KOPPAKA KRISHNA DASS Vs. GADDE RAMAKOTAYYA

JUDGEMENT

(1.) The first respondent was adjudicated an insolvent in I.P.No. 17 of 1953 and by reason of a vesting order made in December, 1953, his property was vested in the Official Receiver, Krishna, who is the second respondent in this appeal. The appellant who is a creditor of the insolvent has filed the present application under sections 4 and 5 of the Provincial Insolvency Act urging that the third respondent cannot be allowed to proceed with the execution of the decree in O.S.No. 271 of 1953. His right to levy execution against the interests of the sons is challenged by the appellant on the plea that an order of vesting of the insolvent's property having been made, it is no longer open to any creditor to proceed in furtherance of the execution of the decree against the shares of the sons. The petition is filed on the basis that the vesting order precludes the subsequent attachment of the son's shares at the instance of any creditor. The Courts below have rejected this plea and hence this appeal.

(2.) On the strength of the decision in Subbarao v. Official Receiver, West Godavari, Mr. Y.G. Krishna Murthy contends that the power of disposal of the share of the sons having been vested in the Official Receiver, the subsequent attachment of that interest by a creditor has no precedence over the right of the Receiver, Counsel submits that the power of disposal is ' property' of the insolvent father and it has passed to the Receiver. Once the vesting takes place, nothing can be done derogatory to the exercise of the power of disposal. The attachment effected at a later date cannot, according to the counsel, obliterate the effect of the antecedent vesting. In the above-mentioned case decided by Venkatesam J., the order of adjudication was made after the attachment but before the execution proceeding resulted in the sale of the property. The learned Judge applied the rule that attachment does not create any charge in faour of the attaching decree holder and on this premise he held that the subsequent vesting of the power of disposal in the Official Receiver enures for the benefit of the general body of the creditors of the insolvent father. The principle laid down by the learned Judge is that: "the order of adjudication divests the right of the attaching creditor, and remits him to the position of an ordinary creditor.".

(3.) The dictum about the divesting of the right of the attaching creditor does not rest on any provision of the Insolvency Law other than section 28-A of the Provincial Insolvency Act, No one can take exeception to the hypothesis that the attachment of property whether in execution of or in anticipation of a decree, does not constitute the attaching creditor a secured creditor. The attachment, nevertheless, brings the property into the custody of the Court and any transfer of the property effected thereafter is void as against the claims enforceable under the attachment. There is no provision of law to the effect that this position of inviolability flowing out of an order of attachment yields place to the order of vesting, although the attachment is of the property of a person other than the insolvent. Where the order of attachment was in respect of the property of the very person against whom proceedings under the law of insolvency have been taken, the position is different and the provisions of the insolvency law are of overriding character.