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S. Pulleswara Rao Vs. Munagala, Basavayya Kutumba Rao Firm and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAndhra Pradesh High Court
Decided On
Case NumberCivil Rev. Pet. Nos. 934 and 935 of 1960
Judge
Reported inAIR1966AP371
ActsCode of Civil Procedure (CPC) , 1908 - Order 21, Rule 52
AppellantS. Pulleswara Rao
RespondentMunagala, Basavayya Kutumba Rao Firm and ors.
Appellant AdvocateK.B. Krishna Murthy, Adv.
Respondent AdvocateA. Kuppuswamy and ;E.S. Ramachandra Murthy, Advs.
DispositionPetitions allowed
Excerpt:
civil - attachment of amount - order 21 rule 52 of code of civil procedure, 1908 - petitioner was creditor of firm - obtained preliminary decree directing firm to render accounts of firm - filed application for attachment of certain amount and sub-judge made order of attachment - respondents were individual decree holders against firm - additional subordinate judge without giving notice to petitioner made orders for attached amount to be given to respondents - orders of additional subordinate judge challenged - when impugned orders were made there was attachment under orders of competent court - held, impugned order illegal. - - 814, that a custody court under the said provisions has no authority to make any rateable distribution unless it is the attaching court as well......made an order of attachment on 8-4-1959 which was effected on 28-7-1959. on 8-4-1959 the other decree-holders filed a joint memo in o.s no. 196 of 1954 in which the property was brought to sale for rateable distribution under section 73 of the code of civil procedure. this was in the court of the 1st additional subordinate judge (sri p. anjaneyaraju) where the amount was lying to the credit of o.s. no. 196 of 1954. the petitioner herein thereupon filed an application, e.a. no. 657 of 1959 on 11-4-1959 impleading all the decree-holders and the judgment debtors with the prayer that the sale proceeds lying in the court may not be paid to the respondents without ordering notice of their application to the petitioner. in the affidavit filed to support this application it was stated that.....
Judgment:

Sharfuddin Ahmed, J.

1. The two C.R.Ps. 934 and 935 of 1960, deal with connected matters. C.R.P No. 934 of 1960 is directed against the order of the 1st Additional Subordinate Judge, Vijayawada dated 11th November 1959 whereby on an application filed by the petitioner herein not to pay the sale proceeds in O.S. No. 196 of 1954 to any of the respondents without ordering notice of the same to the petitioner has been disposed of with the following observations:

'Heard vakils. This petition is closed with permission to the petitioner to raise his objections in the other petitions.'

The other C.R.P. arises out of the order of the same Subordinate Judge issuing cheques in favour of the respondents without notice to the petitioner. The facts necessary to appreciate the circumstances in which these orders were made may briefly be stated:

2. 'The petitioner herein instituted a suit (O. S No 1140 of 19511 in the Sub-Court, Vijayawada for dissolution of partnership and accounts against two brothers, Subbarao and another, who constituted a firm and obtained a preliminary decree on 30-10-1958 dissolving the suit partnership and directing the defendants to render accounts of the suit money of the firm. In the meantime an insolvency petition (I.P. No. 17 of 1951) was filed in the Sub Court, Vijayawada and both the partners were adjudicated insolvents sometime in 1951. This order was, however, set aside by the High Court on 16-3-1959. In between this period number of suits were filed against the insolvent viz. O.S. No. 31 of 1952, O.S. No. 8 of 1955, O.S. No. 636 of 1954, O.S. No. 288 of 1954, O.S. No. 2/1948. O.S. No. 196 of 1954 and O.S. No. 399 of 1951; and decrees were obtained. In execution of one of the decrees so obtained viz.. O.S. No. 196 of 1954 the mill belonging to the insolvent firm was brought to sale and auctioned on 6-7-1957. The sale was confirmed and the sale amount of Rs. 86,598/-and odd was sent to the Official Receiver.

3. As stated above, the adjudication was set aside by the High Court. Thereupon on 7-4-1959, the petitioner herein filed I.A. No. 949 of 1959 in his suit for attachment of the amount before judgment and the Sub-Judge made an order of attachment on 8-4-1959 which was effected on 28-7-1959. On 8-4-1959 the other decree-holders filed a joint memo in O.S No. 196 of 1954 in which the property was brought to sale for rateable distribution under Section 73 of the Code of Civil Procedure. This was in the Court of the 1st Additional Subordinate Judge (Sri P. Anjaneyaraju) where the amount was lying to the credit of O.S. No. 196 of 1954. The petitioner herein thereupon filed an application, E.A. No. 657 of 1959 on 11-4-1959 impleading all the decree-holders and the judgment debtors with the prayer that the sale proceeds lying in the court may not be paid to the respondents without ordering notice of their application to the petitioner. In the affidavit filed to support this application it was stated that the decree-holder respondents were individual decree-holders while the petitioner was a firm-creditor. It was also alleged that the decrees were obtained during the period when the judgment-debtors were adjudicated insolvent without the leave of the court and, therefore, they were all void besides being collusive and fraudulent. It was also mentioned that he had applied for attachment of the sale proceeds in the suit filed by him in the Sub-Court, Vijayawada and orders of attachment were likely to be issued within a day or two. Meanwhile the attachment seems to have been effected and when the case was called for on 10-11-1959 the court observed that the sale proceeds were in the court, that the respondents' contention was that the petitioner had to fall and as the petitioner's advocate was not present and in view of the attachment order the petitioner had an opportunity to appear for opposing the petition and as such the petition was unnecessary. However, the case was posted to next date. On 11-11-1959 the impugned order was made viz., 'This petition is closed with permission for petitioner to raise his objection in the other petition.'

4. Subsequently as evident from the proceedings in the other E.Ps., the learned Additional Subordinate Judge issued various cheques in favour of the respondent-decree-holders without notice to the petitioner herein and C.R.P. No. 935 of 1960 is directed against these orders. The main grievances of the petitioner are:

(i) That as the amount was under attachment by an order of a competent court viz., Principal Subordinate Judge, Vijayawada no rateable distribution should have been effected as it amounted to a contravention of Section 64, C. P. C.

(ii) That when the court has closed his petition (E.A. No. 657 of 1959) on the ground that he was entitled to raise an objection in the other petitions, obviously referring to the petition filed by the respondent-decree-holders for rateable distribution of assets, it should not have disbursed the amount without giving notice to him i.e., the petitioner to contest the same.

5. It is further urged that in the E.A. summarily closed by the impugned order he had raised number of objections viz., that he was a firm-creditor having preference over other decree-holders and the decrees obtained by others were collusive etc. In view of it the court was not justified in closing the said E.A. without giving a finding on these aspects. The summary manner in which the E.A. has been disposed off and subsequently the amount was disbursed without notice to him have deprived him of the opportunity to contest the petitions and, therefore, the order made on 11-11-1959 was liable to be set aside.

6. It is beyond controversy that in E. A. No. 657 of 1959 filed by the petitioner herein this petitioner was claiming preference over the claims of the other decree-holders who had been impleaded as party to the proceedings along with the judgment debtors. It was also contended that the decrees obtained by the respondent-decree-holders were collusive and void. Further, indication was given that the amount was likely to be attached and an application in that behalf was pending in the court of the Principal Sub-ordinate Judge, Vijayawada. The order under revision was made on 11-11-1959 closing the petition with permission to the petitioners to raise the objections in the other petitions. The respondent-decree holders and so also the court were fully aware of the situation but in spite of it when the cheque petitions were filed neither the respondent-decree-holders nor the court thought it fit to give any notice to the petitioner. It is to be noted that pursuant to the order of the Principal Subordinate Judge, attachment was effected on 28-7-1959 and this matter was repeatedly brought to the notice of the presiding officer at the time the cheque petitions came up for orders For example a petition was filed by one of the respondent-decree holders on 12-12-1959 for issuing a cheque for a sum of Rs. 9955-27 P. The office put up a note stating that there was an attachment of the entire amount in O.S. No. 140 of 1951 on the file of this Court. Notwithstanding the said note, the learned 1st Additional Subordinate Judge directed to issue a cheque for the amount stating that there was no stay. Similar was the order in another cheque petition for an amount of Rs. 1470-83 P. On a perusal of the provedings sheet it appears that the entire amount was disbursed between 17th and 22nd of December 1959 without notice to the petitioner in spite of repeated notes by the office that the amount was under attachment. In one case the Subordinate Judge has gone so far as to suo motu advance the date in issuing a cheque for Rs. 1361-19 P. The position is no doubt explainable by attributing lack of diligence to the petitioner but the hurried manner in which the amounts were disbursed without attaching any significance to the office-note and notice to the attaching creditor does call for a more convincing explanation. A note of the proceedings will be given to the administrative side for calling for necessary explanation.

7. The learned counsel for the respondent has urged that the situation has been brought about by lack of diligence on the part of the petitioner himself. It has been further stated that the attachment order made was not binding on the respondents and the petitioner could not have participated in the proceedings under Section 73 of the Code of Civil Procedure i.e., for rateable distribution of assets, as he was not a decree-holder at that stage. No doubt there is some laches on the part of the petitioner but the question is whether in view of the subsisting attachment by the orders of a competent court the executing court was justified in disbursing the amount without notice to the attaching decree-holder.

8. Under Order 21, Rule 52, C. P. C. the powers of the custody court are limited and it has been held in the case of Hiralal v. Akshoy Kumar (Sic), ATR 1933 Cal. 814, that a custody court under the said provisions has no authority to make any rateable distribution unless it is the attaching court as well. Similar view has been taken by the Nagpur High Court in Gvarstlal v. Shankar Rao AIR 1950 Nag. 16. I find myself in respectful agreement with the said views as to hold otherwise and to authorise the custody court to disburse the amounts under attachment without reference to the orders of the attaching court would render attachment innocuous. In that view, it is difficult to sustain the orders made by the Additional Subordinate Judge, Vijayawada ignoring the attachment.

9. The learned counsel for the respondents has tried to minimise the effect of attachment by urging that it was a case of attachment before judgment. I think, the distinction in no way helps the case of the respondents. The other contentions raised by the learned counsel for the respondents that the petitioner could not have participated in proceedings under Section 73 of the Code of Civil Procedure and there was only a preliminary decree in favour of the petitioner at the time of attachment do not seem to be relevant or material at this stage. It admits of no controversy that for the time when the impugned orders were made there was attachment under orders of A competent court. Therefore, the petitioner is liable to succeed on that ground alone. The C.R.Ps. are allowed with costs, setting aside the orders of the lower court made on 11-11-1989 and subsequently in cheque petitions with directions to the lower court to dispose of E.A. No. 657 of 1959 on merits.


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