Auction purchasers acquire a valid title under Section 51(3) of the Provincial Insolvency Act if they purchase the property in good faith, and the status of the insolvency application or adjudication determines their claim to the title.

Pollock, J—This order will also dispose of Miscellaneous Appeals Nos. 258, 260 and 261 of 1943. On 28-4-1932 one of Nathmal's creditors filed a petition to have him adjudged insolvent. On the following day Mr. Gadgil was appointed interim receiver of the debtor's estate and on 30th April he took possession of it, including four houses in Telhara, which are the subject-matter of the present disputes. On the same day, 30-4-1932, another creditor obtained a decree against Nathmal and subsequently in execution attached these four houses. The sales were fixed for 14-9-1934, and on the previous day Mr. Gadgil put in an application to the execution Court, asking for the stay of the sales under Section 52, Provincial Insolvency Act. The execution Court ordered that the sales should proceed, as it was then too late to postpone them, but that the sale-proceeds should not be paid to the decree-holder. The four houses were accordingly sold on 14-9-1934. On 29-9-1934 Mr. Gadgil asked that the houses should be resold as the price fetched was very low, but, in the absence of any allegation of irregularity in the sales, that application was inevitably rejected. On 9-3-1935 Mr. Gadgil put in an application that the sales should not be confirmed on the ground that they were irregular and invalid as they had been held after notice had been given under Section 52, Provincial Insolvency Act. On 28-9-1935 this application was rejected and the sales were confirmed (Ex. A-3), and shortly afterwards the auction-purchasers were put in possession. A revision application by Mr. Gadgil filed in the High Court against that decision was subsequently withdrawn on 25-8-1937, apparently because he had failed to implead the auction-purchasers, Ex. A-6.

2. Eventually after an appalling delay the insolvency application to have Nathmal adjudged insolvent was rejected by the insolvency Court on 30-6-1938, but on 3-2-1939, an appeal against that order was allowed, Nathmal was adjudicated insolvent, and Mr. Gadgil, who up to then had been an interim receiver, became the receiver. On 9-10-1939, the receiver put in four applications under Section 4, Provincial Insolvency Act, asking to be put in possession of these four houses on the ground that the sales were void and that no valid title had passed to the auction-purchasers. The insolvency Court allowed the applications, but the lower appellate Court held that the auction purchasers acquired a good title to the houses against the receiver under Section 51(3), Provincial Insolvency Act, if they purchased the property in good faith, and remanded the cases for a decision on the question of good faith. Against that decision the auction-purchasers have preferred these four appeals.

3. The houses were sold after the insolvency petition had been presented but before the debtor had been adjudicated insolvent, and that distinguishes the present case from Chunnilal v. Vithal and Motilal v. Nathu where conflicting views were expressed on the question whether the auction-purchaser acquires a valid title under Section 51(3), Provincial Insolvency Act, if the sale was held after the adjudication. In Rangappa v. Ghanshyam Niyogi J. held that Section 52, Provincial Insolvency Act, must be read with Section 51 which qualifies it, which means that if the executing Court holds the sale in spite of notices being given under Section 52, the auction-purchaser acquires a valid title under Section 51(3) if he purchases in good faith. It might be possible to distinguish that decision on the facts, for the sale there was held in ignorance of the insolvency proceedings, but I do not think that a sale under Section 52 is void merely because the Court has notice of the insolvency proceedings, for that would be to put an unduly narrow interpretation on Section 51(3). Where a sale is held after the admission of the insolvency petition but before adjudication, the position appears to me to be as stated in Jogendranath Kundu v. Jogneshwar Manda