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Pursattamdas Gujrati and ors. Vs. Lala Baijnath Prosad and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1941Cal240
AppellantPursattamdas Gujrati and ors.
RespondentLala Baijnath Prosad and ors.
Cases ReferredPromothanath Malia v. H.V. Low
Excerpt:
- .....doing so to the detriment of the company. it is an entirely different matter when a creditor of a firm of managing agents seeks to recover his debt by attaching the remuneration to which the managing agent is entitled. a restraint on voluntary alienation does not bar a compulsory sale at the instance of a creditor.6. it is further argued that the decree-holder cannot attach the money payable by the sugar mills to the firm before that money becomes due and that the receiver cannot be appointed to receive the money as it becomes payable. in my opinion, provided a receiver in execution is justified, (and i have held that in the present circumstances it is justified), the whole object of appointing a receiver would be frustrated unless he were empowered to collect the money when it becomes.....
Judgment:
ORDER

McNair, J.

1. This is an application on the part of Lala Banshilal, one of the judgment-debtors, that an order dated 14th September 1939 in so far as it directs an attachment of the right, title and interest of certain persons in the firm of Kashi Prosad & Co., Managing Agents of the Ratna Sugar Mills Co. Ltd., and the appointment of a receiver of all moneys payable to the defendants in that firm by the Sugar Mills, be declared void. It is conceded that the attachment of the right, title and interest of these persons in the managing agents' firm must be set aside, but it has been argued that the appointment of a receiver in execution was a proper appointment and should continue. The learned Advocate-General on behalf of the applicants has argued that there is no necessity for the appointment of a receiver in execution, and he has referred me to several decisions, notably the decision in Holmes v. Millage (1893) 1 QB 551 where at p. 558 Lindley L. J., refers to the circumstances in which a receiver should be appointed in execution in England both before and after the Judicature Act. The learned Lord Justice points out that the appointment of a receiver is a serious interference with business, and says:

We cannot judicially hold the appointment of a receiver in a case in which no Court could grant a receiver before the Judicature Act to be just or convenient within the true meaning of Section 25, Clause 8 of that Act.

2. Rankin C. J., in Promothanath Malia v. H.V. Low & Co : AIR1930Cal502 has drawn attention to the difference between the appointment of a receiver in execution in England and a similar appointment in India. 'What a creditor gets by the appointment of a receiver,' says the learned Chief Justice,

is not execution, but a substitute for execution : a form of equitable relief which is granted on the ground that there is no effective remedy by execution at law. Accordingly, there is authority for the proposition that a person seeking equitable execution must show that he was met by difficulties arising from the nature of the property, which prevented his obtaining relief at law. In India, the distinction between legal and equitable interests is not observed in the full sense in which it is part of the law in England.

3. The learned Chief Justice then points out that in Section 51, Civil P.C., 1908, provision has been made for the appointment of a receiver as a form of execution. The question, in my opinion, to be decided is whether there were circumstances in the particular case under consideration that justified the appointment of a receiver as a method of execution, bearing in mind that the distinction between legal and equitable interests in India is not observed in the same measure as it is in England, and that Section 51, Civil P. C, specifically provides for the appointment of a receiver as a method of execution, without in any way distinguishing it from methods of execution known to the English Common law. The facts here are that the plaintiffs obtained a decree on 4th May 1939 for over Rs. 46,000. The defendants have a joint family business which has a number of branches controlled by separate groups of the joint family. One of those groups is in Calcutta, another in Benares and another in Allahabad. A partition suit has been going on amongst the defendants in the Allahabad Court. The shares of the parties were declared and allotments made, but an appeal is pending from the partition decree, and it is impossible to state at any precise moment the properties which definitely come within the shares of any particular member of the family. Within one month of the decree which the applicants obtained in this suit a fresh suit was filed by certain minor members of the family against the present applicants and other decree -holders for a perpetual injunction restraning them from executing their decrees against the properties of the plaintiffs.

4. As I have already pointed out, owing to the indecisive nature of the partition suit, it is impossible for the applicants to know the properties to which the plaintiffs in that suit are entitled and if the applicants attach properties belonging to any member of the family, they may be held before the Court for contempt in disobeying the injunction. It is urged on behalf of the applicants that the property in Calcutta should first be attached in execution of the decree. That property has already been attached, and it is at least doubtful whether satisfaction can be obtained if it is brought to sale. This plea is put forward because the Calcutta branch is considered by the other members of the firm to be responsible for the debt, and there is an attempt to confine the decree-holder's remedy to the property in Calcutta which on partition will probably be allotted to the Calcutta branch. It will be seen therefore that the present decree-holder can only exercise the ordinary legal remedies at considerable risk and with doubtful results, and it appears to me that in the circumstances to which I have referred there is ample justification for the appointment of a receiver in execution.

5. It is then argued that the receiver has been appointed over money due to the defendants from the company of which their firm are the managing agents, and it is contended that such money constitutes a right of personal service and. within the meaning of S.60 (1), Clause (f), Civil P. C, and as such is immune from attachment. I am not satisfied that these moneys do constitute a right of personal service. The English law on this matter is of little assistance. We have in India a specific provision in the Code of Civil Procedure and what we have to do is to construe Section 60 of that Code. An examination of the various clauses of Section 60 leads to the conclusion that salaries in general may be the subject-matter of attachment other than those which are specifically exempted by such clauses as Clauses (g), (h) and (i) of Section 60 (1). Reference has also been made to Section 87 (b), Companies Act, which contains a provision to the effect that a charge or assignment of his remuneration or any part thereof effected by a managing agent shall be void as against the company. The restriction by Section 87 (b) is( against a managing agent making a voluntary charge or assignment of his remuneration and the object is undoubtedly to prevent him from doing so to the detriment of the company. It is an entirely different matter when a creditor of a firm of managing agents seeks to recover his debt by attaching the remuneration to which the managing agent is entitled. A restraint on voluntary alienation does not bar a compulsory sale at the instance of a creditor.

6. It is further argued that the decree-holder cannot attach the money payable by the Sugar Mills to the firm before that money becomes due and that the receiver cannot be appointed to receive the money as it becomes payable. In my opinion, provided a receiver in execution is justified, (and I have held that in the present circumstances it is justified), the whole object of appointing a receiver would be frustrated unless he were empowered to collect the money when it becomes payable to the judgment-debtors. I can see no objection to this course being followed any more than to the appointment of a receiver at the instance of a mortgagee to collect rents as they fall due and utilize them in payment of the mortgage debts. The order therefore of 14th September in so far as it directs an attachment of the right, title and interest of Kashi Prosad, Banshilal, Sarada Prosad and Krisnadas in Kashi Prosad & Co., managing agents of Ratna Sugar Mills Co. Ltd., must be set aside. Save as aforesaid the application is dismissed with costs. Certified for counsel.


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