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Rm. Ar. Ar. Rm. Arunachalam Chettiar Vs. Ar. S. Sp. Arunachalam Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1935Mad146; 153Ind.Cas.259
AppellantRm. Ar. Ar. Rm. Arunachalam Chettiar
RespondentAr. S. Sp. Arunachalam Chettiar and ors.
Excerpt:
- - but in this case we have got a further complication that another party, namely, defendants 1 to 3, have obtained a valid decree against defendants 4 and 5 and have obtained orders of attachment of the interest of defendants 4 and 5 which are perfectly proper and valid......of the mortgage decree, and an order was passed appointing seshagiri rao, defendant 9 in that suit as receiver. this is ex. e, dated 9th april 1923. a preliminary decree was passed on 31st march 1924 - ex. g. under this decree it was directed:(1) that defendants 1 to 8 shall render accounts to the plaintiffs and shall put instatement of such account into court on or before 24th june 1924, and the plaintiffs are given liberty to surcharge and falsify the same after it is put in and a commissioner will be deputed afterwards; (2) that a receiver be appointed to recover the balance amount remaining due under the decree in o.s. no. 58 of 1915 aforesaid, and to divide the same between the plaintiffs and defendants in proportion to their shares etc.3. in april 1924 another application was.....
Judgment:

Ramesam, J.

1. The facts out of which-this second appeal arises may be first stated. Two Chetti families who maybe referred to as the Chatram family and the Vinagaram family jointly advanced moneys to the Zamindar of Am-mayanayakanoor on mortgage. The-document was taken in the name of the-Vinagaram family only; but now it may be taken as either found or proved that the Chatram family had also a half, share in it. A suit was filed only by the Vinagaram family against the Zamindar of Ammayanayakanoor to realize' the amount. This was O.S. No. 58 of 1915. The matter came upon appeal to-the High Court and it was remanded and finally a revised decree was passed on 7th February 1916, the suit itself being re-numbered as O.S. No. 58 of 1915, there being originally an earlier number. The members of the Vinagaram family,, who are now the present defendants 4 and 5, went on executing the decree and collecting the amounts due under the decree from the Zamindar of Ammayanayakanoor. It would appear that this-decree would be useless and would not bind the successor of the present zamindar. Fortunately for the contending parties in this case, the present zamindar, though very old, is still living, and so long as he is living, further amounts under this decree can be collected. By 1920 it was alleged that a large sum of money was collected by the Vinagaram family, but that two members of that family, namely, defendant 4 and 5, retained much more than their share of the amounts collected to the detriment of the Chatram family. On this basis a suit was filed by the Chatram family against the Vinagaram family and also the common agent named Seshagiri Rao.

2. This suit was originally a suit of 1920, but it was transferred from one Court to another and ultimately it became O.S. No. 24 of 1923. Practically nothing happened during this interval. Meanwhile certain other persons who may be referred to as the A.R.S.S.P. family filed a suit against defendants 4 and 5 in connexion with some other transaction, the details of which are not material hero and obtained a decree in O.S. No. 142 of 1921 in a Sub-Court of Madura. In execution of the decree they applied for attachment of the interest of defendants 4 and 5 in the mortgage decree of O.S. No. 58 of 1915. A prohibitory order was issued on 14th February 1923. This is Ex. 1 in this case. This order was somewhat irregular. The order is addressed to a Court as if the Court is a debtor of the judgment-debtor. In April 1923 an application was made by the plaintiffs in O.S. No. 24 of 1923 for the appointment of a Receiver in respect of the further collections of the mortgage decree, and an order was passed appointing Seshagiri Rao, defendant 9 in that suit as Receiver. This is Ex. E, dated 9th April 1923. A preliminary decree was passed on 31st March 1924 - Ex. G. Under this decree it was directed:

(1) that defendants 1 to 8 shall render accounts to the plaintiffs and shall put instatement of such account into Court on or before 24th June 1924, and the plaintiffs are given liberty to surcharge and falsify the same after it is put in and a Commissioner will be deputed afterwards; (2) that a Receiver be appointed to recover the balance amount remaining due under the decree in O.S. No. 58 of 1915 aforesaid, and to divide the same between the plaintiffs and defendants in proportion to their shares etc.

3. In April 1924 another application was made for the appointment of plaintiff 5 in the suit as Receiver on the ground that Seshagiri Rao was unwilling to continue as Receiver and plaintiff 5 was so appointed. This is Ex. K. For some reason which is not very plain, a further application was made on 8th October 1924, to continue this plaintiff as Receiver. This was ordered and he was authorized to collect sums due under the mortgage decree in O.S. No. 58 of 1915. This is Ex. L. Soon after obtaining, this order plaintiff 5, who was appointed as Receiver, went to the Madura Court and objected to the prohibitive order Ex. 1. The objection that he took in that petition was that the interest of the present, defendants 4 and 5 in the mortgage decree was not 1/4th but 1-16th. The other side seemed to have agreed to this contention and what practically was a consent order was passed limiting the attachment to 1-16th share in the mortgage decree. Here it may be observed that though the prohibitive order describes the share of defendants 4 and 5 as Rs. 18,112-10-3, it does not appear that that order related to any specific fund lying in Court or in the hands of any particular person. It seems to me that that was supposed to be the value of the 1/4th share as it was then supposed to be of defendants 4 and 5. What happened' between March 1925, the date of the consent order, and September 1,926, is not very clear there being no papers on record to show it. But it seems that the Madura Court which issued the order of attachment followed up its order by directing the Receiver in O.S. No. 24 of 1923 to pay down 1-16th of the collections for the benefit of the decree-holders in Madura Court, namely, the presents defendants 1 to 3. Thereupon the Receiver filed another objection to the attachment claiming that until all the decree amount in O.S. No. 58 of 1915 is; collected and the accounts are taken in O.S. No. 24 of 1923 in pursuance of the preliminary decree, it cannot be predicated that a particular sum belongs to the judgment-debtor and therefore he ought not to be called upon to pay any particular amount to the benefit of the judgment-creditors in O.S. No. 142 of 1921. The Subordinate Judge disallowed the contention of the Receiver by his order dated 6th September 1926 Ex. A and yet the actual form of the order he gave seems to show that he had a suspicion that there may be some equities in favour of the Receiver, because while disallowing his contention he stated in para. 8:

To avoid any difficulty in the future in case the judgment-debtors are found liable for any equity in favour of the other co-owners in the final adjustment of accounts I order that that amount will be drawn by the decree-holders in O.S. No. 142 of 1921, on furnishing security.

4. He had merely a suspicion that there might be some equity arising in favour of the plaintiffs in O.S. No. 24 of 1923, and he thought that the equity should be protected by making his order conditional, namely, that security should be given. Thereupon the Receiver in O.S. No. 24 of 1923 has filed the present suit which is O.S. No. 108 of 1927 in the Sub-Court of Madura. The prayer is that the whole order of attachment should be raised and vacated. The Subordinate Judge did not vacate the attachment but gave a decree declaring that the rights of defendants 4 and 5 are subject to the result of an account-taking between the plaintiffs and defendants 4 and 5 and only after defendants 4 and 5 are made to pay all their over-drawings to the plaintiffs the balance is available for other creditors, and defendants 1 and 3 are entitled to proceed only against such balance and no more. There was an appeal to the District Judge. The District Judge allowed the appeal and dismissed the plaintiff's suit with costs throughout. The view he took seems to be based upon two grounds : first, his construction of the preliminary decree in O.S. No. 24 of 1923 and secondly he seems to have thought that the plaintiffs are precluded from raising their present contention by reason of their assent to the attachment of 1-16th share in the order of March 1925. It seems to me that both these grounds are untenable. At the time when the prohibitory order was obtained in 1923, as I have said already, no specific fund was sought to be attached. When in November 1924, the Receiver filed an objection to the attachment there being no attachment of any specific fund, the only point that he could raise at the time and did raise related to the extent of the share of defendants 4 and 5 in the decree. He said that it was l-16th and not 1/4th. The other side agreed to this contention. No other point was raised by the parties and could not be decided by the Court. No decision of any question is either expressly or impliedly involved in the order of 6th March 1925. The learned District Judge thinks that the passing of this order implies a concession on the part of the plaintiff that defendants 4 and 5 are entitled to l-16th share in all future collections under the mortgage decree of O.S. No. 58 of 1915 and the moment they are collected, their share must be disbursed to the creditors irrespective of their own suit O.S. No. 24 of 1923. I do not think any such concession should be read at all in the petition or in the order. It is only when the specific fund, namely, the amounts actually collected by the Receiver was sought to be proceeded against, that the present objection was taken namely that not until the whole suit was decided and the amounts were ascertained could any moneys be allowed to be drawn by defendants 4 and 5 or their creditors.

5. Coming now to the second ground of the learned District Judge it seems to me that it is equally untenable. He takes Clause 2 of the preliminary decree and reads it as if it authorized the Receiver to disburse his collections in the shares possessed by the respective parties irrespective of the result of Clause 1, which deals with accounting. In my opinion Clause 2 of the decree should not be read in that way. The two clauses should be read together. Clause 1 says that the state of the account between the two parties should be ascertained. Clause 2 mentions that the balance of the decree amount should be recovered and disbursed in particular shares. This does not mean that, whatever amount may be found due to the plaintiffs by defendants 4 and 5 on account of their overdrawing one should shut his eyes to that fact and disburse the fractional share due to defendants 4 and 5 leaving the plaintiff to proceed against other property to recover the amount found due on the accounts. I think the proper construction of such a decree is that the Receiver should disburse, subject to the rights of the plaintiffs, as found in Clause 1. The result of such a decree would be if any third party intervenes in the matter that the plaintiff should have all the amounts due to them by reason of the overdrawing first deducted out of the share of defendants 4 and 5 and the balance only should be paid to them. Such an order and such a decree would be binding between the parties. But in this case we have got a further complication that another party, namely, defendants 1 to 3, have obtained a valid decree against defendants 4 and 5 and have obtained orders of attachment of the interest of defendants 4 and 5 which are perfectly proper and valid. Now, what is the effect of such an order of attachment against the rights possessed by the plaintiff under that decree? It seems to me that both the plaintiffs and defendants 1 to 3 are in the position of mere money creditors. Subject to any new light that may be thrown, because I do not want to express a final opinion in the matter in the absence of anything fresh, it cannot be said that one is in the position of a secured creditor and the other in the position of an unsecured creditor.

6. It is true that the plaintiffs have taken steps for safeguarding this amount by the appointment of the Receiver but a step of that kind is no more than getting the property attached or issuing an injunction against the defendant not to alienate his property. All such steps to a certain extent keep the property of the defendant under the control of the Court so as to ultimately make it available to the person who takes the step. But they do not amount to a charge. One may say that at the instance of the plaintiff the property is kept in custodia legis. Defendants 1 to 3 by their order of attachment have practically done the same thing. Both have kept a sort of control over the collections of the mortgage decree but this control does not enable any one of them to say that he is entitled to priority over the other; Each has got certain rights and for the (protection of his rights he has taken a particular step. In the case of plaintiffs they got the Receiver appointed and in the case of the defendants they obtained an attachment. Both have got to be worked out now. I do not wish to pass any final order in the matter unless anything new appears. It seems to me that both rank as equal creditors of the 1-16th share in the collections which prima facie belong to defendants 4 to 5. It does not absolutely belong to them because there are claims against them both at the instance of the plaintiffs and defendants 1 to 3. They have got to satisfy both these claims. Subject to this the share is theirs and it has got to be ratably distributed between them when the question of executing this decree subject to the rights of the attaching creditors arises. In the light of these remarks it seems to me that while the order of the Subordinate Judge has gone to one extreme being too favourable to the plaintiff, the order of the District Judge has gone to the other extreme being too favourable to the defendants. I therefore declare that while the attachment obtained by defendants 1 to 3 need not be raised, their attachment does not give them a charge but only gives a right to proceed against the share of defendants 4 and 5 and both the rights will have to be worked out in execution. Each party will bear his own costs throughout.


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