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Raghunath Das Vs. Sundar Das Khetri - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtMumbai
Decided On
Judge
Reported in(1914)16BOMLR814
AppellantRaghunath Das
RespondentSundar Das Khetri
DispositionAppeal dismissed
Excerpt:
.....creditor-attachment, effect of-execution proceedings-sale -validity-proper proceedings to bind the official assignee-code of civil proceedure (act xiv of 1882) sections 32, 248, 372-indian insolvency act, 1848, section 49, slay of execution proceedings under.;where an order vesting the property of an insolvent in the official assignee is made by the court having jurisdiction in the insolvency under the indian insolvency act, 1848, (11 & 12 viet. c. 21) such property becomes vested in the official assignee from the date of the order, even when it has been attached in execution of a money decree, an order directing the sale of it has been passed.;sarkies v. mussumat bundho baee (1869) 1 n.w.p.h.c.r. 172 (a.c.) approved.;attachment in execution of a money decree followed by an order for..........leaseho colliery. the plaintiffs (the present appellants), claimed title to the property under the official assignee in the solvency of the lessees. the order vesting the property in such official assignee was made under the insolvent debtors (india) act, 1848, on the 8th september 1904. at the date of this order the colliery had been attached in execution case no. 303 of 1904, in which the lessees were the judgment debtors and the defendants (the present respondents) were the judgment creditors, and an order had been obtained for the sale of the interest therein of the judgment debtors. counsel for the respondents admitted that attachment in execution of a money decree followed by such an order for sale does not confer on the judgment creditor any charge on the land (see sarkics v......
Judgment:

Parker, J.

1. The action in which this appeal arises is an action for the recovery of a leaseho colliery. The plaintiffs (the present appellants), claimed title to the property under the Official Assignee in the solvency of the lessees. The order vesting the property in such Official Assignee was made under the Insolvent Debtors (India) Act, 1848, on the 8th September 1904. At the date of this order the colliery had been attached in execution case No. 303 of 1904, in which the lessees were the judgment debtors and the defendants (the present respondents) were the judgment creditors, and an order had been obtained for the sale of the interest therein of the judgment debtors. Counsel for the respondents admitted that attachment in execution of a money decree followed by such an order for sale does not confer on the judgment creditor any charge on the land (see Sarkics v. Mussumat Bandho Baee (1869) 1 N.W.P.H.C.R. 172. An attachment prevents and avoids any private alienation, but does not invalidate an alienation by operation of law such as is effected by a vesting order under the Act of 1848, and an order for sale, though it binds the parties, does not confer title.

2. It follows that under the order of the 8th September 1904, the property vested in the Official Assignee free from any charge in favour of the judgment creditors. The Official Assignee in due course, by order of the Court having jurisdiction in the insolvency, sold the property, and the appellants derive title through the purchaser. Their title is thus prima facie a good and valid title, but it is disputed by the respondents under the following circumstances.

3. On the 12th September 1901 the Judge in the execution proceedings stayed the sale therein directed until further order. This was the proper and indeed tli only thing he could do for the judgment debtors had no longer any interest which could be sold. Further, if, as was no doubt the case, the judgment debt was included in the schedule filed by the insolvents under the Act, their Lordships are of opinion that he was bound to stay the sale under Section 49 of the Act. At any rate the executor could not proceed until the Official Assignee had been properly brought before the Court, and an order binding on him had been obtained. In their Lordships' opinion this could only be done by obtaining an order for the issue of, and by serving him with a notice under Section 248 of the Civil Code of 1882, which was the Code then in force. It was suggested in argument that he might have been made a party to the proceedings either under Section 32 or under Section 372 of the Code, but even if these sections are applicable after final decree, as to which there is considerable doubt (see Goodall v. The Mussoorie Bank, Limited I.L.R. (1887) 10 All. 97 no proceedings seem to have been taken thereunder. What the judgment creditors did was this: they applied to the Judge in the execution case for an order, and on the 30th September 1904, and again on the third November, obtained an order for the issue and service on the Official Assignee of a notice calling upon him to show cause why he should not be substituted in the suit for the judgment debtors. This was not a proper notice under the 248th section. A notice under that section should have called upon the Official Assignee to show cause why the decree should not be executed against him. Had the Official Assignee been served with such a notice, it is at least probable that he would, as in their Lordships' opinion he certainly could, have shown good cause why the decree should not be executed, the property having under the Act and vesting order been transferred to him for the benefit of the creditors of the insolvent generally. It is possible that the notice might be upheld as a proper notice preliminary to adding the Official Assignee as a party under the 32nd section, if that section were applicable, but in order to bind a party added under the 32nd section, he has, after being added, to be served with a summons to appear and answer, and it is not suggested that any such summons was served. Similarly, it is not suggested that any order to carry on proceedings was obtained under the 372nd section.

4. Having obtained leave in that behalf the respondents proceeded to serve the notice in question, and their Lordships will assume that the notice was duly served on the Official Assignee. The Official Assignee took no notice of it, possibly because he had no objection to being substituted as a party, and expected to be served with notice of any further application against him. There is no evidence that he knew that an order for sale had been already made. The time fixed by the notice for cause to be shown having expired, the respondents, without further notice to the Official Assignee applied for and obtained an order not only substituting the Official Assignee as a party in the place of the judgment debtors but directing the sale to proceed. The sale accordingly proceeded. There had to be a fresh sale proclamation by reason of the 291st section of the Code. Such proclamation is not in evidence, but their Lordships must presume in default of evidence to the contrary that the property offered for sale was the property ordered to be sold, that is to say the right and interest of the judgment debtors in the colliery. At the sale the respondents (the judgment creditors), having obtained leave to bid, became the purchasers. The sale was confirmed by the Court on the 8th April 1905, and on the 25th April 1905 the respondents obtained the usual certificate which refers to the right, title, and interest of the judgment debtors as the property sold. Their Lordships are of opinion that this sale was altogether irregular and inoperative. In the first place the property having passed to the Official Assignee it was wrong to allow the sale to proceed at all. The judgment creditors had no charge on the land, and the Court could not properly give them such a charge at the expanse of the other creditors of the insolvents. In the second place no proper steps had been taken to bring the Official Assignee before the Court and obtain an order binding on him, and accordingly he was not bound by anything which was done. In the third place the judgment debtors had at the time of the sale no right, title, or interest which could be sold to or vested in a purchaser, and consequently the respondents acquired no title to the property.

5. Their Lordships' attention was called in this connection to the case of Malkarjun bin Shidramappa Pasare v. Narhari bin Shivappa , but in their opinion there is nothing in that case which has any bearing upon the present appeal. As laid down in Gopal Chunder Chatterjee v. Gunamoni Dasi I.L.R. (1892) Cal. 370, a notice under Section 248 of the Code is necessary in order that the Court should obtain jurisdiction to sell property by way of execution as against the legal representative of a deceased judgment debtor. In the case in 27 Indian Appeals, such a notice had been served, and the Court had determined, as it had power to do for the purpose of the execution proceedings, that the party served with the notice was in fact the legal representative. It had therefore jurisdiction to sell, though the decision as to who was the legal representative was erroneous. There being jurisdiction to sell, and the purchasers having no notice of any irregularity, the sale held good unless or until it were set aside by appropriate proceedings for the purpose. The present case is of a wholly different character. No proper notice was served under the section, and the respondents had full notice of, and indeed were responsible for, the irregularities of the procedure adopted.

6. The respondents suggested that with regard to certain machinery which was included in the sale of the colliery by the Official Assignee, and which was also sought to be recovered in this action, the statute of limitations was a good defence. This point does not appear to have been taken at any time prior to the hearing before their Lordships' Board. It was not one of the issues settled by the Court on the action, nor did the respondents mention it among their grounds of appeal from the decision of the Subordinate Judge. Their Lordships consider that it involves an inquiry as to the nature of the machinery to which it is said to be applicable, and that it is therefore too late to raise it.

7. Their Lordships will humbly advise His Majesty that the appeal ought to be allowed and the decree of the High Court of the 4U1 June 1912 set aside with costs, here and below, and that the judgment of the Subordinate Judge of Burdwan of the 8th September 1909 ought to be restored.


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