1. The insolvent, Gangadhar Vishnu Puranik, was originally the Karta of a joint family consisting of himself, his wife and sons. Some time in March 1965 and February 1966, the joint family of the insolvent had created mortgages in favour of Dattatraya Ganesh Shembekar and others, hereinafter known as the Shembekar Trust, in respect of Survey Nos. 59/1 and 59/6 in village Asudgaon, Taluks Panvel, to secure a total sum of Rs. 3 lacs together with interest. Admittedly, these mortgages of the joint family property were created in respect of joint family debts.
2. In April 1970, a suit for the partition of the joint family properties was filed in this Court by one of the sons of Gangadhar Vishnu Puranik, being Suit No. 339 of 1970. In that suit, by an order dated the 14th of September 1970, the Court Receiver was appointed Receiver of the joint family properties by the consent of the parties. After the appointment of the Court Receiver, on or about the 13th of September 1971, an order was passed adjudicating Gangadhar Vishnu Puranik an insolvent. On that date, an order for the stay of the advertisement of adjudication was also passed. On the 14th of October 1971, the appeal Court granted a stay of the order of adjudication passed on the 13th of September 1971. On the 29th of November 1971, the order of stay was modified and it wae limited to a stay of the advertisement only. Some time thereafter, on the 20th of July 1972, another member of the joint family, Ashok, was also adjudicated an insolvent.
3. After the order of adjudication against Gangadhar Vishnu Puranik, the Official Assignee was brought on the record of the partition suit which was then pending. In this partition suit, a consent preliminary partition decree was passed on the 12th of December 1977 and the matter was referred to the Commissioner for Taking Accounts for the ascertainment of the shares of the various members of the joint family, including the insolvent. Under the consent terms, it was agreed and declared that the status of the joint family was served as from the 5th of April 1966, The matter is still pending before the Commissioner for taking Accounts.
4. Prior to all these proceedings, the mortgagees of Survey Nos. 59/1 and 59/6 had filed a suit in the Court of the Civil Judge, Senior Division, at Alibag, being Special Civil Suit No. 10 of 1969, for the realisation of their mortgage debt. This suit was filed against the mortgagors on or about the 14th of July 1969. On the 16th of July 1969, the mortgagees applied for and obtained an attachment before judgment in respect of various other properties of the joint family. On the 29th of April 1970, the attachment order was varied and the attachment was continued in respect of some of the properties only. On the 29th of June 1970, a preliminary mortgage decree was passed in favour of the mortgagees In the Alibag suit. Thereafter, on the 13th of October, 1971, that is to say after the order of adjudication and a day prior to the order of stay, a decree absolute for sale was passed in respect of the mortgage suit. It is important to note this date because certain arguments have been advanced by the Official Assignee in this connection. Gangadhar Vishnu Puranik was declared an insolvent on the 13th of September 1971 and an order for stay of the advertisement was also passed on that date. On the 14th of October 1971 there was a stay of the order of 13th of September 1971, and one day prior to the order of stay i.e. on the 13th of October 1971 a decree absolute for sale was passed by the Alibag Court. On the date of the decree absolute for sale, the Official Assignee was not made a party to the Alibag suit. Thereafter, proceedings were taken by the mortgagees in the Alibag suit for execution of the decree obtained in their favour, A Darkhast for execution, being Darkhast No. 6 of 1972, was filed on the 6th of May 1972. On the 8th of August 1972, a notice under Order 21, Rule 16, of the Civil Procedure Code was served on the Official Assignee, A notice was also served on the Court Receiver appointed hi the partition suit. Pursuant to these notices, the Court Receiver appeared throughout in the various execution proceedings which have been taken out by the mortgagees. The Official Assignee has stated in his report that he has not taken part in the Special Civil Suit No. 10 of 1969 or the execution proceedings thereunder, as the Court Receiver, High Court, Bombay, was defending the same on behalf of all the parties to the High Court Suit No. 339 of 1970, including the Official Assignee, as also because indemnity was not furnished against the costs of contesting Special Civil Suit No. 10 of 1969 or the execution proceedings. It is also pointed out by the Official Assignee in his report that apart from the notice under Order 21, Rule 16, no other notice has been served on him in respect of Special Civil Suit No. 10 of 1969 or the execution proceedings in respect thereof. Various orders have been passed in the execution proceedings. It seems that during the pendency of this litigation, various joint family properties, including the mortgaged property and the properties in respect of which attachment before judgment was levied, were notified for acquisition. In May 1973, the Court Receiver appointed Receiver in the partition suit received a sum of Rupees 3,26,900/- as and by way of advance compensation in respect of some of the properties of the joint family acquired as aforesaid, but excluding the mortgaged property. In the acquisition proceedings, the Court Receiver obtained from the Land Acquisition Officer a further sum of Rupees 6,82,829.55 as and by way of advance compensation in respect of some of the joint family properties, but excluding the mortgaged property, some time in March 1975. Thereafter, pursuant to the order of the executing Court made on the 27th of March 1975, the mortgagees were permitted to recover from the Special Land Acquisition Officer a sum of Rs. 2,19,989.75, being the compensation in respect of a portion of the attached properties. In April 1976, the executing Court ordered the Court Receiver in the partition suit to deposit in Court a sum of Rs. 3,95,389/- from out of the compensation amounts received by him in respect of some of the attached properties towards the satisfaction of the mortgagees' claim. This order was challenged by the Court Receiver. On the application made by the mortgagees, on the 21st of November 1977 the Court Receiver was once again directed to deposit in the Alibag Court a sum of Rs. 4,40,929.18, being the balance of the decretal amount then due and payable by the mortgagors. Ultimately, after taking various proceedings to challenge this order, the Court . Receiver was directed by this Court to deposit this amount in the Alibag Court, and on or about the 20th of November 1978 the Court Receiver has deposited this amount in the Alibag Court.
5. A few days prior thereto, that is to say, on the 17th of November 1978, the Official Assignee has made a report which is the subject matter of the present proceedings. In the report, the Official Assignee has prayed for an order restraining the mortgagees from directly or indirectly recovering or receiving any moneys or properties other than Survey Nos, 59/1 and 59/6 which have been secured to them under the mortgages dated the 25th of March 1965 and the 5th of February 1966, or the realisations therefrom. It may be noted that, so far, no compensation has been received in respect of these two properties. The Official Assignee has also prayed for an order directing the mortgagees to deposit with the Court Receiver a sum of Rs. 2,19,929.75 which they have recovered from the Special Land Acquisition Officer and has also sought a direction that the Court Receiver should be ordered and directed not to deposit any amount in the Alibag Court. This prayer has now become infructuous in view of the orders already passed whereunder the Court Receiver has already made the deposit. The Official Assignee has also asked for a stay of all further proceedings in Special Civil Suit No. 10 of 1969 and all further execution proceedings thereunder against the two insolvents, Gangadhar Vishnu Puranik and Ashok Gangadhar Puranik.
6. Before the various contentions raised by the Official Assignee are examined, it is necessary to examine the nature of the Official Assignee's right, if any, in respect of the moneys deposited in the Alibagh Court by the Court Receiver and the moneys appropriated by the mortgagees towards their decretal claim. As far as the rest of the amount received pursuant to the acquisition proceedings is concerned it is lying deposited with the Court Receiver in the partition suit by consent of all the parties in that suit, including the Official Assignee. There is, therefore, no claim made by the Official Assignee at this stage in respect of the balance amount lying with the Court Receiver.
7. One of the insolvents, GangadharVishnu Puranik, was the Karta of thejoint family consisting of himself, hiswife and his sons. On the insolvencyof a Karta, all his personal propertyand his undivided share in the Hindujoint family property vest in the Offi-cial Assignee. Under Section 52(2)(b) of thePresidency Towns Insolvency Act, theproperty of the insolvent also includesthe capacity to exercise and to takeproceedings for exercising all suchpowers in or over or in respect of property as might have been exercised bythe insolvent for his own benefit at thecommencement of his insolvency or before his discharge'. The father in ajoint Hindu family has a right to payhis personal debts which have not beencontracted for an immoral purpose fromout of the share of his sons in thejoint family property. Hence, in ajoint family the father has a right topay his personal debts which are not
8. In this connection, a reference may be made to AIR 1931 Mad 317, Ramachandra v. Official Assignee, where it has been observed that notwithstanding the suit for partition and the consequent division in status, the right of the father to have his just debts paid out of the entire family property subsists and where the father has been adjudicated insolvent such right vests in the Official Assignee as 'property of the insolvent divisible among his creditors.' It should, however, be borne in mind that the share of the son does not vest in the Official Assignee; what vests in the Official Assignee is the right to get the personal debts of the insolvent incurred for a 'just' purpose paid from the shares of his sons. This has been clarified by the Privy Council in : (1936)38BOMLR1129 , Sat Narain v. Shri Kishen Das and by the Madras High Court in : AIR1932Mad381 , Krishnamurthy v. Sundaramurthy. In Mulla's Hindu Law, 14th Edition, p. 332, it is stated as follows:--
'On the insolvency of the father of a joint Hindu family governed by the Mitakshara Law, there vest in the Official Assignee or Receiver-
(a) the separate property of the insolvent father and his undivided interest in the joint family property; and
(b) the power which the father has to alienate the joint family property including the interest of his sons therein for paying his antecedent debts not contracted for an immoral purpose.'
The father's right to pay his just personal debts out of the share of his sons in the joint family property subsists only so long as the joint family subsists; the right comes to an end on the severance of the joint family status. Thus, after the severance of the joint family, if the father creates any personal debts, he has no right to alienate his sons' share in the joint family property; the right of alienation which the father has is only in respect of a debt incurred prior to the severance of the joint family. In this connection, a reference may be made to Surajmal v. Motiram : AIR1940Bom22 , where the nature of a son's obligation to pay his father's debts and the rights of the creditors over the joint family property coming to the share of the son on partition are fully discussed.
9. In the present case, admittedly, by virtue of the consent terms filed in the partition suit, a severance has taken place in the joint family status as from the 5th of April 1966. The insolvent's right to get his personal debts paid out of the share of his sons in the joint family would, therefore, be confined to the personal debts incurred by him prior to the 5th of April 1966. In the present case, however, certain joint family properties (including the shares of the sons of the insolvent therein) have been attached by the mortgagees for the realisation of their claim long prior to the insolvency. Once any joint family property is attached, the father has no power to alienate his sons' share in that joint family property for payment of his personal debts. The whole purpose of attachment is to prevent such private alienation. In the present case, the joint family properties were attached by the mortgagees long prior to the insolvency of the father, thus bringing to an end the right of the father to alienate these properties.
10. The sum of Rs. 2,19,989.75 which has been paid to the mortgagees as well as the sum of Rs. 4,40,929.18 which has been deposited by the Court Receiver in the Alibag Court are in respect of the compensation received for the properties originally attached by the martga-gees. Hence, as far as these properties and these amounts are concerned, the insolvent, at the date of his insolvency, had no right to utilise the amounts for the payment of his just personal debts. This right, therefore, cannot vest in the Official Assignee. Therefore, as far as these compensation moneys are concerned, the Official Assignee does not get any right to utilise them for the payment of the personal debts of the insolvent concerned. The only property which vests in the Official Assignee in the present case is the personal property of the insolvent and his share in the joint family property. As far as the share of the insolvent in the joint family property is concerned, a partition suit has already been filed to which the Official Assignee is a party. The consent terms which have been filed in the partition suit are filed with the consent of the Official Assignee also and a Court Receiver has already been appointed of the joint family properties. These joint family properties cannot be divided between the coparceners until all the joint family debts are paid off first, and possibly also the personal debts of the insolvent father incurred prior to April 1966 which might be recoverable from the unattached joint family properties. In the consent terms which have been filed, however, the Official Assignee has not claimed the recovery of any such personal debts of the insolvent father incurred prior to 1966 from out of the joint family properties which were not the subject matter of any attachment. He has agreed that the Commissioner for taking Accounts should ascertain the assets and liabilities of the joint family as on the 5th of April 1966 and that accounts be made up on that basis. Thus in the partition suit, it has been agreed by all the parties thereto, including the Official Assignee who represents the shares coming to the insolvent father and the insolvent Ashok, that the joint family debts will be paid from out of the joint family properties before the share of the insolvent comes into the hands of the Official Assignee. Hence, the only interest which the Official Assignee has in respect of the subject-matter of his report is the undivided share of the insolvent in the joint family properties which might come to his hands after all the joint family debts are paid. The Court Receiver appeared in the execution proceedings on behalf of all the parties to the partition suit in order to represent the interests of the joint family. The Official Assignee also was one such party whose interests were represented by the Court Receiver. He cannot, therefore, complain that the orders in the execution proceedings have been passed behind his back. It should also be noted that in the consent terms which have been filed in the partition suit, the joint family has admitted the debt of the mortgagees. There is, therefore, no dispute raised by any member of the joint family or by the Official Assignee about the debt payable to the mortgagees.
11. In the light of this position in law, the various contentions raised by the Official Assignee need to be examined. The Official Assignee has relied upon the provisions of Sections 53 and 54 of the Presidency Towns Insolvency Act which are as follows:--
'53. (1) Where execution of a decree has issued against the property of a debtor, no person shall be entitled to the benefit of the execution against the Official Assignee, except in respect of assets realised in the course of the execution by sale or otherwise before the date of the admission of insolvency petition.
(2) Nothing in this section shall affect the right of a secured creditor in respect of property against which a decree is executed.
(3) A person who in good faith purchases the property of a debtor under a sale in execution shall in all cases acquire a good title to it against the Official Assignee.
54. Where execution of a decree has issued against any property of a debtor which is saleable in execution, and before the sale thereof notice is given to the Court executing the decree that an order of adjudication has been made against a debtor, the Court shall, on application, direct the property, if In the possession of the Court, to be delivered to the Official Assignee, but the costs of the execution shall be a first charge on the property so delivered, and the Official Assignee may sell the property or an adequate part thereof for the purpose of satisfying the charge.'
Hence, under the provisions of these two sections, after an order of adjudication, execution proceedings cannot be started or continued against the property of the insolvent and the property should be delivered to the Official Assignee.
12. Reliance has been placed in this connection on a case reported in : AIR1956Cal656 . In re, Frank Morton Fisk, where the Court held that a judgment creditor, who had received money realised in the execution proceedings alter the date of the order of adjudication, was bound to refund the money to the Official Assignee. A similar view has been expressed in Sardar Mahomed v. Labhu Ram in AIR 1933 Lah 477, Hence, it has been urged by the Official Assignee that once an order of adjudication is made, there can be no execution proceedings. The attachment levied on the property of the judgment-debtor must also cease and the property must be delivered to the Official Assignee. The two sections quoted above refer to cases where the property of the debtor is sought to be attached in execution of a decree. They cannot apply to a case where the creditor of the joint family of the insolvent seeks to attach the property of the joint family for the recovery of a joint family debt. The joint family properties do not vest is the Official Assignee: nor is he bound to pay the joint family debts. The Official Assignee and some of the mortgagors relied upon the ratio of a decision of this Court in Sardarmal v. Aranvayal Sabhapathy reported in ILR (1897) 21 Bom 205. In that case one of the partners of a partnership firm who was the Manager of the joint family was adjudicated insolvent. A judgment creditor of the insolvent attached the partnership property. On the application of the Official Assignee the property was released from attachment. The Court held that the insolvent as the Karta of the joint family had the power to convey the family property in payment of family debts and this power now vested in the Official Assignee. Hence the power to sell the property in question vested in the Official Assignee, The property could not, therefore, be attached in execution. But these observations of the Court are no longer, good law in view of the express provisions of Section 52(2)(b) of the Presidency Towns Insolvency Act, 1909, which refer only to the 'powers in or over or in respect of property as might have been exercised by the insolvent for his own benefit at the commencement of his insolvency.....' A power to manage the joint family property is not a power which can be exercised by the insolvent for his own benefit. It does not, therefore, vest in the Official Assignee. In Mulla's Hindu Law, 14th Edition, page 332, it is observed as fol-lows: 'The expression 'own benefit' occurring in the clause means the exclusive benefit of the bankrupt. As the right of the manager to sell family property is not exclusively for his benefit but is for the benefit of all the members the proper view to take would be that such power cannot vest in the Receiver under Section 52(2)(b) of the Presidency Towns 'Insolvency Act.' The Official Assignee does not get the right to administer the joint family properties or to sell them for the payment of joint family debts in the event of the insolvency of the Karta. A fortiori he does not get such a right where the joint family has been severed and the rights of a Karta have come to an end prior to insolvency. These are matters which have to be looked into not by the insolvency Court but by the Court which is trying the partition suit. If, in the execution proceedings the Court Receiver represented all the parties to the partition suit, all orders which are passed in those proceedings are binding on the Official Assignee also and it is not open to the insolvency Court to go behind the orders passed by the Court at Alibag, which orders have been the subject-matters of review and or appeal in this Court.
13. The Official Assignee has pointed out that he was not made a party to the suit at the tune when the decree absolute for sale was passed by the Alibag Court. It has been argued that, in the absence of the Official Assignee, the decree absolute for sale is a nullity and is not binding on him. And by now, in his absence, the entire suit has abated. He has relied upon the decision in Kripa Nath v. Ganga Prasad, : AIR1962All256 , where the Court held that in a mortgage suit filed after the insolvency of one of the mortgagors, the Receiver in Insolvency was a necessary party. In the present case, however, at the time when the preliminary mortgage decree was passed, the Official Assignee had not come into the picture at all. All the mortgagors were solvent. The decree absolute for sale was passed during the period when there was a stay order in respect of the order of adjudication. Though the stay order was passed a day later than the decree absolute for sale, it operated as a stay during the entire period covered by the order. Hence the interest of the insolvent did not vest in the Official Assignee as long as the stay was in operation. The Official Assignee could not, therefore, have been brought on the record on the day when the decree absolute for sale was passed. In any event, there is no doubt that on the date of the decree absolute for sale there was an order staying the advertisement of the order of adjudication. Hence, a creditor cannot be expected to join the Official Assignee as a party during the period when there was a stay of the advertisement also. The preliminary mortgage decree and the consequential decree absolute for sale cannot, therefore, be challenged by the Official Assignee. At the stage of execution, a notice under Order 21, Rule 16, was given to the Official Assignee. It is true that no further notice of the execution proceedings has been given to the Official Assignee. But, admittedly, in the execution proceedings, the Court Receiver participated on behalf of all the parties to the partition suit including the Official Assignee. Under these circumstances, it cannot be said that the execution proceedings are not valid or binding on the Official Assignee.
14. The Official Assignee has urged that he is not a legal representative of the insolvent judgment-debtor under Section 47 of the Civil P. C. He should, therefore, have been separately made a party to the execution proceedings. He has relied upon the observations of the Madras High Court in the case of Official Assignee v. Aiyu Dikshithar, reported in AIR 1925 Mad 688. In this case itself the Court has held that for some purposes the Official Assignee represents the insolvent but he has other capacities such as being a representative of the entire body of creditors, and in each case his character must be determined having regard to the circumstances. In the present case, the Official Assignee steps into the shoes of the insolvent as having an interest in the equity of redemption. He, therefore, can be considered as representing the interest of the insolvent judgment-debtor. Secondly, in view of the fact that the Court Receiver did take part in the execution proceedings on behalf of the Official Assignee also, it cannot be held that the Official Assignee had no knowledge of the execution proceedings or that he was not represented thereat. I do not think that this contention of the Official Assignee survives. In any case, he is not disputing the debt of the mortgagees. He is admittedly entitled to such share as the insolvent gets after payment of all the joint family debts. Therefore, he cannot object to the mortgagees realising their debt from the joint family properties which were attached long prior to the insolvency of any of the coparceners and in respect of which compensation moneys were received subsequently.
15. It has next been urged by the Official Assignee that the mortgagees have a right only to go against the security which was originally given to them; they have no right to go against the other property of the joint family before realising the security which is granted in their favour. Mr. J. I. Mehta who appeared for the mortgagees pointed out that the Alibag Court had permitted them to go against the other property of the joint family in view of the fact that no sale could be effected of the securities which were given to them. Anyway, this is a matter which the Alibag Court which is the executing Court alone can look into. The insolvency Court is not concerned with this aspect of the matter at all since this is a dispute between the joint family and a creditor of the joint family.
16. The Official Assignee also urged that the joint family property should be available for pro rata distribution amongst all the creditors of the joint family as well as the personal creditors of the insolvent. As far as the personal creditors of the insolvent are concerned, the Official Assignee has no right to get the personal debts of the insolvent paid out of those joint family properties which were the subject-matter of attachment. As far as the creditors of the joint family are concerned, it requires to be examined whether the joint family properties should be distributed pro rata amongst the creditors of the joint family or whether the attaching creditors are entitled to realise the properties in satisfaction of their decretal claim. It is true that an attachment does not create any charge over the property attached in favour of the attaching creditor. No authority need be cited for this purpose. The Official Assignee has, however, drawn my attention to a decision reported in : AIR1936Bom130 , Byramji Bomanji Talati v. The Official Assignee of Bombay, and to the provisions of Sections 60, 64 and 73 of the Civil P. C. As far as Section 73 of the Code is concerned, it applies to cases where more persons than one have made an application to the Court for the execution of decree for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof. In such a situation where a number of decree-holders wish to realise their decrees from the same property, the assets have to be realised and distributed rateably amongst all such decree-holders. In the present case, I do not find a number of judgment-creditors of the joint family who want the joint family properties to be sold for the recovery of their claims. If such a situation arises, the matter will have to be resolved in the partition suit which is directly concerned with the payment of joint family debts out of the joint family properties. The insolvency Court which is only concerned with the insolvency of some of the members of the joint family, is not concerned with the rateable distribution of the joint family properties amongst the creditors of the joint family.
17. The mortgagees have also pointed out that under Section 7 read with Section 85(3) of the Presidency Towns Insolvency Act, an Insolvency Court does not have any power to give the directions asked for in the report. According to them, the directions amount to setting aside the orders passed by the executing Court in Special Civil Suit No. 10 of 1969; they are m the nature of an appeal from the orders already passed. Under Section 7, the Insolvency Court has very wide powers. In an unreported judgment In re Anglo-Indian Drug & Chemical Co. dated the 20th of Feb. 1973 (Bom),
J. L. Nain, J., expressed the view that Section 7 ought to be freely used in appropriate cases by the Court. In that case, the Court compelled two outsiders to pay the amount to the Official Assignee without the Official Assignee having to file a suit. However, as the Madras High Court has pointed out in AIR 1931 Mad 317, Ramachandra v. Official Assignee, basically the provisions of Section 7 are for the purpose of deciding all questions oi priorities and all other questions which may arise in any case of insolvency and which require to be decided for making a complete distribution of property amongst the creditors of the insolvent. Similarly, under Section 85 also, directions can be given in the course of administration of the property of the insolvent and distribution thereof amongst the creditors of the insolvent. These sections are meant to facilitate the work of the Official Assignee, so that he may not have to file suits in order to recover the estate of the insolvent for the purpose of distribution amongst his creditors. The present case does not fall within the provisions of Section 7 or Section 85. (The provisions of Section 36 are not relevant in the present proceedings). This is a case where the creditor of a joint family is seeking to execute a decree which he has obtained against the joint family. The interest of the Official Assignee in such a litigation is limited to what he would ultimately get as the share of the insolvent in the joint family property after all the liabilities of the joint family have been discharged. Even in order to realise the share of an insolvent in the joint family property, the Official Assignee is required to file a partition suit or to contest a partition suit if filed by any other coparcener. It is well-settled that such a partition suit cannot be brought before an Insolvency Court. A fortiori, the question relating to the execution of decrees against a joint family obtained by creditors of the joint family cannot come before the Insolvency Court. Vide Krishnamurthy v. Sundaramurthy : AIR1932Mad381 , where the Court held that no suit for partition can ever be filed in the Insolvency Court by the Official Assignee representing the father. Hence, the Official Assignee cannot come before the Court by way of a report for the purpose of settling aside the various execution proceedings which have been initiated by the mortgagees and in respect of which various orders have been passed by the competent Court concerned. However, even on merits this is not a fit case in which the directions sought for can be given.
18. Under the circumstances, there will be no order on the report. All interim orders made in this report are vacated.
19. In view of the legal points involved in the report, there will be no order as to costs.
20. Order accordingly.