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Noony Suryanarayanamurthi, Minor Represented by Next Friend and Maternal Grandfather Chode-china Pattabhiramayya Vs. Noony Veerraiu and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtChennai
Decided On
Judge
Reported in(1945)1MLJ292
AppellantNoony Suryanarayanamurthi, Minor Represented by Next Friend and Maternal Grandfather Chode-china Pat
RespondentNoony Veerraiu and ors.
Excerpt:
- .....held that, on reverter under section 37 on annulment of the adjudication of a member of a hindu joint family his share in the family properties or its residue comes back to him as " his individual property so that if on the date of the reversion he is not alive it will go to his heir under the law and not to his coparceners by survivorship." learned counsel for the plaintiff contends that this view is not correct, and we are inclined to agree with him. the learned judge accepts the position that " the insolvent does not cease to be a member of the joint family but still continues as a member thereof," citing the observation in venkatarayudu v. sivaramakrishnayya(1934) 67 m.l.j. 486 : i.l.r. 58 mad. 126 at p. 136 to the effect that " neither the filing of the insolvency petition nor.....
Judgment:

Patanjali Sastri, J.

1. These connected appeals arise out of a suit for partition brought by the appellant in the main appeal A.S. No. 89 of 1943, impleading his father as the first defendant and his brother as the third defendant. The first defendant having been adjudicated insolvent, the Official Receiver in whom the property of the insolvent had vested was joined as the second defendant. Defendants 4 to 6 were the unmarried daughters of the first defendant. Certain creditors and alienees of family properties were also impleaded as defendants 7 to 18, and questions were raised as to the binding character of the transactions which they had respectively entered into with the first or the second defendant as the case may be.

2. Before the third defendant was born in 1938, the half share in the family properties to which the first defendant was entitled at the time of his adjudication (23rd March, 1933) had become vested in the second defendant. After the proceedings in insolvency had lasted for several years, in the course of which the second defendant had realised some of the family properties and distributed dividends, the first defendant applied on 24th June, 1941, under Section 35 of the Provincial Insolvency Act for annulment of his adjudication which had been made ex parte. The application was rejected by the Insolvency Court, but, on appeal, the District Court of East Godavari annulled the adjudication on 7th October, 1944, on the ground that it ought not to have been made, as the alleged fraudulent preference relied on by the petitioning creditor as the sole act of insolvency was not proved to be such in I.A. No. 731 of 1937, initiated by the Official Receiver. The learned District Judge however directed in his order that " the properties of the debtor shall vest in the Official Receiver and suitable directions will be given by the insolvency Court with respect to these properties." From this order the first defendant preferred C.R.P. No. 1621 of 1944 to this Court. It was not clear why the learned Judge vested the debtor's properties in the Official Receiver notwithstanding the annulment of the adjudication. As, however, his order would be justified if the " suitable directions " which he contemplated were intended to relate merely to the completion of unfinished acts of administration or to other special matters, we suggested, with a view to have the position clarified, that the first defendant might apply to the Insolvency Court for further directions as to the delivery of the properties to him. On such application being made that Court, however, was of opinion that in view of the general terms of the vesting order made by the District Court under Section 37, it could not direct the properties to be delivered to the debtor although there were no special circumstances rendering necessary any further interference with the debtor's estate by the Official Receiver, and accordingly ordered the administration in insolvency to proceed as if the adjudication had not been annulled. If the order of the learned District Judge were intended to have this effect it would obviously be in excess of his powers, for it has been held by a Full Bench of this Court in Periakaruppan v. Arunachalam I.L.R. (1940) Mad. 441 that, when an adjudication is annulled under Section 35 of the Provincial Insolvency Act, no vesting order should be made under Section 37 except to the extent that any special circumstances render such vesting necessary. We accordingly allowed the C.R.P. No. 1621 of 1944 and set aside the order of the District Court in so far as it vested the properties of the first defendant in the Official Receiver, but directed that officer to retain the cash realisations in his hands pending the decision in these appeals as to the utilisation, of that fund. The position, therefore, is that the properties of the first defendant which had, on his adjudication, vested in the Official Receiver, now "reverted" to him as provided in Section 37 of the Provincial Insolvency Act.

3. The question next arises as to whether, on such reverter, the properties are held by the first defendant as his separate properties, or as family properties liable to be divided among the members along with the other assets of the family. On the answer to this question depends the quantum of the shares to be allotted to the members of the family; for, as has been stated, the third defendant was born after the first defendant was adjudicated and his share (then one half) in the family properties was vested in the Official Receiver, and if such share now reverts to him as his separate property the plaintiff and the third defendant would each be entitled only to a fourth share, while, if the first defendant's share comes back to him only as family property which it undoubtedly was when it vested in the Official Receiver, the father and the sons would each be entitled to a third share in the entire properties. The decree of the lower Court is based on the former view, and the question is whether it is correct.

4. The only decision on the point which has been brought to our notice is that of Venkataramana Rao, J., in Lakshmana Chettiar v. Srinivasa Iyengar (1936) 71 M.L.J. 707 : I.L.R. (1937) Mad. 203, where that learned Judge held that, on reverter under Section 37 on annulment of the adjudication of a member of a Hindu joint family his share in the family properties or its residue comes back to him as " his individual property so that if on the date of the reversion he is not alive it will go to his heir under the law and not to his coparceners by survivorship." learned Counsel for the plaintiff contends that this view is not correct, and we are inclined to agree with him. The learned Judge accepts the position that " the insolvent does not cease to be a member of the joint family but still continues as a member thereof," citing the observation in Venkatarayudu v. Sivaramakrishnayya(1934) 67 M.L.J. 486 : I.L.R. 58 Mad. 126 at p. 136 to the effect that " neither the filing of the insolvency petition nor the adjudication of the applicant can sever the joint family status." If so, it is somewhat startling to be told that when the insolvent's share reverts to him on the annulment of his adjudication he holds it as his individual property while still continuing as a member of the joint family. This conception of a coparcener holding his share in the family property, or what remains of it after its distribution in insolvency, as his separate property is novel and so opposed to the theory and incidents of joint family and joint family property that it cannot be readily accepted unless the reasons on which it is based lead irresistibly to that conclusion. The learned Judge quotes an obiter dictum of Wallace, J., in Narayan Sah v. Sankar Sah (1929) 57 M.L.J. 685 : I.L.R. 53 Mad.1 at p. 14 (F.B.) that: by the insolvency of a coparcener, of course for his personal debts, his share vests in the Official Assignee and is thus lost to the family ... The death of the coparcener before partition would not restore to the joint family the share which has vested in the Official Assignee, and argues thus:

The members of the family lose their right of survivorship in the share of the insolvent and it ceases to be joint family property, so that on the death of the insolvent the share which vested in the Official Assignee is not divested from him... If this is the legal position, the share of the insolvent is in the hands of the Official Assignee not as joint family property but as separate property available for the benefit of the personal creditors of the insolvent. If the effect of insolvency is to divest the share of the insolvent of its character as joint family property, it cannot regain that character when it comes back to the insolvent on annulment unless he can by an unequivocal act impress it with the said character.

We are unable to agree with this reasoning. It is not, in our opinion, correct to say that an insolvent coparcener's share ceases to be joint family property while it is vested in the Official Assignee merely because the other coparceners lose their right of survivorship in the share or becuse it is not divested from the Official Assignee on the insolvent's death. Similar results follow when a coparcener's undivided interest is attached before his death in execution of a decree obtained for his personal debt, or when a coparcener in Madras or Bombay mortgages his undivided interest to secure his' personal debt. But it cannot be said, and it has never been suggested, that in such circumstances his coparcenary interest ceases to be joint family property and that the surplus left after satisfaction of the decree or the mortgage as the case may be, becomes separate property in his hands. In such cases there is really a conflict of two legal rights, and the Courts have held that the creditor's right prevails to the extent necessary to satisfy his claim. The position when a coparcener is adjudicated insolvent is closely analogous. There is, of course, a vesting of his interest in the receiver to facilitate administration, but this is only for the specific purpose of satisfying the claims of the coparcener's creditors, and there seems to be no more reason to hold that his interest ceases to be joint family property or " is lost to the family ", than in the case of an attachment or a mortgage. In either case, when the purpose for which the law places a fetter on the coparcenary interest has been fulfilled, the surplus of such interest must, as it seems to us, partake of the same character as the interest originally attached or divested as the case may be. We are accordingly of opinion that on the annulment of the adjudication the surplus assets in the hands of the Official Receiver reverted to the first defendant as joint family property.

5. It was then suggested that, in any case, the partition action having been instituted before the adjudication was annulled the members must be deemed to have already become divided in status when the reverter took place and that, therefore, the first defendant could get the surplus assets only on his separate property. We see no force in this contention. The division in status cannot affect the partible character of the property when it comes back to him and he must hold it as a divisible family asset. It follows that the first defendant and his sons, the plaintiff and the third defendant, will each be entitled to a third share in the family properties including those got back from the Official Receiver.

6. In view of the recent decision of this Court in Virupakshareddi v. Sivareddi (1943) 2 M.L.J. 87 : I.L.R. (1944) Mad. 212, holding that the power of a Hindu father to sell his son's share in the family properties in satisfaction of his own personal debts which are neither illegal nor immoral does not vest in the Official Receiver under the Provincial Insolvency Act, the sale of items 23, 27, 30, 31, 32 and 33 by the Official Receiver can be operative only in respect of the first defendant's share which at that time was one half, the third defendant not having been then born. But as the debts for the satisfaction of which these items were sold have been found to be binding on the sons, it will be equitable to allot these properties as far as possible to the share of the first defendant valuing them as at the date of plaint so as to enable the alienees to get a valid title to the properties purchased by them. This disposes of the appeal A.S. No. 106 of 1943 brought by the thirteenth defendant who is the alienee of item 27.

7. It only remains to deal with the claim to relief under the Madras Agriculturists Relief Act, 1938, in respect of the debts due to defendants 7 to 18. It is not disputed that the plaintiff and the third defendant as, well as their family are agriculturists within the meaning of the Act. The first defendant is not eligible for relief, as he was not an agriculturist at the commencement of the Act, his share in the family properties having remained vested in the Official Receiver till the annulment of his adjudication. It has been held that Section 6 of the Act is inapplicable to joint families consisting only of a person and his descendants (vide Sundaram v. Sicbbarao (1942) 1 M.L.J. 327). It follows that under Section 14 the plaintiff and the third defendant will be liable respectively for one-third of the liabilities as scaled down under the Act and the first defendant will be liable for one-third of the debts without the statutory reduction.

8. As the Official Receiver has been appointed receiver of the family properties pending this action, he will pay out of the assets in his hands sums payable to the defendants 4 to 6 for their maintenance during the period since he was appointed as receiver according to the provision made in that behalf. He will also advance to the plaintiff and the third defendant suitable sums having regard to the assets available in his hands for their expenses during the pendency of the suit, such advances being adjusted against the shares allotted to them at the final division.

9. A.S. No. 89 of 1943 will be allowed to the extent indicated above and the decree of the Court below will be modified accordingly. The costs of the plaintiff and the second and third defendants will come out of the estate. The appellant will pay the costs of the contesting respondents other than the second respondent. A.S. No. 106 of 1943 is dismissed with costs (one set).

10. This appeal having been posted for being mentioned, the Court made the following.

11. ORDER--The lower Court may if necessary pass ad interim orders regarding the maintenance of defendants 4 to 6.


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