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Virupaksha Reddi and anr. Vs. Chanalal Siva Reddi and ors. - Court Judgment

LegalCrystal Citation
SubjectFamily;Property
CourtChennai
Decided On
Reported inAIR1943Mad652; (1943)2MLJ87
AppellantVirupaksha Reddi and anr.
RespondentChanalal Siva Reddi and ors.
Cases ReferredSame v. Bank of Upper India
Excerpt:
- - the district court, as well as this court on appeal, concurred in dismissing the application on the ground that it was not shown that the sale had been made either fraudulently or for an inadequate price. we are clearly of opinion that the decision cannot bind the appellants. although the appellants may, be said to have succeeded to some extent, we consider that they have substantially failed in so far as the ultimate result is concerned......1933, the two other brothers were also adjudicated insolvents. after the adjudication the official receiver, in whom the property of the inso vents vested, sold on 8th march, 1934, items 2 to 5, 12 to 33 and 34 in schedule b to chinna anjanappa who was the sixth defendant and now the fifth respondent. the appellants contended in the court below that their interest in the family property did not vest in the official receiver and that the sale by him in favour of anjanappa did not affect their interest at all. they also contended that ayyana gowd and his two brothers had by an oral partition in 1927 become divided in interest. in fact, they went further and said that the properties mentioned in schedule b fell to the share of their father chenabasavana gowd. both these questions,.....
Judgment:

Krishnaswami Ayyangar, J.

1. This is an appeal from the preliminary decree passed by the District Judge of Bellary in a suit for partition instituted by the appellants, who are the sons of Chenabasavana Gowd. Chenabasavana Gowd was the third defendant. The first two defendants are his elder broilers. Ayyana Gowd, the eldest, died during the pendency of the suit. His son was the fourth defendant in the suit and the third respondent here. Siva Reddy, the next brother, was the second defendant in the Ccurt below and the first respondent in the appeal. On the 16th February, 1932, Ayyana Gowd was adjudicated on a creditor's petition, I.P. No. 43 of 1931. Later, on the 20th December, 1933, the two other brothers were also adjudicated insolvents. After the adjudication the Official Receiver, in whom the property of the inso vents vested, sold on 8th March, 1934, items 2 to 5, 12 to 33 and 34 in schedule B to Chinna Anjanappa who was the sixth defendant and now the fifth respondent. The appellants Contended in the Court below that their interest in the family property did not vest in the Official Receiver and that the sale by him in favour of Anjanappa did not affect their interest at all. They also contended that Ayyana Gowd and his two brothers had by an oral partition in 1927 become divided in interest. In fact, they went further and said that the properties mentioned in schedule B fell to the share of their father Chenabasavana Gowd. Both these questions, namely, (1) whether there was a division as alleged by them, and (2) whether the sale by the Official Receiver in favour of the fifth respondent is binding on the appellants, were decided against thorn by the District Judge, and hence they have appealed.

2. The learned District Judge did not try these questions on their merits because he held that there were previous decisions binding upon the parties which made the matter res judicata. When the two brothers Siva Reddi and Chenabasavana Gowd were sought to be adjudicated insolvents they set up the plea that they had become divided from their eldest brother Ayyana Gowd who alone it was said carried on the business which resulted in loss and consequent liabilities in favour of creditors. It was their case that at the partition properties were separately allotted to the two younger brothers, Ayyana Gowd being given for his share a cotton ginning factory. The question of partition so set up was gone into in a proceeding to which the appellants' father and the Official Receiver were parties and the decision was given by the District Court of Bellary that the alleged division had not been established. It seems to us that this decision precludes the appellants from re-agitating the question. In a dispute of this kind their father Chenabasavana Gowd must be taken to have represented not only himself but also his undivided sons who were as much interested in the dispute as himself. That being so, we concur with the learned District Judge in holding that the finding that there was no division in the family in 1927 binds the appellants.

3. On the second question, however, we are unable to accept the decision of the learned District Judge. At the time when he decided the case the decisions under the statutes relating to insolvency had left the question as to what vests in the Official Receiver on the adjudication of a father or managing member, in a state of uncertainty. There were two decisions of this Court, Seetharama Chettiar v. Official Receiver, Tanjore : AIR1926Mad994 and Official Receiver, Anantapur v. Ramachandrappa : AIR1929Mad166 , both decided under the Provincial Insolvency Act, which had held that the power of the father and of the manager respectively to sell the interests of the other members in the family property vests in the Official Receiver, an their adjudication as insolvents. But as the reasoning on which these decisions proceeded was found to be inconsistent with a later decision of the Privy Council in Sat Narain v. Sri Kishen Das, Some v. Bank of Upper India (1936) 71 M.L.J. 812 : L.R. 63 IndAp 384 the question had to be reconsidered by a Full Bench in the case reported as Ramasastrulu v. Balakrishna Rao : AIR1942Mad682 , which, it is to be observed, related to the power of a manager and not to that of a father. The Full Bench held that the manager's power does not devolve on the Official Receiver, and this result was reached on a consideration of the decisions of the Privy Council in Sat Narain v. Behari Lal : AIR1926Mad994 and Sat Narain v. Sri Kishen Das: Same v. Bank of Upper India : AIR1929Mad166 both of which had reference to the power of the father and not of the manager under the Presidency Towns Insolvency Act. The Court pointed out that the Privy Council had held the power to vest in the Official Assignee by virtue of the special provision contained in Section 52(2)(b) of the Presidency Towns Insolvency Act; for which, it is to be remembered, there is no counterpart in the Provincial Act, and not because the power was or could beseemed to be property, as defined in the Act and capable of vesting in the Official Assignee under the vesting section. The effect of the Privy Council decisions was stated to be that they undoubtedly negatived the law as previously understood in this Court, and it was observed that if the power of the father is not property under the Presidency Towns Insolvency Act, it cannot be regarded as property under the Provincial Insolvency Act, and if the father's power is not property, the power of the manager who is not the father cannot be property either. It is plain on a reading of the Full Bench judgment that the line of reasoning adopted by the Privy Council in discussing the father's power formed the basis of the decision with respect to the devolution of the manager's power.

4. The difference however is that while the father's power being a power which he could exercise for his own benefit within Section 52(2)(b) of the Presidency Towns Insolvency Act would vest in the Official Assignee, the manager's power would not, as his power is exercisable for the benefit of the family, and not for his own. It follows that under the Provincial Insolvency Act, which does not contain a provision similar to that found in Section 52(2)(b) of the Presidency Act, neither the father's power nor the manager's power to sell the shares of the other members of the family can vest in the Official Receiver. That being so, the Official Receiver in the present case had no right to sell the interests of the appellants in any of the items of family properties, and to that extent the sale of the 8th March, 1934, must be held to be inoperative. But this does not mean that the appellants are entitled to claim their share free from the binding debts of the family. Indeed in this as in every partition suit provision must be made for the discharge in the first instance of such debts, the balance alone being available for division between the members of the family. We have no doubt that the Court below will bear this principle in mind in adjusting the rights of the parties in the final decree to be passed.

5. On behalf of the respondents it was argued that the sale made by the Official Receiver was a bona fide transaction effected for an adequate price and that it has been so found in I.A. No. 172 of 1934. That was a petition filed by a creditor challenging the sale under Section 68 of the Provincial Insolvency Act. The District Court, as well as this Court on appeal, concurred in dismissing the application on the ground that it was not shown that the sale had been made either fraudulently or for an inadequate price. To this application the appellants were not parties, neither was their father. The Official Receiver was a party, but he could not represent the appellants although he did represent the father to the extent of his interest in the property sold. We are clearly of opinion that the decision cannot bind the appellants.

6. Next it was contended that in adjusting the I equities between the parties in the final decree, the Court should try as far as possible to allot the items sold to the share of the fifth respondent, the purchaser. This is a principle which is very commonly applied in suits for partition and the Court always tries to do equity, if possible, by allotting to the alienee the items alienated to him. We have no doubt that this principle will be kept in mind by the Court below. But we cannot agree that in making the adjustment the properties should be deemed to be of the value at which they were sold in 1934. The proper course for the Court is to take the value of the properties at the time of the division and then effect a fair and equitable partition between the parties entitled. Except to this extent, the appeal fails and must be,dismissed. Although the appellants may, be said to have succeeded to some extent, we consider that they have substantially failed in so far as the ultimate result is concerned. That being so, we direct that the appellants shall pay the costs of the fifth respondent and throughout bear their own which shall not however include the court-fee wrongly held to be payable by him in respect of the relief for the setting aside of the sale.


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