A suit for the recovery of money was instituted by the appellant against one Venkatachalamiah and his two sons on the 8th November 1934 (O.S No. 72 of 1935). Venkatachalamiah applied to be adjudged an insolvent on the 20th November 1934 (I.P No. 7 of 1935) and an interim receiver was appointed by the Insolvency Court on the 23rd January 1935 under S. 20 of the Provincial Insolvency Act. The appellant made an application for attachment before judgment in the suit which had been instituted by him. This was granted and three items of property (Nos. 2, 3 and 4) were attached on the 11th and 12th April 1935. This was followed by a decree in favour of the appellant on the 30th April 1935. Two more items of property (Nos. 1 and 5) were then attached in execution, on the appellant's application in August and September 1935. In view of the petition made by Venkatachalamiah for his adjudication the appellant-decree-holder applied for sale of only the sons' shares in the items attached by him both before judgment and after decree. These were sold on the 4th November 1935 and purchased by the decree-holder himself. Venkatachalamiah was adjudicated on the 18th December 1935. It appears that shortly after this adjudication the Official Receiver in whom the insolvent's estate had vested on account of the order of adjudication made an attempt to sell the sons' shares which had been already sold as stated above and purchased by the decree-holder through Court. He therefore intervened (I.A No. 32 of 1936) and objected to the Official Receiver selling the sons' shares over again. This petition was filed on the 27th January 1936 but the Official Receiver refused to entertain it as he considered that the power of the father to sell the sons' shares in the property was vested in him in spite of their attachment and sale by the execution Court in November 1935. The Official Receiver's order was challenged by the appellant before the District Judge (I.A No. 299 of 1936). While this application was pending in that Court the sons' shares in items 3 and 5 were put to sale by the Official Receiver in March 1936 and were purchased by the 3rd respondent. The application presented by the appellant was dismissed by the District Judge on the 24th April 1936 and it is against this order that he has filed the present appeal.
From the narrative of facts which has been given above it would appear that the only question which emerges for decision is whether the sale by the execution Court in favour of the appellant conferred an indefeasible title on him. This would depend on (a) the effect of Venkatachalamiah's petition for adjudication on the Official Receiver's right of disposal which he claims to have possessed over the shares of his sons in the joint family property and (b) the consequences of the appointment of an interim receiver in the insolvency petition before the sons' shares were attached and sold to the appellant in the execution of his decree.
To take up the first point, it cannot be disputed that a father has power not only to alienate his own share in the joint family property but has also the power to dispose of his sons' shares in certain circumstances, (which need not be discussed here) as long as they continue to remain members of a joint Hindu family. This does not mean, however, that the sons have no rights in the property during their father's life-time. The father's power of disposal and the sons' rights in the property continue to subsist simultaneously as long as they remain joint and their (i.e the sons') shares in the property remain free to be dealt with. If the joint family comes to an end or the sons' shares in the property are alienated by them or attached by their creditors, the father's power of disposal would cease to exist. Similarly if the father exercises his power of disposal legitimately before the joint family has come to an end, or before the sons' shares in the property have been alienated or attached, the disposition by the father would be good and cannot be objected to by the sons or their creditors on the ground that it was made by a person other than the sons who were the owners of the shares. In other words, the power of disposal possessed by a father is co-extensive with that of his son and can be exercised only up till such time as it could have been exercised by the sons themselves.
It is this right of disposal which has been held to vest in the Official Receiver on the father's adjudication. [Sat Narain v. Behari Lal(1), and Bala Venkata Seetharama Chettiar v. Official Receiver Tanjore(2)]. The distinction between this right and the sons' shares in the property must not be confused. The sons were not adjudicated and their shares in the property could not therefore vest in the Official Receiver. They had the power to deal with their shares in spite of the father's adjudication. In the same way their creditors would have the power to attach and sell the sons' undefined shares in the joint family property in spite of their father's insolvency. The Official Receiver cannot be said to possess any more power than the father had. He stands in the shoes of the father and could only exercise the power which the father possessed. If the father's power of disposal would come to an end on alienation by the sons or attachment of their shares, the Official Receiver's power also must be held to come to an end. It would therefore follow that if the father or the Official Receiver has not exercised this power before the sons' shares in the property had been attached or alienated, it could not be exercised after their shares have been attached or alienated. See Gopalakrishnayya v. Gopalam, In the matter of Balusami Ayyar (insolvent), The Official Receiver Coimbatore v. Arunachalam Chettiar(3), Kanyakaparameswaramma v. Venkataramayya(4), Subraya Vithal Naik v. Nagappa Subbaya Shanbhog(5). It has however been contended that inasmuch as it has been held that the power of disposal possessed by the father comes within the definition of the word ‘property’ as used in S. 28 of the Provincial Insolvency Act and since the order of adjudication must be taken to relate back to the date of the petition for insolvency it must follow that the father's power of disposal came to be vested in the Official Receiver from the date on which the application for insolvency was presented by Venkatachalamiah in Court. It may be that an order of adjudication is for certain purposes, to relate back to the date of the insolvency petition but it cannot be reasonably contended that it would be so for all purposes. It is however unnecessary for me to go into this point as I find that the Official Receiver did not exercise this power until the sons' shares in the property were attached and sold.
As to the second point, it was contended that the appointment of an interim receiver under S. 20 of the Provincial Insolvency Act in January 1935 would render the attachment of the sons' shares in the property, either before judgment in April 1935 or after judgment in August and September 1935, invalid and since a valid attachment is a condition precedent for divesting the Official Receiver of his power of disposal, the power continued to remain in him up till such time as it was exercised by him. In order to appreciate the force of this argument one would necessarily have to ascertain the effect of the appointment of an interim receiver and its consequences on the rights of other creditors not only in regard to the Insolvent's immovable properties but also in regard to his power of disposal which he possessed at the time when the order was made. The powers of an interim receiver are not defined in S. 20 of the Act and in the absence of such a definition he can only be, as provided by the section, entitled to take immediate possession of such of the debtor's property as may be directed by the Court. Once he has taken possession of the property, his powers would be those which could have been conferred on a receiver appointed under the Code of Civil Procedure. It would therefore follow that the interim receiver does not derive his power by reason of his appointment but in virtue of his taking possession of the property under the orders of the Court. If we remember that an order of appointment of an interim receiver is passed with the object of maintaining and protecting the debtor's property in the event of an order of adjudication being ultimately passed by the Court, it would be clear that his appointment has not the same effect as the effect of the appointment of an Official Receiver after adjudication. It is only after adjudication that an insolvent can be said to be divested of his property. It is only then and not till then that the property would vest in the Official Receiver but before adjudication the debtor continues to be the legal owner of the property. If the distinction between the appointment of a receiver under Ss. 20 and 28 of the Provincial Insolvency Act is kept in view, it would be clear why the appointment of an interim receiver is held not to deprive the creditors of their power to institute suits against their debtors or to proceed in execution against their property. The attachment of the insolvent's property cannot therefore be invalid on account of the appointment of an interim receiver. Moreover I have already held that even after the father has been adjudicated an insolvent the power of disposal possessed by him ceases to exist on the attachment or alienation of the sons' shares in the property and cannot be exercised by him subsequently. An interim receiver cannot be said to have any larger powers than what the Official Receiver had after the father's adjudication. It would therefore follow that the appointment of an interim receiver would not affect the creditors' powers of attaching the sons' shares in the property. This was the only point on which the application presented on behalf of the appellant was rejected and even this the learned District Judge did not care to examine carefully. I must say that his judgment was perfunctory.
It must for the above reasons be held that the sale of the sons' shares to the 3rd respondent by the Official Receiver in March 1936 would not affect the appellant who had attached the properties long before Venkatachalamiah's adjudication and even purchased them before that date. The appeal must therefore be accepted and the order of the lower Court set aside. The appellant is bound to have his costs.
I was requested by the learned Counsel for the respondent to refer the matter to a Bench as my learned brother King J. has done so in a case which was heard by him (C.M.S.A No. 166 of 1936). The facts of that case were however different as the decree was obtained by a creditor after, and not before as in this case, the order of adjudication was passed. It was executed later. This makes all the difference. See Nagarur Sambayya… v. Nagarur Pedda Subbayya…. I have no doubt in my mind in regard to the conclusion to which I have arrived I would not follow the course suggested. (Leave refused.)
N.R.RAppeal allowed.