(1) The plaintiff appeals from a decision of the Addl. Dt. Judge, given on 21-8- 1961 whereby he set aside the decree passed by the trail Court and decree passed by the trial Court and decreed the plaintiff's suit only for Rs. 350/- The facts which gave rise to the suit may be briefly stated. The plaintiff instituted O. S. 152/52 against the father of the defendants on the foot of promissory notes dt. 20-4-49 and 14-10-50 and obtained a decree against the father. When he put that the decree in execution and attached some joint family property, the sons objected to the execution on the ground that there was a partition of the family property, the sons objected to the execution on the ground that there was a partition of the family property, the sons objected to the execution on the ground that there was a partition of the family property, and therefore the decree obtained against the father cannot be executed against the property which had fallen to the share of the sons. That objection was upheld and consequently the plaintiff has brought the present suit against the sons on the ground that the defendants are liable to pay the decree debt due from the father under the theory of pious obligation.
(2) The father in the meanwhile, had filed an insolvency petition. An Official Receiver was appointed and an order of annulment was subsequently passed. The Official Receiver, calculating the property of the insolvent, declared, the prorata distribution to which the creditors would be entitled to. As the plaintiff had not appeared before the insolvency Court, he did not get anything in that distribution.
(3) The defendant opposed the claim mainly on the ground that after the father was declared insolvent and his liability reduced, the sons cannot be held liable to pay the decree debt. They further contended that the suit was time barred and no such suit could be lie against the sons.
(4) The trial court, after proper enquiry, decreed the plaintiff's suit as prayed for negativing all the objections raised by the defendants.
(5) The plaintiffs preferred an appeal against the judgment of the trail Court. The lower appellate Court, allowing the appeal, decreed the plaintiffs suit only for Rs. 350/-. It was found by it that the plaintiff can institute the suit, that the suit is within limitation and that the sons are liable to pay the decree debt. The court however found that the liability of the sons would be only to the extent of the liability of the father as declared by the insolvency court. Consequently, he passed a decree in favour of the plaintiff for a sum of Rs. 350/- , which the plaintiff would have got under the composition or the scheme. It is this judgment that is now assailed in this second appeal.
(6) It does not seem to be in doubt that if the partition takes place after a creditor institutes a suit, against the father, the decree passed in favour of creditor in such a suit cannot be executed under S. 53, Civil P. C. against the sons who were not made parties to the suit, the principle underlying being that because of the severance of the joint family the father lost the power to alienate the joint family property for the debts, which he had incurred the necessary consequence of which is that the plaintiff had to institute a separate suit for giving effect to the principle of pious obligation against the sons. No objection therefore can be taken for the institutions of such a suit. The matter now is concluded by a decision of the Supreme Court in Pannalal v. Mt. Naraini, : 1SCR544 .
(7) The suit is not barred by limitations also seems to be concluded. Admittedly, the suit is on the basis of the decree which the plaintiff had obtained against the father. It is not a suit based on the original cause of action, that is the promissory notes. To such a suit, Art. 120 of the Limitation Act applies and as the suit was filed within six years from the date of the decree, the suit is not barred by the statue of limitation. That this is the position of law is supported by Periasami Mudaliar v. Seetharama Chettiar, ILR 27 Mad 243 (FB).
(8) The only question which survives for consideration therefore is whether the liability of the sons as found by the lower appellate court can be limited to the extent of Rs. 350/- This conclusion was reached because the learned addl. Dt. Judge thought that as the father would have been ultimately held liable to pay only that much of amount to the plaintiff in the insolvency proceedings no claim of the plaintiff vis-a-vis the sons can be given larger scope than this. In other words, it was found that because of the annulment order, the liability of the father having been reduced, the sons cannot be held liable for more amount than what the plaintiff could have realised if they had appeared before the insolvency court. It is difficult to appreciate this contention, particularly when a decree to that extent was passed against the sons by the lower appellate court. As a matter of principle this does not seem to me to be correct. The general rule cannot be in doubt that when a father, the manager of the joint Hindu family, is declared as an insolvent what vests in the Official Receiver in an insolvency proceedings is not only the undivided share of the father but also his power to alienate the joint family property for the discharge of debts incurred by him. i. e. the power which he may exercise over the interests of the other coparceners as their father. It seems also to be plain that he is not entitled to have vested in him the shares of the other members although he can deal with them if the insolvent could have lawfully done so if there had been no insolvency. In this case the Official Receiver could not have proceeded against the shares of the because in the meanwhile the status of the joint family had broken. The only remedy which was therefore available to the Official Receiver was to institute a suit on the principle of pious obligation against the sons. He has not done it. The insolvency proceedings were subsequently wound up and an annulment order was passed. No discharge order ultimately was admittedly passed. The plaintiff therefore was free to institute the suit for the recovery of the amount due to him on the basis of the decree which he had obtained against the father.
(9) The only argument advanced as against the claim is that the effect of the annulment order is to reduce liability of the father. The liability of the sons on the principle of pious obligation being coextensive with the liability of the father, the sons would be liable to pay only the reduced liability as found by he insolvency court. In support of this contention the learned Advocate for the respondents cited. a passage from Mr. Mulla's Principle of Hindu Mr. Raghavachariar's Principles and Precedents of Hindu Law, Fourth edition , at page 321.
In order to appreciate this contention it becomes necessary to see some of the provisions of the provincial Insolvency Act, hereinafter referred to as ' the Act.' What S. 39 of the Act says is that if the Court approves the proposal, the terms shall be embodied in an order of the court, and the order of adjudication shall be annulled. The consequence of that order is that the composition or the scheme prepared shall be binding on all the creditors so far as relates to any debt due to them from the debtor and provable under the act. It nowhere says that the debt would be extinguished because of the order of approval under S. 39 either totally or partially. Like-wise, S. 44 which related to the effect of an order of discharge passed under S. 41 of the act states that except as provided under sub-s. (1) an order of discharge shall release the insolvent from all debts provable under the Act.
A reading of the two sections would disclose that it is the insolvent who is absolved from the liability of paying the debt. They do not have the effect of extinguishing the debt wholly or partly. It is not therefore correct to say that the legal effect of an order under S. 39 or S. 44 is the proportionate or total extinguishment of the debt. It is one thing to say that the debt is reduced or extinguished of the debt. It is one thing to say that the debt. It is one thing to say that the debt is reduced or extinguished but quite another thing to say that the insolvent is absolved from paying the debts excepts as provided by the Act. Like other debt laws which reduce the debts or in some cases even extinguish them, the Insolvency Act does not reduce or extinguish the debt. It merely regulates the affairs of the insolvent by taking over all the assets and liabilities and judiciously distributing them between the creditors, finally discharging the insolvent from paying the remaining debts, if any. I do not therefore find any difficulty in reaching the conclusion that the said two sections do not extinguish or reduce the debt in any manner.
In must be understood that the liability of the sons to pay the debts incurred by the father is co-extensive with the power of the father to deal with the joint family property. If the partition had not taken place, it is not disputed that the creditor could have reached even the undivided shares of the sons. It also cannot be in doubt that the creditors could have impleaded the sons in the suit which he filed against the father, and if a decree had been passed against both the father and sons, there could have been little objection on the side of the sons in allowing the decree to be executed against their undivided shares, or in other words, against, a joint family property what difference does it make if instead of impleading the sons in the previous suit an independent and subsequent suit is filed against them in order to give effect to the theory of pious obligations, I fail to understand. If they are liable for the discharge of the original debt incurred by the father, they continue to be liable in spite of the fact that a decree is obtained against the father. Their liability need not necessarily be joint with the father. Their liability is based on the well accepted theory of pious obligation. When the second suit is not barred against the sons, how can the sons plead that their liability is co-extensive with the liability of the father, limited to his property in other words, his capacity to pay the debt? In this case, if the sons were to be made parties originally and a decree passed both against the father and sons and if an attempt first was made to execute the decree were then executed against the sons, could they have successfully objected at that stage that because the decree-holder failed to realise the entire amount from the father, the decree-holder cannot object to this, I do not understand as to now how they can now object to this, I do not understand as to how they can now object merely because of the insolvency proceedings. The result of the insolvency proceedings is only to declare that the father has no capacity further to pay the debts. That order only absolves the father from paying the debt within the four corners of that Act. The liability of the sons is not extinguished thereby. Nor the debt is extinguished. When once the debt as far as the sons are concerned is alive and they are in possession of what previously was the joint family, property, they are obliged to pay the debt which admittedly is a pre-partition debt.
The partition which subsequently took place would not permit them to object to the payment of the pre-partition debt. Their obligation under the Hindu law on the other hand was to pay the pre-partition debts first and then to partition the property. If they have failed to do so at the time of the partition, the creditor is perfectly entitled to realise the pre-partition debt from the joint family property. which after partition is in the hands of the sons. As I am clearly of the opinion that the insolvency proceedings do not reduce or extinguish the debt, the plaintiff is entitled to proceed against the sons for the amount which he could not realise from the father in the insolvency proceedings. If he has not received anything, it must follow that he would be entitled to recover the entire debt from the joint family property in the hands of the son.
(10) Mr. Sambasiva Rao, the learned counsel for the respondents, laid great emphasis on Narayanan v. Veerappa, ILR 40 Mad 581 : (AIR 1917 Mad 989). The facts of that case were distinctly removed from the facts with which I am concerned. In that case, a Hindu who was domiciled in India but who carried on trade in Singapore was adjudicated a bankrupt by the Supreme Court at Singapore for debts incurred at Singapore and he eventually obtained at Singapore an order of discharge under the Straits Settlement Bankruptcy Ordinance. The plaintiff who, as one of the creditors, proved his debt and received two of the dividends due to him, was a party to the order of discharge. Under the above said Ordinance, a discharge operated as an extinguishment of the debt. It was in those circumstances that it was held that the extinguishment of the debt the Bankruptcy Laws of Singapore operated as a discharge of it everywhere and the creditor had no right to sue in India the debtor and his undivided sons for the balance of the debt as if it was still subsisting.
It is true their Lordships have also held that under the Hindu Law, a Hindu son is not jointly bound with his father to pay the debts contracted by the father, and hence the said Ordinance under which a discharge of a bankrupt does not discharge a person jointly bound with him does not affect the undivided son. That case can easily be distinguished. In that case, the debt itself was extinguished under the Ordinance. The only question which was left for consideration was whether the extinguishment of a debt under the Singapore Ordinance carries the same effect in India. Their Lordships found that it does carry. That being the position, I do not think that decision renders any assistance to the respondents.
(11) It is no doubt true that Mr. Mulla, in his treatise on Principles of Hindu Law, 12th Edition, at page 430 states :
'The pious obligation of the sons to pay the father's debts lasts only so long as the liability of the father subsists.'
That statement, however, it must be understood, refers to the duration of liability. That is clear from what followed thereafter. The learned author, referring to ILR 40 Mad 581 : , (A I R 1917 Mad 989), says :
'Thus if the father is adjudicated an insolvent for debts contracted by him, and he afterwards obtains his discharge, the effect of the discharging is to release the father from those debts. No suit can therefore be maintained against the father from those debts.' This extract, with due respect, does not appear to be in consonance with the main judgment itself. I have already extracted the material portion of the judgment, and I have no manner of doubt that the learned author does not want to refer to a general proposition of law that because of the insolvency orders, the debt would be considered as extinguished. That this is not what ILR 40 Mad 581 : (AIR 1917 Mad 989 ) decided is clear. This case was distinguished in a decision of the Madras High Court to which I will make hereafter a reference.
(12) Reference was also made to a passage from Mr. Raghavachariar's Hindu Law, Fourth Edition, at page 321. The learned author states :
'In case, the son's liability is dependent on the father's liability and is subsidiary to it. This means that the son is liable only so long as the father is liable and . . . . . . '
This observation was relied on for the purposes of showing that the liability of the son is co-extensive with the father. The learned author however was dealing with the question of limitation and pious obligation in the said paragraph. The learned author himself observes at page 322 :
'It may be that the liability of the contracting party himself is unlimited but that of the son or the husband or the legal representative on the same contract is limited, in case of the son to the extent of the joint family property in his hand's in the case of the husband to the extent of his wife's property which he may have acquired, and in the case of legal representative to the extent of the assets of the deceased which may have come to his hands.'
It is clear from the above said passage that the liability of the sons is co-extensive with that of the joint family property which is in their hands. It nowhere says that because of insolvency, the debt itself is either reduced or extinguished. It is pertinent to note that the learned author does not refer either to ILR 40 Mad 989) or draw any conclusion as was done by Mr. Mulla. This passage also therefore is of little avail to the respondents.
(13) A similar argument was advanced before a Bench of the Madras High Court and this was negatived. In Seetharamayya v. Kesavayya, : AIR1952Mad108 , Chandra Reddy J. ( as he then was )' delivering the opinion of the Bench, observed :
' The release of an insolvent father under S. 44 from all debts does not extinguish the liability of the son who is liable under a decree along with the father is respect of his father's debts.'
The concluded opinion of mine therefore is that both as a matter of principle and as a matter of authority the sons are liable to pay the decree debt in spite of the fact that the father was adjudged insolvent and an annulment order under S. 39 of the Act was passed and a composition or a scheme was prepared under which the plaintiff would have been entitled to recover a fraction of his debt and not the entire debt. That scheme or composition does not, in my view, either reduce the debt or extinguish it in so far as the sons are concerned. That order may absolve within the scope of the Act that father vis-a-vis the debts which he had incurred, but in no way absolves the sons from the liability to pay debts incurred by the father under the principle of pious obligation. The lower appellate Court therefore was not correct in decreeing the plaintiff's suit only to the extent of the debt which would have been allowed by the insolvency Court under the composition or the scheme approved by it. The sons are liable to pay the entire debt. Their liability however would be limited to the extent they are in possession of the joint family property, the decree debt being a pre-partition debt.
(14) For the reasons which I have endeavoured to give, the second appeal is allowed and the suit is decreed as above, In view of the circumstances of the case, however, I make no order as to costs. No leave.
(15) Appeal allowed.