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Gita Ram Vs. Official Receiver, Agra - Court Judgment

LegalCrystal Citation
SubjectFamily;Property
CourtAllahabad High Court
Decided On
Case NumberS.A.F.O. Nos. 6 and 7 of 1971
Judge
Reported inAIR1980All126
ActsProvincial Insolvency Act, 1920 - Sections 4 and 54; Hindu Law
AppellantGita Ram
RespondentOfficial Receiver, Agra
Advocates:Swami Dayal, Adv.
Excerpt:
.....made application for annulment of sale - father cannot alienate his son's interest - held, sale deed annulled only in respect of father's share and valid in respect of share of the sons. - - 2. whether gita ram was a transferee in good faith and if so, to what effect. the appellate judge was satisfied that the transfer executed by the insolvent banarsi das was fraudulent and was void and was liable to be annulled as against the official receiver. it is further held that the fact that the purpose for which the alienation has been effected is one binding on the sons either because it is necessary or for the discharge of antecedent debts goes to confirm the title of the vendee qua the sons, but it is certainly not a ground for holding that on the transaction of sale being set..........loan had been taken by banarsi das for the benefit of the family. as such, the entire joint hindu family property was liable to be sold for the payment of the debts owed by banarsi das. the lower appellate court was further of the view that the mere fact that jagdish babu the son of banarsi das had joined in the sale deed would not save the entire sale deed from being annulled. the lower appellate court also held that the finding that damages for use and occupation at the rate of rs. 8/- per month was correct. it accordingly directed that the whole of the sale deed should be annulled, and that gita ram should be liable to pay damages for use and occupation at the rate of rs. 8/- per month from 3-12-1985 the date on which the order of annulment was initially passed by sri g. p. satsangi,.....
Judgment:

B.N. Sapru, J.

1. Second appeal from order No. 6 of 1971 is directed against the judgment in Civil Appeal No. 107 of 1970 arising out of Miscellaneous Case No. 95 of 1966 and was filed by the Official Receiver and Second Appeal from order No. 7 of 1971 has been filed against the decision in civil appeal No. 109 of 1970 in Misc. Case No. 95 of 1966 and was filed by Gita Ram who is the appellant in both the present appeals.

2. The facts leading to these appeals are very simple. The appellant Gita Ram was carrying on ancestral business. Banarsi Das one was indebted to one Babu Lal for a sum of Rs. 900/- on the basis of a pronote dated 7-1-1966. He was also indebted to Gita Ram Appellant on the basis of a pronote dated 11-2-1963. Banarsi Das was also indebted to several other persons. He owed Rs. 2700/- to Bohre Basdeo Lal, Rs. 100/- to Ramlal, Rs. 150/- to Rajaram and Rs. 200/- to Madan Gopal. All these debts related to the period much prior to the debts owed to Gita Ram and Babu Lal.

3. On 27-9-1963, Banarsi Das sold the house in dispute on his behalf and on behalf of his sons Jagdish Babu and Ashok Babu. As Ashok Babu was a minor, in the sale deed both Banarsi Das and Jagdish Babu signed. The sale deed was registered on 20th August, 1963(?) in favour of the appellant. The property sold was a Kachcha house and a Pakka room for Rs. 2000/-.

4. A creditor Bohre Basdeo Lal filed a petition on 8-9-1963 for declaring Banarsi Das an insolvent. This petition was allowed and on 11-1-1064 BanarsiDas was adjudged an insolvent. Within three months of Banarsi Das being declared an insolvent, the Official Receiver made an application dated 5-5-1964 under Sections 4 and 54 of the Provincial Insolvency Act for the annulment of the sale deeds executed by Banarsi Das and Jagdish Babu in favour of the appellant Gita Ram dated 27-9-1963.

5. Gita Ram contested the matter. The Insolvency Judge framed three issues, two of which are as follows :

1. Whether the transfer in favour of Gita Ram is void, fraudulent and liable to be annulled.

2. Whether Gita Ram was a transferee in good faith and if so, to what effect.

6. The Insolvency Judge after framing the issues dealt with case and held that the sale deed was void and liable to be annulled and that the transfer in favour of Gita Ram had been made to show undue preference to two creditors of Banarsi Das, namely Gita Ram and Babu Lal.

7. Gita Ram preferred an appeal. The appellate Judge was satisfied that the transfer executed by the insolvent Banarsi Das was fraudulent and was void and was liable to be annulled as against the official receiver.

8. The learned Judge took note of the argument on behalf of the appellant that the whole sale deed could not be annulled. It held that the insolvency Judge should further examine the matter and determine whether the whole sale deed should be annulled, or whether they should be annulled in respect of the share of Banarsi Das alone. The Insolvency Judge has awarded damages at the rate of Rs. 8/- per month against Gita Ram. The Appellate Judge held that this matter should also be examined afresh obviously in the context of a finding as to whether the whole of the sale deed was liable to be annulled, or only the sale in respect of the share of Gita Ram alone. With these findings the mat-ter was remanded to the Insolvency Judge.

9. This time the Insolvency Judge held that the sale was liable to be annulled in respect of the share of Banarsi Das which came to be one-thirds of the house property alone, and that the sale in respect of the other two-third share could not be annulled as it did not belong to Banarsi Das. Accordingly, the sale was annulled in respect of the one-third interest of Banarsi Das alone.

10. Both Gita Ram and the Official Receiver were aggrieved. As mentionedearlier, the Official Receiver filed civil appeal No. 107 of 1970, while Gita Ram filed civil appeal No. 109 of 1970 against the order of the Insolvency Judge.

11. The appeal of Gita Ram was dismissed, while the appeal filed by the Official Receiver was allowed by the lower appellate court. The lower appellate court held that Gita Ram and his sons constituted a joint Hindu family and that the Hindu undivided family was carrying on ancestral business. The loan had been taken by Banarsi Das for the benefit of the family. As such, the entire joint Hindu family property was liable to be sold for the payment of the debts owed by Banarsi Das. The lower appellate court was further of the view that the mere fact that Jagdish Babu the son of Banarsi Das had joined in the sale deed would not save the entire sale deed from being annulled. The lower appellate court also held that the finding that damages for use and occupation at the rate of Rs. 8/- per month was correct. It accordingly directed that the whole of the sale deed should be annulled, and that Gita Ram should be liable to pay damages for use and occupation at the rate of Rs. 8/- per month from 3-12-1985 the date on which the order of annulment was initially passed by Sri G. P. Satsangi, the Insolvency Judge, tilt the date of the delivery of possession to the official receiver.

12. Aggrieved by the order of the appellate authority, the instant two connected second appeals have been filed by Gita Ram.

13. I will now take up second appeal from order No. 6 of 1970, which arises out of Civil Appeal No. 107 of 1970 which has been filed by the Official Receiver and has been directed against the order of the Insolvency Judge, who has held that only one-third interest in the house belonging to Banarsi Das was liable to be annulled.

14. The first argument of the learned counsel for the appellant is that in the remand order it had been held that the sons had a two-third share in the house in dispute and the sale deed in respect thereof was not liable to be annulled. It is further the argument of the learned counsel that after the remand order which had become final, it was not open to the lower appellate court, while determining the appeal afresh after remand, to reverse the decision in the first appellate judgment. A perusal of the judgment of remand remanding the matter does not support the contention of the appellant. It is clear from a perusalof the judgment that no final opinion had been expressed by the appellate Judge while remanding the matter. Ha had merely directed the Insolvency Judge to determine the matter afresh. This argument of the learned counsel for the appellant is, therefore, rejected.

15. The next submission of the learned counsel for the appellant is that under the provisions of Section 54(1) of the Provincial Insolvency Act only a transfer made by the insolvent of his own property can be annulled by the Court, He submits that the sale deed having been effected prior to the presentation of the insolvency petition, the sale deed in its entirety could not be annulled. In support of this proposition the learned counsel for the appellant has relied upon a Full Bench decision of this Court in the case of Anand Prakash v. Narain Das Dori Lal : AIR1931All162 , In that case it was held that where a Hindu father who is a member of a joint Hindu family governed by Mitakshara Law, is adjudicated an insolvent, the joint share of the son does not vest in the receiver even though the debt of the father is one which is payable by the sons as a prior duty. It was further held that the right of a Hindu father to sell his sons' interest in the joint family property also vests in the receiver and the receiver can attach the property and sell it. The argument on the basis of the Full Bench is that though it is open to the Official Receiver to attach and sell the interest of the sons in the property, it is not open to him to ask the court to annul it straightway. The learned counsel further argues that since the property is no longer available, it having been transferred, the receiver can take no steps as against the said property.

16. In the instant case, the sale deed had been executed prior to the filing of the insolvency petition. The learned counsel submits that the father can sell the sons' interest in a joint Hindu family property to pay his debts. However, if the property stands transferred then, even a Hindu father cannot sell it. Consequently, the official receiver, who according to the Full Bench decision, steps into the shoes of the father, cannot also sell the interest of the sons in the property, because the property no longer exists.

17. In the case of Chenappa Chetty v. Official Receiver, Salem (AIR 1935 Mad 51), a Division Bench of the Madras High Court held that on the adjudication of an insolvent what vests in the Official Receiver is the interest of theinsolvent and when a transaction entered into by the father not merely on his own behalf but on behalf of others who are not adjudicated insolvent, whose property does not vest in the Official Receiver, is set aside, what vests in the Official Receiver as the result of such setting aside, is merely the interest of the insolvent, and not that of the non-insolvents. It was further held that in so far as the insolvent's share of the property is involved in the alienation, the Official Receiver would get it back when the alienation is set aside, but if under the powers vested in the insolvent father under the general law he has alienated the interest of his sons, who are not insolvents, no order of the insolvency court under Section 54 can get back from the alienee and vest in the Official Receiver the interest of persons who have not been adjudicated insolvents. It is further held that the fact that the purpose for which the alienation has been effected is one binding on the sons either because it is necessary or for the discharge of antecedent debts goes to confirm the title of the vendee qua the sons, but it is certainly not a ground for holding that on the transaction of sale being set aside under Section 54 of the Provincial Insolvency Act, the title of the alienee to the son's share which 'ex concessis' was good under the general law is impaired and avoidable. As a matter of caution it was observed that 'the court was not concerned that the alienation which was sham and nominal and to which different considerations would apply........'

In the Allahabad Full Bench case referred to above Mr. Justice Mukerji has observed :--

'Now I take it that only that property can vest in the Court or in a receiver which was, before the vesting, vested in the insolvent himself. Can we say, in the case of a joint Hindu family governed by the law of Mitakshara that the sons' share was vested in the father? We cannot say so. For the simple reason that while the family is joint, no member of the family is in a position to say what property is vested in him. The entire property belonging to the family is vested in each and everyone of the several members constituting the family...'

'Such being the nature of the property held by a joint Hindu family, it is impossible to say that the father, even as the head of the family has in him vested any portion of the family property. Much less can it be said that the,sons' share that is to say, the share which a son might get on partition in the family is vested in the father. If that be the case, it might follow that on the declaration of the father as an insolvent, the son's share does not vest in the receiver.'

The question whether the right of afather in a joint Hindu family to alienate his son's interest in the joint Hindu family property for payment of his debts is property of the father and. as such, vests in the Official Receiver, does not call for consideration in the present case. The receiver has not exercised any of the powers which vest in the father of a joint Hindu family.

18. In this view of the matter the order of the lower appellate Court holding that the two-thirds interest of the son in the house vested in the receiver and the sale was liable to be annulled in respect thereof, cannot be sustained.

19. Coming to Civil Appeal No. 7 of 1971, it is obvious on a perusal of the judgment that before the lower appellate court the appellant conceded that the interest of Gita Ram, with his one-third share in the house vested in the receiver, and consequently, was liable to be annulled in respect thereof. The counsel for the appellant referred to the order sheet dated 10th January, 1964 of the Court of the Insolvency Judge and the paper No. 25-B which says that Gita Ram had been exonerated at that stage. It is not clear what that order meant and the learned counsel is unable to explain its meaning. He, however, urged that Gita Ram had been exonerated in the insolvency proceedings. I cannot accept this argument. Gita Ram's share in the house undoubtedly vested in the receiver and the sale in respect thereof was liable to be annulled. This appeal must accordingly be dismissed.

20. In the result, S. A. F. O. No. 7 of 1971 is dismissed. The order of the lower appellate court is modified to the extent that the sale deed dated 27-9-1963 executed by Banarsi Das and his sons in favour of Gita Ram appellant and registered on 20th August, 1963 (?) shall stand annulled in respect of the one-third share of Banarsi Das and shall be valid in respect of the two-thirds share of the sons of Banarsi Das. There will be no order as to costs.


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