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Hem Chandra Datta and ors. Vs. Uma Sadhan Mukhopadhya and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1927Cal834,103Ind.Cas.695
AppellantHem Chandra Datta and ors.
RespondentUma Sadhan Mukhopadhya and ors.
Cases ReferredMahomed Kola Mea v. Harperink
Excerpt:
- .....an order passed by the additional district judge of howrah in an insolvency case, by which the learned judge has refused to set aside sale of a property which is alleged to belong to the insolvent, and he has directed the purchaser to deposit the purchase money in full within a week, failing which he has ordered the amount of deposit to be forfeited. the property in question is said to be a garden, consisting of 28 bighas of land including some paddy lands with a brickbuilt house standing thereon. it was under a mortgage in favour of one mul chand baisya whose dues have coma up to about rs. 30,000, the principal amount secured by the mortgage being rs. 15,000. it was put up to sale free from all incumbrances and the appellants purchased the same at the auction for rs. 15,050 being.....
Judgment:

Mukerji, J.

1. This appeal has bean preferred from an order passed by the Additional District Judge of Howrah in an insolvency case, by which the learned Judge has refused to set aside sale of a property which is alleged to belong to the insolvent, and he has directed the purchaser to deposit the purchase money in full within a week, failing which he has ordered the amount of deposit to be forfeited. The property in question is said to be a garden, consisting of 28 bighas of land including some paddy lands with a brickbuilt house standing thereon. It was under a mortgage in favour of one Mul Chand Baisya whose dues have coma up to about Rs. 30,000, the principal amount secured by the mortgage being Rs. 15,000. It was put up to sale free from all incumbrances and the appellants purchased the same at the auction for Rs. 15,050 being the highest bidder therein. They deposited 25 per cent, of the bid, i.e., Rs. 3,672-8. The contesting respondent in the appeal is the mortgagee Mul Chand Baisya. The receiver has supported the appellant in this appeal.

2. The auction sale was held on the 27th September 1926. On the 7th October 1926, the first application to set aside the sale was filed; it was based on the ground that there was a gross misrepresentation or misdescription in the handbills that were issued as in them the property was said to be a 'big garden' 27 1/2 bighas in area, while in point of fact about 20 bighas out of the land was paddy land. Another petition was filed later on the 21th November 1926, in which it was complained that the title deeds of the property had not been made available for the inspection of intending purchasers, that the price of the property was much less, that it was not disclosed that litigation was pending in respect of the insolvent's title to the property and that there were no specifications as regards the real character of the insolvent's rights in the property. The receiver who was asked to report submitted his report on the 4th December 1926, into the details of which it is not necessary to enter. Shortly stated, it recommended an order for the setting aside of the sale.

3. The learned Judge has refused to set aside the sale and has parsed the order to which we have referred. Several objections in the nature of objections in limini have been urged on behalf of the contesting respondent. The first is to the effect that the purchase was made by 3 persons jointly, while the application for setting aside the sale filed on the 7th October 1926, was on behalf of only one of them, namely, Nitai Chand Addy and on the basis of that application the proceedings were not competent. The real position is that Nitai Chand Addy bid at the sale. He disclosed that he was making the purchase on behalf of himself and the other two. He made the deposit, and it may also be mentioned that all the three parsons are the appellants in this appeal. This objection, in oar opinion, has no substance.

4. The next objection is that the proceedings should in view of Section 5, Sub-section (1), Act (5 of 1920) have been as in suits, and that, therefore, they should not have been started except on a verified petition and evidence also should have been taken. This is a more substantial objection, and unless we are able to dispose of the matter on facts about which there can possibly be no controversy we must have to remand the case to the Court below to proceed more regularly. The third objection is that having regard to the proviso to Section 68 of the Act the petition of the purchasers filed on the 24th November 1925, cannot be entertained. With this we do not agree, because, though the act or decision of the receiver must be challenged, if at all, by an application presented within 21 days from date of such act or decision, there is nothing in the Act to show that all the grounds upon which it is challenged must be stated in that application, or that the grounds mentioned therein may not be supplement of or amplified later on. The last objection is that what was complained of was not really the act or decision of the receiver, but that of the Court itself, because in the present case the sale was held by the Court. In our opinion it is possible to take the view that the auction was held by the receiver, though under the direction and supervision of the Court and even if an appeal did not lie to the Judge under Section 63 of the Act, the order passed by him is appealable under Section 75, Sub-section (3), the requisite leave having been obtained.

5. On the merits of the appeal the first thing that we desire to say is that we do not feel pressed by the appellant's objection as regards the lands being paddy lands. We think the appellants had sufficient notice of that fact. The findings of the learned. Judge as to this matter are clear. It is somewhat curious that the learned Judge did not deal with the other allegations that are contained in the petition of the 24th November 1926, and the matters that arise upon the report of the receiver dated the 4th December 1926. We think the learned Judge should have dealt with them, as it is clearly the duty of the Insolvency Court, apart from any objections from the parties before it, to be satisfied as to the propriety of a judicial sale held in respect of the insolvent's estate. So far as these matters are concerned the one thing that, in our opinion, is sufficient to condemn the sale is the fact that the transfer made by the insolvent in favour of one Nirapada, the validity of which was decided against the claimant Nirapada by the Judge, but as regards which an appeal was pending in this Court at the time of the sale, was not disclosed in the handbills or in the conditions of sale. It may be that the appeal is a frivolous one and that it will not succeed, but it was the clear duty of the Court to apprise the intending bidders that the question of insolvent's title to the property was sub judice. In judicial sales it is incumbent on the Court to be scrupulous in the extreme and anything that may affect the bid has to be disclosed with all fairness and in sufficient detail. The principles relating to this matter are now well settled see Mahomed Kola Mea v. Harperink [1909] 36 Cal. 323. We think the appellants may justly complain, that they have been misled into purchasing a property the title whereto is being questioned in a pending litigation of which they were kept in ignorance.

6. The appeal, in our opinion, should succeed. The order of the learned Judge from which the appeal has been preferred is set aside and the deposit money should be refunded to the appellant. There will be no order for costs in these proceedings either in this Court or in the Court below.

7. The rule is discharged. No order to costs.

Graham, J.

8. I agree.


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