Skip to content


The Official Receiver, Representing the Estate of Tadi Bulli Gangireddi of Rajahmundry Vs. Tadi Murali Mohan Reddi and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported in(1948)1MLJ473
AppellantThe Official Receiver, Representing the Estate of Tadi Bulli Gangireddi of Rajahmundry
RespondentTadi Murali Mohan Reddi and ors.
Cases ReferredRamaswami Reddiar v. Kuppalagu Pandithan
Excerpt:
- - per annum from 24th november, 1937. 3. several issues were raised in the court below, and they were all found in favour of the plaintiff, except issue (11) on which the learned subordinate judge held that the suit was bad for non-joinder of karri gavarayya and the second son of gangireddi. defendants 2 and 3 however took the objection that the suit was bad for non-joinder of 'the several parties to the mortgage decree. 6. the learned subordinate judge held that the suit was bad for non-joinder also of karri gavarayya. 15. we have already indicated that the suit is not bad for non-joinder......to be raised, namely, that certain persons had purchased or otherwise acquired interests in the suit properties even by the date of suit and that the suit for contribution was not sustainable as they were not all implea-ded as defendants. no such objection was raised in the written statement, and we did not therefore permit it to be raised at this stage.14. finally it was said that the suit should be remitted to the court below for finding out what amount is due to the plaintiff from the first defendant by way of contribution, regard being had to the values of the two sets of properties in 1931. the pleading of defendants 2 and 3--the first defendant having filed no written statement--is by no means clear. a reference is made in the written statement of defendants 2 and 3 to the.....
Judgment:

Govindarajachari, J.

1. The appellant's suit for contribution under Section 82 of the Transfer of Property Act was dismissed by the Subordinate Judge of Coconada on the ground of non-joinder. One Tadi Bulli Gangireddi was adjudged insolvent on the 13th of November, 1931, in I.A. No. 12 of 1931 which was filed on 17th March, 1931, in the Court of the Subordinate Judge of Coconada. Nine days before the order of adjudication Gangireddi's son who is the first respondent in this appeal and who was the first defendant in the Court below filed O.S. No. 250 of 1931 in the Court of the District Munsiff of Ramachandrapur against his father for partition of the family properties. This resulted in a preliminary decree on the 16th of November, 1931. The Official Receiver was impleaded in the suit on the 16th of February, 1932. Another son was born to Gangireddi in 1934. He is referred to throughout the record by the curious description of' an unnamed boy.' Gangireddi died on the 17th of January, 1934. The second son was impleaded in the partition suit on the 26th of November, 1934, and by the final decree passed in that suit on the 6th of April, 1935, the properties as per list B attached to the decree were allotted to the elder son. Nothing was said about the remaining properties. There can be no doubt that the properties in list B and the other properties were of equal value. Respondents 2 and 3 who were defendants 2 and 3 in the Court below obtained a decree in O.S. No. 2 of 1935 on the file of the Court of the Subor-dinate Judge of Coconada against the interests of the sons of Gangireddi, and some-time in August, 1935, had attached the said interests before judgment. respondents 4 and 5 (defendants 4 and 5) obtained a money decree in similar terms in O.S. No. 26 of 1937 on the file of the Court of the Subordinate Judge of Coconada. Defendants 2 to 5 were impleaded for obtaining a direction that the plaintiff's claim for contribution is entitled to priority over the decrees obtained by those defendants, and that the amount due to the plaintiff should be a first charge on the properties described in the plaint schedule which were among the properties allotted to the first defendant by the final partition decree.

2. On 9th February, 1931, Gangireddi for himself and as guardian of his then minor undivided son, the first defendant, together with one Karri Gavarayya executed a deed of simple mortgage in favour of the Imperial Bank of India for Rs. 37,116-3-0. It is stated in the mortgage that Rs. 19,336-6-0 out of this was the extent of the indebtedness of Gangireddi while the balance of Rs. 17,779-13-0 was due from Gavarayya. The properties belonging to both were mortgaged, those belonging to the Tadi family being described in Schedule A attached to the deed and those belonging to Karri Gavarayya, in Schedule B. It is, inter alia, provided in the mortgage that,

You (meaning the Imperial Bank of India) should recover the entire debt due under this mortgaged property, first from the property described in Schedule A and from other moveable and immoveable properties belonging to the joint family of Bulli Gangireddi and that in case the said debt is not completely paid to you by means of the properties, you should recover the remaining debt by means of the properties described in Schedule B, by means of other moveable and immoveable properties of Karri Gavarayya and on the personal ' liability ' of Gavarayya and Bulli Gangireddi.

The mortgage debt was not repaid, and the Imperial Bank obtained a decree on foot of the deed in O.S. No. 87 of 1931 in the Court of the Subordinate Judge of Coconada. In due course of execution the bank realised Rs. 62,939-5-4 in full satisfaction of the decree, the last of the amounts which went to make up that figure being Rs. 5,359-1-0 drawn by the bank by a cheque dated 24th of November, 1937. Meanwhile the adjudication of Gangireddi was annulled on the 26th of October, 1937, under Section 43 of the Provincial Insolvency Act; but his properties were vested in the plaintiff, the Official Receiver of East Godavari, under Section 37 of the same Act. The amount realised by the sale of the plaintiff's properties being Rs. 35,745, the plaintiff claimed that the amount realised from him in excess of his half share which would be Rs. 31,469-10-9 should be recovered from the properties of the first defendant. The suit was therefore laid for Rs. 4,275-5-3 with interest thereon at six per cent. per annum from 24th November, 1937.

3. Several issues were raised in the Court below, and they were all found in favour of the plaintiff, except issue (11) on which the learned Subordinate Judge held that the suit was bad for non-joinder of Karri Gavarayya and the second son of Gangireddi. The first defendant filed no written statement. Defendants 2 and 3 however took the objection that the suit was bad for non-joinder of ' the several parties to the mortgage decree.'

4. The objection as to the non-joinder of Gangireddi's second son may be shortly dealt with. He was not a party to the mortgage decree. On a strict reading of the pleading, therefore, the objection does not extend to his non-joinder. Still the Court below went into the question and we too permitted the matter to be discussed. It is undeniable, and in fact, it has not been denied, that the second son of Gangireddi who was born long after his father's adjudication as insolvent is not entitled to any share in the properties. It was however contended in the lower Court, and it has been contended before us that as between defendants 2 and 3 and the plaintiff the suit must proceed on the footing that the first defendant is entitled to a half share, the Official Receiver to a one-fourth share and the second son of Gangireddi, to the remaining one-fourth share in the family properties by reason of an order passed in E.A. Nos. 770 and 802 of 1944 on the 22nd of November, 1944. Those were two claim petitions filed by the Official Receiver. It is admitted that no suit was filed to set aside the claim order within one year thereafter so that the conclusion cannot be resisted that for the purpose of the present suit as between the plaintiff on the one hand and defendants 2 and 3 on the other it must be assumed that Gangireddi's second son is entitled to a one-fourth share, though no such assumption need or can be made at the instance of defendants 1, 4 and 5.

5. It is however unnecessary to decide upon the legal consequences of this anomalous position as the plaintiff through his counsel has asked for leave to with-draw the suit against defendants 2 and 3 to which procedure no objection has been taken by their counsel. In our opinion, it is a fit case in which the plaintiff should be permitted to withdraw the suit. He will pay the costs of defendants 2 and 3 in both Courts out of the estate of Gangireddi.

6. The learned Subordinate Judge held that the suit was bad for non-joinder also of Karri Gavarayya. It has been contended for the appellant that there can be no claim for contribution against Gavarayya as the Clause in the deed of mortgage which we have already set out is a contract to the contrary within the meaning of Section 82 of the Transfer of Property Act, and reference is made in this connection to Ramachandrachar v. Srinivasa Aiyangar I.L.R. (1892) Cal. 51, wherein it was held that a contract to the contrary within the meaning of that section is a contract between a mortgagor and a mortgagee, and as a prominent instance of it is mentioned at page 93 of the report a contract ' under which some of the mortgaged properties were to be liable in the first instance and others were only to be liable in the event of the security of the properties liable in the first instance being insufficient.' The principle pointed out in Ratnachandrachar v. Srinivasa Aiyangar I.L.R. (1892) Cal. 51, was approved in a decision of a Full Bench in Damodaraswami Naick v. Govindarajuht (1874) 21 W.R. 415. It has been contended on behalf of the first defendant that the mention in the deed of mortgage of the amounts severally due from Gangireddi and Gavarayya would make a difference. We are unable to accept this distinction, and, in our opinion, in view of the covenant in the deed of mortgage there can be no claim for contribution by Gangireddi against Gavarayya, and in this view Gavarayya is not a necessary party.

7. Mr. Ramanatha Aiyar, counsel for the first defendant, however, raised another point in justification of the dismissal of the suit. He argued that the right to contribution must be regarded as the after-acquired property of the insolvent inasmuch as it accrued on the 24th of November, 1937, an that the plaintiff who is only a receiver appointed under Section 37 of the Provincial Insol-vency Act cannot enforce that right and cited in support of his argument--Veerayya v. SrinivasaRao I.L.R. (1900) Mad. 85, Rajalakshmamma v. Raghavayya : AIR1943Mad429 , Satyanarayanamurthi v. Srinivasa Jagannadh Rao : AIR1943Mad644 and Ramaswami Reddiar v. Kuppalagu Pandithan (1944) 1 M.L.J. 221. This point was found in favour of the appellant by the lower Court with which view we are inclined to agree on principle. None of the first three cases referred to above militates against that view. In Veerayya v. Srinivasa Rao (1944) 1 M.L.J. 221, King, J., who delivered the judgment of the Full Bench first referred to what he described as the three points of view in regard to the situation which arises when an adjudication is annulled, under Section 43 and the insolvent's property is vested in an appointee under Section 37. Disagreeing with the two extreme views (1) that with the annulment the insolvency comes to an abrupt and final conclusion notwithstanding an order under Section 37 and (2) that an order under Section 37 following an order under Section 43 continues the insolvency proceedings for all purposes, the learned Judge expressed his and his colleague's preference to the intermediate view that when an order is passed under Section 37 of the Insolvency Act, the Court retains full power to give directions as to the realisation and disposal of the debtor's assets in accordance with the provisions of the Insolvency Act. He also pointed out that the primary object of an order for annulment under Section 43 is to punish the insolvent by depriving him of any protection which he may have been enjoying under the insolvency law. In discussing the position regarding applications under Sections 53 and 54 a distinction was drawn (that is obiter) between pro-ceedings which had been started before the order of annulment and proceedings which are sought to be started after such an order, and it was said that a receiver acting under Section 37 could not initiate proceedings under those sections.

8. In Rajalakshmamma v. Raghavayya : AIR1943Mad592 and Satyanarayanamurthi v. Srinivasa Jagannadh Rao : AIR1943Mad644 , it was held following Desikachari v. Official Receiver, Chingleput : AIR1943Mad26 and Veerayya v. Srinivasa Rao : (1935)69MLJ364 , that an application under Sections 53, 54 or 54-A does not lie after an insolvent had been granted an unconditional discharge and that there is an analogy between the annulment of adjudication and the granting of an absolute order of discharge with regard to the further disposal of the insolvent's property. In our opinion, none of these decisions directly bears on the question which arises here.

9. If the contention of the respondent's counsel is to be acceptd a curious situation will arise. According to the argument, a receiver under Section 37 who pays money in discharge of a mortgage binding on the estate can have no claim for contribution against a co-mortgagor notwithstanding that the latter is benefited by the payment. The insolvent too may have no claim as the right to contribution is a proprietary and not a personal right arising by virtue of the ownership of the property subject to the mortgage which indubitably is vested in the receiver by the order under Section 37. There is thus no person who can enforce the right of contribution, and there is no way of making the co-mortgagor who defaulted in paying his share of the mortgage reimburse the other estate. We do not think this position is enjoined by anything contained in the Insolvency Act. The right of contribution is a right flowing out of the ownership of the hypotheca and goes with it. It resembles one of the illustrations mentioned at the bar, namely, that of trespass on property belonging to the debtor which is vested in the receiver under Section 37. A claim for future mesne profits in respect of such property cannot be made by the debtor and can be enforced only by the receiver in whom the property itself vests. The non-payment of his share by the co-mortgag or may be regarded as an injury to the plaintiff's property which is to be compensated for by the payment of contribution.

10. It is unnecessary for the purpose of this case to deal with the wider question whether property totally unconnected with any existing on the date of the order under Section 37 will vest in an appointee under that section by force of Section 28(4).

11. As held by one of us in Ramaswami Reddiar v. Kuppalagu Pandithan : (1935)69MLJ364 , where certain properties are vested in a receiver under Section 37, his powers in respect of such properties need not be expressly conferred by the order made under Section 37; they may be such as are necessarily implied by the vesting order, and the receiver will have in respect of such properties the powers he had in respect of the insol-vent's properties generally before the date of the annulment.

12. We must therefore overrule the contention on behalf of the first respondent that the plaintiff cannot sue under Section 82.

13. Another contention was sought to be raised, namely, that certain persons had purchased or otherwise acquired interests in the suit properties even by the date of suit and that the suit for contribution was not sustainable as they were not all implea-ded as defendants. No such objection was raised in the written statement, and we did not therefore permit it to be raised at this stage.

14. Finally it was said that the suit should be remitted to the Court below for finding out what amount is due to the plaintiff from the first defendant by way of contribution, regard being had to the values of the two sets of properties in 1931. The pleading of defendants 2 and 3--the first defendant having filed no written statement--is by no means clear. A reference is made in the written statement of defendants 2 and 3 to the inequality of the sales of the properties of the plaintiff and the first defendant, meaning evidently that it cannot be assumed that what were realised by the Court sales of the plaintiff's properties and of the first defendant's properties represent their correct values on the dates of those sales. This, however, is quite irrelevant, and it is this pleading that was responsible for the way in which issue (7) was worded, namely, 'whether in fact the properties sold were equal or unequal in value?' Notwithstanding that the issue was not happily worded, the learned Subordinate Judge referred to the plaintiff's averment that the properties which fell to the father's share and the properties which fell to the first defendant's share were equal in value. The learned Subordinate Judge accepted the correctness of the plaintiff's pleading in this respect. Some vague evidence was let in on both sides, but the outstanding fact is that in 1935 properties of equal value were allotted to the father and the son (the first defendant). There is nothing to show that the properties were not also of equal value in 1931 which is the material date accor-ding to Section 82 of the Transfer of Property Act. There is also some evidence on the plaintiff's side that there was no appreciable difference in value between 1931 and 1935 and in fact till 1937. Even if there was any such variation, it would affect both shares equally, and it is therefore clear that the values of the properties must have been equal in 1931. The learned Subordinate Judge found that the plaintiff would be entitled to a decree as prayed, had it not been for the defect in his suit on the ground of non-joinder.

15. We have already indicated that the suit is not bad for non-joinder. The result is that the appeal must be allowed and the suit decreed as prayed for with costs of both Courts payable by the first defendant. There will be a direction as prayed against defendants 4 and 5. Defendants 4 and 5 will neither pay nor receive costs in either Court. The suit is withdrawn and dismissed against defendants 2 and 3 who will get their costs in both Courts as already stated. Time fixed for payment of the amount due to the plaintiff will be three months from now.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //