Fakirchand Motichand vs Motichand Hurruckchand on 30 August, 1883

Bombay High Court
Fakirchand Motichand vs Motichand Hurruckchand on 30 August, 1883
Equivalent citations: (1883) ILR 7 Bom 438
Author: Latham
Bench: Latham


Latham, J.

1. The plaintiff in this case alleges that he and his father, Motichand Nathoo, were jointly entitled to four houses in Champagully as their ancestral property; that his father carried on separate business as a shroff, and stopped payment on the 18th, and filed his schedule on the 17th of January, 1879 having in the interval made a fictitious equitable mortgage of the said four houses to the defendant; that his father died in December, 1881; and that on the 22nd of March, 1882, Mr. Lynch, then acting as Official Assignee, was induced by the misrepresentation of the defendant to sell and convey to him the said four houses for the sum of Rs. 24,000, being an utterly inadequate consideration, from which sum the debt claimed by the defendant from the insolvent’s estate was deducted. He prays that the said mortgage and sale may be declared of no effect as against him; and that he may be declared entitled either to the whole, or a part, of the said four houses. The defendant denies the fraud and misrepresentation charged against him; and further submits that such allegations of fraud and misrepresentation are irrelevant in this suit, and he relies on the conveyance to him by the Official Assignee.

2. Seven issues were settled, of which the sixth was in these terms: “Whether on the insolvency of the said Motichand Nathoo the plaintiff’s share (if any) in the properties in the plaint mentioned vested in the Official Assignee”. The other issues went to the merits of the case on the facts alleged. During the opening of the plaintiff’s case it was, with the consent of counsel for the plaintiff and defendant, ordered that, under Section 146 of the Civil Procedure Code, the sixth issue, being an issue of law, on which if decided in favour of the defendant the case might be disposed of, should be tried before the remaining issues. It was admitted by the plaintiff’s counsel, Mr. Telang, that the insolvency was good, and for debts which the plaintiff could not challenge. From the course which the arguments in the case took, I have found it necessary to reframe the issue as follows: “Whether on the insolvency of the said Motichand Nathoo the right to dispose of the plaintiff’s share (if any) in the immoveable properties in the plaint mentioned for the payment of the debts of the said Motichand Nathoo tested in the Official Assignee; and, if so, whether such right was divested on the death of the said Motichand Nathoo”. The points raised in the issue as so framed were fully discussed before me.

3. The first question which arises is, what under Mitakshara law is the extent of the right of a father to bind the interests of his sons in ancestral immoveable property by disposing thereof for the payment of his own debts. This question has of late years been the subject of numerous decisions, especially in the High Court of Calcutta. But I am unable to see that these decisions have added anything to the clear rules laid down by the Privy Council in the two leading cases of Girdhari Lall v. Kantoo Lall L.R. 1 I.A. 321 and Suraj Bunsi Koer v. Sheo Prasad Singh L.R. 6 I.A. 88 and most clearly enunciated in the latter case under the two following propositions: “First, that where joint ancestral property has passed out of a joint family, either under a conveyance executed by a father in consideration of an antecedent debt, or in order to raise money to pay off an antecedent debt, or under a sale in execution of a decree for father’s debts, his sons, by reason of their duty to, pay their father’s debts, cannot recover that property, unless they show that the debts were contracted for immoral purposes, and that the purchasers had notice that they were so contracted and, secondly, that the purchasers at an execution sale, being strangers to the suit, if they have not notice that the debts were so contracted, are not bound to make inquiry beyond what appears on the face of the proceedings.

4. These rules have been implicitly accepted in Bombay in the cases of Narayanacharya v. Narse Krishna L.R. 1 Bom. 262 Sadashiv Dinkar Joshi v. Dinkar Narayan Joshi I.L.R. 6 Bom. 520 and they, and the Indian decisions consequent on them, will be found discussed in Mayne’s Hindu Law (3rd ed.), paras. 280 A to 280 B, and 302, in which last paragraph Mr. Mayne says: “It must be owned that the principle of the Mitakshara, that sons have a right to control their fathers in the alienation of the family property, is almost nullified by the other principle, that they are bound, after his death, to pay his debts, even though contracted without necessity; and by the logical extension of that principle, recently laid down by the Privy Council, that the father is entitled to sell the family property in order to pay off his own debts, which were not contracted for the benefit of the family, but which the sons would be under a moral obligation to discharge”. But for the purposes of the present case it is unnecessary to travel outside the two propositions above cited. I may, however, say that I apprehend there may be some difficulty, now that the test of necessity has gone in preserving for any time the test of immorality as distinguished from that of illegality.

5. The second question is, what is the effect of a vesting order made under the Indian Insolvency Act, 11 and 12 Vict., c. 21, on the petition of the father, or a creditor of the father, upon the right of the father to dispose of the interests of his sons in ancestral immoveable property for the payment of his debts. Such vesting order presupposes the existence of antecedent debts of the father which he cannot, or will not, discharge. Under Section 7 of the Act, all the real and personal estate and effects of the insolvent, and all his future estate right title interest and trust in or to any real or personal estate or effects, with the exceptions therein specified which do not affect the present case, vest in the Official Assignee. Under these words I cannot doubt but that the right of the father to dispose of his son’s interest in ancestral immoveable estate for the payment of his debts vests in the Official Assignee. It has been suggested that this right vests in the Official Assignee as being a ‘power’ within the meaning of Section 30. But I think that it falls more appropriately within the words of Section 7; and that there is no occasion to resort to Section 30, which seems to apply to powers in the ordinary legal sense of the term, created by will or instrument inter vivos. Now, when the property and effects of the father are vested in the Official Assignee, it is his duty, under Section 31, to make sale thereof with all convenient speed: and I think, therefore, that he not merely may, but ought to sell the ancestral immoveable estate, including the interests of the sons therein, so far at least as is necessary for the payment of the debts of the insolvent; and that he can make a good title to such ancestral immoveable estate, including the above mentioned interests.

6. It is contended for the plaintiff, relying on In re Atkinson 2 DeG.M. & G., 140, that the Official Assignee is not a purchaser for value, but stands in the place of the insolvent, taking only such interests as he can give, and subject to all equities by which he is bound. And doubtless this is so, save so far as special statutory rights have been conferred on the Official Assignee, as for instance under Section 24, which enables him to set aside conveyances and transfers which would have been binding upon the insolvent himself. But, in my opinion, the proper mode of asserting such equities is by suit or other proceeding against the Official Assignee. For instance, if the sons of an insolvent alleged that certain of his debts had been incurred for immoral purposes, and were not binding upon their interests in ancestral immoveable estate, I think that they might maintain these allegations in a suit against the Official Assignee; and, in effect, seek to have the property marshalled so as to apply the property, other than such interests of theirs, to the payment of such debts. Further, I think that all questions as to whether debts admitted by or alleged against the insolvent are valid debts, or whether dispositions of property made by the insolvent are valid dispositions, are questions the decision of which belongs to the Insolvent Court. And I cannot doubt but that if the sons of an insolvent showed good cause for challenging any such debt or disposition, and were willing to provide the funds necessary to contest the same, the Official Assignee, or, in the event of his refusal, the Insolvent Court, would in a proper case give full opportunity to investigate the validity of the debt or disposition. Cases are familiar to us in which creditors have been allowed to contest, and have successfully contested, ah admitted debt; and I think that the same liberty would, as a matter of course, be given to a son in a case where his interests might be affected. In the same manner I think that the son would be allowed to set the Official Assignee in motion for the purpose of setting aside a conveyance, winch he could show reasonable cause to suppose had been made in fraud of the Official Assignee, and to his own detriment. But I cannot conceive that it is possible for the son to lie by, and afterwards of his own motion dispute the acts and conveyances of the Official Assignee done and made in the exercise of his statutory powers. I may add that, in the event of the father’s estate producing a surplus over and above the amount required to satisfy his debts, I apprehend that such surplus might be made available to answer the claims of the son in respect of his interest in ancestral immoveable estate sold in the realization of the father’s estate.

7. Next in order is the question, what is the effect of the death of the insolvent on the proceedings pending in his insolvency? It is somewhat remarkable that there is no provision in the Indian Insolvent Act, corresponding to those in the more recent English Acts, for the continuance of the proceedings after the death of the insolvent, as, for instance, Section 80, Clause 9, of the Bankruptcy Act, 1869. There is perhaps less authority on the point in India than might have been expected. But in In re Sitaram Abbaji 10 Bom. H.C. Rep., 58 it was held by Gibbs, J., that the Official Assignee was to proceed, so far as circumstances would permit, in the same manner as he would have done had the insolvent been living. The law seems to have been assumed to be the same in In re Ramsabuck Misser 6 Beng. L.R., 119, where Norman, Officiating C.J., and Markby, J., affirmed an order of Phear, J., which made a rule to continue certain proceedings absolute against the representatives of deceased insolvents, as well as the surviving insolvents and the Official Assignee. But the most striking case is that of In re Kaleechurn Khettry Ind. Jur.O.S.,16, cited in Millett and Clarke’s edition of the Insolvent Act, p. 15, where a prisoner in custody on a charge of murder had filed his petition, and a vesting order had been made; but he was convicted and executed without filing any schedule. It was held by Sir Charles Jackson that the insolvency should proceed, and that the Official Assignee should deal with the estate. I may also mention Bromley v. Goodeve 1 Atkins 75 where Lord Hardwicke held that a commission of bankruptcy (the then course of procedure) might be renewed, though the bankrupt were dead; and that notwithstanding the statute then in force mentioned only the bankrupt, yet it extended to his representatives. And, lastly, I may refer to the notorious insolvency of Ago, Mahomed Rahim Shirazi, pending in the Bombay Court of Insolvency since the time of Sir Erskine Perry, in which repeated proceedings have been taken since the death of the insolvent, and in the interests of which estate I believe that the Official Assignee is at the present moment carrying on a suit.

8. The last question that remains for decision is whether, as ingeniously contended by Mr. Telang, the ancestral immoveable estate upon the father’s death vested by survivorship in the son, divesting the Official Assignee, but subject to the son’s liability to pay the father’s debts. I am not aware of any authority deciding the point expressly or by necessary inference. If Mr. Yate Lee (Law of Bankruptcy, p. 225,) is right in considering that the Commissioners in Bankruptcy could, under 6 Geo. IV, c. 16, Section 65, after the bankrupt’s death convey an estate tail of which he had been seized in his lifetime, that case is closely analogous to the present. I must, however, say that the authority to which he refers–Ex parte Somerville 1 Mont. & Ayr., 408; 3 Dea. & C., 668–is less positive in its language than the opinion which he bases on it. But it does seem to me that, when once it is established that the proceedings in insolvency and the powers of the Official Assignee continue after the insolvent’s death, the legal aspect of the matter is that the natural existence of the insolvent is for the purpose of dealing with and realizing his estate artificially continued in the Official Assignee, who can after such death deal with that estate as he could have dealt with it while the insolvent was still alive. To hold the contrary would certainly lead to the most wasteful circuity of action; as it cannot be doubted but that the Official Assignee, as representing the creditors of the father, could by suit compel the son to dispose of the ancestral immoveable estate, so far as might be required to discharge the father’s debts not being immoral.

9. In conclusion, I may very briefly refer to the case of Deendayal Lall v. Jugdeep Narayan Singh L.R. 4 I.A. 247 as that case was relied on by the plaintiff’s counsel. I must say that I cannot see how that case is applicable here, as in the conveyance of March 22, 1882, the Official Assignee has expressly conveyed to the defendant “all the right title and interest”, not merely of “the said Motichand Nathoo, deceased”, but also of “him Michael Placid Lynch as such Assignee as aforesaid”, i.e., as Official Assignee as well as Assignee of the estate and effects of the insolvent, so passing everything which the Official Assignee could pass. The case itself has been the subject of much comment; and considerable difficulty seems to have been felt, especially at Calcutta, as to how it is to be harmonized with the Privy Council decisions above referred to. But the tendency of recent judgments has been to consider whether it was intended to sue the father in his representative capacity or not; and if such was the intention, to hold the son’s interest bound, though the decree may have been made against the father alone, and only his right, title and interest expressly specified as sold in execution. See Umbica Prosad Tewary v. Ram Sahay Lall I.L.R. 8 Cal. 898; Sheo Prosad v. Jung Bahadoor I.L.R. 9 Cal 389; Ramdut Singh v. Mahender Prasad I.L.R. 9 Cal. 452; Baso Kooer V. Hurry Dass I.L.R., 9 Cal., 495,

10. For the reasons above given, I find on the issue now under consideration that “on the insolvency of Motichand Nathoo the right to dispose of the plaintiffs share (if any) in the immoveable properties in the plaint mentioned for the payment of the debts of the said Motichand Nathoo vested in the Official Assignee; and that such right was not divested on the death of the said Motichand Nathoo”. And as on this finding of law the case may be disposed of, I give my judgment for the defendant with costs.

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