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The Official Assignee of Madras Vs. Allu Ramachandra Ayyar and ors. - Court Judgment

LegalCrystal Citation
SubjectFamily;Civil
CourtMumbai
Decided On
Judge
Reported in(1923)ILR46Bom54
AppellantThe Official Assignee of Madras
RespondentAllu Ramachandra Ayyar and ors.
Excerpt:
hindu law - insolvency--joint family--managing member adjudicated insolvent--effect of adjudication--rights of official assignee--joint possession--exclusive possession of joint family properly--personal rights of manager, whether transferred to official assignee--vesting of other members' shares--alienee--joint owner--rights of official assignee and other members--right of official assignee to deal with other members' shares--nature of debt. - - these propositions are to be found clearly stated in the judgment of latham, j......the official assignee.2. this involves a consideration of the rights of the official assignee to joint family property, when the managing member is adjudicated insolvent, for n. b. baluswami ayyar was the managing member of a joint hindu family consisting of himself and his sons and, as such managing member, had control over the properties in question. this insolvent's interest in the partnership business belonging to the two insolvents was not an ancestral property. the minor sons had no interest in it and. the debts of n. b. baluswami ayyar are in the main business debts incurred in the partnership business.3. it can be taken as established law that the official assignee on the insolvency of the managing member of a joint hindu family succeeds to two things (1) the undivided interest.....
Judgment:

Schwabe, C.J.

1. The Official Assignee in the insolvency of N. B. Baluswami Ayyar and Narasimha Ayyar brought this suit against the minor sons of N. B. Baluswami Ayyar to set aside a deed of partition executed by that insolvent in favour of his minor sons. The learned Judge Kumaraswami Sastri, J., held that the deed was fraudulent and void as against the Official Assignee. The Official Assignee asked for declarations that the interests of the minors in the property should be vested in him and that the possession of all the properties included in the deed should be delivered to him. These declarations were refused and hence this appeal. It has, however, been admitted before us that the declaration that the shares of the sons had vested was rightly refused and the only question remaining for our decision is whether possession ought to have been ordered to be delivered to the Official Assignee.

2. This involves a consideration of the rights of the Official Assignee to joint family property, when the managing member is adjudicated insolvent, for N. B. Baluswami Ayyar was the managing member of a joint Hindu family consisting of himself and his sons and, as such managing member, had control over the properties in question. This insolvent's interest in the partnership business belonging to the two insolvents was not an ancestral property. The minor sons had no interest in it and. the debts of N. B. Baluswami Ayyar are in the main business debts incurred in the partnership business.

3. It can be taken as established law that the Official Assignee on the insolvency of the managing member of a joint Hindu family succeeds to two things (1) the undivided interest of the insolvent in the joint property and (2) his rights as managing member so far as they can be exercised for his own benefit. It is also established that he is not entitled to have vested in him the shares of the other members although he can deal with them if the insolvent could lawfully have done so if there had been no insolvency. These propositions are to be found clearly stated in the judgment of Latham, J., in Fakirchand, Motichand v. Motichand Harruckchand I.L.R. (1883) 7 Bom. 438 which has been followed in many subsequent cases. This is the combined effect of Sections 7, 30 and 52 of the Presidency Towns Insolvency Act and of the Hindu Law as to the rights of a managing member---see Nunna Setti v. Chidaraboyina I.L.R. (1903) Mad. 214. It follows that the Official Assignee standing for this purpose in the shoes of the insolvent can alienate the minor sons' interests in the joint property for the purpose of paying the insolvent's debts unless the debts in question were incurred for an illegal or immoral purpose, the presumption being that they were not.

4. The question remains whether the Official Assignee is entitled to possession of the joint property. He is joint owner of the property and, in my judgment, he must be entitled to joint possession thereof. It is no doubt true that a stranger cannot by reason of having purchased a share in the joint property insist on having joint possession. But the Official Assignee is not an alienee, but the representative of the insolvent.

5. There are certain rights of a managing member which the Official Assignee cannot exercise by reason of the personal nature of the rights, such as the right to live in the family house or to share in the family meals. But in my judgment, he is entitled to all the rights of the insolvent including the right to possession except such rights as are in their nature personal to a member of the family as such.

6. I expressly refrain from deciding anything as to what the respective rights of the parties will be hereafter. It is for the Official Assignee to decide after examining the nature of the debts whether he can exercise the insolvent's right, as managing member, of selling the assets for the benefit of the creditors; and if there are separate assets of the insolvent in which his co-parceners have no interest, to what extent they are to be used in paying the debts, in relief of the joint family property, and so on, and it may be open to the minor sons, if so advised, to object to any proposed sale on the ground that the debts that it is proposed to discharge were incurred for an immoral or illegal purpose; though it is right to point out that it has in this case already been argued that the business was of an illegal or immoral character by reason of its alleged speculative nature and this point has been decided adversely to the contention of the minor sons by the learned Judge who heard the case. In Sanyasi Charan Mandal v. Asutosh Ghose I.L.R. (1915) Calc. 225 where persons entitled to four-fifths of the undivided joint family property were adjudicated insolvents, but the member of the family entitled to the other one-fifth was not, the Court directed that the Receiver who was in the position of the Official Assignee should take possession of four-fifths share of the property. In this case the Official Assignee as representing the managing member is entitled to joint possession of the whole and the order in this case must be varied accordingly.

7. The case is one of general importance and there will be no order as to costs except that the Official Assignee will take his taxed costs of this appeal on the Original Side scale out of the estate.

8. V. Varadarajulu, Solicitor for appellant.

9. A. Kandaswami, Solicitor for respondent.


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