NOONY SURYANARAYANAMURTHI, MINOR REPRESENTED BY NEXT FRIEND AND MATERNAL GRANDFATHER CHODE-CHINA PATTABHIRAMAYYA Vs. NOONY VEERRAIU AND ORS.

JUDGEMENT

(1.) THESE connected appeals arise out of a suit for partition brought by the appellant in the main appeal A.S. No. 89 of 1943, impleading his father as the first defendant and his brother as the third defendant. The first defendant having been adjudicated insolvent, the Official Receiver in whom the property of the insolvent had vested was joined as the second defendant. Defendants 4 to 6 were the unmarried daughters of the first defendant. Certain creditors and alienees of family properties were also impleaded as defendants 7 to 18, and questions were raised as to the binding character of the transactions which they had respectively entered into with the first or the second defendant as the case may be.

(2.) BEFORE the third defendant was born in 1938, the half share in the family properties to which the first defendant was entitled at the time of his adjudication (23rd March, 1933) had become vested in the second defendant. After the proceedings in insolvency had lasted for several years, in the course of which the second defendant had realised some of the family properties and distributed dividends, the first defendant applied on 24th June, 1941, under Section 35 of the Provincial Insolvency Act for annulment of his adjudication which had been made ex parte. The application was rejected by the Insolvency Court, but, on appeal, the District Court of East Godavari annulled the adjudication on 7th October, 1944, on the ground that it ought not to have been made, as the alleged fraudulent preference relied on by the petitioning creditor as the sole act of insolvency was not proved to be such in I.A. No. 731 of 1937, initiated by the Official Receiver. The learned District Judge however directed in his order that " the properties of the debtor shall vest in the Official Receiver and suitable directions will be given by the insolvency Court with respect to these properties." From this order the first defendant preferred C.R.P. No. 1621 of 1944 to this Court. It was not clear why the learned Judge vested the debtor's properties in the Official Receiver notwithstanding the annulment of the adjudication. As, however, his order would be justified if the " suitable directions " which he contemplated were intended to relate merely to the completion of unfinished acts of administration or to other special matters, we suggested, with a view to have the position clarified, that the first defendant might apply to the Insolvency Court for further directions as to the delivery of the properties to him. On such application being made that Court, however, was of opinion that in view of the general terms of the vesting order made by the District Court under Section 37, it could not direct the properties to be delivered to the debtor although there were no special circumstances rendering necessary any further interference with the debtor's estate by the Official Receiver, and accordingly ordered the administration in insolvency to proceed as if the adjudication had not been annulled. If the order of the learned District Judge were intended to have this effect it would obviously be in excess of his powers, for it has been held by a Full Bench of this Court in Periakaruppan v. Arunachalam, I.L.R. (1940) Mad. 441 that, when an adjudication is annulled under Section 35 of the Provincial Insolvency Act, no vesting order should be made under Section 37 except to the extent that any special circumstances render such vesting necessary. We accordingly allowed the C.R.P. No. 1621 of 1944 and set aside the order of the District Court in so far as it vested the properties of the first defendant in the Official Receiver, but directed that officer to retain the cash realisations in his hands pending the decision in these appeals as to the utilisation, of that fund. The position, therefore, is that the properties of the first defendant which had, on his adjudication, vested in the Official Receiver, now "reverted" to him as provided in Section 37 of the Provincial Insolvency Act.

(3.) THE only decision on the point which has been brought to our notice is that of Venkataramana Rao, J., in Lakshmana Chettiar v. : (1936)71MLJ707 , where that learned Judge held that, on reverter under Section 37 on annulment of the adjudication of a member of a Hindu joint family his share in the family properties or its residue comes back to him as " his individual property so that if on the date of the reversion he is not alive it will go to his heir under the law and not to his coparceners by survivorship." learned Counsel for the plaintiff contends that this view is not correct, and we are inclined to agree with him. The learned Judge accepts the position that " the insolvent does not cease to be a member of the joint family but still continues as a member thereof," citing the observation in Venkatarayudu v. Sivaramakrishnayya, (1934) 67 M.L.J. 486 :, I.L.R. 58 Mad. 126 to the effect that " neither the filing of the insolvency petition nor the adjudication of the applicant can sever the joint family status." If so, it is somewhat startling to be told that when the insolvent's share reverts to him on the annulment of his adjudication he holds it as his individual property while still continuing as a member of the joint family. This conception of a coparcener holding his share in the family property, or what remains of it after its distribution in insolvency, as his separate property is novel and so opposed to the theory and incidents of joint family and joint family property that it cannot be readily accepted unless the reasons on which it is based lead irresistibly to that conclusion. The learned Judge quotes an obiter dictum of Wallace, J., in Narayan Sah v. : AIR1929Mad865 that: