CHENNAPPA CHETTY Vs. OFFICIAL RECEIVER SALEM

JUDGEMENT

(1.) There was a Joint family consisting of a father and two sons. The father had incurred debts and was adjudicated an insolvent on a- creditor's petition filed on 11-3-1946. On 12-2-1946 the insolvent had executed in favour of one Chinnappa Chetti a deed of sale of all the lands belonging to him. This deed was executed by the insolvent on his own behalf and as the guardian of his two minor sons for a consideration of Rs. 3000. The consideration for this sale was made up in part of amounts due to the vendee himself under two antecedent mortgage deeds, and in part of amounts due to him and his deceased elder brother on promissory notes.

(2.) After the adjudication, the Official Receiver filed a petition to set aside the sale deed dated 12-2-1946 under Sections 53 and 64, Provincial Insolvency Act. The learned Subordinate Judge came to the conclusion on a review of the evidence that the vendee had not purchased the property in "good faith and for valuable consideration" and that it was clear that the object of the insolvent in executing the sale was with a view to giving the vendee a preference over other creditors without any pressure from him. On these findings the application by the Official Receiver was ordered.

(3.) The purchaser took the matter in appeal to the District Court in C. M. A. No. 87 of 1950. The learned Additional District Judge agreed with the first Court that the transaction of sale fell within Section 54 as a fraudulent preference. A fresh point however was raised in the appellate Court that since the Insolvent had conveyed to the purchaser not merely his interest in the family properties but also the interest of his two sons as their guardian, and as these two coparceners had not been adjudicated, the insolvency court had no jurisdiction to set aside the sale in full, but could only set it aside as regards the one-third share of the insolvent, and that, the purchaser's rights to the two-third share of the sons could not be affected by any order under Section 54.