In a case where no receiver is appointed, a creditor can make an application for annulment of a transfer under Section 53 of the Provincial Insolvency Act without obtaining prior leave of the Court.

JUDGMENT - Padhye, J.

1. This revision arises out of an insolvency matter. It has come to us on a reference being made at the instance of Masodkar, J. vide his order dated October 19, 1972. The learned Single Judge has stated the facts in his referring order and saw the conflict in the case-law on the question whether in a case where after adjudication no receiver is appointed, a creditor, without obtaining prior leave of the Court, can move an application under Section 53 and/or Section 54 of the Provincial Insolvency Act. The other question that arises in the case is whether the transfer, which is sought to be challenged by the creditors is for valuable consideration and good faith. The whole case has been referred to us for decision and we, therefore, deal with both these aspects of the matter. A very few facts need be stated to appreciate the points involved.

2. The opponent No. 4 Umakant Gajananrao Pathak was indebted to certain creditors. On May 24, 1960, he executed a deed of sale of a house in favour of Rajaram and Balwant for a consideration of Rs. 30,000. On the same date, he also executed an unregistered document in favour of the said two persons who are the applicants in respect of his saw mill and a shed for an amount of Rs. 10,000. The saw mill and the shed are said to have been further transferred by the applicants Rajaram and Balwant to one Marotirao and Mandakini by an oral transfer. The applicant No. 1 Rajaram is dead and his legal heirs have been substituted in his place. It appears that these were taken to be acts of insolvency on the part of the opponent No. 4 Umakant and the Non-applicants Nos. 2 and 3 made an application to the Insolvency Court on October 6, 1960 for adjudicating the opponent No. 4 as an insolvent. To the same effect an application was made on October 31, 1960 by the non-application No.1. By an order dated December 14, 1961, the non-applicant No. 4 Umakant was adjudged an insolvent. No receiver, however was appointed by the Court.

3. These two transfers were challenged by the creditors-opponents Nos. 1 to 3 by an application under Sections 53 and 54 of the Provincial Insolvency Act, Mr. Udhoji for the applicants, however, stated that he confines his case only in respect of the house and not with respect tot he saw mill and the shed. This application was registered as Miscellaneous Judicial Case No. 31 of 1962. Several challenges were made on behalf of the transferees - both on law and facts and the Insolvency Court by its order dated August 23, 1965 held that the transfers were neither for valuable consideration nor in good faith an it annulled the transfers.

4. The transferees filed an appeal before the District Judge challenging the order of the Insolvency Court and the Miscellaneous Civil Appeal No. 147 of 1965 was dismissed by the District Judge by his order dated December 24, 1966. He, however, differed from the finding of the first Court on the question of consideration holding that the transfers were for valuable consideration but good faith was lacking. The transferees, therefore, have challenged these orders by this application for revision. The applicants-transferees contend that the creditors had no locus standi to make the applications for annulment of the transfer under Section 53 and 564 of the Provincial Insolvency Act. It was also contended that in any case, without prior leave of the Court, which must be express, an application by the creditor or creditors would not be tenable. It was further contended that there must be an express order by the Court showing an application of mind granting leave to the creditors to prosecute the application for annulment of transfer. It was further contended that the applications for annulment could not be maintainable under Section 54 of the Insolvency Act as the applications were filed more than three months after the date of the transfer and if at all, the application could only be under Section 53 of the Insolvency Act.

5. The following

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