The annulment of sale certificates during ongoing insolvency proceedings lacks legal efficacy, as established under Sections 28, 52, 55, and 56 of the Kerala Insolvency Act, 1955.

JUDGMENT :

EASWARAN S., J.

1. These Miscellaneous Second Appeals raises common questions of law and hence considered and disposed of together by this common judgment.

2. The appellants are respondents 3 and 4 in an application under Section 52 r/w Sec.55 and 28 of the KERALA INSOLVENCY ACT , 1955. The brief facts necessary for the disposal of the appeals are as follows:

3. An insolvency petition came to be filed against the 2^nd respondent before the I^st Additional Sub Court, Ernakulam. The Insolvency Petition was filed on 14.07.2015 and was admitted on 15.7.2015. On 16.12.2015, the trial court ordered symbolic possession of the property to the Official Receiver and on 02.11.2019, the 2^nd respondent and its partners including respondents 2 and 3 in I.A.No.3/2021 were adjudged as insolvents. Thus, the order of adjudication as insolvent relates back to the date of presentation of the insolvency petition. The appellants are the creditors of the insolvents who filed O.S.No. 125/2010 seeking for recovery of money against the 2^nd respondent. It appears that the suit was decreed and E.P.No.125/2013 was filed. Similarly, O.S No.126/2010 was also filed, which was also decreed, resulted in Execution Petition 53/2014. The Executing Court namely the Sub Court, North Paravur in execution of the judgment and decree in O.S No.125/2010 and 126/2010, proclaimed an extent of 2.37 Ares of land belonging to the 2^nd respondent and sold in execution of the decree and the appellants as decree holders purchased the property. The Official Receiver appointed by the Insolvency Court, proceeded to file an application as IA No.3/2021 to annul the sale certificate. Similarly, I.A 2/2021 was also filed by one of the creditors to cancel the sale certificate. Both these applications were considered together and the Sub Court found that in terms of the provisions contained under Section 28 (1) r/w Sec.56, the sale certificate has no efficacy of law and accordingly directed the appellants to surrender the sale certificate and cancel the same.

4. Aggrieved by the order of the Sub Court, the appellants preferred AS Nos.75/2022 and 86/2022 before the I^st Additional District Court, Ernakulam. By judgment dated 21.11.2024, both the appeals were dismissed. While admitting the appeals, this Court by order dated 02.06.2025 framed the following substantial questions of law.

“A. Whether resort to provisions contained in Sections 28 , 52 and 56 of the KERALA INSOLVENCY ACT , 1955, which have no application, can be made before any court of law?

B. Whether a sale certificate issued by a competent court can be annulled by a court of co-equal or subordinate jurisdiction?

C. Whether the courts below can act on presumption without the support of evidence in regard to the conduct of the parties involved in the case?

D. Whether the courts below have even adverted to the substantial and important questions of law in adjudicating the case against the appellants?

E. Whether the appellants are not subjected to manifest injustice and prejudice on account of totally unsustainable proceedings?

F. Whether the rights under Article 300A of the Constitution of India enjoyed by the appellants, have not been infracted?”

5. Heard Sri. K.Ramakumar, the learned Senior Counsel for the appellants assisted by Shehin S. and Smt.Asha.B.Mathew, the learned counsel appearing for the Official Receiver and Sri.Jacob Mathew Manalil, the learned counsel appearing for the 6^th respondent in MSA No.28/2025.

6. Sri.K.Ramakumar, the learned Senior Counsel appearing for the appellants contended that the application by the Official Receiver is not one under Section 56 . The application filed by the individual creditor could not