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Kishan Swarup Vs. Mukandi Lal and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad
Decided On
Reported inAIR1934All252
AppellantKishan Swarup
RespondentMukandi Lal and anr.
Excerpt:
- - months later, on 12th july 1930, mukandi lal made an application under order 21, rule 90 to set aside the sale on the ground of some irregularities in the procedure, and nearly two years later the official receiver made an application to the effect that mukandi lai's application of 12th july 1930 should be regarded as his own under section 53, provincial insolvency act, 1920. the trial court allowed the official receiver's application and set aside the sale on the ground that the auction-purchaser had not purchased the property in good faith.kendall, j.1. this appeal is made by an auction-purchaser at a sale in execution of a decree, and it arises from the following circumstances: one mukandi lal had applied to be declared insolvent in. june 1929. some of his property had been put up for sale in execution of a decree against him and on 19th july 1929 an application was made to the insolvency court for stay of the sale proceedings and also for a direction to the munsif of agra to transfer the sale proceeds to the court. the application for stay of sale was disallowed by the judge of the insolvency court. on 6th august 1929 the sale took, place and the property was purchased by the appellant. on 25th october 1929 mukandi lal was declared an insolvent, and on 23rd november 1929 the sale was confirmed and possession was.....
Judgment:

Kendall, J.

1. This appeal is made by an auction-purchaser at a sale in execution of a decree, and it arises from the following circumstances: One Mukandi Lal had applied to be declared insolvent in. June 1929. Some of his property had been put up for sale in execution of a decree against him and on 19th July 1929 an application was made to the insolvency Court for stay of the sale proceedings and also for a direction to the Munsif of Agra to transfer the sale proceeds to the Court. The application for stay of sale was disallowed by the Judge of the insolvency Court. On 6th August 1929 the sale took, place and the property was purchased by the appellant. On 25th October 1929 Mukandi Lal was declared an insolvent, and on 23rd November 1929 the sale was confirmed and possession was subsequently given to the auction-purchaser. Several; months later, on 12th July 1930, Mukandi Lal made an application under Order 21, Rule 90 to set aside the sale on the ground of some irregularities in the procedure, and nearly two years later the official receiver made an application to the effect that Mukandi Lai's application of 12th July 1930 should be regarded as his own under Section 53, Provincial Insolvency Act, 1920. The trial Court allowed the official receiver's application and set aside the sale on the ground that the auction-purchaser had not purchased the property in good faith. There was an appeal to the District Judge, who pointed out that Section 53, Insolvency Act, did not apply to the case of a transfer by sale in execution of a decree; but he regarded the application with reference to Section 51, Insolvency Act, and then found that the sale should not have been held, that as the petition for insolvency had been made in June 1929, i.e., before the sale, the consent of the insolvency Court was necessary, and he therefore agreed with the trial Court in allowing the official receiver's application and in setting aside the sale, but for entirely different reasons.

2. In has been argued in second appeal that in spite of the provisions of Section 28, Provincial Insolvency Act, the property did not, after the sale, vest in the Court. Under Section 51, Provincial Insolvency Act:

Where execution of a decree has issued against the property of a debtor, no person shall be entitled to the benefit of the execution against the receiver except in respect of asseta realized in the course at the execution by sale or otherwise before the date of the admission ot the petition.

3. The learned District Judge has apparently read this section as meaning that the auction-purchaser cannot be entitled to the benefit of the execution against the receiver, and he seems to have regarded this section as complementary to Section 28 under which the property of the judgment debtor vests in the Court with effect from the date of the application for an adjudication, if and when an order of adjudication has been made. The auction-purchaser however has nothing to do with the benefit of the execution, and the assets realised in the course of the execution by sale or otherwise are not his concern. Section 51 undoubtedly implies that the ' assets realised in the course of the execution by sale' are the property of the receiver, and expressly states that 'no person shall be entitled to the benefit of the execution against the receiver.' Now, Section 28 of the Act vests the property which belonged to the judgment-debtor in the receiver, and S, 51 vests the proceeds of selling that property in the receiver. Unless Section 28 is modified by Section 51, it would seem that both the property and the sale proeoods of the property vest in the receiver when an auction-sale has taken place between the date of the application and the date ot the adjudication. Such a result would be anomalous, and I do not think that this has been the intention of the legislature. It has been pointed out on behalf of the appellant that a Bench of the High Court at Patna in the case of Johhi Bam Surajmal Firm v. Ghouthmal Bhagirath A.I.R. 1931 Pat 70 held that in similar circumstances the property did not vest in the receiver, and there is some support for this view in the opinion expressed by a Bench of the Allahabad High Court in the case of Din Dayal v. Oursaran Lal A.I.R. 1920 All. 253, p. 291 of 18 A. L. J. The references in this judgment are to the earlier Provincial Insolvency Act, but there is no practical difference in the interpretation. After quoting Clause (1) of Section 34, the Bench remarked:

The provisions of Section 16(6) cannot control the provision of Section 34 of the Act in this respect. As noted above, Nanak Prasad had not only attached the houses in execution of his money decree, but the execution had proceeded further and the assets had been realized long before the order of adjudication was made I agree in the interpretation put by the learned Judicial Commissioner upon the provisions of Section 34, and hold that the ownership of the houses in question did not vest in the receiver.

4. It will be seen that the application made by the official receiver was one for setting aside the sale, and I do not find that there is any express provision in the Insolvency Act enabling him to do so. It might be that in some cases he could apply for the setting aside of a sale under the provisions of the civil Procedure Code, but this is not the case here, for both the applications of Mukandi Lal to set aside the sale'under Order 21, Rule 90 and that of the official receiver to identify himself with that application were made long after the period of limitation had expired. The lower appellate Court has found that the sale must beset aside owing to t ha provisions of Section 51, Provincial Insolvency Act (which as I have shown is not in itself applicable to the case), read withS. 28 of the Act. There is authority however, as I have shown above, for holding that when an auction-sale has taken place, the property itself no longer vests in the Court or the receiver, but under 8. 51 the sale proceeds are at the receiver's disposal. I think for this reason that the decision of the Court below is wrong and must be set aside. I therefore allow the appeal with coats in all Courts and direct that the application to set aside the sale be dismissed with costs.


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