R. Chidambara Mudaliar and Another vs K.V. Ranganatham and Another

Alfred Henry Lionel Leach, C.J.—The appellants have been adjudicated insolvents by an order of this Court, dated the 28th October,

1941. They challenge the validity of that order on two grounds. In the first place they say that no act of insolvency was committed, and in the

second place that the evidence does not prove that there was a debt due to the petitioning creditor on the date of his application.

On the 29th January, 1941, a creditor, who had filed a suit against the appellants, obtained an order for the attachment before judgment of

certain immovable property belonging to them. The suit was successful, and on the 27th July, 1941, a decree was passed against the appellants for

Rs. 10,500. On the llth September, 1941, the decree-holder applied for the sale of the property which was already under attachment. The petition

for adjudication of the appellants was filed on the 17th October, 1941, and the act of insolvency alleged was that the debtors'' property had been

under attachment for more than 21 days. Section 9 (e) of the Presidency Towns Insolvency Act states that a debtor commits an act of insolvency

if any of his property has been sold or attached! for a period of not less than 21 days in execution of the decree of any Court for the payment of

money.

The appellants contend that C1. (e) of Section 9, does not apply in this case. They, say that as the attachment was effected before judgment, it

cannot be deemed to be an attachment in execution of the decree.

Order 38, Rule 11 of the CPC provides that where property is under attachment before judgment and a decree is subsequently passed in favour

of the plaintiff, it shall not be necessary upon an application for execution of the decree to apply for a re-attachment of the property. Therefore,

where property has been attached by an order of attachment before judgment and the plaintiff obtains a decree for payment of money, all that he

has got to do is to apply for an order of the Court directing the sale of the property attached. When such an application is made, the attachment

automatically becomes an attachment in execution of the decree. In my judgment, no other construction is open. If, however, authority is wanted, it

is to be found in Meyyappa Chettiar v. Chidambaram Chettiar (1923) 46 M.L.J. 415 : ILR Mad. 483 and in Konchadu Dalayya Vs. Malla

Sundara Narayana and Others, . In Meyyappa Chettiar v. Chidambaram Chettiar (1923) 46 M.L.J. 415 : ILR Mad. 483, the question was

whether the words ""property attached in execution"" to be found in Order 21, Rule 57, CPC include property attached before judgment, when

there has been a decree followed by an execution petition for the purpose of bringing the attached property to sale. The majority view was that

those words did include property attached before judgment. Waller, J., observed that once it has been found that for one purpose an application to

execute converts an attachment before judgment into an attachment in execution, the conclusion is inevitable that the conversion operates for all

purposes. He added that the same question had been argued before him with reference to Section 9 of the Presidency Towns Insolvency Act, and

in this connection said:

Under that section, an act of insolvency is committed where any part of a man''s property has been attached in execution of a decree for over 21

days. It would, in my opinion, be anomalous to hold that an attachment before judgment takes the judgment-debtor out of the section, even though

execution ''had been proceeding against his property for more than the prescribed period.

In Konchadu Dalayya Vs. Malla Sundara Narayana and Others, , Varadachariar, J., delivering the judgment of the Bench said,

As a question of ''principle, if an attachment before judgment can be treated as an attachment for purposes of execution at all, it is difficult to see

what necessity there is for an order of Court. A more reasonable view seems to us to be to hold that from the time the decree-holder applies for

execution, he elects to avail himself of the attachment before judgment and from that moment the attachment before judgment becomes an

attachment available for purposes of execution.

It follows from what I have already said that I am in entire agreement with these observations and that I consider the learned Judge sitting in

insolvency was right in holding that there had been an attachment of the appellants'' property for more than 21 days, within the meaning of Section

9 (e) of the Presidency Towns Insolvency Act.

The appellants'' second contention can be disposed of in a few words. A creditor who asks for an order of adjudication against his debtor must,

of course, prove that the debtor owes him at least Rs. 500, at the time the application is made. In this case the petitioning creditor claimed that

there was due to him Rs. 3,825 on a promissory note, dated 12th May, 1940. The petition was supported by an affidavit setting out this fact and

stating that the amount due on the promissory note had not been paid. The appellants filed a counter-affidavit in which they alleged that no

consideration had passed and went on to aver that the petitioning creditor had been paid. In an affidavit in reply, the petitioning creditor denied

these allegations. The evidence before the Court consisted of the two affidavits of the petitioning creditor and the affidavit of the appellants which

contained these somewhat conflicting pleas. The learned Judge accepted the affidavits of the petitioning creditor as being true and I see no reason

to doubt the correctness of his decision.

In my opinion the appeal fails and should be dismissed with costs which should be paid out of the estate of the insolvents.

Bell, J.

I agree.