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1963 Supreme(Mad) 21
Madras High Court
JAGADISAN
R.P.David - Appellant
Versus
M.Thiagarajan - Respondent
Decided On : 01/18/1963
T.M. Krishnaswami Iyer, for T.R. Srinivasan, for Petitioner; Advocate General, N. Mani Narayanam, M.M. Ismail and King and Partridge, for Respondents.
The court has no jurisdiction to receive offers and communicate it to the manager to ascertain his views as regards its acceptability.
Headnote:
INDIAN LUNACY ACT, 1922 - S. 75 - SALE OF LUNATIC'S ESTATE - MANAGER'S POWER - COURT'S JURISDICTION - PROCEDURE FOR SALE - OFFER TO PURCHASE - ACCEPTANCE BY COURT - VALIDITY - JUDICIAL EXERCISE OF POWER - REVISION - JURISDICTION.
Fact of the Case:
The managers of the estate of a lunatic, appointed under the Indian Lunacy Act, 1922, advertised the sale of the estate and received five offers, including one from the petitioner for Rs. 5 lakhs, which was the highest. The managers submitted a report to the court recommending the acceptance of the petitioner's offer. However, the court received an offer from the respondent for Rs. 5,05,000, which was not made to the managers in accordance with the terms and conditions prescribed by them. The court, without notice to the petitioner, accepted the respondent's offer and granted permission to the managers to sell the estate to him.
Finding of the Court:
The court held that the court below had no jurisdiction to consider the belated offer of the respondent, which was not good either in form or in substance. It was lacking in form as it was not made to the managers but to the court though ultimately the managers for reasons known to themselves, preferred to treat it as good. It was substantially infirm and defective as it was not accompanied by ten per cent deposit as was insisted upon by the managers in the terms and conditions issued. They made it plain that a bare offer without deposit would be ignored. Having chalked out this procedure, they ought not to have departed from it and persuaded themselves to approve or recommend an offer which was sprung in a peculiar way. There must be some orderliness and propriety even in respect of inviting and receiving offers for purchase of the lunatic's estate, and placing them before the court. They function under the statute and they cannot take up the position that their sphere is subject to no control. The proviso to S. 75(1) imposes a curb on their power to effect a sale. The exercise of this power is coupled with a duty to act in the best interests of the estate, conforming to a decent standard of rectitude and fair play. In the present case the managers did not act rightly in agreeing to the offer of the respondent which emerged before the court by passing the terms and conditions prescribed by them. They were not consistent in accepting the offer of the respondent when they had already accepted the offer of the petitioner and filed an application for sanctioning the sale to the latter. It is true that the acceptance by the managers would not conclude the contract as it was subject to approval by the court. If the court's sanction were not necessary, clearly, there was a binding contract between the managers and the petitioner. In such an event the subsequent acceptance of the respondent's offer would amount to breach of the first contract. The present case is not one of that kind. The managers cannot be charged with breach of contract but yet they cannot acquit themselves of impropriety and failure to discharge their duty satisfactorily. It is their indiscretion, nay, devious conduct, which enabled the court to assume jurisdiction at the instance of the respondent who had no right to go behind the court and to make an offer to be considered with the other offers. The court has no inherent power or jurisdiction to receive offers apart from the jurisdiction exercisable under S. 75 of the Lunacy Act.
Issues: 1. Whether the court below had jurisdiction to consider the belated offer of the respondent, which was not good either in form or in substance? 2. Whether the court below acted judicially in accepting the respondent's offer and granting permission to the managers to sell the estate to him? 3. Whether the court below erred in rejecting the petitioner's application for sanctioning and approving his offer of Rs. 5,00,000?
Ratio Decidendi: 1. The court has no jurisdiction to receive offers and communicate it to the manager to ascertain his views as regards its acceptability. 2. The court is bound to accept the highest bid at the auction and it would not be permissible to extend the auction to the court room. 3. The court must be vigilant and circumspect in matters of sale of lunatic's estate, and it is bound to investigate with an amount of care and an anxiety, and ascertain the proper price for a sale of the lunatic's property having regard to the actual prevailing market value of similar properties in the locality. 4. The manager's power of sale is not unfettered and beyond the control of the court. It is under the surveillance of the court. The court can refuse permission to sell, reject the offers placed before it and direct the manager to call for fresh and further offers or to sell by public auction.
Final Decision: C.R.P. 1634 of 1962 is allowed with costs in this court. The order of the court below in I. A. 401 of 1962 is set aside and I. A. 401 of 1962 is hereby dismissed. C.R.P. 1635 of 1962 is also allowed but without costs. The order of the court below in I. A. 402 of 1962 is set aside and that interlocutory application is restored to the file of the District Court of Salem to be disposed of afresh.
2. I shall briefly refer to the facts and events leading upto these petitions in a chronological order as far as possible. A certain coffee estate called "the Riverdale estate" which consists of a large extent of coffee plantations and a bungalow belonged to two sisters, Miss Mary Hoi well Short, and Miss Alice Edith Short, who obtained it as bequest under the last will and testament of their father. In proceedings under the Indian Lunacy Act, O. P. 34 of 1939 on the file of the District Court, Salem, the former was adjudged as lunatic. By order of court dated 20-4-1960 one Mr. Muirhead, partner of Messrs. King and Partridge, Solicitors and one Rev. E.L. Poyser were appointed joint managers to manage the estate of the adjudged lunatic. The Riverdale estate which as stated already belonged to the two sisters in equal moieties was managed by the widow and son of the deceased brother of the owners, Mrs. R. Margaret Short and Mr. John Short. John Short left for England where he settled down permanently. Mrs. Margaret Short also desired and intended to leave India for good. The managers were not in a position to manage the estate efficiently. They therefore thought it best to sell the estate and to invest the sale proceeds in so far as the half share of the lunatic was concerned, to fetch a good return for the upkeep and maintenance of the lunatic. The other half sharer of the estate also desired to sell away her interests in the property so that the maximum and the best available price could be secured. The managers were also of the opinion that having regard to the keen demand for purchase of coffee estates in general the time was propitious to sell the Riverdale estate for a good price.
3. The managers filed I. A. 66 of 1961 in the court below seeking permission to sell the entire interest of the lunatic in the Riverdale estate and to invest the share of the proceeds of the sale belonging to the lunatic in such "Government securities or other investments as the court may be pleased to direct. In the affidavit in support of this application for sanction the managers averred as follows :
"The first respondent who is the owner of the other half is also of the view that she cannot manage her share and desires to sell her interests as in her view also a sale of the entire estate alone would fetch the maximum price, and is prepared to co-operate with the joint managers in selling the entire estate if that course is decided upon by them. All the relatives desire that the entire estate be sold with the permission of the court and with the consent of the first respondent herein."
The court granted the necessary permission by its order dated 24-1-1962. The order was in these terms :
"I am satisfied that it would be beneficial to the lunatic to sell her share also along with that of the first respondent (Alice Edith Short). Permission is granted. The manager would sub
