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Epoh, Indian Overseas Bank. Vs. S.M. Mohamed Musthaba Sahib and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberL.P.A. No. 99 of 1969
Judge
Reported inAIR1977Mad199; (1977)1MLJ349
ActsLimitation Act, 1908 - Schedule - Article 182; Provincial Insolvency Act - Sections 28(2); Presidency Towns Insolvency Act, 1909 - Sections 17; Indian Insolvency Act; Code of Civil Procedure (CPC), 1908 - Sections 13, 14 and 44-A - Order 21, Rules 22, 54 and 66; Code of Civil Procedure (CPC) (Amendment) Act, 1933 - Sections 2
AppellantEpoh, Indian Overseas Bank.
RespondentS.M. Mohamed Musthaba Sahib and ors.
Cases ReferredUthamram v. Abdul Kasim Co.
Excerpt:
.....to properties in india.;normally in international law and practice an order of bankruptcy in a foreign country cannot have any effect on the immovable properties in another country. so for as the indian insolvency act is concerned, section 28(2) of the provincial insolvency act provides that on the making of an order of adjudication the whole of the property of the insolvent shall vest in the court in a receiver as provided for in the enactment. the act extends to the whole of india. the adjudication order does not operate to vest the insolvent's immovable property situated in a foreign state in the official assignee. therefore, the vesting of the property of the debtor under the indian insolvency act will not have the effect of vesting his property in a foreign country. there can be..........court, viz., the federation of malaysia.3. the objection that was raised to the execution of the foreign decree was that notice under o, xxi, r. 22, c. p. code was mandatory before attachment could be ordered, and that, secondly the supervening insolvency of the judgment-debtor in the federation of malaysia was a bar to the maintainability of the execution petition. it is common ground that after the decree was passed by the foreign court but before execution was laid in the district court of south arcot the judgment-debtor became insolvent.4. the trial court sustained the objection raised by the judgment-debtor and found that the execution petition was not competent. it held that, as the insolvency of the judgment-debtor had supervened the passing of the decree in the foreign court.....
Judgment:
1. This appeal is preferred by the India Overseas Bank, Epoh, by its power agent, Joseph Ambrose, against the judgment of Ramaprasada Rao, J. in A. A. O. No. 230 of 1966.

2. The appellant filed an application under S. 44-A read with O, XXI, Rs. 54 and 66, C. P. Code, for attachment and sale of the judgment-debtor's immoveable properties, in the District Court of South Arcot. The District Judge ordered notice and transferred it to the file of the Court of the Subordinate Judge. The decree that was sought to be executed was one that was obtained in a foreign court, viz., the Federation of Malaysia.

3. The objection that was raised to the execution of the foreign decree was that notice under O, XXI, R. 22, C. P. Code was mandatory before attachment could be ordered, and that, secondly the supervening insolvency of the judgment-debtor in the Federation of Malaysia was a bar to the maintainability of the execution petition. It is common ground that after the decree was passed by the foreign court but before execution was laid in the District Court of South Arcot the judgment-debtor became insolvent.

4. The trial court sustained the objection raised by the judgment-debtor and found that the execution petition was not competent. It held that, as the insolvency of the judgment-debtor had supervened the passing of the decree in the foreign court before execution was levied, the execution petition was not competent. The trial court did not give any clear finding whether notice was taken before attachment was ordered. We find from the records, that notice for 26-10-1964 and attachment was ordered by the District Court on 19-8-1964, and the matter was transferred to the court of the Subordinate Judge on that day. The point therefore regarding want of notice is maintainable.

5. On appeal of this court, Ramaprasada Rao J., dismissed the appeal holding that the supervening insolvency in the foreign State was a bar to the levy of any process in execution or otherwise against the person who was so adjudged insolvent in the foreign county. The learned Judge followed the decision of this court in Uthamram v. Abdul Kasim Co., .

6. In this appeal, Mr. C. Ramakrishna, learned counsel for the appellant, questions the correctness of the decision of the trial court as well as that of the learned single Judge of this court. His submission is that under S. 44-A which was enacted by S. 2, C. P. Code Amendment Act (Act VIII of 1933) It was provided that. Where a certified copy of the superior courts of any reciprocating territory has been filed in a District Court, the decree may be executed in the State as if it had been passed by the District Court. It is not disputed that the decree is that of the High Court of Epoh, a superior court It is also conceded that it is a reciprocating territory. Section 44-A is therefore applicable and the decree of the foreign court is executable as if it had been passed by the District Court in India. Section 13, C. P. Code provides that a foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties. That the judgment the is sought to be executed falls within S. 14 is also not disputed for it is conceded that the decision was pronounced by a court of competent jurisdiction and that it was given on the merits of the case. The decision of the trial court as well as that of the learned single Judge of this court was mainly based on the decision of this court in Uthamram v. Abdul Kasim CO., where it has been held that where subsequent to the date of application for execution of a foreign decree in India against immoveable properties the debtor has been adjudged an insolvent in that foreign country, an execution cannot be laid against him in that county, it would follow that it would not be maintainable in this country as well. Two questions that arose for consideration before the Bench were--(I) whether the non-submission of a certificate from the superior court at Singapore showing the extent to which the decree was still outstanding would be a bar to the maintainability of the execution petition; and (ii) whether the execution petition was barred by limitation. On the first question the lower court had held that the omission to file a non-satisfaction memo would not amount to a material irregularity and that notwithstanding the fact that the execution petition was unaccompanied by a certificate specified in Section 44-A(2), the application was maintainable. On the second question, the court had held that subject to the question of limitation, the judgment of the foreign court would be conclusive as to any matter directly adjudicated upon between the same parties. On a consideration of the facts. the Bench of this court held that Art. 182 of the Limitation Act. 1908, would apply to all cases of execution petitions filed under S. 44-A whether the foreign court which gave the judgment was a chartered High Court or any other superior court and that in the case before them the execution petition was barred by limitation. Having disposed of the two questions referred to above, the Bench proceeded to observe that it was not necessary for the purpose of the case to consider whether the principle of comity of nations should prevent the creditor from executing his decree by proceeding against the immoveable property in a foreign country which and not vested in the Assignee in Bankruptcy and in respect of which such Assignee had take; no steps to reduce if to his possession for facilitating universal distribution of the bankrupt's effects Having so observed, the learned Judges referred to proviso (b) to R. 195(1) in Dicey's Conflict of Laws 7th Edn. which runs as follows--

"that no judgment of a foreign court will be ordered to be registered if it could not be enforced by execution in the country of the original court. This rule is based upon the Foreign Judgments (Reciprocal Enforcement) Act 1933 of the United Kingdom".

Relying on this statement in Dicey the Bench observed that this statement in Dicey could be taken as a statement of the rule of International Law on the subject and concluded that, if the execution could not be laid against the debtor in the Singapore High Court, as he had become insolvent, it would follow that execution would not be maintainable in this country as well. Mr. Ramakrishna submits that the observations regarding the liability of immoveable property in a foreign country in bankruptcy proceedings is not only obiter dicta but also erroneous. There can be no doubt that the observations are in the nature of obiter dicta. We also agree with the learned counsel on an examination of the authorities that were placed before us, that the decision has no support in any rule of International Law or in the decisions of Indian courts.

7. Disey made observations, relied on in Uthamram v. Abdul Kasim Co., , in respect of the effect of the Bankruptcy Act in England and the Foreign Judgments (Reciprocal Enforcement) Act 1933. In dealing with the effect of the English Bankruptcy Act, at page 666 of the Conflict of Laws by Dicey and Morris. 8th Edn., R. 118 is stated n the following terms--

"An assignment of a bankrupt's property to the trustee in bankruptcy under the Bankruptcy Act 1914, is, or operates as, an assignment of the bankrupt's (1) immoveables (land) (2) moveables-whether situate in England or elsewhere".

The comment of the learned author is--

".......by including immoveables situated abroad among the property of the bankrupts, the Act attributes a wide effect to an English Bankruptcy than English court would, apart from statute, give to foreign bankruptcy."

Thus it is clear that it is only by virtue of the enactment of the Bankruptcy Act 1914, the English courts have taken jurisdiction over immoveables whether situate in England or elsewhere. At page 663 the learned author observes--

"The fact that debtor has been adjudicated bankrupt abroad doe snot necessarily mean that there are no available assets in England. In the first place, if the was adjudicated bankrupt in a country outside the United Kingdom. The English court might not recognise that the courts of that county had jurisdiction to adjudicate him bankrupt, and even if they had, the foreign order would not have any direct effect on immoveables in England." (underlining ours).

Again at page 667 the learned author observes--

"With regard to countries foreign in the question whether sense it is obvious that the question whether property of the bankrupt situated in such a country does of does not pass to the English trustee in bankruptcy must depend in the last resort on the lex situs. For no Act of Parliament can of its own force and effect transfer property situated, e.g., in France, from the bankrupt to the trustee.

Hence, although English law says that all the property of the bankrupt vest in his trustee, it may be difficult for the trustee to make his title effective, so far as property in a politically foreign country is concerned as against, e.g., a judgment creditor levying execution there, or the trustee in later local bankruptcy."

8. The passages above referred to make it clear that the jurisdiction of the English courts id derived from the special provisions of R. 118 and that normally in Inter-national Law and practice an order of bankruptcy in a foreign country cannot have any effect on the immoveable properties in another country.

9. So far as the Indian Insolvency Act is concerned. S. 28(2) of the Provincial Insolvency Act provides that on the making of an order of adjudication the whole of the property of the insolvent shall vest in the court or in a receiver as provided for in the enactment. The Act extends to the whole of India. In In re Sumermul Surana, AIR 1932 Cal 124, it has been held that under S. 17 of the Presidency Towns Insolvency Act, the adjudication order does not operate to vest the insolvent's immoveable property situated in a foreign State in the Official Assignee. After referring to the judgment of Rankin J., in In re Mogi and Co., AIR 1926 Cal 898: 96 Ind Cas 459, the court held that the adjudication order did not operate to vest the insolvent's immoveable property situated in a foreign State in the Official Assignee. It may be noted that the decision was rendered in relation to S. 17 of the Presidency Towns Insolvency Act (Act III of 1909) where the wording was that on the making of an order of adjudication the property of the insolvent wherever situate shall vest in the Official Assignee. These words were construed as meaning the property of the insolvent wherever situate in India. It is, therefore. clear that the vesting of the property of the debtor under the Indian Insolvency Act will not have the effect of vesting his property in a foreign country. We were unable to look into the position of the Insolvency law in Malaysia at the time when the decree was passed and execution was levied in this country, as the necessary books were not available. But there can be no doubt that the adjudication of the debtor and the vesting of his properties of Malaysia in the Official Assignee will not have the effect of including his properties in India. Further, we are satisfied that the foreign court, i.e., the court in Malaysia, cannot direct the vesting of the debtor's properties in India, at any rat, so far as immoveable properties are concerned. as the doctrine of lex situs is applicable.

10. The decision of the Indian Courts are also in accordance with the view we have taken. The earliest case in In re Mogi and Co., AIR 1926 Cal 898, where Rankin J. held that the Presidency Towns Insolvency Act was a statute of Indian Legislature and operated wherever, but not elsewhere, that Legislature could give the law and that the Act did not operate as regards immoveables belonging to an insolvent in a foreign country unless it was shown that the foreign law will give effect to the Act. To the same effect is the decision in In re Sumarmul Surana, AIR 1932 Cal 124, which followed In re Mogi and Co., AIR 1926 Cal 898, where it was held that the adjudication order did not operate to vest the insolvent's immoveable property situated in a foreign State in the Official Assignee. The point has been elaborately dealt with in Lakhpat Rai Sharma v. Atma Singh. . Dealing with the effect of S. 44-A. C. P. Code, the learned Judge observed that the moment a certified copy of a decree of any of the superior courts of any reciprocating territory and a certificate from such superior court stating the extent, if any to which the decree had been satisfied or adjusted were produced in a District Court in India, then the decree might be executed in India as if it had been passed by the District Court. Regarding the effect of the adjudication in a foreign country, after referring to the various decisions, the learned Judge held that there was nothing in law to find that the adjudication order would affect the immoveable property of the insolvent in another country.

11. It is clear from the decisions referred to above that so far as immoveable property is concerned, the adjudication of the debtor will have no effect, and if the decree-holder satisfies the requirement s of S. 44-A, C. P. Code, execution can proceed.

12. The point which was stressed by the learned counsel for the respondent was that the observations in Uthamram v. Abdul Kasim Co., and Dicey to the effect that, when the decree could not be executed in the court that passed the decree itself, it could not be executed in a foreign country was good law. Without going into the question as to the correctness of this position in general, we are of the opinion that so far as the insolvency of the debtor in a foreign country is concerned, this observation is not applicable for, as we have held, in law the adjudication will have no effect on the insolvent's immoveable property in a foreign country and that the immoveable property in the foreign country will not vest in the Official Assignee. There being no bar to execution under S. 44-A, C. P. Code, execution will lie.

13. In this view, we accept the contentions of Mr. G. Ramakrishna, learned counsel for the appellant, allow the appeal and direct that execution will proceed. There will be no order as to costs.

14. Appeal allowed.


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