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1992 JLJ 235
D.M. Dharmadhikari. J.
Bhanwarlal and others v. Babulal and others
Misc. Appeal No. 155 of 1982: against the order of A.K. Pandey, District Judge. Raipur: Decided On 24.9.1991.
A person complaining or the act or the receiver may either apply under S. 68 or proceed under the ordinary law or the land. Section 4 does not prescribe any application for relict‘ under that section. Its object is to define the limits or jurisdiction or the Courts exercising powers in insolvency. It is not correct to say that a person aggrieved by an act of the receiver has the choice or making an application under S. 4 or under S. 68, AIR 1937 Lahore 2, AIR 1937 Lahore 297, AIR 1937 Lahore 757 and AIR 1934 Rangoon 97 relied on. AIR 1938 Nag. 320 held no more good law and also distinguished on facts. AIR 1967 SC 1780 followed. [Paras 9 to 11
(2) Insolvency Act, 1920 (Provincial) -- S. 68 - Proviso -- period of limitation of 21 days -- starts from the formal communication of act or decision -- act or decision not conveyed -- limitation does not commence. AIR 1961 SC 1500 followed. [Para 14
(3) Contact Act, 1872 -- S, 74 -- auction sale by receiver appointed under insolvency proceedings -- terms of auction not notified in writing -- even verbally bidders were not told that l/4th deposit was liable to be forfeited if 3/4th deposit was not paid within a stipulated time -- deposit is not ‘earnest‘ but only a payment of ‘part of price , -- forfeiture of such amount is penalty which without proof of any loss to the auctioning authority cannot be supported by this provision.
It is not clear from his reply that he pointedly told the bidders that the 1/4th initial deposit will be treated as ‘earnest‘ and would be liable to be forfeited in the event of default by the highest bidders to make deposit of the remaining auction money within the stipulated period of thirty days. The contents of reply dated 17.10.1981 submitted by the receiver in the Court are also, in my opinion, not sufficient to hold that 1/4th advance deposit of bid money was by way of earnest and as guarantee for fulfillment of other terms of the contract so as to justify its forfeiture on the alleged breach on the part of the highest bidder. Without proof of any loss to the auctioning authority the forfeiture of 1/4th deposit, therefore, cannot be supported by provisions of S. 74 of the Contract Act. AIR 1970 SC 1986 and AIR 1962SC 1141 distinguished. AIR 1970 SC 1955 followed. [Para 19
¼1½ fnokyk vf/kfu;e] 1920 ¼izkarh;½ && /kkjk 68 rFkk 4 && fjlhoj dh dkjZokbZ ds fo#) U;k;ky; esa ifjokn && dsoy /kkjk 68 ds v/khu dkjZokbZ vFkok fofu‘p; ls 21 fnu ds Hkhrj fd;k tk ldrk gS && /kkjk 4 ykxw ugha gksrhA fjlhoj ds dk;Z ds laca/k esa ifjoin djus okyk O;fDr /kkjk 68 ds v/khu vkosnu dj ldrk gS vFkok lkekU; ns‘kfof/k ds v/khu dk;Zokgh dj ldrk gSA /kkjk 4 }kjk ml /kkjk ds v/khu vuqrks"k dk dksbZ vkosnu fofgr ugha gSA mldk mÌs‘; fnokfy;k fo"k;d ‘kfDr;k¡ iz;ksx djus okys U;k;ky;ksa dh vf/kdkfjrk dh lhek,¡ ifjfuf‘pr djuk gSA ;g dguk lgh ugha gS fd fjlhoj ds dk;Z ls O;fFkr O;fDr /kkjk 4 vFkok /kkjk 68 ds v/khu vkonsu djus dk pquko dj ldrk gSA , vkb vkj 1937 ykgkSj 2] , vkb vkj 1937 ykgkSj 297] , vkb vkj 1937 ykgkSj 757 rFkk , vkb vkj 1934 jaxwu 97 voyafcrA , vkb vkj 1938 ukxiqj 320 vc ekU; fof/k ugha rFkk rF;ksa ij Hkh izHksfnrA , vkb vkj 1967 ,l lh 1780 vuqlfjrA ¿ iSjk 9 ls 11À ¼2½ fnokyk vf/kfu;e 1920 ¼izkarh;½ && /kkjk 68& ijarqd && 21 fnu dh ifjlhek dh dkykof/k && dk;Z vFkok fofu‘p; dh ;Fkkjhfr lalwpuk ls izkjaHk gksrh gS && dk;Z vFkok fofj‘p; laiszf"kr ugha fd;k x;k && ifjlhek izkjaHk ugha gqbZA , vkb vkj 1961 ,l lh 1500 vuqlfjrA ¿ iSjk 14À ¼3½ lafonk vf/kfu;e] 1872 && /kkjk 74 && fnokyk dh dk;Zokfg;ksa esa fu;qDr fjlhoj }kjk ubyke&foØ; && ubykeh ds fuca/ku fyf[kr esa lwfpr ugha fd, x, && ekSf[kd :i ls cksyh yxkus okyksa dks ugha crk;k x;k fd 1@4 fu{ksi leiàr fd, tkus ds nkf;Rok/khu Fkk ;fn 3@4 fu{ksi vuqc) le; ds Hkhrj lank; ugha fd;k x;k && fu{ksi *vfxze* ugha gS vfirq dsoy dher ds Hkkx* lank; gS && ,wlh jde leiàr fd;k tkuk ‘kfLr gS tks fd ubykeh izkf/kdkjh dks gqbZ dksbZ gkfu ds lcwr ds vHkko esa bl mica/k }kjk lekfFkZr ugah dh tk ldrhA mlds ¼fjlhoj½ tokc ls ;g Li"V ugha gS fd mlus cksyh yxkus okyksa dks lqLi"V :i ls ;g crk;k gS fd 1@4 izkjafHkd fu{ksi *vfxze* ds :i esa ekuk tk,xk rFkk rhl fnu dh vuqc) dkykof/k ds Hkhrj mPpre cksyh yxkus okyksa }kjk ckdh ds ubyke /ku dk fu{ksi djkus esa O;frØe fd, tkus dh n‘kk esa leiàr fd, tkus ;ksX; gksxkA fjlhoj }kjk U;k;ky; esa izLrqr rkjh[k 17-10-1981 ds mRrj dh fo"k;&oLrq Hkh] esjh jk; esa] ;g vfHkfu/kkZfjr djus ds fy, i;kZIr ugha gS fd cksyh /ku dk 1@4 vf/knk; fu{ksi vfxze ds :i esa rFkk mPpre cksyh yxkus okys dh vksj ls vfHkdfFkr Hkax ij leiàr dks U;k;ksfpr Bgjkus ds fy, lafonk ds vU; fuca/kuksa dh iwfrZ ds fy, izR;kHkwfr ds :i esa FkkA vr%] ubykeh izkf/kdkjh dks gqbZ fdlh gkfu ds lcwr ds vHkko esa 1@4 fu{ksi dh leiàfr] lafonk vf/kfu;e dh /kkjk 74 ds mica/kksa }kjk lefFkZr ugha dh tk ldrhA , vkb vkj 1970 ,l lh 1986 rFkk , vkb vkj 1962 ,l lh 1141 izHksfnrA , vkb vkj 1970 ,l lh 1955 vuqlfjrA ¿ iSjk 19À
D.M. Dharmadhikari, J. -- 1. This appeal is by the auction purchasers, under S. 75 of the Provincial Insolvency Act, 1920 (hereinafter referred to as 'the Act'). They are aggrieved by the action of the receiver -- forfeiting their one-fourth deposit of the bid money for alleged breach of the terms of the auction in not depositing remaining slim of the bid within thirty days of the auction.
2. The applicants first approached the Insolvency Court by an application under S, 68 of the Act which was allowed and the forfeiture was set aside with directions to the receiver to return the one-fourth deposit. The receiver preferred an appeal under S. 75 of the Act to the Court of the District Judge, Raipur, who by order dated 4.3.1982 allowed the appeal by setting aside the order of the Insolvency Court and upholding the action of the receiver of forfeiture of Pile-fourth deposit. The auction purchasers have, therefore, approached this Court in this appeal.
3. By order passed on 25.3.1974, the partners of firm Jawerchand Thakarsi, Sadar Bazar, Raipur were adjudged insolvent under S. 9 of the Act with effect from 4.10.1972. That was the date of presentation of the petition in the Insolvency Court for the purpose. By order dated 11.1.1975, one Shri R.M. Agarwal, Advocate, was appointed receiver under S. 56 of the Act to take possession of the property and asset" of the insolvent" and for exercising statutory powers of sale and realization of the debt" under S. 59 of the Act. On 31.12.1975, in place of Shri R.M. Agarwal, Advocate Shri N.K. Pandey, Advocate, respondent No. 4 was appointed receiver. On 10.1.1977, the Insolvency Court directed the newly appointed receiver to take charge of the property of the insolvent on 19.4.1978. The receiver sought permission of the Court to sell some properties of the insolvents. On 25.1.1979, however, there were objections filed to the proposed sale. Hence, the Court directed the receiver not to finalize the sale till the objections were decided. The receiver was directed to conduct the sale by auction and submit its report. The receiver advertised the date of sale and held auction of house Nos. 11/109 to 113 of Sadar Bazar, Raipur on 29.1.1979. The highest bid of Rs. 2,81,000/- offered by the appellants was accepted and they deposited a sum of Rs. 1,38,000/- immediately on acceptance of the hid. It is not disputed that the remaining 3/4th amount of hid was not deposited within thirty days of the date of the auction. The appellants case is that the receiver failed to produce title deeds of the houses and backed out of his assurance to deliver vacant possession of the properties auctioned which was the main cause of rising of the bid. The appellants, therefore, had withheld their 3/4th deposits. It is also not in dispute, as is clear from the report of the receiver and the contents of the written reply submitted by him to the Court, after the auction on 17.10.1981, that the terms of the auction were neither advertised before auction nor were they reduced in writing for supply to the intending bidders present on the date of auction. The case of the receiver is that the terms of the auction required deposit of one-fourth amount immediately on acceptance of highest bid and liability to deposit the remaining 3/4th within thirty days as a condition was orally informed to the bidders present.
4. After conducting the auction, the receiver submitted his report to the Court on 8.5.1979 and informed that 1/4th deposit made by the auction purchasers had been forfeited for non-deposit of the remaining bid money within the stipulated period of thirty days. It is also not in dispute that no formal intimation of forfeiture of 1/4th deposit was given to the auction purchasers by the receiver. The auction purchasers complained against the action of the receiver, by their application under Section 68 of the Act filed on 25.4.80. By order dated 20,11.1982 the Insolvency Court set aside the action of the receiver holdi
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