Sardar And Another v. B. Navin Chandra And Others

1. This is an appeal ??? out of insolvency proceedings. The appellants are two brothers, who were adjudge insolvents. On 31st March 1935, the Official Receiver attached their house and ??? it on 26th May 1935. The appellant objected on 31st May 1935, alleging that they were agriculturists and occupied the house as such, which was exempt from sale in insolvency proceedings. They also objected on the ground that there were material irregularities in the sale. The insolvency Court so far allowed the objection as to set aside the sale but directed that it should be re sold. The appellants preferred an appeal to the District Judge under Section 75 of the Insolvency Act, impugning the correctness of the order of the insolvency Court. The District Judge held that on the merits the appellants' appeal was entitled to succeed, but their objection to the insolvency Court, which should be considered to be an appeal under S. 68 from an order or action of the Official Receiver, was barred by limitation. Accordingly he dismissed their objection (or appeal) to the insolvency Court from the order or act of the Official Receiver, on the ground that it had been preferred beyond time. The reason on which this view is based, is that the objection (or appeal) should have been preferred within 21 days from the act of the Official Receiver combined of and that, as it had been preferred more than 21 days from the date of attachment, though within 21 days from ??? date of sale, it was beyond time. The ??? Judge observed:

It was a wrongful act on the part of the Official Receiver to attach this house. The insolvents ??? apply to the Court to release the house. The ??? took place in continuation of the same act of ??? Official Receiver and no new right of objection ??? acquired by the insolvents when the property ??? put up for sale, as unlike Civil Procedure Code ??? separate order for sale of property is called for ??? is necessary in the insolvency proceedings.

It seems to me that the learned Judge under a misapprehension as regards the ??? of the sale proceedings which can ??? taken by an Official Receiver. An Officer Receiver sells the property of the invent, because it is vested in him (the finical Receiver). I have not been referred ??? any provision in the Insolvency Act which requires or empowers the Official Receiver to attach the property as a necessary preliminary to sale as in the case of execution of decrees under the Code of ??? Procedure. The Official Receiver may ??? the insolvent's property as any other ??? individual, having disposing power ??? certain property vested in him, can ??? He may advertise for sale of the ??? in any manner he likes and can ??? it to the highest bidder. The sale is ??? in any sense, “in continuation” of attachment. It is a distinct act of the Receiver which can be objected to by the solvent before the insolvency Court by ??? application under Section 68 of the Provincial Insolvency Act. It is open to the insolvent ??? apply within 21 days after the receiver ??? to sell the property which the insolvent alleges cannot be sold. In most ??? the insolvent will be well advised if ??? objects or appeals at that stage, because ??? a sale actually takes place and rights of ??? persons come into existence, complications may be introduced. There is, however, nothing to prevent him from applying to the insolvency Court within ??? days after the sale itself, complaining ??? the Official Receiver had sold property ??? he had no right to sell. Whatever ??? be the proper order of the insolvency court on the merits of such objection, ??? can be no doubt that it is not barred ??? limitation only because an earliar ??? or act of the receiver was left ???.

2. In the present case the insolvency court set aside the sale, and the only question which the learned District Judge had to decide was whether a release could be ordered by that Court; and as the learned District Judge has clearly held that the house is not liable to attachment and sale under Section 60 of the CPC it follows that it was not vested in the receiver.

3. In this view, the receiver had no power to sell it, and the order of re-sale was illegal. In these circumstances, this appeal is allowed. The order of the lower appellate Court and that of the insolvency Court directing re-sale of the house in dispute are set aside. The appellants shall have their costs of these proceedings in all the Courts.

P.R/D.S

4. Appeal allowed.