G.R. Venkatarama Sastriar vs The Official Receiver and Another

Curgenven, J.—The appellant in these two appeals is a creditor in an insolvency petition in which one G.S. Venkata-ramana Aiyar was

adjudicated insolvent. The appellant''s debt related to a promissory note of which the insolvent and another were the endorsees. No doubt because

the insolvent was not alone concerned, the appellant applied for leave to sue him together with the other party to the endorsed note and obtained

an order in the following terms:

The Official Receiver reports that leave may be granted. I therefore grant leave to sue the insolvent also with the condition that the money if any

realised from the insolvent must be handed over to the Receiver for distribution. The petitioner can only rank as an ordinary creditor and share with

others in case he gets a decree against the insolvent and realises from him.

The appellant accordingly brought a suit against the insolvent and his five undivided sons, and against the other endorsee to-the note and his son,

and obtained a decree on the 29th December, 1927.

In the insolvency proceedings the Official Receiver fixed the sale of the joint family property of the insolvent for the 9th March, 1928. On the

day before, the 8th, appellant made an application that the sale should be stayed, supporting it with an affidavit to the terms of which we will refer

later. The sale was accordingly put off and on the 15th the learned Subordinate Judge passed an order to the effect that both sides had agreed that

the right, title and interest of the family of the insolvent, including those of his sons, should be sold by the Official Receiver. Meanwhile on the 6th

March the appellant had applied for the attachment of the son''s shares under his decree and the attachment was actually effected on the 15th.

Upon this there ensued an order by the executing Court, dated 13th July, 1928 in which it was observed that the attachment deprived the Official

Receiver of the power to sell the sons'' shares and therefore that the order of the 15th March that the Official Receiver was to sell the whole

property could not stand. The executing Court accordingly concluded that the Official Receiver could only sell the share of the insolent himself, i.e.

5/6th of the property and that the remaining 5/6th should be sold in execution. This order was brought up to this Court in C.M.A. No. 280 of

1928 and it was decided that since the decree-holder had agreed to the sale by the Official Receiver it was not open to him to pursue his execution

petition for sale. The Official Receiver was therefore to sell the whole property, and when that was done the rights of the parties could be

determined in due course. The Official Receiver has now sold the whole property. Of the sum that was realised, as to the 1/6th share of the

insolvent himself no question arises and it has been sent to the Official Receiver for distribution. The question that remains is with regard to the

remainder, a sum of Rs. 9,050, representing the 5/6th shares of the sons.

The principle which has been relied upon before us by Mr. T.M. Krishnaswami Aiyar is that the attachment of a son''s share puts an end to the

Official Receiver''s right of sale, derived from the right ordinary vesting in the father. This is an indisputable proposition, well established by a

number of decisions - as for instance Gopala Krishnayya v. Gopalan ILR (1928) 51 Mad. 342 : 54 M.L.J. 674 and Subraya v. Nagappa ILR

(1908) 33 Bom. 264. Accordingly it is argued that the attachment of the 15th March deprived the Official Receiver of any claim to proceed

against the sons'' shares as assets normally divisible in insolvency. The mere fact that he held the sale of the whole will not of course affect this

principle. So far as this argument goes it is undoubtedly a valid one, but there are special circumstances in this case to which reference must now

be made.

u/s 28(2) of the Provincial Insolvency Act no creditor can commence any suit except with the leave of the Court and on such terms as the Court

may impose. We have already quoted the terms of the order in which the court gave the appellant leave to sue. It stated that the money if any

''realised from the insolvent'' must be handed over to the Receiver for distribution. Mr. Krishnaswami Aiyar would have us read this phrase as if it

meant money realised from the property of the insolvent, using the word ''property'' in its narrow sense as defined in Section 2(3) of the Insolvency

Act. To read it in this manner would mean that the father''s right to sell the sons'' shares, a right normally availed of by a receiver selling in

insolvency, would be excluded. We think it is not correct to give the order such a narrow construction. It has been held that in the sense in which

the word ''property'' is used in Section 28 of the Provincial Insolvency Act the father''s power to sell the son''s share is property and as such vests

in the Official Receiver. This is the effect of the observations of a majority of the learned Judges in the Full Bench case in Seetharama Chettiar v.

Official Receiver, Tanjore ILR (1926) 49 Mad. 849 : 51 M.L.J. 269 Venkatasubba Rao, J. the third Judge, going even further and holding that

such a power would be property as defined in Section 2(d). There is a decision similar to that of the majority in the above case in Anand Prakash

v. Narrain Das Dori Lal ILR (1930) 53 All. 239 another Full Bench case. Even therefore if the order had provided that the proceeds of''the

insolvent''s property should be handed over to the Official Receiver it might well be held that that would still include money derived from the

exercise of the father''s power to sell. There is another and perhaps more substantial reason for reading this order in the wider and not in the

narrower sense. The right to realise the sons'' shares is an ordinary right of the Official Receiver, so that unless it was intended to save this right the

appellant was being given a preference over other creditors, who would in the absence of his suit have been entitled to share in the proceeds of the

sons'' shares. Not only is there no reason to suppose that the court passing the order intended this but the concluding sentence of that order makes

it clear that the appellant was to get no such preference. That this was how the appellant himself understood the order appears to us plain from his

affidavit of the 8th March supporting his application for a stay of the receiver''s sale. He says in effect that one of the sons is likely to challenge the

power of the Official Receiver to sell and that the Official Receiver''s notice and sale is not very explicit, so that the property might not be sold for a

proper price. It would be better therefore, he says, to sell the whole property in execution. If this is done he has no objection to the whole

proceeds being sent to the Insolvency Court, which, he adds, was a condition on which leave to sue was granted. Now as regards the notification

of the Official Receiver''s sale it appears that what was advertised was the right, title and interest of the insolvent in the joint family property, and it

has been held by the Privy Council in Sripat Singh Dugar v. Prodyot Kumar Tagore (1916) L.R. IndAp 1 : ILR 44 Cal. 524 : 32 M.L.J. 133 that

these words though not in themselves unambiguous may in suitable circumstances be read so as to include the father''s right to sell; and we cannot

doubt in the present case that it was the intention of the Official Receiver to sell the whole property on the 9th March. If that had been done the

appellant''s attachment would never have been made nor the basis of the claim for the present action laid at all. By representations which he made

in his affidavit he secured the postponement of the sale. To those representations he must now be held. They run counter to his present position

that he has an exclusive right to the proceeds of the sons'' shares.

We have it then that the terms of the insolvency court''s order permitting the appellant to sue require that the whole proceeds of the joint family

property should be paid to the credit of the insolvency; and even if the matter were in doubt the appellant has disqualified himself by his subsequent

representations from disputing the claim now made by the Official Receiver in the interests of his fellow creditors. We accordingly dismiss the

appeals. The appellant will pay the costs of the Official Receiver (one Advocate''s fee).