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Bhagwandas Vs. Lakshmi Chand and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1935All643; 155Ind.Cas.661
AppellantBhagwandas
RespondentLakshmi Chand and anr.
Cases ReferredAnand Prakash v. Narain Das Dori Lal
Excerpt:
- - there are several grounds on which the defendant's case must fail......scheme one ram babu was appointed receiver to the estate and he took charge of the entire family property including the undivided shares of all the members. in order to strengthen the position of the receiver amolak chand, whose name had been left out from the application, executed a deed of release on 10th july 1924, relinquishing all claim to any share in, the family property. it was after this release that the present defendant in execution of the decree got amolak's share attached on 14th may 1925. on 5th february 1925, ram babu the receiver sold the property to the present plaintiff. it, was after the sale that the defendant-appellant purchased amolak's share at auction. we are not concerned with the result, of the finding in a previous proceeding which took place in 1927.....
Judgment:

1. This is a defendants appeal arising out of a suit for declaration as to the plain-tiff's ownership in a certain property. Munna Lal and his three sons were carrying on an ancestral business under the name of firm Gobind Ram Munna Lal and became heavily indebted. On the application of some of the creditors the firm was declared insolvent on 1st August 1922. In the application the firm had been described as the firm Gobind Ram Munna Lal through Munna Lal Radhe Lal and Brij Mohan, and the name of Arnolak Chand, the youngest son of Munna Lal, was somehow omitted from the application. But it is noteworthy that it was the firm itself which was adjudicated as insolvent and not the individual members of the family.

2. The present defendant-appellant obtained a decree against the firm through the four persons on 14th November 1922. An objection had been taken in the suit that the defendants were insolvents and they could not be sued separately but the Court overruled that objection on the ground that a decree could be given on certain conditions and pointed out that the decree-holder would of course take the decree to the insolvent; Court and get a rateable distribution of the assets along with the other creditors. In the Insolvency Court a composition scheme was submitted and approved by the Court on 16th May 1924, to which the present appellants also agree. In accordance with the composition scheme one Ram Babu was appointed receiver to the estate and he took charge of the entire family property including the undivided shares of all the members. In order to strengthen the position of the receiver Amolak Chand, whose name had been left out from the application, executed a deed of release on 10th July 1924, relinquishing all claim to any share in, the family property. It was after this release that the present defendant in execution of the decree got Amolak's share attached on 14th May 1925. On 5th February 1925, Ram Babu the receiver sold the property to the present plaintiff. It, was after the sale that the defendant-appellant purchased Amolak's share at auction. We are not concerned with the result, of the finding in a previous proceeding which took place in 1927 to which neither the official receiver nor the present respondent was a party.

3. The Courts below have disallowed the pleas of the defendants and have decreed the claim holding that the property validly passed to the present plaintiff in preference to the defendant. There are several grounds on which the defendant's case must fail.

4. In the first place it was the firm itself which was declared insolvent and pot any individual persons. Under the authority vested in this High Court by Section 79, Provincial Insolvency Act, this Court has framed certain rules which have the same effect as if enacted in this Act. Ch. 19, Rule 27, provides that adjudication order made against a firm shall operate as if it were an adjudication order made against each of the persons who at the date of the order is a partner in the firm. If that analogy be applied to the members of a firm carried on by a joint Hindu family then the effect of the adjudication of the firm as an insolvent was to make all the members of the family insolvents.

5. In the second place the defendant-appellant obtained his decree on the understanding that he was getting a decree against certain insolvents and his exclusive remedy would be to go to the insolvency Court and get rateable shares in the assets and not that he would proceed separately by way of execution and claim priority as against the official receiver. In the third place the defendant himself agreed to the composition scheme and was a party to the arrangement under which the entire property was to be disposed of by the official receiver. In the fourth place the official receiver had already taken possession of the entire estate on behalf of the creditors and had exercised the right which had previously vested in the father to dispose of the property in payment of his debt.

6. It has now been held by the Full Bench in the case of Anand Prakash v. Narain Das Dori Lal 1931 All. 162 that the right of a Hindu father to dispose of the joint Hindu family property in order to satisfy his own debts is property within the meaning of Section 28, Insolvency Act, and vests in the receiver and that the receiver is entitled to seize the entire family property and transfer it in order to satisfy the debts of the father. Now it is not incumbent on such a receiver to obtain an order of the Court to execute it and attach the family property. He can straightaway seize the property and sell it under a private deed, it not being incumbent upon him to take an attachment. In these circumstances if the principles of English Law are to be applied to the system under which properties are held by a Hindu family the seizure of the property by the receiver must be taken to be tantamount to attachment of the property by him so as to get his interest, crystallised in preference to any creditor who subsequently attaches the same property. We do not think that the receiver should be put in any worse position than if he had actually taken out an order for attachment and got the property attached though in either case he would sell it afterwards.

7. In the fifth place the appellant instead of going to the insolvency Court and claiming the rateable share in the assets as had been directed in the judgment, proceeded to execute the decree independently of the insolvency Court and attached the property contrary to the provisions of Section 28(2), Insolvency Act. He had no right to take this legal proceeding independently of the insolvency Court.

8. In the sixth place Amolak had already executed a deed of release in favour of the receiver relinquishing all his interest in the property. There is nothing' in the law to prevent him from surrendering his rights particularly when the firm was declared insolvent. The debts were due against the whole family and as a member of the family he was under the rules of the High Court liable to pay such debts. The subsequent attachment of the supposed interest of Amolak by the present appellant cannot confer upon him any additional right which would be paramount to the rights of the receiver. We therefore think that the appeal has no force and we accordingly dismiss it with costs.


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