OFFICIAL RECEIVER Vs. IMPERIAL BANK OF INDIA

JUDGEMENT

(1.) This is an appeal against an order passed by the learned District Judge of East Godaveri in an execution application and it is an order that raises a point of some interest. The facts can be shortly stated. The action was brought by what I will call the execution creditor against the father and manager of a joint Hindu family and his son and nephew. In that action the plaintiff was successful and obtained a decree against the father personally and against the son and nephew in respect of their share in the joint family property. Following upon that decree the judgment creditor attached the family property, that is to say, the interest therein, both of the father and manager and of his son and nephew.

(2.) The next step was that the father became an insolvent. The Official Receiver took charge of his properties. He communicated with the executing Court claiming the whole of the attached property and sought to stop the sale. The executing Court decided to continue the sale and everything thereafter has proceeded on the basis that the sale took place without in the least affecting the rights of the Official Receiver to the sale proceeds, that is to say, if the Official Receiver has a right in respect of the whole property the whole of the sale proceeds are his and on the other hand if he has a right in part, he is entitled to part of the sale proceeds. The learned District Judge has held in fact that the Official Receiver is not entitled to such part of the sale proceeds which represent the interests of the son and nephew in the joint family property. It is urged before us that the Official Receiver is entitled to the whole of the sale proceeds on the ground that the action was in respect of the father's debts, that the father had subsequently become an insolvent and that the judgment creditor should be in no better position than the general body of creditors, that the attachment has not affected the sale, for the relevant time is when the petition was filed, and that Secs.51 and 52, Provincial Insolvency Act, apply. In our opinion however the legal position that arises in circumstances such as this can be shortly expressed as follows: Section 52 provides: Where execution of a decree has issued against any property of a debtor which is saleable in execution and before the sale thereof notice is given to the Court executing the decree that an insolvency petition by or against the debtor has been admitted, the Court shall, on an application, direct the property if in the possession of the Court, to be delivered to the Receiver, but the costs of the suit in which the decree was made and of the execution shall be a first charge on the property so delivered, and the Receiver may sell the property or an adequate part thereof for the purpose of satisfying the charge.

(3.) That section in our opinion relates to a decree which was issued against the property of a debtor. Section 51 restricts the rights of a creditor in execution in the following terms: Where execution of a decree has issued against the property of a debtor, no person shall be entitled to the benefit of the execution against the Receiver except in respect of assets realised in the course of the execution by sale or otherwise before the date of the admission of the petition.