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Haran Chandra Chakravarti Vs. Joychand and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtKolkata
Decided On
Reported inAIR1929Cal524
AppellantHaran Chandra Chakravarti
RespondentJoychand and ors.
Cases ReferredIn Phul Kumari v. Ghanshyam
Excerpt:
- .....not to the claimants. in this suit the claimants and the judgment-debtor were made defendants. the suit was decreed in the trial court on 30th september 1921. the claimants appealed against that decree to this court and the final decree of this court was made on 22nd march 1921. in the meantime on 5th november 1921, the judgment-debtor was adjudicated insolvent and a receiver was appointed of his properties. the property which was the subject-matter of the suit brought by the appellant was not included in the schedule of the properties of the insolvent. the receiver did not take possession of the property nor did he take any interest in the litigation relating to that property. after the decree of the high court setting aside the order releasing the property from attachment and declaring.....
Judgment:

B.B. Ghose, J.

1. This is an appeal by a creditor who is described as creditor No. 4 against the order of the District Judge of Rajshahi dated 20th September 1927, made in an insolvency proceeding. The appellant had obtained a decree for over Rs. 5,000 on 16th July 1914. In 1915 he attached a house as belonging to his judgment-debtor, since adjudicated insolvent. Pour claim cases were started by the sons of the judgment-debtor who alleged that the property attached did not belong to the judgment-debtor but to themselves. Those claims were allowed on 23rd August 1915 and the property released from attachment.

2. On 18th May 1916 the appellant brought a suit as provided under Order 21, Rule 63, Civil P.C. for a declaration that the property belonged to his judgment-debtor and not to the claimants. In this suit the claimants and the judgment-debtor were made defendants. The suit was decreed in the trial Court on 30th September 1921. The claimants appealed against that decree to this Court and the final decree of this Court was made on 22nd March 1921. In the meantime on 5th November 1921, the judgment-debtor was adjudicated insolvent and a receiver was appointed of his properties. The property which was the subject-matter of the suit brought by the appellant was not included in the schedule of the properties of the insolvent. The receiver did not take possession of the property nor did he take any interest in the litigation relating to that property. After the decree of the High Court setting aside the order releasing the property from attachment and declaring that the appellant could proceed in execution against the property in suit as belonging to his judgment-debtor, the insolvent judgment-debtor applied in the insolvency proceeding on 30th July 1924, for including the property in question in his schedule. After that date the receiver took possession of the property and proceeded to sell it. The present appeal arises out of an application made by the appellant that the whole of his decretal amount should be paid first out of the assets realized by sale of the disputed property on the ground that as the property was made available for the creditors of the judgment-debtor at his instance he was entitled to a first charge on the property. The argument was based upon the fact that the result of the decree in the suit brought by him was that the attachment that was effected in 1915 in execution of the appellant's decree was revived and it should be considered as having continued throughout and this attachment constituted a charge on the property. He is therefore entitled to preference to other creditors. The learned Judge rejected that contention holding it to be wholly untenable and that the appellant must rank equally with other unsecured creditors in the distribution of the assets. The appeal is against that order and the appellant claims that the whole of his dues should be paid first out of the assets realised by the sale of the property in question.

3. It is true that when on account of a claim being allowed under Order 21, Rule 60, Civil P.C, a property is released from attachment if the decree-holder brings a suit as provided under Order 21, Rule 63, and that suit is decided in his favour, the result is according to the authorities that the attachment is revived, although the property was released from attachment under Rule 60. The authority for this proposition is to be found in the cases of Bonomali Rai v. Prosonno Narain Choudhury [1896] 23 Cal. 829, Ram Chandra Marwari v. Mudheswar Singh [1906] 33 Cal. 1158, Protap Chandra Gope v. Sarat Chandra Gangopadhya A.I.R. 1921 Cal. 101 and Anthaya v. Manjaiya A.I.R. 1922 Mad. 176. It may, therefore, be held that the property was subject to attachment at the time when it was included in his schedule by the insolvent on 31st July 1924 and when the receiver took possession of it. But the effect of this attachment is surely not what appellant claims it to be. Attachment does not create any title in favour of the attaching creditor. It merely prevents private alienation: see the cases of Moti Lal v. Karrab-ul-din [1897] 25 Cal. 179 and Baghunath Das v. Sundar Das A.I.R. 1914 P.C. 129. The position of the appellant as an attaching creditor did not, therefore, confer any title upon him in the property in question and he is only entitled to be classed with other creditors all of whom are entitled to reteable distribution of the assets in the hands of the receiver. The rights of an executing creditor are defined in Section 51, Provincial Insolvency Act, which provides that where execution of a decree has issued against the property of a debtor, no person shall be entitled to the benefit of the execution against the receiver except in respect of assets realised in the course of the execution by sale or otherwise before the date of the admission of the petition. The appellant, therefore, has no higher right than that of any other unsecured creditor, and he is not entitled to have his decree satisfied in full out of the sale proceeds of the property attached by him.

4. It is, however, contended on behalf of the appellant that under Section 52, Provincial Insolvency Act, he is at any rate entitled to the costs awarded to him in the suit in which the decree was made and to the costs of the execution. His contention is that the release of the property from attachment under Order 21, Rule 60, Civil P.C., and the period during the continuance of his suit and the appeal in the High Court should be considered as one proceeding in attachment and as under the authorities referred to above the attachment that was made in 1915 should be considered to have revived, he is entitled to all the costs under Section 52 of the Act. It is contended on the other hand on behalf of the respondents who are the other creditors of the insolvent, that Section 52, Provincial Insolvency Act, applied only to cases where the attachment is of moveable properties and the contention is based upon the words

the Court shall, on application, direct the property, if in the possession of the Court, to be delivered to the Receiver.

5. As immovable property attached by the Court cannot be said to be in the possession of the Court which could be delivered to the Receiver, this section must be confined to cases of moveable properties which were taken possession of by the Court in attachment. I do not agree with this contention. The opening words of Section 52 refers to attachment of any kind of property which is saleable and the words on which the respondents rely need not be confined to moveable property alone. Where immovable property is attached in execution of a decree, it is commonly stated that the property is in the custody of the Court and there is no reason to suppose that the legislature meant that the attaching decree-holder would have a charge for his costs where moveable property is attached but he would be entitled to no such relief if immovable property is attached by him although, as in the present ease, the proceedings relating to the attachment of the property are taken at considerable cost of money and trouble. The true construction, therefore, in my opinion is that Section 52 refers to the case of attachment of all kinds of property and is not confined to moveable property alone.

6. The next contention on behalf of the respondents is that if the appellant is held to be entitled to any costs as first charge then it must be confined to the costs in the decree for money and those of the execution proceedings which led to the release of the property from attachment; or in other words, the costs incurred by him up to the 23rd August 1915 and not the costs of the subsequent proceedings in the suit which he brought in order to substantiate his right to attach the property as belonging to his judgment-debtor. That argument does not seem to me to be acceptable. The object of the suit under Order 21, Rule 63, is to maintain the attachment and get rid of the order of release (Bonomali's case) [1896] 23 Cal. 829. If it is held that the result of the subsequent suit was that the attachment was revived as it must be held in accordance with the cases cited above, it seems to me difficult to avoid the conclusion that the proceedings in the suit which led to the revival of the attachment should be considered as proceedings in furtherance of execution, and I think that the expression 'costs of the execution' should have a liberal interpretation so as to include the costs of the suit brought under Order 21, Rule 63 of the Code in which the appellant succeeded in having the order under Rule 60 releasing the property from attachment set aside. In Phul Kumari v. Ghanshyam [1908] 35 Cal. 202 their Lordships expressed an opinion that such a suit is the only mode of obtaining a review of the order in such cases and also as if it were 'simply a form of appeal.' Having regard to the fact that it was only after the appellant succeeded in his suit finally, the insolvent included the property in his schedule and the Receiver took, possession it is only just and proper that the appellant should get all the costs as a first charge on the property. It is by reason of the effort of the appellant that this property has been made available to the entire body of creditors. The Receiver never stirred to take possession of the property as belonging to the insolvent. Having saved the property for the benefit of the creditors as against the claims of third persons, it seems to be wrong that he should not be allowed to claim a charge for the expenses incurred by him on the property.

7. The order of the learned Judge, therefore, should be varied to this extent that the appellant shall have a first charge on the property for the costs of the suit in which the decree was made and of the execution proceedings including the costs of the suit brought under Order 21, Rule 63, Civil P.C. in the trial Court and in the appellate Court and after the charge is satisfied, the balance of the assets realized will be distributed rate-ably amongst the several creditors including the appellant for the rest of his claim. Having regard to the fact that the success has been divided, there will be no order as to costs of this appeal.

Panton, J.

8. I agree.


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