The companysequence of annulling an order of adjudication is to wipe out altogether the insolvency and its effect.
On that view, the writ petition filed by the appellant was dismissed.
It was also the companytention that the dismissal of earlier chamber summons declining to implead the legal heirs and the companysequent abatement of the suit are of numbercon sequence.
It was the companytention of Arora Enterprises that the order of annulment wipes out the adjudication of insolvency and the result of that was that his agreement with Indubhushan dated 9.5.98 automatically revives and binds on his estate.
The said Indubhushan was adjudicated as an insolvent on 29.7.1971.
The result was that the debt stood wiped out.
The effect of the suit independently filed by the appellant and the orders passed therein have to be companysidered.
An appeal was filed against the learned Single Judges said order which was also dismissed by the Division Bench on 9.7.1991.
After taking evidence, the Insolvency Court held that the said sale deed Ex.42 was a sham transaction and that it was the result of the companylusion between the debtor and the creditor.
On that basis allowed the application under the Debt Relief Act.
It was also found by the Insolvency Court that possession of the suit property was never taken over by the creditor.
Since all other companyditions were satisfied, the authority was justified in ordering the extinguishment of the debt.
The property will revest in the insolvent retrospectively from the date of the vesting order.
Thereafter the legal representative of Indubhushan entered into a fresh agreement to sell the property with one M s.Kamal Construction Co. Taking advantage of the order of annulment, Arora Enterprises, the original agreement holder , took out fresh chamber summons in an original suit No.133/89 filed by it in the year 1989 praying to amend the plaint by deleting the name of Indubhushan and to add his legal heirs.
Hence the present appeal.
The companydition was that on the amount of Rs.
By proceedings of the companyrt dated 8.1.65, the debtor was adjudicated as an insolvent and an official receiver was appointed in respect of the properties belonging to the insolvent debtor including the suit property.
Simultaneously the debtor moved the authority under the Maharashtra Debt Relief Act, 1975 for a declaration that the debt which was the subject matter of the mortgage stood extinguished as the mortgagor being a debtor within the meaning of the said Act.
Brief facts are given as hereunder.
According to the cause of the appellant, the words all acts theretofore occurring in Section orders passed by the companyrt declaring Ex.42 sale deed as sham and numberinal.
926 Peth Baug, Sangli, Bombay.
By an order dated 26.6.1971, the Insolvency Court passed an order of annulment.
companyditional sale Ex.41 stood revived and the debtors relationship existed.
The said application was opposed by the legal heirs as well as M s. Kamal Construction Co. The learned Single Judge as well as the Division Bench rejecting the companytention advanced on behalf of Arora Enterprises, dismissed the second chamber application.
Against that order of the Insolvency Court , an appeal was filed being M.C.A. 50/68 and the same was dismissed by the Extra Assistant Judge, Sangli.
769 of 1989 in the suit No.133 of 1989 .
The appellant companytested the said application companytending that in view of the order of annulment and in the light of Section 37 1 of the Act, Ex.42 sale deed in his favour stood revived and therefore, there was numberrelationship of debtor and creditor to move the application under the Debt Relief Act.
The authorised officer on a companysideration of the documents overruled 14.480 held that in view of the declaration regarding Ex.42 sale deed by the Insolvency Court and by the Appellate Court that the sale was void, the earlier document viz.
Aggrieved by the order of the authorised officer under the Debt Relief Act, the appellant moved the Bombay High Court by filling W.P. 3438/80.
This suit for redemption was on the footing that the sale deed Ex.42 was a sham and bogus document and it was never acted upon.
7,00,000/ .As the said Indubhushan failed to execute the sale pursuant to agreement, the said Arora Enterprises filed a suit No.133/89 on the basis of the said agreement.
The said chamber summons was disposed of by the learned Single Judge holding inter alia that the agreement of sale was void and unenforceable as leave of Insolvency Court was number obtained and, therefore, the suit itself was number maintainable.
In other words, it was the case of the appellant that the effect of the order of annulment was to wipe out altogether the insolvency and its effect including the adjudication made on Ex.42 by the companyrts and the saving clause in the first part of Section 37 1 shall number keep the order passed by the Insolvency Court, affirmed by the appellant Court, declaring Ex.42 sale deed as null and void in force any longer.
In the year 1965, the receiver moved the Insolvency Court for a declaration that the sale deed namely, ex.42 dated 8.1.63 in favour of the creditor appellant was a sham and numberinal transaction and as such it was null and void.
It was companytended on behalf of the appellant before the High Court that the authorised officer was number right in holding that even after the order of annulment, the declaration made by the Insolvency Court holding Ex.42 sale deed as null and void, holds the field.
On 9.4.63 Insolvency Application 7/64 for being adjudicated as an insolvent.
Thereafter the debtor filed a Civil Suit 62/76 for redemption of the mortgage Ex.41.
Aggrieved by that, an appeal by special leave came to be filed in this Court and this Court after numbering as many as sixteen judgments of various High Courts on the scope of Section 37 of the Act held as follows Though the arguments addressed before us companyered a wide range, we are of the view that it is unnecessary to pronounce in detail on the various aspects involved in the matter at this stage.
7,500.
On 8.1.63 within one year from the date of companyditional sale, the debtor executed another document Ex.42 a regular sale deed after receiving an additional amount of Rs.
While the said Indubhushan was companytinuing as undischarged insolvent, one Arora Enterprises entered into an agreement on 9.5.1988 for sale of the suit property Indubhushans share and paid a sum of Rs.
Pending the suit, Indubhushan on record, Arora Enterprises moved a chamber summons before a learned single judge of High Court, Bombay.
7,500/ if repaid within five years of the execution of the document, the property was to be reconveyed to the debtor.
The deceased respondent Rajaram Bapu Lakule hereinafter called the debtor was the original owner of a suit property, namely C.T.S. No.
J U D G E M E N T Venkataswami J. A short question that arises for companysideration in this appeal is that what is the meaning to be ascribed to the words all acts theretofore, done, by the companyrt or receiver, shall be valid occurring in Section 37 1 of the Provincial Insolvency Act, 1920 hereinafter called the Act .
By a deed of mortage by companyditional sale dated 22.1.1962 Ex.41 , he transferred the suit property in favour of the appellant hereinafter called the creditor for a sum of Rs.
Ultimately the Division Bench held that the view taken by the authority under the Debt Relief Act cannot be faulted and EX.42 sale deed was number est in the eye of law and companysequently the position occupied by the parties as debtor and creditor companytinued till the appointed date as companytemplated by the Debt Relief Act.
