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Paruchuri Venkatramayya Vs. Abburi Virayya - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported in160Ind.Cas.423; (1935)69MLJ914
AppellantParuchuri Venkatramayya
RespondentAbburi Virayya
Cases ReferredSubramanyam v. Narasimham
Excerpt:
- .....why i should not respectfully agree with them. the object of section 28 is to secure for the official receiver the unrestricted right to dispose of an insolvent's property, and it is to preserve that right that suits and other proceedings aimed at the insolvent's property are prohibited. had the official receiver been the appellant here it may be that the appeal would have succeeded, as he was not a party though he ought to have been a party, to defendant 1's suit. that matter would depend upon the precise nature of the property vested in the official receiver in his power to sell the shares of all the members of the family. but with the insolvency and its administration the present appellant has no concern whatever. it is for the official receiver and not for him to interfere if.....
Judgment:

King, J.

1. Defendants 2 to 5 in O.S. No. 752 of 1930 on the file of the learned District Munsif of Guntur are Virayya, Ponnayya, Nayudamma and Venkayya, members of a joint Hindu family. In 1927 one Kotha Rattamma obtained decrees against these Defendants. In January 1928 Virayya and Ponnayya were adjudicated insolvents. At some time in 1930 subsequent to 5th March, Rattamma executed these decrees by bringing to sale the shares of the non-insolvent members, Nayudamma and Venkayya. Meanwhile, on 5th March 1930 one Abburi Virayya Defendant 1 in O.S. No. 752 brought a suit against all the members of the family on a promissory note executed by Virayya and Ponnayya, the two insolvents. He obtained a decree ex parte in April 1930 and in September 1930 was awarded rateable distribution from the proceeds of the sale above referred to. Shortly afterwards this suit O.S. No. 752 was brought by Plaintiff, who claims under a will executed by Rattamma, for a declaration that Defendant l's decree was invalid, collusive and fraudulent, and for the return of the money paid to him in the rateable distribution.

2. The learned District Munsif decreed Plaintiff's suit on a pure question of law. He held that Defendant l's suit in 1930 against the two insolvents and the two other members of their family was filed with a knowledge of the insolvency and offended against the provisions of Section 28 of the Provincial Insolvency Act. The decree obtained by Defendant 1 was therefore void, the Court having no jurisdiction to pass it. On appeal the learned District Judge of Guntur, relying upon a decision of a Bench of this Court in Subramanyam v. Narasimham (1928) 56 M.L.J. 489 held that the decree was not void, even though the suit had been filed with knowledge of the insolvency and remanded the suit for trial upon the remaining issues. Against this order Plaintiff has appealed, and the question which I have to decide is whether Defendant l's decree is or is not void by reason of the provisions of Section 28 of the Provincial Insolvency Act.

3. There can be no doubt in the first place that Defendant l's suit did offend against the provisions of Section 28. The suit was not filed against the non-insolvent members of the family alone, and as the learned District Munsif has rightly pointed out, could not have been so filed even had Defendant 1 wished to take that course.

4. In concluding that the Court had no jurisdiction to entertain Defendant l's suit, the learned District Munsif relied upon a decision of a Bench of this Court reported in Easwara Aiyar v. Govindarajulu Naidu I.L.R.(1915) 39 689. In that case a decree was obtained in the Presidency Small Cause Court against a person who was afterwards adjudicated insolvent by the High Court. After the adjudication the decree-holder filed an execution Petition against the judgment-debtor without obtaining the leave of the Insolvency Court in the course of which a security bond was executed to the Small Cause Court by a third party. It was held that the Small Cause Court had no jurisdiction to entertain the Execution Petition and that the security bond was therefore void. Now the question is whether this decision can be stressed so far as to lay it down that in all cases in which a suit is filed which offends against the provisions of Section 28 of the Act the Court has no jurisdiction to entertain the suit. In Subramanyam v. Narasimham (1928) 52 M.L.J. 489 this decision is discussed by Thiruvenkatachariar, J. at p. 509, and he points out that it was not a decision given in collateral proceedings, but the setting aside of an illegal order in an appeal against it. I do not therefore consider that in disposing of this appeal I am bound to follow Easwara Aiyar v. Govindarajulu Naidu I.L.R.(1915) 39 689.

5. Subramanyam v. Narasimham (1928) 52 M.L.J. 489 is equally not binding upon me as it was not necessary for the decision of that case, to hold as the learned Judges held that a decree passed in a suit which offends against the provisions of Section 28 is not a nullity. At the same time however the learned Judges have gone into this question at considerable length and I can see no sufficient reason why I should not respectfully agree with them. The object of Section 28 is to secure for the Official Receiver the unrestricted right to dispose of an insolvent's property, and it is to preserve that right that suits and other proceedings aimed at the insolvent's property are prohibited. Had the Official Receiver been the appellant here it may be that the appeal would have succeeded, as he was not a party though he ought to have been a party, to Defendant 1's suit. That matter would depend upon the precise nature of the property vested in the Official Receiver in his power to sell the shares of all the members of the family. But with the insolvency and its administration the present Appellant has no concern whatever. It is for the Official Receiver and not for him to interfere if the insolvent's estate is in jeopardy as the result of Defendant 1's decree. Here there is nothing to show that the insolvent's estate is in any danger. Indeed it is obviously not, for the money realised by the Court-sale can never be part of the insolvent's estate. Once the sale is held, the Official Receiver's power to sell is extinguished, nor can it matter to the Official Receiver who shares or does not share in the money realised. Appellant may no doubt feel a sense of grievance in the fact that Defendant 1 is now placed upon the same footing as himself, in spite of his conduct in filing a prohibited suit, but I do not see how he can be permitted to contend that the decree obtained by Defendant 1 cannot be executed in so far as its execution affects only the property of those of his judgment-debtors who are not insolvents.

6. The appeal is accordingly dismissed with costs.


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