A.Nos.127 and 142 of 2008 IN THE HIGH COURT OF JUDICATURE AT MADRAS Reserved on : 31.01.2019 Pronounced on : 22.12.2020 CORAM: THE HON'BLE MR. JUSTICE R.SURESH KUMAR A.Nos.127 and 142 of 2008 in I.P.No.69 of 1998 C.Dayalan ........ Applicant / third party in both the applications -vs- 1. K.Radhakrishnan 2. The Official Assignee High Court, Chennai - 600 104. 3. Messrs Alwin & Company New No.260, Old No.204, Thambu Chetty Street, First Floor, Chennai - 600 001. ........ Respondents in both the applications Prayer in A.No.127 of 2008 : Application filed under Section 7 of Presidency Towns Insolvency Act 1909, seeking an order to grant stay of all further proceedings pursuant to auction notice issued by the Official Assignee, High Court, Madras as published in Tamil Daily "Thinathanthi" issue dated 28.03.2008 insofar as it relates to the land comprised in Survey 1/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 No.396/4B situate in Thirunindravur village, Poonamallee Taluk, Thiruvallur District. Prayer in A.No.142 of 2008 : Application filed under Section 7 of Presidency Towns Insolvency Act 1909, seeking an order to grant stay of all further proceedings pursuant to the auction notice issued by the Official Assignee in regard to the properties covered in I.P.No.69/1998 as published in Tamil Daily "Thinathanthi" issue dated 27.04.2008 insofar as it relates to the land comprised in Survey No.396/4A of Thirunindravur village, Poonamallee Taluk, Thiruvallur District. For Applicant : Mr.V.Ayyadurai, Senior counsel for Mr.J.Manoharan For Respondents : Mr.C.Ramesh for Insolvent (R1) Mr.K.V.Ananthakrushnan for Official Assignee (R2) COMMON ORDER A.No.127 of 2008 has been filed under Section 7 of the Presidency Towns Insolvency Act 1909, seeking an order to grant stay of all further proceedings pursuant to auction notice issued by the Official Assignee, High Court, Madras as published in Tamil Daily "Thinathanthi" issue dated 28.03.2008 insofar as it relates to the land comprised in Survey No.396/4B situate in Thirunindravur village, Poonamallee Taluk, Thiruvallur District. 2/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 2. A.No.142 of 2008 has been filed under Section 7 of the Presidency Towns Insolvency Act 1909, seeking an order to grant stay of all further proceedings pursuant to the auction notice issued by the Official Assignee in regard to the properties covered in I.P.No.69/1998 as published in Tamil Daily "Thinathanthi" issue dated 27.04.2008 insofar as it relates to the land comprised in Survey No.396/4A of Thirunindravur village, Poonamallee Taluk, Thiruvallur District. 3. These two applications were filed by the applicant who is the third party in I.P.No.69 of 1998 seeking the aforesaid prayer of stay of all further proceedings pursuant to the auction notice issued by the Official Assignee in regard to the properties covered in I.P.No.69 of 1998 as published in Tamil Daily, Thinathanthi dated 28.03.2008, insofar as it relates to the land comprised in S.No.396/4B of Thiruninravur village, Poonamallee Taluk, Thiruvallur District and with the similar prayer in respect of the auction notice issued by the Official Assignee in regard to the property covered in I.P.No.69 of 1998 as published in Tamil Daily, Thinathanthi, issue dated 27.04.2008 insofar as it relates to the land comprised in S.No.396/4A of 3/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 Thiruninravur village, Poonamallee Taluk, Thiruvallur District, pending disposal of I.P.No.69 of 1998. 4. The main Insolvency Petition, I.P.No.69 of 1998 was filed by the first respondent Insolvent, who filed the said I.P. as a Debtor Petition under Section 9(1) (f) of the Presidency Towns Insolvency Act (herein after referred to as “the Act”). In the said I.P, this Court, by order, dated 30.07.1998 declared him as Insolvent. 5. Thereafter he filed Schedule Of Affairs, in short “SOA”, where he had disclosed 115 unsecured creditors for a sum of Rs.66,29,098/- and his total liability according to him is Rs.69,87,685.80/- and the assets to the value of Rs.22,16,358.80/-. 6. In this context, it seems that, in the SOA filed on 12.11.1998, the insolvent had disclosed the properties bearing S.Nos.396/3, 396/1, 405/4 and 200/5 to the extent of 1.37 acres. 4/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 7. Only pursuant to the said disclosure made by the insolvent in the SOA, the respondent Official Assignee proceeded to bring the property, i.e., S.No.394/4B, which, according to the OA, is 396/3, for auction sale. Accordingly auction notice was issued in the Thinathanthi Tamil Newspaper as stated supra and in that context, the third party applicant, one C.Dayalan has filed the application in A.No.127 of 2008. 8. As per the averments made in the affidavit filed in support of A.No.127 of 2008, the case as projected by the applicant / third party are as follows : (i) The first respondent insolvent in the main I.P was declared to be insolvent by order of this Court, dated 30.07.1998, who, during the public examination, seems to have given statement as to the schedule of affairs, where, he has stated that, among the properties, he own lands in S.No.396/3 also, measuring to an extent of 38 cents and also having lands in various other survey numbers. 5/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 (ii) The Official Assignee issued notification for auction sale in respect of properties comprised in S.No.395/5 and 396/4B situate at Thiruninravur village, Poonamallee Taluk, Thiruvallur District which was published in Thinathanthi Tamil Newspaper on 28.03.2008, according to which, auction had to be held on 05.04.2008. (iii) It is the case of the applicant that, the property in S.No.396/4B is owned by the applicant, as he purchased the same form one Venkataramani in and by a registered sale deed dated 11.02.20024 in Doc.No.695/2004 on the file of the Sub-Registrar Office, Avadi. (iv) The applicant had purchased total extent of 1 acre 67 cents under the said registered sale deed comprising S.Nos.396/4A, 396/4B and 396/4C, which are corresponding to the old S.No.396/4. (v) It is the further case of the applicant that, since the insolvent first respondent does not have any property in S.No.396/4B as notified in the auction notice, it was verified by the applicant and on verification, he was 6/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 given to understand that, the title deeds of the insolvent referred to the S.No.396/4B and the extent of his purchase is mentioned as 72 cents. In this regard, according to the applicant, the Official Assignee without verifying the Revenue records had proceeded to issue auction notice. (vi) It is the further case of the applicant that, he is the absolute owner of the entire property of 1.67 acres in S.No.396/4, which was sub-divided subsequently into 396/4A, 4B and 4C. Apart from this land, the applicant is also owning other lands in various survey numbers such as 395/4, 5A, 396/2, 3B, 4A, 4B and 4C, 397/2B, 404/2C, 405/1, 3, 4B, 5, 6A, 7 and 406/1. Comprising all these land, the applicant have developed a layout and which was approved by the proceedings of the Member Secretary, CMDA in Lr.No.L1/24092/2006, dated 15.12.2006. Therefore, the layout have been approved by the CMDA includes the land at S.No.396/4B also. (vii) It is the further case of the applicant that, the subject land in S.No.396/4B is not affected by any of the prohibitory transactions as provided in Sections 53 to 56 of the Act. 7/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 (viii) It is the further case of the applicant that, the further verification of the Revenue records reveals that, the land at S.No.396/4 measuring to an extent of 1 acre 67 cents was originally belonged to one Lakshmi Narasimhan, who sold the entire extent to one Bhoopathy and his brother, by name M.V.Munirathinam, under sale deed, dated 17.01.1970 in Doc.No.214/1970 on the file of the Sub-Registrar Office, Poonamallee. The said land was purchased from them by one T.K.N.Kannappan on 17.12.1979 in a registered sale deed in Doc.No.4448/1979 on the file of the Sub- Registrar Office, Poonamallee, who in turn sold the entire extent of 1.67 acres in the said S.No.396/4 to the vendor of the applicant, namely Venkataramani by a registered sale deed, dated 04.03.1996. (ix) The applicant purchased the said extent of 1.67 acres from that Venkataramani in S.No.396/4 under the registered sale deed, dated 11.02.2004 bearing Doc.No.695/2004 on the file of the Sub-Registrar Office, Avadi for valuable consideration. 8/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 (x) In fact in the schedule mentioned in the said sale deed, under which the property in question was purchased by the applicant, it has been specifically mentioned that, the property conveyed to the applicant is comprised in S.No.396/4A, 4B and 4C corresponding to old S.No.396/4. Therefore the land in question is part of the larger extent of 1.67 acres in S.No.396/4, which has been purchased by the applicant by a valid sale registered in the Sub-Registrar Office concerned and the vendor of the applicant and other predecessors in title of the applicant right from 1970 had been continuously transferred the properties under registered sale deeds in the year 1970 and 1979. (xi) In this context, it is the further case of the applicant that, there is a land at old S.No.396/3 measuring to an extent of 1.10 acres, which was corresponding to earlier paimash No.312. The said land was owned by one V.S.Subramaniya Mudaliar who had sold the entire extent of 1.10 acres in favour of one K.Ragavalu Naidu in the year 1958 in Doc.No.1492/1958. After the death of Ragavalu Naidu, his wife and two sons executed three separate sale deeds on the same date, i.e., on 06.04.1985 to one 9/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 Narayanaswamy, one Sundaram and one Chockalingam in Doc.Nos.1804/1985, 1802/1985 and 1805/1985 respectively conveying the sale of the land to the extent of 16 cents, 75 cents and 76 cents respectively, totally measuring an extent of 1.67 cents and they also mentioned in the respective sale deeds that, it was S.No.396/4 instead of mentioning S.No.396/3. (xii) Subsequent to the said sale taken place between the legal heirs of Ragavalu Naidu and the three persons mentioned above, subsequent sale also had been effected. In this regard, the insolvent first respondent derives his title through one Banumathi by virtue of registered sale deed, dated 28.09.1995 bearing Doc.No.4153/1995 on the file of the Sub-Registrar Office, Avadi. The vendor of the insolvent had purchased the said piece of land from Chockalingam in and by sale deed, dated 14.11.1990 bearing Doc.No.6378/1990 on the file of the Sub-Registrar Office, Poonamallee. In all the sale deeds, the survey number was mechanically given as 396/4 instead of 396/3. However based on the sale deed executed on 06.04.1985 by the legal heirs of the Ragavalu Naidu in favour of three individuals 10/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 referred to above, the Revenue records were also mutated incorrectly without tallying the corresponding paimash number. (xiii) It is the further case of the applicant that, the predecessor in title of the property purchased by the insolvent, having realised the mistake, jointly applied for correction of survey number under UDR scheme and requested to issue patta for an extent of 1.10 acres only, even though they have purchased larger extent comprised in S.No.396/3, i.e., for an extent of 1.67 acres. The Tahsildar concerned of Sriperumbudur having conducted enquiry issued new Patta No.212 in the joint names of Narayanaswamy, Sundaram and Chockalingam who have purchased the land actually comprised in S.No.396/3 but with the wrong description in their sale deeds, as if the land bearing with S.No.396/4. (xiv) It is the further case of the applicant that, in the proceedings issued by the Tahsildar, dated 12.03.1996 the mistake already crept in was rectified and the extent of land comprised in S.No.396/3 was also restricted to 0.44.5 hectares, which is equivalent to 1 acre 10 cents. In the meanwhile 11/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 the land in S.No.396/4 in the Revenue records were sub-divided on the basis of the sale deeds, dated 06.04.1985 as 396/4A, 396/4B and 396/4C in the name of the joint pattadhars respectively. (xv) Since the land in S.No.396/4 had already been sub-divided, the Tahsildar has issued a new Patta No.52 in favour of the then owner of the land in S.No.396/4, viz., T.K.N.Kannappan who is the predecessor in title of the property belonged to the applicant, i.e., S.No.396/4. (xvi) The change in the Revenue records had been taken place well after the purchase made by the insolvent, dated 28.09.1995 and in this regard, according to the applicant, the respondent insolvent was having knowledge about the Revenue Records. (xvii) Therefore as per the order, dated 12.03.1996 of the Tahsildar, the insolvent respondent owned the land in Patta No.212 and that the predecessor in title of the applicant herein owned the land in Patta No.52. 12/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 (xviii) Thereafter the predecessor in title of the applicant, i.e., T.K.N.Kannappan was issued with fresh patta for the land comprised in S.No.396/4 measuring to an extent of 1 acre 67 cents and also for his land comprised in S.Nos.397/4, 402/2 in Pata No.357. The said T.K.N.Kannappan sold the entire extent comprised in S.No.396/4 measuring to an extent of 1 acre 67 cents in and by registered sale deed, dated 04.03.1996 bearing Doc.No.1129/1996 on the file of the Sub-Registrar, Avadi in favour of the vendor of the applicant by name one Venkataramani. From the said Venkataramani, the applicant purchased the total extent of 1.67 acres in the old S.No.396/4, which was continued to be mentioned on account of sub division as S.No.396/4A, 4B and 4C, by a registered sale deed, dated 11.02.2004. (xix) It is the further case of the applicant that, in fact the insolvent having known about the mistake entry and the subsequent order of the Tahsildar, dated 12.03.1996 resulted in issuance of new patta number after rectifying the mistake, had correctly declared in his SOA that, he owned land in S.No.396/3, even though his title deed, dated 28.09.1995 disclose 13/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 different survey number as S.No.396/4B. The insolvent purchased the land in question on 28.09.1995. The Tahsildar issued new patta setting right the survey numbers of the land on 12.03.1996. The insolvent did not choose to apply for mutation of revenue records as per the order of the Tahsildar, dated 12.03.1996, whereas the applicant mutated the revenue records suitably and has also paid kist for the land in S.No.396/4A, 4B and 4C. The CMDA also having satisfied with the ownership and title of the applicant, granted approval for layout including the land in question bearing S.No.396/4B in and by order, dated 23.12.2006 for layout No.129/2006. (xx) With this definite case on the part of the applicant, since auction notice was issued by the respondent Official Assignee in respect of the property in S.No.396/4B, challenging the same, A.No.127 of 2008 has been filed with the aforesaid prayer by the applicant / third party. (xxi) Like that, the another piece of land, i.e., S.No.396/4A also was brought to the auction sale by the issuance of notice in Thinathanthi, dated 27.04.2008 fixing the date of auction as 08.05.2008 and therefore 14/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 challenging that notification, the applicant / third party filed A.No.142 of 2008 with the similar prayer. (xxii) That is how, both these applications were filed by the applicant by projecting the aforesaid case in the affidavit filed in support of these two applications. 9. The insolvent respondent has filed counter affidavit for both the applications separately, where the insolvent has denied various averments made by the applicant in the respective affidavit filed in support of these applications. That apart, the insolvent has stated that, the property in S.No.396/4 belong to one K.Ragavalu Naidu who purchased the same in the year 1958 under a registered Doc.No.1492/1958. After his demise, his wife and sons executed three sale deeds on 06.04.1985 in favour of three persons, namely Narayanaswamy, Sundaram and Chockalingam. 10. He would further state in his counter that, the said Narayanaswamy by sale deeds, dated 28.12.1995 under Doc.No.5529 / 95 at 15/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 SRO, Avadi conveyed to an extent of 60 cents in S.No.396/1, 16 cents in S.No.396/4A and ½ cent in S.No.395/5, in all measuring 76 ½ cents in favour of the insolvent. His further case is that, the said Chockalingam, by sale deed, dated 17.04.1989 conveyed an extent of 76 cents in S.No.396/4B in favour of one Lakshmanan, who in turn, by deed of sale, dated 14.11.1990 sold the property to one Banumathi and the said Banumathi conveyed the said property measuring 76 cents in favour of T.N.Sambandan, who in turn by a deed of sale, dated 28.09.1995 conveyed an extent of 72 cents in favour of the insolvent. 11. In both the sale deeds, according to the insolvent, the third party / applicant stood as witness. 12. Insofar as the contention raised by the applicant side that, the mentioning of survey number instead of 396/3, it has been wrongly mentioned as 396/4 right from the sale deeds taken place in the year 1985 by the legal heirs of K.Ragavalu Naidu to and in favour of three persons, from whom only properties have been transferred to the insolvent as he 16/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 claimed, therefore the said mistake committed or mistake crept in the sale deed has been rectified by issuance of patta by the Tahsildar is concerned, it is incorrect, he says, and therefore, it is denied by the insolvent. 13. In this regard, the statement of the applicant that, the land at S.No.396/3 is having the extent of only 1.10 acres, whereas the land at S.No.396/4 having the extent of 1.67 acres, which was originally belonged to one Lakshmi Narasimhan, who sold to V.Bhoopathy and M.V.Munirathinam, from whom the predecessor in title of the applicant and his vendor namely T.K.N.Kannappan and Venkataramani respectively purchased the same and from whom the applicant Dayalan purchased the property on 11.02.2004 is concerned, it is not the correct statement and therefore this has not been accepted by the insolvent. 14. Insofar as the declaration made by the insolvent in the SOA that, he is having land only at S.No.396/3, the insolvent has stated in his counter affidavit that, the applicant had involved in the preparation of the schedule, only on his dictation or his dictating terms, therefore, the insolvent has 17/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 given the wrong disclosure, as if that he is having land at S.No.396/3, but the fact remains that, he is having land only at S.No.396/4B and 4A. By stating all these averments, the respondent insolvent filed the counter affidavit. 15. The respondent Official Assignee has filed a common report in both the applications, where the Official Assignee, in short, OA, stated that, the insolvent was declared so, by orders of this Court, dated 30.07.1998 in the main I.P. He had filed SOA on 12.11.1998, wherein he had disclosed that, he is having property at S.No.396/3, however, that is equivalent to or if it is correctly mentioned, it is only S.No.396/4B. The insolvent was doing business in four names as per his statement, but he failed to disclose the names of his partners. The insolvent formed a registered partnership firm under the name of AR.KE.VEE Investments on 19.06.1995 consisting of six partners. The firm's all creditors are included in the schedule of affairs, dated 12.11.1998. The insolvent evaded his appearance before the OA in collusion with the applicant and only when the market value increased recently, the insolvent started to assist the OA in the year 2008. 18/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 16. The OA has further stated in the report that, the property was originally belonged to AR.KE.VEE Investments, in which the insolvent was partner, which was purchased by the applicant C.Dayalan. The insolvent has shown the applicant C.Dayalan as 111th unsecured creditor in the SOA for a sum of Rs.1,53,000/-. 17. The report further states that, the applicant in his letter, dated 01.04.2004 produced copies of the sale deeds executed in his favour for the property comprised in S.No.396/4A and 4B, whereas in the Encumbrance Certificate obtained in the Sub-Registrar Office, Avadi on 16.04.2008, the property stands in the name of insolvent Radhakrishnan. Therefore, there are strong reasons to believe that, the S.No.396/4B was erased and other number, i.e., 396/4 is added in Doc.No.1129 / 1996, dated 04.03.1996 at Sub-Registrar Office, Avadi. 18. The OA has further stated in the report that, the applicant is not based on the document made a claim, but only based on the order passed by the Tahsildar, who is not the appropriate authority. According to the copy of 19/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 the sale deed furnished by the insolvent, the property in S.No.396/4 belonged to one K.Ragavalu Naidu, who purchased in the year 1958 under a registered Doc.No.1492 / 1958. After his demise, his wife and two sons, on 06.04.1985 executed three sale deeds in favour of the three persons, namely Narayanaswamy, Sundaram and Chockalingam separately and from them, on 28.12.1995, the insolvent had purchased 76 ½ cents from Narayanaswamy, wherein the property bearing S.No.396/4A of 16 cents was also included. 19. Similarly, on 28.09.1995, the insolvent had purchased 72 ½ cents from one Banumathi through her agent T.N.Sambandam, vide Doc.No.4153 of 1995 and the said Banumathi purchased the said property from Chockalingam, who was one among the three purchasers from legal heirs of Ragavalu Naidu, on 14.11.1990. The property bearing S.No.396/4B for the extent of 0.72 cents also was conveyed in the said document. Therefore the insolvent Radhakrishnan acquired title to the S.Nos.396/4A, 396/4B, 395/5, 396/1 and 396/4. 20/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 20. By stating these, how the property devolved form the original owners from 1958 till the insolvent Radhakrishnan, had been stated by the Official Assignee in the report. Like that, the devolution of the title of the applicant Dayalan also has been mentioned from the original owner Lakshmi Narasimhan till the applicant Dayalan, vide his sale deed, dated 11.02.2004. 21. The Official Assignee had further stated in the report that, about the certified copy of Doc.No.1129 of 1996 from SRO, Avadi, which confers the title to Venkataramani, from whom the applicant had purchased the subject property, on verification of the copies of Doc.No.1129 of 1996 submitted by the insolvent and also the copy submitted by the applicant Dayalan, when compared, which, according to the OA, disclosed that, the copies submitted by the insolvent Radhakrishnan disclosed in the schedule three properties, which include the one, i.e., S.No.396/3 for 1.10 acres. In four boundaries, it has been mentioned 396/3. Like that, in the copy submitted by the applicant Dayalan, it has been mentioned as S.No.396/4 - 1.67 acres and the certified copy obtained from the Registrar Office also 21/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 tallying with the S.No.396/4 but the extent is not 1.67 acres, it was only 1.10 acres. By pointing out these changes, the OA has stated in the report that, there are reasons to believe that S.No.396/3 was deleted and in its place another number 396/4 was unauthorisedly substituted by the applicant. Therefore, according to the OA, this is an unauthorised meddling and interpolating with the contents of the original document without authority. 22. Insofar as first and second auction sale conducted in respect of property in S.Nos.396/4B and 4A respectively are concerned, the report of the OA further states that, since on the first sale, the highest bid was only Rs.31,70,000/-, whereas the reserve price fixed by the OA was Rs.47,50,000/-, another sale was decided to be conducted. In the second sale held on 03.06.2008, the sale started with opening bid of Rs.32,20,000/-, the higher bid was Rs.43,60,000/- by one N.Ramalingam s/o. G.Narayanasamy. 23. Like that, in respect of property in S.No.396/4A, along with other properties held on 08.05.2008, the highest bid was Rs.50,40,000/- but the 22/57 https://www.mhc.tn.gov.in/judis/ A.Nos.127 and 142 of 2008 reserve price fixed by the OA was Rs.90,00,000/-. Therefore the second sale was conducted, where the highest bid was Rs.61,40,000/- by one Rajendran. In this regard, the OA has further stated that, the market