AI Structured Summary
Not yet generated for this judgment
Judgment
(1) Sri M. P. Sundararajan at this stage raised the contention that at the most only a declaration can be given in an application under S. 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 12-12-1963 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 S. 7. Items 6 and 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. Gopalan, ILR 51 Mad
342: AIR 1928 Mad 479; Official Receiver Vs. Imperial Bank of India and Another, and Rm. Ar. Ar. Rm. Arunachalam Chettiar (dead) and
Others Vs. Sabaratnam Chettiar and Others, . But as has been explained by Venkataramana Rao J. and Somayya J. in Swarupchand Rayanji and
Others Vs. Majeti Janakiramayya and Others, the cases cited by Sri Sundararajan were cases where the competition was only between the
attaching execution creditor and the Official Receiver representing the general body of creditors, and all that the cases cited by Sri. Sundararajan
must be held o 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, the 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 learned Judges Venkataramana Rao and Somayya JJ. followed the prior
decision of Varadachariar J. and Gentle J. in Diravyam Pillai and Another Vs. Veeranan Ambalam and Others, where this distinction has been
made.
(2) In Diravyam Pillai and Another Vs. Veeranan Ambalam and Others, 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 Rm. Ar. Ar. Rm.
Arunachalam Chettiar (dead) and Others Vs. Sabaratnam Chettiar and Others, 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 co-parcenery 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 S. 64 C. P. C. by which only the son whose
share was being attached would be precluded from effecting a private sale of that share, and even there any private sale effected by the son after
such attachment would not be altogether void but would be void only in respect of the attachment effected by the execution erector.
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 S. 64 C.
P. C. 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 and 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
s. 64 C. P. C. to the same extent as the son would be liable. But even so, Varadachariar J. pointed out that S. 64 C. P. C. 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 creditor to sell the son''s share
but would only make that right subordinate to the right of the attaching creditor under S. 64 C. P. C.
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.
(3) In Swarupchand Rayanji and Others Vs. Majeti Janakiramayya and Others, Venkataramana Rao J. and Somayya J. followed the above
decision of Varadachariar J. and Gentle J. In Swarupchand Rayanji and Others Vs. Majeti Janakiramayya and Others, 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 the
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 the surplus. For instance, the son''s share may be worth Rs. 10000 and the attachment by the son''s creditor may be only for Rs.
1000. 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 Rm. Ar. Ar. Rm. Arunachalam Chettiar (dead) and Others Vs. Sabaratnam Chettiar and Others, .
(4) The explanation by Varadachariar and Gentle JJ. Venkataramana Rao and Somayya JJ. of the decisions in AIR 1943 101 (Nagpur) and I
respectfully adopt that explanation, particularly as it seems to me to be based on sound reasoning.
(5) 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 S. 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. 50000 and the father has got
debts to the extent of Rs. 20000 not tainted with illegality and immorality, provision has to be made for the discharge of this debt of Rs. 20000 and
only the remainder of Rupees 30000 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 Koduru Venku Reddi and Another Vs. Magunta Venku Reddi
and Others, 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 co-parcener, 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 Bankey Lal and Others Vs. Durga Prasad and
Others particularly the decision of Mukherji J. who quotes the relevant texts, and the decision of the Supreme Court in S.M. Jakati and Another
Vs. S.M. Borkar and Others, . This right is also recognised in the very judgments of Ramesam J. and Madhavan Nair J. in In the matter of Official
Assignee Vs. Ramachandra Aiyar and Others, a decision relied on by Sri Sundararajan at an earlier stage. This is also recognised in Thumbalam
Gooty Thimmiah Vs. The Official Receiver of Bellary and Others, another decision cited by Sri Sundararajan himself.
(6) If I understood Sri Sundararajan aright, he did not, and indeed 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 S. 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 A.N. Ramachandra Aiyar and Others Vs. The Official Assignee of Madras and Others, which held that such an adjustment and
provision for the father''s debt could be made even in a proceeding under S. 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 A.N. Ramachandra Aiyar and Others Vs. The Official
Assignee of Madras and Others, 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 (of ILR Mad):(at p. 323 of AIR).
(7) Finally it may also be mentioned that the decisions in Komaragiri Bitchalugadu Vs. Emperor, ; Official Receiver Vs. Imperial Bank of India and
Another, ; Rm. Ar. Ar. Rm. Arunachalam Chettiar (dead) and Others Vs. Sabaratnam Chettiar and Others, and Thumbalam Gooty Thimmiah Vs.
The Official Receiver of Bellary and Others, and Thumbalam Gooty Thimmiah Vs. The Official Receiver of Bellary and Others, were not cases
where there was a comprehensive suit for partition or a petition under S. 7 of the Presidency Towns Insolvency Act or S. 4 of the Provincial
Insolvency Act, and they can be distinguished on that ground.
(8) 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 in 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.
Order accordingly.
***