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A.Pr. L.M.L. Lakshmanan Chettiar Vs. K. Sreenivasa Ayyangar - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in166Ind.Cas.378
AppellantA.Pr. L.M.L. Lakshmanan Chettiar
RespondentK. Sreenivasa Ayyangar
Cases ReferredFirm Jethaji Peraji v. Krishnayya
Excerpt:
hindu law - joint family--insolvency of member--effect on his share--annulment of adjudication--insolvent's share, whether reverts as joint family property or remains member's individual property--death of member before annulment--share, whether goes to his undivided brothers by survivorship or to his heirs. - .....insolvent one raghava ayyangar and his brother, the 1st defendant, were undivided brothers of a joint family owning certain immovable property. in 1922 the said raghava ayyangar was adjudicated an insolvent by the high court. subsequent to his adjudication and before obtaining the order of discharge, he appeared to have borrowed from the plaintiff a sum of money on a promissory note. he died thereafter. subsequent to his death the plaintiff filed in or about 1930 o.s. no. 1098 of 1929 on the said promissory note against the 1st defendant, and his sons, defendants nos. 2 and 3, and also the 4th defendant who was the widow of the said raghava ayyangar. a decree was passed in the said suit against the defendant for the amount, claimed by the plaintiff payable out of the assets of the.....
Judgment:

Venkataramana Rao, J.

1. This miscellaneous second appeal raises a question as to the effect of an annulment in regard to the share of the insolvent who was at the moment of adjudication a member of a joint undivided Hindu family. The insolvent one Raghava Ayyangar and his brother, the 1st defendant, were undivided brothers of a joint family owning certain immovable property. In 1922 the said Raghava Ayyangar was adjudicated an insolvent by the High Court. Subsequent to his adjudication and before obtaining the order of discharge, he appeared to have borrowed from the plaintiff a sum of money on a promissory note. He died thereafter. Subsequent to his death the plaintiff filed in or about 1930 O.S. No. 1098 of 1929 on the said promissory note against the 1st defendant, and his sons, defendants Nos. 2 and 3, and also the 4th defendant who was the widow of the said Raghava Ayyangar. A decree was passed in the said suit against the defendant for the amount, claimed by the plaintiff payable out of the assets of the said Raghava Ayangar in the hands of the defendants. On September 28, 1931. The adjudication order was annulled and I find from the report of the Official Assignee that it was at his instance that the order of adjudication was annulled. The ground for the annulment was that the creditors had been paid in full but in spite thereof the insolvent had not applied for annulment and that after the insolvent was dead the Official Assignee desired that the adjudication should be annulled and that he might be permitted to draw his commission on the amount paid to the creditors. The plaintiff filed an application for execution of his decree out of which this second appeal arises for attaching and selling a half share in the properties mentioned by him in the execution petition. The application was resisted on two grounds; that the properties were the separate properties of the 1st defendant; and even assuming they were joint family properties the 1st defendant had a half share on the date of adjudication, and on annulment they reverted to defendants Nos. 1 to 3 as joint family property and they have taken the same by survivorship and the creditor had no right to attach the same. Both the Courts have concurrently found that the properties were not separate properties but joint family properties wherein Raghava Ayyangar had a half share. The District Munsif allowed execution to proceed; but the learned District Judge dismissed the execution petition on the ground that immediately on the annulment, the property veted in defendants Nos. 1 to 3 as joint family property, and it cannot be regarded as assets in the hands of the 1st defendant liable to be proceeded against for the debts of the said Raghava Ayyangar. This view of the learned District Judge has now been assailed before me as unsound by Mr. Seshadri Ayyangar. I am inclined to accept his contention. The legal consequences of a valid order of adjudication made on the insolvency of a member of a co-parcenery in regard to his share in the joint family property may be thus stated.

2. The share of the insolvent vests in the Official Receiver. In regard to an insolvent who is a father having undivided sons, the right of the father to dispose of his sons Share are in the joint family property for the discharge of debts which were neither illegal nor immoral also vests in the Official Receiver. The insolvent does not cease to be a member of a joint family but still continues as a member thereof. In a recent decision of this Court the following observations occur:

Neither the filing of the insolvency petition nor the adjudication of the applicant can sever the joint family status. Vide, Venkatarayudu v. Sivarama Krishnayya : AIR1934Mad676 .

3. In that case it was held that the vendee from the Official Receiver of an undivided share of a member did not become a tenant-in-common with the other members of the family and, therefore, was not entitled to claim mesne profits from the date of sale. Bankruptcy is an involuntary alienation. On the question whether an alienation of a share of a member of a joint family effects a severance in status, there has been a conflict of opinion. One view is that it does effect a severance in status. Vide, Sonnararajan v. Arunaehalam Chetty 39 M 159 : 33 Ind. Cas. 368 : 29 M.L.J. 793 : 2 L.W. 1247 : 18 M.L.T. 552 : (1916) 1 M.W.N. 16 and Chinnu Pillai v. Kalimuthu Chetty 35 M 47 : 9 Ind. Cas. 596 : (1911) 1 M.W.N 238 : 9 M.L.T. 389 : 21 M.L.J. 246 The other view is that it does not. The ground for this view may be thus stated. The severance of a joint family can only be effected by a mode known and recognised by Hindu Law, that is, what is called vibagha or partition. The effect of a partition according to Hindu Law is:

whether it is effected amicably or by a decree of Court that it breaks not only the joint ownership of the property, but also the family union, that is, the corporate character of the family. Aiyyagari Venkatarammayya v. Aiyyagari Ramayya 25 M 690.

4. The effect of an alienation may be to break up the joint ownership of the property but the corporate character of the family can only be disturbed by a member. It is unnecessary for, me to consider which view is correct. But there can be no doubt as to what the consequences of an alienation. They are thus stated by Mr. Justice Bhashyam Ayyangar;

An undivided member of a family though he may have alienated the whole or any part of his undivided share will continue to be a member of the family with the rights of survivorship between himself and the remaining members in respect of all the family property other than what he has transfer red. No doubt such a member acts unfairly towards the rest of the family and if they are dissatisfied with his so doing, their only remedy is to become divided from him' vide. Aiyyagari Venkataramayya v. Aiyyagari Ramayya 25 M 690

5. The members of the family lose their right of survivorship in the share of the insolvent and it ceases to be joint family property so that on the death of the insolvent the share which vested in the Official Assignee is not divesled from him vide, Fakirchand Motichand v. Motichand Hurruckchand 7 B 438 and the observations of Wallace, J., in Narayana Sah v. Sankar Sah 53 M 1 : 121 Ind. Cas. 1 : 57 M.L.J. 685 : 30 L.W. 751 : A.I.R. (1930) Mad. 97..That by the insolvency of a coparcener of course for his personal debts, his share vests in the Official Assignee and is thus lost to the joint family...the death of the co-parcener before, partition would not restore to the joint family the share which has vested in the Official Assignee.

6. If this is the true legal position, the share of the insolvent is in the hands of the Official Assignee not as joint family property but as separate property available for the benefit of the personal creditors of the insolvent. The question is what is the effect of an annulment on the said property in the circumstances of this case when there has been a valid adjudication. Mr. Ramaswamy Ayyangar argues that under Section 37, on annulment the property reverts to the debtor. The effect of a revertor according to him is that the property regains its original character as joint family property and is taken by the members of the family as if no partition had taken place with benefits of survivorship; and, therefore, it will not be available to the personal creditors of the insolvent unless that share had been seized in execution and rendered available for the enforcement of the debts. Mr. Ramaswamy Ayyangar relied on two English cases, viz. Bailey v. Johnson (1851) 6 Ex. 279 and Bailey v. Johnson (1853) 7 Ex. 263 : 41 L.J. Ex. 211 : 20 W.R 1013 same case on appeal for the position that the effect of an. Annulment is to remit the debtor to his original position at the moment of adjudication as if there had been no insolvency, and, therefore, as at the moment of adjudication, the debtor was a member of a joint family the property went back to him as joint family property. Construing an analogous Section 81 of the English Bankruptcy Act of 1869 Kelly C.B. in Bailey v. Johnson (1851) 6 Ex. 279 observed thus:..The only sensible meaning which can be attached to the word 'revert' is, that what was apparently the property of the trustees at the time of the annulling of the bankruptcy, shall thereupon become the property of the person whose bankruptcy has been annulled, as if it had always been his.

7. This observation, in my opinion, does not support Mr. Ramaswamy Ayyangar. If the language of Kelly, C.B., is to be given full effect it is this. At the date of annulment it was the property of the trustee and on annulment it becomes the property of the debtor, that is, the property goes back to the debtor with the same character in which it was held by the Official Receiver while the bankruptcy continued. The annulment would not completely wipe out the effect of a valid order of adjudication. The bankruptcy is wiped out to this extent, viz. That the property goes to the debtor free from all claims in bankruptcy so that the debtor can deal with the property as if it is his own, that is, with all the original powers and rights which he would have had had there been no bankruptcy. In the same case Bailey v. Johnson (1853) 7 Ex. 263 : 41 L.J. Ex. 211 : 20 W.R. 1013 it will be seen that Blackburn, J., was not prepared to say the effect of Section 81 in every case will be

to go back to the beginning and to place the bankrupt in the position of having always owned what is by the section to revert to him....

8. I agree with the remarks of Reilly, J., in Firm Jethaji Peraji v. Krishnayya 52 M 648 : 122 Ind. Cas. 351 : 29 L.W. 619 : 57 M.L.J 116 : (1922) M.W.N. 489 : Ind. Rul. (1930) Mad. 319 : A.I.R. 1930 Mad. 278:

Certainly it cannot be suggested that in this country annulment of adjudication puts the clock back as if the adjudication had never been.

9. It will be unsafe to rely upon observations in the cases decided in England where the conditions are not similar and where the conception of a joint Hindu family is unknown. Once the effect of insolvency is to divest the share of the insolvent of its character as joint family property, it cannot regain that character when it comes back to the insolvent on annulment unless he can by unequivocal act of his own impress it with the said character. Under Section 37 of the Provincial Insolvency Act, it reverts to the debtor as his property, that is, as his individual property, so that if on the date of the reversion, he is not alive it will go to his heir under the law; and in this case the widow, the 4th defendant; the property thus being not joint family property defendants Nos. 1 to 3 have not taken it by survivorship. It is, therefore, available for the satisfaction of the debt of the plaintiff. I, therefore, reverse the decree of the learned District Judge and restore that of the District Munsif with costs. Leave refused.


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