Kovvuri Sathireddi Vs Tadi Anasuya and Another

Chandra Reddi, J.@mdashThe petitioner seeks to revise the order of the District Judge confirming that of the Subordinate Judge annulling an alienation, u/s 63 of the Provincial Insolvency Act evidenced by Ex. E dated 30th November 1941. The document was executed by one Tatareddi and his minor son represented by him, his brother Subba Reddi and the latter''s minor son for an alleged consideration of Rs. 3,000 in favour of the respondent. Within a few months thereafter, Tatareddi was adjudged an insolvent in I. P. No. 2 of 1942. Thereafter the petitioner moved the Official Receiver to take steps for avoidance of this document u/s 53 of the provincial insolvency Act. As the latter refused to do so, he applied for and obtained permission of the court u/s 54-A of the Provincial Insolvency Act. Having thus obtained the leave of the court, the petitioner filed an application u/s 63 of the Act in the court of the Subordinate Judge of Rajahmundry for a declaration that the sale deed in question was void against the creditors and the Official Receiver and for making the property available for distribution among the creditors. The transaction was impeached on the grounds that there was no consideration for this sale and that at any rate the alienee did not act in good faith in taking a conveyance of these properties.

2. The trial court found that the sale in question was fully supported by consideration but was vitiated by lack of good faith on the part of the vendee. In the result it set aside Ex. B. in respect of the insolvent''s one-fourth share.

3. Both parties appealed against this decision to the District court. The appellate Judge concurred in the opinion of the Subordinate Judge both as regards want of good faith of the alienee and the extent to which the sale could be avoided. In the result, the appeal filed by the alienee as well as the cross-objections filed by the petitioning creditor were dismissed.

4. The petitioning creditor has filed the present revision petition challenging the correctness of the decision of the courts below relating to the share of the minor. It may be mentioned that the alienee has not questioned the correctness of the finding that the transaction was not entered into in good faith and that has become final.

5. It is urged by Mr. Parthasarathi in support of this petition that the order of the District Judge is erroneous being opposed to the provisions of Section 53 of the Provincial Insolvency Act. He also relied upon two of the rulings of this court which I will refer to presently. On this question, there is a conflict of judicial opinion. Two of the learned Judges of this court took one view while an opposite view was taken in three cases of this court and in a Bench decision of the Nagpur High Court.

6. Before dealing with these cases it is necessary to refer to the terms of Section 53 of the Provincial Insolvency Act:

"Any transfer of property not being a transfer made before and in consideration of marriage or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration shall, if the transferor is adjudged Insolvent on a petition presented within two years after the date of the transfer, be voidable, as against the receiver and may be annulled by the court."

Under Section 53 it is only a transfer made by the insolvent that can be avoided as against the receiver. The point for consideration is whether the transfer by Tatareddl included his son''s share also.

7. In -- S.P.P.L. Palaniappa Chettiar, through his authorised agent Ramanathan Chettiar Vs. The Official Reciever of Madura, , the person subsequently adjudged an insolvent executed a document both on his own behalf and on behalf of his minor sons. The question was whether in an application to annul the sale an order could be passed so as to affect the shares of the minor sons conveyed by the document. Pandrang Row J. decided that the transfer as regards the sons'' share also could be annulled dissenting from a ruling of this court in -- A.L.S.P.P.L. Subramanian Chettiar Vs. Subbaraya Goundan and Others, . The ratio of this decision was that as the father had the right to alienate the son''s share in the joint family property for binding purposes, the execution of the sale deed by him conveyed the entire interest in the joint family property and the joining of the minor sons represented by himself as the guardian as the executants of the document did not make any difference as regards the legal effect of the transaction.

8. This was followed by Abdur Rahman J. in -- Dasari Murugappa Mudali Vs. The Official Receiver and Others, . The learned Judge was not inclined to accept the view taken by Sundaram Chettiar J. in A.L.S.P.P.L. Subramanian Chettiar Vs. Subbaraya Goundan and Others, ''. He thought that as the transaction was found to be sham or fictitious, the title of the minor son to the property continued to vest in him and therefore the father could exercise his power of disposal in respect of that share.

9. As I have already stated above, a different view was taken by Sundaram Chettiar J. in A.L.S.P.P.L. Subramanian Chettiar Vs. Subbaraya Goundan and Others, . In that case a mortgage deed was executed by one Subbaraya who was subsequently adjudged an insolvent and his two minor sons represented by him as their guardian. One of the petitioning creditors attacked this transaction u/s 54 of the Provincial Insolvency Act. When the matter came up to this court in a civil revision petition, Sundaram Chettiar J. took the view that the mortgage deed could be declared to be fraudulent and void as against the receiver only to the extent of the share of the insolvent. In the opinion of the learned Judge the document was executed not only by the father but by the sons as well and the fact that the sons were minors and were represented by their father does not make the mortgage effected by the father as the managing member of the family. It is stated that the circumstance that the sons also were parties to the document, showed the father alone was not the transferor so as to render the whole document voidable as against the receiver.

10. This reasoning was accepted by Kuppuswami Aiyar J. in -- Jashi Parvatavardhanamma Vs. Adusumalli Venkataramiah and Others, .

11. In -- The Official Receiver Vs. Neminadha Mudaliar, , Horwill J. thought that there was really no conflict between the law laid down by Sundaram Chettiar J. and that laid down by Pandrang Row J. The learned Judge observed that if it appears from the document of transfer that the insolvent was transferring the share of his son by virtue of his right as an undivided father the principle of law enunciated by Pandrang Row J. might be applied, whereas if the document showed that the son was himself a party to the transaction, then the father was hot purporting to exercise his right as the manager of the family. In this case the mortgage was executed by three insolvents who were father and his two sons and by the grandsons who were not adjudged insolvents. Two of the grandsons were minors while one of them was a major. The learned Judge came to the conclusion, that the fact that the minor sons joined as executants of the document indicated that the fathers did not purport to act in the capacity of the Hindu fathers selling their sons'' share. The rule stated in this case seems to be in consonance with the view expressed by Sundaram Chettiar J. in A.L.S.P.P.L. Subramanian Chettiar Vs. Subbaraya Goundan and Others, ''.

12. The dictum laid down in this line of cases gains support from a ruling of a Bench of the Nagpur High Court in -- ''Dattatraya v. Yeshodabai'', AIR 1949 Nag 323 (P). It was laid down there that when a father & his sons some of whom were minors transfer the family property for a family debt and the father alone is adjudicated an insolvent, the sale as regards the sons'' share could not be avoided in an application u/s 53 of the Provincial Insolvency Act. It looks to me that the principle enunciated by Sundaram Chettiar J. in A.L.S.P.P.L. Subramanian Chettiar Vs. Subbaraya Goundan and Others, '', followed in Jashi Parvatavardhanamma Vs. Adusumalli Venkataramiah and Others, '' and also by Horwill J. in The Official Receiver Vs. Neminadha Mudaliar, '', is the correct one and I express my respectful agreement with it. In my judgment the test propounded by Pandrang ROW J. in -- S.P.P.L. Palaniappa Chettiar, through his authorised agent Ramanathan Chettiar Vs. The Official Reciever of Madura, '', is not a proper one.

13. The question whether a father as the manager of the family has the right to alienate the sons share for a binding debt is not quite relevant in considering whether he alone was a transferor within the meaning of Section 53 of the Act. The mere fact that the father has got such a power does not imply that he is purporting to exercise that power in any given case. If really he was alienating the family properties as the undivided father and manager of the family, there was no reason why the sous should also be made to join as the executants of the document. The circumstance that the sons also joined in the execution of the document as represented by their father is an indication that the father was not acting in his capacity as the manager, and that the parties intended that the sons also should figure as the transferors which meant that the insolvent alone was not the transferor. In this case, the association of the brother and his son also with the insolvent and his son shows clearly that all the four were the executants of the document and therefore they should be regarded as transferors. u/s 53 of the Provincial Insolvency Act it is only a transfer effected by the insolvent that could be annulled and the share of the minor son would be unaffected. A declaration contemplated u/s 53 of the Act cannot be obtained as against the sons'' share.

14. It follows that the decision of the Appellate Judge is correct and should be allowed. In the result the civil revision petition is dismissed with costs.