Re-vested property after insolvency annulment cannot be bound by decree or sale without proper representation

An appeal can be maintained where the impugned order proceeds on the basis that the appellant represented a party or a sufficiently represented person, because that assumption itself is challengeable. A decree and execution sale, however, do not bind a person whose property has re-vested in him after annulment of insolvency unless he was brought on record or otherwise properly and subsistingly represented when the proceedings were taken. Once the insolvency adjudication was annulled, the Official Receiver became functus officio and could not represent the estate. The decree, sale, and obstruction proceedings were therefore ineffective against the omitted person's interest, and the delivery petition failed.

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Issues: (i) Whether the appeal was competent against an order passed against persons claiming through a non-party to the suit. (ii) Whether a decree and execution sale could bind the interest of a person whose property had re-vested in him after annulment of insolvency, when he was not brought on record.

Issue (i): Whether the appeal was competent against an order passed against persons claiming through a non-party to the suit.

Analysis: The objection that the appellants had no right of appeal failed because the order below proceeded on the footing that they represented a party to the suit, or a person sufficiently represented by a party. A person against whom an order is made on that basis is entitled to challenge the correctness of the assumption on which jurisdiction was exercised. Section 146 of the Civil Procedure Code also enabled a representative to take proceedings which the person represented could have taken.

Conclusion: The preliminary objection to maintainability was overruled.

Issue (ii): Whether a decree and execution sale could bind the interest of a person whose property had re-vested in him after annulment of insolvency, when he was not brought on record.

Analysis: The governing rule is that no person can be bound or prejudiced by proceedings to which neither he nor the person under whom he claims was a party, unless it is shown that he was sufficiently represented when the order was passed. Once the adjudication in insolvency was annulled, the Official Receiver became functus officio and could no longer represent the insolvent's estate. The cases relied on for the decree-holder concerned de facto trustees or devolution during pendency in contexts where the institution was still adequately represented; they did not justify binding a person who had ceased to be represented and was omitted from the record. Neither Order 21, Rule 103 nor Section 47 of the Civil Procedure Code displaced this principle.

Conclusion: The decree and sale did not bind the re-vested interest of the omitted person, and the obstruction could not be removed against his transferees.

Final Conclusion: The order under appeal was set aside and the petition for delivery was dismissed with costs.

Ratio Decidendi: A decree or execution sale does not bind a person whose interest has re-vested in him after insolvency annulment unless he is brought on record or is otherwise properly and subsistingly represented at the time of the proceeding.

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