Skip to content


The Imperial Bank of India Vs. Balasubramania Pandia Tevar and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1945Mad412; (1945)2MLJ49
AppellantThe Imperial Bank of India
RespondentBalasubramania Pandia Tevar and ors.
Cases ReferredNana Rao v. Arunachalatn Chettiar
Excerpt:
- - it was expected that the unsuccessful parties would apply for stay of execution of the decree of the lower court which directed delivery to the successful party of possession of the estate and the moneys which had been collected by the receiver appointed during the pendency of the litigation in the trial court. so, if before the assets were realised by the court in execution of the decree of one decree-holder, other dcree-holders had satisfied the provisions which would enable them to obtain the benefit of rateable distribution under section 73, civil procedure code, the private transfer would be subject to all these claims. if these two conditions are satisfied, the new decree-holders (meaning thereby the decree-holders who obtained their decrees after the order of this court in.....1. this and the connected appeals are filed against the order of the district judge of tinnevelly passed in several proceedings which were taken to enforce the rights of various decree-holders and the imperial bank of india, the appellant, and raise a common question whether certain decree-holders can obtain rateable distribution under section 73 of the code of civil procedure of the amounts deposited in o.s. no. 3 of 1922 on the file of the lower court which related to the succession to the uthumalai estate. that estate was originally held by one navaneethakrishna and on his death his adoptive mother rani meenakshi sundara nachiar succeeded to the estate. she died in 1921 and disputes arose as to the succession to the zamindari. there were three claimants. one claimed to be the father's.....
Judgment:

1. This and the connected appeals are filed against the order of the District Judge of Tinnevelly passed in several proceedings which were taken to enforce the rights of various decree-holders and the Imperial Bank of India, the appellant, and raise a common question whether certain decree-holders can obtain rateable distribution under Section 73 of the Code of Civil Procedure of the amounts deposited in O.S. No. 3 of 1922 on the file of the lower Court which related to the succession to the Uthumalai estate. That estate was originally held by one Navaneethakrishna and on his death his adoptive mother Rani Meenakshi Sundara Nachiar succeeded to the estate. She died in 1921 and disputes arose as to the succession to the zamindari. There were three claimants. One claimed to be the father's sister's son of the last male holder and filed O.S. No. 1 of 1922 on the file of the lower Court. The second claimant was one Marudappa Tevar who claimed that he was adopted by the deceased Rani Meenakshi Sundara Nachiar and he filed O.S. No. 2 of 1922. Lastly, one Subbayya Tevar as the maternal uncle of the last male owner filed O.S. No. 3 of 1922 in the same Court. Marudappa Tevar who claimed by adoption also put forward an alternative claim under a will executed by Rani Meenakshi Sundara Nachiar. The District Judge upheld the claim of Subbayya Tevar as the maternal uncle of the last male owner. He negatived the adoption of Marudappa Tevar and also the claim under the will put forward by him. Thus O.S. No. 3 of 1922 was decreed and the other suits were dismissed. There were appeals to the High Court in all the suits. The claim of Subbayya Tevar as the maternal uncle was upheld. Marudappa's adoption was negatived but he was held entitled to the bequests under Rani Meenakshi Sundara Nachiar's will, the will being held to be valid and operative. Further appeals were taken to the Judicial Committee and the decision of the High Court was confirmed. (Vide Bala Subramania v. Subbayya : AIR1939Mad168 )

2. Subbayya Tevar, the claimant who succeeded in all the Courts, was in need of finance for the conduct of the litigation. One Subramania Chetti undertook to finance him and by April, 1929, had advanced very large sums of money. By that time the District Court's judgment had been delivered and appeals had been filed in the High Court. It was expected that the unsuccessful parties would apply for stay of execution of the decree of the lower Court which directed delivery to the successful party of possession of the estate and the moneys which had been collected by the receiver appointed during the pendency of the litigation in the trial Court. There was an agreement, Ex. I, between Subramania Chetti the financier and Subbayya Tevar by which the amount advanced by Subramania Chettiar till then was settled at nine lakhs of rupees. It was provided inter alia that this sum of nine lakhs should not carry interest from the 12th February, 1929, that Subramania Chetti should be entitled to the income from the entire pannai (private) lands in the zamindari as and from Fasli 1339 except to a small extent which was negligible, that the Chetti was entitled to draw the monies deposited in Court, if necessary, by giving security, and that the money when drawn should appropriated towards the discharge of the amount of nine lakhs. It was also provided that the Chettiar should have a charge over the Zamindari and its properties except certain temples and their properties of which the zamindar was the dharmakartha.

3. As expected, applications were filed for stay of execution of the decree in various suits and the applications were all heard together by the High Court which passed a common order on the 8th August, 1-929. In regard to the moneys then in deposit in the District Court, it was ordered that Subramania Chettiar may, on furnishing security to the satisfaction of the District Court, draw the whole or any portion from time to time. As regards delivery of possession the order was that Subbayya Tevar may take possession of the zamindari on giving security. In pursuance of this order, Subramania Chettiar drew three lakhs of rupees after giving security. The appeals in the High Court were all disposed of by a common judgment, dated the 2nd April, 1935. Before that date several persons had obtained decrees against Subramania Chettiar and had levied attachments over the moneys in Court to the credit of O.S. Nos. 1, 2 and 3 of 1922, District Court, Tinnevelly and the attachments were made between the 15th September, 1932 and November, 1934. Before disposing of the appeals, on the 2nd April, 1935, the High Court directed Subramania Chettiar to be made a party respondent to some appeals in order to enable him to watch the litigation and prevent any collusive compromise to his detriment in the further stages of the litigation. On the same day the learned Judges passed an order in order to give effect to an agreement which had been entered into by that date between Subramania Chetti, Subbayya Tevar, and the Imperial Bank, which had advanced large sums of money to Subramania Chetti in order to enable him to finance the litigation. The order empowered the Imperial Bank to draw a sum of four and a half lakhs of rupees from and out of the moneys deposited to the credit of the original suits in the lower Court on their undertaking to pay back the said moneys in the event of the decrees passed by the High Court being reversed by the Privy Council. This was to be applied pro tanto in discharge of Subbayya Tevar's liability to the Chettiar. This order was also incorporated in the decrees passed by the High Court in the various appeals.

4. When passing this order and when incorporating the same in its decrees the High Court was unaware of the fact that there were numerous decree-holders including the Indian Bank, Ltd., who had obtained decrees against Subramania Chettiar and had levied attachments against his interest in the moneys in question. One of such creditors, the Indian Bank, having come to know of the order in favour of the Imperial Bank put in an application stating that the order empowering the Imperial Bank to draw 4 1/2. lakhs was made without notice to the creditors and that it would prejudicially affect the many creditors who had attached the said moneys prior to the date of the order. The learned Judges passed an order on the 9th May, 1935, and said this:

In disposing of appeals Nos, 159 of 1929, 411, 428 and 429 of 1930, we passed certain orders on 2nd April, 1935, permitting certain funds lying in. the Court below to be drawn out. On the consent of the parties, we permitted the funds to be drawn out by the Imperial Bank (who is not a party to the appeals) on behalf of the successful party. It is now brought to our notice that that there may be strangers who have attached the funds as a result of the attachment order. Our order is not intended to affect such persons. All such claims will have to be dealt with by the appropriate courts having jurisdiction to deal with the matter and it is to be understood that the power of such courts to deal with it is not affected by any order we have passed.

5. Before this order was passed by the High Court, the Imperial Bank had drawn a sum of three lakhs of rupees from the District Court on giving an undertaking to that Court that they would pay back any amount which might be drawn by them if at any time the Court should order a refund of any such amount. As there were still 1 1/2 lakhs of rupees to be drawn, the Imperial Bank presented an application to the District Court, Tinnevelly, on the 25th July, 1935, requesting the issue of a cheque for the said sum of 1 1/2 lakhs. By this time, nine creditors who had attached the interest of Subramania Chetti, appeared and opposed this application on the ground that the Imperial Bank can draw the money only after satisfying their claims which were stated to be then of the value of Rs. 1,72,616. The application filed by the Imperial Bank was E.A. No. 145 of 1935. Notice of this application was given to the various attaching decree-holders and they were all made party respondents to that application. They also filed independent applications for payment of the sums due to them. Certain orders were originally passed by Mr. Mack, the then District Judge, on the 9th November, 1935. They came up on appeal in C.M.A. No. 454 of 1935 and connected C.M.As. and this Court reversed the decision of the District Judge on some questions and remanded the applications for disposal according to law. The applications were disposed-of by Mr. Balakrishna Ayyar on the 16th March, 1942, by a common order and the present appeal and the connected appeals are filed against that order.

6. Not content with opposing the application of the Imperial Bank the various attaching decree-holders filed independent applications of their own. They were all persons who had obtained decrees against Subramania Chetti. Some of these decrees were passed by the High Court in the exercise of its jurisdiction on the Original Side, some by the Sub-Court, Tinnevelly and one by the Sub-Court, Kumbakonam. In some cases, the interests of Subramania Chetty had already been attached, some before judgment and some after decrees. Most of them were, by the time of Mr. Mack's order, transferred to the District Court, Tinnevelly and applications for execution had been filed. Further details will be mentioned as and when necessary. So, by the time the matter came on for disposal before Mr. Mack in 1935, there were 9 decree-holders who put forward claims as attaching decree-holders. The effect of Mr. Mack's order is one of the principal questions in this appeal.

7. Briefly put, Mr. Mack upheld the contention of the attaching decree-holders that they were entitled to priority over the Imperial Bank. The agreement between the Imperial Bank, Subramania Chetty and Subbayya Tevar amounts to a private transfer. Under Section 64 of the Code of Civil Procedure, any private transfer after an attachment is subject to all claims enforceable under the attachment. The orders of the High Court were passed with the consent of the parties and therefore have no higher sanction than that of a mere private transfer. Even if one decree-holder had attached the interests of Subramania Chetty, under the explanation to Section 64, claims enforceable under an attachment include claims for the rateable distribution of assets. So, if before the assets were realised by the Court in execution of the decree of one decree-holder, other dcree-holders had satisfied the provisions which would enable them to obtain the benefit of rateable distribution under Section 73, Civil Procedure Code, the private transfer would be subject to all these claims.

8. Mr. Mack rejected the claims of two of the decree-holders on the ground that their attachments were not valid and subsisting on the date of the equitable assignment. The claims of the other seven decree-holders were upheld. The amounts due to them as on the date of his order was ascertained to be Rs. 1,59,361. By that time, three lakhs had been drawn by Subramania Chettiar and another, three lakhs by the Imperial Bank. Marudappa Tevar whose claims as the legatee were upheld by the High Court was found entitled to a large sum out of the amounts which had been deposited into Court during the pendency of the suits and of the appeals. The fund in Court represented the sums due to the legatee and the sums due to Subbayya Tevar. After setting apart the sums due to the legatee and deducting the sums which had already been drawn, there was only a sum of Rs. 1,35,553-2-6. Mr. Mack directed the Imperial Bank which had given an undertaking to bring back any amounts when so ordered by the Court to repay a sum of Rs. 23,807-13-6. Then the Judge proceeded to consider the question whether the various decree-holders whose claims he upheld were entitled to payment of the amounts found due to them. Curiously, the Judge held for reasons which will be mentioned later, that they were not entitled to payment in these proceedings; He accordingly dismissed their applications for payment, but he directed the Imperial Bank to bring back the sum of Rs. 23,807-13-6 within a month from the date of the order. This was a common order passed on the application of the Imperial Bank and on the applications of various decree-holders. Appeals and revision petitions were filed by the various parties in this Court and they were all disposed of by a common judgment by Venkataramana Rao and Newsam, JJ., on the 4th May, 1939. They dissented from the view taken by the District Judge and held that the various decree-holders were entitled to payment of the sums adjudged to be due to them under their various decrees in these very proceedings. They upheld the decision of the District Judge directing the Imperial Bank to bring back the sumof Rs. 23,807-13-6. But instead of passing final orders, the learned Judges remanded the matter to the District Court. By the time the matter came on before the District Judge for disposal in 1942, several other persons obtained decrees against Subramania Chetti and applied for execution to the District Court, Tinnevelly and they filed applications claiming rateable distribution under Section 73, Civil Procedure Code. Their claim was that as the amount of Rs. 1,59,000 which had been adjudged by Mr. Mack to be due to the seven decree-holders whose claims he upheld had not been received by the executing Court and as the result of the High Court judgment further calculations had to be made and further questions decided, the amount continued to lie to the credit of O.S. No. 3 of 1922 on the file of the District Court and that, therefore, they were in time under Section 73, Civil Procedure Code. The District Judge upheld that contention and hence this appeal.

9. There are some other minor questions which are raised but the important question depends upon the applicability of Section 73, Civil Procedure Code, to the facts of this case. That section runs thus:

Where assets are held by a Court and more persons than one have, before the receipt of such assets, made application to the Court for the execution of decrees for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof, the assets, after deducting the costs of realisation, shall be rateably distributed among all such persons.

10. Under this section if in execution of a decree in, one suit, assets are held by a Court and more persons than one applied to the Court for the execution of decrees for payment of money passed against the same judgment-debtor before the receipt of such assets, they are entitled to rateable distribution of these assets. There must be assets held by one executing Court and the applications for execution of other decrees must be made before the assets were received by the executing Court. If these two conditions are satisfied, the new decree-holders (meaning thereby the decree-holders who obtained their decrees after the order of this Court in 1939) would be entitled to the benefit of Section 73.

11. The assets were not realised by sale in execution of any property in this' case. Moneys had already been deposited into Court to the credit of O.S. Nos. 1, 2 and 3 of 1922 in the succession suits. Where assets are held by one Court which may be called the custody Court and another Court is executing a money decree, Order 21, Rule 52, Civil Procedure Code, provides that the amount in the custody Court shall be attached by the executing Court by giving notice to the custody Court to hold the amount or property subject to further orders of the executing Court. The material portion of Order 21, Rule 52 leaving out words which do not apply to this case runs as follows:

12. Where the property to be attached is in the custody of any Court, the attachment shall be made by a notice to such. Court, requesting that such property may be held subject to the further orders of the Court from which the notice is issued:

Provided that, where such property is in the custody of a Court, any question of title or priority arising between the decree-holder and any other person, not being the judgment-debtor, claiming to be interested in such property by virtue of any assignment, attachment or otherwise, shall be determined by such Court.

13. If the executing Court and the custody Court are different, the amount lying in the custody Court can be got at by the decree-holder executing his decree in another Court by attaching the amount in the custody Court in the manner provided under Order 21, Rule 52. After levying the attachment in the manner laid down in that section, further orders would be passed by the executing Court requesting the custody Court to send so much of the money as is necessary for payment to the decree-holder. The money would then be received by the executing Court and that would be the time when the assets are received for the purpose of sec-iion 73. If the two Courts had been different and the money had been received by the executing Court from the custody Court there would be no difficulty in finding the exact time before which the persons claiming rateable distribution must apply for execution of their decrees.

14. In a case where, as here, the executing Court and the custody Court are the same, there is considerable difficulty in determining this point of time. Different views have been expressed on this question, but so far as this Court is concerned, the question is settled by a decision of a Full Bench of five Judges in Visvanathan Chetty v. Arunachalam Chettyi : (1920)39MLJ608 . The position is expressed slightly differently by the different Judges who composed the Bench. Krishnan, J., held that when the Court, as the attaching Court, passes an order in execution of the decree under execution calling for the money standing to the credit of another suit the point of time under Section 73, C.P. Code, is reached. Other Judges hold that realisation of assets under Section 73, C.P. Code, takes place when the Court as the custody Court passes an order transferring the amount standing to the credit of one suit to the credit of the decree under execution.

15. The respondents urge that there has been no order either calling for the money from the suit to the credit of which the amount stood or an order transferring any amount to the credit of the decree under execution. The contention of the appellant, on the other hand, is that the order of Mr. Mack and the appellate order of this Court passed by Venkataramana Rao and Newsam, JJ., are sufficient to satisfy the requirements laid down by this Court in the decision just referred to.

16. A further contention is raised that the Full Bench decision is wrong and that in a case where the executing Court and the custody Court are the same, no such order was at all necessary and that the moment when the execution petition was filed in one suit, and attachment ordered, the amount standing to the credit of another suit in the same Court must be taken to have been available for distribution in the decree under execution and that the relevant point of time under Section 73, C.P. Code, is the time when attachment order was passed. But it is not open to us, sitting as a Division Bench, to consider the correctness of that decision, and, therefore, we merely note this argument.

17. The only question, therefore, that we have to decide is whether either the order of Mr. Mack or the order of this Court contains directions which would satisfy the requirements of the Full Bench decision. Having regard to the large interests at stake lengthy arguments have been addressed to us by the learned advocates on either side and they have subjected the orders of the two Courts to a very minute examination and close scrutiny. Before going further we must at this stage refer to the Full Bench decision at some length.

18. One Lakshmanan Chetti was the common debtor. He had two creditors, Viswanathan Chetti and Arunachalam Chetti. In execution of a decree which Lakshmanan Chetti had obtained in O.S. No. 207 of 1908, in the Sub-Court, Ram-nad, a sum of Rs. 1,755 was deposited to his credit in that Court. Viswanathan Chetti, one of his creditors, obtained a decree in O.S. No. 87 of 1913, against Lakshmanan Chetti for Rs. 8,415-10-3, filed an execution petition on the 23rd December, 1915, and applied for attachment of the sum of Rs. 1,755 lying in deposit in the same Court to the credit of Lakshmanan Chetti in O.S. No. 207 of 1908. On this application, the Subordinate Judge passed an order 'Attach. Notice of attachment to the second defendant.' The other creditor Arunachalam Chetti obtained a decree in O.S. No. 9 of 1914, against Lakshmanan Chetti and filed an execution application in the Sub-Court, Ramnad, on 25th February, 1916, and applied for attachment of the same amount. On the 6th March, 1916, the Subordinate Judge ordered the amount to be rateably distributed among the two decree-holders. Then Viswanathan Chetti filed the suit which came up before the Full Bench for a declaration that he was entitled to the whole of the amount in priority to Arunachalam Chetti. Both the lower Courts dismissed the suit and owing to some conflict of opinion a reference was made to the Full Bench. The question considered by the Full Bench was whether Arunachalam who applied for execution on the 25th of February, 1916, was entitled to rateable distribution. It will be noticed that in execution of the decree of Viswanathan an order of attachment was actually passed in December, 1915, prior to Arunachalam filing his execution petition. If the order of 23rd December, 1915, directing attachment of the amount in question was the point of time relevant under Section 73, C.P. Code, the respondent Arunachalam would not be entitled to rateable distribution. No further order had been passed by the Court in execution of Viswanathan's decree before Arunachalam filed his execution application.

19. Wallis, C.J., who delivered the leading judgment held that when the executing Court and the custody Court are different, it is only when the funds in the custody Court are actually sent over and received by the executing Court that it can be postulated that there was 'receipt of assets' within the meaning of Section 73, C.P. Code. Then the learned Judge proceeded to consider a case where the attaching Court and the custody Court are the same. He first pointed out that the fact that money was lying in Court to the credit of the judgment-debtor in a suit other than that in which the attachment was made does not make it assets 'held by a Court' within the meaning of Section 73. Then comes the following observation:

Such assets may of course be attached by the Court in execution of another decree of the same Court. The Code, does not say how such attachment is to be made. The order 'attach' appears to be sufficient, though of course some record of the attachment must be placed among the records of the suits to the credit of which the money is lying. On the other hand, the order of attachment does not of itself effect a transfer to the credit of the suit in which the attachment is made so as to constitute a receipt of assets within the meaning of Section 73: The money may not be available as being already subject to another attachment, possibly in another Court, and it is only then the Court comes to the conclusion that there is no objection and orders the money, or so much as it thinks necessary to satisfy the decree-holders who have applied to it for execution, to be transferred to the credit of the first attaching creditor's suit which it is engaged in executing, that there can be said to be receipt of assets within the meaning of Section 73 and that a rateable distribution can be made.

20. Sadasiva Iyer, J., held that the expression 'before the receipt of such assets' must be qualified by the understood words 'levied in the course of execution and paid into Court in satisfaction of any of the decrees under execution or transferred for purposes of execution, to the credit of one or more of the decrees under execution.

Then he said:

In the present case, the assets seem not to have been 'received' in this sense till long after the dates of the two attachments, in question and in fact, till the money was impliedly so transferred to the credit of one or both of the decrees just before the order was passed for rateable distribution.

21. Krishnan, J., expresses himself slightly differently and said this after dealing with cases of property which had to be sold in order to be converted into money:

But if it is money in the hands of the custody Court the attaching Court may direct the money to be paid over to itself. It is only when the attaching Court gets the money into its hands so as to be available for distribution, that Section 73, Civil Procedure Code, comes into play; rateable distribution will then have to be given to all decree-holders who have brought themselves under the terms of the section by having applied for execution prior to the receipt of such assets. When the attaching Court and the custody Court are the same, it seems to me that an order should be made by the Court as attaching Court for transferring the money from the suit in which it came into Court to the suit in which the attachment took place. It is only when this is done, the Court as attaching Court, can properly be said to have received the assets and to hold it within the meaning of Section 73; and the decree-holders who have attached prior to that are entitled to rateable distribution.

22. Having regard to the expression 'prior to the receipt of such assets' in Section 73 the rule is perhaps more accurately laid down by the other four Judges who composed the Full Bench. Having regard to the considerations pointed out by Wallis, C.J., that even an order of attachment passed by the Court in execution of one decree may not be sufficient as funds may not be available for being attached for the reason that they were already attached by another Court or for some other reason, it would perhaps be more accurate to say that when the custody Court considered that money was available, and made an order transferring the amount or so much of it as was required for the purpose of the execution to the credit of the suit in which the decree was being executed that the receipt of assets can be said to have taken place.

23. This case was subjected to discussion by this Court in a later decision reported in Nachiappa Chettiar v. Subbier : AIR1923Mad505 .

24. One Subbier filed a suit O.S. No. 506 of 1917 in the Periakulam District Munsif's Court and obtained attachment before judgment of certain goods belonging to the debtor in March, 1917. The goods were sold and the proceeds paid into Court on the 11th April to the credit of that suit. Nachiappa Chetti, another creditor of the same debtor, filed O.S. No. 678 of 1917 and attached before judgment the money in deposit in the same Court on the 14th April, and obtained his decree on the 19th April. On the 7th June he applied not in his own suit but in Subbier's suit, i.e., the suit in which the money had been realised, for payment out to him of his decree amount. Before the application was disposed of Subbier got his decree on the 2nd July and applied on 3rd July for a cheque for payment out of the money which had been deposited in his suit. There were two other creditors of the same debtor. One Rangasami Iyer filed O.S. No. 617 of 1917, obtained a decree on the 8th June and applied for payment on the 29th June. The last creditor Sunara Row obtained his decree and applied for payment on the 30th July. The last one was after Subbier got his decree and applied for a cheque which he did on the 3rd July. The District Munsif held that Subbier was entitled to the whole of the amount. The matter was taken to the High Court and Bakewell, J., held that Nachiappa who obtained the decree first, attached the amount and applied for payment out on the 7th June was exclusively entitled to the proceeds. There was a further appeal to two learned Judges and they differred. Sadasiva Ayyar, J., held that Subbier, Nachiappa and Rangasami were entitled to rateable distribution while Coutts-Trotter, J., agreed with Bakewell, J. Against this judgment a further appeal under the Letters Patent was filed and it came on before three learned Judges. It was clear that attachment before judgment gave the creditor no right to a preference. Hence Subbier was not by reason of the fact that he got the amount attached before judgment entitled to any preference on that ground. Under the Code, assets realised by selling the property attached before judgment, are not assets realised in execution of a decree. All the judges held that the assets would become 'assets realised in execution of a decree' when a decree is later on obtained by the creditor or at any rate when after obtaining the decree he applies for execution of it. Nachiappa's claim had been upheld by two learned Judges for the reason that after obtaining the decree in the same Court he applied to the custody Court for payment out. All the learned Judges held that as no order was passed on the application of Nachiappa directing payment to him of the amount in deposit, the stage of receipt of assets had not been reached; and they further held that his application to the custody Court did not give him any right. They said that he ought to have applied in his own suit, i.e., to the executing Court and obtained some order on his execution petition. It was only later that assets could be held to have been received in his suit.

25. Then dealing with the claim of Subbier to be paid the amount exclusively it was held that attachment before judgment did not give him any exclusive right, that by the time he obtained his decree Nachiappa had already obtained his decree and had applied for execution and that Rangasanli also obtained his decree and applied for payment on the 29th June, 1917. 3rd July, 1917, when after getting his decree Subbier applied for payment out was treated as the relevant point of time.

26. One learned Judge went further and said that the point of time for the purpose of Section 73 would be only when some order was passed on Subbier's application or on the application of other creditors directing payment out and that therefore it was only when the District Munsif passed his order on the 31st August, 1917 ordering the amount to be paid exclusively to Subbier that the receipt of assets could be said to have taken place. All the learned Judges pointed out that the case before them was covered by the Full Bench decision in Visvanadham Chetti v. Arunachalam Chetti : (1920)39MLJ608 . Schwabe, C.J., summarised the decision in the earlier Full Bench thus:

It was held. . that there is no receipt of assets within the meaning of Section 73 until the Court holding the money comes to the conclusion that no objection exists, and orders the money to be transferred to the credit of the first attaching creditor's suit, the decree in which it is engaged in executing. This is the effect of the judgment of Wallis, C.J., with which Ayling and Napier, JJ., agreed. . Krishnan, J., put it that only when the1 money is transferred to the credit of the suit in which attachment takes place, can the attaching Court be said to have received the assets and hold them within the meaning of Section 73, and that the decree-holders who have attached prior t6 that are entitled to rateable distribution. . In this case the money in Court had never been levied in execution nor transferred to the credit of any other suit than Subbier's and did not become available as assets held by the Court under Section 73 until an order was made on the application by Subbier for execution of his decree.

27. Krishnan, J., who was a party to the earlier Full Bench decision put the point thus:

We have thus here also a case of money in Court being attached by the same Court as in the Full Bench case. According to the ruling in the Full Bench case that money became assets held by the Court and available for payment out in execution only after the District Munsif passed the order for payment.

28. Dealing with Nachiappa's claim on the ground that he had applied for payment out in execution of his decree which he obtained the learned Judge said this:

But in applying for execution by issue of a cheque to him he applied to the Court in Subbier's suit, O.S. No. 566 of 1917. So far as he was concerned, the Court acting in that suit was the custody Court, the attaching Court being the Court acting in his own suit No. 678 of 1917. The custody Court could not pay out the money to him without an order of the attaching Court to that effect as it has to hold the money subject to the orders of the attaching Court under Rule 52 of Order 21, Civil Procedure Code. If he wanted payment out he should have applied in his own suit and obtained an order from the Court as attaching Court for payment in execution before asking the custody Court to pay or he should have applied in his own suit for transferring the amount to the credit of his suit and then got that Court to pay the money to him. This application to the custody Court for payment was not a proper application and was rightly disregarded by the District Munsif.

The italics are ours.

29. Dealing with the claim of Nachiappa, Wallace, J., said this: 'In any case the appellant's application was thus not in form, and the Court, either for this reason or some other, did not choose to act on it then. Had it then ordered payment one might infer that it had, as custody Court, 'settled the question of priority, and had itself, as attaching Court, transferred the money at credit of Subbier's suit to the credit of appellant's suit. But it refrained, and the money remained where it was, held as before, money in the Court as custody Court held subject to the disposal of the Court as attaching Court, in suspense as it were until the attaching Court had before it a proper execution application, i e. an execution application in the suit in which the first attachment took place, or an execution application in another suit praying for transfer to that suit of the money from the suit in which it was. When that occurred it was then for the attaching Court and executing Court to decide to work out the attachment and call up the attached money for satisfying the various applicants. There was no such application until Subbier put in his application on 2nd July, 1917, for cheque. In my opinion the Court ought to have then proceeded to execute Subbier's decree with due regard to the claims of persons entitled under Section 73 to rateable distribution. There was no reason then for delaying matters further. However the Court still refrained from moving, and, so far as one can see, the fund remained in the custody Court in the same state as it had been from the beginning until on 31st August, 1917, the Court decided to distribute and determined that the whole of it should go to Subbier. Only then can it be said that the attaching Courtcalled up the fund in the custody Court for use in execution of the pending unsatisfied decrees and only then can it be said that the assets were received within the meaning of section ,73.

30. There are three periods of time indicated by different Judges in these two decisions. One is what we may call the extreme view that it is only when the executing Court orders payment out of the sum to one or other of the decree-holders that receipt of assets takes place. Another view is that when the executing Court or attaching Court passes an order calling for' money from the custody Court this point of time is reached and the third view is that the custody Court should pass some order transferring the amount to the credit of the executing Court. We think that the right view is that propounded by Wallis, C.J., in which three other Judges concurred and that is the third of the views just set out. Even if there is no formal order by the custody Court transferring the amount to the credit of one of the suits under execution we may, if payment out is ordered by the executing Court, take it that money was impliedly transferred by the custody Court to the credit of the decree in which payment out is ordered.

31. Stress has been rightly laid before us by the learned advocate for the appellant that owing to the delay in the disposal by the Court of the application of the Imperial Bank and of the applications of the seven attaching decree-holders whose claims were upheld by the High Court, various new decree-holders have been held entitled to participate imposing a further liability on the Imperial Bank and also further disabilities on the attaching decree-holders. They therefore urge that when Mr. Mack adjudged that Rs. 1,59,000 was payable to the seven attaching decree-holders whose claims he upheld and directed Rs. 23,807 to be brought in by the Imperial Bank it must be held that there was receipt of assets within the meaning of Section 73.* In the alternative they urge that at any rate, when the Court proceeded to consider the claims of the executing creditors for payment out to them, this point of time must be held to have been reached. It is pointed out that it is only after the receipt of assets actual or notional, that the executing Court can proceed to discuss the rights of the various attaching decree-holders for payment out. As the District Judge discussed their right to payment out, it must be held that the assets had been received by the executing Court. This appears to be a very plausible argument but it does not take note of at least one vital factor. The first portion of the order of Mr. Mack is that Rs. 1,59,000 odd was payable to the seven decree-holders. Having said that, he directed the Imperial Bank to pay Rs. 23,000 odd into Court. There it stopped. It is only Rs. 1,35,000 odd that was in Court, at that time. Rs. 23,000 odd had yet to be paid by the Imperial Bank and by no stretch of language or application of fiction, can it be said that Rs. 23,807 had been actually or notionally received by the executing Court. It had not been received even by the custody Court. It had been paid out on an undertaking to repay. The order was that the Imperial Bank should repay and it is admitted that until this day the amount has not been repaid. Thus the argument of the learned Advocate for the appellant fails as regards this sum of Rs. 23,000 odd at any rate. So this argument cannot be accepted. -

32. Then it is argued that because Mr. Mack discussed the question whether the attaching decree-holders were entitled to payment out or not, it must be held that there was receipt of assets. But we cannot accept the proposition that the executing Court must always be taken to discuss the question of payment out only after receipt of assets. Take a case where several decree-holders apply to the Court for execution of their decrees and a large sum is lying to the credit of that common judgment-debtor in another Court. Money is called for but not received yet. In such a case the Court might, in case of disputes between rival decree-holders on the question whether some of them are entitled to rateable distribution, determine that question beforehand so that as and when the money is received from the custody Court, payment may be made in accordance with the decision already arrived at. So it cannot be postulated that merely because the execution Court determined the question whether some people were entitled to rateable distribution or whether all or any of the decree-holders were entitled to payment out, we must assume a prior receipt of assets. In this case, the Court considered that the money had not become the property of Subramania Chetti, their common creditor. Rightly or wrongly, Mr. Mack took the view that there was no assignment to Subramania Chetti of the amount that had been deposited to the credit of O.S. Nos. 1, 2 and 3 of 1922. It was, therefore, held that as the money had not become that of the judgment-debtor, no decree-holder was entitled to payment out. It was evidently to meet a possible eventuality of an appellate Court differing from his view that Mr. Mack directed the Imperial Bank to bring back Rs. 23,800 and ordered retention in Court of Rs. 1,59,000.

33. His order to retain this sum in Court is again said to bring about the receipt of assets within the meaning of Section 73 as laid down in the two decisions just referred to. Here again, it is one single order regarding the entire sum of Rs. 1,59,000. Rs. 1,35,000 admittedly was the only sum lying in Court. The order 'retain' could not possibly cover Rs. 23,000 odd which had not yet been received and could only mean that as and when that amount was paid, it should be retained in the custody Court. That being so, it is difficult to see how the order to retain the money and that in the custody Court can be held to be receipt of assets by the executing Court. It is to the custody Court that the Imperial Bank had given the undertaking to pay the sum which that Court might order to be brought back. It is as the custody Court that the District Court determined how much of the amount lying in its custody had to be transferred for the purpose of meeting the claims of attaching decree-holders. But there the custody Court. stopped. As laid down by the Full Bench in Viswanathan Chetti v. Arunachalam Chetti : (1920)39MLJ608 and accepted by the later decision two things must take place: first, the custody Court must come to the conclusion that there was no objection to transfer the amount necessary to pay the decree-holder at whose instance the fund was attached; secondly, there must be an order by the custody Court transferring the amount to the credit of the first attaching creditor's suit which it is engaged in executing. It is only then that there can be said to be receipt of assets within the meaning of Section 73. Here the first requisite is satisfied, namely, the custody Court came to the conclusion that there was no objection, and determined that Rs. 1,59,000 and odd was necessary for the purpose of satisfying the. claims of the decree-holders. But there was no order transferring the amount to the credit of any of the attaching creditor's suits which it was engaged in executing. In fact, the entire sum was not yet with the custody Court. It had yet to get in a large sum of over Rs. 23,000 from the Imperial Bank. Until the Imperial Bank paid back that sunn, the custody Court cannot be said even by any fiction, to have transferred Rs. 1,59,000 to the credit of one of the decrees under execution.

34. We have then to deal with the argument based upon the judgment of the High Court. Here there is less room for the argument that the order of the High Court satisfies the requirements laid down by the two decisions. The District Judge held that the attaching decree-holders were not entitled to payment. One reason given by him was that the common judgment-debtor Subramania Chettiar had not become the owner of the fund in question. The High Court disagreed with this, but they did not order payment to the seven decree-holders whose claims were upheld. They expressly held that they were not dealing with any other objection to payment out. They stated thus:

In view of the expression of opinion by us that there has been an equitable assignment of a portion of the fund in Court in favour of Subramania Chetti, the order of the learned Judge in the Court below in so far as it negatives the right of the attaching creditors to payments to them in satisfaction of their claims on the ground that there was no money directly available to Subramania Chetti is wrong. Whether the view of the learned Judge is correct or not on any other ground, we do not propose to go into the matter.

The italics are ours.

35. Then they remanded the matter to the lower Court. Thus it is clear that the High Court did not decide that the attaching decree-holders were entitled to payment. They dealt with the one reason given by the District Judge and held that it was wrong, but they did not decide whether the order of the District Judge can be upheld on any other ground. So, they remitted the question for consideration on other grounds. Even as regards the determination of the sum due to the attaching decree-holders, while there is a statement that it was Rs. 1,59,000 as mentioned by the District Judge, they ordered fresh calculations to be made obviously for the reason that by the time the matter came on for consideration by the High Court, the sums due to the attaching decree-holders would be very, much more than the sum of Rs. 1,59,000. They were all entitled to interest up to the date of payment. Hence, we cannot agree, with the contention of the learned Advocate for the appellant that the order of the High Court satisfies the requirements of Section 73, Civil Procedure Code.

36. The next point raised by Mr. O.T.G. Nambiar, the learned Advocate for the Imperial Bank, is that his clients are not bound to repay the sum which they had drawn with interest. This argument has no force whatever. An undertaking to repay involves an obligation to repay the sum with interest if later on it is found that the money had been wrongly claimed and wrongly paid. In the present case, at the time when the High Court was asked to pass an order empowering the Imperial Rank to draw Rs. 4 1/2 lakhs, it was not brought to the notice of the High Court that there were decree-holders who had already obtained decrees against Subramania Chetti and attached the sums lying to the credit of O.S. Nos. 1, 2 and 3 of 1922. The Imperial Bank was evidently ignorant of these attachments, but Subramania Chetti must have known them. At any rate, without imputing any dishonesty to any one, it is clear that there was a representation to the Court that the Imperial Bank was entitled to the amount and it is equally clear that the order was one which the Court would not have passed if it had been apprised of the real facts of the case. That a private alienation cannot prevail against the claims enforceable under the prior attachments is clear and we have pointed out the Imperial Bank was only a private transferee. Without providing for all the decree-holders who had attached or whose claims were enforceable under an attachment already made, the Imperial Bank could not draw the amount in Court, and yet as soon as the order was made by the High Court, the Imperial Bank got an order from the District Court on the 25th April, 1935, allowing three lakhs of rupees to be drawn from Court. Fortunately, the District Court took an undertaking from the Imperial Bank on that occasion that they would pay back the whole or any portion of the amount drawn by them if so ordered by that Court. Now, it has been found that the Imperial Bank had no right whatever to draw the whole of the three lakhs of rupees. Whatever sum is found repayable has to be repaid with interest. It is not necessary to refer to the decisions in detail. It is enough to refer to Alagappa Chettiar v. Muthukumara Chettiar I.L.R. (1917) Mad. 316.

37. Several other questions were raised by Mr. Nambiar which are of a technical character, and which were not raised in the lower Court. It is said by him that his client was not a party to the proceedings taken by the attaching decree-holders and that, therefore, his client could not raise these objections in the lower Court. But on the application made by the Imperial Bank, all the attaching decree-holders were given notice and they were all made parties and they put forward their rights in opposition to the appellant's claim. The applications for payment out made by the various decree-holders were all heard together along with the application of the Imperial Bank for payment to them of a further sum of one and a half lakhs. Right from the beginning all the applications were disposed of together both by the trial Court and by the High Court. We see, therefore, no force in the point raised by Mr. Nambiar. If there were any technical objections they ought to have been raised in the trial Court.

38. It is said that the decrees had not been transferred to the District Court, that the applications should have been filed in the custody Court, and that they must be headed in the suit in which the money was being realised. The last ground has no force whatever. We have not been referred to any provision of law or to any authority saying that the applications must be headed in the suit in which the moneys are being realised. The argument that the applications should be filed in the custody Court has no force whatever. This has been held to confer no right whatever in the decision in Nachiappa Chettiar v. Subbier : AIR1923Mad505 . The application for, execution must be made to the executing Court. Dealing with the other objection that the decrees had not been transferred to the District Court, Tinnevelly, we see no foundation in fact. Further, this question involves investigation of facts and we are not prepared to allow it at this stage. All the decrees seem to have been transferred to the District Court for execution. It is, therefore, unnecessary to deal with the contention of Mr. Bashyam, the learned advocate for the contesting respondents that the other decree-holders who claim rateable distribution need not even apply to the Court which is realising the assets, that it is enough if applications for executions are made before the receipt of the assets to the various Courts in which they had got their decrees and that the only requisite is that before the assets are received by the one Court, applications for execution of other decrees should have been made but not necessarily to the Court which was realising the assets. Reliance is placed on a decision of this Court in Nana Rao v. Arunachalatn Chettiar : AIR1940Mad385 and as we said already, it is unnecessary to go into this question.

39. The result is that C.M.A. No. 221 of 1942 fails and it is dismissed with costs of respondents who applied for execution after 1939. Before leaving this appeal, we have to make one further order as a result of an application for stay being made to this Court by the appellant and an interim order of stay having been obtained from this Court in C.M.P. No. 2082 of 1942. After filing this appeal, the ap-pellant got an interim order staying the execution of the decree pending final orders on that petition. Unfortunately, having regard to the fact that there are a large number of respondents in that petition, the matter remains pending final hearing even on this day. It appears that several attempts were made by some of the respondents to have the petition heard, but they were not successful as the Court evidently thought that until all the respondents were served, the application for stay ought not to be heard.

40. The result is that the respondents decree-holders have been unable to enforce the order in their favour and to get the sums adjudged to them until this date. The order of the lower Court directs the Imperial Bank to bring back Rs. 1,79,609-14-3 by the 6th June, 1942. There is an obvious omission to provide for further interest in case of default of compliance with that order. This seems to have been a pure oversight. Under Order 41, Rule 33, Civil Procedure Code, this Court has got powers to pass any order which the lower Court might have omitted to pass and that in favour of all or any of the respondents even though the respondents did not file an appeal or a memorandum of objections. We consider that this is a fit case in which we should exercise this power. Having regard to the fact that it was obviously an accidental omission by the lower Court and to the fact that the appellant got an interim order for stay on a petition which has not been heard even till this date, we direct that the appellant should bring back the sum of Rs. 1,79,609-14-3 with interest at six per cent, per annum from 6th June, 1942, until date of payment. Costs which have been ordered by this Court in C.M.A. No. 454 of 1935 to abide the result will have to be paid to the seven decree-holders who had attached prior to that date, viz., 2nd April, 1935. They are respondents Nos. 4, 5, 6 and 9 10 12.

41. CM.P. No. 2082 of 1942 is dismissed.

42. C.M.P. Nos. 1659 and 1660 of 1944 ordered.

43. CM.As. Nos. 355 of 1942, 417 of 1942, 418 of 1942,-419 of 1942 and C.R. Ps. Nos. 1124 of 1942, 1274 of 1942, 1275 of 1942, and 1276 of 1.942, are all dismissed with costs in C.R.P. No. 1124 of 1942 and in C.M.As. Nos. 417 of 1942, 418 of 1942 and 419 of 1942 one set in each. C.M.P. No. 3217 of 1942, dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //