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Katta Virayya and ors. Vs. the Official Receiver and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtChennai
Decided On
Reported inAIR1940Mad611; (1940)1MLJ574
AppellantKatta Virayya and ors.
RespondentThe Official Receiver and ors.
Cases ReferredM.T.T. K.M.M.N. Venkatachelan Chettiar v. M.T.T.K.M.M.S.M.A.R. Murugesan I.L.R.
Excerpt:
- - even on that point, the lower appellate court is not satisfied;.....creditors to set aside a sale of the insolvents' property on the grounds of fraud and collusion, material irregularity, want of proclamation, and the knocking down of the property for a grossly inadequate sum. both the courts below have found that there was no fraud or collusion or material irregularity and have therefore dismissed the suit.2. it is argued here that even though the findings of the courts below as to the absence of fraud and material irregularity are true; yet the insufficiency of consideration is in itself a sufficient ground to warrant the court in setting aside the sale; for the insolvency court is not limited to the same considerations as a civil court under order 21, rule 90, civil procedure code. m.t.t.k.m.m.n. venkatachelan chettiar v. m.t.t.k.m.m.s.m.a.r......
Judgment:

Horwill, J.

1. This suit has been brought by three creditors to set aside a sale of the insolvents' property on the grounds of fraud and collusion, material irregularity, want of proclamation, and the knocking down of the property for a grossly inadequate sum. Both the Courts below have found that there was no fraud or collusion or material irregularity and have therefore dismissed the suit.

2. It is argued here that even though the findings of the Courts below as to the absence of fraud and material irregularity are true; yet the insufficiency of consideration is in itself a sufficient ground to warrant the Court in setting aside the sale; for the Insolvency Court is not limited to the same considerations as a Civil Court under Order 21, Rule 90, Civil Procedure Code. M.T.T.K.M.M.N. Venkatachelan Chettiar v. M.T.T.K.M.M.S.M.A.R. Murugesan I.L.R.(1931) 9 Rang. 231 has been quoted as an authority for this position. It was there held that the Insolvency Court has always full control over the acts of the Official Receiver and can therefore set aside a sale where it is of opinion that it has been unfair or has caused any wrongful loss to the creditor; and that therefore the Court is not circumscribed by the narrow provisions of Order 21, Rule 90, Civil Procedure Code. That case, however does not bear very much resemblance to the present one, as there was an undoubted hardship there to a particular creditor who had been attending the auctions and who, on account of the incorrect information given by the bailiff, was not actually present when the property was knocked down to the highest bidder. He at once went to the Court and was obviously distressed by his misfortune. It was held that under Section 68 of the Provincial Insolvency Act the Insolvency Court had every right to set aside the sale on such a ground, even though there was no fraud or material irregularity. In the present case all that can be said for the appellants is that the sum realised was inadequate. Even on that point, the lower appellate Court is not satisfied; but the fact that the appellants have deposited in Court Rs. 2,000 since the filing of this appeal is some indication that they considered the property to be worth very much more than the Rs. 250 for which it was knocked down.

3. In the present case there is another obstacle in the way of the appellants. They did not put in an application under Section 68 of the Provincial Insolvency Act as the creditor did in M.T.T. K.M.M.N. Venkatachelan Chettiar v. M.T.T.K.M.M.S.M.A.R. Murugesan I.L.R.(1931) 9 Rang. 231 and the Court that tried the present suit was not the Insolvency Court at all. An ordinary Civil Court has no power or control over the acts of the Official Receiver. Presumably, a sale can be set aside in a Civil Court only on grounds similar to those on which a contract could be set aside. A mere irregularity or inadequacy of price would be no ground for setting aside a sale in, a suit.

4. In either event, therefore, the appeal fails and is dismissed with costs of the third respondent. The amount deposited in Court by the appellants will be refunded.


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