1. This appeal arises out of orders in an insolvency proceeding, the name of the insolvent being Sanatan Pal. The permission of this Court has been obtained under Section 46 of the Provincial Insolvency Act to prefer this appeal after permission had been refused by the District Judge.
2. One Nanda Kumar Saha obtained a decree against the insolvent on the 24th May 1911.
3. He took out execution proceedings and some property of the insolvent was sold on the 17th February 1913 to the purchasers Kali Krishna Pal and Amar Chand Pal. Kali Krishna sold the property which he had purchased to the appellant Madhu Sudan, who must not be confused with another Madhu Sudan Pal who is one of the respondents in this appeal. The date of the conveyance to the appellant was 28th February 1913. In the meantime, Sanatan Pal on the 7th October 1912 applied to be declared an insolvent and the order of adjudication was passed on the 7th February 1913. The proceeds of the execution sale were rateably distributed amongst three persons who had decrees against the insolvent. As the sale took place after the order of adjudication, these decree-holders were ordered to refund the money that they had received towards the satisfaction of their decrees. It was objected that the sale was invalid because it had taken place after the order of adjudication and on this objection, the District Judge referred the matter to the Receiver for report on the 21st February 1914.
4. On the 25th February 1914, the Receiver submitted the following report:
Madhu Sudan Pal, who purchased same properties from Kali Krishna Pal, auction-purchaser of some immoveable properties of the insolvent in Execution Case No.' 257 of -1912 of the 2nd Munsif of Munshiganj, filed a petition praying that the properties he purchased may be exempted from re-sale by the Receiver under Section 34, Sub-section 3 of the Provincial Insolvency Act.
Sanatan Pal was declared an insolvent 7th February 1913 and his properties we sold in auction in Execution Case No. 257 1912 and purchased by Kali Krishna F on 25th February 1913, i.e., more than fortnight after the order of adjudication.'
5. We may mention here that this date wrong. It was the 17th February, 10 da; after the order of adjudication.
6. The Receiver's report continues:
Two witnesses on each side have bee examined in presence of the Pleaders. There is no doubt that the purchaser Madhu Suda Pal knew of the insolvency proceeding, He is a neighbour of, the insolvent an distantly related to him. The properties also seem to have been sold at a low price and the transaction was not without suspicion.
Under the circumstances, the properties , should be re-sold by the Receiver and Madht Sudan Pal should be ordered to deposit Rs. 122 as early as possible as referred to in my last report.
7. On receipt of this report, the District Judge passed the following order: 'Receiver's report considered. The properties will be re-sold. Madhu Sudan Pal to deposit Rs. 122 by 11th instant.' This is the order against which this appeal has been preferred. Madhu Sudan there referred to is the decree-holder-respondent of that name.
8. The appellant subsequently applied for a . review of that order and it was refused on the 10th June 1914. On the 4th July 1914, an application for leave to appeal against this order was refused; but it is not necessary to consider these subsequent orders.
9. It is clear that the Receiver, in his report on which the order of the learned District Judge was based, has failed to appreciate the real point on which this matter turns. . Section 34 of the Provincial Insolvency Act lays down: '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.'
10. The question which the Receiver had to consider was, not whether Madhu Sudan purchased the property in good faith, but whether Madhu Sudan's vendors, Kali Krishna Pal, and Amar Ohand Pal had purchased it in good faith. As regards Amar Chand, there does not appear to be any suggestion ever made that he had any knowledge of the a insolvency, or was not a bona fide purchaser. 3 As regards Kali Charan Shaha it is suggested that .he may have been a benamidar for Kali Krishna; but there is nothing to support this suggestion. Such facts as have been placed before us support the view that he purchased in good faith in his own interest and only parted with the property to the appellant Madhu Sudan for the reasons stated in the sale-deed, namely, to avoid litigation. If Kali Krishna's title was good, the title of his purchaser Madhu Sudan was also good, irrespective of whether Madhu Sudan knew of the insolvency or not at the time of purchase. If we were to hold that Kali Krishna could not pass a good title to persons who were aware of the insolvency, it would be impossible now for Kali Krishna to transfer his interest, since by this time all persons who have any desire to purchase the property must be aware of the course of events.
11. We hold, therefore, that both Kali Krishna and Amar Chand purchased the property in good faith and consequently acquired a good title and there is, therefore, no reason for setting aside the sale. We accordingly decree this appeal and reverse the order of the lower Court. The auction-sale in Execution Proceedings No. 257 of 1912 in the Court of the 2nd Munsif of Munshiganj held on the 17th February 1913 will stand good and the order directing the re-sale of property is set aside. The order directing the refund of the purchase-money by the decree-holders will stand. The money will be paid to the Receiver for the benefit of the creditors.
12. As these proceedings have been rendered necessary by the failure of the appellant to appear before the District Judge on the date fixed for hearing when this order was passed, we direct that the parties do pay their own costs in this appeal.