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Official Receiver Vs. Sait Lalchand Khushalchand Firm and ors. - Court Judgment

LegalCrystal Citation
Subjectcivil
CourtChennai
Decided On
Reported inAIR1943Mad94
AppellantOfficial Receiver
RespondentSait Lalchand Khushalchand Firm and ors.
Cases ReferredGovind Baba Gurjar v. Jijibai Sahib
Excerpt:
- .....it make the money which belonged to the insolvent any the less his property. with reference to the sons' shares we have listened to very elaborate arguments, but the matter seems to us to be comparatively simple. it is well, established that the attachment of the sons' shares in hindu joint family property automatically prevents the father from exercising over those shares his power to sell the property and utilise the proceeds for the discharge of his own just debts. similarly, when the shares of the sons have been attached by a creditor before the father's assets vest in the official receiver, the vesting in the official receiver of the power of the father to dispose of his sons' shares for the payment of his own debts cannot enable that power to be exercised over the properties so.....
Judgment:

Wadsworth, J.

1. This appeal relates to certain complications which took place following the insolvency of defendant 2. The appellant here is the Official Receiver of Guntur who is defendant 1 in the suit. The plaintiff got a decree on 16th December 1930 against the insolvent and had made one ineffective attempt to execute it before the insolvency petition was filed in 1931. The adjudication was in 1932 and the Official Receiver in the administration of the estate sold certain assets of the insolvent and his three sons. The decree-holder proved for his debt before 25th March 1935. The Insolvency Court sanctioned the distribution of a dividend out of the realisations, which amounted to more than Rs. 9000. Unfortunately, the dividend had not been distributed when on 31st August 1936 the Insolvency Court annulled the adjudication for failure of the insolvent to apply for his discharge. It appears that this annulment order was passed without any enquiry regarding the state of the administration and no vesting order was passed. On 24th September 1936 one of the creditors filed an application in the Insolvency Court, praying for the re-vesting of the assets of the ex-insolvent in the Official Receiver. While this application was still pending, on 6th October 1936 the present plaintiff filed an execution petition in which he prayed for the attachment of Rs. 6135-1-0 out of the funds in the hands of the Official Receiver, and he got an interim prohibitory order which was served on the Official Receiver on 20th October 1936.

2. A month later the Insolvency Court passed an order revesting the fund which was still in the Official Receiver's hands, so that it could be used for the benefit of the creditors in the insolvency. On the same day the executing Court requested the Official Receiver to send the attached sum for the satisfaction of the plaintiff's decree. Owing to the revesting order, the money was not sent and the Official Receiver made a successful claim against the attachment and the execution petition was dismissed. Hence the plaintiff was obliged to file this suit to vacate the order on the said petition. He has succeeded completely before the lower Court. There is little doubt that so far as the insolvent father's share in the property is concerned, the re-vesting order makes the amount of this sale-proceeds available to the Official Receiver. There was only an attachment at the time of the re-vesting order. This attachment will create no charge, nor would it make the money which belonged to the insolvent any the less his property. With reference to the sons' shares we have listened to very elaborate arguments, but the matter seems to us to be comparatively simple. It is well, established that the attachment of the sons' shares in Hindu joint family property automatically prevents the father from exercising over those shares his power to sell the property and utilise the proceeds for the discharge of his own just debts. Similarly, when the shares of the sons have been attached by a creditor before the father's assets vest in the Official Receiver, the vesting in the Official Receiver of the power of the father to dispose of his sons' shares for the payment of his own debts cannot enable that power to be exercised over the properties so attached: vide Official Receiver, Coimbatore v. Arunachalam Chetti A.I.R. 1934 Mad. 217. It seems to follow that at the time of the revesting order, the sons' shares being under an attachment by the plaintiff, the re-vesting order would give to the Official Receiver no power to sell those shares or to use the proceeds of those shares for the satisfaction of the other debts of the father to the extent of the attachment.

3. It has however been argued that the claim of the plaintiff to execute his decree against the shares of the sons was barred by limitation. It was admittedly a decree against the father alone which was alive as against the father by reason of the provisions of Section 78, Provincial Insolvency Act. The basis of the appellant's contention is the theory that it was open to the creditor at any time to have proceeded against the shares of the sons, when the father was an insolvent, without the leave of the Court. Whatever be the position, when the son is himself a judgment-debtor, we doubt very much whether the creditor will have such a power when his decree was in terms against the father alone and the father is an insolvent. In order to get at the property of the sons, it will be necessary for the creditor to execute his decree by what is really the exercise of the father's power. That power of sale being vested in the Official Receiver as part of the property of the father, it seems to us, that there can be no execution under that power without the leave of the Insolvency Court.

4. No doubt cases have been cited in which there appears to have been an execution against the sons' shares without the leave of the Court seized of the insolvency of the father, no objection being raised to the procedure. But these appear to be cases in which execution was started against both father and son before the insolvency and our attention has not been, drawn to any case in which it has been held when the objection has been raised, that the creditor who has a decree only against the father can proceed against the sons' shares without the leave of the Court, the father being an insolvent. There is clear authority, vide Ramachandra Iyer v. Official Assignee, Madras A.I.R. 1931 Mad. 317 for the general proposition that when the debt is alive against the father, it is alive against the son in the absence of special circumstances, such as that created by a renewal after a partition between the father and son, or perhaps the position when the father and son were both defendants and the father alone was an insolvent against whom limitation is saved under Section 78, Provincial Insolvency Act. But, on the facts of the present case, we have no doubt that the execution of the plaintiff's decree against the father by the attachment of the proceeds of the sale of the sons' shares was not barred by limitation.

5. The suggestion has been made that when the insolvency is annulled, the proceeds of the sale of the sons' shares will not revert either to the sons or to the insolvent for the benefit of the sons, but will remain earmarked for the benefit of the creditors in the insolvency for the discharge of whose debts the properties were sold. No authority has been cited for this proposition which seems to be clearly contrary to the terms of Section 37 (1), Provincial Insolvency Act. On the annulment of the insolvency, in the absence of an appointment by the Court, the property of the debtor reverts to him to the extent of his right or interest therein. If the fund representing the sons' shares is to be regarded as in a limited sense the property of the insolvent (as seems to be contemplated in Sat Narain v. Beharilal it will revert to the insolvent to the extent of his interest therein a his interest is limited to the power to devote the fund to the payment of his just debts, which power will be suspended by the attachment at the instance of a creditor. If, on the other hand, the fund is regarded as the property of the sons until it is actually utilised for the discharge of the father's debts, it will clearly revert to the sons from whom it was taken. In either case, it will be out of the reach of the Official Receiver, by reason of the attachment before the revesting order begins to operate.

6. We do not think it necessary to discuss in detail the further contentions that the revesting order can have a retrospective effect or that the doctrine of lis pendens will apply by reason of the filing of the application for a revesting order. The doctrine of lis pendens does not apply to moveables: vide Govind Baba Gurjar v. Jijibai Sahib (1912) 36 Bom. 189. In the result, therefore, we allow the appeal to the extent that there will be a declaration that the one-fourth share of the insolvent himself is not liable to be attached in execution of the decree. In other respects the appeal is dismissed. Parties will pay and receive costs throughout proportionately to their failure or success.


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