Virupaksha Reddi and Another vs Chanalal Siva Reddi and Others

Krishnaswami Ayyangar, J.—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.

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.

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, T.S. Balavenkataseetharama Chettiar and Another Vs. The

Official Receiver and Others, and The Official Receiver Vs. Ramachandrappa by next friend Bala Nagamma and Others, , 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 Nori Ramasastrulu Vs. Teluguntla

Balakrishna Rao and Another, , 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 T.S. Balavenkataseetharama Chettiar and Another Vs. The Official Receiver and Others, and The Official Receiver Vs.

Ramachandrappa by next friend Bala Nagamma and Others, 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.

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.

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 u/s 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.

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.