Chandra Nageswaran vs T.R. Balakrishnan and Others

Srinivasan, J.—The concurrent findings of the Courts below are wholly unsustainable. The first respondent herein was adjudged insolvent

and the Official Receiver brought his property to sale. As regards the subject matter of present dispute, the appellant purchased the same in the

sale held on 12.1.1977. The first respondent filed a petition u/s 68(1) of the Provincial Insolvency Act to set aside the sale. In the petition three

grounds were urged. The first was that there was no proper notice of sale issued to all the 170 creditors. The second objection was that the sale

was adjourned from 17.12.1976 to 12.1.1977 and the Official Receiver had no jurisdiction to adjourn a sale in the midst of the holding of the sale.

Thirdly it was contended that the mortgage over the property was not disclosed in the proclamation for sale and therefore the sale was invalid.

When the matter was heard by the Subordinate Judge, Salem, no material was placed before him in support of the above three contentions. But

a fourth objection was raised in the arguments that the first respondent had only a life interest in the property, which could not be sold by the

official Receiver. It was argued that u/s 28(5) of the Provincial Insolvency Act, a property of an insolvent, which was exempt from attachment

under the CPC could not vest in the Official Receiver and he could not take any proceedings against the same. That objection was upheld by the

Subordinate Judge purporting to follow a judgment of this Court in Chenchulakshmi Animal v. Subramanian (1972) 1 M.L.J. 206. The

Subordinate Judge held that the first respondent had only a life interest in the properties and the sale was not valid. Consequently, he set aside the

sale.

On appeal by the appellant herein, the First Additional District Judge, Salem, confirmed the order of the Subordinate Judge placing reliance on

the same judgment of this Court. The aggrieved auction-purchaser has preferred this Civil Miscellaneous Second Appeal.

At the outset, it must be pointed out that the judgment in Chenchulakshmi Ammal v. Subramanian (1972) 1 M.L.J. 206, has no bearing on this

case. K.S. Venkataraman, J., had to consider in that case whether a mere right to enjoy the income from a house property could be attached or

sold. Learned Judge held that when the interest was not transferable, it could not be attached and sold and in such a case, only an equitable

execution could be granted by appointment of a receiver to collect the rents and profits and after payment of municipal taxes and provision for

repairs, the balance could be made available to the decree-holder. That was not a case in which a life estate was conferred on the judgment-

debtor. But in the present case, there is no doubt that the first respondent had a life estate, under the partition deed dated 26.11.1938, which is

relied on by him for the purpose of contending that he has only a right to enjoy the income and no alienable interest in the property. The relevant

recital in the document is to the effect that the first respondent shall not alienate the property in any manner by mortgage or sale; but he shall lease

out the same and enjoy the rental income and after his death, the parties 2 and 3 in the document and their heirs shall take the property equally with

absolute rights. This document clearly confers a right to immediate possession of the property itself by the first respondent herein and enjoyment

thereof by leasing out, if necessary. The document does not prevent the first respondent from enjoying a property by himself occupying the same.

Just because he is permitted to lease out the property and enjoy the rental income, it does not mean that what is granted to the first respondent

under the document is only a right to enjoy the income and not any interest in the property. This is made clear further by the provision in the same

document to the effect that if the first respondent gets married, he can take the property absolutely. Thus, there is a provision for the life estate

enlarging into an absolute estate in the event of the first respondent getting married. Therefore, there is no difficulty in holding that the first

respondent got a life estate in the property. He is therefore entitled to enjoy the property during his lifetime. Such life estate can always be the

subject matter of attachment and sale. Whoever purchases the life estate will be entitled to take possession and enjoy the property till the death of

the first respondent. Hence the Courts below are in error in setting aside the sale, taking the view that the official Receiver was not entitled to sell

the property or any portion thereof.

It is argued by learned Counsel for the first respondent that the sale is liable to be set aside because it is with reference to entire property as such

and it is not a sale of the life estate. I do not agree. Whatever was owned by the first respondent on the date of sale would undoubtedly pass on to

the purchaser. Even if the description in the sale proclamation is that of the property, that would only mean that the right, title and interest of the first

respondent would be the subject matter of sale and that would pass on to the purchaser.

Learned Counsel for the appellant draws my attention to Ex.B-15. It is an order passed by this Court in C.R.P.No.1131 of 1978. That revision

arises out of an application filed by the first respondent herein objecting to the receiver''s proceedings against the property now in dispute. His

objection at that time was that the property was exempted from attachment u/s 60 of the CPC and consequently, the Official Receiver was not

entitled to take possession of the same because of the provisions of Section 28(5) of the Provincial Insolvency Act. Insofar as the question, which

was considered by the Courts below is concerned, the objection that was put forward by the first respondent in the said revision petition is the

same and it was in no way different. The Courts below negatived the objection raised by the first respondent and directed the receiver to take

possession. This Court upheld the orders of the Court below and dismissed the revision petition. It was clearly held by this Court that the property

was liable to be sold at the instance of the Official Receiver. The contention put forward by the first respondent that he had only a right of

maintenance vis-a-vis the property was negatived by this Court.

Hence it is not open to the first respondent to contend in the present proceedings that the sale should be cancelled in view of the fact that he had

only a life estate in the property.

In the result, the orders of the Courts below are set aside and I.A. No. 104 of 1977 filed by the first respondent herein to set aside the sale

dated 12.1.1977 is dismissed with costs throughout.