The court underscored the importance of ensuring maximum price recovery for equitable asset distribution in insolvency proceedings.

JUDGMENT

Raman, J, This is an appeal filed by one of the creditors of third respondent at the execution stage. Third respondent herein, against whom there is a mortgage decree obtained by the second respondent Federal Bank. On execution of the decree, property of the third respondent was sold and purchased by the first respondent. Sale certificate was also issued. The appellant herein filed a claim petition under Order 21 Rule 90 of the Code of Civil Procedure. He also filed an application under Order 21 Rule 58. It is found that there is no material irregularity or fraud and dismissed the application filed under Order 21 Rule 90. The application filed under Order 21 Rule 58 was also dismissed finding that he has no claim. Hence this appeal is filed.

2. It is contended that the appellant had filed an Ex.F.A.103/2009. 2 insolvency petition before the Sub Court, Trichur for declaring the third respondent herein as an insolvent, wherein the present debt of the Bank is also included, and according to him the Bank having thus opted to come within the insolvency proceedings for ratable distribution of the assets of the third respondent, the Bank ought to have disclosed the same at the time of sale of the property. First respondent is the auction purchaser. It is also contended that the property was sold at avery low price as a result many of the other creditors are defrauded. The additional fifth respondent, who is another creditor, has offered an amount of Rs.9,00,000/- by way of consideration for the property, which has now been sold in favour of the first respondent for Rs.4,80,000/- and the same is now lying in deposit in the Treasury. It is contended that in such circumstances, if the property is allowed to be purchased by the additional fifth respondent for a total consideration of Rs.9,00,000/-, the balance amount will be available for equitable distribution by the insolvency court among the other unsecured Ex.F.A.103/2009. 3 creditors.

3. We heard the parties at length. The first respondent herein also filed a counter affidavit and a statement of accounts, as per which he has incurred a total amount of Rs.8,04,436/- inclusive of the Advocate fee and miscellaneous expenditure of Rs.30,000/-. He has also claimed 12% interest for the deposited amount from the respective dates on which the amounts have been deposited. Though it has been contended by the appellant and the additional fifth respondent that the first respondent cannot claim, as of right, interest at 12% and also relied on the provisions contained in Order 21 Rule 93. It was rightly pointed out by the first respondent that though there is a discretion in the matter of grant of interest, there is no reason why the first respondent should be denied the interest. As a matter of fact, according to him he is entitled to get compensation, because ultimately he will have to re-convey the property after foregoing the benefits accrued to him. He relied on Hindi Pracharak Prakashan v. M/s.

the decision reported in Ex.F.A.103/2009. 4 G.K. Borthers (1990 KHC 1046), wherein in a similar situation it was found that 12% interest would be a just compensation. In the facts and circumstances and after hearing the parties, we find that since there are more number of creditors waiting for ratable distribution of the assets belonging to the judgment debtor, the property should fetch the maximum price, in which case after satisfying the claim of decree holder Bank, whatever balance amount left will be available for ratable distribution. But, in the meantime, since the property has been sold and the amount has been deposited by the first respondent, we asked the learned counsel for the first respondent whether he is interested to retain the property by paying additional amount, which the additional fifth respondent has offered. But counsel submitted that the first respondent is not interested to incur any further amount in this regard and he is satisfied if the amount as per the statement is p