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Chennappa Chetty Vs. Official Receiver, Salem and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberCivil Revn. Petn. No. 682 of 1952
Judge
Reported inAIR1955Mad51; (1954)IIMLJ755
ActsProvincial Insolvency Act, 1920 - Sections 28A, 53 and 54
AppellantChennappa Chetty
RespondentOfficial Receiver, Salem and ors.
Appellant AdvocateN.R. Raghava Chariar, Adv.
Respondent AdvocateN.C. Srinivasan, Adv.
DispositionRevision allowed
Cases ReferredSathi Reddi v. Anasuya
Excerpt:
.....vendee quoad the sons, hut is certainly not a ground for holding that on the transaction of sale being set aside under section 54, provincial insolvency act, the title of the alienee to the sons' share which 'ex concessis' was good under the general law is impaired and avoided......in the official receiver the interests of persons, who have not been adjudicated. the fact that the purpose for which the alienation has been effected is one binding on the sons either because it is for necessity or for the discharge of antecedent debts goes to confirm the title of the vendee quoad the sons, hut is certainly not a ground for holding that on the transaction of sale being set aside under section 54, provincial insolvency act, the title of the alienee to the sons' share which 'ex concessis' was good under the general law is impaired and avoided. of course we are not here concerned with the alienation which is sham and nominal to which different considerations would apply.11. we, therefore, consider that the view of sundaram chetti j. in the case referred to above and which.....
Judgment:

Rajagopala Aiyangar, J.

8. The facts of this case have been fully set out in the order of reference to a Bench and it is unnecessary to set them out afresh.

9. The question arising for our consideration is whether when an alienation by a father is set aside under Section 54, Provincial Insolvency Act, the setting aside of this alienation affects merely the interest of the Insolvent, or whether the interest of the sons also is divested from the vendee. In the present case, a father executed the impugned deed of sale on his own behalf and as the guardian of his two minorsons for a consideration of Rs. 3000. The father alone was adjudicated an insolvent and after the adjudication the Official Receiver filed a petition to set aside the sale under Section 54, Provincial Insolvency Act. The learned Subordinate Judge who tried the petition In the first instance found the sale voidable under Section 54, Insolvency Act, and set it aside not merely in respect of the share of the father, but also in respect of the share of the two sons on whose behalf the father purported to effect the alienation.

The question as to the quantum of the interest which could be the subject-matter of adjudicatloa In the insolvency proceedings was raised before the learned District Judge in the appeal to that court by the vendee. But the learned District Judge agreeing with the trial court that the transaction in question was a fraudulent preference, set aside the sale in full and not merely as regards the one-third share of the insolvent. The matter was brought up to this Court in this civil revision petition by the vendee.

10. The question raised by the petitioner was the subject of several decisions of this Court, the earliest of which is that of Sundaram Chetti J. In : AIR1935Mad246 '. The deed which was attacked in that case as a fraudulent preference had been executed by the Insolvent for himself and as father and guardian of his two minor sons. The learned Judge held that the deed should be treated as a composite deed executed by three persons having distinct interests and, on the insolvency of one, the transfer could be set aside by the Insolvency Court in regard to his own share and not as regards the share of the non-insolvent vendors. This decision has received support in subsequent decisions of this court in : AIR1944Mad235 and -- AIR 1945 Mad 253 (F)' as well as in the recent decision of this Court in -- 'Sathi Reddi v. Anasuya', : AIR1954Mad431 (H).

The Calcutta High Court has taken a similar view as regards the effect of an order under Section 54 of the Act in : AIR1942Cal342 ' and Similarly a Bench of the Nagpur High Court in '. The only dissent from this point of view is to be found in two judgments of single Judges of this Court in AIR 1937 Mad 791 (B)' by Pandrang Row J. and -- AIR 1943 Mad 303 (D)' by Abdur Rahman J.

Viewing the case apart from authority, it is clear to us that on the adjudication of an insolvent what vests in the Official Receiver is the interest of the insolvent and when a transaction entered into by the father not merely on his own behalf, but on behalf of others, who are not adjudicated and whose property does not vest in the Official Receiver is set aside, what vests in the Official Receiver as the result of such setting aside is merely the interest of the insolvent father and not that of the non-insolvents.

The question as to the father's power to allegate family property for the discharge of antecedent debts and the provision enacted in Section 28-A, Provincial Insolvency Act, vesting such a power in the Official Receiver is wholly irrelevant for the consideration of the present question; for we are not here concerned with any alienation by the Official Receiver in which event alone the question of Section 28-A, Insolvency Act, will arise, but we are concerned with the effect of an alienation effected by the insolvent.

In so far as the insolvent's share of property is fnvolved in the alienation, the Official Receiver would get it back when the alienation is set aside, but if under the powers vested in the insolvent father under the general law he has alienated the interests of his sons who are not insolvents, no order of the Insolvency Court under Section 54 can get back from the alience and vest in the Official Receiver the interests of persons, who have not been adjudicated. The fact that the purpose for which the alienation has been effected is one binding on the sons either because it is for necessity or for the discharge of antecedent debts goes to confirm the title of the vendee quoad the sons, hut is certainly not a ground for holding that on the transaction of sale being set aside under Section 54, Provincial Insolvency Act, the title of the alienee to the sons' share which 'ex concessis' was good under the general law is impaired and avoided. Of course we are not here concerned with the alienation which is sham and nominal to which different considerations would apply.

11. We, therefore, consider that the view of Sundaram Chetti J. in the case referred to above and which has been followed almost consistently by this Court and the other Courts is the correct one. The result is that the Civil Revision Petition is allowed and the order of the Court below will be modified by making the order under Section 54 apply only to the share of the insolvent in the suit property. There will be no order as to costs.


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