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G.R. Venkatarama Sastriar Vs. the Official Receiver, Representing the Estate of the Insolvent and the General Body of Creditors in I.P. No. 8 of 1925, Sub-court and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtChennai
Decided On
Reported in(1935)68MLJ357
AppellantG.R. Venkatarama Sastriar
RespondentThe Official Receiver, Representing the Estate of the Insolvent and the General Body of Creditors In
Cases ReferredSripat Singh Dugar v. Prodyot Kumar Tagore
Excerpt:
- - no doubt because the insolvent was not alone concerned, the appellant applied for leave to sue him together with the other party to the endorsed note and obtained an order in the following terms: this is an indisputable proposition, well established by a number of decisions -as for instance gopala krishnayya v. even therefore if the order had provided that the proceeds of'the insolvent's property should be handed over to the official receiver it might well be held that that would still include money derived from the exercise of the father's power to sell. it would be better therefore, he says, to sell the whole property in execution......with the other party to the endorsed note and obtained an order in the following terms:the official receiver reports that leave may be granted. i therefore grant leave to sue the insolvent also with the condition that the money if any realised from the insolvent must be handed over to the receiver for distribution. the petitioner can only rank as an ordinary creditor and share with others in case he gets a decree against the insolvent and realises from him.2. the appellant accordingly brought a suit against the insolvent and his five undivided sons, and against the other endorsee to-the note and his son, and obtained a decree on the 29th december, 1927.3. in the insolvency proceedings the official receiver fixed the sale of the joint family property of the insolvent for the 9th.....
Judgment:

Curgenven, J.

1. The appellant in these two appeals is a creditor in an insolvency petition in which one G.S. Venkata-ramana Aiyar was adjudicated insolvent. The appellant's debt related to a promissory note of which the insolvent and another were the endorsees. No doubt because the insolvent was not alone concerned, the appellant applied for leave to sue him together with the other party to the endorsed note and obtained an order in the following terms:

The Official Receiver reports that leave may be granted. I therefore grant leave to sue the insolvent also with the condition that the money if any realised from the insolvent must be handed over to the Receiver for distribution. The petitioner can only rank as an ordinary creditor and share with others in case he gets a decree against the insolvent and realises from him.

2. The appellant accordingly brought a suit against the insolvent and his five undivided sons, and against the other endorsee to-the note and his son, and obtained a decree on the 29th December, 1927.

3. In the insolvency proceedings the Official Receiver fixed the sale of the joint family property of the insolvent for the 9th March, 1928. On the day before, the 8th, appellant made an application that the sale should be stayed, supporting it with an affidavit to the terms of which we will refer later. The sale was accordingly put off and on the 15th the learned Subordinate Judge passed an order to the effect that both sides had agreed that the right, title and interest of the family of the insolvent, including those of his sons, should be sold by the Official Receiver. Meanwhile on the 6th March the appellant had applied for the attachment of the son's shares under his decree and the attachment was actually effected on the 15th. Upon this there ensued an order by the executing Court, dated 13th July, 1928 in which it was observed that the attachment deprived the Official Receiver of the power to sell the sons' shares and therefore that the order of the 15th March that the Official Receiver was to sell the whole property could not stand. The executing Court accordingly concluded that the Official Receiver could only sell the share of the insolent himself, i.e. 5/6th of the property and that the remaining 5/6th should be sold in execution. This order was brought up to this Court in C.M.A. No. 280 of 1928 and it was decided that since the decree-holder had agreed to the sale by the Official Receiver it was not open to him to pursue his execution petition for sale. The Official Receiver was therefore to sell the whole property, and when that was done the rights of the parties could be determined in due course. The Official Receiver has now sold the whole property. Of the sum that was realised, as to the 1/6th share of the insolvent himself no question arises and it has been sent to the Official Receiver for distribution. The question that remains is with regard to the remainder, a sum of Rs. 9,050, representing the 5/6th shares of the sons.

4. The principle which has been relied upon before us by Mr. T.M. Krishnaswami Aiyar is that the attachment of a son's share puts an end to the Official Receiver's right of sale, derived from the right ordinary vesting in the father. This is an indisputable proposition, well established by a number of decisions - as for instance Gopala Krishnayya v. Gopalan I.L.R. (1928) 51 Mad. 342 : 54 M.L.J. 674 and Subraya v. Nagappa I.L.R. (1908) 33 Bom. 264. Accordingly it is argued that the attachment of the 15th March deprived the Official Receiver of any claim to proceed against the sons' shares as assets normally divisible in insolvency. The mere fact that he held the sale of the whole will not of course affect this principle. So far as this argument goes it is undoubtedly a valid one, but there are special circumstances in this case to which reference must now be made.

5. Under Section 28(2) of the Provincial Insolvency Act no creditor can commence any suit except with the leave of the Court and on such terms as the Court may impose. We have already quoted the terms of the order in which the court gave the appellant leave to sue. It stated that the money if any 'realised from the insolvent' must be handed over to the Receiver for distribution. Mr. Krishnaswami Aiyar would have us read this phrase as if it meant money realised from the property of the insolvent, using the word 'property' in its narrow sense as defined in Section 2(3) of the Insolvency Act. To read it in this manner would mean that the father's right to sell the sons' shares, a right normally availed of by a receiver selling in insolvency, would be excluded. We think it is not correct to give the order such a narrow construction. It has been held that in the sense in which the word 'property' is used in Section 28 of the Provincial Insolvency Act the father's power to sell the son's share is property and as such vests in the Official Receiver. This is the effect of the observations of a majority of the learned Judges in the Full Bench case in Seetharama Chettiar v. Official Receiver, Tanjore I.L.R. (1926) 49 Mad. 849 : 51 M.L.J. 269 Venkatasubba Rao, J. the third Judge, going even further and holding that such a power would be property as defined in Section 2(d). There is a decision similar to that of the majority in the above case in Anand Prakash v. Narrain Das Dori Lal I.L.R. (1930) 53 All. 239 another Full Bench case. Even therefore if the order had provided that the proceeds of'the insolvent's property should be handed over to the Official Receiver it might well be held that that would still include money derived from the exercise of the father's power to sell. There is another and perhaps more substantial reason for reading this order in the wider and not in the narrower sense. The right to realise the sons' shares is an ordinary right of the Official Receiver, so that unless it was intended to save this right the appellant was being given a preference over other creditors, who would in the absence of his suit have been entitled to share in the proceeds of the sons' shares. Not only is there no reason to suppose that the court passing the order intended this but the concluding sentence of that order makes it clear that the appellant was to get no such preference. That this was how the appellant himself understood the order appears to us plain from his affidavit of the 8th March supporting his application for a stay of the receiver's sale. He says in effect that one of the sons is likely to challenge the power of the Official Receiver to sell and that the Official Receiver's notice and sale is not very explicit, so that the property might not be sold for a proper price. It would be better therefore, he says, to sell the whole property in execution. If this is done he has no objection to the whole proceeds being sent to the Insolvency Court, which, he adds, was a condition on which leave to sue was granted. Now as regards the notification of the Official Receiver's sale it appears that what was advertised was the right, title and interest of the insolvent in the joint family property, and it has been held by the Privy Council in Sripat Singh Dugar v. Prodyot Kumar Tagore (1916) L.R. IndAp 1 : I.L.R. 44 Cal. 524 : 32 M.L.J. 133 that these words though not in themselves unambiguous may in suitable circumstances be read so as to include the father's right to sell; and we cannot doubt in the present case that it was the intention of the Official Receiver to sell the whole property on the 9th March. If that had been done the appellant's attachment would never have been made nor the basis of the claim for the present action laid at all. By representations which he made in his affidavit he secured the postponement of the sale. To those representations he must now be held. They run counter to his present position that he has an exclusive right to the proceeds of the sons' shares.

6. We have it then that the terms of the insolvency court's order permitting the appellant to sue require that the whole proceeds of the joint family property should be paid to the credit of the insolvency; and even if the matter were in doubt the appellant has disqualified himself by his subsequent representations from disputing the claim now made by the Official Receiver in the interests of his fellow creditors. We accordingly dismiss the appeals. The appellant will pay the costs of the Official Receiver (one Advocate's fee).


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