C.A.V. Baluswami Naidu vs The Official Receiver and Another

Pandrang Row, J.—A review was granted in these appeals as my previous decision allowing these appeals was based on the sole ground

that at the time the Official Receiver attempted to sell the properties, the adjudication of the insolvent had been annulled and there was no order

vesting the property in the Official Receiver. It has now been discovered - and the fact is not denied - that there was such an order, namely, the

order of the Subordinate Judge dated 8th December, 1927, to the effect that the right, title and interest of the insolvent in the properties shall revest

in the Official Receiver and that he should sell the same and distribute the proceeds among the creditors. This order was passed within a month

after the annulment, the annulment being made on the 11th November, 1927. It was not seriously contended before me though the point was not

abandoned, that the order of the 8th December, 1927, was without jurisdiction, because it was passed, not simultaneously with the order of

annulment, but sometime later. The point was not pressed seriously because of at least three decisions against any such contention, namely,

Chouthmal Bhagirath v. Jokhiram Surajmal I.L.R.(1932) 12 Pat. 163 Balla Mal v. Mst. Fatima Bibi I.L.R.(1934) 15 Lah. 698 and Abdul Latif v.

R. Percival 40 C.W.N. 1229. In view of the fact that this point has been dealt with in at least three decided cases referred to. above, it is in my.

opinion unnecessary for me to say more on this point than that I agree with the decisions in those cases and find that the order of the Subordinate

Judge was perfectly valid. It follows therefore that the ground on which the appeals were originally allowed does not exist, and the appeals were

therefore argued as regards the other points raised in the grounds of appeal.

It appears to have been contended in the lower Courts that the adjudication order in this case had effect only as against the insolvent''s share in

the assets of his firm and had no effect against his family property. That contention has not been repeated before me and I need not deal with it

further than to say that I agree with the Courts below in dismissing that contention. The point argued before me in these appeals is that so far as the

son''s share at least is concerned, it must be held that the Official Receiver has no power to sell because of the attachment in execution of the

decrees obtained by the appellants against the son and the subsequent sales in Court auction in their favour. The revesting of the properties in the

Official Receiver puts an end to the case of the appellants so far as the father''s share in the properties is concerned. But it is contended that the

son''s share stands on a different footing because, though the power of the father to sell the son''s share, which is admittedly the father''s property,

vested in the Official Receiver on adjudication, nevertheless, that power is lost and cannot be availed of by the Official Receiver by reason of the

attachment of the son''s share. The proposition is not seriously contested that if there is a valid attachment of the son''s share, the Official Receiver

cannot avail himself of the father''s power to sell the son''s share for the satisfaction of his proper debts. The question therefore has been argued

whether there was in this case any attachment of the son''s share and if so whether it is valid and binding on the Official Receiver. Actually what

happened in this case was: there was an adjudication on 26th November, 1923, sometime after the insolvent had died, the death having taken

place in 1922. After the adjudication, the appellants, or to be quite accurate, Baluswami Naidu and Abbas Rowther, instituted suits against the son

for recovery of debts due by his deceased father though these were debts which could, have been proved in insolvency and in respect of which

therefore no other legal remedy was permitted by law so far as the property of the insolvent was concerned. Section 28, Sub-section (2) of the

Provincial Insolvency Act runs as follows:

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 proceedings, except with the leave of the Court and on such terms as the

Court may impose.

and there is no doubt (1) that the debt in respect of which the suits were launched against the son were debts provable under the Insolvency Act;

(2) that the insolvency proceedings were pending at the time the suits were instituted; and (3) that leave of the Court had not been obtained for the

suits. The only question that remains is therefore whether the suits were directed against the property of the insolvent. The decrees passed in the

two suits show that the claim of the plaintiffs was in respect of promissory notes executed by the deceased father and that the son was sued as the

legal representative of his deceased father. The decree in one suit was to the effect that the son should, out of his father''s assets, pay the sum

decreed, while, in the other suit, the decree was to the effect that the plaintiff do recover from the family property of the father in the hands of the

son. It would therefore appear that these suits were really directed against the property of the deceased insolvent in the hands of his son, though

these properties, were family properties in which the son had his own share. I am unable to say that these suits were not suits directed against the

property of the insolvent in respect of debts due by the insolvent and provable in the insolvency. It is no doubt possible in abstract theory to split

the suits into suits against the insolvent''s share in the family property and suits against the son''s share in the family property, but that is not how the

suits were framed and the decrees were made. The suits were suits against the properties of the insolvent in the hands of his son, and it must be

remembered in this connection that the debts of the father were such that the whole of the family property including the son''s share was liable for

them. Section 53 of the CPC provides:

For the purposes of Section SO and Section 52 (of the same Code) property in the hands of a son or other descendant which is liable under

Hindu Law for the payment of the debt of a deceased ancestor in respect of which a decree has been passed, shall be deemed to be property of

the deceased which has come to the hands of the son or other descendant as his legal representative.

Section 52 of the Code provides:

Where a decree is passed against a party as the legal representative of a deceased person, and the decree is for the payment of money out of the

property of the deceased, it may be executed by the attachment and sale of any such property.

It must be presumed, in the absence of the orders of attachment and of sale, that in these cases the property that was attached was the property

of the deceased father in the hands of the son and that it was this property that was sold. It follows therefore that what has taken place is something

which is directly prohibited by Section 28, Sub-section (2) of the Provincial Insolvency Act, and I am unable to see why when there has been a

definite infraction of the law, as in this case, the proceedings which were obviously carried on in defiance of the law should be so split up in order

to extract therefrom a part which might with some plausibility be argued be not definitely prohibited by the law. In other words, I do not see why

suits which were really against the entire family property should be regarded as being also in part suits against the son''s share even when no relief

was sought against the son personally. The son was sued only as the legal representative of his deceased father and the claim was only against the

family property in his hands.

Considerable reliance was placed by the advocate for the appellants on The Official Receiver, Coimbatore v. Arunachalam Chettiar (1933) 66

M.L.J. 412. But that was a case in which there was a valid attachment before adjudication an attachment to which no-objection could be taken at

the time it was made. It was only the subsequent adjudication that made any difference so far as the attachment was concerned. What was held in

that case was that when there was a valid attachment of the entire family property before the adjudication of the father, the power to sell the son''s

share does not vest in the Official Receiver, on adjudication. This proposition is not contested, and it does not apply to the present case where the

validity of the attachment at the time it was made is attacked as being opposed to the provisions of Section 28, Sub-section (2) of the Provincial

Insolvency Act. As observed by the learned District Judge, the filing of the suits as against the son in respect of the debts of the father who had

been adjudicated an insolvent was obviously dictated by a desire to benefit the plaintiffs at the expense of the general body of creditors, and there

is no reason why this reprehensible tendency on the part of individual creditors to steal a march over others when the debtor has become an

insolvent should be encouraged by what may be called ''splitting'' heirs'' in this manner.

I am of opinion that the judgment of the District Judge in these cases is substantially in accordance with law; in any case I am not at all satisfied

that the judgment of the District Judge is vitiated by any error of law.

The appeals are therefore dismissed with costs.