OFFICIAL ASSIGNEE OF MADRAS Vs. ALLU RAMACHANDRA AYYAR

JUDGEMENT

(1.) The Official Assignee in the insolvency of N. B. Baluswami Ayyar and Narasimha Ayyar brought this suit against the minor sons of N. B. Baluswami Ayyar to set aside a deed of partition executed by that insolvent in favour of his minor sons. The learned Judge Kumaraswami Sastri, J., held that the deed was fraudulent and void as against the Official Assignee. The Official Assignee asked for declarations that the interests of the minors in the property should be vested in him and that the possession of all the properties included in the deed should be delivered to him. These declarations were refused and hence this appeal. It has, however, been admitted before us that the declaration that the shares of the sons had vested was rightly refused and the only question remaining for our decision is whether possession ought to have been ordered to be delivered to the Official Assignee.

(2.) This involves a consideration of the rights of the Official Assignee to joint family property, when the managing member is adjudicated insolvent, for N. B. Baluswami Ayyar was the managing member of a joint Hindu family consisting of himself and his sons and, as such managing member, had control over the properties in question. This insolvent's interest in the partnership business belonging to the two insolvents was not an ancestral property. The minor sons had no interest in it and. the debts of N. B. Baluswami Ayyar are in the main business debts incurred in the partnership business.

(3.) It can be taken as established law that the Official Assignee on the insolvency of the managing member of a joint Hindu family succeeds to two things (1) the undivided interest of the insolvent in the joint property and (2) his rights as managing member so far as they can be exercised for his own benefit. It is also established that he is not entitled to have vested in him the shares of the other members although he can deal with them if the insolvent could lawfully have done so if there had been no insolvency. These propositions are to be found clearly stated in the judgment of Latham, J., in Fakirchand, Motichand V/s. Motichand Harruckchand (1883) I.L.R. 7 Bom. 438, which has been followed in many subsequent cases. This is the combined effect of Secs.7, 30 and 52 of the Presidency Towns Insolvency Act and of the Hindu Law as to the rights of a managing member---see Nunna Setti V/s. Chidaraboyina (1903) I.L.R. 26 Mad. 214. It follows that the Official Assignee standing for this purpose in the shoes of the insolvent can alienate the minor sons interests in the joint property for the purpose of paying the insolvent's debts unless the debts in question were incurred for an illegal or immoral purpose, the presumption being that they were not.