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Periasami Servai and anr. and Krishnan Servai Vs. Alagu Servai and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1975)2MLJ421
AppellantPeriasami Servai and anr. and Krishnan Servai
RespondentAlagu Servai and ors.
Cases ReferredSabarianandan Nadar and Anr. v. Chellachi Mdachi and Anr. L.P.A. No.
Excerpt:
- .....all the period the insolvent and his heirs after his death were in possession and enjoyment of the suit properties.13. in a suit for partition by the legal representatives of the insolvent, when some of the defendants contended that notwithstanding the discharge, the properties never reverted or revested in the insolvent, and that the co-tenancy or co-ownership between the brothers had been extinguished by the insolvency, it was held that even though there was no order revesting the properties in the insolvent after the absolute discharge order was made, by reason of the inaction of the official receiver and the creditors, the properties of the insolvent have revested in the heirs of the insolvent. the contention that in the absence of any revesting order, the insolvent loses his title.....
Judgment:

S. Mohan, J.

1. These two second appeals arise out of O.S. No, 207 of 1966 filed before the District Munsif of Sivaganga, for a declaration and injunction.

2. There are two items, which form the suit properties. One is a vacant site, C.C1. B-3, as shown in the plaint rough plan, which is triangular in shape, and the other marked D.D1. B1. B-2. The suit is filed on behalf of the plaintiff and defendants 6 to 9 as ancestral properties. The claim is further based upon adverse possession.

3. In defence, it was contended that the entire property was surveyed as T.S. No. 11 and an extent of 56 cents belonging to the first defendant was 'acquired for the formation of the Railway feeder road, C. Cl B3 portion was surveyed as part of Survey No. 48/2 and it belonged to the first defendant. D, Dl B1 B2 portion belonged to defendants 2 to 5. The basis of the defendants' claim is by adverse possession.

4. The trial Court decreed the suit on a consideration of the oral and documentary evidence, whereupon defendants 2 to 5 preferred A.S. No. 37 of 1971 and the first defendant preferred A.S. No. 97 of .1971. Both these appeals were dismissed by the learned Subordinate Judge, Sivaganga.

5. Second appeal No. 730 of 1972 is against A.S. No. 37 of 1971, while Second Appeal No. 659 of 1973 is against A.S. No.

6. One of the important points in the second appeal, which has not been adverted to by both the Courts below, presumably because this was not raised, is what is the effect of the admission by the plaintiff that he is an undischarged insolvent. This will be material with regard to two aspects, viz. (1) the maintainability of the suit or at any rate, as regards his share; and (2) whether he could plead adverse possession as against the Official Receiver.

7. The learned Counsel for the appellant draws my attention to the evidence of P.W. 1 who, in cross-examination says : ' I am an undischarged insolvent. I had no revesting order from the Official Receiver. The Insolvency Petition was dismissed as I did not take further steps. I did not move the Court for the withdrawal of the petition and for revesting of the properties from the Receiver. '

8. On this, it is argued that he remained an undischarged insolvent and certainly the suit cannot be maintained, even though the claim is on behalf of the plaintiff and defendants 6 to 9. The further submission is that he cannot prescribe adverse possession as against the Official Receiver.

9. As against this, Mr. S. Varadarajulu Naidu, submits that at this stage the appellant should not be allowed to raise this ground since it was not raised either in the Memorandum of grounds of the appeal before the lower Appellate Court, or even in the present second appeal.

He refers to the evidence in chief-examination of the plaintiff (P.W. 1) wherein it is stated : ' The Insolvency petition was dismissed and I paid for the debts ' and on this basis it is contended that there is no such thing as dismissal of the insolvency petition under the Provincial Insolvency Act. This would only mean that the insolvent was discharged, more so, when all the debts had been paid off. In this connection, my attention is drawn to Sections 28 (2), 37 and 43 of the Provincial Insolvency Act and also a number of decided cases to support the argument that no revesting order is necessary, having regard to the long lapse of time and having regard to the inaction of the Official Receiver, it must be deemed that the plaintiff was no longer an insolvent.

10. I will first dispose of the submission that the appellant should not be allowed to raise this ground, at this belated stage. No doubt there is no specific ground either before the lower Appellate Court, or in the second appeal. But, since no objection could be taken, as there is material on record in the form of the admission of P.W. 1, it is but necessary that the appellant should be given a chance to raise this ground, and therefore, I permitted him to argue.

11. In order to appreciate these arguments pertaining to law, it is necessary to refer to the following three sections of the Provincial Insolvency Act. They are Sections 28,37 and 43. The effect of these sections, to put it shortly, would be that as soon as an order of adjudication is made, the entire property of the insolvent vests in the Official Receiver. Until the adjudication is annulled, whatever acts were done by the Official Receiver, they would be valid. Where on the day appointed for considering the application of discharge, if the debtor does not appear, the Court may pass such order as it thinks fit. On the basis of this section, it is contended that no specific order of revesting is necessary. It may be so. But, in this case, what is required to be decided is whether the so-called dismissal would enable the learned Counsel for the respondents to contend that the insolvency proceedings got terminated. In other words, whether the insolvent ceases to be so.

12. The first case that is cited before me is Khadir Bi v. Mamoodunnissa Begum : (1973)2MLJ36 where the insolvency was in 1935. The properties of the insolvent vested in the Official Receiver on his adjudication. The absolute discharge was granted in 1938. Full payment was not made to the creditors. But neither the Official Receiver nor any of the creditors took any steps seeking to bring the properties to sale to satisfy the claims of the creditors in full. During all the period the insolvent and his heirs after his death were in possession and enjoyment of the suit properties.

13. In a suit for partition by the legal representatives of the insolvent, when some of the defendants contended that notwithstanding the discharge, the properties never reverted or revested in the insolvent, and that the co-tenancy or co-ownership between the brothers had been extinguished by the insolvency, it was held that even though there was no order revesting the properties in the insolvent after the absolute discharge order was made, by reason of the inaction of the Official Receiver and the creditors, the properties of the insolvent have revested in the heirs of the insolvent. The contention that in the absence of any revesting order, the insolvent loses his title to the properties is therefore, untenable.

14. This case is easily distinguishable, since there was an order of absolute discharge passed in the year 1938. Hence, this does not support the respondent. There was also no such evidence in this case.

15. As to what is the meaning of an undischarged insolvent for the purpose of the then Madras Local Boards Act, came up for consideration in Chinniya Pillai v. Subbaratnam Pillai : AIR1941Mad22 , and it was held:

Annulment of adjudication on whatever ground it is based, must be taken to put an end to the legal character of an insolvent which adjudication under the Act confers upon a debtor and a person whose adjudication is annulled under Section 43 cannot therefore be held to be an 'undischarged insolvent' disqualified for election to a Local Board under Madras Local Boards Act, Section 55 (2) (b). The meaning of ' undischarged insolvent' in Section 55 (2) (b) of the Local Boards Act cannot be controlled by anything contained in Section 73 of the Provincial Insolvency Act.

16. This has no relevance to the case on hand, since it was argued there that mere annulment would be of no consequence. But there must be specific of discharge.

17. As to the effect of annulment, the following two decisions viz., Bhadramma v. Parvateesam 63 M.L.J. 414 : 139 Ind.Cas. 574 : 36 L.W. 655 : A.I.R. 1932 Mad. 731 and Subbiah Goundan v Ramaswami Gaundan : AIR1954Mad604 , are pressed into service. These cases again, have no application .

18. Akkayya y. Appayya : AIR1947Mad238 , is yet another decision which is relied on. I find by a reading of that decision that it was only the question of limitation that came up for consideration and, therefore that again is inapplicable.

19. Lastly, reliance is placed on Suryanarayanamurtki v. Veeraju : (1945)1MLJ292 . In that case it was held that an insolvent co-parcener's, share of property does not cease to be joint family property while it is vested in the Official Receiver merely because the other co-parceners lose their right of survivorship in the share or because it is not divested from the Official Receiver on the insolvent's death When the purpose for which the law places a fetter on the coparcenary interest (namely, for satisfying the claims of the coparcener's creditors) has been fulfilled, the surplus of such interest must partake of the same character as the interest divested by the adjudication as insolvent. Accordingly on reverter under Section 37 of the Provincial Insolvency Act, on annulment of the adjudication of a member of a Hindu joint family his assets m the hands of the Official Receiver come back to him as joint family property and not as his separate property.

20 There again, it has to be' noted that on the annulment of adjudication, as to what would be its effect on the insolvent's share was the question that came up for consideration. But, in this case, as seen above, there is no evidence as to the fate of the insolvency proceedings. Moreover the question here is whether the erstwhile insolvent could prescribe title adversely as against the Official Assignee.

21. The learned Counsel for the appellant relies on the judgment of this Court in Sabarianandan Nadar and Anr. v. Chellachi Mdachi and Anr. L.P.A. No. 2 of 1968 This again has no application to the present case.

22. So, in order to effectively and properly adjudicate the rights of the parties, I think that the interests of justice require that the matter should be remanded to the trial Court for fresh consideration on the limited question as to how and when the insolvency proceedings came to an end, or whether the first respondent herein continues to be an undischarged insolvent. If the latter is the case, the question as to whether the suit could be maintained by him even though it is filed on behalf of himself and defendants 6 to 9 and whether adverse possession could be pleaded as against the Official Receiver, are matters which require to be decided. If necessary, the trial Court will frame an issue in this regard and proceed to determine the same upon oral and documentary evidence, which is already on record and which may be filed or let in by the parties hereafter, for which I grant liberty. It is needless for me to point out that the Court below will decide the matter, uninfluenced by any of the observations on the question of law and the case law cited by either side.

23. In the result, the second appeals are allowed and the case will be remanded to the trial Court (District Munsif Court) for fresh disposal in the light of the above observations. The appellant will be entitled to refund of Court-fee in both the second appeals. Costs will abide the result of the suit. No leave.


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