A third party can annul insolvency adjudication under Section 21 if all debts are settled and the estate is surplus, considering changes in circumstance.

JUDGMENT :

C.V. Karthikeyan, J.

This appeal has been filed questioning the order dated 29.10.2018 in application No.193 of 2010 in IP No.99 of 1997.

2.The appellant herein as third party to the proceedings in IP No.99 of 1997, had filed an application in A.No.193 of 2010 seeking to direct the Official Assignee to release the subject property at Flat No.3A, III Floor, Parkland Apartments, No.2, Kamalabai Street, T.Nagar, Chennai – 17.

3.The appellant herein had entered into an agreement of sale, dated 28.01.1992, with Titus Eapen, the third respondent herein, with respect to Flat No.3A, III Floor, Parkland Apartments, No.2, Kamalabai Street, T.Nagar,Chennai – 17, for a total consideration of Rs.9,00,000/-. IP No.99 of 1997 had been filed by the first and second respondents herein, M/s. Cathedral Chits Private Limited, represented by its Director K.V.Thomas and M/s.MBF Chits Private Limited, represented by its Director K.V.Thomas, seeking to adjudicate the third and fourth respondents herein, Titus Eapen and Sheela Eapen as insolvents. In the petition, it had been stated that the said respondents, Titus Eapen and Sheela Eapen were carrying on business in finance and stock broking and joined in the chit business of the petitioning creditors and had also bid at the auction and had taken the prize money. They had then failed to repay the same. The petitioning creditors then filed petitions before the Registrar for Central Madras Chit Fund cases and obtained orders for payments of the amounts due.

4.It had been contended that the amount due to the first petitioning creditor, M/s.Cathedral Chits Private Limited, was Rs.42,868/- and the amount due to the second petitioning creditor, M/s.MBF Chits Private Limited was Rs.83,332/-. It had been further contended that the third and fourth respondents had departed from their dwelling house and usual place of business and had therefore committed acts of insolvency within the meaning of Sections 9 (d) (i) (ii) & (iii) of the Presidency Towns Insolvency Act. It was further contended that the third and fourth respondents own immovable properties including Flat No.3A, III Floor, Parkland Apartments, No.2, Kamalabai Street, T.Nagar, Chennai – 17. It was under those circumstances that the said petition in I.P.No.99 of 1997 was filed. By an order dated 27.04.1998, the said respondents, Titus Eapen and Sheela Eapen were adjudicated as insolvents. On and from that date, their assets stood vested in the office of the Official Assignee.

5.The appellant herein had then entered into an agreement with the petitioning creditors on 30.04.1999 that on payment of a sum of Rs.90,000/- to them, the petitioning creditors would withdraw the insolvency petition. It was contended that the appellant herein was a tenant under Titus Eapen and Sheela Eapen. In the agreement, the fact that I.P.No.99 of 1997 had been filed was disclosed, the fact that the said property was shown as a property in the insolvency petition was also disclosed. The fact that the property stood vested with the Official Assignee was also disclosed. It was contended that if it so vests, then the appellant herein would be deprived of his possession and to prevent that eventuality, he had entered into an agreement with the petitioning creditors overriding the rights of the office of the Official Assignee. Thereafter, the petitioning creditors addressed a letter to the Official Assignee on 08.05.1999, calling upon him to withdraw the insolvency petition against the insolvents. He also addressed a letter to his counsel instructing him not to