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Pommalai Goundan and anr. Vs. Settia Goundan - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1962)1MLJ6
AppellantPommalai Goundan and anr.
RespondentSettia Goundan
Cases ReferredNagaportharaw v. Subbaraw
Excerpt:
- - their lordships were considering the particular facts of the case and i am of the view that the failure of the creditor to take adequate steps in the insolvency court would make no difference. so far as the decree against the sons is concerned their lordships observed that it was open to the sons to say that the suit would not be competent because leave of insolvency court had not been obtained against the father and if the suit could not be proceeded against the father it could not be proceeded against them as well......for partition of the family properties was passed. a creditor's petition for adjudicating the father as insolvent was filed in march, 1931, and the father was adjudicated insolvent in november, 1931. in december, 1931 the father filed a schedule acknowledging his indebtedness in respect of the four promissory notes. it may be observed that this acknowledgment of indebteness was after the preliminary decree was passed. their lordships the chief justice and mockett, j., held that the father has always the power to give an acknowledgment and if he gives one in respect of a pre-partition debt that debt continues to be enforceable against the family property in the hands of his son for another three years. the first point is therefore found against the petitioners.5. the second and third.....
Judgment:

Kailasam, J.

1. The defendants have preferred this petition against the decree granted by the learned District Munsif, Sankaridrug.

2. The two defendants are the sons of one Kuppichi Goundan. Kuppichi Goundan borrowed a sum of Rs. 240 for his family expenses on 10th March, 1952 and executed the suit promissory note in favour of the plaintiff. On 27th February, 1955, Kuppichi Goundan paid a sum of Rs. 45 and made an endorsement on the suit promissory note itself. It is admitted that before the date of this endorsement Kuppichi Goundan and defendants 1 and 2 became divided. Kuppichi Goundan was adjudged an insolvent in I.P. No. 24 of 1956 on the file of the Sub-Court, Salem. After the adjudication of the father, the executant of the promissory note, as insolvent, the plaintiff filed the suit against the present defendants, the sons of the insolvent. The trial Court found that the borrowing under Exhibit A-1 was for family expenses of the defendants and their father. The trial Court also found that the endorsement made on the promissory note by the father after the partition between himself and his sons can be relied on for the purpose of extending the period of limitation. The trial Court also found that it is not necessary for the plaintiff to implead the father as a party in the present suit. On the above findings the trial Court gave a decree to the plaintiff as prayed for.

The learned Counsel for the petitioners raised various contentions. He submitted that the father after partition cannot make an endorsement on the promissory note and thereby extend the period of limitation on the promissory note and make the defendants, the divided sons, liable. He submitted that the suit against the two divided sons during the lifetime of the father, when he is adjudged insolvent, is not competent. He also submitted that the Official Receiver ought to have been made a party and that a suit cannot be laid against the sons without leave of the n solvency Court.

3. As the contentions raised by the petitioners were of considerable importance and as the respondent was not represented I requested Mr. K. Raman to act as amicus curiae and he has given me considerable help in the disposal of this revision petition and I am thankful to him.

4. Regarding the first contention of the learned Counsel for the petitioners that the father cannot make an endorsement and extend the time as against the sons after the partition of the family, the question is directly covered by the Full Bench decision of this Court reported in Mohana Reddi v. Gangaraju : AIR1941Mad772 . In the above case the father executed four promissory notes in 1929 and 1930. In November, 1931 a preliminary decree for partition of the family properties was passed. A creditor's petition for adjudicating the father as insolvent was filed in March, 1931, and the father was adjudicated insolvent in November, 1931. In December, 1931 the father filed a schedule acknowledging his indebtedness in respect of the four promissory notes. It may be observed that this acknowledgment of indebteness was after the preliminary decree was passed. Their Lordships the Chief Justice and Mockett, J., held that the father has always the power to give an acknowledgment and if he gives one in respect of a pre-partition debt that debt continues to be enforceable against the family property in the hands of his son for another three years. The first point is therefore found against the petitioners.

5. The second and third points can be conveniently dealt with together. As stated already, it has been found that the suit promissory note was executed by the father for joint family purposes. Soon after the execution of the promissory note the family became divided and an acknowledgment was made by the father after the partition, and afterwards the father was adjudicated insolvent and the present suit is filed by the plaintiff against the two sons without either impleading the father or the Official Receiver. The question that arises for consideration is whether the sons can be sued without impleading the father or obtaining the leave of the Insolvency Court. The learned Counsel for the petitioners relied on a passage in the Full Bench decision reported in Periaswami Mudaliar v. Seetharama Chettiar (1903) 14 M.L.J. 84 : I.L.R. Mad. 243 . Bhashyam Ayyangar, J., observed at page 247:

Though during the father's lifetime the suit could not be brought against the son only for recovery of a debt due by the father, yet the son may be joined as a party defendant in a suit brought against the father and if the plaintiff succeeds in the suit against both the father and the son, a sale of joint family property which takes place in execution of such decree will bind the son also....

The point that was decided in the Full Bench decision was that independently of the debt arising from the original transaction, the decree against the father by its own force created a debt as against, him, which his sons, according to the Hindu Law, are under an obligation to discharge unless they show that such debt was illegal or immoral. In the case before their Lordships the family was undivided and the debt that was incurred was by the father, and the sons were sought to be made liable under the theory of pious obligation. The plaintiff obtained a decree against the father and after the date of the decree the father, died. The execution of the decree was refused as against the family properties in the possession of the defendants. Later the plaintiff filed a suit against the defendants and obtained a fresh decree. While dealing with the above facts their Lordships observed that during the father's lifetime a suit cannot be brought against the son only for recovery of a debt due by the father. Dealing with this case in Murali Mohan Reddi v. Brahmayya : AIR1942Mad327 , Venkataramana Rao, J., observes:

It will be seen that this proposition was based by Mulla on an observation by Bhashyam Aiyangar, J., in Periaswami Mudaliar v. Seetharama Chettiar (1903) 14 M.L.J. 84 ; I.L.R. Mad. 243 . In that case the learned Judge was dealing with a case where the father and sons were undivided and the exact point for decision was whether a suit could be filed against the son after the father's death on a decree obtained by a creditor against the: father alone during his lifetime.

The learned Judge expressed a doubt later and observed:

But how far this is applicable to cases where there was division between the father and so where insolvency supervenes is not free from difficulty.

As the Full Bench was dealing with the case of an undivided joint family and the suit was filed after the death of the father, the observations cannot be held to be applicable to the case of an undivided family and when insolvency has supervened, as pointed out by Venkataramana Rao, J.

6. In the case of an insolvency of a father of a Hindu undivided family the shares of the undivided sons do not vest in the Official Receiver, but the power of the father to sell the son's interests vests in the Official Receiver. But this is a case where the father and the sons have become divided. When there is a severance of status the power to sell the sons' interest does not vest in the Official Receiver. Section 28(2) of the Provincial Insolvency Act runs thus:

On the making of an order of adjudication, the whole of the property of the insolvent shall vest in the Court or in a receiver as hereinafter provided, and shall become divisible among the creditors, and thereafter, except as provided by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable under this Act shall during the pendency of the insolvency proceedings have any remedy against the property of the insolvent in respect of the debt, or commence any suit or other legal proceeding, except with the leave of the Court and on such terms as the Court may impose.

When the property of the insolvent father of a Hindu divided family vests in the Official Receiver, the right to sell the sons' share does not vest in the Official Receiver. But the son of a Hindu father has got a duty to pay the debts of his father under the doctrine of pious obligation. In this case the debt in question was incurred by the father for joint family purposes before the partition took place. In such a case, even though a division takes place, the son continues to be liable to pay the debt from out of the family property in his hands. Section 28(2) of the Provincial Insolvency Act does not prohibit a creditor from filing a suit against an undivided son against whom and against whose assets the Insolvency Court has no control.

7. The facts in Murali Mohan Reddi v. Brahmayya : AIR1942Mad327 , are more or less similar to the facts in the present case. A creditor filed a suit against the sons for recovery of amounts due under two promissory notes dated 12th November, 1930 and 5th December, 1930, executed by the father who was dead at the time of the filing of the suit. When the promissory notes were executed, the son and his father were members of a Hindu undivided joint family and the debt was incurred for family purposes. On a petition filed by the creditors of the father, the father was adjudicated insolvent on 13th November, 1931. Before the order of adjudication the son filed a suit for partition against the father on 16th November, 1931. The creditor proved the father's debt before the Official Receiver but no dividend was declared. In the suit filed by the creditor against the son of the insolvent after the insolvent's death the Subordinate Judge gave a decree and the son preferred an appeal to the High Court. Venkataramana Rao, J., in dealing with this case held that in this case the power to sell the son's interest ceases the moment severance of interest between the father and the son takes place and that therefore the right to sell the son's share is not the property of the insolvent that vests in the Official Receiver. The learned Judge also held that Section 28(2) does not prohibit the commencement of a suit by a creditor against the divided son without the leave of the Court. Dealing with this question the learned Judge observes as follows:

The words 'commence any suit or other legal proceedings' must be construed as referring to a suit or other proceeding against an insolvent having regard to the context. No doubt the words are general but if the wide interpretation as contended by Mr. Raghava Rao is given, it would mean that a creditor is prohibited from filing a suit even as against a person who is 'jointly indebted with the insolvent and whose property could not have vested in the Official Receiver. We do not think it was the intention of the Legislature to prohibit all suits in respect of the debt even as against persons over whom or whose assets the Insolvent Court would have no control.

Dealing with the right of the creditor for maintaining a suit as against the son his Lordship observed:

As the defendant is liable to pay the debt, which was contracted on hi she half by the father who was also the manager from and out of the share of the joint family property in his possession a suit against him by the creditor would be competent especially where necessary steps to enforce the relief against the father have been taken in proceedings in insolvency.

Thus it will be found that the Bench has recognised the right of the creditor to file a suit against the son for recovery of a debt incurred by the father who was the manager of the joint family property from out of the share of the joint family property in his hands. In this case the creditor did not take any steps in the insolvency proceedings to enforce the relief against the father by moving the Official Receiver or the Insolvency Court. In the present case the insolvent father is alive whereas in the case before the Bench the insolvent father was dead. The question for consideration is whether these two circumstances would make any difference in the decision of the case. The observations of their Lordships are general in nature and have been affirmed in a later decision in Nagaportharaw v. Subbaraw : AIR1942Mad360 , in the following terms:

Recently the question arose in Murali Mohan Reddi v. Brahmayya : AIR1942Mad327 whether leave of the Insolvency Court is necessary to file a suit against the undivided sons of a father who was adjudicated insolvent in respect of a debt incurred by the father for the benefit of the joint family and it was there held that it was not necessary to do so. After hearing learned Counsel in this case we see no reason to take a different view.

These observations are wide enough to include the case where the father is alive and there is no reason why the right of a creditor to proceed against the son should be denied because the insolvent father is alive. But their Lordships have specifically observed that the right of the creditor to file a suit against the son would be competent especially when necessary steps to enforce the relief against the father have been taken in proceedings in insolvency. Their Lordships were considering the particular facts of the case and I am of the view that the failure of the creditor to take adequate steps in the Insolvency Court would make no difference.

8. The next case that may be considered is Nagaportharaw v. Subbaraw : AIR1942Mad360 . In that case after the adjudication of the father as insolvent a creditor filed a suit against the father and his sons without impleading the Official Receiver and obtained a decree. An application was filed by a creditor in insolvency for a declaration that the decree obtained by the creditor was a nullity, as the creditor instituted the suit without obtaining the leave of the Insolvency Court and obtained a decree against the insolvent personally and against the joint family property in the hands of the sons. The creditor who obtained the decree alleged that he was not aware of any insolvency proceedings when he filed the suit and that in any event the decree could not be set aside in its entirety and if at all it could only be declared as a nullity against the insolvent and not against his sons. The learned District Judge held that the suit filed against the father and the sons without the leave of the Insolvency Court was incompetent and that therefore the decree was a nullity. Their Lordships considered the question whether the Insolvency Court had a right to declare the decree obtained by the creditor as a nullity in its entirety. Their Lordships observed that it was not disputed that the Insolvency Court might give a declaration that the decree was not binding so far as the Official Receiver was concerned as representing the insolvent. So far as the decree against the sons is concerned their Lordships observed that it was open to the sons to say that the suit would not be competent because leave of Insolvency Court had not been obtained against the father and if the suit could not be proceeded against the father it could not be proceeded against them as well. In the case before their Lordships no objection was taken by the sons and the decree had become final as against them. In the case before me the sons did object to the creditor proceeding against them but it may be noted that in the present case the suit was filed against the sons alone whereas in the case before their Lordships the suit was filed as against the father and sons. What their Lordships observed is that it was open to the sons to say that the suit was not competent because leave of Insolvency Court had not been obtained as against the father. In this case the question of obtaining leave of the Insolvency Court does not arise as the father was not impleaded in the suit, and as already held as the sons were divided the right to sell the sons' share has not vested in the Official Receiver and therefore Section 28(2) of the Insolvency Act is not a bar to the filing of the suit against the sons.

9. In the circumstances of the case I am of the view that there is no objection in law against the creditor filing a suit against the sons in regard to a debt incurred by the father as manager of the joint family for joint family purposes, even though subsequently they become divided and the father becomes an insolvent. The petition is therefore dismissed, but in the circumstances without costs.


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