Rm. Ar. Ar. Rm. Arunachalam Chettiar (dead) and Others vs Sabaratnam Chettiar and Others

Alfred Henry Lionel Leach, C.J.—On the 24th September, 1931, the appellant obtained a decree for Rs. 19,383-10-1 with interest against

one Ramaswami Chettiar and his five sons. The father and the sons constituted a joint Hindu family. In 1926 the father was adjudicated an

insolvent by the Subordinate Judge of Tinnevelly. The Court of the Subordinate Judge of Devakottah subsequently obtained seisin of the insolvency

proceedings and the estate of the insolvent vested in the Official Receiver of Ramnad. The Official Receiver sought to bring the whole of the family

properties to sale for the benefit of the creditors on the ground that the sons'' shares in those properties were available for the discharge of the

father''s debts on the principle of Hindu law that sons are liable for their father''s debts. The Official Receiver received bids for the various items of

property in March 1932, but he did not accept any bid and adjourned the sale until the 9th April, 1932. Mean while the appellant had filed in the

Court of the Subordinate Judge of Devakottah proceedings in execution of his decree and asked for the attachment of the shares of the sons in the

family properties. An order was issued and the properties were attached. The appellant then filed an application asking the Court to restrain the

Official Receiver from proceeding to sell the shares of the sons in the attached properties. By consent, on the 9th April, 1932, an order was

passed by the Subordinate Judge allowing the Official Receiver to proceed with the sale of the properties, but subject to his paying five-sixths of

the proceeds (the amount representing the sons'' shares) into Court pending the decision of the main application. In pursuance of this order the

Official Receiver sold the properties in June 1932 and realised a total sum of Rs. 17,400. Of this amount Rs. 14,500, representing the shares of

the sons, was deposited in the Court of the Subordinate Judge. The Subordinate Judge having heard the parties held that the appellant was entitled

to an order for payment to him of the Rs 14,500 on the ground that the Official Receiver''s power to sell the interests of the sons in the properties

for the discharge of the father''s debts was defeated by the order of attachment. The Official Receiver appealed to the District Judge, who reversed

the decision of the Subordinate judge on the ground that the right to sell the properties had vested in the Official Receiver either at the time of

adjudication or some time before the sale of the properties took place. The learned District Judge failed to understand the question which was

before him. The fact that the right to sell the sons'' shares had devolved on the Official Receiver was not the only factor. The present appeal is from

the order of the District Judge.

The appellant contends that the Official Receiver merely stands in the shoes of the father. He says that as the attachment would be valid against

the father and would prevent him from exercising his power to sell his sons'' interests in the family properties in order to discharge his own debts,

the attachment puts an end to the right of the Official Receiver to sell as he has no greater rights than the father. The Official Receiver does not

attempt to support the decision of the District Judge on the ground given by the District Judge, but he says that there cannot be a valid attachment

without the leave of the Insolvency Court and in this connection relies on the provisions of Section 28 of the Provincial Insolvency Act, 1920.

Before examining the effect of Section 28 it will be convenient to refer to certain authorities which lay down principles which have application here.

In Sat Narain v. Behari Lal (1924) 47 M.L.J. 857 : L.R. 52 IndAp 22 : ILR 6 Lah. 1 , the Privy Council held that when a Hindu is adjudicated

an insolvent under the Presidency Towns Insolvency Act, 1909, his sons'' interests in the joint family property do not thereby become vested in the

Official Assignee, although u/s 52 or in some other way their interests in the family property might be available for the payment of the father''s

debts. There is no provision in the Provincial Insolvency Act which renders the position any different to the position under the Presidency Towns

Insolvency Act. In T.S. Balavenkataseetharama Chettiar and Another Vs. The Official Receiver and Others, , a case governed by the Provincial

Insolvency Act, a Full Bench of this Court expressly held that on the insolvency of a Hindu who is subject to the Mitakshara law the insolvent''s

power to sell his sons'' shares in the family property for paying his just and proper debts vests in the Official Receiver but that the sons'' shares do

not vest in him. This principle was reaffirmed by the Judicial Committee in Sat Narain v. Sri Kishen Das : Same v. Bank of Upper India (1936) 71

M.L.J. 812 : L.R. 63 IndAp 384 : ILR 17 Lah. 644 . There their Lordships pointed out that although Section 52(2)(b) of the Presidency Towns

Insolvency Act entitles the Official Assignee to exercise the father''s powers to sell the share of his son in the family property to discharge his debts

such powers are subject to limitation.

Section 28(2) of the Provincial Insolvency Act states:

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.

This section refers only to the property of the insolvent and the prohibition against the institution of legal proceedings-without the leave of the

Court refers to proceedings with regard to the insolvent''s property. Although the right of an insolvent Hindu father to sell his son''s share in the

family property to discharge his own lawful debts vests in the Official Assignee or the Official Receiver as the case may be it does not follow that

proceedings cannot be taken in respect of the son''s interest in the family property without the leave of the Insolvency Court. The right to sell the

son''s interest only exists so long as the son''s interests in the family property exists. If the interest has been sold or if there has been a lawful

attachment, which has the same effect, there exists no property over which the power can be exercised.

The right of a creditor to proceed to attach a son''s property notwithstanding the father''s insolvency has been recognised by two Benches of this

Court. In Adusumilli Gopalakrishnayya Vs. Peyyeti Gopalam and Others, , Ramesam and Devadoss, JJ., held that notwithstanding that on the

insolvency of a Hindu father joint with his son the power of the father to sell the son''s share in the family property passed to the Official Receiver in

the insolvency, the Official Receiver is not entitled to exercise that power after there has been an attachment of the son''s share by a creditor. The

attaching creditor is entitled to proceed with the execution by selling the share of the son. In Manickam Pillai v. Vallayya Naicken A.A.O. No. 253

of 1936 a decision which has not yet been reported. King and. Krishnaswami Aiyangar, JJ., had to consider the direct question whether Section

28(2) of the Provincial Insolvency Act prohibits an attachment of a son''s share without1 the leave of the Insolvency Court. They held that it did

not. The learned Judges in that case pointed out that all that the Official Receiver can do in respect of the property of the undivided sons of ant

insolvent is to exercise the power of the insolvent himself and sell that property to meet the insolvent''s debt; but that power can be defeated at any

time by any action taken by the sons themselves to dispose of their property or by any action taken by the sons'' creditors against them., This

principle was also recognised by Krishnan Pandalai, J., in Chinna Veeriah v. Gurivi Reddi (1933) 66 M.L.J. 277 . In that case, after the

adjudication of the managing member of a joint Hindu family a creditor filed a suit on, a promissory note executed by the managing member. The

suit was dismissed as against the insolvent and the Official Receiver, but was decreed as against the other members of the joint family. It was

argued on appeal that the suit could not even be maintained as against the other members of the family on the ground that on the insolvency of the

managing member the power to sell the whole of the family property to discharge the debts of the family vested in the Official Receiver as the

property of the insolvent. The Court held that, the creditor was not resorting to any property of the insolvent or trying to interfere with the power of

the Official Receiver. The creditor was only seeking to realise his debt from the share of the son in the family property and therefore the suit was

main tainable.

The learned advocate for the Official Receiver has quoted the decision of Pandrang Row, J. (sitting alone) in C.A.V. Baluswami Naidu Vs. The

Official Receiver and Another, . The learned Judge does appear to have formed the opinion that in the case of the insolvency of a Hindu father

Section 28(2) of the Provincial Insolvency Act does prevent the creditors of a son from attaching the sons'' share in the family property without the

leave of the Insolvency Court. As I have indicated I do not share this view and as I have also indicated it is opposed to the decisions of two

Benches of this Court: Adusumilli Gopalakrishnayya Vs. Peyyeti Gopalam and Others, and Manicka Pillai v. Vellaya Naicker A.A.O. No. 253 of

1936. The position is that while the interest of the son remains unsold or unattached the Official Assignee has the right to sell the properties for the

lawful debts of the insolvent father, but unless he exercises his right he may lose it and he loses it if the interest of the son is attached by a creditor

of the son.

For these reasons I hold that the decision of the District Judge is wrong and the decision of the Subordinate Judge should be restored.

Accordingly I would allow the appeal with costs against the Official Receiver here and below.

Somayya, J.

I agree.