Indaji Majaji vs Cooverji Nowroji Gamadia

Mirza, J.—This is a notice under the provisions of the Bombay High Court Rules 300 to 302. The plaintiffs obtained a decree against the defendant in this suit on August 10, 1925, for Rs. 3,289-7-0 for debt and interest and the costs of the suit. By a warrant of attachment they attached certain motor-cars and furniture belonging to the defendant under the provisions of Order 21, Rule 43, of the Code of Civil Procedure. On August 21, 1925, the Sheriff certified that he had received from the defendant Rs. 3,451-11-1 being the amount paid under the warrant of attachment of his moveable property under Order 21, Rule 43, and that he held the said sum subject to poundage and other incidental charges. On September 24, 1925, the Prothonotary certified at the request of the plaintiffs'' attorneys the names of three judgment creditors who had within twelve months prior to August 21, 1925, being the date of the realization of the assets mentioned in the Sheriff''s certificate, applied for execution of their respective decrees for money against the judgment-debtor. On September 24, 1925, the Prothonotary issued, his notice to the said judgment-creditors and the plaintiffs for the determination of their respective claims to the said amount by me under the provisions of Rule 302 of the Bombay High Court rules.

The plaintiff''s claim priority over the other judgment-creditors on the ground that the moneys were paid specifically for the object of raising the attachment on the moveables levied at their instance. The applicants, on the other hand, contend that they are entitled to rateable distribution along with the plaintiffs : under the provisions of Section 73 of the Code of Civil Procedure.

Section 73 of the CPC provides inter alia as under:

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 realization, shall be rate, ably distributed among all such persons.

There can be no doubt here that the assets are held by the Court, for the moneys now are in the custody of the Sheriff. It is also conceded that the applicants made their respective applications to the Court for the execution of their decrees before the receipt by the Court of the assets now held by the Sheriff and that they have not obtained satisfaction of their decrees. They would be entitled to rateable distribution if the moneys have come into the custody of the Court in the course of execution.

The scope of Section 73 in favour of rateable distribution appears to be much larger than that of Section 295 of the Civil P.C. of 1882 which it has replaced. u/s 270 of the still earlier Code of 1859 there was no provision for rateable distribution, but the creditor who attached the property first in the order of time had a prior claim to have the decree satisfied out of the sale proceeds of the property attached. The law was changed by Section 295 of the Code of 1882 in favour of rateable distribution. The language of Section 295, however, was : "where assets are realized by sale or otherwise in execution of a decree," instead of as in the present Section 73, "where assets are held by the Court." Further where Section 295 uses the expression "prior to the realization," the present section substitutes for those words "before the receipt of such assets." Section 259 of the CPC was interpreted by the appeal Court in the case of Purshotamdass Tribhovandass v. Mahant Surajbharthi Haribharthi [1882] 6 Bom. 588, as meaning that it should be read as if the words "from the property of the judgment-debtor" were inserted after the word "realized." In that case the appeal Court held that moneys paid by a judgment-debtor under arrest in satisfaction of the decree against him are not assess realized by sale or otherwise within the meaning of Section 295 of the Civil P.C. Act X of 1877. Sargent C.J., stated that Section 295, was one of a number of sections under the heading of general rules as to the sale and delivery of property, and should on that account be read as if the words " from the property of the judgment-debtor "were inserted after the word "realized." This case served as the leading authority on the point in subsequent cases and was followed in Gopal Dai v. Ghunni Lal [1886] 8 All. 67 ; Sew Bux Bogla v. Shib Chunder Sen [1886] 8 All. 67 ; Prosonnomoyi Dassi v. Sreenauth Roy [1894] 21 Cal. 809 and Vibudhapriya Tirthaswami v. Yusuf Sahib [1905] 28 Mad. 380 . In the case of Manilal Umedram v. Nanabhai Maneklal [1903] 28 Bom. 264 the appeal Court in a later judgment appears to have doubted the correctness of the reasoning of Sargent C.J., in Purushotamdas'' case [1882] 6 Bom. 588. Jenkins C.J., in the course of his judgment, remarks (p. 274):

Prima facie the word ''realized'' implies that property has been converted into or obtained in cash or some other form available for immediate distribution and there is nothing in the word itself which requires that that process should take place as the result of any ulterior proceeding in the course of execution.

Whatever the correctness of the case-law out the subject of the interpretation of Section 295 of the old Code may be, the law in my opinion is now altered by Section 73 and we need not go further than the language of that section to interpret its clear meaning.

The appeal Court in a later decision has considered the interpretation to be put upon Section 73. In the case of Sorabji Coovarji v. Kala Raghunath [1911] 36 Bom. 156 Scott, C.J., in the course of his judgment, remarks on this point as under (p. 163):

The question remains whether the moneys paid into Court for a particular purpose can be treated as assets distributable u/s 73 of the Code. That section provides that 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 realization, shall be ratably distributed among all such persons. In the reference to the costs of realization we have an indication that the Legislature contemplated that the assets referred to should be assets held in the process of execution. If we were to hold that money paid into Court, under Order 21, Rule 55, was assets held by the Court within the meaning of Section 73, we should be only nullifying the provisions of Rule 55; for there would be no inducement to any judgment-debtor to procure a payment into Court of the amount of the claim of his attaching creditor if the money could at once be absorbed by rateable distribution amongst a number of other creditors.

With great respect, in my opinion, this interpretation of Section 73 is erroneous. It would, however, be binding upon me if the opinion was expressed by the appeal Court in a matter with which it was directly dealing. If the remarks are only in the nature of obiter dicta I am not bound to follow them unless I am of opinion that they lay down the correct law. In the case before the appeal Court what the appeal Court had to decide was that at the instance of two judgment-creditors a certain immovable property of the judgment-debtor having been attached, the other judgment-creditors had put in applications for execution without issuing any attachment. On the date fixed for the sale of the attached property the judgment-debtor had paid into Court the decretal amount due to she attaching creditors. On the next day after the payment into Court an ex parte application had been made to the Court and the Court had ordered rateable distribution of the money paid into Court and further sale of the properties which had been attached towards further satisfaction of the claims of the judgment-creditors. The order of the Judge on this point was on September 27, 1909. Against that order an appeal was preferred to the District Court, but long before it came on for hearing the sale of the properties had taken place. The sale was held on January 26, 1910. The judgment-debtor applied that the sale should not be confirmed, but his application was dismissed on April 14, 1910. The judgment-debtor appealed from the order of dismissal to the District Judge who, on June 30, 1910, dismissed the appeal. In June, 1911 the appeal against the order of September 27, 1909, came on before the District Court, but as the question of the confirmation of the sale had already been decided by the Court adversely to the appellant, no further proceedings were taken on the appeal against the order of September 27. The judgment-debtor came to the Court appealing only against the order of June 30, 1910. That order had reference to the dismissal of the judgment-debtor''s application that the sale should not be confirmed. The judgment of the appeal Court, in my opinion, is concerned directly only with that point; and not with the point whether the order for rateable distribution among the judgment-creditors, dated September, 27, 1909, was or was not valid. Had the order of September 27, 1909), been appealed from, the pronouncement of the appeal Court with regard to the interpretation of Section 73 would be binding upon me. As that opinion now stands, I am of opinion, that it is in the nature only of obiter dicta which I need not follow if I am of the contrary opinion from what the appeal Court on the materials before it was.

Had the point of rateable distribution u/s 73 been directly before the appeal Court the case before me would be analogous to what the appeal Court had to determine. There moneys were paid into Court with the object of raising an attachment which had been levied upon immovable property. The appeal Court held that moneys paid into Court with the object of raising a subsisting attachment on immovable property should be paid to the attaching creditor only and should not be distributed rateably among the attaching creditors arid the other creditors who had made applications for execution. On that analogy moneys paid for raising an attachment upon moveables should be paid to the attaching creditor whose attachment it was intended to raise thereby. In my opinion, however, the remarks of the appeal Court on this point are only in the nature of obiter dicta. The appeal Court remanded the case to the lower Court to be dealt with according to law. It does not follow from this that the appeal Court directed the lower Court to apply the interpretation of Section 73 in their judgment in determining the rights of the attaching and other creditors to the moneys brought into Court. All that the appeal Court determined was that there was no subsisting attachment on the properties when the sale took place and hence the sale should hot be confirmed.

In the case of Nathmal Ghamirmal Vs. Maniram Radhakisson, Pratt, J. had occasion to consider the judgment of the appeal Court. In the case before Pratt, J., the judgment-creditor had attached certain moveables belonging to the judgment-debtor under Order 21, Rule 43. The sheriff''s bailiff on entering the judgment-debtor''s shop had shown him the warrant of attachment and had told him that if the moneys wore not paid he would seize and keep in his custody the moveable property in the shop. The judgment-debtor these upon had paid the decretal amount with costs of execution and the sheriff''s poundage. The question before the learned Judge was similar to what I have here to determine, namely, whether the amount in the hands of the sheriff was available for rateable distribution among the judgment-creditors who had made previous applications for execution, or was to go in its entirety to, the attaching creditor. The learned Judge, in an elaborate judgment in which he reviewed previous authorities, came to the conclusion that the appeal Court judgment in Sorabji Coovarji v. Kala Raghunath [1911] 36 Bom. 156 was erroneous. But he was of the opinion that the judgment in its interpretation of Section 73 was binding upon him. He, therefore, decided in favour of the attaching creditor receiving the whole amount. I agree with the learned Judge in the opinion he has expressed with regard to the judgment in Sorabji v. Kola Baghunath [1911] 36 Bom. 156 being erroneous. But with great respect, I differ from his view that that judgment was binding upon him in the matter which he had to decide.

The appeal Court of Madras refused to follow the reasoning contained in Sorabji Coovarji v. Kala Raghunath [1911] 36 Bom. 156 in the case of Thiraviyam Pillai v. Lakshmana Pillai [1917] 41 Mad. 616. In the case of Noor Mahomed Daivood v. Bilasiram Thakursidass [1919] 47 Cal. 515 Rankin, J., had to determine the same point which I am now called upon to decide. The learned Judge has dissented from the decision in Sorabji Goovarji v. Iiala Raahunaih [1911] 36 Bom. 156 which was cited and relied upon before him.

I hold, therefore, that the amount in the hands of the sheriff should be rate ably distributed. The attaching creditors and judgment-creditiors, whose applications in execution are in time, will tack on the costs to their respective decrees.

Counsel certified.