This Second Appeal is preferred by the appellants/respondent Nos.2 and 3 in I.P.No.56/1975 aggrieved by the Decree and Judgment dated 04.06.2007 in A.S.No.7 of 2004 passed by the VII Additional District and Sessions Judge (Fast Track Court), Vijayawada, whereby and whereunder the learned Judge allowed the appeal filed by the petitioners and set aside the order in I.A.No.5079 of 1991 in I.P.No.56 of 1975 on the file of II Additional Senior Civil Judge, Vijayawada, filed for delivery of schedule property.

2. The factual matrix of the case is thus:

(a) The case of the petitioners in I.A.No.5079 of 1991 before the Insolvency Court is that one Namburi Sridhara Rao was adjudicated as an insolvent in I.P.No.56 of 1975 and his properties were handed over to the Official Receiver, Krishna, Machilipatnam, for administration of estate of the insolvent. The schedule property was sold in public auction on 18.01.1980 subject to two mortgages. In the said auction held by the Official Receiver, A.V. Raja Gopal Raothe 1st petitioner, happened to be the highest bidder and auction was knocked down for Rs.1650/- subject to the above mortgages and he subsequently deposited entire sale consideration and also discharged the above mortgages and the said sale was also ratified by the proceedings of the Insolvency Court on 14.10.1980.

(b) It is the further case of petitioners that whenever 1st petitioner approached the Official Receiver to register the sale deed, he postponed the same on the ground that Urban Ceiling Authority has to accord permission for registering the document as the properties were covered under the agglomeration of Vijayawada Sub-registry and that he applied for permission. However, permission could not be secured as there was no follow-up action by Official Receiver. Subsequently, 1st petitioner suffered heart attack and his boy used to go to the office of Official Receiver and finally he was informed that adjudication orders were annulled under Section 43 of Provincial Insolvency Act (for short the Act) as per the proceedings of the Insolvency Court dated 07.03.1981. Then the 1st petitioner filed two petitions i.e., I.A.No.5660/1989 to set aside the annulment order dated 07.03.1981 and I.A.No.5661/1989 to direct the Official Receiver, Krishna to execute the sale deed and both the petitions were allowed on 26.06.1990 and thereafter the Official Receiver, executed the sale deed and registered on 22.08.1991 in favour of 1st petitioner.

(c) It is further contended that on 07.09.1991, respondents 2 and 3 got issued legal notice to the 1st petitioner with all false and concocted allegations alleging that they have purchased 1900 sq.yards of site in R.S.No.14 of Machavaram with an old tiled house belonging to the insolvent from his wife and daughter by a registered sale deed dated 07.12.1987 and that they were in possession of the same since then. It is contended that the alleged sale deeds neither bind the 1st petitioner nor do they confer any rights or title over the schedule property in favour of respondents 2 and 3. Hence, the petition I.A.No.5079/1991.

(d) The 1st respondent Official Receiver, Krishna filed counter and contended that what all done by him was under due process of law and the sale deed executed by him in favour of 1st petitioner is valid and binding and the sale deeds executed in favour of the respondents 2 and 3 by the wife and daughter of the insolvent were not valid and hence they need to be rejected.

(e) The 2nd respondent by filing counter, contended that in I.P.No.56/1975, Namburi Sridhar Rao was adjudged as an insolvent and the said adjudication was annulled without imposing any conditions and without vesting the property to any person and hence the effect of annulling adjudication was to wipe out the effect of insolvency altogether and restoring the prior state and thereby, the property vested in the insolvent with retrospective effect. Sridhar Rao died on 27.10.1983 i.e., long after the annulment of adj