Decided on November 05,1952



Govinda Menon, J. - (1.) The second appeal and the memorandum of cross-objections raise the same point as both the appellant and the cross-objector were plaintiffs 1 and 2 respectively in the court of first instance. The suit was laid on the allegation that the first defendant as an assignee from the second defendant trespassed upon the suit properties while they were in the possession of the plaintiffs and the relief claimed was that the plaintiffs may be given possession of the suit properties and a decree against the first defendant for past and future mesne profits. Both the lower courts have dismissed the suit and hence this second appeal and memorandum of cross-objections.
(2.) The father of the plaintiffs and his brother were jointly running a chit fund as stakeholders. According to the terms of the chit fund transaction, the chit was to run for about a period of 12 years with one chit being auctioned every year. The subscription for a ticket was Rs. 750 and at the auction the person who bid for the lowest amount got the prize. It was in the nature of the usual auction chit fund, the details of which are unnecessary to elaborate here. Ex. D. 3 dated 14-3-1922 is the memorandum of agreement signed by the plaintiff's father and his brother and it contains the stipulations under which the chit was to run. Ex. B. 4 is the security bond executed by the stakeholders in favour of the ticket-holders giving the family property as security for the proper conduct of the chit and securing the subscribers the amount subscribed by them. There was no complaint regarding the conduct of the chit till the 10th ticket and at the tenth auction the ticket was purchased jointly by two persons, the 2nd defendant Venkataramana Aiyar and another Palani Goundan who had each taken half a ticket in the chit. The amount of the bid was to be paid by both the plaintiff's father and his brother jointly. The plaintiff's father paid his hah" share to Palani Go under but his brother did not pay the amount due from him to Venkataramana Aiyar, the other half ticket holder. O. S. No. 132 of 1931 in the court of the Subordinate Judge of Coimbatore was filed by Venkataramana. Aiyar against the plaintiff's father and his brother for recovery of the amount due to him. Ex. D. 5 dated 8-10-1931 is a copy of the plaint in that suit. To that, suit the other stakeholder who had also an interest in the transaction and in the properties given as security were not impleaded, the only two defendants being the plaintiff's father and his brother. While the suit was pending on 14-10-1931 a creditor of the plaintiff's father presented an insolvency petition (Ex. B. 12) to adjudge the plaintiffs father as insolvent, the allegation being that he had leased out his lands fraudulently to one Muthumarappa Goundan, thereby making it difficult for the creditors to realise the debts due from him. While this petition was pending and before 'the adjudication took place O. S. No. 92 of 1931 was decreed in favour of Venkataramana" Aiyar on 5-12-1031. On 19-2-1332, the plaintiff's father was adjudicated insolvent, the result being that according to the provisions of the Insolvency Act the adjudication was deemed to take effect from the date of the presentation of the insolvency petition, i.e., on 14-10-1931. The Official Receiver in whom the properties of the plaintiff's father vested was not made a party to O. S. No. 192 of 1931 at all. By E. p. No. 703 of 1034, Venkataramana Aiyar brought to sale the properties which were given as security and the sale was held on 23-1-1835, Venkataramana Aiyar himself being the purchaser at the court auction. Ex. D. 5 is the sale certificate issued to Venkataramana Aiyar on 25-2-1935. Thereafter Venkataramana Aiyar assigned his right in the properly to the first defendant who according to the plaintiffs is in unlawful possession of the suit properties, through the tenant the 11th defendant. As the plaintiffs' father did not apply for discharge the insolvency itself was annulled on 30-10-1935.
(3.) Another decree-holder, who was in a similar position like Venkataramana Aiyar, filed O. S. No. 41 of 1934 in the Sub Court, Coimbatore, making not only the stakeholder but the other subscribers, the present plaintiffs, the Official Receiver, Coimbatore and all parties concerned with the properties given as security as defendant. In that suit the present plaintiffs were defendants 25 and 26 their father being the first defendant. Ex. D. 11 is the plaint in the suit and Ex. D. 11 a the judgment, and Ex. O. 11-b the decree. Venkataramana Aiyar was the 17th defendant in that suit. Issue 2 therein was whether the security bond executed by defendants 1 and 2 (stakeholders) was for illegal and immoral purposes is the security bond binding on defendants 23 to 36 of whom defendants 25 and 23 were the minor sons of the first defendant Krishnaswami Goundan? The finding of the learned Judge on issue 3 was that the security bond executed by defendants 1 and 2 therein was binding on defendants 23 to 26 and it was not executed for illegal or immoral purposes. Paragraph 8 of Ex. D. 11-b further held that the decree in o. S. No. 192 of 1931 obtained by the 17th defendant Venkataramana Aiyar will not be of any avail to him as against the plaintiffs in that suit but would be subject to the rights of the plaintiffs under that decree. The lower court has held that the decree in O. S. No. 41 of 1934 will be binding on the plaintiffs as they were parties to it. Therefore they cannot now contend that the chit transaction was started for purposes not binding on the Joint family. But the real question for consideration is whether the decree in O. S. No. 192 of 1931 is null and void. The question that has been elaborately argued before us is whether when once the insolvency is annulled, all the proceedings taken subsequent to the filing of the insolvency petition are completely wiped off except those which are specifically reserved under Section 37 of the Act. What is contended 6n behalf of the appellant is that since the Official Receiver who was the person entitled to represent the estate was not made a party to O. S. No. 192 of 1931 the decree in that suit would be null and void and cannot have any binding force so far as the properties are concerned. The fact that the insolvency was later on annulled would not affect the void nature of the decree. The respondents' contention is that the annulment of the insolvency creates a situation as if there had been no insolvency at all and therefore any infirmity in the non-impleading of the Official Receiver as a party would not affect the validity of the decree obtained. In our opinion on this aspect of the case there is some conflict of opinion in this court.;

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