HIGH COURT OF NAGPUR
Macnair, Subhedar
KANHAIYALAL MARWADI – Appellant
Versus
DAHLIA BARI – Respondent
Decided on : 28-02-1933
Receiver - Insolvency of Manager of Joint Hindu Family - Provincial Insolvency Act - Section 2(e), Presidency Towns Insolvency Act - Vithal v. Ramchandra - Sat Narain v. Behari Lal - Undivided interests of coparceners in joint family property do not vest in receiver upon manager's insolvency, but manager's power to dispose of such shares for joint family debts may vest. Manager's insolvency does not affect solvent members' ownership and powers over their undivided shares. Receiver cannot attach coparceners' property. Objector's undivided interest rightly released from attachment.
Fact of the Case:
Bapu was adjudged insolvent and the appellant, a creditor, was appointed as a receiver to take charge of Bapu's estate. The respondent, a nephew of the insolvent, objected to the attachment of a house and mango trees, claiming ownership. The insolvency Court held that there was no partition between the objector and the insolvent, and that the attached property belonged to the joint family. Both the objector and the receiver appealed to the District Judge, but both appeals were dismissed. The receiver then filed the present second appeal.
Finding of the Court:
The appellate court held that the insolvency Court's decision releasing the property in question was correct, as the entire joint family property did not vest in the receiver upon the manager's insolvency. The manager's power to dispose of joint family property for joint family debts may vest in the receiver, but the undivided interests of coparceners do not vest in the receiver.
Issues: The main issue was whether the receiver could attach the undivided interest of the objector in the joint family property upon the manager's insolvency.
Ratio Decidendi: The court relied on the interpretation of the Provincial Insolvency Act and the Presidency Towns Insolvency Act, as well as the decisions in Vithal v. Ramchandra and Sat Narain v. Behari Lal. It held that the undivided interests of coparceners in joint family property do not vest in the receiver upon the manager's insolvency, but the manager's power to dispose of such shares for joint family debts may vest.
Final Decision: The appeal filed by the receiver was dismissed, and the undivided interest of the objector was rightly released from attachment.
Macnair And Subhedar, A J C—On his own petition one Bapu was adjudged insolvent on 22nd September 1928 and the appellant, who is one of the creditors, was appointed a receiver to take charge of Bapu's estate. At the instance of the receiver warrants for attachment of the insolvent's property were issued and some property was attached. The respondent Dablia, a nephew of the insolvent, filed an objection against the attachment of one of the three attached houses and certain mango trees on the ground that the house belonged to him because of its having been allotted to his share at the private partition made between him and the insolvent about five years previously and that the trees were purchased by him from the insolvent on 10th August 1927. The insolvency Court held that there was no partition between the objector and the insolvent as alleged by the former, that both of them still formed a joint Hindu family and that therefore the attached property belonged to the joint family : the sale of the trees was held fraudulent. On these findings the insolvency Court passed the following order :
This is not a case where the objection has been filed by a son of the insolvent. Therefore the receiver cannot sell the interest of the objector even if the insolvent may be a manager of the family. Therefore I order the release of the undivided interest of the objector in the house and mango trees in question.
2. Against this decision both the objector and the receiver appealed to the District Judge, but both the appeals were dismissed. On the receiver's appeal the learned Judge held that since on the insolvency of the manager of a joint Hindu family neither the entire joint family property nor the manager's power of disposing of it for the satisfaction of the joint family debts vests in the receiver, the decision of the insolvency Court releasing the property in question was correct. It is against this appellate order that the receiver has filed the present second appeal. On the strength of certain observations in Vithal v. Ramchandra it was contended on behalf of the appellant that since the entire joint family property had vested in the receiver upon the adjudication of Bapu,. the manager, as insolvent, the objector,. Dablia, being a member of the coparcenary had no right to prefer any objection against the attachment of his interest in the joint family property and that the Courts below therefore erred in releasing his undivided interest in the house and the mango trees in question. It was also urged that if the entire joint property had not vested in the receiver, the manager's power of disposal had so-vested and the receiver, in consequence-of this, could attach the entire family property.
3. In Vithal v. Ramchandra one Ganpati, who was the manager of the joint family consisting of himself and his brother Shrikrishna and his sons, had executed a bond in favour of a creditor. Subsequently Ganpati was declared insolvent and the creditor instead of proceeding in the insolvency Court filed a suit in the Court of Small Causes against Ganpati and the sons of Shrikrishna to recover the amount due on the bond. The trial Court decreed the claim overruling the objections of the defendants, that it had no jurisdiction to try the suit in virtue of the bar created by Section 28, Provincial Insolvency Act. The defendants having come up to this Court in revision Prideaux, A. J. C., upheld the contention in defence and dismissed the plaintiff's suit with costs holding that the proper forum for the trial of the claim was the insolvency Court in spite of the fact that the minor defendants were not adjudged bankrupts. This is what the learned Judge observed at pp. 129 and 130 of the report :
It has been held that where the father of a joint Hindu family which includes minor sons as well as himself seeks the protection of the Bankruptcy Court, he must place all his property at the disposal of the Court : see Bawan Das v. O.M. Chiene, 1922 AIR(All) 79,
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