NACHIMUTHU CHETTIAR Vs. RAMAKKAL

JUDGEMENT

(1.) The appellant is a mortgagee from a Hindu father of a joint family consisting of himself and his two minor sons. The father applied in I.P. No. 37 of 1923 of the District Court of Coimbatore to be adjudicated an insolvent. The application was on 21 March 1923. It was transferred on 26 March 1923 to the Official Receiver who was appointed interim receiver. The Official Receiver compounded with the appellant who agreed to relinquish his mortgage and have the properties sold free of encumbrance provided he was first satisfied out of the sale proceeds. The Official Receiver got him to reduce the interest also substantially, applied for permission to sell the property free of the mortgage and advertised it for sale for 26 April 1924. Then a suit was filed in the name of the minor sons for partition and an injunction was obtained restraining the Official Receiver from proceeding with the sale. The Official Receiver and the appellant were made parties to the suit. The minor sons, represented by their mother as next friend, contended that the mortgage by the father in the appellant's favour was for purposes not binding on them and therefore should not be recognized. The Court found that the mortgage was for paying off antecedent debts and other binding purposes. A preliminary decree was accordingly given on 24 June 1926 for partition of the entire family property subject to the encumbrance in favour of the appellant. The final decree was passed on 10 August 1926. With that decree the injunction against the Official Receiver came to an end. He again applied to the insolvency Court for permission to sell the entire property including the son's shares. He set out the advantages to the minors, and pointed out the benefit to the estate by selling the property free of the mortgage. On this the District Court passed an order dated 3 March 1927. The report of the Official Receiver is there summed up as one requesting that he may be permitted to hold a sale of the insolvent's property free of the mortgage dated 1 June 1919 and to pay the mortgagee the amount due out of the proceeds of sale as per reduced rate of interest.

(2.) The order is"permitted." It may be noted that what the Official Receiver actually asked permission to sell in his application was the whole of the suit properties. It is unfortunate that the gist of his application in the order is stated as "the sale of the insolvent's property" which creates some uncertainty as to what the Court really ordered to be sold. The minor sons then presented a petition to the Official Receiver that their shares should be excluded from the sale. It was dismissed and the sale was held on 14 April 1927 and the properties were purchased by the mortgagee. The minor sons then filed an appeal under Section 68, Provincial Insolvency Act, against; the order of the Official Receiver. This appeal was first filed in the District Court, but subsequently, jurisdiction having been extended to the Sub-Court, it came up for disposal before the Subordinate Judge of Coimbatore. I may perhaps remark that this has unfortunately tended to increase the difficulties of the case. The District Judge who sanctioned the sale in the order referred to above was Mr. Mackay and as noted above the application of the Official Receiver is not correctly set out in the abstract on which the order was passed. And Mr. Burn (now Burn, J.) who succeeded Mr. Mackey had taken the view throughout what was sold was only the insolvent's interest in the property. It is contended before me that everybody understood that what was sold was the whole property including the sons interest and the view of the Subordinate Judge throughout is that the entire interest of both the father and the two sons was sold.

(3.) When this appeal by the minor sons was transferred to the Subordinate Judge he dismissed it on the ground that as the debt has been found to be binding on the minors, the entire property could be sold. Against this decision the minor sons preferred an appeal to the District Court. The learned District Judge without calling on the respondent, the auction purchaser (the present appellant) dismissed the appeal on the ground that the sale deed executed by the Official Receiver expressly conveys to the purchaser only the right, title and interest of the insolvent himself and as it was executed after the insolvent's sons had got a decree for partition of their shares it is quite clear that the sale deed could not by any stretch of the language or of the imagination be held to convey the shares of his sons also.