OFFICIAL RECEIVER OF RAMNAD Vs. LAKSHMANAN CHETTIAR

JUDGEMENT

(1.) This civil miscellaneous second appeal arises out of an interlocutory application filed in the Court of Subordinate Judge of Devakotta by one Valliammai Achi in the insolvency proceedings relating to her husband Muthiah Chettiar. Her case was that a sum of Rs. 14,000 given to her at her wedding was handed over to her father-in-law in accordance with the custom prevalant in her community-the Nattukottai Chetti community-that this amount was invested by her father-in-law in K. M.A. L. A. and other firms for her benefit and after his death her husband withdrew the amount and its interest and invested the same in A.M. firm which he started in Singapore and that the amount at the time of her application had accumulated to Rs. 1,62,362-6-o. This money, she contended, was held by her husband, the insolvent, for her benefit and therefore she should be given a first charge on his entire assets. Before filing this petition she had filed an application as an ordinary creditor of her husband. That application she did not press and it was therefore dismissed. The Official Receiver in opposing the application under appeal did not admit that Valliammai Achi was given Rs. 14,000 at her wedding or that that amount was invested by her father-in-law for her benefit. He contended that even if there was such an investment it did not remain as trust money but that Valliammai Achi lentit to the insolvent to start the A. M. business and that therefore he stood in the position of a debtor and not a trustee. The learned Subordinate Judge accepted the case of Valliammai Achi with regard to the deposit made with her father-in-law and the investment by him in other firms but he doubted if he acted as a trustee in doing so. He however held that the insolvent took the amount from his wife as a loan. On the question of the charge he came to the conclusion that even if it were assumed that the insolvent was a trustee in respect of the amount in question there was no evidence connecting the property in respect of which the charge was claimed with the assets of the A. M. firm, and that unless the properties were traced to the assets of that firm, Valliammai Achi was not entitled to the charge claimed by her. He therefore held that Valliammai Achi was entitled to claim the amount as an ordinary creditor. On appeal the learned District Judge took the view that the amount claimed by the petitioner, constituted a trust fund. It was contended before him that in view of this conclusion a charge should be created over the entire assets on the basis that in Nattukottai Chetti families which are trading families the entire assets should be regarded as trade assets. The learned Judge did not accept this contention as A. M. firm was not ancestral business, but he came to the conclusion that the insolvent constructed a bungalow and acquired two sites with the assets of the A. M. firm and therefore gave the present first respondent, one of the sons of Valliammai Achi who had come on record as her legal representative-she having died after the appeal was filed, a charge in respect of these properties. The second respondent, another son of Valliammai Achi was declared an insolvent and his interest vested in the Official Receiver, Ramnad. This appeal has been filed by the Official Receiver, while the first respondent has filed a memorandum of cross-objections centend ing that he should have been granted a charge over the entire assets of his father.

(2.) That a sum of Rs. 14,000 was given to Valliammai Achi at her wedding and that this amount was handed over to her father-in-law who invested it from time to time in several firms is not disputed; nor is there any controversy with regard to the actual amount due to her. The finding of the learned District Judge that the amount of Rs. 14,000 at the inception constituted a trust fund is not contested; but it is argued that his conclusion that the amount retained the character of a trust fund even after it was brought into the A. M. firm is not correct. It is contended that the insolvent borrowed the money from Valliammai Achi when he started the A. M. firm and was therefore a debtor and not a trustee. Alternatively it is argued that assuming it was a trust fund even after it was taken into the A. M. business at Singapore, Valliammai was not entitled to a charge over the properties over which a charge has been created, as those properties have not been traced to the assets of the A. M. firm.

(3.) The learned District Judge has not discussed the evidence in this case as fully as he should have done. It cannot however be said that he has not discussed the evidence at all; but it appears to us on a full consideration of all the material evidence on record that his conclusions cannot be upheld and that both the contentions of the appellant have to prevail.