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Lalchand Radhakisan Vs. Ramdayal Ramnarayan - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberSecond Appeal No. 723 of 1935
Judge
Reported inAIR1939Bom112; (1939)41BOMLR176
AppellantLalchand Radhakisan
RespondentRamdayal Ramnarayan
Excerpt:
civil procedure code (act v of 1908), sections 47, 73, 145 and 115 - rateable distribution-ex parte decree-execution-slay of execution-surety passing bond to court for paying amount, if any, decreed-fresh decree-payment by surety into court of amount-other debtors applying for rateable distribution-rateable distribution not permissible-order for rateable distribution-appeal-revision.;the expression 'assets held by a court' in section 73 of the civil procedure code, 1908, means assets received in execution of a decree. when the assets are paid into the court for a specific purpose, they cannot be applied generally in execution, so as to defeat the specific purpose. the section does not apply to moneys paid into court in a suit when no question of execution arises.;sorabji coovarji v. kala..........to execute their fresh decree, and notice of this was given to the surety. on june 2, 1933, the surety paid rs. 700 into court, and, on june 5 he paid rs. 2,700 into court, thus making up the total of rs. 3,400 which he had undertaken to pay. on the same day, i.e. june 5, 1933, respondents nos. 7 and 8, who had obtained decrees against the same judgment-debtor in other suits, applied for rateable distribution. the decrees of respondents nos. 7 and 8 were obtained long after the stay of execution granted to the judgment-debtor in 1930. the question which arises is whether the rs. 3,400 paid into court by the surety is subject to rateable distribution. the lower courts have held that the sum of rs. 700 which was paid into court before the application for rateable distribution was not.....
Judgment:

John Beaumont, Kt., C.J.

1. This is a second appeal from a judgment of the District Judge of Ahmednagar and it raises a question in execution. The facts are that in the year 1930 the present appellants obtained an ex parte decree in the Thana Court, and they applied to execute that decree in the Court of Ahmednagar. The defendants asked for a stay of execution, and the Court granted a stay on terms that respondent No. 6 on this appeal became surety for the judgment-debtor. A surety bond was executed (exhibit 14), which stated that the defendants had applied for stay of execution in the Thana Court and that on that application the First Class Subordinate Judge of Thana passed an order that if the defendants furnished a fit and solvent surety for the decretal amount in the First Class Court at Ahmednagar the execution proceedings should be stayed. Accordingly, respondent No. 6 became surety for the defendants to the extent of Rs. 3,400 and he agreed with the Court that the defendants should submit to and discharge their liabilities on the decree or order, which decree or order would be passed in the suit in the Thana Court. It was also provided that if the defendants failed to act accordingly, the surety would himself pay into Court Rs. 3,400; so that the bond was taken by the Court of Ahmednagar to secure the plaintiffs against any loss by reason of the execution of their decree being stayed. It seems to me that the plain intention of the bond was that if the plaintiffs ultimately became entitled to the amount of the decree, it could be satisfied out of the money in Court and the plaintiffs would, therefore, not lose on account of the execution being stayed.

2. It appears that subsequently the ex parte decree was set aside in the Thana Court, but in 1932 the plaintiffs obtained a decree in the same suit inter partes, so that in effect no advantage was obtained by setting aside the ex parte decree. In March, 1933, the plaintiffs applied in the Ahmednagar Court to execute their fresh decree, and notice of this was given to the surety. On June 2, 1933, the surety paid Rs. 700 into Court, and, on June 5 he paid Rs. 2,700 into Court, thus making up the total of Rs. 3,400 which he had undertaken to pay. On the same day, i.e. June 5, 1933, respondents Nos. 7 and 8, who had obtained decrees against the same judgment-debtor in other suits, applied for rateable distribution. The decrees of respondents Nos. 7 and 8 were obtained long after the stay of execution granted to the judgment-debtor in 1930. The question which arises is whether the Rs. 3,400 paid into Court by the surety is subject to rateable distribution. The lower Courts have held that the sum of Rs. 700 which was paid into Court before the application for rateable distribution was not subject to rateable distribution, but that the Rs. 2,700 was so subject. The question is whether that view of the matter is right.

3. Section 73 of the Civil Procedure Code provides that where assets are held by a Court and more persons than one make application for execution of decrees, the assets are to be distributed rateably. The first question which arises is what is the exact meaning of the expression 'assets held by a Court'. Under Section 295 of the old Code the expression was 'when assets are realised by sale or otherwise in execution of a decree.' No doubt the expression in the present Code is wider, but it is plain that some limitation must be put upon the generality of the expression. It is, I think, apparent from a consideration of the terms of the section, and its position in the Code, that the words 'assets held by a Court' must be assets received in execution. The section plainly does not apply to monies paid into Court in a suit when no question of execution arises. I think that all the High Courts in India are in agreement that the expression 'assets held by a Court' means assets received in execution, though there has been some difference of opinion as to the exact effect of these words. I think also that we must apply to the words one other limitation, and that is, that when the assets have been paid in for a specific purpose, they cannot be applied generally in execution, so as to defeat the specific purpose. It seems to me clear that if a Court receives money on terms that it is to be applied for payment of the debt of A, it cannot apply the money in payment of the debt of B. The Court cannot commit what would be in substance a breach of trust. The general principle above mentioned was laid down by a division bench of this Court in Sorabji Coovarji v. Kola Raghunath I.L.R. (1911) 36 Bom. 156 : 13 Bom. L.R. 1193, in which it was held that monies paid into Court under Order XXI, Rule 55, of the Civil Procedure Code, were monies paid for a particular purpose and were not applicable in rateable distribution. The actual decision has been dissented from in some other High Courts, which considered that monies paid under Order XXI, Rule 55, being paid by the judgment-debtor, and paid in execution, were subject to rateable distribution, but the general principle has not, I think, been dissented from. In the present case the monies were paid into Court for a particular purpose. The Court was being asked to stay execution of the plaintiffs' decree, which was being challenged, but which at the moment was executable. The Court granted a stay on terms which ensured that the plaintiffs' debt was secured. That is what it comes to. Having entered into an arrangement with the surety that he would pay the amount of the plaintiffs' debt, and having taken security from him, the Court stayed the execution of the plaintiffs' decree. It is obvious that if, when the plaintiffs ultimately come to execute their decree, the Court holds that creditors who have obtained their decrees long after the money was paid into Court by the surety are entitled to share in it, the Court is not carrying out the arrangement which was intended to secure the original decree-holders. The original decree-holders are being very seriously prejudiced by the stay of execution of their decree. If the execution had not been stayed, the decree could have been executed in 1930, and there would then have been no question of rateable distribution. I do not see how it can be suggested that the Court, having received these monies on terms which seem to me to make it necessary for the Court to apply them in payment of the plaintiffs' debt, should now apply them in payment of somebody else's debt as well as the plaintiffs' debt. That disposes of the appeal on the merits.

4. I should have mentioned that preliminary objection was taken that an appeal did not lie, but in my opinion the question involved on this appeal affects not only the creditors inter se but it affects the surety to a considerable extent and the judgment-debtor to a lesser extent. I think, therefore, that an appeal does lie under Section 47 read with Section 145 of the Civil Procedure Code; but even if an appeal does not lie, we could deal with the matter in revision under Section 115 on the ground that the lower Courts have committed material irregularity in not carrying out the arrangement which was entered into. I think, therefore, that the appeal must be allowed and the darkhast proceedings should go back to the executing Court for being disposed of according to law.

5. Costs in this Court and the lower appellate Court to be paid by respondents Nos. 6, 7 and 8. Money, if already paid to respondents Nos. 7 and 8, to be refunded to the plaintiffs.


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