Chitturi Perraju and Another vs Chitturi China Perraju and Others

Viswanatha Sastri, J.—The Plaintiffs are the Appellants in this appeal. They sued for partition and delivery of separate possession of their l/6th share of their family properties free from the claims of purchasers at a sale held by the Official Receiver in the insolvency of their paternal grand-father the first Defendant. Defendants 2 to 4 are the sons of the first Defendant and the Plaintiffs are the sons of the second Defendant. The 1st Defendant was adjudicated an insolvent in 1. P. No. 23 of 193C'' in 1937.

The Official Receiver in whom the properties of the insolvent vested sold them to various purchasers In the course of administration. The sales by the Official Receiver were effected in 1989. The case of the Plaintiffs was that the sales by the Official Receiver did not convey their shares in the joint family properties or even the share of their father the second Defendant and all that the purchasers got under the sale effected by the Official Receiver in their favour was the l/4th share of the first Defendant, the insolvent, in the family properties. There was no challenge by the Plaintiffs that the debts incurred by the first Defendant were tainted by immorality or illegality or were such as would not be binding on the Plaintiffs'' share Of the family properties by reason of their pious obligation to discharge the debts of their paternal grand-father. In the Court below, the Plaintiffs were met by the defence that u/s 28-A of the Provincial Insolvency Act v. of 1920 the property of the insolvent comprised the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the insolvent for his own benefit at the commencement of his insolvency and that the Official Receiver had exercised the power of the insolvent to sell the shares of his grand-sons.

It is well-known that the effect of the enactment of Section 28-A of Act v. of 1020 in 1948 was so supersede the decision of the Pull Bench of the Madras High Court in Nori Ramasastrulu Vs. Teluguntla Balakrishna Rao and Another, (A) which laid down that the insolvency of the father of a Mitakshara joint family would not vest in the Official Receiver the power of the father to sell the sons'' shares- for the discharge of debts binding on the sons either on the ground of family necessity or of pious obligation. The amendment of the law by the enactment of Section 28-A was intended to oe retrospective and was expressed to be such. It was contended on behalf of the alienees that the sale by the Official Receiver conveyed not only the interest of the insolvent but the entire interest in the property including the interest of the insolvent''s .sons and grand-sons. The alienees relied upon the amendment of the law by the enactment of Section 28-A in support of their contention that on the adjudication of the first Defendant as an insolvent not only his share but also his power to dispose one of his sons and grand-sons vested in the Official Receiver u/s 28 of the Provincial Insolvency Act.

In the Court below, a, prolonged and strenuous argument was directed to establish that Section 28-A of the Provincial Insolvency Act was ultra vires the Central Legislature inasmuch as it affected rights in or over land and the transfer, alienation and devolution of agricultural land comprised in entry 21 of List II of the Provincial Legislative list of the Constitution Act of 1935. This contention was negatived by the learned Subordinate Judge in an exhaustive judgment. It was elaborately dealt with by Subba Rao and Pancha-pakesa Ayyar, JJ. in Kolandayammal Vs. Sinnavelappa Goundan and Others, (B), and the learned judges came to the constitution that Section 28-A was intra vires the Dominion Legislature and the power to sell the entire joint family property including the shares of the 60ns vested in the Official Receiver on the insolvency or the father of a, Mitakshara joint family. It is unnecessary for us to deal at length with the reasons that have been given by the learned Judges in support of their conclusion and it is enough to say that We are in respectful agreement with the decision.

The next question that was argued related to the quantum of the interest sold by the Official Receiver in the course of his administration of the estate of the insolvent. The contention of the learned advocate for the Appellant is that the Official Receiver had not conveyed the interest of the sons in the joint family properties and had not taken the necessary steps for the purpose of enabling, him to exercise the power which the insolvent had, to dispose of the sons'' share of the family properties. Reliance has been placed on the decision of a learned Single Judge of the Nagpur High Court in Fatehchand Dipchand v. Hiralal Shraogi AIR 1935 Nag 193 (C). for the proposition that if the Receiver had intended to sell the sons'' interest also, he ought to have proceeded u/s 4 of the Provincial Insolvency Act and seized their share after giving them full notice. Section 4 of the Provincial Insolvency Act enables the insolvency Court to decide all questions whether of title or priority, or of any nature what-so-ever. and whether involving matters of law or of fact, which may arise in any case of insolvency coming within the cognisance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case. In our opinion, it is not obligatory on the Court in every case where, on the insolvency of a Hindu Mitakshara father, the Official Receiver purports to exercise the power vested in the father to sell the sons'' shares for satisfying his debts, to hold an enquiry u/s 4 of the Act. In the present case there is not even an allegation that the debts were not antecedent debts binding on the share of the sons or grand-sons by reason of their pious obligation. Nor is there an allegation that the debts were tainted by illegality or immorality. In these circumstances, it is difficult to see what objection the sons could have put forward to the exercise of the power of sale by the Official Receiver in a proceeding u/s 4 of the Provincial Insolvency Act. In the case of an ordinary creditor it is open to him to enforce payment of the personal debt of a father not being illegal or immoral, by attachment and sale of the entire interest of the father and his sons in the family property and it is not necessary that the sons should be made parties either to the suit itself or to the proceedings in execution. The question whether the execution sale passes only the father''s interest in the property sold or the whole property including the sons'' interest depends upon the scope of the execution proceedings including the sale proclamation and the sale certificate. It cannot be contended that the co-parcenary interest of the sons would not pass to the purchaser at an execution sale merely because the suit was against the father alone and the sons were not impleaded. The question in each case will be what did the Court intend to sell and what did the purchaser bargain and pay for. If in a proceeding u/s 4 of the Act initiated by the sons or by the creditors, the sons dispute the right of the Official Receiver to sell their shares in the family properties and the matter is decided one way or the other, the adjudication would be binding on the parties and the Official Receiver should, in administering and selling the property of the insolvent, give effect to that decision. If no proceed-fn" u/s 4 had been taken, all that the t.CH.s could claim is an opportunity to show that the sale by the Official Receiver was not binding on their interest in the property bv reason oi'' the debts or the lather not being ''binding upon them under the rule oi'' pious obligation. As already observed, in the present case, it is not suggested the the debts were such as the sons or the grandsons of tile insolvent would not be bound to pay by reason of their pious obligation under the Hindu law.

The further contention of the learned advocate for the Appellants is that though it was open to the Official Receiver to sell the share of the sons by exercising the power of the father he had not actually done so in this case. The question whether in a particular case, the Official Receiver has exercised that power and has conveyed the entire interest in the property including the sons'' share must be decided on the facts of that case. It is true that the mere fact that the order of adjudication vests in the Official Receiver not only the share of the fulher but alto the power of disposition possessed by the lather over the sons'' shares would not by itself convey to the Purchaser the sharer of the sons unless there is indication in the deed cf sale or in the sale proceedings which preceded the sale that tile Official Receiver purported to exercise thai, power of sale and did in fact sell the sons'' shares also. Reference was made to M. Thirumaleshwara Bhatta Vs. Balike Govinda Bhatta and Others, (D), where Satyanarayana Rao, J; held that in the circumstances of that case the sons'' share did not vest in the purchaser from the Official Receiver in the insolvency of a Hindu father. The decision of the learned Judge was based on the facts of that case and on the terms of the proclamation of the sale and the sale deed actually executed by the Official Receive;1. The learned Judge observed as follows:

If he (the Official Receiver) had conveyed not merely the insolvent''s right but also the right of the son it could very well be presumed that he purported to exercise the right to 11 the right of the father to sell the son''s share as well. But in the absence of any specific language in the deed conveying the interest of the son in the property or in the absence of any other indication in the deed from which the intention to convey the larger estate could be gathered, it is impossible to uphold the contention urged on behalf or the second Defendant by Mr. Krishna Rao that this deed vested in the second Defendant not merely the share of the father but also the share of the son as well. We arc not here concerned with the correctness of the conclusion of the learned judge ff the facts of the particular case. All that wc respectfully point out is that it is sufficient if The Official Receiver in fact exercises the right of the father to sell the share of the sons and conveys the entire interest in the property to the purchaser. The Official Receiver need not purport "to exercise the right to sell the right of the father to sell the son''s share as well, whatever this might mean.'' It is sufficient if he sells the absolute interest in the property. There is no doubt a difference between the existence of a power and its actual exercise and the mere existence of power may not be sufficient to show that in any particular case that it was exercised. At the same time the deed of sale executed by the Official Receiver need not i specifically recite that he was exercising the power !of sale vested in him under Sections 28 and" 28-A of the Act. It will be sufficient if he purports to I convey the entire interest in the property and not merely the share of the insolvent father. In the present case, what has been sold is the right of the insolvent in the property described in the schedule. This is the usual clause found in sale deeds executed by* Official Receivers in order to exclude the statutory warranty of title and to intimate to the purchaser that he takes the risk of any defect in the title to the property conveyed. The proclamation of sale published by the Official Receiver clearly stated that he would be selling the entire family properties inclusive of the sons'' shares in exercise of the power of sale vested in him and the properties described in the sale notice were thereafter sold. One of the sale deeds executed by the Official Receiver has been filed by way of sample in the present case and under that document, the right of the insolvent in the properties described in the schedule was conveyed to the purchaser with absolute powers of disposition by way of gift, sale etc. The schedule annexed to the sale deed clearly describes the property and there is no indication in the document that anything less than the entire property or only the share of the father in the property or the property excluding the son''s shares, was sold. It was not only the right but the duty of the Official Receiver to sell the entire property of the insolvent for the benefit of his creditors and where the insolvent''s property included the power to sell his sons'' shares in respect of the insolvent''s antecedent debts not tainted by illegality Or immorality it may be presumed that the Official Receiver exercised the right vested in him by law for the benefit of the creditors though the sale deed does not say so. We have also to take due notice of the fact that at the time of the sale by the Official Receiver, the well understood legal position was that the further could convey the interest of his sons for the discharge of his untainted debts and that the Official Receiver in whom the father''s interest vested on his insolvency, had also a similar right. The question in these cases is what was intended and accepted to be sold and actually was sold, according to the law understood to be prevailing at the time and not what might have been sold under an alteration in the law as subsequently declared by judicial decisions. At the time of the sale, the decisions were to the effected the law was declared by the decisions-that the Official Receiver could exercise the power of sale which a Hindu father had apd sell the interest of the sons in the joint family property. We may presume that the sales by the Official Receiver were made in conformity with the then prevailing view of the law. See Abdul Aziz Khan v. Appayasami N;.ioker ILR 27 Mad 131 (PC) (E). For these reasons we are of the opinion, that the entire joint family properties including the shares of the Plaintiffs were sold by the Official Receiver and that such sales were valid and operative to convey the interest of the Plaintiffs to the purchasers. A similar view was taken in Gudivada Rama Rao Vs. Pottiswami and Others, (P) and in Kolandayammal Vs. Sinnavelappa Goundan and Others, (B).

The result is that this appeal fails and is dismissed with costs.