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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,  617 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 618 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 619 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 620 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 622 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. 623 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.  627