IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD MONDAY, THE TWENTIETH DAY OF SEPTEMBER TWO THOUSAND AND TEN PRESENT HON’BLE SRI JUSTICE K.C.BHANU CIVIL MISCELLANEOUS APPEAL No.1614 OF 2008 Between: State Bank of India, Rep. by its Branch Manager, Adoni, Kurnool District. ..... Appellant AND The Official Receiver, District & Sessions Court, Kurnool. & 8 others ..... Respondents The Court made the following: HON’BLE SRI JUSTICE K.C.BHANU CIVIL MISCELLANEOUS APPEAL No.1614 OF 2008 JUDGMENT: This Civil Miscellaneous Appeal, under Section 75 of the Provisional Insolvency Act, 1920 (in short, “the Act”), is filed by the appellant/third party against the order, dated 06.12.2008, in C.F.R.No.11 of 2008 in O.R.No.13 of 2008, on the file of the Official Receiver, Kurnool, in I.P.No.2 of 2007, on the file of the II Additional District Judge, Kurnool, whereunder and whereby, the petition filed by the appellant bank not to sale the petition schedule properties, as they were mortgaged to bank, was ordered to be present before the insolvency Court. 2. Heard. 3. Learned counsel for the appellant contended that since the appellant bank has got a first charge over the property, the property cannot be subjected to sale and the impugned order is liable to be set aside. 4. On the other hand, the learned counsel for the respondents contended that the appeal is not maintainable before this Court in view of Section 68 (1) of the Act and therefore, he prays to dismiss the appeal. 5. The Official Receiver was appointed by the District Court in pursuance of the orders in I.P. No.1 of 2007. 6. Learned counsel for the appellant placed reliance on Section 68 of the Act which reads as follows: “Appeal to Court against receiver: - If the insolvent or any of the creditors or any other person is aggrieved by any act or decision of the receiver, he may apply to the Court, and the Court may confirm reverse or modify the act or decision complained of, and make such order as it thinks just: Provided that no application under this section shall be entertained after the expiration of twenty-one days from the date of the act or decision complained of.” 7. The word “Court” according to the learned counsel for the appellant is the Insolvency Court and therefore, the appeal lies to the District Court. Whereas, Section 75 (3) of the Act reads as follows: “Any such person aggrieved by any other order made by a District Court otherwise than in appeal from an order made by a subordinate Court may appeal to the High Court by leave of the District Court or of the High Court.” 8. No doubt, the impugned order is not arising directly from the District Court but Section 75 (3) of the Act has to be read in consonance with Section 82 of the Act which reads as follows: “Saving: - Nothing in this Act shall - (a) affect the Presidency-towns Insolvency Act, 1909, or (b) apply to cases to which Chapter IV of the Dekkhan Agriculturists Relief Act, 1879, is applicable.” So, from the above provision, it is clear that the order made or act done by the Official Receiver is the act of the Court. The Official Receiver was appointed by the District Court for the purpose of deciding the issue in this case. Under Section 28 (6) of the Act, the order of adjudication of Insolvency Court will not have any effect on the secured creditor in realizing the amount. If such is the case, then certainly the appeal lies to the High Court. Even otherwise, the Official Receiver ought to have taken a decision and pass appropriate orders on the petition filed by the appellant. In view of the fact that the appellant is a secured creditor, if the property is to be sold, the first charge of property should be on the appellant and in the first instance, sale proceeds should be paid to the appellant and the remaining proceeds have to be decided in accordance with the orders that may be passed by the Official Receiver. 9. Therefore, the Insolvency Court is directed to proceed with the proclamation of sale. But however, the sale shall be subjected to the following conditions. The appellant, who is secured creditor, is entitled, in the first instance, for the sale proceeds in respect of the mortgaged property. After satisfying the loan of the bank, the sale proceeds, if any, shall have to be resolved by the Official Receiver in accordance with law. Hence, the first charge is created on the appellant over the property mortgaged. 10. Accordingly, the Civil Miscellaneous Appeal is allowed. There shall be no order as to costs. ______________ (K.C.BHANU, J) Dated: 20th September, 2010. KL HON’BLE SRI JUSTICE K.C.BHANU CIVIL MISCELLANEOUS APPEAL No.1614 OF 2008 20th September, 2010. KL