ORDER

The issue that arises for consideration in this application filed by the Official Assignee under Section 55 of the Presidency Town Insolvency Act, 1909 (Hereinafter referred to as "1909 Act") is whether the sale deed dated 18.08.2011 executed by the respondent Nos.1 and 2 (Insolvents) in favour of the respondent Nos.3 and 4 (purchasers) has been executed in "good faith" and "for valuable sale consideration".

2. The debtor petition in I.P.No.14 of 2012 was filed by the respondent Nos.1 and 2 on 14.02.2012 to declare themselves as insolvents. They were adjudicated as insolvents by this Court on their petition vide order dated 16.02.2012 and thereafter, they had filed their statements on

12.06.2012.

3. According to the Official Assignee, the respondent Nos.1 and 2 (Insolvents) had disclosed in their statements to the Official Assignee that a residential property situated at No.4, Srinivas Apartments, Ground Floor, Sathulla Street, T.Nagar, Chennai (Hereinafter referred to as "Property") was sold by them in the year 2011 for a sum of Rs.40,00,000/- to the fourth respondent.

4. According to the Official Assignee, it was discovered, based on a valuation report, that the market value of the property as on 18.08.2011 was Rs.43,90,000/-. However, according to the Official Assignee, in the sale deed dated 18.08.2011, the property has been conveyed by the respondent Nos.1 and 2 (Insolvents) to the respondent Nos.3 and 4 (Purchasers) for a sum of Rs.15,83,200/-.

5. According to the Official Assignee, the sale which is less than two years prior to the date of adjudication is void and the transfer of property by the respondent Nos.1 and 2 (Insolvents) was not a transfer made in favour of the purchasers viz., the respondent Nos.3 and 4 in good faith and for valuable consideration.

6. The respondent Nos.1 and 2 (Insolvents) have remained ex-parte in this application. The respondent Nos.3 and 4, who are the purchasers, have filed a counter to this application, denying the contentions of the applicant. They have contended that they are bonafide purchasers, having paid the valuable sale consideration for the purchase of the property from the insolvents. According to them, on the basis of the value of the building, the undivided share of the land, furniture, accessories, modular kitchen, AC, Television, 15 row cots made of teak wood, the valuable sale consideration payable to the insolvents was firmed up at Rs.50,50,000/-, which was the prevailing market rate and the sale agreement dated 18.02.2011 was entered into for the said price with the insolvents.

7. According to the respondent Nos.3 and 4 (Purchasers), the total sale consideration of Rs.50,50,000/- comprises of the following:

a) Rs.8,52,200/- was paid as sale consideration for the undivided share of the land;

b) Rs.7,31,000/- was paid as sale consideration for the super built up area and the sale deed dated 18.08.2011 for Rs.15,83,200/- was executed by the respondent Nos.1 and 2 (Insolvents) in favour of the respondent Nos.3 and 4;

c) The balance sale consideration of Rs.34,66,800/- was paid by the respondent Nos.3 and 4 towards furnishings, fittings, electrical items, household appliances, etc., i.e., the movables in the said flat, which amount that was paid towards movables is not subject to stamp duty nor does the sale of the said movables require registration under law and hence, not required to be mentioned in the sale deed.

8. According to the respondent Nos.3 and 4 (purchasers), out of the aggregate sum of Rs.50,50,000/-, a sum of Rs.29,00,000/- was paid through crossed cheques and receipts obtained from the respondent Nos.1 and 2 (Insolvents). According to them, a sum of Rs.12,00,000/- was paid by cash against duly stamped receipt signed by the respondent Nos.1 and 2 (Insolvents) and another sum of Rs.8,44,188/- was paid by cheque to the credit of the loan account of the respondent Nos.1 and 2 (Insolvents) held with Indian Bank and the said loan was cleared in full and the said propert