Validity of sale by Official Receiver of interest of insolvent.

The concurrent findings of the Courts below are wholly unsustainable. The first respondent herein was adjudged insolvent and the Official Receiver brought his property to sale. As regards the subject matter of present dispute, the appellant purchased the same in the sale held on 12-1-1977. The first respondent filed a petition u/S. 68(1) of the Provincial Insolvency Act to set aside the sale. In the petition three grounds were urged. The first was that there was no proper notice of sale issued to all the 170 creditors. The second objection was that the sale was adjourned from 17-12-1976 to 12-1-1977 and the Official Receiver had no jurisdiction to adjourn a sale in the midst of the holding of the sale. Thirdly it was contended that the mortgage over the property was not disclosed in the proclamation for sale and therefore the sale was invalid.

2. When the matter was heard by the Subordinate Judge, Salem, no material was placed before him in support of the above three contentions. But a fourth objection was raised in the arguments that the first respondent had only a life interest in the property, which could not be sold by the Official Receiver. It was argued that under S. 28(5) of the Provincial Insolvency Act, a property of an insolvent, which was exempt from attachment under the Code of Civil Procedure could not vest in the Official Receiver and he could not take any proceedings against the same. That objection was upheld by the Subordinate Judge purporting to follow a judgment of this Court in Chenchulakshmi Ammal v. Subramanian (1972) 1 Mad LJ 206 : 85 Mad LW 903 : 1972 AIR(Madras) 348). The Subordinate Judge held that the first respondent had only a life interest in the properties and the sale was not valid. Consequently, he set aside the sale.

3. On appeal by the appellant herein, the I Additional District Judge, Salem, confirmed the order of the Subordinate Judge placing reliance on the same judgment of this Court. The aggrieved auction-purchaser has preferred this Civil Miscellaneous Second Appeal.

4. At the outset, it must be pointed out that the judgment in Chenchulakshmi Ammal v. Subramanian (1972) 1 Mad LJ 206 : 1972 AIR(Madras) 348) has no bearing on this case. K. S. Venkataraman, J. had to consider in that case whether a mere right to enjoy the income from a house property could be attached or sold. Learned Judge held that when the interest was not transferable, it could not be attached and sold and in such a case, only an equitable execution could be granted by appointment of a receiver to collect the rents and profits and after payment of municipal taxes and provision for repairs, the balance could be made available to the decree-holder. That was not a case in which a life estate was conferred on the judgment-debtor. But in the present case, there is no doubt that the first respondent had a life estate, under the partition deed dated 26-11-1938, which is relied on by him for the purpose of contending that he has only a right to enjoy the income and no alienable interest in the property. The relevant recital in the document is to the effect that the first respondent shall not alienate the property in any manner by mortgage or sale; but he shall lease out the same and enjoy the rental income and after his death, the parties 2 and 3 in the document and their heirs shall take the property equally with absolute rights. This document clearly confers a right to immediate possession of the property itself by the first respondent herein and enjoyment thereof by leasing out, if necessary. The document does not prevent the first respondent from enjoying a property by himself occupying the same. Just because he is permitted to lease out the property and enjoy the rental income, it does not mean that what is granted to the first respondent under the document is only a right to enjoy the income and not any interest in the property. This is made clear further by the provision in the same document to the effect that