Decided on April 18,1944

Perumalla Papiah And Ors. Respondents


- (1.) THE question involved in this second appeal is whether the suit is either premature or barred by limitation. The suit is filed to recover a sum of Rs. 600 borrowed from the plaintiff by defendant 1, Papiah, on 3rd February 1925, with interest. Defendants 2 to 6 are the, coparceners of Papiah. Defendant 2 is his younger brother and defendants 3, 4 and 5 are the sons of defendant 1, Papiah, and defendant 6 is the son of defendant 2. These are respondents 1 to 6 in the second appeal. As Papiah was adjudged an insolvent the Official Receiver of Karnool has been added as defendant 7 and he is respondent 7 in the appeal. The suit was filed on 11th February 1941 and it is said that the suit is not barred by reason of the insolvency proceedings in I.P. No. 27 of 1927 in which defendant 1, Papiah, was adjudged an insolvent and by reason of the fact that those proceedings are still pending. Defendant 2 Narasimiah was also adjudged an insolvent in I.P. No. 24 of 1929. That also is said to be pending. The plaintiff says that he proved his debt in the insolvency and that the sons of defendants 1 and 2 are liable to pay the debts of their father by reason of the rule of pious obligation and that so long as the claim against the father is alive, the suit against the sons is also in time. The first Court held that as there has been no annulment of the adjudication of defendants 1 and 2, Section 78, Provincial Insolvency Act, which was pressed into service by the appellant would not apply as in his view that section enables a creditor to deduct the time between the date of the adjudication and the date of the annulment only if the suit was filed after the annulment. He also took the view that if the suit was filed before the annulment of the adjudication the ordinary period of limitation applied and the suit would be barred. Under the circumstances he allowed the plaintiff to withdraw the suit with liberty to file a fresh suit after the adjudication is annulled. The lower appellate Court has in substance upheld this view.
(2.) IN second appeal it is urged that the view taken by the lower Courts is wrong and that the suit is in time. In the alternative it is said that there are two prayers in the plaint: (1) a declaration that the entire debt of the suit amount, court expenses and subsequent interest was incurred by defendants 1 and 2 for 1 tie benefit of the family of all the defendants and (2) enabling the plaintiff to recover the amount from the defendants' joint family properties and also from the properties belonging to the shares of defendants 3 to 6. This is a prayer which we do not generally come across, but it was necessitated by the following circumstances. This Official Receiver of Karnool who was appointed Receiver in both the insolvencies had to take various proceedings in order to set aside several alienations which had been effected shortly before the insolvency with a view to shield the property from the creditors. After succeeding in those attempts, the Official Receiver advertised the properties for sale. But on the eve of those sales, ho received a notice from the two sons of Papiah on 8th September 1936, whereby they declared that they have 2/9th share in the joint family estate, that the debts contracted by the insolvent were not binding on their shares and called upon the Official Receiver not to sell the 2/9th share and to deliver possession of the same to them. On 14th September 1936 those two sons filed a partition suit, O.S. No. 1055 of 1936, in the Court of the District Munsif of Kurnool for partition and separate possession of their share. In that suit they impleaded not only the other non -insolvent members of the coparcenary entitled to the respective shares, but also the insolvents and the Official Receiver. An attempt was made by the Official Receiver to sell the shares of the sons as well while the suit was pending, but the Official Receiver was properly restrained by an injunction from selling anything beyond the shares of the insolvents. The shares of the insolvents were accordingly sold by" the Official Receiver and a dividend was declared and the plaintiff in this suit also received a dividend. The Official Receiver contested the partition suit O.S. No. 1055 of 1936 and pleaded that the various debts contracted by the insolvents were binding on the sons, the plaintiffs, that the debts were neither illegal nor immoral and that the creditors were also necessary parties to the suit. On these contentions an issue was raised, namely, whether the creditors of the insolvent were necessary parties to the suit. The Official Receiver also filed a petition requesting the Court to frame an additional issue in the suit whether the debts contracted by the insolvents were or were not binding on the sons. But the plaintiffs contended that the additional issue was unnecessary and that it did not arise in the suit. The District Munsif dismissed the petition saying that as the plaintiffs had alleged in the plaint that the debts incurred by the insolvents were avyawaharika debts, they were bound to prove the same in the suit. But after saying this he proceeded to add that the creditors were not parties to the suit and that any declaration regarding the illegal or immoral nature of the debts would not be binding on the creditors. A revision petition filed by the Official Receiver in this Court proved ineffective. The Official Receiver ought to have pressed for an adjudication of the question as to what were the debts binding on the whole family and for provision being made for the discharge of all the debts binding on the plaintiffs in that suit before a partition was made of the family properties. It was not really necessary to have the creditors as parties to that suit as the Official Receiver represented them. It is very unfortunate that the Official Receiver did not press upon the attention of the Court that an enquiry should be made as to what debts were payable by the plaintiffs and that provision should be made for the discharge of those debts before effecting a partition. One of the creditors applied in the insolvency Court Under Section 4, Provincial Insolvency Act, in M.P. No. 460 of 1940 asking the Court to decide that the debts included in the schedule of creditors were not incurred for illegal or immoral purposes and to direct the Official Receiver to sell the shares of the sons as well. The insolvency Court said that the Official Receiver had failed to take advantage of the partition suit to have this question tried and that the insolvency Court had no right to sell the sons' shares after the partition suit had been filed. It was also observed that each creditor would have to file a suit to enforce the pious obligation of the sons to discharge the father's debts. The present suit was then filed.
(3.) NOW , it is said that so long as the adjudication is not annulled the provisions of Section 78 do not apply and that as things stand at present, the suit should be dismissed as barred, and that if the suits are filed after the adjudication is annulled, they may have a remedy against the sons. Before the Provincial Insolvency Act, 5 of 1920, there was no section corresponding to Section 78 of the present Act. Under the Act as it then stood it was held by this Court in Ramasami Pilial v. Govindasami Naicker, A.I.R. 1919 Mad. 656 that an adjudication does not prevent time running and that limitation is not suspended by reason of the adjudication, If a creditor did not file a suit with the necessary leave of the Court Under Section 16 of the Act of 1907 and the adjudication was annulled before the administration" was complete, the creditor found that his remedy became barred if by the date of the annulment and by the time he filed a suit, the suit upon the original cause of action was barred. It is to remedy this situation that Section 78 was enacted. Does Section 78 which enables the deduction of time between the date of the adjudication and the date of the order of annulment enable a creditor to say that a suit filed before annulment is not barred. In Official Receiver Guntur v. : AIR1943Mad94 this Court had to deal with the effect of Section 78, Clause (2) Provincial Insolvency Act. The plaintiff got a decree on 16th December 1930 against the father who was adjudged an insolvent. The adjudication was made in 1932. The decree -holder proved his debt in the insolvency. On 31st August 1936 the insolvency Court annulled the adjudication. On 24th September 1936 one of the creditors applied praying for the revesting of the property in the Official Receiver. While that application was pending, the plaintiff filed an execution petition to attach the funds in the hands of the Receiver and the attachment was made. A month later, the insolvency Court passed an order revesting the properties and the fund in question in the Official Receiver so that they could be utilized for the benefit of the creditors in the insolvency Court. The Official Receiver claimed that the attachment made by the creditor was ineffective and the executing Court upheld the contention. Thereupon the suit which came up before the High Court was filed for establishing the plaintiff's right, to proceed against the fund attached which involved a setting aside of the order passed on the Official Receiver's claim. With reference to the father's share of the proceeds, it was held that even though there was a valid attachment prior to the revesting order, as an attachment does not create a charge, the decree -holder could not proceed against the father's share after the revesting order which amounted to a fresh adjudication and vested that share in the Official Receiver. Dealing with the sons' shares in the funds the learned Judges (Wadsworth and Patanjali Sastri JJ.) said this: With reference to the sons' shares we have listened to very elaborate arguments, but the matter seems to us to be comparatively simple. It is well established that the attachment of the sons' shares in Hindu joint family property automatically prevents the father from exercising over those shares his power to sell the property and utilize the proceeds for the discharge of his own just debt. Similarly when the shares of the sons have been attached by a creditor before the father's assets vest in the Official Receiver, the vesting in the Official Receiver of the power of the father to dispose of his son's shares for the payment of his own debts cannot enable that power to be exercised over the properties so attached .... It seems to follow that at the time of the revesting order, the sons' shares being under an attachment by the plaintiff, the revesting order would give to 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. Then they dealt with the question whether the claim of the plaintiff to execute his decree against the shares of the sons was barred by limitation. It was admittedly a decree against the father alone and the contention of the appellant was that so long as the claim was alive as against the father, it was also alive as against the sons. The learned Judges said this: It was admittedly a decree against the father alone which was alive as against the father by reason of the provisions of Section 78, Provincial Insolvency Act .... There is clear authority for the general proposition that when the debt is alive against the father, it is alive against the son in the absence of special circumstances, such as that created by a renewal after a partition between the father and son or perhaps the position when the father and son were both defendants and the father alone was an insolvent against whom limitation is saved Under Section 78, Provincial Insolvency Act. But on the facts of the present case we have no doubt that the execution of the plaintiff's decree against the father by the attachment of the proceeds of the sale of the sons' shares was not barred by limitation.;

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