Official Receiver vs M. Rm. K.A.R. Rm. Arunachalam Chettiar

Madhavan Nair, J.—The Official Receiver of Coimbatore is the appellant. One Arunachalam Chettiar obtained a money decree in O.S. 206

of 1926 against one Krishnasami Goundan. The joint family properties of the judgment-debtor and his three sons had been attached before

judgment. These were proclaimed for sale in execution of the decree. In the meanwhile, Krishnasami Goundan was declared insolvent and the

Official Receiver and the judgment-debtor, the insolvent, applied by E.A 15 of 1928 and E.A. 14 of 1928 for stopping of the sale in execution.

The decree-holder opposed these applications and they were dismissed; but the Subordinate Judge directed that the proceeds of the sale in

execution should be sent to the Official Receiver for distribution amongst the general body of the. creditors of the insolvent. Accordingly,, a sum of

Rs. 5,177-11-0 was sent to the Official Receiver.

A holder of another decree against Krishnasami Goundan applied for a rateable distribution of the amount sent to the Official Receiver and an

order was passed on that application, E.A. 256 of 1928, asking him to apply for the transfer of the amount sent to the Official Receiver to the

execution Court. Arunachalam Chettiar, the decree-holder, in O.S. 206 of 1926 also applied by a memo for three-fourths of the amount being sent

for on the ground that the insolvent''s properties alone were vested in the Official Receiver and that he was entitled to the shares of the insolvent''s

three sons in the amount. E.A. 256 of 1928 was dismissed owing to the absence of the petitioner and his vakil. In response to the order of the

Court on the respondent''s application, the Official Receiver sent back the money, that is, three-fourths of the amount to the execution Court and

presented the application, E.A. 379 of 1928, out of which this C.M.S. A. arises praying that Arunachalam Chettiar, the decree-holder in O.S. 206

of 1926, must not be paid any portion of the amount and that the sum should enure to the benefit of the general body of the creditors of Krishna-

swami Goundan.

The question for consideration is whether this three-fourths of the amount should go to the decree-holder in O.S. 206 of 1926, the respondent

in this Court, or to the general body of Krishnaswami Goundan''s creditors. The Subordinate Judge held that the decree-holder was bound by the

order passed on E. A''s. 14 and 15 of 1928, as he failed to prosecute an appeal which he filed against that order and further, that the money must

go to the general body of creditors because the attachment effected in execution was an attachment of the father''s right to dispose of his sons''

shares to pay his own debts ""not being immoral or illegal"" and that the same right vested in the Official Receiver on the adjudication of the

judgment-debtor as insolvent. He therefore ordered that the amount should be sent back to the Official Receiver. On appeal, the learned District

Judge set aside the order of the Subordinate Judge. This G. M. S.A. has been filed by the Official Receiver against the order of the learned District

Judge.

The first question for decision is whether the order passed by the Subordinate Judge on E. A''s. 14 and 15 of 1928 bars the right of the

respondent to apply for the return of the fund in question. The appellant contends that, since it was decided that the money realized in execution

should be sent to the Official Receiver, it is no longer open to the respondent to ask for the return of that money. He argues that the order operates

as a bar on the ground of constructive res judicata. In those applications the petitioners relied on Section 52, Provincial Insolvency Act, to stop the

sale, but as the property was only attached and had not come into the possession of the Court the applications were dismissed; and the Court

made a direction that the proceeds of the sale should be sent to the Official Receiver for distribution amongst the creditors. The decree-holder, the

respondent, preferred an appeal against the order dismissing his application but he did not prosecute it. It is clear that the question regarding the

respective rights of the decree-holder in O.S. 206 of 1926 and the Official Receiver as regards the sale proceeds did not arise for decision in those

petitions. It is no doubt true that the learned Judge passed an order to the effect that the proceeds of the sale should be sent to the Official

Receiver, but having regard to the fact that the question which the Court had to decide was whether the sale should be stopped, I cannot consider

the direction made by the Subordinate Judge as a judicial determination of the respective rights of the parties to the sale proceeds. As this was not

the question for decision there was no obligation on the part of the decree-holder to raise the contention that he is entitled to three-fourths of the

amount. I agree with the opinion of the District Judge that the decree-holder, the respondent, is not precluded by the order on E. A''s. 14 and 15

of 1928 from asking that the amount in question should be returned by the Official Receiver to the execution Court.

The next point is whether the view of the Subordinate Judge that this money should go to the general body of creditors on the ground that the

attachment effected in execution was an attachment of the father''s right to dispose of his sons'' shares to pay his own debts ""not being immoral or

illegal"" is right. On the insolvency of the father of a joint Hindu family it is only his own share of the family property that vests in the Official

Receiver. The shares of his sons do not vest in the Official Receiver. With respect to those shares what vests in the Official Receiver is only the

father''s power of disposal. In this case the entire property belonging to the judgment-debtor and his sons had been attached before the judgment-

debtor was adjudicated as an insolvent. The petition for adjudication was presented after the date of the attachment. It therefore follows that the,

father''s power of disposal of the sons'' shares had been destroyed by the existing attachment of those shares; and the Official Receiver cannot

therefore get any power to deal with the sons'' shares by reason of the order of adjudication: see the decision in Gopalakrishnayya v. Gopalan AIR

1928 Mad. 479. If so,. the Subordinate Judge''s view that the attachment effected was an attachment of the father''s right to dispose of his sons''

shares to pay his own debts is clearly wrong. This was the view of the District Judge and I agree with that view; but it is argued by Mr.

Krishnaswami Ayyar that the moment a property had been sold the entire sale proceeds become available to the Official Receiver for distribution

amongst the general body of creditors.

His contention is that the Official Receiver is precluded only from selling the shares of the sons; and that the suspension of that power does not in

any way affect his rights to appropriate the sale proceeds realized from the sale. When the power of sale is once destroyed by the existing

attachment I do not think the Official Receiver has any right to appropriate the sale proceeds accruing from the sale of the sons'' shares. No

authority is cited in support of the proposition contended for by the appellant. I do not think that the decision of the Full Bench in In the matter of

Official Assignee Vs. Ramachandra Aiyar and Others, , which holds that the institution of a suit by the sons against their father for partition after the

latter''s adjudication as an insolvent extinguishes the right of the Official Assignee to alienate privately the sons'' shares for the father''s debts can in

any way he interpreted as supporting the appellant''s contention, nor do I think that Section 51 Insolvency Act, relied on by Mr. Krishnaswami

Ayyar, can be used for that purpose as under that section the Official Receiver is entitled to the benefit of the execution only against the property of

the debtor (the insolvent). I may say that the argument based on Section 51, Provincial Insolvency Act, was not put forward in either of the Courts

below.

In the result the C.M.S. A. fails and is dismissed with costs.