Judgement

- The three appellants in this second appeal feel aggrieved by the decision of the Additional Subordinate Judge, Masulipatam, in A.S. No.64 of 1956 on his file whereby he confirmed the judgment of the District Munsif, Masulipatam dismissing O.S. No.295 of 1954 in which these three appellants were the plaintiffs.

2. Sama Purnachandra Rao respondent No.1 filed O.S. No.506 of 1931 in the District Munsifs Court, Bapatla, for a decree against eight defendants. The first defendant in that suit was Dara Subba Rao, who was said to be the manager of the joint family consisting of himself, his two brothers who were D-2 and D-3 (in that suit) and also of D-4 to D-7. D-5 in that suit was the son of a predeceased brother of Dara Subba Rao. Defendants 6 and 7 were the sons of D-3 in that suit. D-4 in that suit was the adopted son of D-1 viz. Dara Subba Rao (for the sake of convenience, hereafter I shall refer to D-1 in that suit as Dara Subba Rao, D-1, D-2, D-3 as insolvents and D-4 to D-7 in that suit as non-insolvents). Purnachandra Rao filed an I.A. for attachment of the properties of D-1 to D-7 before judgment and an order was passed by the District Munsif on 4-6-1931 ordering attachment before judgment. Accordingly, the properties were attached including the property concerned in the present appeal, which is a portion of a house bearing Municipal No.582 in Kojjilpet in Masulipatam town. Subsequently, a decree was passed against D-1 to D-7 on 9-1-1932. Meanwhile, on 4-7-1931, a creditor filed I.P. No.57/31 in the District Court, Krishna for adjudicating as insolvents the seven persons who were defendants 1 to 7 in O.S. No.506 of 1931. The District Court passed orders on 26-11-32 adjudicating Dara Subba Rao and his two brothers alone as insolvents and dismissing the petition as against others namely, the non-insolvents. On 23-3-1933, the Official Receiver held sale of properties. In that sale, one K. Anjaneyulu purchased the property concerned in this suit (viz.,) one portion of house No.582, Kojjilipet. One Dara Siva Rao purchased the other portion of that house. Later, on 21-9-1937, the Insolvency Court passed an order in I.A. No.631 of 1936 discharging the three insolvents.

3. Subsequently, Purnachandra Rao filed E.P. Nos.482/43 and 488/43 in District Munsifs Court, Masulipatam in execution of his decree in O.S. No.506 of 1931. K. Anjaneyulu filed. E.A. No.301/48 praying that the property which had been purchased by him in the Insolvency proceedings (herein referred to for convenience as "suit property") be sold last. Purnachandra Rao did not have any objection to such course and the petition was, accordingly, ordered on 2-3-48. Ex. B-6 contains the order. Subsequently, there was some litigation as a result of which Purnachandra Rao entered into a compromise in A.S. No.16 of 1951 on the file of the Sub Court, Masulipatam, under which Purnachandra Rao gave up from scope of execution of his decree in O.S. No.508 of 1931 the other portion of house No.582, which had been purchased by Dara Siva Rao, E.P. No.482/43 was still pending. Purnachandra Rao decree-holder sought to bring to sale the suit property, i.e. the item which had been purchased by K. Anjaneyulu. The latter was dead. His son, Ram Krishna Das (as plaintiff No.1) along with two other plaintiffs who were executors (2nd plaintiff being the mother and guardian of the then minor plaintiff No.1) filed E.A. No.1475 of 1953 a petition under Ss.47, 151 and O.21 R. 58 C.P.C. claiming the property as belonging to plaintiff No.1 and contending that the decree in O.S. No.506 of 1931 had become extinct and was no longer executable. In that E.A. the judgment-debtors in O.S. No.506 of 1931 were impleaded as respondents 2 to 8. Among them, respondents 6 to 8 were the widow and minor sons of Dara Gopalakrishniah who was D-4 in O.S. No.506/31 and was the adopted son of Dara Subba Rao (D-1 in O.S. No.506 of 1931). By the consent of parties E.A. No.1475/53 was registered as a suit and numbered by the executing Court as O.S. No.295 of 1954. Purnachandra Rao, contested the suit. On behalf of D-6 and D-7, a court guardian was appointed and he filed a written statement. The other defendants remained ex parte.

4. The learned District Munsif framed two issues as follows:

1. Whether the decree debt in O.S. No.506/31 on the file of the District Munsifs Court, Bapatla became extinct and not executable for the reasons stated in para 12 of the plaint?

2. Whether the plaintiffs are entitled to the declaration of title?

The learned District Munsif found both the issues against the plaintiffs. The learned Subordinate Judge framed four points in appeal. Of them we are concerned with only two points. They are as follows :

1. What is the extent of the right acquired by Kantheti Anjaneyulu in the suit property by virtue of the sale in insolvency?

2. Whether the decree in O.S. No.508/31 on the file of the District Munsifs Court, Bapatla became extinguished as a result of the order of discharge passed in I. P. No.57/31 and I.A. No.631/36 dated 1-9-1937?

On point No.1, he found that the right acquired by K. Anjaneyulu was only the right of the insolvent judgment-debtors in the suit property and not the rights of the non-insolvent judgment-debtors. On point No.2, he held that the liability of the non-insolvent judgment-debtors had not become extinguished.

5. The findings of the learned Subordinate Judge on the above two points have been attacked before me in this appeal. The points on which the arguments are advanced before me are the points which had been numbered by the learned Subordinate Judge as points 1 and 2.

Point No.1: It was contended before the learned Subordinate Judge that the attachment of the suit property effecting the judgment was not valid. There was no plea in the plaint that the attachment was not valid. Nor was there a plea anywhere in the, written statement about the validity of the attachment. There was no issue about the validity. But on some oral and documentary evidence barring the validity of the attachment, this point was argued before the learned Sub-ordinate Judge. The latter observed that there was no oral evidence on the part of the plaintiffs to indicate that the properties had in fact been attached before judgment, and that there was nothing in evidence to show that the order of attachment was affixed to the house in Robertsonpet or to the agricultural lands, or that the notices of attachment were affixed to the court house. All the same he held that, in view of the conduct of the parties all along, it was not open to the plaintiffs to raise the question of attachment at the late stage. The learned Subordinate Judge also held that the plaintiffs were estopped by principle of constructive res judicata from questioning the factum of attachment in view of the fact that K. Anjaneyulu had himself filed E.A. No.301 of 1948 and had not questioned the validity of the attachment before judgment. Beyond doubt, the principle of res judicata applies to Execution Petitions as regards important aspects like the validity of attachment though Sec.11 C.P.C. does not itself directly apply to the proceedings in execution. I see no reason to disagree with the finding of the learned Subordinate Judge that the plaintiffs were estopped by the principle of res judicata from questioning the factum and validity of the attachment before judgment.

6. The sale deed, Ex. A-12 was executed by the Official Receiver in favour of plaintiff No.1 on 1-6-1954 i.e. even after the claim petition was filed and O.S. No.294/54 had been registered. It mentions that the rights of the insolvents property were sold. It does not specifically mention that the Official Receiver sold the rights possessed by the insolvents to dispose of the shares of the non-insolvents. The learned counsel for the plaintiffs points out that Ex.A-12 all the same, mentions that the sale was as per the notification of the official Receiver. In Ex. A-7, a printed handbill advertising the sale, there is no mention that the proposed sale was to include the insolvents rights for disposal of the shares of the non-insolvents. But, the sale notification (Ex. A-8) does mention such power of disposal. Ex. A-8, which is an official notification, prevails over Ex. A-7 and Ex. A-12 follows Ex. A-8. Consequently, the power of disposal of the shares of the non-insolvents (judgment-debtors) would have passed to K. Anjaneyulu under the sale deed, if such power of disposal could have been validly sold by the offcial Receiver. This point is dependent on the answer to point No.2.

7. Point No.2:

Section 34 (2) runs as follows :

"Save as provided by sub-section (1) all debts and liabilities present or future........to which the debtor is subject when be is adjudged an insolvent, or to which he may become subject before his discharge by reason of any obligation incurred before the date of such adjudication, shall be deemed to be debts provable under this Act. Consequently the decree debt or the liability to which the insolvent was subject, when he was adjudged an insolvent, was provable under the Act. It was proved under the Act under S.44(2) the insolvents liability was released. But, the non-insolvent judgment-debtors debt under the decree would not be affected by S.44 (2). In Krishnaswamy Mudaliar v. Official Assignee, Madras, ILR 26 Mad 673, it was held that the attachment of Decree-holder does not have the effect of conferring title on him. In D.D. Italia v. Official Assignee of Madras, 52 Mad LW 894 at 897 : ( AIR 1941 Mad 183 at 185) and Manicka Chettiar v. Official Assignee of Madras, 57 Mad LW 128 : (AIR 1944 Mad 333), it was held that when a judgment-debtor became an insolvent, the attachment which had been already made fell to the ground. But the principle of the above decision does not apply to the rights and shares of non-insolvents judgment-debtors as they were not adjudicated insolvents. In Official Receiver, Guntur v. Firm Lalchand Khushalchand, AIR 1943 Mad 94 it was held that the attachment of the sons share in a Hindu joint family property automatically prevents the father from exercising over those shares, his power to sell the property and utilise the proceeds for the discharge of his own just debts and that similarly, when the shares of the sons are attached by a creditor before the fathers assets vest in the Official Receiver, the vesting in the Official Receiver of the power of the father to dispose of his sons shares for the payment of his (fathers) own debts cannot enable that power to be exercised over the properties so attached."

It was also held that

"consequently when, at the time of the revesting order, the sons shares are under an attachment by a creditor, the revesting order would give the Official Receiver no power to sell those shares or to use the proceeds of those shares for the satisfaction of the other debts of the father to the extent of the attachment."

This decision of a Division Bench directly applies to the present case and shows that the Official Receiver had no power to sell the shares of the sops, at the time when he did i.e. when the insolvency of the father subsisted and before the discharge was made. Consequently, in any case, the sale did not convey title to K. Anjaneyulu in the share of the sons.

8. In Maya Nandan and Bros. v. Arunachalam, AIR 1926 Mad 1106, it was held that:

"When the father is discharged and his obligation is ended, that of the sons also goes with it. But it would be different if a decree had been obtained against the son or even against the father prior to the insolvency in which case it may be possible for the creditor to seize the joint family property in the hands of the son in execution proceedings."

The above observation was obiter dictum in that decision, but was affirmed by another Division Bench of the Madras High Court in Seetharamayya v. Kesavayya, AIR 1952 Mad 108 and thus became accepted principle of law. In the latter decision, it was held as follows :

"Whatever might be the position prior to the decree, when the obligation of a Hindu son to pay his fathers debts fructifies into a decree it imposes a joint liability on the son along with the father and the former is jointly bound along with the latter within the meaning of sub-sec.3 of S.44"

Section 44 (2) and (3) of the Provincial Insolvency Act run as follows :

"(2) Save as otherwise provided by subsection (1), an order of discharge shall release the insolvent from all debts provable under this Act

(3) An order of discharge shall not release any person who, at the date of the presentation of the petition, was a partner or co-trustee with the insolvent, or was jointly bound or bad made any joint contract with him or any person who was surety for him."

8a The learned Advocate for the non-insolvents contends as follows: The date of presentation of the petition means the date of presentation of the insolvency petition, not the date of presentation of the application for discharge. The decree in this case was passed only after the date of the presentation of the insolvency petition. On the date of presentation of the petition, the decree debt did not exist. On the other hand, what existed on that date was only the original debt incurred by the father. When the insolvent was granted discharge, the debt of the insolvent ceased to exist and, therefore, the debt of the non-insolvent ceased to exist. Consequently, on the date of presentation of the insolvency petition, the non-insolvent sons were not jointly bound along with the insolvents to pay the debt. Consequently, the decision in AIR 1952 Mad 108 does not apply to this case.

9. This contention looks attractive, but a scrutiny shows it to be untenable. In the first place, once a decree has been passed imposing a joint liability, it supersedes the original debt and from then onwards, it is the decree which governs the liability and not the original debt. Consequently, if a decree is passed, the original debt cannot be made ineffective and even if it be found that the debt would have become ineffective, (if a decree had not been passed) if, in fact a decree had been passed, the decree would continue to be valid. For, a decree once passed continues to be valid and binding, unless and until it is made ineffective specifically either by being set aside on appeal or by provisions of statute, which are specifically made applicable to such a decree. Further, a careful study of the decision in AIR 1952 Mad 108 goes to show that in that decision the learned Judges held in effect that, after a decree had been passed against non-insolvent son for joint liability with his father who was adjudicated insolvent on an insolvency petition which had been filed before the decree was passed, the non-insolvent son was not released from, liability in view of the operation of S.44 (3) of the Provincial Insolvency Act by reason of the discharge of the father from insolvency after the decree was passed, under the following circumstances :

1. When a decree was passed after the presentation of the insolvency petition, against noninsolivent son alone;

2. against non-insolvent son and the Official Receiver as representing the insolvent father. In that case the question arose about the execution of three decrees as follows :

1. Decree in O.S. No.467 of 1953 against the insolvent father and non-insolvent son. (date of decree not ascertainable from the decision).

2. Decree in O.S. No.206 of 1936 on the file of the District Munsifs Court, Repalli, on the debt contracted by the father against the non-insolvent son alone. It is mentioned in the judgment that the father who had contracted the debt had become insolvent by the time of the decree.

3. Decree in O.S. No.44 of 1934 in Sub Court, Repalli, against the non-insolvent son and the Official Receiver, Guntur, as representing the fathers estate.

The father was adjudged an insolvent in I.P. No.73 of 1934. Ultimately, the insolvent was given absolute discharge in or after 1940. The dates of the decrees are not known and the date of adjudication is not known, though, it appears certain that the adjudication was done after the decree in O.S. No.467/33 was passed (as the decree was against the father and not. against the Official Receiver) and before the other two decrees were passed. It is clear that the decree Nos.2 and 3 were passed after the father was adjudicated an insolvent. Obviously, they were passed after the Insolvency petition has been filed. The debts concerned in all the decrees had been contracted by the insolvent father and the non-insolvent sons liability was only on the principle of pious obligation. Section 44 (3) applied with regard to the shares of the non-insolvents shares as regards decree Nos.2 and 3 also (in addition to decree No.1).

10. In effect, the learned Judges held that the non-insolvent son was jointly bound under the decree Nos.2 and 3 for the purpose of S.44 (3), though the decree was passed after the date of presentation of the Insolvency petition. In discussing the purport and effect of S.44 (3), the learned Judges have mentioned that a person must be deemed to be jointly bound on the date of presentation of the petition, but they have not specifically considered the question as to whether the date of presentation of the petition meant the date of presentation of the insolvency petition or of discharge application. This particular, question was not argued before them. But, it was obvious that the decree was passed after the presentation of the Insolvency petition and still the learned Judges considered that the son was jointly bound under the decree and that S.44 (3) applied. Therefore, the above decision of the Division Bench, which is binding on this court, is an authority for the position that S.44 (3) applies and operates so as to save from release, the shares of non-insolvent sons under a decree passed against them and the father after the date of presentation of the Insolvency petition.

11. In Official Receiver, Coimbatore v. Arunachalam Chettiar, 66 Mad LJ 412 : (AIR 1934 Mad 217), it was held that, on the adjudication of the father in a joint Hindu family, the shares of the sons do not vest in the Official Receiver but only the fathers power of disposal vests in him and that, where the entire joint family property belonging to the father and the sons had been attached by the creditor before the petition for adjudication by the father, the fathers power to sell was destroyed by the attachment and was no longer available to the Official Receiver and that he had no power to deal with the sons shares. The contention of the learned advocate for the appellant in this behalf cannot be accepted.

Both the points raised by the learned counsel for the appellant are untenable.

I, therefore dismiss the second appeal with costs. No leave.

Appeal dismissed.