IN THE HIGH COURT OF MARAS
Devadoss
G. Narasimulu
Versus
P. Basava Sankaram
Decided On : 8 September, 1924
Official Receiver - Property Sale - Provincial Insolvency Act (Act V of 1920) - Section 27, Section 56 - The court discussed the provisions of the Provincial Insolvency Act and the authority of the Official Receiver to sell the property of an insolvent, including the share of an undivided son. The judgment clarified the circumstances under which the Official Receiver could convey a good title to the vendee and the effect of a subsequent vesting order on the validity of the sale.
Fact of the Case:
The plaintiff, son of the 2nd defendant, filed a suit challenging the sale of his share of the property by the Official Receiver to the defendants. The lower courts gave conflicting decisions on the validity of the sale, leading to the appeal.
Finding of the Court:
The court held that the property of the insolvent vested in the Official Receiver on a later date, and the appellants derived a good title from the Official Receiver. Consequently, the plaintiff was not entitled to a decree for partition as his share had been validly conveyed to the appellants.
Issues: Validity of the sale by the Official Receiver, authority to sell the share of an undivided son, effect of subsequent vesting order on the sale, and entitlement of the plaintiff to a decree for partition.
Ratio Decidendi: The court clarified the authority of the Official Receiver to sell the property of an insolvent, including the share of an undivided son, and the effect of a subsequent vesting order on the validity of the sale. It held that the appellants derived a good title from the Official Receiver, and the plaintiff was not entitled to a decree for partition.
Final Decision: The appeals were allowed, the plaintiff's suit was dismissed, and both parties were made to bear their own costs throughout.
Devadoss, J.
1. Plaintiff is the son of the 2nd defendant. The 1st defendant is the Official Receiver of Masulipatam. Defendants 6 to 5 are vendees of the plaint pro party from the 1st defendant. The plaintiff has brought this suit for declaration that the sale by the 1st defendant of the plaintiffa share of the property to defendants 3 to JIB invalid and for a division by metes and bounds of his share of the property. The plaintiff soaae 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 un divided son, and that the Official Receiver had no right to sell his share of the pro" porperty to the defendants 3 to 5. The 2nd defendant applied to be adjudicated an solvent 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 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. Varadaehariar 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 WHS 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 bas 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 Munsiff 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. Varadaehariar 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 A.I.R. 1923 Mad. 55, that "whore 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 competant to the latter to deal with their shares if the doubts of the insolvent were of such a nature as to be binding on their interest." Mr. Varadaehariars 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 III of 1909) so f
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