Court supervision of officer-conducted sales permits inquiry into alleged misconduct before confirmation and admission of evidence.

Court may supervise and, when a sale is authorised only subject to court confirmation, hold a summary inquiry into allegations that its officer (official liquidator) acted irregularly or fraudulently; statutory provisions and inherent powers permit third parties to notify the court and prompt it to prevent prejudice from unlawful acts by its officer. The court's power to post a petition for evidence pending that inquiry is appropriate, and the lower court's order to admit evidence and proceed with inquiry is sustained, resulting in dismissal of the appeal.

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Issues: Whether the court may, before confirming a sale conducted by its officer (the official liquidator), inquire into allegations of misconduct or fraud by that officer and whether the lower court was justified in posting the petition impeaching the sale for evidence.

Analysis: The issue requires determining the court's power and duty to supervise actions of its officers where an officer conducts a sale subject to the court's confirmation and allegations of irregularity or fraud are brought to the court's notice prior to confirmation. Relevant statutory provisions include Section 179(c) and Section 183(5) of the Indian Companies Act, 1913, and the court's inherent powers (including Section 151 of the Civil Procedure Code) as recognised in precedent. When a sale is authorised only with court sanction or stated to be subject to court confirmation, that reservation enables the court to safeguard against fraudulent or irregular conduct by its officer. Authorities establish that even a stranger may bring to the court's attention a report of its officer acting in excess of authority so the court can hold a summary inquiry to prevent prejudice from unlawful acts of its officer. The lower court's decision to overrule the preliminary objection on the basis that an inquiry was warranted and to post the petition for evidence aligns with these principles.

Conclusion: The court may inquire into allegations of misconduct by the official liquidator before confirming a sale and the lower court's order posting the petition for evidence is upheld; the appeal is dismissed.

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