COIMBATORE VENKATARAMANA VILAS CO LTD Vs. OFFICIAL RECEIVER

JUDGEMENT

(1.) One Kandaswami Pillai died in 1923 leaving a considerable amount of property, but large debts. He was survived by two widows and seven sons, of whom only two were majors. The eldest son was Sivagurunatha. On 16 January 1924 the second son Chidambaram, and the widows purporting to act as the guardians of their respective sons, granted a power of attorney to Sivagurunatha to administer the estate of the deceased. Why it was necessary to execute this power of attorney is not apparent. Sivagurunatha was under Hindu law the manager of the family and lawful guardian of the minors. On 18 January 1924 Sivagurunatha sold certain. immovable property belonging to the estate and five days later sold other estate property. On 22 February, 1924 a creditor applied for his adjudication in insolvency on the ground that the two transfers which he had effected in the previous month constituted fraudulent preferences under the insolvency law. The application was filed in. the District Court of Coimbatore and the District Judge dismissed it. An appeal followed to this Court and this Court being of the opinion that the case had not been properly dealt with on the merits set aside the order of dismissal and remanded the case for further enquiry. When the case came before the District Judge on remand Sivagurunatha consented to an order of adjudication being passed against him and to an order vesting in the Official Receiver the properties which his father had left. Accordingly orders to that effect were passed on 11th August 1926. The Official Receiver took possession of the estate and has to a very large extent carried out the task of administration. Nearly all the properties have been sold and the creditors have been paid eight annas in the rupee.

(2.) The present petitioner is admittedly a creditor of the estate. He also claims to be a secured creditor under two bonds executed respectively on 30 January 1924 and 21st February 1924, but the validity of these documents is being challenged by the Official Receiver. On 18 March 1932 the petitioner, as a counterblast, filed an application for an order annulling the adjudication. This application was heard by the Subordinate Judge of Coimbatore and was dismissed. The petitioner appealed to the District Judge, who concurred in the order dismissing the petition and consequently dismissed his appeal. He then filed a petition asking this Court in the exercise of its revisional powers to set aside the adjudication. "When the case was before the District Judge the petitioner contended that the order was bad because Sivagurunatha had no personal liability in the matter and that in any event the Court had no power to order the vesting of the entire estate properties in the Official Receiver. On the first point the District Judge held that there was personal liability because when pressed for payment by a creditor Sivagurunatha had asked and obtained time to collect the outstandings. On the second point he held that the petitioner could have appealed against the vesting order, but as he had not done so it was too late to attack it. The petition now before us came in the first instance before Varadachariar J. who referred it to a Bench because he was unable to accept as correct the opinion of the District Judge that the mere asking for and the obtaining of time to collect the outstandings was sufficient to make Sivagurunatha personally liable for his father's debts. The learned Judge also considered that the language used in the judgment of this Court in Muthu Veerappa Chettiar V/s. Sivagurunatha Pillal in setting aside the order dismissing the application for adjudication and remanding that application for inquiry was too general in character.

(3.) We are in entire agreement with Varadachariar J. that the mere asking for and obtaining of time for payment would not make Sivagurunatha personally liable and if he was not personally liable he could not be adjudicated for his father's debts. But the question of what is the effect of time being asked for and granted really does not arise in this case. The position here is that Sivagurunatha accepted in the insolvency proceedings the contention that he was personally liable and had committed acts of insolvency. What was operating in his mind, it is not necessary to inquire. It is far too late in the day for the petitioner to challenge the order of adjudication, and the same remark applies to his attempt to have the vesting order set aside. For over 11 years he and the members of Sivagurunatha's family have acquiesced in the adjudication and in the administration of the estate by the Official Receiver. Had he so desired, the petitioner could have challenged on appeal both the order of adjudication and the vesting order adjudication and the vesting order. He accepted these orders as being proper orders and would not have come into Court today if the Official Receiver had not questioned his claim to rank as a secured creditor. This is certainly not a case in which the exercise of the Court's revisional powers are called for. The order of the District judge for its revision must be dismissed with costs.