Ramaswami Reddiar vs Kuppalagu Pandithan and Others

Happell, J.—The question in this civil miscellaneous second appeal is whether an Official Receiver has power to sell property vested in him

by an order of Court passed u/s 37, Provincial Insolvency Act, without the express permission of the Court. The petitioning creditor in I. P. No. 3

of 1935 in the Court of the Subordinate Judge of Sivaganga is the appellant and the insolvent in that petition is respondent l. The adjudication of the

insolvent was annulled as he failed to apply for discharge, but at the same time certain properties were vested in the Official Receiver by an order

of Court. The Official Receiver sold these properties and they were purchased by the appellant. Thereupon the insolvent made an application

purporting to be made under various sections of the Provincial Insolvency Act and Section 151, Civil P. C, asking that the sales should be set

aside. The Subordinate Judge dismissed the application, but the appeal to the District Judge of Ramnad was allowed and the sales were set aside.

The learned District Judge referred to the decision of a Full Bench of this Court in Veerayya v. Sreenivasarao AIR 1935 Mad. 826 and

construed that decision to mean that a receiver in whom property was vested by an order made u/s 37 was not empowered to sell those properties

except with the permission of the Court. The same question has been considered by Horwill J. sitting alone in Chenna Basappa v. Official

Receiver, Bellary AIR 1943 Mad. 266 and he held that the power to sell property and distribute the proceeds must be implied from the vesting

order itself. With great respect, I agree that this is the effect of the decision of the Full Bench. The main question which was before the Full Bench

was whether the Court had any powers of control at all over the property and the receiver once the order of annulment of the adjudication had

been made. The Bench had not to consider whether any particular acts performed by the receiver would be illegal unless the previous permission

of the Court had been taken. King J. no doubt observes in his judgment at p. 925 that ""the person appointed u/s 37 has no longer by the mere fact

of his appointment the powers which a receiver has under the Act."" But that does not necessarily mean that the appointee will not have by

implication the powers which the Official Receiver had previously in respect of the properties vested in him. As King J. pointed out himself in

Karunakara Menon v. Sankara Unni AIR 1943 Mad. 644 once an adjudication has been annulled or an absolute order of discharge granted ""there

is no power in the Official Receiver to institute new proceedings u/s 53 or Section 54, Insolvency Act."" A receiver appointed u/s 37 has therefore

no longer all the powers which a receiver has under the Act even if he has all these powers in respect of the property vested in him. The judgment

goes on, ""he has only such powers as are necessarily implied by the vesting order;"" and these powers in respect of the property which has been

vested in him, it seems to me, must be such powers as he had in respect of the insolvent''s properties generally before the date of the annulment.

There is no reason why they should be either wider or more restricted. In this view, the decision of the District Judge cannot be upheld. The appeal

must be allowed with costs throughout. Leave refused.