SANKARANARAYANA PILLAI Vs. RAJAMANI ALIAS GURUSWAMI NADAR

JUDGEMENT

(1.) The plaintiffs in this suit are the sons of defendants 1 and 2 and in 1912, defendants 1 and 2 and 3 defendant who were carrying on business together were adjudicated insolvents, and at the same time the plaintiffs who were made parties to the insolvency petition were also adjudicated. The family properties of defendants 1 and 2 were sold by the Official Receiver and now the plaintiffs bring this suit to recover their 4/9ths share in that property on the ground that they were wrongly adjudicated insolvents and that consequently, the sale of their property by the Official Receiver was void as against them.

(2.) Assuming that the plaintiffs who were then minors were wrongly adjudicated insolvents, the question remains whether the sales effected by the Official Receiver did or did not pass their interest in the family property.

(3.) The sale is objected to on two grounds, firstly, that the Official Receiver purported to sell the share of the plaintiffs and, not having authority to do so as their adjudication was illegal, the property did not pass; and, secondly, it is contended that the property of the insolvents did not vest in the Official Receiver. The Subordinate Judge has decided the second point against the plaintiffs but has found on the first point that the Official Receiver purported to sell the plaintiffs share as well as the shares of their fathers, defendants 1 and 2, and that, as he had no right to sell the minors shares, the same is not binding upon them. On referring to the sale deeds Exhibits XVI, XXII, XXVIII, XXX, etc., we find that the Official Receiver sold the properties belonging to defendants 1 to 3 and the plaintiffs. In several of the sale deeds there is also a recital that these persons had all been adjudicated insolvents, and it is these documents that the Subordinate Judge has interpreted as constituting a sale of the minors rights in the property separately from the rights of those legally adjudicated insolvents. The appellants, however, rely on two cases decided by the Privy Council, namely Bijraj Neopani v. Pura Sundary Dasee (1914) ILR 43 C 56 : 27 MLJ 93 (PC) and Gharibulla V/s. Khalak Singh (1903) ILR 25 A 407 (PC). The former was a case of a sale wherein the vendor purported to sell certain property as the beneficial owner. As a matter of fact, he was not entitled to the property as beneficial owner, but, as an executor, he had full title to the property and it was held that, inasmuch as he purported to pass the whole of the property and had power to do so as executor, the title passed, it being held that " the plain legal interpretation of the deed should not be allowed to be affected by speculations as to what particular rights existing in the various vendors were present to the minds of some or all of the parties to the conveyance at the date of its execution. Applying this principle to the present case, we find that the Official Receiver had power to sell not only the share of the adult insolvents but had also vested in him the power of these insolvents as fathers to sell their sons interest in the property for the payment of antecedent debts. The Official Receiver had ,therefore, power to sell the shares of the plaintiffs as well as of the fathers. The recital in the deed is that the property belonging to all the members of the family is sold and there is no specific recital that the shares of the various persons are sold separately. It is, therefore, difficult to read into the document any intention to sell the shares separately, and, in accordance with the principle of Bijraj Neopani V/s. Pura Sundary Dasee (1914) ILR 43 C 56 : 27 MLJ 93 (PC) it must be held that the property which purported to be sold and which actually was vested in the Official Receiver would pass to the vendees, and that property includes the shares of the sons. The second case Gharibullah V/s. Khalak Singh (1903) ILR 25 A 407 (PC) is a case where the manager of a family mortgaged, in conjunction with another major member of the family and a minor represented by his mother as guardian, the whole family property. Although it was held that the mother as guardian of the minor could not make a mortgage of the minors property without the sanction of the Court which was not obtained, it was held that the managing member had power to sell the whole property for the benefit of the family, and that, therefore, the whole of the property passed. .Here again although the minor's interest purported to be conveyed, and the minor through his guardian was a party to the document yet as the manager had the right to dispose of the minor's interest also, the minor's interest was deemed to have been mortgaged. On the authority of these two decisions, I think it is clear that the sale deeds executed by the Official Receiver had the effect of passing the interest of the minors but it is argued for the respondents that there are other cases of the Privy Council which take a contrary view, namely, Balwant Singh V/s. R. Clancy (1912) ILR 34 A 296 : 23 MLJ 18 (PC) and Ganesh Rao v. Tuljaram Rao (1913) ILR 36 M 295 : 25 MLJ 150 (PC), but both these cases are distinguishable. In the former case there was a specific statement in the sale deeds that the vendor was the only sharer in the property and he did not in any way purport to dispose of the rights of his brother who was subsequently found to be entitled to a share. The document was explicit and referred only to the interest of the actual vendor. In the second case a father and his son entered into a compromise of a suit, the father purporting to act as guardian of the son. It was there held that, as the father had not obtained the permission of the Court to enter into the compromise the compromise was not binding on the son, and the plea that the father could have entered into the compromise in his personal capacity and thereby made it binding on his minor son was not accepted, although the case in which the minor is represented by some other person as guardian was expressly left open, possibly with reference to the decision in Gharibullah V/s. Khalak Singh (1903) ILR 25 A 407 (PC). On the ground therefore that the compromise was entered into by the father not only on his own behalf but on behalf of his son, and that he had not obtained the permission of the Court, the compromise was held not to be binding under Section 462 C.P.C. I am, therefore of opinion that the sales by the Official Receiver which purported to sell the whole property belonging to the family had the effect of passing the whole property, for the right of disposing of the whole property had become vested in the Official Receiver, and he must, be deemed to have sold that right. I may also refer to two decisions of this Court in support of this conclusion Surappa Raja V/s. Venkayya (1915) MWN 908 and Rajagopalan V/s. Subbararna Iyer (1919) MWN 356. Another case relied on by the appellants Sabapathy Chetty V/s. Ponnuswami Chatty (1915) 28 IC 365 is apparently in conflict with the Privy Council decision in Balwant Singh V/s. R. Clancy (1912) ILR 34 A 396 : 23 MLJ 18 (PC), but it is unnecessary to discuss that question here. It has been repeatedly decided that the power of a father to dispose of his sons share does vest in the Official Receiver, when the father becomes insolvent, and there was nothing in Mr. Krishnaswami Iyer's argument of sufficient force to induce me to re-open the question. In view of this finding, the plaintiff's suit would have to be dismissed; but Mr. A. Krishnaswami Iyer seeks to support the decree on the ground that the decision of the Subordinate Judge that the property of the insolvents had become vested in the Official Receiver is wrong. The order of the District Judge on the insolvency petition was as follows.--Petitioner examined. No opposition. Adjudication order passed. Referred to Official Receiver for further proceedings . . . . It is now contended that this order does not amount to the appointment of a receiver under Section 18 (1 ) of the Provincial Insolvency Act and that, consequently, the property did not vest in the Official Receiver. That section runs as follows " The Court may at the time of the order of adjudication, or at any time afterwards, appoint a receiver for the property of the insolvent, and such property shall thereupon vest in such receiver. It has been held in several cases in this Court that an appointment order is necessary and that the property does not vest in the Official Receiver without such order, but I would hold that even if this proposition is conceded it does not help the respondents because there is an order of appointment in this case. Under Section 19 (1) "the Local Government may appoint such persons as it thinks fit (to be called Official Receiver) to be receivers under this Act. " in the present case such a receiver had been appointed by the Local Government for the District of Tinnevelly and it appears to me that the Court, having passed an order of adjudication and referred the insolvency petition to the Official Receiver for further proceedings, must have intended to appoint and be deemed to have appointed the gentleman called " Official Receiver" as the receiver in this particular insolvency. [ am not prepared to hold, as contended by Mr. Krishnaswami Iyer, that the proceedings in the District Judge's order must be read as meaning judicial proceedings only, his argument being that the reference was merely a reference to the Official Receiver to exercise the powers which could be delegated to him under S.52 of the Act. No such limitation is found in the order itself and therefore the order " Referred for further proceedings " is only intelligible in the view that the case was referred to the person who had been appointed receiver under the Act, with the intention that he should act as receiver in this particular case and the order amounts to an order of appointment. It is quite clear that the Court, the Official Receiver and all the parties acted under the impression that a receiver had been appointed and that the insolvents property vested in him. This order was in 1912 and even when this suit was brought in 1918, it was recited in the plaint that the property vested in the Official Receiver, and it was only during the course of the trial that the question was raised by the plaintiffs apparently upon a perusal of the order of the District Judge and of a subsequent formal order passed by him in 1916 appointing the Official Receiver for the property of the insolvents in this case. This subsequent order was not passed by the same Judge who passed the original order and cannot affect in any way the meaning of the former order. The cases relied upon, namely, Official Receiver of Trichinopoly V/s. Soma-Sundaram Chettiar , Muthuswami Swamiar V/s. Somo Kandiar (1920) ILR 43 M 869 : 39 MLJ 438 and Vythilinga Padayachi V/s. Ponnuswami Padayachi are cases in which no order of appointment had been made. The petitions of the insolvents having been sent to the Official Receiver before adjudication, such an order passed before adjudication could hardly be interpreted as an order passed at the time, or after adjudication, under Section 18 (1). Those cases are therefore, of little value in the present case in the view that I take of the District judge's order of 1912 which was passed at the time of adjudication. There is another case reported in Subba Iyer V/s. Ramaswami Iyengar (1921) ILR 44 M 547 : 40 MLJ 207 in which it was held that, although there had been no order appointing a receiver, yet the acts done by the Official Receiver in administering the estate would be deemed to be acts done as agent of the Court, such acts being subsequently ratified and, therefore, valid. It is suggested that the decision in Subba Iyer V/s. Ramaswami Iyengar (1921) ILR 44 M 547 : 40 MLJ 207 is not right, because at the time the order of agency was passed property had not vested in the Court; but whether or not this is a valid objection the same objection cannot be taken in the present case because by the order of adjudication the property became vested in the Court. Accepting this case as an authority for the proposition that the Official Receiver could act as agent, it is clear that the subsequent ratification by the Court would make the proceedings valid. I would, therefore, hold that the property of the major insolvents was vested in the Official Receiver at the date of sale and, consequently, the sales are effective either as acts of the Receiver properly appointed, or as the agent of the Court.