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K.M.K.R.K.R. Ramanadhan Chettiar by His Agent, Rama Aiyar Vs. P.L.V.V.R. Subramania Chettiar and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported in(1924)47MLJ759
AppellantK.M.K.R.K.R. Ramanadhan Chettiar by His Agent, Rama Aiyar
RespondentP.L.V.V.R. Subramania Chettiar and anr.
Cases ReferredThe Maharaja of Burdwan v. Apurba Krishna Roy
Excerpt:
- .....person shall be entitled to the benefit of the execution against the receiver except in respect of assets realised in the course of the execution by sale or otherwise before the date of the admission of the petition.' it has been argued by mr. krishnaswami iyer that, according to this section, irrespective of the time of realisation, assets realised in the course of execution by a sale which has been held before the date of the admission of the insolvency petition are preserved for the benefit of the execution creditor or, in other words, if the sale by means of which the assets are realised is held before the date of the admission of the petition, then the assets, even if they be realised after the date of the admission of the petition, enure to the advantage of the execution creditor......
Judgment:

Madhavan Nair, J.

1. The facts of this case are not disputed. In execution of a decree against the 2nd respondent his properties were brought to sale on the 27th of June, 1922, and the auction-purchaser deposited 25 per cent of the sale proceeds in the District Munsif's Court at Tiruppur. On the 1st of July, 1922 an insolvency petition was filed against the 2nd respondent and the Official Receiver was appointed interim Receiver on the 4th July, 1922. The balance of the purchase-money was deposited on the nth of July, 1922 and the 2nd respondent was adjudicated an insolvent on the 15th of September, 1922. In the meanwhile, the sale proceeds of the 2nd respondent's properties were forwarded to the Official Receiver by the District Munsif. On the 26th of July, 1922 an application was filed before the District Judge of Coimbatore by the creditor who attached the properties and brought them to sale for the re-transfer to the District Munsif's Court of Tiruppur, of the sale proceeds to be dealt with by him according to law. The petitioning-creditor who applied un3er the insolvency law for the adjudication of the debtor as an insolvent and for the appointment of the interim Receiver resisted this application and the District Judge rejected it. This appeal is by the creditor against the order of the District Judge refusing to re-transfer to the District Munsif's Court of Tiruppur the sale proceeds of the 2nd respondent's properties now in the possession of the interim Receiver.

2. The principle of law to be applied to the decision, of this appeal is embodied in Section 51 Clause (1) of the Provincial Insolvency Act which runs as, follows :--' Where execution of a decree has issued against the property of a debtor, no person shall be entitled to the benefit of the execution against the Receiver except in respect of assets realised in the course of the execution by sale or otherwise before the date of the admission of the petition.' It has been argued by Mr. Krishnaswami Iyer that, according to this section, irrespective of the time of realisation, assets realised in the course of execution by a sale which has been held before the date of the admission of the insolvency petition are preserved for the benefit of the execution creditor or, in other words, if the sale by means of which the assets are realised is held before the date of the admission of the petition, then the assets, even if they be realised after the date of the admission of the petition, enure to the advantage of the execution creditor. Shortly stated, this argument makes the ' date of the admission of the petition ' qualify the ' sale ' and not ' assets realised ' in the section. The records in the case do not show the date of the admission of the petition; but, for the purposes of this appeal, the date may be taken to be some time between the 1st and 4th July; in any event, it cannot have been later than the 4th of July, when the interim Receiver was appointed. Since the execution sale in this case was held on the 27th of June, 1922, i.e., anterior to the 4th of July, it follows from the argument just stated that the appellant-creditor is entitled to all the assets as against the interim Receiver. We cannot accept this argument. It seems to us that ' the policy and object of the statute is to secure the even distribution of a debtor's estate among his creditors, and to prevent the more active creditors from getting an undue advantage over those who may be less active ' Bower v. Hett (1895) 2 Q.B. 51. This object will obviously be frustrated if we accept the construction put upon the section by the learned Vakil for the appellant. We think that the words ' date of the admission of the petition' occurring in this section qualify 'assets realised'; so that only assets realised before the date of the admission of the petition will enure to the benefit of the execution-creditor. The question then arising for consideration is, were assets realised in the course of execution before the date of the admission of the petition in this case The words ' assets realised in the course of execution ' have been interpreted in many decisions in cases which arose under Section 295 of the old Civil Procedure Code corresponding to Section 73 of the present Code. We think these may be usefully referred to for elucidating the meaning of the words ' assets realised ''occurring in this section. In Hafez Mahomed Ali Khan v. Damodar Pramanick ILR (1891) C 242 it was held that, when property is sold in execution of a decree, the sale proceeds may be said to be assets realised only when the balance of the purchase-money is paid and not when 25 per cent is deposited in Court. In Ramanathan Chettiar v. Subramania Sastrial ILR (1902) M 179 occur the following observations by Sir Arnold White, C.J. :--' It seems to me that the word ' assets ' in Section 295, Civil Procedure Code, means the proceeds of the sale of the property which is sold in execution of the decree. As far as the present case is concerned, I am of opinion that the assets were realised when the whole of the proceeds were paid into Court. ' Though there is no doubt a change in the corresponding provision of Section 73 of the present Code in that it substitutes the word ' receipt ' for the word ' realised ' in Section 295, still, so far as the question before us is concerned, the decisions under Section 73 are also helpful in arriving at a conclusion as to the meaning of the term ' assets realised. ' In the case in Arimuthu Chetti v. Vyapuri Pandaram ILR (1910) M 588 : 21 MLJ 505, where the purchaser made the deposit on the 17th September, 1909, and the balance of the purchase-money was paid into Court on the 29th September, 1909, it was stated by Abdur Rahim, J. ' It must be taken, having regard to the decision in Ramanathan Chettiar v. Subramania Sastrial ILR (1902) M 179, that the assets were realised only on the 29th September, 1909, within the meaning of Section 295 of the old Code. There is no doubt a change in the corresponding provision of Section 73 of the present Code. But so far as the question before me is concerned, the change in the language is immaterial. The purchase-money becomes the asset of the judgment-debtor only when the balance is received and not when the deposit is made. ' To the same effect is also the decision in The Maharaja of Burdwan v. Apurba Krishna Roy 15 CWN 872. Having regard to these decisions, we must hold that in this case the appellant is not entitled to claim either the balance of the purchase-money or the initial deposit of 25 per cent., as they cannot be considered to be ' assets realised ' in the course of execution by sale before the date of the admission of the insolvency petition within the meaning of Section 51 of the Provincial Insolvency Act. It follows, therefore, that the appellant's petition for a re-transfer of the sale proceeds to the District Munsif's Court of Tiruppur, was rightly rejected by the District Judge.

3. We dismiss this Civil Miscellaneous Appeal with costs.

4. In C.M.A. No. 23 of 1923 :--Following the decision in C.M.A. No. 22 of 1923, this Civil Miscellaneous Appeal is also dismissed. No costs.


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