Ponnuthaye Ammal vs The Official Receiver

Krishnan Pandalai, J.—This is an appeal by the plaintiff (decree-holder) against the order of the District Judge of Coimbatore declaring on

the application of the respondent (the Official Receiver of Coimbatore) that the decree is of no force as against the respondent and that the

execution of it by sale of the properties of the insolvent (1st defendant) in the decree cannot proceed.

The facts are simple and undisputed. The appellant is a widow and she sued the 1st defendant, her husband''s brother and the 2nd defendant,

son of the 1st defendant, members of the joint family of her husband, for arrears of maintenance and for future maintenance claiming a charge for

the latter on certain family properties specified in the plaint. Four days after the suit was registered, i.e., on the 22nd August, 1927, the 1st

defendant was adjudicated insolvent. On the 21st November the plaintiff''s vakil reported that the 1st defendant had been adjudicated and asked

for time to consider what should be done. On the 12th December he submitted that he did not want to add the Official Receiver as a party and

elected to proceed with the suit as it stood. On this no one seriously defended the suit and on the 15th November, 1928, a decree was passed as

prayed making the future maintenance a charge on the B schedule property. The respondent (appellant herein) executed her decree and tried to

bring the property charged to sale. Then the Official Receiver intervened and objected to the execution on the ground that he ought to have been

impleaded and that the insolvent''s property had vested in him. The Subordinate Judge rejected this objection and ordered the execution to

proceed. The learned District Judge in appeal reversed this order holding that the decree charging the property of the insolvent without impleading

the Official Receiver is a nullity.

The order of the Lower Court so far as it dismissed the execution petition entirely is obviously wrong. The decree was obtained against two

persons, the 1st defendant who subsequently was adjudged insolvent and the 2nd defendant, a minor who was defended by a guardian appointed

by the Court and who has not been adjudicated an insolvent. Whatever may be the consequences of not impleading the Official Receiver who

represented the estate of the 1st defendant, it can have no effect on the decree so far as it is against the 2nd defendant.

But the appellant''s learned advocate contends that the order is wrong even as against the decree against the 1st defendant. His contention is that

even in a case in which the rights of property of a defendant are in question the insolvency of that defendant does not require that the Official

Receiver in whom his property vests should be brought on the record. According to the argument it is immaterial whether he is impleaded or not

and it is said that the Official Receiver is bound whether he is added or not. This is opposed to clear authority upon the subject. It may be

conceded that this suit in which the plaintiff prayed for a charge for her future maintenance upon the B schedule property is one in which the right to

immovable property was directly in question and that therefore the rule of lis pendens is within its proper limits applicable thereto. It is therefore

said that by virtue of Order 22, Rule 10 of the CPC the Official Receiver who became the assignee by operation of law of the defendants''

property need be impleaded only with the leave of the Court which according to the argument implies that it is optional with the plaintiff to add the

Receiver or not. The short answer to this argument is that the Official Receiver was not excluded by the refusal of any leave of the Court in this

case. On the contrary the plaintiff after taking time to consider reported that she preferred to continue the suit without the Official Receiver. It

therefore is incorrect to call in aid anything which may depend upon leave of the Court being refused. But the idea of the leave of Court has no

place at all in this case because the question is whether the respondent (appellant herein) is entitled to say that she shall keep the benefit of the

decree against the property of a person which she knew had by operation of law passed to the Official Receiver. On this point the decision in

Puninthavelu Mudaliar v. Bhashyam Ayyangar ILR (1901) 25 Mad. 406 : 12 M.L.J. 282 is sufficient to show that the appellant''s contention is

wrong. In that case the plaintiff was a mortgagee but of chattels and the question was what was the effect of the decree obtained by him in the

absence of the Official Assignee in whom the property of the defendant had vested. Both the learned Judges agreed in the view that where the

mortgagor becomes bankrupt pending the suit the trustee in bankruptcy is not bound by a decree for foreclosure in his absence. This matter is dealt

at some length by Bhashyam Aiyangar, J., at pages 422 and 423, where he cites Wood v. Surr (1854) 19 Beav. 551 : 52 E.R. 465. ""The principle

of the decision in Wood v. Surr (1854) 19 Beav. 551 : 52 E.R. 465. is that the Official Assignee being one appointed ''in invitum"" and not a

voluntary purchaser"" as in the case of a transfer by act of parties or by an ''involuntary sale'' in execution of a decree, the doctrine of lis pendens

cannot affect him and the party seeking to bind him (the Official Assignee) by the result of the suit, pending which the interest of its subject-matter

has-devolved on him by operation of law, ought to take proceedings to join him as a party to the suit and obtain the decree against him."" The

decision of the Privy Council cited by the learned Judges, (1927) L.R. 54 I.A. 190 (Privy Council) , is based on the same principle but is not

strictly applicable to this case because in that case the defendant on the record died and in bringing in his legal representative his son was

impleaded but it transpired that the son had become insolvent before the suit and that therefore his father''s inheritance, when it fell in, also vested in

the Official Receiver. In those circumstances the Privy Council held that the proper party, namely, the Official Receiver, was not on the record to

represent the estate and therefore the decree need not bind him. In this case the insolvency of the defendant was pending the suit.

The same result, so far as this case is concerned, is arrived at by reference to Section 28(2) of the Provincial Insolvency Act which declares that

after the order of adjudication no creditor to whom the insolvent is indebted in respect of any debt provable under the insolvency shall have any

remedy against the property of the insolvent in respect of the debt or commence any suit or other legal proceeding except with the leave of the

Court. In this case if there was no other irregularity execution was sought of the property of the insolvent vested in* the Official Receiver without

leave of the Court and the petition, was liable to be dismissed on that ground alone. For the above reasons the order of the Lower Court will be

varied by declaring that the decree in O.S. No. 166 of 1927 and execution, proceedings in pursuance of it are invalid as against the Official

Receiver in so far as he represents the estate of the 1st defendant but otherwise they are valid. The appellant has substantially failed and must pay

the costs of the respondent.