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C.R. Subramania Aiyar Vs. the Official Receiver and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtChennai
Decided On
Reported inAIR1926Mad432; (1926)50MLJ665
AppellantC.R. Subramania Aiyar
RespondentThe Official Receiver and anr.
Cases Referred and Nanna Setti v. Chidaraboyina
Excerpt:
- - a year later the adjudication was annulled by the district judge and the annulment was set aside by this court on 23rd january, 1923. 2. at the outset it will be well to clear the ground of two errors......order in insolvency was made on 15th december. a year later the adjudication was annulled by the district judge and the annulment was set aside by this court on 23rd january, 1923.2. at the outset it will be well to clear the ground of two errors. the learned district judge states in his order that the adjudication took place on 28th september, 1920. the order which is before us is under the hand and seal of the official receiver of the tanjore district and is dated 15th december, 1920. next the affidavits filed in support of the petition under order 21, rule 90, to set aside the sale declare that the properties of the insolvent had become vested in the official receiver. under section 28 of act v of 1920 vesting only takes place upon adjudication, and under section 29 it is not till.....
Judgment:

1. We are asked to revise the order of the District Judge of West Tanjore (Mr. Viswanatha Sastri) setting aside a sale held in execution of a decree which had been confirmed by the Subordinate Judge of Kumbakonam. The sale was held on 30th September, 1920. Seven days previously, on 23rd September, the 1st judgment-debtor who is the father of the other judgment-debtors presented an insolvency petition. An interim Receiver was appointed and he wrote and asked the Subordinate Judge to stop the sale. It was nevertheless held and confirmed by the Subordinate Judge on 27th November. An adjudication order in insolvency was made on 15th December. A year later the adjudication was annulled by the District Judge and the annulment was set aside by this Court on 23rd January, 1923.

2. At the outset it will be well to clear the ground of two errors. The learned District Judge states in his order that the adjudication took place on 28th September, 1920. The order which is before us is under the hand and seal of the Official Receiver of the Tanjore District and is dated 15th December, 1920. Next the affidavits filed in support of the petition under Order 21, Rule 90, to set aside the sale declare that the properties of the insolvent had become vested in the Official Receiver. Under Section 28 of Act V of 1920 vesting only takes place upon adjudication, and under Section 29 it is not till then that a Court in which proceedings are pending against a debtor, is bound to stay them.

3. An interim Receiver has under Section 20 only the powers of a Receiver appointed under the Code of Civil Procedure and he is not clothed even with those powers till he takes possession of the debtor's properties. This is clear from the section itself. A Receiver appointed under the Code must obtain possession before the leave of the Court is required for disturbing his possession. Until he is actually in possession a creditor is not debarred from proceeding to execution vide Livinia Ashton v. Madhabmoni Dasi (1910) 11 CLJ 489, Kanailal v. Manoo Bibi (1910) 11 CLJ 489 and Rajah Jagadish Chandra Deo Dhabal Deb v. Bhubaneswar Mitra 27 CWN 38.

4. The Receiver referred to in Sections 51 and 52 is a Receiver appointed upon adjudication and the learned District Judge was of opinion that the Subordinate Judge ought to have stopped the sale as soon as he was informed about the appointment of the Official Receiver as interim Receiver. Although the writer of the letter of September, 28th happened to be the Official Receiver of the Tanjore District, he was acting in the capacity of an interim Receiver, and therefore, as he was not in possession of the debtor's properties, the Subordinate Judge was not bound to stop the sale or to direct the property to be delivered to him under Section 52 vide Ralla Ram v. Ram Labhaya (1924) 6 Lah LJ 832. After the sale had been completed there was no reason for setting it aside besides the suggestion that the price fetched was low. The encumbrances on the properties were all set out in the remarks column of the sale Proclamation. Instead of requiring evidence as to the value of the items sold, the learned Judge was guided by hearsay information as to the prices of land prevailing in and near the town of Kumbakonam. It was not shown that any material irregularities were committed in the publication or conduct of the sale or that any one sustained substantial injury thereby. As regards the sale proceeds in Court the Subordinate Judge has told the Receiver that he may make any application that he may be entitled to make in respect of them. As the sale took place after the petition to be declared insolvent was presented, applications for distribution of the assets will be dealt with under Section 51

5. As regards the sons' shares the learned District Judge observed that the Official Receiver can exercise the right of the insolvent's father to sell his son's shares in immoveable property to pay antecedent debts. This view as to the powers of an Official Receiver under the Provincial Insolvency Act receives support from Rangiah Chetti v. Thanikachala Mudali ILR (1895) M. 74 Nunna Chetti v. Chidarahoyina ILR (1903) M 214, Kuppuswami Goundan v. Marimuthu Goundan ILR (1903) M. 214 and Narasimudu v. Basava Sankaram : (1924)47MLJ749 and is consistent with the acknowledged right of creditors to proceed against the sons' shares for the satisfaction of debts of a Hindu father that are either illegal or immoral, and with the principle that in the interest of the creditors the father's power of disposition of property for discharging antecedent debts should not be lost upon his being adjudicated insolvent, but should be vested in the responsible official who is entrusted with the proportional distribution of his estate and payment of his debts.

6. A different view has been taken by a Bench of this Court as to the powers of an Official Assignee over the sons' shares under the Presidency Towns Insolvency Act in Official Assignee of Madras v. Ramachandra Aiyar : (1922)43MLJ569 and by the Judicial Committee of the Privy Council in Sat Narain v. Behari Lal (1924) 47 MLJ 857 who had to construe the meaning of Sections 2(c) and 52(2)(b) of that Act, of which the latter section has no counter-part in the Provincial Insolvency Act, with which we are now concerned. Their Lordships expressed no opinion as to the correctness of Rangiah Cketty v. Thanikachala Mudali ILR (1895) M. 74 and Nanna Setti v. Chidaraboyina ILR (1903) M 214, which as they point out, are decisions under different statutes.

7. It may be that in the light of the Privy Council's decision as to the power exercisable by an Official Assignee under the Presidency Towns Insolvency Act, the correctness of the decisions of this Court as to the powers of Official Receivers under the Provincial Insolvency Act may some day require reconsideration, but it is unnecessary to discuss the question further in the present case, because the learned District judge was certainly mistaken in thinking that the powers of an Official Receiver, whatever they, may be under a correct interpretation of the sections of the Provincial Insolvency Act, was possessed by an interim Receiver, in whom for want of an order of adjudication the property of the insolvent had not yet vested.

8. The Civil Revision Petition is allowed and the order of the Subordinate Judge is restored with costs of the petitioner in this Court including the printing of documents which was done in the Civil Miscellaneous Second Appeal and in the District Court and the costs in C.M.S.A. No. 37 of 1922 in this Court and the District Court to be paid out of the Insolvent's estate.

9. The Civil Miscellaneous Second Appeal (140 of 1923) is dismissed, as a second appeal will not lie by reason of Section 104(2), Civil Procedure Code.


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