K L VENKATARAM Vs. NSCHOCKKIER

JUDGEMENT

(1.) These Civil Miscellaneous Appeals arise out of insolvency proceedings under the Provincial Insolvency Act. Two brothers, K.L. Venkataram and K.L. Gopal, were declared insolvents and their property vested in the Official Receiver of Madura. The Official. Receiver executed sale- deeds of separate items of their properties to various vendees who are the respondents before us. The sale-deeds purport to have conveyed the whole properties and not the shares of the insolvents themselves. The purchasers applied for delivery of possession of the properties and complained of obstruction. The obstruction was based upon a deed of trust, dated 6th January, 1926, under which the shares of the sons were settled for the conduct of a charity. Under this trust deed the insolvents themselves were appointed trustees and they objected to the taking of possession by the purchasers relying on this trust deed. It is unnecessary to consider the nature (bona fide or otherwise) of the trust deed. Whatever its effect may be as a deed of trust, it certainly relates to the sons shares of the properties and the question arises whether the purchasers from the Official Receiver can obtain delivery of possession of the shares of the sons of the insolvents under Section 4 of the Provincial Insolvency Act. The petitions were originally filed under Section 56 of the Act, but one of them was afterwards amended by adding Section 4 also. The District Judge considered all of them as applications under Section 4. Section 4 of the Provincial Insolvency Act corresponds to Section 7 of the Presidency Towns Insolvency Act and Section 105(1) of the English Bankruptcy Act. It gives very wide powers to the Insolvency Court to settle questions of priority or title arising in the course of the insolvency for the purpose of doing justice to the parties and for the proper distribution of the insolvent's estate. It has been construed in Abdul Khader V/s. The Official Assignee of Madras (1916) I.L.R. 40 Mad. 810 as giving jurisdiction to the Insolvency Court to deal with the claims of the insolvent as against properties and persons beyond the ordinary jurisdiction of the Court which has got the insolvency jurisdiction. This decision has been recently affirmed by a Full Bench decision of this Court but it is doubtful whether Section 4 covers a case of this kind that we have got before us now.

(2.) It will be convenient here to take a short survey of the decisions relating to the position of the Official Receiver in relation to the shares of the sons of the insolvent. In The Official Assignee of Madras V/s. Ramachandra Aiyar (1922) I.L.R. 46 Mad. 54 : 43 M.L.J. Schwabe, C.J. and Coutts-Trotter, J. (as he then was) held that the interest of the sons does not vest in the Official Assignee by reason of an adjudication and that the Official Assignee as representing the managing member is entitled to joint possession along with the sons of the family property. In Sat Narain V/s. Behari Lal (1924) L.R. 52 I.A. 22 : I.L.R. 6 Lah. I : 47 M.L.J. 857 (P.C.) the Judicial Committee also came to the same conclusion that the property of the sons does not vest in the Official Receiver by reason of the adjudication, but they observe that the Official Receiver can deal with the son's share by reason of the power of the father which may vest in the Official Receiver by reason of the insolvency. Relying on this observation of the Privy Council it was decided by a Full Bench, Seetharama Chettiar V/s. Official Receiver, Tanjore 1926) I.L.R. 49 Mad. 849 : 51 M.L.J. 269 (F.B.), that the Official Receiver can sell the son's share also and another Full Bench in Basava Sankaran V/s. Anjaneyulu (1926) I.L.R. 50 Mad. 135 : 51 M.L.J. 529 (F.B.) has held that where the Official Receiver sells the son's share at a time when there is no vesting order the purchaser can take advantage of Section 43 of the Transfer of Property Act. The law, therefore, as it now stands, shows that the Official Receiver can sell the son's share also to a stranger. The Official Receiver himself can apply under Section 4 for possession of the insolvent's share of the estate, but does it follow from these two positions that the purchaser from the Official Receiver can apply under Section 4? Once the Official Receiver has sold the property to a stranger and converted the insolvent's estate into money, his business is to distribute this money among the creditors and it cannot be said that delivery of possession is a necessary part in the work of distributing the assets of the insolvent among the creditors. Where a claim is made against the insolvent himself in respect of his share only or against a rival purchaser of the insolvents property itself the matter may be different. One of the objects of the Insolvency Act is to adjudicate upon the validity of such claims. Secs.53 and 54 of the Provincial Insolvency Act show that one of the primary duties of the Insolvency Court is to decide whether the alienations of the insolvent should be set aside as having been made in fraud of creditors or having been in fraudulent preference of one creditor against another; but where we have got to deal with the son's share the matter is entirely different and the decisionin Ex parte Anderson (1870) L.R. 5 Ch. App. 473 relied on by Mr. Krishnaswami Aiyar, the learned Vakil for the respondents, cannot, therefore, help him. On the other hand it has been held by this Court in Official Receiver of South Arcot V/s. Perumal Pillai (1923) 18 L.W. 884 and Chittammal V/s. Ponnuswami Naicker (1925) I.L.R. 49 Mad. 762 : 50 M.L.J. 180 that an application of this kind is not sustainable in an Insolvency Court. Mr. Krishnaswami Aiyar, on the other hand, relies upon Ramaswami Chettiar V/s. Ramaswami Aiyangar (1921) I.L.R. 45 Mad. 434 : 42 M.L.J. 185. That decision was before the series of cases which I referred to above and which place the position of the sons on a different footing from that of the father. In the case in Ramaswami Chettiar V/s. Ramaswami Aiyangar (1921) I.L.R. 45 Mad. 434 : 42 M.L.J. 185 the obstruction was by the sons not only in respect of their own shares but also in respect of the whole of the estate of the insolvent on the ground that the purchase was benami and no distinction was made between the father's share and son's share. It was really an obstruction to the Receiver taking possession of what was then considered as the insolvent's property. It was held that such a question can be considered by the Insolvency Court. But the position of the sons has been distinguished from the position of the father by the later cases and the decision in Ramaswami Chettiar V/s. Ramaswami Aiyangar (1921) I.L.R. 45 Mad. 434 : 42 M.L.J. 185 cannot be considered as covering the case of a son objecting in respect of his own share or of any objection raised by another person as guardian on behalf of a minor son or of any other person claiming any interest in respect of the son's share only.

(3.) The result is that we must hold that in so far as the sons shares are concerned, the purchaser from the Official Receiver is not entitled to apply for delivery of possession under Section 4 of the Provincial Insolvency Act. His remedy would be by going to the ordinary Courts and by filing regular suits for possession.