IN THE HIGH COURT OF MARAS
Devadoss
Garapati Narasimudu
Versus
Pinnamaneni Basava Sankaram,
Decided On : 8 September, 1924
FACT OF THE CASE: Plaintiff brought suit for declaration that the sale by the 1st defendant of the plaintiffs share of the property to defendants 3 to 5 is invalid and for a division by metes and bounds of his share of the property. FINDING OF THE COURT: The appellants have derived a good title from the Official Receiver and the plaintiff is not entitled to a decree for partition. ISSUES: Validity of sale by the 1st defendant, rights of the Official Receiver, and entitlement of the plaintiff to a decree for partition. RATIO DECIDENDI: The property of the insolvent vested in the Official Receiver on 1st Feb. 1921, and the appellants are entitled to rely upon that fact and set up their right against the plaintiff. FINAL DECISION: The appeals are allowed and the plaintiffs suit is dismissed. MAIN LEGAL POINT: The property of the insolvent vested in the Official Receiver, and the appellants derived a good title from the Official Receiver. CATEGORY: Property Law SUB-CATEGORY: Insolvency and Bankruptcy
Devadoss, J.
1. Plaintiff is the son of the 2nd defendant The 1st defendant is the Official Receiver of Masulipatam. Defendants 3 to 5 are vendees of the plaint property from the 1st defendant. The plaintiff has brought this suit for declaration that the sale by the 1st defendant of the plaintiffs share of the property to defendants 3 to 5 is invalid and for a division by metes and bounds of his share of the property. The plaintiffs case 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 undivided son, and that the Official Receiver had no right to sell his share of the property to the defendants 3 to
5. The 2nd defendant applied to be adjudicated an insolvent on 24th January, 1918. His petition was referred for disposal to the Official Receiver on 31st January, 1918. The 2nd defendant was adjudicated insolvent on 15th July, 1918. The Official Receiver held an auction sale of the property of the insolvent on 25th August, 1918, and executed a sale deed in favour of the defendants 3 to 5 on 12th September, 1918. The plaint was filed on 27th 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 sons share.
2. Mr. Varadachariar 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 sons share and that by the vesting order of 1st February, 1921, any defect in the title of the Official Receiver was cured. An objection was 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 has 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 1st February, 1921. The judgment of the District Munsif was delivered on 9th 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. Varadachariar 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 (1922) ILR 46 M 54 : 43 MLJ 569 that "where 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 competent to the latter to deal with their shares if the debts of the insolvent were of such a nature as to be binding on their interest. " Mr. Varadachariars 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
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