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Madras High Court · body

1964 DIGILAW 23 (MAD)

In the matter of Narella Thirupathiswami Chetti, an v. Nerella Venkayya, minor by guardian K. T. Seshaiah

1964-01-08

K.S.VENKATARAMAN

body1964
Judgment.- Sri M.P. Sundararajan at this stage raised the contention that at the most only a declaration can be given in an application under section 7 of the Presidency Towns Insolvency Act about the binding nature of the debts on the son’s share, but the Official Assignee will not have a power of sale because some of the creditors of the father had already attached the share of the son in proceedings in execution of the decrees obtained by them against the father or against the father and son. He has furnished a list dated 12th December, 1963, showing the particulars of 8 such cases. Items 1 to 5 and 7 therein are said to be cases where the attachment had taken place prior to the presentation of the present application under section 7. Items 6 ana 8 are cases where the attachment was effected after the presentation of the present application. The contention of the learned Counsel is that there are Bench decisions of this Court which have held that on such attachment by an execution creditor of the son’s share, the father’s power of sale is at an end. The decisions he referred to are Gopalakrishnayya v. Gopalan1, Official Receiver, East Godavari v. Imperial Bank of India2 and Arunachala Chettiar v. Sabaratnam Chettiar3. But as has been explained by Venkataramana Rao, J., and Somayya, J., in Rayanji v. Janakiramayya4, the cases cited by Sri Sundararajan were cases where the competition was only between the attaching execution creditors and the Official Receiver representing the general body of creditors, and all that the cases cited by Sri Sundararajan must be held to have decided was that where the execution creditor attaches the son’s share in execution of a decree obtained against the father or against the son or against the father and the son, that attachment will prevail over the Official Receiver when he wants to attach the same son’s share for the payment of the debts of the father not tainted with illegality or immorality, and that subject to the right of precedence of the attaching execution creditor, the Official Receiver’s right will still be available. The learnea Judges, Venkataramana Rao and Somayya, JJ., followed the prior decision of Varadachariar, J., and Gentle, J., in Diraviyam v. Veerannan5, where this distinction has been made. The learnea Judges, Venkataramana Rao and Somayya, JJ., followed the prior decision of Varadachariar, J., and Gentle, J., in Diraviyam v. Veerannan5, where this distinction has been made. In Diraviyam v. Veeranna5, there was a contract of sale by the members of the joint family. Then there was an attachment by an execution creditor and later there was insolvency. In the insolvency proceedings the Official Receiver executed a sale-deed in performance of the contract of sale. It was urged that the sale was invalid, the contention being that with the attachment by the execution creditor the Official Receiver’s power of sale was at an end, and the cases relied on by Sri Sundararajan, except the case in Arunachalam Chettiar v. Sabaratnam3, which was decided later, were relied on. Varadachariar, J., expressed the opinion that the right of the creditor of the father to seize the son’s share was a right to which the coparcenary right of the son was subject and therefore the right of the creditor of the father to seize the son’s share could not be defeated even by attachment of the son’s share by the execution creditor of the son. He emphasised that the effect of attachment is that embodied in section 64, Civil Procedure Code, by which only the son whose share was being attached would be precluded from effecting a private sale of that share, and even then any private sale effected by the son after such attachment would not be altogether void but void only in respect of the attachment effected by the execution creditor. Varadachariar, J., pointed out that the creditor of the father is entitled under Hindu Law to enforce the pious obligation of the son for the father’s debt and cannot be said to derive his right through the son and would not therefore be subject to the disability imposed on the son under section 64, Civil Procedure Code. However, Varadachariar, J., did not think it necessary to refer this point for the decision of a Full Bench and was content to assume that the right of the father ana of the father’s creditor to seize the son’s share for the satisfaction of the father’s debt would be subject to the liability under section 64, Civil Procedure Code, to the same extent as the son would be liable. But even so, Varadachariar, J., pointed out that section 64, Civil Procedure Code, would not altogether destroy the son’s right to alienate his share and equally would not destroy the power of the father or of the father’s creditors to sell the son’s share, but would only make that right subordinate to the right of the attaching creditor under section 64, Civil Procedure Code. In that particular case, he proceeded to point out further that the attaching creditor could only attach the son’ s share with the liability which it had at the time of the attachment and the son’s share was under the liability of the earlier contract of sale, and in that view of the matter, it was held that the attaching creditor would be bound by the earlier contract of sale. In Rayanji v. Janakiramayya1, Venkataramana Rao, J., and Somayya, J., followed the above decision of Varadachariar J. and Gentle, J. In Rayanji v. Janakiramayya1 an execution creditor, namely, the 16th defendant, had made an attachment of the son’s share but had not yet brought the property to sale. It was held that, in view of that circumstance, the Official Receiver was entitled to sell the son’s share though the purchaser from the Official Receiver would have to give way to the necessary extent to the claims of the attaching creditor, namely, the 16th defendant. Somayya, J., pointed out pertinently that even after the claims of the attaching creditor are satisfied, there may be a large surplus left and it would be wrong to hold that the Official Receiver cannot lay any claim even to that surplus. For instance, the son’s share may be worth Rs. 10,000 and the attachment by the son’s creditor may be only for Rs. 1,000. Somayya, J., pointed out that the balance must be available to the Official Receiver. It is interesting to note that Somayya, J., was a party to the decision in Arunachala Chetti v. Sabartnam2. The explanation by Varadachariar and Gentle, JJ., and Venkataramana Rao, J., and Somayya, J., of the decisions in Gopalakrishnayya v. Gopalan3, Official Receiver, East Godavari v. Imperial Bank of India4. Arunachalam Chettiar v. Sabaratnam2, was adopted by the Nagpur High Court in Lakshminarayana v. Dinker5, and by the Kerala High Court in Rmachandra v. Kannivelan6, and I respectfully adopt that explanation, particularly as it seems to me to be based on sound reasoning. Arunachalam Chettiar v. Sabaratnam2, was adopted by the Nagpur High Court in Lakshminarayana v. Dinker5, and by the Kerala High Court in Rmachandra v. Kannivelan6, and I respectfully adopt that explanation, particularly as it seems to me to be based on sound reasoning. If this were all, it would mean that in the present case the Official Assignee must give precedence to the rights of the eight creditors, who have effected attachment of the son’s share or at least to the claims of the creditors 1 to 5 and 7 in the list submitted by Mr. Sundararajan, where the attachment had been effected before the presentation of the present application under section 7. But there is another principle which comes into play in the present case, according to which the attaching creditors are not entitled to any such precedence over the Official Assignee. The principle is that the purchaser of the share of the son in a joint Hindu family has only an equity to step into the shoes of the son and enforce partition but when such partition comes to be effected, provision has first to be made for the discharge of the just debts of the father, that is debts not tainted with illegality and immorality. For instance, if the properties of the father and the son are worth say Rs. 50,000, and the father has got debts to the extent of Rs. 20,000, not tainted with illegality and immorality, provision has to be made for the discharge of this debt of Rs. 20,000 and only the remainder of Rs. 30,000 will be available for division between the father and the son. This position never seems to have been in doubt and was expressly laid down in Venku Reddi v. Venku Reddi7. Defendants 5 and 6 in that case were purchasers of the share of the second defendant, son of the first defendant, and it was held that the purchaser was subject to the same liability as the son to satisfy the debts of the father. It was observed: "The purchaser of an undivided share of a Hindu coparcener, it has been held, gets only an equity to enforce partition and takes the share when partitioned subject to all the liabilities on it in the hands of his vendor. It was observed: "The purchaser of an undivided share of a Hindu coparcener, it has been held, gets only an equity to enforce partition and takes the share when partitioned subject to all the liabilities on it in the hands of his vendor. Clearly, therefore, defendants 5 and 6 can get the second defendant’s share only subject to the liability for the debt, if it is subject to that liability in the second defendant’s hands." Reference may also be made to the decision of the Full Bench of the Allahabad High Court in Bankeylal v. Durga Prasad1, particularly the decision of Mukerji, J., who quotes the relevant texts and the decision of the Supreme Court in Jakati v. Berkur2. This right is also recognised in the very Judgments of Ramesam, J., and Madhavan Nair, J., in Balusami Aiyar and another In re3, a decision relied on by Sri Sundararajan, at an earlier stage. This is also recognised in Thimmiah v. Official Receiver, Bellary4, another decision cited by Sri Sundararajan himself. If I understood Sri Sundararajan aright, he did not, and indeed he could not, dispute the position that in a partition suit, provision has to be made for the father’s just debts before the partition can be effected and that the purchaser of the son’s share will be subject to this liability to satisfy the father’s debts first before he can get the son’s share. But he submitted that such adjustment could not be effected in a proceeding under section 7 of the Presidency Towns Insolvency Act. But it is precisely this contention which I negatived in an earlier portion of the judgment following the Bench decision in Ramachandra Iyer v. Official Assignee, Madras5, which held that such an adjustment and provision for the father’s debts could be made even in a proceeding under section 7 of the Presidency Towns Insolvency Act, irrespective of the pendency of the partition suit. It goes without saying that it would be vain to give merely a declaration that the son’s share is liable for particular debts unless that right can be enforced by sale. This is recognised by Curgenven, J., in Ramachandra Iyer v. Official Assignee, Madras5, where he says that in his opinion the Insolvency Court must have the consequential power of directing the sale of the minor’s property, and by Bashyam Aiyangar, J., in the same decision at page 756. This is recognised by Curgenven, J., in Ramachandra Iyer v. Official Assignee, Madras5, where he says that in his opinion the Insolvency Court must have the consequential power of directing the sale of the minor’s property, and by Bashyam Aiyangar, J., in the same decision at page 756. Finally it may also be mentioned that the decisions in Gopalakrishnayya v. Gopalan6 Official Receiver East Godavari v. Imperial Bank of India7 and Thimmiah v. Official Receiver Bellary4, and Arunachalam Chettiar v. Sabaratnam8, were not cases where there was a comprehensive suit for partition or a petition under section 7 of the Presidency Towns Insolvency Act or section 4 of the Provincial Insolvency Act, and they can be distinguished on that ground. The position therefore is that a provision will have to be made first to satisfy the debts which have now been declared to be binding on the minor before a partition can be effected and only on what remains the creditors who have attached the son’s share can lay their claims. The Official Assignee can sell the son’s share too for this purpose. P.R.N. -------- Order accordingly.