Yaddanapudi Pullayya vs Yaddanapudi Venkatasubbamma and Others

Horwill, J.—The appellant was adjudged insolvent; but his adjudication was annulled on the 10th September, 1935. By the same order the

property of the appellant was directed to continue to vest in the Official Receiver for a period of one year. Within that year, on the 29th February,

1936, a creditor filed E. P. No. 185 of 1936 without impleading the Official Receiver and took certain preliminary steps. On the 26th September,

1936, after the period for which the property was ordered to continue to vest in the Official Receiver had expired, the Official Receiver sent a

letter to the Court asking it to stay its hand as he intended applying to the Insolvency Court for an order directing the property to continue to vest in

him for some longer period. He made such an application to the Insolvency Court; but it was dismissed on the ground that the execution petition

was pending and that it would be unfair to order the property to continue to vest with retrospective effect. So on the 5th October, 1936, after the

property had ceased to vest in the Official Receiver and again vested in the appellant, the property was brought to sale, A third party purchased it

for what has been held to be a fair price, and the money now remains in Court for distribution amongst the creditors.

The question is whether the fact that this application was filed during the period that the property vested in the Official Receiver renders the sale,

which took place after the property had ceased to vest in the Official Receiver, void or illegal. As the appellant was no longer an insolvent, the bar

of Section 28 (2) does not apply; but it is argued that as the insolvent was not then the owner of the property, the Official Receiver in whom the

property vested, should have been brought on record. I quite agree that he should have been made a party; but the question is whether the sale

must be set aside, despite the fact that the appellant was fully heard.

The Judicial Committee, in considering a similar application against an insolvent, held in Raghunath Das and Others vs. Sundar Das Khetri that

the sale was void for three reasons. The first was that the judgment-creditors had no charge on the land and the Court could not properly give

them such a charge at the expense of the other creditors of the insolvent. The second was that no proper steps had been taken to bring the Official

Assignee before the Court and obtain an order binding on him and accordingly he would not be bound by anything which was done; and the third

was that the judgment-debtors had at the time of the sale no right, title or interest which could be sold to or vested in a purchaser, and that

consequently the respondent acquired no title to the property. The third of these grounds would not here apply; because at the time of the sale the

judgment-debtor had full right, title and interest in the property. The second objection too is irrelevant to the present case; because it is not the

Official Assignee or one of the creditors who now objects; but the debtor himself, who did have notice. The first objection would apply to this

case; but as the proceedings were not void ab initio, the sale cannot be set aside except on equitable grounds which do not exist in the present

case. It is true that notice should have gone to the Official Receiver; and as has been said in Rajagopala Ayyar v. Ramanujachari (1923) 46 M.L.J.

104 : ILR Mad. 288 and in Gopal Chunder Chatteljee v. Gunamoni Dasi I.L.R.(1892) Cal. 370 referred to in Raghunath Das and Others vs.

Sundar Das Khetri it is notice to the Official, Receiver or the Official Assignee that gives the Court jurisdiction to proceed against him. But, in the

present case we are only concerned with whether the Court can proceed against the judgment-debtor. Although the procedure adopted by the

lower Court was irregular the judgment-debtor has nothing to complain of. If the appellant had not been given a fair hearing at an earlier stage

because he was not a person interested in the property, he would of course have good ground to have the sale set aside; but no equitable reason

exists why the sale should be set aside.

The appeal is dismissed with the costs of the third respondent.