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Southern Steelmet and Alloys Ltd. Vs. B.M. Steel, Madras - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberO.S.A. No. 1 of 1978
Judge
Reported inAIR1978Mad270; (1978)1MLJ468
ActsCode of Civil Procedure (CPC) , 1908 - Order 21, Rule 58; ;Code of Civil Procedure (CPC) (Amendment) Act, 1976
AppellantSouthern Steelmet and Alloys Ltd.
RespondentB.M. Steel, Madras
Appellant AdvocateK. Parasaran, Adv. for B. Soundarapandian, Adv.
Respondent AdvocateM.R. Narayanaswami, Adv.
DispositionAppeal allowed
Excerpt:
.....mandates that the court enquiring such a claim petition should determine such questions. after the claim or objection had been adjudicated upon, the order made thereon should have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree. though perforce an order is contemplated to be passed under order xxi, rule 58 of civil procedure code, that order has the legal effect of a decree. such an order is a substitute for a decision resulting in a decree in an ordinary litigation. a decree as is understood both legally and commonly results in the adjudication of rights, privileged and duties of a party to a legal proceeding. such being the intendment of the amendment rule under order xxi, rule 58 of civil procedure code, the enquiry contemplated..........such property is not liable to such attachment, the court shall proceed to adjudicate upon the claim or objection in accordance with the provisions herein contained;provided that no such claim or objection shall be entertained-(a) where, before the claim is preferred or objection is made, the property attached has already been sold or(b) where the court considers that the claim or objection was designedly or unnecessarily delayed.(2) all questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection, shall be determined by the court dealing with the claim or objection and not by a separate suit.(3) upon the.....
Judgment:
1. Two applications, Appln. No. 3578 of 1977 by B. M. Steel Pvt. Ltd., and Appn. No. 3595 of 1977 by Maharashtra Bank for similar reliefs were filed on the Original Side of this court under Order 21 Rule 58 C. P. Code, stating that both the applicants as above were the owners of the steel and M. S. rounds or were interested in them and which were at No. 32 Suryanarayana Chetti St, Madras 13, and which according to the company, were their goods and which according to the Bank were goods in and over which they had an enforceable legal right. The appellant as plaintiff instituted a suit CS No. 354 of 1977 on the file of the Original Side of this court against a partnership firm known as B. M. Steel impleading the partners therein as defendants 2 to 6. Contemporaneous with the filing of the suit, an application for attachment before judgment was filed by the plaintiff-appellant. Notice in that application was served on the partnership firm B. M. Steel. When ultimately the application for attachment before judgment came up for final disposal B. M. Steel was prepared to give an undertaking not to alienate the goods belonging to it. In consonance with the undertaking which they wanted to give, they filed on affidavit, but later it was discovered, according to the plaintiff, that a large stock of over 52 tons of steel belonging to B. M. Steel which was available at No. 32 Suryanarayana Chetti St, was not included in the affidavit of undertaking. It was also averred that there is every possibility of B. M. Steel transferring such goods in the aforesaid godown to another company which was an incorporated one and which is the applicant in Appn. No. 3578 of 1977 and that if B. M. Steel effected a transfer of such goods to the incorporated company, they would be put to irreparable loss. They sought therefore a physical attachment of those goods instead of accepting the affidavit of undertaking filed by B. M. Steel. Accordingly, an attachment was effected on 14-11-1977 of goods, inter alia, found at No. 32 Suryanarayana Chetti St,. The incorported company as claimant filed Appn. No. 3578 of 1977 and sought for raising of the attachment claiming the goods as their own and setting up a title in themselves indepen- dent of that of B. M. Steel. This was opposed by the plaintiff in the main suit. When the claim petition as it is popularly called filed under Order 21 Rule 58 C. P. Code came up for hearing, the learned Judge, enquired into the matter summarily and on the affidavits and probably on representations made before him at the time of the hearing. He mainly adverted to the fact that the supplies were made after the date of the incorporation of the private limited company, that such supplies therefore not having been made to the corporate body pursuant to any understanding or contract, they were not liable to pay for the goods and that, therefore, the attachment of their goods for a debt due by B. M. Steel is illegal. The contention of the plaintiff throughout was that the incorporated company is alter ego of B. M. Steel that the memorandum of association of the incorporated company provides for the taking over of the business of B. M. Steel, which obviously includes its assets, that almost all the partners of B. M. Steel are the directors of the incorporated company and that therefore the claim that the goods at No. 32 Suryanarayana Chetti St, are the goods of B. M. Steel is not sustainable. The learned Judge after referring to the contentions of the parties raised the attachment. As against this, the present appeal has been filed.

2. Mr. K. Parasaran, the learned counsel for the appellant, referred to us the change of law after the amendment of the Civil Procedure Code by Central Act 104 of 1976. There has been a drastic change in the literature, the mode of approach and the method by which a decision should be arrived at and which should be adopted by a civil court when an application under Order 21, Rule 58 comes up for adjudication. Whilst under the earlier law, such an investigation of claim and objection to attachment of attached property was summary in nature, the present law provides as it were a significant departure in the matter of disposal and adjudication of such claims. Order 21 Rule 58, as it stands today reads as follows:--

"58. Adjudication of claims to, or objections to attachment of, property -- (1) Where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution _of a decree on the ground that such property is not liable to such attachment, the court shall proceed to adjudicate upon the claim or objection in accordance with the provisions herein contained;

Provided that no such claim or objection shall be entertained-

(a) where, before the claim is preferred or objection is made, the property attached has already been sold or

(b) where the court considers that the claim or objection was designedly or unnecessarily delayed.

(2) All questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection, shall be determined by the court dealing with the claim or objection and not by a separate suit.

(3) Upon the determination of the questions referred to in Sub-rule (2) the court shall, in accordance with such determination-

(a) allow the claim or objection and release the property from attachment either wholly or to such extent as it thinks fit; or

(b) disallow the claim or objection; or

(c) continue the attachment subject to any mortgage, charge or other interest in favour of any person; or

(d) pass such order as in the circumstances of the case it deems fit.

(4) Where any claim or objection has been adjudicated upon under this rule, the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.

(5) Where a claim or an objection is preferred and the Court under the proviso to Sub-rule (1), refuses to entertain it, the party against whom such order is made may institute a suit to establish the right which he claims to the property in dispute; but, subject to the result of such suit if any an order so refusing to entertain the claim or objection shall be conclusive."

3. The order contemplates a full enquiry into all questions including questions relating to right, title or interest in the property attached which arise between the parties to the proceeding and mandates that the court enquiring such a claim petition shall determine such questions. There is also an embargo on the institution of a separate suit for the determination of such above questions. Sub-clause (4) of Order 21, Rule 58 throws abundant light upon the nature and character of the decision ultimately to be arrived at by the civil court on such adjudication under Order 21 Rule 58. It says that after the claim or objection has been adjudicated upon, the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree, Though perforce an order is contemplated to be passed under Order 21 Rule 58 C. P. C. that order has the legal effect of a decree. Such an order is a substitute for a decision resulting in a decree in an ordinary litigation. A decree as is understood both legally and commonly results in the adjudication of rights, privileges, and duties of a party to a legal proceeding. Such being the intendment of the amended rule under Order 21 Rule 58 C. P. C. in our view the enquiry contemplated under Order 21 R. 58 C. P. C. is no longer of a summary nature, but should be full, realistic and after giving adequate opportunity to the parties concerned to prove their respective claims, rights, title and interest in the property attached. We are, therefore, of the view and rightly Mr. M. R. Narayanswami appearing for the incorporated company agrees with us that there has not been such a full adjudication of the rights of parties by the learned Judge when he passed the order appealed against.

4. We are not traversing the merits urged by the parties before the trial court and even before us. Though contentions mostly factual were raised by the parties, they stood there as bare contentions without being substantiated by corroborative evidence and acceptable material. We have already expressed the view that the adjudication referred to under Order 21 Rule 58 C. P. Code not being summary and as it is the intention of the Legislature under the amended Civil Procedure Code that it should be a decision as if rendered in a regular suit resulting in an appealable decree, we are of the view that a fuller examination of the rights of parties has to be held in the instant case after giving them adequate opportunity to place all relevant materials before the trial court, so that it could ultimately decide and adjudicate on all questions including questions relating to right, title or interest in the property attached which eigher directly or indirectly arise between the parties to the proceedings. This not having been done, we are constrained to set aside the order of the learned Judge and remit the subject matter to the Original Side of this court for a fuller and detailed examination as contemplated under the amended provision and for an ultimate decision after adjudication of the rights of parties. To the above extent, the appeal is allowed. There will be no order as to costs.


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