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Karnani Industrial Bank Ltd. Vs. Baraboni Coal Concern Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1938Cal471
AppellantKarnani Industrial Bank Ltd.
RespondentBaraboni Coal Concern Ltd. and anr.
Cases ReferredVenkatasubba Rao v. Asiatic Steam Navigation Co. Calcutta
Excerpt:
- .....allowing this decree-holder to withdraw the said amount in satisfaction and liquidation of the charge decree executed herein.4. the court thereupon issued notice to the opposite party earn chandra marwari and he opposed the application. on hearing the parties, the subordinate judge by his order dated 25th september 1937 dismissed the application for execution on the ground that earn chandra marwari was not a party to the suit (high court suit no. 373 of 1937). at the same time he directed that the money, rs. 9800, should be paid 'neither to the bank nor to ram chandra marwari until either of them obtains an order from the high court by filing a suit or otherwise for the payment of the said amount'. against that order the present rule has been obtained.5. it is contended by mr. roy.....
Judgment:

S.K. Ghose, J.

1. The petitioner in this rule is Karnani Industrial Bank Ltd. The rule is opposed by opposite party No. 2 Earn Chandra Marwari. It has arisen out of the following circumstances. On 1st April 1926 Earn Chandra Marwari opposite party No. 2 obtained a money decree in Suit No. 54 of 1927 against Economic Coal Company Ltd. which went into liquidation and was amalgamated with Baraboni Coal Concern Ltd., opposite party No. 1 in this rule. On 21st December 1933 Baraboni Coal Concern Ltd., obtained a decree of His Majesty in Council, for costs amounting to about Rs. 10,905 against certain deity. According to the petitioners' case the Coal Company created a first charge in favour of the petitioner Bank of the said cost decree by a deed of hypothecation on 12th March 1934. According to the case of the opposite party No. 2 this deed of hypothecation was a collusive document subsequently created but antedated. The Coal Company filed Execution Case No. 164 of 1934 in order to execute the decree for costs against certain properties of the Thakur. Earn Chandra Marwari attached the decree for costs, got himself substituted in the place of the Coal Company, and had the Execution Case No. 164 struck off. On 4th September 1936 Earn Chandra Marwari started a fresh Execution Case No. 178 of 1936 and attached the properties of the Thakur in execution of the Coal Company's decree for costs. On the same date the petitioner Bank having obtained a money decree for a large amount in Suit No. 1884 of 1928 dated 21st September 1928 in the Original Side of the Calcutta High Court against the Coal Company put that decree into execution in Execution Case No. 179 of 1936 and also attached the Coal Company's decree for costs.

2. In the Execution Case No. 179, the Bank applied for rateable distribution which was allowed by the Court. But subsequently the Bank filed an application claiming a charge under the decree in Suit No. 1884 of 1928 and praying for the sale of the properties in Case No. 178 free from incumbrances in his favour. The order of the Court was that the properties should be sold for cash and that the sale proceeds should be withheld till the respective claims of the parties were adjudicated upon. Execution Case No. 179 was thereafter not proceeded with and on 22nd April 1937 it was dismissed for default. Prior to that on 7th January 1937 in Execution Case No. 178 the properties of the Thakur which had been attached in execution of the decree for costs were sold by auction for Rs. 9800 to the attaching creditor Earn Chandra Marwari. This sale was confirmed on 23rd August 1937, Meanwhile on 9th March 1937 the petitioner Bank filed mortgage Suit No. 373 of 1936 in the Calcutta High Court upon the deed of hypothecation without making Earn Chandra Marwari a party. The suit was heard ex parte and on 16th April 1937 the Bank obtained a decree for Rs. 12,528 declaring a charge on the aforesaid decree for costs with a further direction as follows:

It is further ordered and decreed that the aforesaid costs amounting to Rupees ten thousand nine hundred and five, annas twelve and pies four when realized or such portion of the same as may be realized together with interest thereon and costs be forthwith paid to the plaintiff Bank and appropriated pro tanto towards the amount payable to the plaintiff Bank under the decree.

3. On 30th June 1937 the petitioner bank filed Execution Case No. 126 of 1937 putting his decree into execution and filed an application in which it was stated that in the money Execution Case No. 178 of 1936 the properties of the Thakur were sold for Rs. 9800 and the sale proceeds were in deposit and praying

that an order be passed to the effect this decree-holder can follow the amounts in deposit in Money Execution Case No. 178 of 1936 and also an order be passed allowing this decree-holder to withdraw the said amount in satisfaction and liquidation of the charge decree executed herein.

4. The Court thereupon issued notice to the opposite party Earn Chandra Marwari and he opposed the application. On hearing the parties, the Subordinate Judge by his order dated 25th September 1937 dismissed the application for execution on the ground that Earn Chandra Marwari was not a party to the suit (High Court Suit No. 373 of 1937). At the same time he directed that the money, Rs. 9800, should be paid 'neither to the Bank nor to Ram Chandra Marwari until either of them obtains an order from the High Court by filing a suit or otherwise for the payment of the said amount'. Against that order the present rule has been obtained.

5. It is contended by Mr. Roy for the petitioners that the Subordinate Judge was wrong in proceeding on the ground that Earn Chandra Marwari was a stranger to the decree which was sought to be executed in Execution Case No. 126 and that the application for execution was in order in accordance with Order 21, Rule 11, Civil P.C. He has contended that in that application the mode in which the assistance of the Court is required is correctly stated, if not under Sub-clause (i) of Clause (j) of Sub-rule (2), then under the residuary Sub-clause (v). This may be said with regard to the form of the application, but, whether the Court would be justified in executing the decree in accordance with the mode stated therein would depend upon the terms of the decree made in Suit No. 373 of 1936. Mr. Roy has laid stress on the second direction in the decree that the costs amounting to Rs. 10,905 odd 'when realized or such portion of the same as may be realized: should be forthwith paid and appropriated pro tanto towards the amount payable to the plaintiff Bank'. This obviously means realization in execution of the same decree,, not realization in execution of somebody else's decree. This makes all the difference in the case before us, because the amount of Rs. 9800, which was the subject-matter of dispute had been obtained in execution of the decree obtained by opposite party No. 2, Earn Chandra Marwari, in Execution, Case No. 178. Mr. Roy has sought to base his contention on the doctrine of substituted security as derived from judicial sales and he has referred to the case in Gosto Behary Pyne v. Shib Nath Dutt (1893) 20 Cal 241. It may be sufficient for my purpose to distinguish that case, which incidentally was a, case of a putni sale binding on the mortgagee, on the ground that the subject-matter of that sale was surplus sale proceeds which were no concern of the party at whose instance the sale was held. Order 21, Rule 53 also strengthens the case of an attaching creditor like Earn Chandra Marwari. It may further be pointed out in the present case that the security was substituted before the mortgage suit was instituted, since the sale took place on 7th January 1937 and the mortgage suit was filed on 9th March 1937, and the subject-matter of the mortgage suit was not the substituted security, namely Rs. 9800.

6. Mr. Roy has further contended that an application for payment out of the sale proceeds to another decree-holder is a sufficient compliance with the Rule and for this contention he has relied on Ghanaya Lal v. Punjab National Bank Ltd. (1932) 19 AIR Lah 534. Here again the analogy does not hold good because the facts in that case were entirely different. There the question was one of limitation and the relevant facts were that before the mortgage decree was obtained, another attaching creditor filed an execution case and in that case the Court made an order in the presence of all parties that the property should be sold and out of the sale proceeds a certain sum should be paid to the mortgagee Bank and the rest to the other decree-holders. The Bank apparently consented to this order and put it into execution. The only question was whether the application was. in accordance with law within the meaning of Clause (5), Col. 3 of Article 182, Schedule 1 of the Lim. Act.

7. Mr. Roy has further contended that it was not open to Earn Chandra Marwari to intervene in his execution case and he has strongly relied on the case in Ismail Hassam v. T.S. Haji Moosa & Co. (1930) 17 AIR Mad 538. Here again the authority cited does not help him, because the facts of that case are exactly opposite to the facts of the present case and the principle deducible therefrom appears to strengthen the case of the opposite party Ram Chandra Marwari for the simple reason that it is the petitioner Bank which is intervening in the execution case of Earn Chandra Marwari and not vice versa. It may be pointed out also that there was no claim filed under Order 21, Rule 58, Civil P.C. As to why Earn Chandra Marwari was not made a party to the mortgage Suit No. 373, Mr. Roy has contended that an attaching creditor is not a necessary party to a mortgage suit. On the other side our attention has been drawn to the observation made by Mulla in his Commentary on the Transfer of Property Act, Edn. 2, page 507 where he says-that:

Although the attaching creditor has no charge he has a right to bring the property to sale and as a matter of policy there is no reason why he should not be allowed to protect that right by redeeming the mortgage on the property.

8. In any case it is difficult to see why a person in the position of Earn Chandra Marwari should not be a proper party, as for instance, like a person who is in possession and likely to resist the claim of the successful plaintiff in the mortgage suit. In any case the fact remains that Earn Chandra Marwari is a stranger to the decree which is sought to be executed in Case No. 126 of 1937. It seems to me that' the order which the learned Subordinate Judge has made is a sensible one and it is open to the petitioner to have recourse to a proper suit. I do think therefore that the order as made by the learned Sub-ordinate Judge does not call for interference. The rule will therefore stand discharged with costs hearing fee being assessed at 10 gold mohurs to be paid to the opposite party No. 2 Earn Chandra Marwari. There is a further application under Section 115, Civil P.C. filed by opposite party No. 2 at the time of the argument. The prayer is that Earn Chandra Marwari may be allowed to withdraw the amount of Rs. 9800 on furnishing proper security. I have already said that the order as made by the learned Subordinate Judge is a sensible one and that it should not be interfered with. I do not think that this belated application on the part of Earn Chandra Marwari should be allowed. This application must therefore stand dismissed. There will be no order as to costs in the application. Earn Chandra Marwari will be at liberty to apply to this Court if nothing is done with regard to the payment of the money to him within one year from this date.

Nasim Ali, J.

9. I agree. The learned Counsel appearing for the petitioners con. tended that his clients were entitled to art order for the payment of the money which had been realised by opposite party No. 2 in the execution proceeding started by them inasmuch as their prayers in their application for execution for the decree for charge obtained by them covered this relief. It is argued by the learned Counsel? that the prayer of the petitioners in their execution petition comes under either Sub-clause (i) or Sub-clause (v) of Clause (j) of Order 21, Rule 11(2), Civil P.C. Sub-clause (i) contemplates a prayer for delivery of any property specifically decreed. When such a prayer is made, the executing Court under Section 51 of the Code can order delivery of the property specifically decreed subject to conditions and limitations as are prescribed by the rules. Order 21, Rule 31 lays down how this delivery is to be made. The words specific moveable' in Rule 31 do not include 'money' : Sankunni Menon v. Govinda Menon (1914) 1 AIR Mad 572. A decree for delivery of specific moveable property which can be enforced by the stringent method prescribed by this Rule can be passed only in a suit where the plaintiff alleges and proves facts which give him a right to compel its delivery under the provisions of Section 11, Specific Relief Act : Venkatasubba Rao v. Asiatic Steam Navigation Co. Calcutta (1916) 3 AIR Mad 314. It cannot be disputed in this case that the decree which the petitioners have obtained on the basis of their alleged charge and which they are executing is not a decree in a suit coming under the said section.

10. The argument in support of the alternative contention, viz. that the prayer of the petitioners in their execution petition comes under Sub-clause (v) of Clause (j) of Order 21, Rule 11 (2) of the Code and entitles them to have an order for the payment of the money under Section 51, Clause (e) is this : The decree in execution declares a charge over the decree attached by the opposite party No. 2 in his execution. The executing Court while executing his decree cannot go behind it and cannot enquire into the question as to whether the decree was obtained collusively or fraudulently. The money which has been realised by the opposite party No. 2 in the execution of his decree has now taken the place of the decree attached and is therefore a substituted security. By operation of the decree declaring charge, the petitioners are entitled to enforce this charge and as the security has now assumed a new shape, namely cash money lying in deposit in the execution case started by the opposite party No. 2, the petitioners are entitled to follow this money and withdraw it in enforcement of this charge. The basis of the contention is that the cash money in question has now taken the place of the decree over which the charge was declared. Certain cases were cited by the learned Counsel in support of the proposition that a charge-holder is entitled to have his charge enforced over subject of the pledge in the new form which it assumes. The reported cases show that the principle of substituted security and the right of the charge-holder to follow the subject of the pledge in the new form has been applied to cases where the conversion of the security becomes binding on the charge-holder by operation of law.

11. In the present case according to the petitioners' own case the charge over the decree for costs was created before the opposite party No. 2 attached it. On this position the attachment must be taken to be subject to the charge. Before the petitioners instituted their suit for enforcement of their charge over the decree for costs, the sale proceeds of the properties sold in the execution of the attached decree for costs were realised, and kept in deposit in Court and by operation of Order 21, Rule 53 Clause (2) Civil P.C. the opposite party became entitled to withdraw them in satisfaction of his decree. The provisions of Rule 53 for all practical purposes create a statutory assignment of the decree attached in favour of the attaching decree-holder, for the satisfaction of his decree. If before the attachment a valid charge was created over the decree attached as alleged by the petitioners, the attaching creditor by virtue of the right conferred upon him by Order 21, Rule 53 acquired the right to redeem the charge before the petitioners brought their suit for enforcement of the charge. The petitioners were therefore bound to make the opposite party No. 2 a party to their suit for enforcement of the alleged charge. This however they did not do. The decree obtained by the petitioners in the absence of opposite party No. 2 cannot, therefore, affect his rights. No relief can be given to the petitioners against the opposite party No. 2 in their present execution proceeding as the decree under execution cannot affect the interest of the opposite party No. 2 in the money in question. The dispute between the petitioners and the opposite party No. 2 over the money cannot be decided in the execution proceeding started by the petitioners. The learned Subordinate Judge was therefore right in retaining the money till the question of title to the money was adjudicated upon in an appropriate proceeding.


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