Case Note & Summary
The Official Assignee filed a report seeking directions regarding two flats (E-901 and E-905) situated in Pune, which were transferred by the Insolvent No.2 (Atul Indrakumar Bora) via a Deed of Transfer and Assignment dated 29th March, 2016. The Insolvents (K.K.B. Properties and Atul Indrakumar Bora) were adjudged insolvent on 17th April, 2018, and their estate vested in the Official Assignee under Section 17 of the Presidency Towns Insolvency Act, 1909. The Official Assignee discovered that the Insolvent No.2 had transferred the flats to a third party (Parag Hemraj Bora) after the adjudication. The court examined the report and held that since the property vested in the Official Assignee upon adjudication, any subsequent transfer by the insolvent is void. The court declared the Deed of Transfer and Assignment null and void, permitted the Official Assignee to take physical possession of the flats with police assistance, and directed the society to record the nullity. The court also allowed the Official Assignee to appoint a valuer to ascertain the insolvent's 50% share in the flats.
Headnote
A) Insolvency Law - Vesting of Property - Section 17 of Presidency Towns Insolvency Act, 1909 - Upon adjudication as insolvent, the estate and effects of the insolvent vest in the Official Assignee - Any transfer of property by the insolvent after the date of adjudication is void and not binding on the Official Assignee - The court held that the Deed of Transfer and Assignment dated 29th March, 2016 executed by the Insolvent No.2 in respect of the flats is null and void as the insolvent had no authority to transfer the property after adjudication (Paras 1-3).
Issue of Consideration
Whether the Deed of Transfer and Assignment dated 29th March, 2016 executed by the Insolvent No.2 in respect of Flat Nos. E-901 and E-905 is null and void and not binding on the Official Assignee, and whether the Official Assignee can take possession of the said flats.
Final Decision
The court declared the Deed of Transfer and Assignment dated 29th March, 2016 null and void and not binding on the Official Assignee. The Official Assignee is permitted to take physical possession of Flat Nos. E-901 and E-905 with police assistance. The Kasturkunj Co-operative Housing Society Limited is directed to record the nullity. The Official Assignee may appoint a valuer to ascertain the 50% share of the Insolvent in the flats.
Law Points
- Vesting of property in Official Assignee under Section 17 of Presidency Towns Insolvency Act
- 1909
- Transfer after adjudication void
- Insolvent cannot transfer property after vesting
- Third party purchaser not protected if transfer after insolvency adjudication
Case Details
2024 LawText (BOM) (03) 77
Official Assignee's Report No. 15 of 2019 in Insolvency Petition No. 18 of 2017
Mr. Y.S. Bhate with Mr. Anil Bagwe for Insolvents, Mr. Sanjay Kshirsagar with Mr. Ashutosh Singh for Third Party Purchaser, Mrs. C. J. Bhatt, Official Assignee with Mr. Arun Kesarkar, Deputy Official Assignee, Mrs. M. R. Parkar, Insolvency Registrar
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Nature of Litigation
Official Assignee's Report seeking declaration that a Deed of Transfer and Assignment is null and void and for permission to take possession of flats.
Remedy Sought
Official Assignee seeks declaration that Deed of Transfer and Assignment dated 29th March, 2016 is null and void, permission to take physical possession of flats, direction to society to record nullity, appointment of valuer, and direction for deposit of valuation amount.
Filing Reason
The Insolvent No.2 transferred flats after being adjudged insolvent, and the Official Assignee seeks to recover the property for the benefit of creditors.
Previous Decisions
On 17th April, 2018, M/s K.K.B. Properties and Atul Indrakumar Bora were adjudged as Insolvents by the Insolvency Court.
Issues
Whether the Deed of Transfer and Assignment dated 29th March, 2016 is null and void and not binding on the Official Assignee.
Whether the Official Assignee can take physical possession of the flats.
Submissions/Arguments
Official Assignee submitted that upon adjudication, the estate vested in him under Section 17 of the Act, and the transfer by the insolvent after adjudication is void.
Third party purchaser may have argued that the transfer was valid, but the court found it void.
Ratio Decidendi
Upon adjudication as insolvent, the estate and effects of the insolvent vest in the Official Assignee under Section 17 of the Presidency Towns Insolvency Act, 1909. Any transfer of property by the insolvent after the date of adjudication is void and not binding on the Official Assignee.
Judgment Excerpts
This Official Assignee's Report seeks the following directions: (a) that this Hon'ble Court be pleased to declare that the Deed of Transfer and Assignment dated 29th March, 2016 ... be treated as null and void and not binding on the Official Assignee;
In the Insolvency Petition filed by the Petitioning Creditor, on 17th April, 2018, M/s K. K. B. properties ... had been adjudged as Insolvents by the Insolvency Court and therefore, the estate and effects had become vested in the Official Assignee pursuant to Section 17 of the Presidency Towns Insolvency Act, 1909
Procedural History
Insolvency Petition No. 18 of 2017 was filed by the Petitioning Creditor. On 17th April, 2018, the Insolvents were adjudged insolvent. Thereafter, the Official Assignee filed Report No. 15 of 2019 seeking directions regarding the flats transferred by the Insolvent No.2.
Acts & Sections
- Presidency Towns Insolvency Act, 1909: Section 17
- Indian Partnership Act, 1932:
