1. By an order of the Insolvent Court, dated the 25th October 1880, the property of one Narayanasawmy Naidu, an insolvent, became vested in the Official Assignee of Madras. On the 11th of July 1881, the insolvent obtained his personal discharge but he obtained no order for his discharge in the nature of a certificate, so that by virtue of the vesting order of 1880 and Section 7 of the Insolvency Act of 1848, all the estate and interest of the insolvent in any real or personal estate which the insolvent might purchase or which might revert, descend, be devised or bequeathed or come to him, vested in the Official Assignee. On the 19th August 1902, the insolvent mortgaged to the plaintiffs in this suit certain immoveable property, which he had acquired under the Will of one Ammai Ammal, who died in 1894 as a member of his joint family. The plaintiff brought this suit upon the mortgage and, on 17th July 1906, obtained a decree for sale of the mortgaged property and the payment of Rs. 5,910-13-2 and costs.
2. On the 12th October 1907, the Official Assignee applied by Judge's summons that the sale-proceeds of the mortgaged property might be paid to him and a consent order was passed directing that the property should be sold and the proceeds paid into Court. On the 15th November 1909, it was ordered that the Official Assignee should have the further conduct of the suit and that the legal representatives of the insolvent defendant, then deceased, should be brought in as parties.
3. The property has been sold and the Official Assignee now applies that the sale-proceeds now in Court may be paid to him. Under Section 7 of the Insolvency Act, the order of 1880 vested the insolvent's after-acquired property in the Official Assignee, without any conveyance or assignment, so that the bequest contained in the Will of Ammai Ammal conveyed the interest to the insolvent but the property bequeathed passed at once to the Official Assignee see In re New Land Development Association and Gray (1892) 2 Ch. 138 per Chitty, J., page 145 cited in Rowlandson v. Champion 17 M. k 21.
4. It has been held by the English Courts that when a bankrupt has been having and dealing with present estate, alienations of such property by him, before the trustee in Bankruptcy intervenes, will not be disturbed, but that this rule does not apply to real property which passes by conveyance; and this distinction has been approved by this Court in Rowlandson v. Champion 17 M. k 21.
5. It follows that the mortgaged property never passed to the insolvent and he never had any lawful power to dispose of it and that his possession was that of a trespasser. It was the duty of the insolvent to account to the Official Assignee for all the property acquired by him and he might possibly have been made criminally liable for mortgaging it to the plaintiff (see Insolvency Act, Sections 50, 70) but it does not appear that he was guilty of deceit or committed any fraud upon the Official Assignee see Abdul Kareem Sahib v. The Official Assignee of Madras 28 M.k 168.
6. I am of opinion that the possession of the insolvent was adverse to the Official Assignee since it did not originate from any lawful title; and it appears from the affidavit of the 2nd defendant that possession commenced in 1894. The right of the Official Assignee to the property was, therefore, extinguished in 1907. Limitation Act Section 28 Schedule II Article 144 : Kistocomul Mitter v. Suresh Chunder Deb 12 C.L.R. 253.
7. It is unnecessary, therefore, to consider the argument on his behalf that his application of the 12th October 1907 was under Section 26 of the Insolvent Act and is not within the Limitation Act or to deal with the procedure adopted by him to which no objection was, moreover, raised by the plaintiffs.
8. The motion is dismissed with costs, two sets.