ARAVAPALLI SUBRAHMANYAM VIJAYAKUMAR Vs. OFFICIAL RECEIVER GUNTUR

JUDGEMENT

(1.) 1. The plaintiffs in O.S.No. 8/1967, on the file of the Court of the District Judge, Guntur, are the appellants. They filed the suit against 111 defendants, for setting aside the order of dismissal for default of the suit O.S. No. 5/1952 on the file of the Court of Subordinate Judge, Narasaraopet, or in the alternative for partition and separate possession of the plaint A to C Schedule properties Into six equal shares and for recovery of four such shares, or in the alternative for partition of items I and 2 of the plaint A schedule into six equal shares and for allotment of four such shares and also for recovery of plaintiffs' shares out of the amounts realised by the Official Receiver, first defendant being the sale proceeds of the properties sold by him. The suit was dismissed in toto. Hence the appeal. It is not necessary to traverse the several allegations in the plaint and the written statement as the points now raised In the appeal are with-In a narrow compass. The relevant facts which are necessary for disposal of the appeal may now be stated. One Aravapalli Venkatappayya who was a rich Vysya gentleman, was carrying on trade in rice milling. He died In the year 1923 leaving behind two sons, Subrahmanyam and A. Venkatarao, the father of plaintiffs I to 4 and the second defendant, After the death of Venkatappayya, Subrahmanyam, the eldest son was managing the family trade. Subrahmanyam died some time In December, 1940 and thereafter, Venkatarao came into management of the mill. Till 1944 the family was carrying on trade in rice milling. But, in 1944, Venkatarao started business in oil and oilcakes. Between the years 1946 to 1948, Venkatarao had Incurred several debts to the tune of nearly five lakhs. On 19-7-1948 he executed a mortgage In favour of the Indian Bank Limited. Madras, the 5th defendant, for a sum of Rs. 3,30,000/- The mortgage deed, Ex.B.1 was executed on 19-7-1948 and it comprised of both the house and landed property of the family and it was executed by Venkatarao for himself and on behalf of his sons. The borrowings of were mainly from Tenali and Guntur branches of the Indian Bank as open loans and key loans. On 10-7-1948, he also passed a letter in favour of Indian Bank, pledging the machinery. Thereafter, Venkatarao appeared to have Incurred losses in business, and some of the creditors filed a petition I. P. No. 20/1948 for adjudicating Venkata Rao as an insolvent and he was adjudged as an Insolvent on 30-12-1948. and all the family properties of Venkatarao vested In the Official Receiver, the first defendant. The Official Receiver filed an application for sett/ng aside the mortgage Ex.B.1 In favour of the Indian Bank. On 22-8-1949, the mother of the plaintiffs, the third defendant, sent notices on behalf of the plaintiffs 1 to 3 to the Official Receiver and the Insolvent, expressing that the plaintiffs I to 3 intend to divide and become separate from the father. At that stage, the Official Receiver, filed an application I A.No. 1546/49 seeking permission of the Court to prosecute Venkatarao for not co-operating with the Official Receiver with regard to the administration of the insolvent's estate and It was ordered on 5-10-1949. At that stage, a compromise petition Ex.B.2 was filed, in and by which it was agreed that the or. dinary creditors should be paid four an as in a rupee in full discharge of their debts due to them from the Insolvent, and that the Official Receiver should sell the insolvent's properties and pay four annas in a rupee to the ordinary creditors and the balance of the sale proceeds should go In discharge of the mortgage debt due to the Indian Bank This compromise was ordered by the Court by order dated 31-7-1950 (vide Ex.B. 2(a) ),

(2.) But subsequently, the mother of the plaintiffs, the third defendant therein filed a suit O.S.No, 5/1952, on the file of the Subordinate Judge, Narataraopet, for partition of the plaint A to C Schedule properties and for recovery of four shares out of six shares. The Official Receiver was fmpleaded as the first defendant, Venkatarao, the father as second defendant, and the peternal aunt of the plaintiffs as 4th defendant. The suit was filed only on behalf of plaintiffs I to 3, as by that date the 4th plaintiff was not born. That suit was however, dismissed on 6.1-1954. for default as per order Ex.A.2. The mother, who was the next friend and guardian of plaintiffs I to 3 file an application I.A.No. 174/54 for setting aside the order ef dismissal for default on the ground that she was unable to attend the court on account of Illness. But, that petition was dismissed on 10-11-54. Against said order, an appeal A. A. O. 110/55 was filed in this Court and that appeal was also dismissed on 28-10-1959 (vide Ex.A.3). It appears the Official Receiver had filed another application I.A.No.2446/52 for permission to prosecute Venkatirao and that was ordered on 27-3-54 (Ex.B.5). These facts are not in dispute.

(3.) After the dismissal of the appeal A.A.O.No. 110/1955 by this Court, the present suit was filed by plaintiffs I to 4, represented by their maternal uncle as the next friend for the reliefs mentioned above. The plaintiffs' case was that the suit O.S.No. 5/52 was not properly conducted by their mother as guardian and next friend, that there was negligence on her part and that she was induced to abstain from prosecuting the case, because the Official Receiver by that time prevailed upon Venkatarao giving him false promises that he would not be prosecuted for non-cooperation under Section 22 of the Insolvency Act, and because of the said inducement, the mother of the plaintiffs defaulted in appearing In Court when the suit was called. The plaintiffs also challenged the several debts in favour of the creditors by Venkatarao as illegal, immoral and avyavaharlka and that the sales effected by the Official Receiver would not bind the plaintiffs and that the mortgage in favour of the 5th defendant was fraudulently obtained, A contention was also raised that the second defendant was adpoted by his paternal uncle, Subrahmanyam and therefore his share would not vest in the Official Receiver. The defendants filed written statements contesting the suit.