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1937 Supreme(Mad) 193

IN THE HIGH COURT OF MADRAS
Pandrang Row, J.
S.P.P.L. Palaniappa Chettiar, through his authorised agent Ramanathan Chettiar
Versus
The Official Reciever of Madura
Decided On : 30.04.1937

The legal principle established is that under Section 54 of the Provincial Insolvency Act, a transfer of property made by the insolvent, which ex facie binds the whole property, can be annulled by the Court when the conditions are satisfied, even if it involves joint family property in which minor sons have an interest.

Headnote:

Provincial Insolvency Act - Hypothecation Bond - Validity of Transfer of Family Property

Fact of the Case:

The Official Receiver of Madura filed a petition under Section 54 of the Provincial Insolvency Act to declare a hypothecation bond as void and annul it, as it was found to be a fraudulent preference.

Finding of the Court:

The Court found that the transfer of the entire family property through the hypothecation bond, including the shares of the minor sons represented by the insolvent, was valid and could be annulled under Section 54 of the Act.

Issues: The main issue was whether the transfer could be set aside or annulled only as regards the insolvent's own share in the family properties or also in respect of the minors' shares in the properties.

Ratio Decidendi: The Court held that the transfer of the entire family property, including the shares of the minor sons represented by the insolvent, could be annulled under Section 54 of the Act, as the father had authority to mortgage the entire family property for a valid family necessity.

Final Decision: The petition was dismissed, and the decree appealed from was upheld, with costs.

JUDGMENT

Pandrang Row, J.

1. This petition arises out of an application by the Official Receiver of Madura under Section 54 of the Provincial Insolvency Act to declare as void a certain hypothecation bond dated 21st July, 1931, in favour of the respondent and to annul the same.

2. The bond was executed by the insolvent in I.P. No. 48 of 1931 and also on behalf of his minor sons. On the merits it was found by both the Courts below that the alienation was a fraudulent preference and it was accordingly annulled. In this petition no attempt has been made to question the correctness of the concurrent findings to this effect by the two Courts below, and the only point urged is that the transfer can be set aside or annulled only as regards the insolvents own share in the family properties which were mortgaged and that it cannot be set aside or annulled in respect of the minors shares in the properties, because it is only the transfer of the insolvents property that can be set aside under Section 54 of the Act. Reliance is placed in support of this contention on the decision of Sundaram Chettiar, J., reported in Subramanian Chettiar v. Subbaraya Goundan AIR1935Mad246 . No other decision on the point has been brought to notice, and Sundaram Chettiar, J., in his judgment mentions that the point is a new one. I have given my best consideration to this question and I find myself unable to agree with the view expressed by Sundaram Chettiar, J. The main; point to remember is that what was mortgaged was the family property and not the separate shares of the executants, namely, the father and the sons. The mere fact that the sons also were joined in the document with the father representing them does not show that it was intended to mortgage the sonsshares separately from the fathers share. What was done was that the entire family property was mortgaged, the executants being not merely the father but also his minor sons represented by him. The minor sons cannot be said to have had any separate share in the family property which they could hypothecate under the bond. In a somewhat similar case, the only difference being that instead of the father the eldest brother and managing member of the family took part along with his brothers, namely, the case reported in Gharib-ullah v. Khalak Singh (1903) L.R. 30 IndAp 165 : I.L.R. 25 All. 407 (P.C.) which went up to the Privy Council it was held that though in that case one of the three executants of the deed was a minor represented by his mother and the alienation was open to objection on the ground that the mother could not validly act as guardian of the minors property the alienation was upheld by their Lordships on the Judicial Committee on the ground that the eldest brothers execution of the document was sufficient to convey the entire interest in the family property once it was proved that the alienation was for valid family necessity. In the present case there can be no doubt that the father had authority to mortgage the entire family property because the debt for which the mortgage was executed was an antecedent debt of his not tainted by illegality or immorality. In other words, this is a case in which the father, that is, the insolvent, was himself entitled in law to convey the entire interest in the family property and his execution of the bond purports to convey the entire interest also. In these circumstances the mere joining of his minor sons represented by himself as their guardian does not in any way diminish the legal effect of the transaction which is that of a valid alienation of the entire joint family property by the father. Section 54 of the Provincial Insolvency Act is to the effect that a transfer of property made by the insolvent may in certain circumstances be annulled by the Court. The present transfer is a transfer of property made by the insolvent and the other conditions are satisfied. The section does not say that it is only a transfer of the insolvents own or separate prop

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