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TMI Blog1950 (1) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... by the fourth defendant under Ex. P-4, dated 12-12-1935. Defendants 4 to 13 are the alienees or their successors-in-interest. Usufructuary mortgage interest in the second item devolved on the 15th defendant and he is in possession of the same. The plaintiff filed O.S. No. 109 of 1944 on the file of the Court of the Subordinate Judge, Coimbatore for partition and possession of his one-fourth share in the plaint schedule properties mainly on the ground that the Official Receiver had no power to sell the shares of the members of the family other than the first defendant. Pending the suit defendants 2, 3, 4, 5, 7, 8, 11, 12, and 10 have entered into a compromise with the plaintiff and a compromise decree was passed in respect of them. The learned Subordinate Judge relying upon the provisions of the Provincial Insolvency Act as it then stood, held that the Official Receiver had no power to sell the son's shares in the family properties. He gave a decree to the plaintiff for the recovery of one-fourth share of the properties in the possession of the 9th defendant and the 15th defendant The 15th defendant under the decree would be entitled to possession only after depositing a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the subject-matter of the Legislation was covered by Item 45 of the Federal Legislative List dealing with "Duties of excise on tobacco and other goods manufactured or produced in India" and therefore the Act was 'ultra vires' of the provincial legislature. Sir Maurice Gwyer, C.J., in holding that the said Act was not 'ultra vires' of the Provincial Legislature, quoted with approval the passage in 'Citizens Insurance Co. v. Parsons' (1882) 7 A.C. 96 : In these cases it Is the duty of the Courts however difficult it may be, to ascertain in what degree, and to what extent, authority to deal with matters falling within these classes of subjects exists in each Legislature, and to define in the particular case, before them to limits of their respective powers. It could not have been the intention that a conflict should exist; and in order to prevent such a result, the two sections must be read together and the language of one interpreted, and where necessary, modified by that of the other. In this way, it may, in most cases, be found possible to arrive at a reasonable and practical construction of the language of the Sections, so as to reconcile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty, including agricultural land, then clearly the Act went beyond the powers of the Legislature; but when a Legislature with limited and restricted powers makes use of a word of such wide and general import, the presumption must surely be that it is using it with reference to that kind of property with respect to which it is competent to legislate and to no other. In the view they have taken of the validity of the Act, the learned Judges held that the question of severability did not arise for consideration. In 'Subrahmanyan Chettiar v. Muthuswami Goundan (1941) 1 M.L.J. Sup 1 the validity of the Madras Agriculturists' Relief Act (IV of 1938), in so far as it affected promissory notes came in question. That Act was challenged as invading the forbidden field of entry No. 28 of List II of the Constitution Act. The impugned legislation was supported with reference to item 27 of the Provincial List" Money lending and money-lenders." At page 17 Sir Maurice Gwyer, C. J., says' : It must inevitably happen from time to time that legislation though purporting to deal with subject in one list, touches also on a subject in another list and the different provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore was 'ultra vires' of the Provincial Legislature. The Judicial Committee approved the statement of law made by Sir Maurice Gwyer, C. J., in 'Subrahmanyam Chettiar v. Muthuswami Gondan ' (1941) 1 M.L.J. Sup 1 already quoted. At page 13 they say: Subjects must still overlap and where they do the question must be asked what in pith and substance is the effect of the enactment of which complaint is made and in what list is its true nature and character to be found. If these questions could not be asked, much beneficent legislation would be stifled at birth, and many of the subjects entrusted to Provincial Legislation could never effectively be dealt with. Dealing with the argument of the invasion by the Provincial Legislature' to the subjects enumerated in the Federal List they, observe: No doubt it is an important matter, not as their Lordships think because the validity of an Act can be determined by discriminating between degrees of invasion, but for the purpose of determining what is the pith and substance of the impugned Act. Its provisions may advance so far into Federal territory as to show that its true nature is not concerned with Provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant, in determining the scope of the power, to have regard to what is ordinarily treated as embraced within that topic in legislative practice and particularly in the legislative practice of the state which has conferred the power. Thus in considering what might be appropriately and legitimately enacted by the Dominion Parliament under its power to legislate in relation to "bankruptcy and insolvency", it was considered relevant to discuss the usual contents of bankruptcy statutes. The relevancy of this passage in regard to the facts of the present case will be considered in due course. In 'Attorney-General for British Columbia v. Attorney-General for Canada', (1937) A.C. 391 the validity of the Farmers' Creditors Arrangement Amendment Act, 1935, came under Judicial scrutiny. Under that Act a fanner who was unable to meet his liabilities as they became due might make a proposal for a composition, and if the proposal was not accepted by the creditors, the matter was referred to Board of Review to formulate a proposal. The Board had the power to confirm the proposal which then became binding on the creditors and the debtor. The Judicial Committee held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake laws for a province or any part thereof with respect to any of the matters enumerated in List II in the said Schedule (hereinafter called the "Provincial Legislative List"). List II Provincial Legislative List. Item 21. Land, that is to say, rights in or over land, land tenures, including the relation of landlord and tenant, and the collection of rents, transfer, alienation and devolution of agricultural land; land improvement and agricultural loans; colonization; Courts of Wards; encumbered and attached estates; treasure trove. 'List III concurrent Legislative List. Item Section Transfer of property other than agricultural land; registration of deeds and documents. Items 12. Bankruptcy and insolvency; administrator general and official trustees. In the Provincial Insolvency Act after Section 28, the following section was inserted as Section 28A: Insolvent's property to comprise certain capacity. The property of the insolvent shall comprise and shall always be deemed to have comprised also the capacity to exercise and to take proceedings for exercising all-such powers in or over in respect of property as might have been exercised by the insolvent for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing manner: Bankruptcy is a proceeding by which, when a debtor cannot pay his debts or discharge his liabilities or the persons to whom he owes money or has incurred liabilities cannot obtain satisfaction of their claims, the State, in certain circumstances, takes possession of his property by an officer appointed for the purpose, and such property is realised and distributed in equal proportions amongst the persons to whom the debtor owes money or has incurred pecuniary liabilities. The fundamental characteristic of insolvency legislation is stated by Lord Thankerton in 'A. G. for British Columbia v. A. G. for Canada' 1937 A.C. 391 In a general sense insolvency means inability to meet one's debts or obligations; in a technical sense, it means the condition or standard of inability to meet debts or obligations, upon the occurrence of which the statutory law enables a creditor to intervene, with the assistance of a Court to stop individual action by creditors and to secure administration of the debtor's assets in the general interest of the creditors. It is therefore conceived in the interest of the creditors as a class and provides for distribution of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of a large extent of properties which they were accustomed to look to for discharging their liabilities in the case of the debtor's insolvency, presumably, the Amending Act was passed to get round the Full Bench decision and to declare the correctness of the pre-existing law. Under the Amending Act the capacity of the Official Receiver to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the insolvent are also included in the definition of property. The "pith and substance" of the Amending Act is clearly within the scope of item 12 of List 3: "bankruptcy and insolvency". The true nature and character of the legislation the scope and the ambit of it obviously relate to legislation in regard to bankruptcy and insolvency. The fact that it incidentally infringes on some other items in the Provincial List does not affect its validity. 8. Looking from a different angle, the same result would follow. A comparative study of list I and list 3 discloses that item 12 of list III is not in conflict with item 21 of List II. The following items may be noticed for comparison: Item 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther or the manager, as the case may be, to alienate the other members' shares in the family properties. The Amending Act says that the property of the Insolvent shall comprise also such power. Either under Section 28 or under Section 28A the property of the insolvent can vest only after his adjudication i.e. at the commencement of the insolvency. It cannot conceivably vest in the Official Receiver before the adjudication of the insolvent. By reason of Section 28A that property comprises the said power. If the whole of the property of the insolvent can vest in the Court or in the receiver at the commencement of the insolvency, there is no difficulty in holding that along with the entire property, his powers mentioned in Section 28A also vest in the receiver. The words "or before his discharge" also are emphasised in support of the learned counsel's argument that during that period the insolvent could not have any such power in him as all his properties would have vested in the Court or the receiver. But this ignores the fact that pending the insolvency the insolvent might get some properties or powers by devolution or otherwise. Such properties of powers also woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ights etc. was conveyed to the purchaser. At the time of the execution of the sale deed, the well-understood legal position was that the father could convey the interests of the sons also for his debts and therefore the receiver in whom the father's interests vested, had also a similar right. There is no reason to assume that he did not purport to convey the undoubted rights he had in the property. Indeed the sale notice Ex. D-6, clearly says that he will sell also the rights over the sons' shares. Further the schedules annexed to the sale deed give the entire extent of the properties sold. In the schedules it is not stated that only the father's share was sold. Even in the plaint the plaintiff understood this transaction as conveying the entire family estate. We therefore hold that under Ex. P-2 not only the father's interest but the interests of the sons also were sold. 12. The other sale deed is Ex. P-4 dated 12-12-1935. By this sale deed the receiver purported to sell all the right, title and interest of the insolvent including the son's share if any therein. The schedule contains the entire properties. Ex. D-6, the sale notice dated 27-6-1933, clearly men ..... X X X X Extracts X X X X X X X X Extracts X X X X
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