Right to benefit of Section 53(3).

These appeals, filed under Clause 15 of the Letters Patent from the judgment of Kailasam, J., involve, inter alia, the following question which has given rise to this Reference:

“Whether mere knowledge on the part of a purchaser in an execution sale about the admission of a petition to adjudicate the judgment-debtor insolvent, will render his purchase in Court auction as one not made in good faith and thereby deny him the protection afforded by section 53 (3) of the Presidency Towns Insolvency Act which corresponds to section 51 (3) of the Provincial Insolvency Act?”

By his judgment, the learned Judge set aside, on the application of the Official Assignee under section 7 of the Presidency Towns Insolvency Act (which will hereafter be referred to as the Act), certain sales conducted by the District Munsiff’s Court, Poonamallee, in execution of decrees obtained against one Ramalinga Reddy. E.K. Raghava Reddi, the appellant in O.S.A. No. 16 of 1963, is the purchaser in those sales which form the subject-matter of these appeals. He subsequently sold a few items of the properties so purchased to the appellants in O.S.A. No. 23 of 1963.

Several persons had filed suits and obtained decrees against Ramalinga Reddi. The first of the suits was O.S. No. 283 of 1956 on the file of the District Munsif’s Court, Poonamallee. Three other decrees had also been passed against the same debtor by the City Civil Court, Madras, in O.S. Nos. 2457 of 1955, 2236 of 1955 and 2458 of 1958. Those decrees were transmitted to the Poonamallee District Munsif’s

Court, for execution against the properties of the judgment-debtor, which were situate within its jurisdiction.

The decree-holder in O.S. No. 283 of 1936 executed his decree by attachment and sale of certain agricultural lands. On 1st April, 1959, one Mr. Suryanarayana purchased at the Court auction an extent of Ac. 3.05 cents of land for a sum of Rs. 1,150. This purchase forms the subject-matter of an appal to this Court with which we are not at present concerned.

In execution of the decree in O.S. No. 2457 of 1955, a house in Sriperumpudur belonging to the judgment-debtor, was sold on 15th April, 1959 in favour of E. K. Raghava Reddy for a sum of Rs. 2,205. In similar proceedings taken with respect to decrees in O.S. Nos. 2236 of 1955 and 2458 of 1958, agricultural lands covering respectively an extent of Ac. 2.84 cents and Ac. 4.70 cents were sold on 22nd April, 1959, to E. K. Raghava Reddy himself for Rs. 2,281 and Rs. 2,250. All the sales were duly confirmed, in accordance with the provisions contained in the Code of Civil Procedure.

In the meantime, one of the creditors of the judgment-debtor, filed a petition in this Court on 1st November, 1958, I.P. No. 13 of 1959 — to adjudicate him an insolvent. The act of insolvency alleged fell under section 9 (e) of the Act, namely, that the debtor’s properties had suffered attachment for more than twenty-one days in execution of a decree against him, such period of attachment having been completed by 6th August, 1958. The petition was admitted on 25th February, and the actual adjudication was made on 7th September, 1959.

Even during the pendency of the petition, the Official Assignee had been appointed as an Interim Receiver. This was on 1st May, 1959. He reduced the debtor’s properties to his possession on the 9th and 10th of the following month. This happened before the confirmation of the sales by the Executing Court, to which we have made reference earlier.

It will, however, be noticed that although the petition for adjudication was admitted as early as February, 1959, no steps had been taken by any one concerned to obtain a stay of execution of the decrees. But on 15th April, 1959, the judgmentdebtor appraised the Executing Court in O.S. Nos. 2236 of 1955 and 2458 of 1958, about the pendency of the Insolvency Petition, and applied for an adjournment of the sales. The Court granted a week’s time to the debtor to produce an order for