AIR 1964 ANDHRA PRADESH 299 ::(1964) 1 AndhLT 178 ::(1963) 2 Andh WR 81 ::ILR (1965) Andhra Pra 813

Andhra Pradesh High Court

Hon'ble Judge(s): P. Satyanarayana Raju, Ananthanarayana Ayyar , JJ

(A) Contract Act (9 of 1872) , S.39, S.62— Contract by insolvent - After initiation of insolvency processing, out before adjudication is not per se void Provincial Insolvency Act (5 of 1920) , S.28— Insolvency does not determine a contract. Nor does insolvency per se operate as rescission of a contract. But conduct on the part of the insolvent or the Official Assignee, which practically amounts to notice to those with whom the insolvent had contracted, that he does not mean to perform any of his contracts, may amount to a refusal to perform entitling the other party to the contract to rescind. A contract by the insolvent to buy property cannot be specifically enforced against the Official Receiver. Where, however, the Official Receiver, insists on the performance of the contract, he must be ready and willing to perform the insolvent's part of the contract to the same extent to which the insolvent should have clone had he remained solvent.(Para 15) There is no statutory prohibition against the sale of the debtors' properties after the insolvency proceedings have been initiated. So too, a contract entered into by an insolvent, after the insolvency proceedings have been initiated but before he is adjudged an insolvent, is not per se void. It is open to the Official Receiver to get the transaction set aside but until....