Tripuramallu Venkatanarasu. v. Jamili Venkatarangayya.
1950-10-26
BALAKRISHNA AYYAR
body1950
DigiLaw.ai
Judgment.-The material facts are few. One Venkataratnam was adjudged an insolvent in I.P.No.13 of 1923, on the file of the Subordinate Judge of Guntur. He died on 10th December, 1933, leaving behind him three sons. Between 1937 and 1939 the Official Receiver, Guntur, sold some of the properties of the joint family and realised 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 and prayed for the attachment being raised. The Subordinate Judge allowed the objections of the Official Receiver and raised the attachment. Against that order, Venkatanarasu came to this Court in C.R.P.No.1156 of 1946 which was disposed of on 20th July, 1948. In the order made on that date this Court directed that an enquiry should be made into the character and source of the funds now sought to be attached and claimed to be the property of the judgment-debtor. The matter was remanded for disposal afresh in the light of the observations made in that order. After the case thus went back to the trial Court this question was gone into and accepting a memo filed by the Official Receiver, the learned Subordinate Judge found that the property sold was the joint family property of Venkataratnam and 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 and 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 and the claim petition filed by the Official Receiver allowed. Against that order these two revision petitions 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.
Against that order these two revision petitions 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 and his sons those properties would have been joint family properties available for division among Venkataratnam and his sons. The fund into which the properties were converted by the Official Receiver retain the character of the properties from which it arose and must be treated as joint family property and 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 immoveable properties of the joint family so too he can attach the fund into which those 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 contended that till the money is actually paid over to the creditor it should be treated as an asset of the joint family liable to and 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 and 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 and 28-A of the Provincial Insolvency Act. On the adjudication of a person as an insolvent, the whole of his property vests in the Court or the receiver under section 28(2) of the Insolvency Act. When the insolvent 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.
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 of categories, the nature of the vesting in the Official Receiver will be the same in respect of both the categories and the extent of the control which the Official Receiver would have over the moneys realised 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 insolvent-father would be at his absolute disposal for payment to the creditors of the insolvent 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 and 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 insolvent 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 Official Receiver of Ramnad v. Devarayan Chettiar1 lends some support to the conclusion I have reached. In that case a creditor obtained a decree against a Hindu father and his two sons in 1934. In 1935 the father was adjudged an insolvent. In 1936 the Official Receiver took possession of two villages belonging to the joint family and realised the rents and profits accruing therefrom. In 1942 the sons instituted a suit for partition to which the Official Receiver was made a party.
In 1935 the father was adjudged an insolvent. In 1936 the Official Receiver took possession of two villages belonging to the joint family and realised the rents and 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 Court 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 realised 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 realised should, in the first instance, go to pay the father’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 revision petitions are dismissed with costs, one set. K.S. ----- Petitions dismissed.