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John Carapiet Galstaun Vs. Woomesh Chandra Bannerjee and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Judge
Reported in35Ind.Cas.850
AppellantJohn Carapiet Galstaun
RespondentWoomesh Chandra Bannerjee and anr.
Cases Referred and Gray v. Haig
Excerpt:
civil procedure code (act v of 1908), section 73, order xxi, rule 65 - execution sole in pursuance of consent decree--sale held by on auctioneer, the nominee of parties--agent of court--receipt of purchase-money by auctioneer, whether 'receipt of assets' by court--rateable distribution--consent decree, characteristics of. - .....22nd september and a large sum of money was realised. it has been contended here that this was a sale held, not in execution at the instance of the court, but rather at the instance of the judgment-debtor sullivan pursuant, to the agreement between him and his creditor abbas. in support of this argument, reference has been made to the decision in golam hossein cassim arif v. fatima begum 6 ind. cas. 300 : 16 c.w.n. 394. stress has also been laid on the circumstance that the steps contemplated by the code of civil procedure as necessary preliminaries to a valid sale held at the instance of the court were not taken in this case, because the properties were not attached and the requisite notices were not issued. in our opinion, it is fairly clear, on the proceedings taken in their.....
Judgment:

1. We are invited in this Rule to set aside an order made in a proceeding for rateable distribution under Section 73, Civil Procedure Code. The sequence of events which led to the order in question is really not in controversy and may be briefly stated. On the 23rd August 1915, one Banerjee, now opposite party in this Rule, obtained a decree for Rs. 22,441 against Sullivan on the Original Side of this Court. On the 26th August 1915, one Mohammad Abbas obtained a consent decree against Sullivan for Rs, 5,200 in the Court of the Subordinate Judge of the 24-Pergan-nahs. On the 31st August 1915, Galstaun, petitioner in this Rule, obtained a decree for Rs. 8,105 against Sullivan on the Original Side of this Court. On the 21st and 22nd September 1915, a considerable sum was realised by a sale of the moveable properties of the judgment-debtor held by Mackenzie Lyall and Co. under the orders of the Subordinate Judge. The question in controversy is whether Galstaun is entitled to rateable distribution of the sale-proceeds. To appreciate the precise position of the rival claimants, we must examine in detail the proceedings taken for execution of the three decrees.

2. As regards the first decree, we find that a precept was on the 24th August 1915 sent to the Court of the Subordinate Judge under Section 46, Civil Procedure Code, and the moveable properties of the judgment-debtor were attached on that basis. On the 6th September 1915, an order was made by this Court for transfer of the decree to the Court of the Subordinate Judge of the 24-Pergannahs for execution. As regards the second decree, we find that Abbas applied for execution on the 8th September 1915. On that very day, an order was made for sale of properties by Mackenzie Lynll and Co., but the proceeding thus initiated was dismissed on the 20th September, as Abbas had in the interval transferred the decree to Banerjee. On that very day, Banerjee made an application to execute the decree as assignee thereof. The sale previously mentioned was held by Mackenzie Lyall and Co. on the 21st and 22nd September 1915. As regards the third decree, we find that Galstaun was not able to obtain an order for transfer from this Court to the Court of the Subordinate Judge, till the 15th December 1915; and his application for execution was not made before the Subordinate Judge till the 14th March 1916. Mackenzie Lyall & Co. sent a cheque to the Subordinate Judge on the 15th March 1916 for Rs. 12,637, the net proceeds in their hands. The question arises, whether, in these circumstances, Galstaun is entitled to obtain rateable distribution under Section 43, Civil Procedure Code.

3. The first sub-section of Section 73 is in these terms; 'Where assets are held by a Court, and more persons than one have, before the receipt of such assets, made application to the Court for the execution of decrees for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof, the assets, after deducting the costs of realisation, shall be rateably distributed among all such persons.' Two of the requisite elements are established in this case; namely, first, assets are held by the Court of the Subordinate Judge; and secondly, each of the decree-holders has obtained a decree for payment of money against the same judgment-debtor and has not obtained satisfaction thereof. The question, consequently, reduces itself to this: who among the rival claimants did, before the receipt of the assets by the Court, make an application to the Court for execution of his decree? In the determination of the question, two points require consideration, namely, first what was the true position of Mackenzie Lyall and Co. when they held the sale of the moveable properties on the 21st and 22nd September 1915; did they hold the sale as the agent of the Court or as the agent of the judgment-debtor Sullivan? Secondly, was the receipt of money by the auctioneers equivalent to 'receipt of assets by the Court' within the meaning of Section 73, Code of Civil Procedure?

4. The determination of the fist question depends upon the terms of the consent decree made in the suit between Abbas and Sullivan and the true significance of the proceedings taken for the enforcement of that decree. It is indisputable that the sale was held, not in execution of the first or the third decree, but in a proceeding on the basis of the second decree. Was the sale, then, held on the basis of the second decree by Mackenzie Lyall and Co. as in execution of that decree or was it held at the instance of the judgment-debtor and was in essence a private sale for his benefit alone? The answer depends upon the true construction of the consent decree, in which, as happens frequently, sufficient care was not taken to set out precisely the reliefs granted to the successful litigant. That decree, as we read it, provides that the defendant Sullivan will sell, through Mackenzie Lyall and Co. the whole of the furniture belonging to him, and, according to the terms of the compromise, will pay out of the net sale-proceeds the sum of Rs. 5,200 to the plaintiff; that if the net sale-proceeds be not sufficient to pay the whole of the said sum, the proceeds shall be paid in part-payment of the said sum of Rs. 5,200 and the plaintiff will recover the balance from the defendant; that for the payment of the said sum of Rs. 5,200, the furniture or the net sale-proceeds thereof shall in the meantime be charged in the first instance with the payment of the said sum to the plaintiff.' This decree clearly contemplated a sale in the first instance by the defendant himself through Mackenzie Lyall and Co. and payment by him to the decree-holder of the sum of Rs. 5,200 out of the net sale-proceeds. It was with reference to this aspect of the consent decree that, as soon as it was made, the Court instructed Mackenzie Lyall and Co. to sell the furniture. Difficulties, however, arose from the conduct, of the judgment-debtor who was, for some unexplained reason, unwilling to proceed with the sale, and what had been contemplated by the decree was not carried out. The result was that, on the 8th September 1915, the decree-holder was driven to apply to the Court for execution and for an order upon Mackenzie Lyall and Co. to sell the moveables. This application was granted and an order was made as prayed. Whether such an order was or was not contemplated by the decree, it is not for us to determine in the present proceedings. But the fact remains that the Court issued instructions to Mackenzie Lyall and Co. to sell the furniture, and the correspondence between the Court and the auctioneers indisputably shows that the auctioneers proceeded to sell the moveables of the judgment-debtor, not at his request, but under the orders of the Court. Before the sale could actually be held, the decree had, however, been assigned by Abbas to Banerjee. Banerjee, as we have seen, thereupon applied for execution as assignee under Rule 16 of Older XXI of the Code, and prayed that fresh instructions might be issued to the auctioneers to hold the sale of the moveables of the judgment-debtor. The Court held that such a step was unnecessary, obviously on the ground that instructions had already been issued to the auctioneers on the application for execution made by Abbas. The sale was then held on the 21st and 22nd September and a large sum of money was realised. It has been contended here that this was a sale held, not in execution at the instance of the Court, but rather at the instance of the judgment-debtor Sullivan pursuant, to the agreement between him and his creditor Abbas. In support of this argument, reference has been made to the decision in Golam Hossein Cassim Arif v. Fatima Begum 6 Ind. Cas. 300 : 16 C.W.N. 394. Stress has also been laid on the circumstance that the steps contemplated by the Code of Civil Procedure as necessary preliminaries to a valid sale held at the instance of the Court were not taken in this case, because the properties were not attached and the requisite notices were not issued. In our opinion, it is fairly clear, on the proceedings taken in their entirety, that the sale was held by the Court through the agency of the auctioneers. The employment of agents for the conduct of a sale of this description is clearly contemplated by Rule 65 of Order XXI of the Code, which provides that, save as otherwise prescribed, every sale in execution of a decree shall be conducted by an officer of the Court or by such other person as the Court may appoint in this behalf and shall be made by public auction in the manner prescribed. In the present case, the person appointed by the Court, under Order XXI, Rule 65, was no doubt the very person nominated by the parties at the time the consent decree was made. It is also true, as observed by Ray, L.J., in the case of Huddersfield Banking Co. v. Lister (1895) 2 Ch. 273 : 64 L.J. Ch. 523 : 12 R. 331 : 72 L.T. 703 : 43 W.R. 567 that a consent order is a mere creature of agreement and carries out the agreement between the parties, or as Parke, J., puts it in Wentworth v. Bullen 9 B. & C. 840 : 9 L.J. (O.S.) K.B. 33 : 109 E.R. 313 the contract is not the less a contract and subject to the incidents of a contract, because there is superaded the command of a Judge. But it is nevertheless an order of the Court and possesses one at least of the essential characteristics of an order made by a Court of Justice, namely, it is an order capable of execution by the Court. In the case before us, the agreement of the parties that the moveable properties of the judgment-debtor would be sold by Mackenzie Lyall and Co. was accepted by the Court and embodied in the decree. The inference follows that when, upon the application of the judgment-debtor, the Court instructed Mackenzie Lyall and Co. to hold the sale, the Court took a step in execution and the sale was held in execution by a person appointed by the Court in that behalf. The decision of Fletcher, J., in Golam Hossein Gasdm Arij v. Fatima Begum 6 Ind. Cas. 300 : 16 C.W.N. 394 does not militate against this view and is clearly distinguishable; that case only rules that a sale by a Receiver is not a sale by the Court for the purpose of grant of a sale certificate. That principle obviously has no application to the case before us. It may be added that if the sale here be treated as a private sale held at the instance of 'the judgment-debtor by an agent nominated by him, there would be no room for the application of Section 73, Code of Civil Procedure, and the application of Calstaun for rateable distribution could not possibly be entertained. On the first question, we must consequently hold that Mackenzie Lyall and Co. held the sale at the instance of the Court and that the sale was in essence a sale by the Court itself.

5. The determination of the second question involves the solution of the problem whether receipt of the purchase-money by the auctioneers from the purchasers was equivalent to receipt of assets by the Court within the meaning of Sub-section (1) of Section 73, Code of Civil Procedure. We have been invited to answer this question in the negative, on the authority of the decision in Maharaja of Burdwan v. Apurba Krishna Roy 10 Ind. Cas. 527 : 15 C.W.N. 872 : 14 C.L.J. 50. That case is of no assistance in the examination of the question raised before us. The sale there was of immoveable property; under the provisions of the Code, upon such a sale, one-fourth of the purchase money is required to be paid into Court at the time the bid is accepted; the remainder must be brought into Court by the purchaser within a prescribed time. The question in controversy was, whether assets could be deemed to have been received by the Court within the meaning of Section 73 before the entire purchase-money had been paid into Court. The answer was in the negative, for the obvious reason that till the entire purchase-money had been brought into Court, there was no completed sale on the basis whereof the sale proceeds could be distributed amongst the rival claimants. It is also clear that rateable distribution in that case was sought, not in respect of the one-fourth share of purchase-money paid into Court at the time of the acceptance of the bid, but of the entire purchase-money; and with reference to a three-fourths share thereof at least, there could be no controversy that the assets were not received till such portion had been paid into Court. The case before us is of an entirely different description. Here, what was sold was move able property and the entire purchase-money was paid by the purchasers into the hands of the auctioneers in one instalment. The question thus arises, whether the receipt of the purchase-money by the auctioneers was receipt of the assets by the Court. We are clearly of opinion that the answer must be in the affirmative. The policy which underlies Section 73 obviously is to fix the point of time when the entire body of persons entitled to claim rateable distribution should be finally ascertained; that point of time is the moment when the entire purchase-money has been paid by the purchaser. It is immaterial from this point of view, whether the purchase-money has been actually paid into the treasury or into the hands of a person employed by the Court to hold the sale. This view is consistent with the elementary principle that when an auctioneer receives the purchase-money as agent of the vendor, it is his duty immediately to account for it and pay over the balance due to the latter. This is in conformity with the decisions in Crosskey v. Mills 1 C.M. & R. 298 : 3 L.J. Ex. 297 and Gray v. Haig 20 Beav. 219 : 52 E.R. 587 : 109 R.R. 396. We hold accordingly that the assets in the present case were received by the Court for purposes of Section 73 on the 22nd September 1915, and not on the 15th March 1916 when the cheque was sent by the auctioneers. It is not necessary for us to enunciate a general principle of universal application that receipt of money by an agent is in all conceivable circumstances equivalent to receipt of money by the principal, it is sufficient to hold that when a sale has been held by a Court in execution under Order XXI, Rule 65, receipt of purchase-money by the agent is, for purposes of Section 73, equivalent to receipt of assets by the Court. In this view, it is plain that the assets were received by the Court, before Calstaun applied for execution of his decree.

6. We desire to add that the view we take is clearly consistent with the broad justice of the case. It has been conclusively proved that the delay in the transmission of the purchase-money by the auctioneers to the Court was due entirely to the action of Galstaun himself. He made an application to this Court on the Original Side with a view to restrain the auctioneers from transmitting the sale proceeds to the Court of the Subordinate Judge. He obtained an ex parte order to this effect, on the allegation that the money was held by them within the jurisdiction of this Court as agents of his judgment-debtor, Sullivan. The Court was subsequently apprised that the ex parte order had been obtained on a suppression of the fact that the money was in the hands of the auctioneers, not as the agents of Sullivan, but as the agents of the Court of the Subordinate Judge, who had directed the sale. The result was that the order was forthwith recalled and the auctioneers transmitted the cheque to the Subordinate Judge without delay. The parties should clearly be placed in the position they would have occupied if the erroneous order had never been made. It would, in our opinion, have been lamentable if, in such circumstances, we were constrained, upon a narrow construction of Section 73, to hold that the petitioner had by recourse to a device succeeded in detaining the money in the hands of the auctioneers for several months and thereby securing an advantage to which he would not otherwise be entitled under the law.

7. The result is that this Rule is discharged with costs. We assess the hearing-fee at five gold mohurs.


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