Full Judgment Text
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PETITIONER:
VENKATA REDDI AND OTHERS
Vs.
RESPONDENT:
POTHI REDDI
DATE OF JUDGMENT:
30/11/1962
BENCH:
MUDHOLKAR, J.R.
BENCH:
MUDHOLKAR, J.R.
IMAM, SYED JAFFER
SUBBARAO, K.
AYYANGAR, N. RAJAGOPALA
CITATION:
1963 AIR 992 1963 SCR Supl. (2) 616
CITATOR INFO :
R 1965 SC1055 (6)
ACT:
Preliminary Decree-Partition suit-Father’s insolvency-Suit
challenging Official Receiver’s sale of sons’ share-New law
declaring such right but made subject to previous final
decision of court-Preliminary decree, if a "final decision"-
Provincial Insolvency (Amendment) Act, 1948(25 of 1948),
s.2-Provincial Insolvency Act, 1920 (5 of 1920), s. 28A.
HEADNOTE:
The appellants’ father was adjudicated an insolvent and the
Official Receiver put up for sale the property belonging to
the undivided family including the two-thirds share of the
appellants. On February 1, 1943, the appellants instituted
a suit for the partition of the joint family property
impleading therein the respondent, the purchaser of the
property, and claimed that on their father’s adjudication
only his share vested in the Official Receiver and that the
latter had no right to sell their two-thirds share. The
trial court accepted this contention and passed a
preliminary decree for partition in favour of the
appellants. The decree was confirmed by the High Court of
Madras on November 18, 1946. On an application made by the
appellants, a final decree was passed ex-parte on August 17,
1946, but it was set aside at the instance of the
respondent. In the meantime s. 28A of the Provincial
Insolvency Act, 1920, came into force in 1948, under which
the disposing power of the father over the interest of his
undivided sons also vested in the Official Receiver. By the
first proviso to the section it was provided "that nothing
in this section shall affect any transfer of the property of
the insolvent by...... a Receiver .... made before the
Commencement of the Provincial Insolvency (Amendment) Act,
1948, which has been the subject of a final decision by a
competent court". The District Munsif held that the
Amending Act did not affect the preliminary decree and
restored the ex-parte final decree. The question was
whether the preliminary decree for partition which was
affirmed finally in second appeal by the High Court was a
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final decision within s. 28A of the Act.
Held, that a preliminary decree passed, whether it is in a
mortgage suit or a partition suit, is not a tentative decree
but,
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must, in so far as the matters dealt with by it are
concerned, be regarded as embodying the final decision of
the Court passing that decree within the meaning of the
first proviso to s. 28A of the Provincial Insolvency Act,
1920.
A final decision means a decision which would operate as res
judicata between the parties if it is not sought to be
modified or reversed by preferring an appeal or a revision
or a review application as is permitted by the Code of Civil
Procedure, 1908.
In re A Debtor, [1929] 2 Ch.146, considered.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 199 of 1960.
Appeal by special leave from the judgment and decree dated
December 1, 1955, of the Madras High Court in second Appeal
No. 736 of 1953.
R.Ganapathy Iyer, R. Thiagarajan and G. Gopalakrishnan,
for the appellants.
V.S. Prashar, A. S. Chaturvedi and K. R. Chaudhari, for
the respondent.
1962. November 30. The judgment of the Court was delivered
by
MUDHOLKAR, J. -Only one question arises for consideration in
this appeal by special leave and that is the meaning to be
given to the expression final decision’ occurring in the
first proviso to s. 28 A of the Provincial Insolvency Act,
1920 (Act No. 5 of 1920), introduced by Act No. 25 of 1948.
For appreciating the argument advanced before us a few facts
have to be stated. Venkata Reddy, the father of the
appellants, was adjudicated an insolvent by the Sub-Court,
Salem’ in I. P. No. 73 of 1935. ’At that time only the
appellants 1 and 2 were born while the third appellant was
born later. The father’s one-third share was put up for
auction by the Official Receiver and was purchased by one
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Karuppan Pillai for Rs. 80/-. The Official Receiver then
put up for auction the two-thirds share belonging to
appellants 1 and 2 on July 27, 1936, which was purchased by
the same person for Rs. 341/-. He sold the entire property
to the respondent Pethi Reddy on May 25, 1939, for Rs.
300/-.
The appellants instituted a suit on February 1, 1.943, for
the partition of the joint family property to which suit
they made Pethi Reddy a party and claimed thereunder two-
thirds share in the property puchased by him. In that suit
it was contended on behalf of the respondent that on their
father’s insolvency the share of the appellants in the joint
family property also vested in the Official Receiver and
that he had the power to sell it. The contention was
negatived by the trial court which passed a preliminary
decree for partition in favour of the appellants. The
decree was affirmed in appeal by the District judge and
eventually by the High Court in second appeal, except with a
slight variation regarding the amount of mesne profits. The
decision of the High Court is dated November 18, 1946. On
January 18, 1946 the appellants made an application for a
final decree which was granted ex parte on August 17, 1946.
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At the instance of the present respondent this decree was
set aside. By that time the new provision, that is, s. 28 A
of the Provincial, Insolvency Act, had come into force. On
the basis of this provision it was contended by the
respondent that the appellants were not entitled to the
allotment of their two-thirds share in the property
purchased by him inasmuch as that share had also vested in
the Official Receiver. The District Munsif held that Act 25
of 1948 which introduced s. 28 A did not affect the
preliminary decree for partition since it had been passed on
August 20, 1943. He, therefore, restored the ex parte final
decree which had been set aside on December 17, 1950. The
appeal preferred by the respondent against the decision of
the District
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Munsif was dismissed by the Principal Subordinate judge,
Salem, whereupon he preferred a second appeal before the
High Court. The High Court allowed the appeal and dismissed
the application of the appellant for passing the final
decree,
Section 28A of the Provincial Insolvency Act runs as
follows:
"The property of the insolvent shall comprise
and shall always be deemed to have comprised
also the capacity to exercise and to take
proceedings for exercising all such powers in
or over or in respect of property as might
have been exercised by the insolvent for his
own benefit at the commencement of his
insolvency or before his discharge :
Provided that nothing in this section shall
affect any sale, mortgage or other transfer of
the property of the insolvent by a Court or
Receiver or the Collector acting tinder s. 60
made before the commencement of the Provincial
Insolvency (Amendment) Act, 1948, which has
been the subject of a final decision by a
competent Court
Provided further that the property of the
insolvent shall not be deemed by reason of
anything contained in this section to comprise
his capacity referred to in this section in
respect of any such sale, *mortgage or other
transfer of property made in the State of
Madras after the 28th day of July, 1942. and
before the commencement of the Provincial
Insolvency (Amendment) Act, 1948."
The objects and reasons set out in the bill which sought to
introduce this provision were to bring the provisions of the
provincial insolvency Act
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in line with those of the Presidency Towns Insolvency Act in
so far as the vesting of the joint family property in the
Official Receiver upon the father"s insolvency was
concerned. While under the Presidency Towns Insolvency Act,
in a case of this kind, the disposing power of the father
over the interest of his undivided sons also vests in the
Official Receiver and not merely the father’s own interest
in the joint family property’ there was divergence of
opinion amongst the High Courts in India as to whether under
the Provincial Insolvency Act the father’s disposing power
over his undivided sons’ interest also vests in the Official
Receiver. A Full Bench of the Madras High Court held in
Ramasastrulu v. Balakrishna Rao (1) that it does not. It
was in the light of this decision that in the appellants
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suit for partition, a preliminary decree was passed with
respect to their two- thirds interest in the joint family
property which had been sold by the Official Receiver. In
the course of the decision of the Full Bench a suggestion
was made that the legislature should step in and bring the
provisions of the Provincial Insolvency Act in the relevant
respect in line with those of the Presidency Towns
Insolvency Act.
The new provision makes it clear that the law is and has
always been that upon the father’s insolvency his disposing
power over the interest of his undivided sons in the joint
family property vests in the Official Receiver and that
consequently the latter has a right to sell that interest.
The-provision is thus declaratory of the law and was
intended to apply to all cases except those covered by the
two provisos. We are concerned here only with the first
proviso. This proviso excepts from the operation of the Act
a transaction such as a sale by an Official Receiver which
has been the subject of a final decision by a competent
Court. The short question, therefore. is whether the
preliminary decree for partition passed in this case which
was affirmed finally in second
(1) I.L.R. [1943] Mad. 83.
621
appeal by the High Court of Madras can be regard as a
final decision. The competence of the court is not in
question here. What is, however, contended is that in a
partition suit the only decision which can be said to be a
final decision is the final decree passed in the case and
that since final decree proceedings were still going on when
the Amending Act came into force the first proviso was not
available to the appellants. It is contended on behalf of
the appellants that since the rights of the parties are
adjudicated upon by the court before a preliminary decree is
passed that decree must, in so far as rights adjudicated
upon arc concerned, be deemed to be a final decision: The
word "decision’ even in its popular sense means a concluded
opinion (see Stroud’s Judicial Dictionary--3rd ed. Vol. 1,
p. 743). Where, therefore, the decision is embodied in the
judgment which is followed by a decree finality must
naturally attach itself to it in the sense that it is no
longer open to question by either party except in an appeal,
review or revision petition as provided for by law. The High
Court has, however, observed
"The mere declaration of the rights of the
plaintiff by the preliminary decree, would, in
our opinion not amount to a final decision for
it is well known that even if a preliminary
decree is passed either in a mortgage suit or
in a partition suit, there are certain
contingencies in which such a preliminary
decree can be modified or amended and
therefore would not become final."
It is not clear from the judgment what the contingencies
referred to by the High Court are in which a preliminary
decree can be modified or amended unless what the learned
judges meant was modified or amended in appeal or in review
or in revision or in exceptional circumstances by resorting
to the powers conferred by ss. 151 and 152 of the Code of
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Civil Procedure. If that is what the High Court meant then
every decree passed by a Court including decrees passed in
cases which do not contemplate making of a preliminary
decree are liable to be modified and amended. Therefore, if
the reason given by the High Court is accepted it would mean
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that no finality attaches to decree at all. That is not the
law. A decision is said to be final when so far as, ,the
Court rendering it is concerned, it is unalterable except by
resort to such provisions of the Code of Civil Procedure as
permit its reversal, modification or amendment. Similarly,
a final decision would mean a decision which would operate
as res judicate between the parties if it is not sought to
be modified or reversed by preferring an appeal or a
revision or a review application as is permitted by the
Code. A preliminary decree passed, whether it is in a mort-
gage suit or a partition suit, is not a tentative decree but
must, in so far as the matters dealt with by it are
concerned, be regarded as conclusive. No doubt, in suits
which contemplate the making of two decrees--a preliminary
decree and a final decree-the decree which would be
executable would be the final decree But the finality of a
decree or a decision does not necessarily depend upon its
being executable. The legislature in its wisdom has thought
that suits of certain types should be decided in stages and
though the suit in such cases can be regarded as fully and
completely decided only after a final decree is made the
decision of the court arrived at the earlier stage also has
a finality attached to it. It would be relevant to refer to
s. 97 of the Code of Civil Procedure which provides that
where a party aggrieved by a preliminary decree does not
appeal from it, he is’ precluded from disputing its.
correctness in any appeal which may be preferred from the
final decree. This provision thus clearly indicates that as
to the matters covered by it, a preliminary decree is
regarded as embodying the final decision of the court pass-
ing that decree.
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The High Court, however, thinks that a decision cannot be
regarded as final if further proceedings are required to be
taken for procuring the relief to which a party is held
entitled by that decision. In support of its view the High
Court has referred to the following observations in in re A
Debtor(1)
"It is clear., therefore, that further
proceedings will be necessary to get the money
out of court and I think it is also clear that
the order of October 24, in its own terms, did
not finally determine. the right of the
petitioner, or any one else, in respect of the
sum to be paid. In my opinion, therefore, the
order is not a ’final order"
In that case the Divorce Court made an order that; "the co-
respondent do within seven days from the service of this
order pay into Court the sum of pound 67 Is. 9d. being the
amount of the petitioner’s costs, as taxed and certified by
one of the registrars of this Division. The order was made
in that form because at that time the ultimate fate of the
petition was undecided. No doubt, the decree nisi had been
passed but it’ had yet to be made absolute land the right of
the petitioner to receive the costs might never have been
brought to fruition. The money had therefore to be paid
into the court. A little latter a further order was made by
the President of the Divorce Court in these terms
"Upon hearing the solicitors for the
petitioner I do order that the order herein
dated the 11th day of July 1928 be varied and
that (the debtor) the co-respondent do within
seven days from the service of this order pay
to Messrs H. L. Lumley & Co., of 35 Picadilly
W. 1, the solicitors of the petitioner, the
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sum of pound 67 Is. 9d. being the amount of
the petitioner’s taxed costs as taxed and
certified by one of the
(1)[1929] 2 Ch, 146.
624
registrars of this Division, the said
solicitors undertaking to lodge in Court any
sums recovered under this order."
Pursuant to this order the solicitors gave an undertaking
required by the Court to the registrar on October 26. On
November 5, the decree nisi was made absolute. On January
2, 1929, a bankruptcy notice was issued by the solicitors
against the debtor, for payment to them of the amount of
pound 67 1 s. 9d. The co-respondent did not comply with the
bankruptcy notice and accordingly on January 27, the
solicitors presented a bankruptcy petition against him.
Over-ruling the objection by the co-respondent, that is, the
debtor that the bankruptcy notice was bad on, amongst other
things, the ground that the second order made by the
President of the Divorce Division was not a final order
within sub-s. 1 (g) of s. 1 of the Bankruptcy Act, 1914,
the registrar made a receiving order. In appeal it was
contended that the receiving order was wrong because’ the
solicitors were not the creditors of the debtor and also
because the order for payment of the costs to them was not a
final order. While upholding the latter contention Lord
Hanworth, M. R., said what has been quoted above and relied
upon by the High Court. Upon the particular facts of the
case the order was clearly not a final order and in making
the observations quoted above the Master of Rolls did not
formulate a test for determining what could be regarded as a
final order in every kind of case. The observations of the
Master of Rolls must be read in the context of the facts of
the case decided by him. Read that way those observations
do not help the respondents.
Apart from this, the short answer to the reason given by the
High Court is that even a money decree passed in a suit
would cease to be a final decision because if the judgment-
debtor against whom the
625
decree is pawed does not pay the amount voluntarily
execution proceedings will have to be taken for re-’
covering the amount from him. It would thus lead to an
absurdity if the test adopted by the High Court is accepted.
In support of the High Court’s view a few decisions were
cited at the bar but as they are of no assistance we have
not thought it fit to refer to them. We may, however, refer
to a decision of this court upon which reliance was placed
by the respondents. That is the decision in Vakalapudi Sri
Ranga Rao and others V. Mutyala Ammanna (1) in which it was
held that a particular order was not a final decision within
the meaning of the first proviso to S. 28-A. There, in a
suit for partition and another suit for possession of the
suit property and arrears of rent, it was contended that
upon the father’s insolvency the Official Receiver was in-
competent to sell the son’s interest in the joint family
property. The contention was negatived by the trial court
but upheld in appeals by the Subordinate judge who remanded
the suits to the trial court with certain directions.
Appeals preferred against his decision were dismissed by the
High Court. Before the decision of the suits after remand,
the Amending Act, XXV of 1948 came into force and it was
contended before the trial court that in view of the new
provision the sale by the Official Receiver must be held to
be good even so far as the sons’ interest was concerned.
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This contention was negatived by the trial court on the
ground that the decision of the High Court on the point was
a "final order’ within the meaning of the proviso. The
District judge, before whom appeals were preferred, however,
negatived the contention and held that there was no final
order with regard to the sale by the Official Receiver. The
High Court reversed the decision of the District judge but
this Court held that the orders of remand made by the
Subordinate Judge and upheld by the High Court were
interlocutory orders as also were the orders of
(1) C.A. No. 634 of 1957, decided on March 29, 1961.
626
the High Court in the appeals prefer-red before it and as
such could be challenged in the appeal preferred before this
Court against the decision of the High Court in the appeal
against the final decree in the suit. In the case before us
the preliminary decree was never challenged at all by
preferring any appeal and therefore, the matters conclude
by it are not open to challenge in an appeal against the
final decree. Further, a preliminary decree cannot be
equated with an interlocutory order within the meaning of s.
105, Code of Civil Procedure. It will thus be seen that the
decision relied upon has no application to the facts of this
case.
Our conclusion, therefore, is that in this case the sale
made by the Official Receiver during the insolvency of the
appellants’ father was the subject of a final decision by a
competent court inasmuch as that court decided that the sale
was of no avail to the purchaser at the Official Receiver
had no power to effect that sale. Nothing more was required
to be established by the appellants before being entitled to
the protection of the first proviso to s.28A. Since they
have established what was required to be established by
them, they are entitled to a final decree and the High Court
was in error in dismissing their application in that behalf.
In the result we allow the appeal, set aside the judgment
and decree of the High Court and restore that of the trial
court as affirmed in appeal by the learned Subordinate
judge. Costs in this court and in the High Court will be
borne by the present respondent. The remaining costs will
be home as ordered by the first appellate court.
Appeal allowed.
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