HIGH COURT OF JUDICATURE AT MADRAS
R.S. RAMANATHAN, J.
R. Venkatesh
Versus
Kalliammal & Others
S.A. No. 264 of 2011
Decided On : 13-07-2012
Provincial Insolvency Act - Jurisdiction of Civil Court - Sections 53 and 54 - Summary
Fact of the Case:
The plaintiffs sought declaration that the auction sale conducted by the Official Receiver was null and void and not binding on them. The trial court decreed the suit in favor of the plaintiffs. The appellant and Official Receiver appealed, but the lower appellate court confirmed the trial court's decision. The appellant then filed a second appeal.
Finding of the Court:
The court held that the civil court had jurisdiction to entertain the suit as the sales in favor of the plaintiffs were only voidable, not void, and therefore, the Insolvency Court did not have exclusive jurisdiction. The court also found that the annulment proceedings initiated by the Official Receiver were time-barred and not binding on the plaintiffs. The court further noted that the subsequent purchasers, the plaintiffs, were not made parties to the annulment proceedings and therefore, the annulment order was not binding on them.
Issues: 1. Jurisdiction of the Civil Court to entertain the suit. 2. Validity of the annulment proceedings initiated by the Official Receiver. 3. Binding nature of the annulment order on the subsequent purchasers.
Ratio Decidendi: The court held that the civil court had jurisdiction to entertain the suit as the sales in favor of the plaintiffs were only voidable, not void, and therefore, the Insolvency Court did not have exclusive jurisdiction. The court also found that the annulment proceedings initiated by the Official Receiver were time-barred and not binding on the plaintiffs. The court further noted that the subsequent purchasers, the plaintiffs, were not made parties to the annulment proceedings and therefore, the annulment order was not binding on them.
Final Decision: The second appeal was dismissed, and the judgments and decrees of the courts below were confirmed.
1. The unsuccessful first defendant is the appellant. The predecessors in title of the respondents 1 to 6 herein namely, Kalliammal and Balasubramaniam filed the suit O.S.No.413 of 2004 on the file of the Subordinate Judge, Coimbatore, for declaration that the sale conducted by the Official Receiver in respect of the suit property in IP No.7 of 87 is null and void and not binding on the plaintiffs and for permanent injunction.
2. The case of the plaintiffs was that the suit property having a total extent of 849 sq.ft of land and building, belonged to a partnership firm known as 'Parameshwari Hall' represented by its partners O.Jayaraman, J.Venkatraman and J.Kumarvavelu. The said partnership firm sold the northern side block of the suit property to one P.Balaji under Ex.A3, dated 12.09.1986 and southern side block consisting of 363 sq.ft to one P.Gopal under Ex.A5 on the same date. By reason of the sales in favour of Gopal and Balaji, certain acts of insolvency alleged to have been committed by the partnership firm, the creditors of the partnership firm filed I.P.No.7 of 1987 to adjudge the partnership firm and its partners as 'insolvent'. In that petition, Gopal and Balaji were also impleaded as respondents and they did not prosecute the case and by order, dated 15.04.1994, the partnership firm and its partners were adjudged 'insolvent' in I.P.No.7 of 1987. Meanwhile, the said Balaji, who purchased the property under Ex.A3 sold the said extent under Ex.A2 to one Krishnamoorthy and from Krishnamoorthy, Ramakrishnan, the husband of the first plaintiff Kaliammal purchased that property under Ex.A1, dated 04.03.1993. Similarly, from Gopal, the first plaintiff purchased the southern side block consisting of 363 sq.ft. of land and building under Ex.A4, dated 4.3.1993. Therefore, Ramakrishnan and Kalliammal became the absolute owners of the entire extent of 849 sq.ft. and they are husband and wife and after the death of Ramakrishnan, the properties were enjoyed by Kalliammal and Balasubramanim as owners.
3. It is the case of the plaintiffs that they are the bona fide purchasers for value and they are not aware of the pendency of I.P proceedings and they purchased the property on 04.03.1993 before the date of adjudication of their vendors as 'insolvents' and therefore, their sale cannot be impeached. It is their further case that the Official Receiver filed I.A.No.473 of 2002 under sections 53 and 54 of the Provincial Insolvency Act to annual the sale deeds, dated 12.09.1986, Exs.A3 and A5 in favour of Gopal and Balaji. In that application also, Gopal and Balaji were made as parties and the plaintiffs, who were the subsequent purchasers were not made as parties and the sales were annulled in I.A.No.473 of 2002 and therefore, the Official Receiver sold the property in public auction and the same was purchased by the appellant herein and therefore, the suit was filed for declaration that auction sale by the Official Receiver in favour of the appellant herein in I.P.No.7 of 1983 was null and void and not binding on the plaintiffs.
4. The first defendant/appellant contested the suit stating I.P.No.7 of 87 was filed on 10.12.1986 within three months from the date of Exs.A3 and A5, namely 12.09.1986 and in that petition, it was stated that the insolvents, namely the vendors of Gopal and Balaji under Exs.A3 and A5 committed acts of insolvency by selling the property with an intention to defeat the creditors. In that petition, Gopal and Balaji were parties and they did not contest the proceedings and the debtors, namely the owners of the property were adjudged as 'insolvents' by order, dated 15.04.1994 under Ex.B2 and I.P.No.7 of 87 was filed by the creditors on 10.12.1996 and by virtue of the provision of 28(7) of the Provincial Insolvency Act, the order of adjudication relates back to the date of filing of the petition, namely 10.12.1986 and therefore, any sale that took place thereafter, will not bind the Official Receiver and
Login now and unlock free premium legal research
Login to SupremeToday AI and access free legal analysis, AI highlights, and smart tools.
Login
now!
India’s Legal research and Law Firm App, Download now!
Copyright © 2023 Vikas Info Solution Pvt Ltd. All Rights Reserved.