T. Vijiaranga Naidu and Another vs D. Narayanappa

Bell, J.—This civil revision petition is against an order of the Full Bench of the Madras Small Cause Court on a new trial application filed by

the defendants (petitioners here) against the decision of the Chief Court decreeing a suit for Rs. 650.

This money was claimed by the plaintiff by way of indemnity under a sale deed relating to a house purchased by him from the defendants. The

defendants were father and son and the father had in 1934 become an insolvent on his own petition. He was duly adjudicated but obtained his

discharge on 29th November, 1940.

In 1938 the mortgagee of the property (later sold to the plaintiff) brought a suit on the mortgage and got a decree. The property was brought to

sale on 16th January, 1940 and bought by the mortgagee. It was not however confirmed and on 26th February, 1940, after his discharge, the first

defendant and his son sold the property to the plaintiff. The plaintiff was willing to pay off the encumbrance and did in fact do so.

The balance due under the purchase agreement, namely, about Rs. 900 was paid to the defendants.

Then the Official Assignee came on the scene. He filed a petition to set aside the sale because he said the property was still vested in him despite

the discharge. The matter came before Chandrasekhara Aiyar, J., who held after investigating the facts that the purchaser of the property, the

plaintiff in the subsequent suit, should pay a sum of Rs. 500 to the Official Assignee to be distributed amongst the creditors.

The plaintiff thereupon brought a suit for Rs. 650 made up of that Rs. 500 and incidental cost and expenses, against the defendants. They said in

opposition that the Official Assignee had been a party to the mortgage proceedings in 1938 and from that date until after the sale of the property,

had never put forward any claim to it or to any proceeds out of its sale. They said that he had in fact abandoned any claim and that in effect the

property had re-vested in them and that they were entitled to sell and retain any balance.

Before the Chief Court and before the Full Bench of the Small Cause Court the defendants relied on the decision reported in Sheonandan v.

Kashi ILR (1916) All. 223, in support of their contention that after the discharge of an insolvent a sale held by him is good and passes whatever

rights the insolvent had to the purchaser giving the latter a full and absolute title. This decision however was dissented from by a Calcutta case

reported in Tarak Das Dhar v. Santosh Kumar Mallik ILR (1937) 2 Cal. 386. In my view, with great respect the latter case is the more

acceptable statement of the law. At page 391 is set out the question which is the same in this case:

Did the property in question, therefore, in some way or other either remain that of the insolvent or became re-vested in him in such manner that at

the time when this suit was instituted he was in a position to say that the title to that property was in him?

At page 393 the Court says:

It is very difficult to see how it can rightly be contended that once a particular item of property has vested in the Official Assignee by virtue of the

operation of Section 17 of the Presidency Towns Insolvency Act that property can become re-vested in the insolvent without any other action on

the part of the Official Assignee save an expression of opinion that the property is of no value and that be does not propose to do anything in the

way of attempting to make the property available for the creditors of the insolvent and that accordingly he is abandoning the property. Mr. Page, I

think, realised the difficulty which confronted him in endeavouring to persuade us to accept the view that in law there can be such an abandonment

of incorporeal or Immovable property by the Official Assignee as to bring it about that it becomes automatically or by some sort of metaphysical

process, as it were, re-vested in the insolvent either during the currency of his insolvency or after his discharge.

They pointed out that this is obviously contrary to the express provisions of the Transfer of Property Act. The Full Bench was therefore in my

opinion right in basing their decision on the Calcutta case. It follows that the property did not re-vest in the insolvent and he had no right to sell it

without the permission of the Official Assignee. In the sale deed he gave an indemnity to the plaintiff which is now being used against him.

In the result this petition must be dismissed with costs.