POTLURI JANARDHANA RAO Vs. YELAMANCHILI BASAVAIAH

JUDGEMENT

(1.) An interesting question of law is whether an unequal partition between the coparceners viz., the father and the son of a Hindu joint family governed by Mitakshara Law, is an act of insolvency within the meaning of Section 6 (b) of the Provincial Insolvency Act (5 of 1920) for short, "the Act" (Claims Adjudication). The facts are not in dispute. Potluri Venkata Basavaiah, the father of the petitioner, the second respondent had contracted debts. Without discharging them, under Ex. A-2 dated September 6, 1977, partition was effected between him and the petitioner. The joint family property consists of Ac. 5-70 cents of which the father had taken Ac. 1 -33 cents and given to the petitioner Ac. 4-37 cents with an express recital therein that the son is not bound by the debts contracted by the father. Obviously aggrieved by the act of partition, the first respondent- a creditor, laid I.P. No. 14/77 to decicre Venkata Basavaiah to be an insolvent. The Insolvency Court declared him to be an insolvent which was confirmed on appeal. Thus the present revision.

(2.) Sri. Veerabhadraiah learned counsellor the petitioner contended that the petitioner had an antecedent title and share in the joint family property being a member of the coparcenary and what was uncertain was got crysta!ised in the partition under Ex. A-2 and acquired no new title thereunder. Therefore it is neither transfer nor an act of insolvency within the meaning of Sec. 6 (b) of the Act. In support thereof, he placed strong reliance on V.N. Sarin Vs. Ajit Kumar (1) AIR 1966 SC 432. Sri Parabrahma Sastry, learned counsel for the respondent, on the other hand, contended that under Section 5 of the Transfer of Property Act, the partition is a transfer of property coming under Section 2 (1) (d) of the Act. Therefore it is an act of insolvency. Alternatively, it is contended that an unequal partition under Ex. A-2 was effected with an intention to defeat and delay the claims of the creditor and so it constitutes an act of insolvency. Therefore, there is no error of jurisdiction in the conclusion reached by the Courts below warranting interference. In support thereof, he places strong reliance on Baji Rao Vs. Daulat Rao (2) AIR 1930 Nag 215 and Was Deo Vs. Haidar Hassan (3) AIR 1936 Lahore 336. The question, there fore, is whether partition between the coparceners governed by Mitakshara Hindu Law is an act of insolvency ? Section 2 (1) (d) defines "property" to mean "to include any property over which" Or the profits of which any person has a disposing power which he may exercise for his own benefit". Section 2 (1) (f) defines "transfer of property" which includes a transfer of any interest in property and the creation of any charge upon the property. Section 6 of the Act adumbrates the acts of insolvency thus :

(3.) Section 28-A of the Act which was brought by the Amendment Act 1948, also amplifies that position by stating that 'the property of the insolvent shall comprise and shall always be deemed to have comprised also the capacity to exercise...............in of over or in respect of the property as might have been exercised by the insolvent for his own benefit at the commencement of his insolvency or before his discharge.' (Unnecessary phrases have been omitted since they are not relevant for the purpose of this case). The judgemade law thus finds acceptance and had statutory base. Thus, it is clear that under the doctrine of pious obligation under the Mitakshara Hindu Law and also by operation of Section 28-A of the Act, the father has and shall always be deemed to have capacity to exercise his power over the entire joint family property to dispose it of to discharge the pre-partition joint family debts by sale of the property of the sons, which went to his share in the partition. The question is whether such an interest over the property would be a transfer within the meaning of Section 6 (b) of the Act? This question was considered for the first time by the Judicial Commissioner Nagpur in Baji Rao vs. Daulat Rao (9) AIR 1930 Nag 215. Therein it was held that :