Tripuramallu Venkatanarasu vs Jamili Venkatarangayya and Others

Balakrishna Ayyar, J.—The material facts are few. One Venkataratnam was adjudged an inslvt in I. P. No. 13 of 1923 on the file of the

Subordinate Judge of Guntur. He died on 10-12-1933 leaving behind him three sons. Between 1937 & 1939 the Official Receiver, Guntur, sold

some of the properties of the joint family & realized certain moneys. In 1945 a certain Venkatanarasu obtained a decree in S. C. No. 60 of 1945

on the file of the Subordinate Judge, Guntur, against the sons of Venkataratnam. After obtaining his decree Venkatanarasu applied in E. A. No.

214 of 1945 for the attachment of that part of the money in the hands of the Official Receiver which would represent the share of the sons of

Venkataratnam. The Official Receiver then filed his objections in E. A. No. 37 of 1946 & prayed for the attachment being raised. The Subordinate

Judge allowed the objections of the Official Receiver & raised the attachment. Against that order, Venkatanarasu came to this Ct in C. R. P. No.

1160 of 1946 which was disposed of on 20-7-1948. In the order made on that date this Ct directed that an enquiry should be made into the

character & source of the funds now sought to be attached & claimed to be the property of title Judgment-debtors. The matter was remanded for

disposal afresh in the light of the Observations made in that order.

After the case went back to the trial Ct this question was gone into & accepting a memo filed by the Official Receiver, the learned Subordinate

Judge found that the property sold was the Joint family property of Venkataratnam & his sons. He however held that the fund in the hands of the

Official Receiver should be utilised in the first instance to pay the debts of Venkataratnam & that the creditors of the sons would be entitled to

proceed only against the surplus if any. In that view the E. P. filed by Venkatanarasu was dismissed & the claim petition filed by the Official

Receiver allowed. Against that order these two revision petns have been filed.

The principal argument of Mr. Ramanarasu the learned Advocate for the petitioner may be put this way. The insolvency of a father does not by

itself disrupt the joint family or bring about a severance in status. If the Official Receiver had not sold the properties of Venkataratnam & his sons

those properties would have been joint family properties available for division among Venkataratnam & his sons. The fund into which the

properties were converted by the Official Receiver retained the character of the properties from which it arose & must be treated as joint family

property & liable to be divided among the sons. Just in the same way as a creditor who has obtained a decree against a son can attach his share in

the immovable properties of the joint family so too he can attach the fund into which these properties have been converted. Mr. Ramanarasu

recognised that it is open to a Hindu father to sell the share of his sons in order that he might pay antecedent debts not tainted with illegality or

immorality. But he contends that till the money is actually paid over to the creditor it should be treated as an asset of the Joint family liable to &

available for division. Consequently till the Official Receiver had actually paid out the moneys, the fund in his hands continued to retain the

character of joint family property & is, therefore, liable to satisfy a decree that has been obtained against the sons.

There is no doubt a considerable amount of logic behind this argument. But it seems to me that if accepted it would nullify the provisions of

Sections 28 & 28A, Provincial Insolvency Act. On the adjudication of a person as an inslvt, the whole of his property vests in the Ct of the

receiver u/s 28(2), Insolvency Act. When the inslvt is a Hindu father the property that would thus vest in the receiver would consist of, two heads

or categories. One would be the share of the father in the joint family property. The other would be the right, capacity or power of the father to sell

the shares of the sons to pay antecedent debts which are not illegal or immoral in character. Since the Insolvency Act makes no distinction between

these two heads or categories, the nature of the vesting in the Official Receiver will be the same in respect of both the categories & the extent of

the control which the Official Receiver would have over the moneys realized from both the categories would be the same. It cannot be disputed

that any money which the Official Receiver realises by the sale of the share of the inslvt father would be at his absolute disposal for payment to the

creditors of the inslvt. If, after such payments are made, any surplus is left, it will revert to the joint family, unless there has been in the meantime a

disruption of the status of the family. Exactly so too with the funds realised by the Official Receiver by selling the shares of the sons in exercise of

the father''s power to do so. Putting the matter in another form, the effect of the vesting would be to take out or abstract from the joint family the

properties that so vest in the Official Receiver & the funds realised by him by the sale of the properties must also be deemed to have been

abstracted or taken out from the joint family. Those funds would be at the disposal of the Official Receiver for payment to the creditors of the inslvt

father, subject always, of course, to the reverter of any surplus.

There appears to be no authority directly bearing on the question but the decision in The Official Receiver of Ramnad Vs. P.L.P. Devarayan

Chettiar and Others, lends some support to the conclusion which I have reached. In that case a creditor obtained a decree against a Hindu father

& his two sons in 1934. In 1935 the father was adjudged an inslvt. In 1936 the Official Receiver took possession of two villages belonging to the

joint family & realised the rents & profits accruing therefrom. In 1942 the sons instituted a suit for partition to which the Official Receiver was

made a party. The Official Receiver had in his hands funds which represented the collection of rents from the two villages for the years 1936 to

1945. The creditor sought to proceed against the shares of the sons in the moneys in the hands of the Official Receiver. This Ct held that the

creditor could do so in respect of the sums realised after the institution of the partition suit but not in respect of sums realized earlier; because the

receiver who collected the rents from the shares of the sons in the properties after the institution of the suit for partition cannot be said to have

collected them in the exercise of the power of the father for the purpose of applying them to discharge the debts of the father since that power had

come to an end with the institution of the partition Suit. This decision, therefore, implies that till the institution of the partition suit, moneys realized

should, in the first instance, go to pay the lather''s debts. As I said before, this decision is not directly in point; nevertheless, it indirectly supports the

conclusion I have arrived at.

In the result both the revn petns are dismissed with costs, one set.