V R M RAMASAMI NAIDU Vs. TMMUTHUSAMIA PILLAI

JUDGEMENT

(1.) The main facts of this case can be stated shortly. Plaintiff obtained a decree against 2nd, 3rd and 4th defendants and, after attaching money, alleged to belong to them and to be in 1st defendant s possession, was appointed Receiver in his own execution and in that capacity is now attempting to recover from 1st defendant, the other defendants being impleaded as persons interested. The defence of 1st defendant the appellant before us, is that (1) the money is a sum due to 2nd, 3rd and 4th defendants and one Rajappa Mudali, the right to collect which he acquired in a legal manner; (2) if his own title is bad, some at least of the money has vested in persons other than plaintiff, those who are administering 2nd and 3rd defendants estates in insolvency.

(2.) The Lower Appellate Court s judgment is mainly occupied with the second of these contentions. The facts relied on are that 2nd defendant on 13th March 1911 and 3rd defendant on 7th October 1911 became insolvents, the one in Tinnevelly and the other in Madura, and their assets therefore vested for the benefit of all their creditors, before plaintiff attached this portion of them on 15th July 1914. The District Munsiff s finding that this was so in the case of 2nd defendant has not been attacked. He and the Lower Appellate Court found otherwise in the case of 3rd defendant, because he was adjudicated insolvent by the Official Receiver, Madura, and bo distinct vesting order, such as The Official Receiver of Trichinopoly v. Somasundram Chettiar , requires, having been passed, the debtor s estate is still available to satisfy individual claims. But this is unsustainable. The authority cited may entail that the estate did not in the absence of a distinct order vest in the Official Receiver. The fact, which the Lower Courts overlooked, remains that in any case it vested under Section 16(1) of the Provincial Insolvency Act in the Court and became divisible among the creditors from the date of the petition and that under Section 16(2) after the date of the adjudication, which related back to that of the petition, no creditor had any remedy against it. The cases of 2nd and 3rd defendants are therefdre similar. Plaintiff can execute his decree only by proving in their insolvencies; and on this ground at least his claim to what is alleged to be in part their money in 1st defendant s hands must fail.

(3.) The Lower Appellate Court has next held against 1st defendant s right to that money on the special ground that he obtained it in proceedings, which could not bind them or 4th defendant. It consists in a debt, which he has collected in virtue of his purchase at a sale held by the Official Receiver, Tinnevelly, in the administration of the estate of Rajappa Mudali above referred to and of an assignment to him, Exhibit I, by 2nd defendant. That sale is represented by 1st defendant as being of the debts due to a firm composed of Rajappa and 2nd, 3rd and 4tb defendants. But, as Exhibit B, the auction list, shows, what was sold was only, " the right to arrears due to Rajappa Mudali, insolvent petitioner, as due under the day- book and ledger of R.M. shop", R.M.N. being the firm above referred to. Exhibit K, the sale- deed by the Official Receiver to 1st defendant, is no doubt for "the debts due to the joint shop conducted under the style of R.M. by Rajappa Mudali." But the insolvency was, it is not disputed, that of Rajappa, not the firm; and it is sufficiently clear that only his share, not 2nd, 3rd and 4th defendants , purported to be or could have been sold. How the Official Receiver could sell one partner s share of the debts due to the firm, instead of following the normal course and selling his share in its assets, as it might be ascertained, is not clear; but this irregularity appears to have gone unnoticed until the hearing in this Court and on the view I take, would not affect the conclusion. The sale in these circumstances giving no title to any portion of the debts except Rajappa s, 1st defendant has relied also on Exhibit I, the assignment of 2nd and 3rd defendants shares, which he obtained shortly after. It is, I agree with the Lower Court, ineffectual as regards 3rd defendants share, because Exhibit A, his power of attorney in 2nd defendant s favour, authorised the latter only to collect debts due to the shop, not to realiza their value or any part of it by selling them. The re3ult so far is that 1st defendant s right to the debts has been established only in respect of 2nd defendant s and Rajappa s shares, but that, as already found, plaintiff cannot be heard to deny it in respect of the former s. The question is next of the general objection, which has been made to his claim to the share of 4th defendant. That objection would, it may be observed, be available against his claim to the other shares also.