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Doraiappa Iyer Alias Krishnaswamy Iyer Vs. the Official Assignee of Madras and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Judge
Reported inAIR1921Mad456; 65Ind.Cas.244; (1922)42MLJ141
AppellantDoraiappa Iyer Alias Krishnaswamy Iyer
RespondentThe Official Assignee of Madras and ors.
Cases ReferredEllis v. Silber
Excerpt:
.....indemnity against future litigation by minor son of insolvent--decision of insolvency court that security property passed free to official assignee--res judicata--civil procedure code (act v of 1908), section 11. - - in the insolvency court the official assignee found himself confronted with a claim to the property covered by the security bond, and in order properly to administer the estate and distribute the property completely among the creditors of the insolvent, it was necessary for him to know whether or not the security, held by the purchaser, the present appellant, was a good security or a bad security; for, if the necessary, for if the security was good, the official assignee could not deal with the property without providing in some way for the appellant; if, on the other..........covered by the security bond, and in order properly to administer the estate and distribute the property completely among the creditors of the insolvent, it was necessary for him to know whether or not the security, held by the purchaser, the present appellant, was a good security or a bad security; for, if the necessary, for if the security was good, the official assignee could not deal with the property without providing in some way for the appellant; if, on the other hand, the security was bad, in the sense of being no longer required, then the official assignee could sell that property free from that encumbrance. it may be that he will have some day to meet the question whether the minors infant children of the insolvent have an interest in that security property. but that is not.....
Judgment:

W.S. Schwabe, C.J.

1. In this case the question for our determination is whether under Section 7 of the Presidency Towns Insolvency Act there was jurisdiction in the Insolvency Court to decide between the parties. The matter arises in this way. The insolvent sold certain property--the property was family property--and the purchaser being doubtful as to whether the insolvent could give him a good or complete title to the whole property, required some further--also family property--to be given to him as security against the other minor members of the family raising the question there after that the sale of the first property was as against them bad. In the Insolvency Court the Official Assignee found himself confronted with a claim to the property covered by the security bond, and in order properly to administer the estate and distribute the property completely among the creditors of the insolvent, it was necessary for him to know whether or not the security, held by the purchaser, the present appellant, was a good security or a bad security; for, if the necessary, for if the security was good, the Official Assignee could not deal with the property without providing in some way for the appellant; if, on the other hand, the security was bad, in the sense of being no longer required, then the Official Assignee could sell that property free from that encumbrance. It may be that he will have some day to meet the question whether the minors infant children of the insolvent have an interest in that security property. But that is not the matter which is before the Court; at present. For the proper disposal of the property, as the minors are interested, an application was made and a proper guardian ad liten was appointed for them and the matter came before the Insolvency Court, they being represented. The mater was heard and determined on the merits.

2. There is no appeal to us on the question of the fact whether or not there were debts which the managing member of the family properly paid out of the moneys he received from the sale. NO question of that kind teems to have been raised in the Court below and no question is raised before us, but it is said that there is a danger that when these minors some of ages, they might come into Court and ask that the sale of the first property should be set aside and that if that happens, the purchaser would require or might require that security property to make good to him the loss which was thereby suffered. Whether the minors would be able hereafter to come into Court and make such application successfully must depend, in my view, on the proper interpretation of Section 7 of the Presidency Towns Insolvency Act of 1(sic)09, The words of that section are taken word for word from the Bankruptcy Assets of England. It was found necessary there--no doubt it is also found necessary here--that questions of that kind should be determined, for, otherwise, the insolvency would have to go on until such time as the infants chose to raise the question. In my view, it is to provide for this very kind of matter that that section was passed. The words are: 'Decide all questions of priorities, and all other questions whatsoever, whether of law or of fact, which may arise in any case of insolvency coming within the cognizance of the Court or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a Complete distribution of property in any such case.' It is quite impossible for the Court to do complete justice or to make a complete distribution of assets in this case unless the Court can say whether the property in question is property which passed to the Official Assignee free from encumbrance. The Court cannot say that without hearing the matter and disposing of it. It has heard the matter and disposed of it, and in my view the decision of that Court is binding on the minor children of the bankrupt. That being so, the security is no longer required, because it has been decided, and, in my opinion, finally decided, that the sale by the minors' father is binding on them; and the order which has been made in the Court below setting aside this bond is, in my view, correct. I am confirmed in this view by a reference to the English cases of Ellis v. Silber (1872) 8 Ch. 83 and Motion, In re, Maule v. Davis (1873) 9 Ch. 19(. Taking the case of Ellis v. Silber (1872) 8 Ch. 83, the words 'assets which come to their hands and the mode of administering them are subject to that jurisdiction' are words which might aptly be used and applied to the facts of this case.

3. In these circumstances the appeal fails and is dismissed with costs.

Odgers, J.

4. I am of the same opinion. I have else where expressed my view that Section 4 of the Provincial Insolvency Act, which corresponds in terms with Section 7 of the Presidency Towns Insolvency Act, was inserted in the new Act in order to provide for a contest of the character that arises in the present appeal. It was long the subject of discussion as to whether and how far the decision of the Court of Insolvency acted as res judicata in other proceedings, and in my view it is quite clear that Section 7 was inserted to make such decision binding as being res judicata. I, therefore, agree that the appeal should be dismissed with costs.


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