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In Re: P.V. Radhakrishniah Chetty of K. Narayanaswami and Company - Court Judgment

LegalCrystal Citation
Decided On
Reported in84Ind.Cas.128
AppellantIn Re: P.V. Radhakrishniah Chetty of K. Narayanaswami and Company;In Re: P.V. Chenroya Chetty and P.
Cases ReferredOfficial Assignee of Madras v. Ramehandra Aiyar
residency towns insolvency act (iii of 1909), section 8 - adjudication--power to annul adjudication, extent of--hindu law--joint family--insolvency of coparcener, effect of--shares of minor co-parceners, whether affected. - .....necessary to decide, i am inclined to hold that: (i) the business at madras is an extension of the family business at vayalpad and was carried on with family funds, (ii) though it may not be open to a manager (other than a father) to create a new family business so as to impose any liability on the minor members, vide sanyasi charan mandal v. krishnadhan banerji 67 ind. cas. 124 : 49 c.p 560 : 30 m.l.t. 228 : 20 a.l.j. 409 : 24 bom. l.r. 700 : 35 c.l.j. 498 : 43 m.l.j. 41 : (1922) m.w.n. 364 : 26 c.w.n. 954 : a.i.r. (1922) (p.g.) 237 : 16 l.w. 533 : 49 i.a. 108 and sadasiva, mudaliar v. hajee fakeer mahomed sait 72 ind. cas. 48 : 44 m.l.j. 396 : a.i.r. (1922) (p.c.) 397 : 17 l.w. 288 : 32 m.l.t. 99 : 27 c.w.n. 677 : 37 c.l.j. 569 yet a father can; (see mayne's hindu law, 9th edition,.....

Ramesam, J.

1. This is a matter arising out of the insolvency of P.V. Chenroya Chetty and Brothers.

2. The history of the family is briefly told. The family belongs to Vayalpad in the Cnddappah District. They belong to the Komati caste, the premier trading caste in Southern India, specially among the Telugus. Chenroya, the grand-father of the insolvents, carried on his business, namely, a money-lending business, at Vayalpad. After him, his son Venkataramiah continued the old business. He tried business in grain in partnership with others, but this was not very successful. In 1911 a cloth business was started. Soon after this, Venkataramiah retired and his eldest son began to attend to the business. In 1912 the eldest son opened a piece goads business at Madras under the style of P.V. Chenroya Chetty and Brothers. The second son Ramanujam Chetty was attending college. In 1917, he attained majority and left the college. In 19118-1919 the business was extended to Bombay and the third brother Radha-krishna was in charge of it. The business at Bombay ended in heavy losses. Debts were also incurred by the firm at Madras. On 15th October, 1920, all the debts (Madras and Bombay) were consolidated into a single debt and a deed of mortgage was executed for Rs. 80,000, in favour of the executors of Volaipalli Venkata Veerabrahman Chetty. In December 1920 the third brother was declared insolvent. On 3rd August 1921 the two elder brothers applied to be and were declared insolvents.

3. On 7th November 1922, on the application of the Official Assignee, CouttsTrotter, J., held that the interests of all the members were liable and directed their sale by the Official Assignee. In this petition, the minors (that is, the two brothers of the insolvents and the sons of the insolvents) were represented by their fathers as guardians ad litem; but no formal order of appointment as guardian ad litem was made. It is now said that the notices were not served on them as guardians. Anyhow, in insolvency, the jurisdiction to annul a prior order under Section 8 is wider than the power to review under the C.P.C. and the whole question now that both sides are represented, is open before me.

4. The present petition is filed by the minors (that is the 4th and 5th brothers of the insolvents and the sons of the insolvents). Substantially, it seeks for a declaration that the shares of the minor are not liable to be sold by the Official Assignee. The petition has not been pressed, so far as the sons of the Insolvents are concerned, I think rightly; and it has to be considered, as far as Balaramaswamy and Devanathaswamy are concerned, who will be referred to hereafter as the petitioners.

5. Two points have been argued before me:

(1) How far the mortgage is binding on the petitioners.

(2) Even if it is binding, whether the. Official Assignee can deal with the shares.

6. It seems to me the decision of the first point is unnecessary, in view of my opinion on the second. If it is necessary to decide, I am inclined to hold that: (i) the business at Madras is an extension of the family business at Vayalpad and was carried on with family funds, (ii) Though it may not be open to a manager (other than a father) to create a new family business so as to impose any liability on the minor members, Vide Sanyasi Charan Mandal v. Krishnadhan Banerji 67 Ind. Cas. 124 : 49 C.P 560 : 30 M.L.T. 228 : 20 A.L.J. 409 : 24 Bom. L.R. 700 : 35 C.L.J. 498 : 43 M.L.J. 41 : (1922) M.W.N. 364 : 26 C.W.N. 954 : A.I.R. (1922) (P.G.) 237 : 16 L.W. 533 : 49 I.A. 108 and Sadasiva, Mudaliar v. Hajee Fakeer Mahomed Sait 72 Ind. Cas. 48 : 44 M.L.J. 396 : A.I.R. (1922) (P.C.) 397 : 17 L.W. 288 : 32 M.L.T. 99 : 27 C.W.N. 677 : 37 C.L.J. 569 yet a father can; (see Mayne's Hindu Law, 9th Edition, pages 396 to 400). (ii) In the present case, the father consented to the extension of the family business and took part in it, such part as was consistent with his age. (iv) All the major members never imagined for a moment that the business was other than a family business. It is unnecessary to refer to the evidence supporting these conclusions. (v) The mortgage-deed, to which all the minors and the father are parties, shows that though it refers to the debts as the debts of Chenroya Chetty, and Brothers only, the deed of mortgage is binding on all the members. See the judgment of the Privy Council dated 29th November, 1923; Brij Narain v. Mangla Prasad 77 Ind. Cas. 689 : 46 M.L.J. 23 : 21 A.L.J. 934 : 5 P.L.T. 1 : 28 C.W.N. 253 : (1921) M.W.N. 68 : 19 L.W. 72 : 2 P.L.K. 41 : 10 O. & A.L.R. 82 : A.I.R. (1924) (P.C.) 50 : 33 M.L.T. 457 : 46 A.P 95 : 26 Bom. L.R. 500 : 11 O.L.J. 107 : 51 I.A. 129

7. But on the second point, I think, the petition has to be allowed. The father, Venkataramiah, has not been declared an insolvent. It is true that not only the properties but also the powers of the insolvents are vested in the Official Assignee [Official Assignee of Madras v. Ramehandra Aiyar 68 Ind. Cas. 898 : 48 M.P 54 : 16 L.W. 559 : (1922) M.W.N. 653 : 43 M.L.J. 569 : A.I.R. (1923) (M.) 55. But Chenroya Chetty and his two brothers have no power to sell the properties of their brothers. I do not think that they can be regarded as the managers of the joint family properties (outside the firm properties). The fact that the father, Venkataramiah, was named as the guardian negatives the suggestion. If so, whatever may be the binding nature of the mortgage, as matters stand, the properties of Balaramaswamy and Devanathaswamy are not vested in the official Assignee; nor can he sell or otherwise deal with them. I accordingly declare. The petitioners will have half of the taxed costs. The other minors will pay half the costs of the Official Assignee.

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