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Jetha Bhima and Co. Vs. Lady Janbai - Court Judgment

LegalCrystal Citation
Decided On
Case Number O.C.J. Suit No. 892 of 1910
Reported in(1912)14BOMLR511
AppellantJetha Bhima and Co.
RespondentLady Janbai
DispositionSuit dismissed
civil procedure code (act v of 1908), section 64-attachment-private alienation of the attached property after the attachment-subsequent attachment by another creditor-private alienation whether void against subsequent attachment-insolvency-attachment after the insolvency of the judgment-debtor gives no benefit to the attaching creditor under section 64 of the civil procedure code.;b obtained a degree against m and attached in 1896 his right, title and interest in his property. m assigned to j soon after b' a attachment the whole of his right, title and interest in his property which amounted to considerably more than the claim of b. in 1899 m became insolvent. in 1904 the plaintiff levied an attachment on m's property in virtue of a decree obtained by him in 1898. the defendant, after b's..........very simply and in a very few words. where there is an attachment, and after that attachment a private alienation, and after that private alienation again other creditors obtain decrees and put in claims for rateable distribution, then although those claims are made by persons different from the original attaching creditor and referable to different decrees, nevertheless they are now expressly made claims enforceable under the first attachment, provided that the first attachment is carried out and in execution assets are actually realized under that attachment and so made available for distribution rateably. in such circumstances the main private alienation is void against all the claims of the creditors who have put in petitions for rateable distribution of assets after that private.....

Beaman J.

1. The material facts and date may be very briefly stated.

2. In 1894 Balkrishna brought a suit against Mahomed Medhi, obtained a decree for the sum of Rs. 7000, and attached the right, title and interest of his debtor in certain properties, the said right, title and interest being variously computed in the arguments before me at from one to three lacs in the year 1896. Shortly after that attachment, the judgment-debtor Mahomed Medhi assigned the whole of his right, title and interest to the defendant in this suit Lady Janbai. I may neglect the decree in attachment of Moti Gulabdas, which attachment was subsequent to the private assignment to the defendant. In 1898 the present plaintiff brought a suit and obtained a decree against his debtor Mahomed Medhi. In 1899 Mahomed Medhi took the benefit of the Insolvency Act, and his insolvency with a short break, which is not material to any point or argument in this case, continued until Balkrishna's attachment was finally raised in the year 1907 and indeed is still subsisting. In 1904 the present plaintiff levied an attachment on the property already attached by, and still lying under the attachment of, Balkrishna. After Balkrishna's debt had been paid off and his attachment raised, Lady Janbai applied to the Judge in Chambers and got the present plaintiff's attachment raised in 1910. The plaintiff has, therefore, been obliged to bring this suit to have it declared that the particular property upon which his attachment had been placed is the property of his judgment-debtor, and is, therefore, still liable to attachment.

3. It is quite clear upon this short statement of facts that unless the assignment of 1896 to the defendant Lady Janbai is void under Section 64 of the Civil Procedure Code, the plaintiff has no case, for if he wished to impeach that assignment upon any other ground, it is clear that he would be now time-barred. The question then is whether in the facts and events that have happened the private assignment of 1896 is void against the plaintiffs attachment of 1904, because that latter attachment is a claim enforceable under Balkrishna's attachment of 1896. It will be convenient to leave aside for a moment the complication introduced by the insolvency and to deal with the rights of the parties in this suit as though no insolvency had occurred.

4. I will, therefore, briefly state what I conceive to be the law governing the rights of the plaintiff and the defendant under Section 64 read with Section 73 of the Civil Procedure Code. My conclusion has been arrived at after a very careful and exhaustive study of all the leading authorities upon this head of the law, and it can be stated very simply and in a very few words. Where there is an attachment, and after that attachment a private alienation, and after that private alienation again other creditors obtain decrees and put in claims for rateable distribution, then although those claims are made by persons different from the original attaching creditor and referable to different decrees, nevertheless they are now expressly made claims enforceable under the first attachment, provided that the first attachment is carried out and in execution assets are actually realized under that attachment and so made available for distribution rateably. In such circumstances the main private alienation is void against all the claims of the creditors who have put in petitions for rateable distribution of assets after that private alienation was made. Where, however, there has been an attachment, and after that a private alienation, and after that again petitions for rateable distribution by other creditors, and the first attachment is swept away by reason of the attaching creditor declining to] proceed with it, or accepting satisfaction privately, then all the subsequent claims to rateable distribution go with the attachment. Subsequent creditors, where that has happened, obtain no protection under Section 64 against private alienation, for their claims to rateable distribution are only claims enforceable under the attachment, provided that attachment results in the realisation of assets which the Court can rateably distribute. I do not think that a single authority among the many I have consulted could be found the other way.

5. The next question is whether where subsequent creditors instead of applying merely for rateable distribution, impose attachments of their own during the continuance of a prior attachment, those later attachments are claims enforceable under the first. It is to be observed that the practice of this Court on its Original Side as explained to me by the Prothonotary is that where property has already been attached and other creditors issue subsequent attachments, those attachments so long as the first continues are entered in what is called the Negative Book, where they are left to be dealt with as events turn out. If the first attachment falls through, then the first in date of the subsequent applications for attachment in the Negative Book is substituted for it. But if the first attachment runs its full course, then all these subsequent attachments are treated as prayers for rateable distribution. That being the practice, I am to consider whether the subsequent attaching creditor is in a better position under Section 64 than a subsequent creditor who has only applied for rateable distribution. I think it is clear that he is, for while an application for rateable distribution goes altogether when the original attachment falls through, an application for attachment, which may have to be converted into a prayer for rateable distribution, always stands ready to take the place of the first attachment should that creditor desist from proceeding with it. So that we arrive at this position. Suppose A has attached the property of X, and X. has thereafter privately alienated that property, and after that alienation again B, C and D, other creditors of X, impose attachments, A's attachment continuing in force the while, will the main private alienation by X be void against the attachments of B, C and D in order should A's attachment be withdrawn or fall through And the answer to that clearly depends upon whether these subsequent attachments are really claims enforceable under the first attachment. In a sense they may certainly be said to be claims enforceable ' under' it, because so long as A prosecutes his attachment the hands of B, C and D are tied and they can do nothing but wait realizations and rateable distribution. So that in fact whatever may be said in law the subsequent attaching creditors are under, that is to say subject to, the attachment first imposed. But assuming that attachment to have been withdrawn or satisfied in any way short of realisation in execution, then the question is whether the first of the subsequent attachments, which is there to take its place, is to take its place as from its own date or the date of the first attachment. If the latter, then doubtless it would be prior in point of time to the private alienation and the private alienation would of course without further need of argument be subject to it. But it may still be doubted, I think, whether subsequent attachments of this kind waiting their turn in the event of the prior attachment falling through can be said in strictness to be claims enforceable under that attachment, for it is a prerequisite of their being enforceable at all that that attachment should first disappear. This is of course not the case where instead of attachments, prayers have been made for rateable distribution. Those are in strictness claims enforceable under the existing attachment, and had there been any doubt upon the question, since the introduction of the new Code of Civil Procedure that doubt has been finally removed.

6. This somewhat nice question, whether a subsequent attachment nominally, though not really, imposed during the continuance of a prior attachment is a claim enforceable under it, never as far as I am aware has been made the subject of a judicial decision except in one very recent case of Bibi Miyakhan v. Gulabchand : (1911)13BOMLR1189 . There the facts were that during the continuance of an attachment which was, I believe, although this does not appear from the report, being conducted by the Collector, the judgment-debtor made a private sale of the attached property which was not certified to the Court at the time it was made. Then a very few days after that private alienation another creditor put in a darkhast asking in the alternative for rateable distribution or for a second attachment. The first attachment appears to have lasted for nearly two years after this transaction, and the learned Judges Chandavarkar and Batchelor JJ. held that although the second darkhast could not have been granted where it asked for a second attachment and as regards its prayer for rateable distribution, no question of that kind could arise when the first attachment had fallen through, yet when that first attachment was swept away the alternative prayer of this darkhast was there to take its place, and upon that principle, which seems to imply that they referred the date of the second attachment back to the date of the first, the learned Judges held that the main private alienation was void. As this is the only case directly in point which I have been able to find (for I think that the other case decided a month earlier by Chandavarica and Hay ward JJ. is of a different character and distinguishable since the conclusion the learned Judges arrived at does not agree or does not seem to agree with the view of the law I have expressed, I consulted those learned Judges as to the true scope and intention of the judgment. It then appeared that this case was really the case of a decree transferred for execution to the Collector under the old Section 325A of the Code and in dealing with cases of that kind it may well be that different considerations arise and may influence the decision. Were I sure that those learned Judges had intended to lay down the rule that any subsequent attachment imposed during the continuance of a prior attachment is a claim enforceable under it and the main prior private alienation is, therefore, void against the second attachment when the first has fallen through under Section 64 of our Code, I should of course feel myself bound by that decision. When I first studied it I thought that was what the learned Judges had meant to decide and I was inclined to think that the decision was right. It was not until after very long reflection and minute examination of many other authorities that I began to doubt the correctness of the decision. Whether it be right or wrong, however, is not a question for me to answer. I should be bound by it and it could only be overturned if wrong by a decision of a Full Bench. It will be seen how closely the facts of that case (excepting the method of execution) resemble the facts of the case I have to deal with, for supposing that the decrees there were being executed in the usual way, there would be an attachment corresponding with Balkrishna's attachment, a private assignment corresponding time with Lady Janbai's, and a subsequent attachment corresponding with the attachment upon which the plaintiff relies. In both cases the assignment came between the first and the second attachment, and in both cases the first attachment, although it was finally settled privately and so fell through, was in force and subsisting at the time of the second. So that I should have felt it extremely difficult to distinguish that case from the present, and although I understand that the learned Judges did not really mean to lay down quite so broad and far-reaching a principle, I think, I should have been compelled to say that the present facts fell under that judgment, and that, as there, so here, the main private alienation was void against the subsequent attaching creditors. It appears to me in principle to make no difference that Balkrishna's attachment in this case dragged on for eleven years and the plaintiff had not even obtained a decree, much less imposed his attachment, until some years after the private alienation.

7. But there is another ground, upon which, without distinguishing the Bench decision, I have referred to, I think, I may safely dispose of this case. So far I have treated the facts and the law as though none of the arguments were affected or the conclusions disturbed by the fact that the debtor in this case became an insolvent after the private alienation but before the second attachment. I have now to consider how far an otherwise entirely general conclusion must be modified by that special factor. I have already said that in my own view, if I can see my way to distinguish the case of Bibi Miyakhan v. Gulabchand : (1911)13BOMLR1189 , the result would be the same, for I feel very grave doubt whether a subsequent attaching creditor is really entitled to the protection of Section 64 of the Code when a prior attachment has been obtained and fallen through. I see no reason either in law or in equity why this should be so. I have explained that in law I see no reason, for as a pure question of interpretation, I think, it is impossible to say that a claim by way of second attachment is enforceable under a prior attachment when a condition precedent for enforcing the former is the removal of the latter. In equity, that is to say upon general principles of justice, I also fail to understand why a dilatory creditor should have the benefit of the protection which is accorded to one more diligent. There is nothing that I know of to prevent a dozen creditors levying attachments on the same day and although no doubt the first in point of time would still be called the attaching creditor, yet if his attachment fell through the others would come in as from the same date and would all be equally protected. Now, no consideration of this kind appears to me to apply to the case of a creditor who imposes an attachment no less than eight years after the attachment and after the private alienation, on the strength of the one and against the other of which he invokes the protection of Section 64.

8. I turn now to the consideration of the somewhat singular state of affairs brought about by the insolvency of the judgment-debtor in 1899. At that time the whole of his interest had been attached under the decree of 1896 and had been assigned away subject to that decree in the same year. The Official Assignee appears from the first to have recognised the bona fides and legal validity of the assignment, subject, of course, to the claim of the first attaching creditor, although the Official assignee took no steps to have that attachment raised. It was not until five years after the insolvency that the present plaintiff, who had obtained a decree in 1898, levied the attachment upon which he now relies; and it is certainly an extraordinary, and, I should think, very anomalous, state of affairs which discloses the attachment of 1896 still subsisting and apparently not finally raised until 1907. What, then, is the effect of an attachment imposed by the creditor of a judgment-debtor who has taken the benefit of the Insolvency Act after the vesting order has been made As to all existing attachments, I think it may be said generally that they ought to be raised either by the Courts suo motu or at the instance of the attaching creditors or of the Official Assignee, for it is well understood that such attachments ordinarily give no preference, still less create any title; and when they are found to be existing the Official Assignee usually acting on behalf of all the creditors gets them removed, so that all the funds may be available for rateable distribution. In the present instance this was not done, because the Official Assignee, as I have said, adopted a view from the first that so far as this attached property was concerned it had been validly assigned away before the insolvency. But had the usual course been followed, then there would have been no attachment subsequent to the assignment of 1896 of which the present plaintiff could have availed himself even for the purposes of a technical argument in 1904; and it might be contended that although the Official Assignee did not, he ought to have raised Balkrishna's attachment of 1896, for that attachment was admittedly good against the subsequent assignment to the extent of the decreed claim, and inasmuch as the attachment itself gave no preference it might be thought that that decreed claim was thus an asset realisable for the benefit of all the creditors. My present point, however, is by insisting upon what would have followed had this attachment been raised, to extract the position I now propose to take that the later attachment of 1904 while the insolvency was still continuing was for all legal intents and purposes a nullity in itself and of no service to the plaintiff under the attachment of 1896 to be made a ground of claiming the protection of 64 against the private assignment. Upon the vesting order being made, all the property of an insolvent passes to the Official Assignee and all decrees and other proceedings against the insolvent are ordinarily stayed. Whether they are stayed by express order or by operation of law, it appears to me that no progress could in any case be made with them, for the property of the insolvent debtor is no longer there to be attached and the decree-holders must wait until the insolvency terminates if they wish to enforce their decrees against the persons of whom the law has indirectly, but very clearly, announced to the whole world that no property is attachable at all.

9. I do not think, therefore, that the plaintiff can rely upon his attachment of 1904 as bringing him within the scope and meaning of Section 64 of the Civil Procedure Code and so making the private assignment void against him. I do not think myself that he could have done so had there been no insolvency; but as there was an insolvency, and, therefore, no property belonging to his judgment-debtor upon which any legal attachment could have been levied in 1904 or against which any legal process issuing from any Court could have gone, the whole of that attachment appears to me to be suspended so long as the insolvency exists and to have no legal effects or consequences whatsoever. We need not, however, go too finely into the question of the general principle upon which I am now basing this judgment, and that is this that while the insolvency continued no attaching creditor purporting to attach the insolvent's property could take any advantage thereby under any of the sections dealing with ordinary execution proceedings under the Code of Civil Procedure.

10. In this view of the law, I think the plaintiffs case entirely fails and must now be dismissed with all costs.

11. Costs of one counsel for the Official Assignee up to the first hearing.

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