IN THE HIGH COURT OF MADRAS
Bardswell, J.
The Official Receiver
Versus
M.R.M.K.A.R.R.M. Arunachalam Chettiar
Decided On : 15.11.1933
Official Receiver - Insolvency - Provincial Insolvency Act, Section 51, Civil Procedure Code, Section 60 - The court discussed the attachment before judgment of joint family property, the power of the Official Receiver to deal with the sons' shares, and the applicability of Section 51 of the Provincial Insolvency Act. The court held that the entire joint family property was attached and brought to sale, and the attachment was binding on the sons' shares. It concluded that the sale proceeds of the sons' shares represent those shares and affirmed the decision of the lower court.
Fact of the Case:
The suit was brought against Krishnaswami Goundan on a promissory note, and the joint family property was attached before judgment. The judgment-debtor filed an insolvency petition, and the Official Receiver applied for stay of the sale in execution. The executing Court ordered the sale proceeds to go to the Official Receiver, but the decree-holder applied for three-fourths of the proceeds to be sent to the executing Court on his behalf.
Finding of the Court:
The court found that the entire joint family property was attached and brought to sale, and the attachment was binding on the sons' shares. It held that the sale proceeds of the sons' shares represent those shares and affirmed the decision of the lower court.
Issues: The issues involved the attachment before judgment of joint family property, the power of the Official Receiver to deal with the sons' shares, and the applicability of Section 51 of the Provincial Insolvency Act.
Ratio Decidendi: The court held that the attachment before judgment was binding on the sons' shares, and the sale proceeds of the sons' shares represent those shares. It also concluded that Section 51 of the Provincial Insolvency Act did not apply to the execution against the shares of the sons.
Final Decision: The court affirmed the decision of the lower court, dismissing the appeal with costs.
Bardswell, J.
1. This is an appeal against the decision of., Madhavan Nair, J. in Second Appeal. The appellant is the Official Receiver of Coimbatore. A suit (O.S. No. 206 of 1926 on the file of the Subordinate Judge of Coimbatore) was brought by Arunachalam Chetti against Krishnasvvami Goundan on a promissory note. There was an attachment before judgment of what was admittedly the joint family property of Krishnaswami Goundan, though it was attached only as being the property of Krishnaswami Goundan, and his sons were not made parties to the suit. The plaintiff on 11th December, 1926, got a decree and applied in execution for the sale of the attached property. The judgment-debtor, Krishnaswami Goundan, filed an insolvency petition (I. P. No. 320 of 1927), on which he was adjudicated an insolvent in February, 1928. By an order passed in December, 1927,- the Official Receiver had been made interim Receiver pending the adjudication and on 6th January, 1928, both he and the judgment-debtor applied for stay of the sale in execution. The executing Court ordered that the sale should go on but that the sale proceeds should go to the Official Receiver. The sale proceeds were sent to the Official Receiver accordingly but Arunachalam Chettiar applied for three-fourths of them to be sent to the executing Court on his behalf, on the ground that they represented the shares of the three sons of the insolvent, which shares had been attached before the presentation of the insolvency petition. The three-fourths were ordered to be sent, and the Official Receiver transmitted the money. He had not, however, been given notice of the decree-holders application and he filed the petition with which this appeal is concerned, praying that he might be heard before a cheque was issued. The Principal Subordinate Judge held that no cheque could be issued to the decree-holder for the three-fourths but that the three-fourths should be sent back to the Official Receiver. On appeal, however, the District Judge ordered the money to be returned to the executing Court and his decision has been upheld by Madhavan Nair, J. on Second Appeal.
2. That learned Judge in his judgment has thus expressed himself "The petition for adjudication was presented after the date of the attachment. It therefore follows that the fathers power of disposal of the sons shares had been destroyed by the existing attachment of those shares; and the Official Receiver cannot therefore get any power to deal with the sons shares by reason of the order of adjudication." It is now argued for the appellant, Official Receiver, that this view of the law is wrong. Mr. Krishnaswamier in his argument has, of course, to allow that the shares of the sons do not vest in the Official Receiver. This has been decided by the Privy Council in Sat Narain v. Behari Lal (1924) L.R. 52 IndAp 22 : I.L.R. 6 Lah. 1 : (1924) 47 M.L.J. 857. But he refers us to the Full Bench decision in Seetharama Chettiar v. Official Receiver, Tanjore I.L.R. (1926) Mad. 849 : (1926) 51 M.L.J. 269 (F.B.) in which the decision of the Privy Council in the Lahore case has been considered and explained and it has been held that, alike under the Presidency-towns Insolvency Act and the Provincial Insolvency Act, the power of a Hindu father to sell the shares of his sons for paying his just and proper debts, vests in the Official Receiver, the Privy Council decision not being an authority to the contrary. He also quotes another Full Bench decision in In re Sellamuthu Servai I.L.R. (1923) Mad. 87 : (1923) 46 M.L.J. 86 (F.B.) in which it was held that the Official Assignee standing in the shoes of the insolvent father could exercise the fathers right of selling the sons shares also in the ancestral estate, in payment of any debt incurred by the father that was neither illegal nor immoral. What has to be shown, however, in the present case is whether the selling power of the insolvent over his sons shares in the property was available at
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