KOTTA GOVINDARAJULU CHETTIAR Vs. SIVARAMA KRISHNAN MINOR

JUDGEMENT

(1.) Defendant 1 is the appellant before us. The facts leading to this litigation are these. Defendant 2 and his sons, defendants 3 and 4, executed two mortgages in favour of defendant 1 each for Rs. 7000, one on 13-8-1932 and the other on 14-8-1932, Exs. D-17 and D-18. Defendant 1 filed O.S. No. 14 of 1937 on the file of the Sub-Court, Trichinopoly, for recovering the amounts due under those two mortgages. He also applied for the appointment of a Receiver on the allegation that the security was insufficient. On 21-6-1937 he was appointed Receiver and he took possession of the properties some time in November or December 1937. Meantime, a preliminary decree was passed on 21-6-1937 and a final decree on 18-1-1938. In execution of this decree, the mortgaged properties were brought to sale. Defendant I applied in E. A. 378 of 1940 for permission to bid at the auction and set off the amount due to him and this was granted on 12-7-1940. The sale was actually held on 4-12-1940 and defendant 1 became the purchaser for a sum of Rs. 15,400. The sale was duly confirmed and he was discharged from receivership. Then defendant 5 applied in E. A. 14 of 1941 for setting aside the sale under Order 21, Rule 90 and Section 47, C. P. C. It may be mentioned that no objection was taken that the purchase by defendant 1 on 4-12-1940 was bad for want of permission of the Court. This petition was dismissed on the ground that no security was furnished. The present suit was filed on 29-4-1944. The plaintiff is the son of defendant 3 and he was born some time in 1938. The object of the suit is to get rid of the mortgage decree and the sale. The allegations in the plaint are of the usual kind in this class of suits. It is alleged that the mortgage bonds were not supported by consideration, that defendant 3, the father, was leading an immoral life and that therefore the debts were illegal and immoral and not binding on the plaintiff. It is further stated that the proceedings in O.S. 14 of 1937 are not binding on the plaintiff because the interests of the joint family were not properly safeguarded by defendant 2, the Manager. Then it is alleged that the execution sale was vitiated by several irregularities and that the price of Rs. 15,400 was too low. The prayer is that ignoring the decree and the sale, the plaintiff should be given his share in the property. Defendant 1 denied these allegations. The other defendants who are members of the family supported the plaintiff. Obviously they are behind the plaintiff. The subordinate Judge held that the mortgage bonds were fully supported by consideration, that the allegations about immorality were baseless, that defendant 2, the manager, duly and adequately represented the entire joint family, that there were no irregularities in the conduct of the sale and he accordingly held that the decree and the sale were all binding on all the members of the family including the plaintiff.

(2.) Apart from the above allegations, the plaintiff also stated that defendant 1 purchased the property without getting the sanction of the Court as he was bound to do as a Receiver and for want of that sanction, the sale was illegal and void. Dealing with this question, the subordinate Judge reviewed the authorities and held that the sale was not a nullity and that it was only voidable at the instance of the members of the family. He further held that the sale having been confirmed without any steps being taken by any members of the family for having it set aside, the order of confirmation having been made under Order 21, Rule 92(3), neither the plaintiff nor the other members of the family were entitled to attack the sale. On these findings, the suit should have been dismissed. But the subordinate Judge took up a new point. Relying upon certain observations in the case of -- 'Nugent v. Nugent', (1907) 2 Ch. 292 (A) the learned subordinate Judge held that defendant 1 was in the position of a trustee by reason of the purchase on 4-12-1940 and that he was a trustee for the mortgagors as well as himself and therefore the plaintiff was entitled as a beneficiary to recover his one-ninth share of the property, but at the same time the plaintiff was bound to pay one-third of the mortgage amount and other incidental expenses. It is against this decree that defendant 1 has preferred this appeal. The plaintiff has also filed a memorandum of cross-objections.

(3.) The first question that has to be decided is whether the purchase by defendant 1 on 4-12-1940 is a nullity or it is only voidable at the instance of the judgment-debtors or the other members of the family. We agree with the subordinate Judge that the sale is not a nullity. It was only liable to be set aside in appropriate proceedings at the instance of the members of the family. A Receiver is in a fiduciary relationship to the owners of the property over which he is appointed Receiver. For that reason, the law prohibits a purchase of the property by him without the sanction of the Court. To permit him to purchase the property without such sanction would be to put him in a position where his interest would conflict with his duty. But this rule is intended only for the benefit of the owners of the property. That benefit can be waived by them, and they can affirm the sale. The subordinate Judge rightly relies upon the following passage in Halsbury's Laws of England, Vol. 28, page 73, para. 137, as supporting the position that the sale is not a nullity: "If all parties interested are 'sui juris', they may, of course, elect to affirm the sale."