G NARASIMULU Vs. PBASAVA SANKARAM

JUDGEMENT

(1.) Plaintiff is the son of the 2nd defendant. The 1 defendant is the Official Receiver of Masulipatam. Defendants 6 to 5 are vendees of the plaint pro party from the 1 defendant. The plaintiff has brought this suit for declaration that the sale by the 1 defendant of the plaintiffa share of the property to defendants 3 to JIB invalid and for a division by metes and bounds of his share of the property. The plaintiff soaae is that the 2nd defendant his father, was leading an immoral life and that he contracted debts for purposes which could not bind the plaintiff, his un divided son, and that the Official Receiver had no right to sell his share of the pro" porperty to the defendants 3 to 5. The 2nd defendant applied to be adjudicated an solvent on 24 January, 1918. His petition was referred for disposal to the Official Receiver on 31 January, 1918. The 2nd defendant was adjudicated insolvent on 15 July, 1918. The Official held an auction sale of the property of the insolvent on 25 August, 1918, and executed a sale deed in favour of the defendants 3 to 5 on 12 September 1918 The plaint was filed on 27 June, 1919 The district Munsif gave a preliminary decree in favour of the plaintiff and passed a final decree. On appeal the Subordinate Judge of Masulipatam held that the Official Receiver had no right to sell the property inasmuch as on the date of the sale the property did not vest in him and dismissed the appeal of the defendants 3 to 5. The District Munsif found that the debts of the 2nd defendant were not tainted with illegality or immorality. The Subordinate Judge held that the Official Receiver purported to sell the whole of the property including the son's share.

(2.) Mr. Varadaehariar who appears for the appellants contends that the whole property vested in the Official Receiver and under the law the Official Receiver is entitled to dispose of the whole property including the son's share and that by the vesting order of 1 February, 1921, any defect in the title of the Official Receiver was cured. An objection WHS taken that as the property did not vest in the Official Receiver the sale by him was bad. There are decisions of this Court which held that there must be an order by the District Court vesting the property in the Official Receiver, otherwise, the Official Receiver bas no right to deal with the property. Under Section 27 of the Provincial Insolvency Act (Act V of 1920), on the making of an order of adjudication the whole property of the insolvent vests in the Court and till the Court appoints a Receiver of the property under Section 56 of the Provincial Insolvency Act the property does not vest in him. In this case no such order was passed by the District Court till 1 February, 1921. The judgment of the District Munsiff was delivered on 9 February, 1921. The question in this case is whether the Official Receiver could give a good title to the vendee. It is admitted that on the date of the sale the property did not vest in him, no order to that effect having been passed by the District Court. It is urged by Mr. Varadaehariar that the property of the insolvent vested in the District Court and therefore the plaintiff could not sue for a declaration of his right. It was held by the learned Chief Justice and Coutts-Trotter, J., in Official Assignee of Madras v. Ramachandra Aiyar A.I.R. 1923 Mad. 55, that "whore the managing member of a joint Hindu family consisting of himself and his sons is adjudicated an insolvent, the interest of the sons does not vest in the Official Assignee by reason of the adjudication, although it would be competant to the latter to deal with their shares if the doubts of the insolvent were of such a nature as to be binding on their interest." Mr. Varadaehariar's contention is that there is a difference between the law as contained in the Provincial Insolvency Act (Act V of 1920) and that contained in the Presidency Towns Insolvency Act (Act III of 1909) so far as this point is concorned and that Section 52 of the Presidency Towns Insolvency Act gives power specifically to the Official Assignee to exercise and lake proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the insolvent for his own benefit; and that such a provision as that contained in Section 52, not being enacted in the Provincial Insolvency Act, it must be assumed that what vests in the Official Receiver is not only the property of the insolvent but the property of the undivided Hindu son as well. I was at first inclined to uphold this contention as the definition of the word property clearly includes not only the property of the insolvent but all the property over which ho could exercise a right for his own benefit and a Hindu father can sell for his own debt his undivided son's share. Though a literal interpretation of the definition of the word property in Section 2 of the Provincial Insolvency Act V of 1920 may be favourable to the appellants contention yet sitting as a single Judge I felt bound to follow the decision in Official Assignee of Madras V/s. Ilamachandra Iyer A.I.R. 1923 Mad. 55. But before I delivered the judgment in the case, I came across in 20 L.W. a short note of the recent decision of the learned Officiating Chief Juatica and Srinivasa Aiyaagar, J., in A.S. No. 139 of 1921. Kuppu swami Goundan v. Marimuthu Qoundan A.I.R. 1925 Mad. 52. I ssnt for the decision and as I found that the learned Chief Justice dissented from the ruling in Official Assignee of Madras V/s. Hamachandra Aiyar A.I.R. 1923 Mad. 55. I had the case posted for further argument and heard it with reference to that ruling. The learned Officiating Chief Justice and Srinivasa Aiyangar, J., held that what vests in the Official Receiver is not only the share of a Hindu father but also the share of his undivided son which he could alienate for his own debt. Following that decision I hold that the share of the plaintiff did vest in the District Court. This does not prevent a son from bringing a suit for partition of his share on the ground that the father's debt was illegal or immoral and that the father could not convey his share validly for such a debt. Section 27 of the Provincial Insolvency Act V of 1920 applies only to suits by creditors of the insolvent. A suit by a person who is not a creditor and who claims independently of the insolvent is not barred by the provisions of the Indian Insolvency Act.

(3.) In this case the Official Receiver purported to sell the son's share also. That is the finding of the Subordinate Judge and that is also the plaintiff's case as set out in para. 7 of the plaint. The contention for the respondent is that the Official Receiver could not convey the property which did not vest in him and that the vendees did not get a good title. On the date of the sale the property of the Insolvent including that of the son's share was vested in the District Court. On 1st February, 1921, the District Court passed an order vesting the property in the Official Receiver. Two points are urged for the appellant-(1) that the sale being by an agent of a principal who afterwards ratified it, is good, (2) though the property did not vest in the Official Receiver before the date of sale yet it vested in him after the sale and under Section 43 of the Transfer of Property Act the vendees got a good title. As regards the first contention, it is urged on behalf of the respondent that under Section 200 of the Contract Act a principal could not ratify an act to the prejudice of third persons. The Official Receiver is an Officer of the Court and acts on behalf of the District Court. As a rule the District Court by an order vests the property of the insolvent in the Official Receiver. In this casa such an order was not passed, although the District Court transferred the petition of the insolvent for disposal. When the District Court was appraised of the fact that it was necessary that it should pass an order vesting the property in the. Official Receiver it passed such an order on 1 February, 1921. Before the order was passed, the Official Receiver sold the property to the appellants. Where a person who acts ordinarily as an agent bona fide thinking that he has a right to act for the principal conveys the property of the principal it is open to the principal to ratify such act and thereby give a good title to the vendee. If an agent acts without authority and thereby prejudices the rights of third persons the ratification by the principal would not validate the act. But where the principal's property is alienated, and the only person that could be prejudiced is the principal himself, Section 200 does not stand in the way of such an acfc being ratified by the principal. In Subbu Aiyar v. Ramaswami Iyengar A.I.R. 1921 Mad. 216 it was held that a sale by the Official Receiver before the vesting order was valid. The learned Judges observed that the Official Receiver is an agent of the District Court and that his act is valid. No doubt in that case they relied upon the general terms of the order as giving power to the Official Receiver to deal with the property though there was no subsequent order vesting the property. In this case there is an order subsequent to the sale, vesting the property in the Official Receiver. This decision is quoted with approval in Sankaranarayana Pillai V/s. Rajamani A.I.R. 1924 Mad. 550, Phillips, J., observes with reference to the case in Subba Aiyar V/s. Ramaswami Iyengar A.I.R. 1921 Mad. 216, "accepting this case as an authority for the proposition that the Official Receiver can act as agent it is clear that the subsequent ratification by the Court would make the proceedings valid.1 The respondent relies upon two eases, one in Sankara Rao V/s. Ramaknshnayya A.I.R. 1924 Mad. 461 and another in Vythilinga Padayachi V/s. Ponnuswami Padayachi A.I.R. 1921 Mad. 642 as supporting his contention that in the absence of vesting order before the date of sale the Official Receiver could not give a valid title to the vendee from him. But in these two cases, there was no vesting order. It is well settled that there should be an order by the District Court vesting the property of the insolvent in the Official Receiver otherwise the property of the insolvent would not vest in him. The two cases relied upon by the respondent do not conflict with the decisions in Subba Aiyar v. Ramaswami Iyengar A.I.R. 1921 Mad. 216, and Sankaranarayana Pillai v. Rajamani A.I.R. 1924 Mad. 550. In this case the order of the District Judge vesting the property in the Official Receiver is sufficient ratification of his act so as to give a good title to the appellants.