they filed an application there under Section 151, Civil Procedure Code, whereas Section 4, Insolvency Act, would have been far more appropriate, for payment to them of this balance as something deposited by them over and above what was necessary to pay all the creditors in full and the expenses of the administration. The insolvent made a counter claim for this balance as surplus payable to him under Section 67 of the Insolvency Act. The learned District Judge upheld the claim of the insolvent and dismissed the petition of these alienees.

(3.) An interesting point of conflicting equities arises for determination in the case of these parties to a transaction which the insolvency Court has found to be one neither entered into in good faith nor for valuable consideration and on these grounds voidable as against the Official Receiver.