R. Krishnamurthy Ayyar vs Pasupuletti Munuswami and Another

Mockett, J.—The petitioner is the decree-holder in S.C.S. No. 167 of 1933. The decree was against two defendants. It ordered them

jointly and severally to pay a sum of money and with regard to defendant 2 it said:

It is further ordered that the decree against defendant 2 shall stand stayed in case he pays on the 5th of every month commencing from 5th July

1933, at the rate of Rs. 10 per mensem until the decree is satisfied; in case of default of any instalment this stay order will cease. The stay order

will also have effect only on defendant 2 furnishing security of immovable property for the decree amount and agreeing to pay interest at 9 percent,

per annum on or before 5th July 1933.

A security bond was executed by defendant 2 and it referred to certain Immovable property and stated:

I will be paying without default the said decree amount as per order of Court by the 5th of each month. In case of default of any instalment as

aforesaid, the balance that may then be due after giving credit to payments so far made, may be recovered in one lump sum from me and from my

properties described in the schedule hereunder and I can have no objection thereto. Until the aforesaid decree amount is fully realized I have kept

the aforementioned property belonging to me viz., my house worth about Rs. 1,000 as security. I shall not alienate in any manner the said house

until the aforesaid decree amount is fully satisfied.

In our view that surety bond and the decree clearly created a charge on the property concerned in favour of the decree-holder. Now

respondent 1 filed an application for rateable distribution in this case and that was allowed by the District Munsif on the ground shortly that no

charge was created on the property. The other questions raised in this revision petition were apparently not argued. It was decided on the question

of charge or no charge. Mr. Srinivasathathachariar has argued that on the authority of three decisions of this High Court this property is not

available for rateable distribution. We consider that proposition is amply supported by the cases he cited and there appears to be no real difference

of opinion in the authorities in this High Court as has been suggested by Mr. Sampath Iyengar. Two of the cases are reported in M.R.M.A.

Subramania Chettiar Vs. The Hon''ble B. Raja Rajeswara Sethupathi Alias Muthuramalinga Sethupathi Avergal, , and the other, Ramiah Iyer v.

Gopala Aiyar AIR 1919 Mad 607. of M.R.M.A. Subramania Chettiar Vs. The Hon''ble B. Raja Rajeswara Sethupathi Alias Muthuramalinga

Sethupathi Avergal, , a Bench consisting of Wallis, C.J. and Kumaraswami Sastri, J. considered much the same question which we have to

consider now and at p. 332 the learned Judges held as follows:

The effect of Immovable property being given as security is something more than attachment because it makes the property applicable solely in

discharge of the judgment debt and not liable to rateable distribution among other judgment creditors,

and on the facts in that case it was held that the Immovable property in question had been given as security and that a charge was therefore created

upon it. In the other case at p. 1053 the position was most carefully considered by Ayling and Coutts-Trotter, JJ. Coutts-Trotter, J. in giving the

judgment of the Court refers to a statement of the law as given in M.R.M.A. Subramania Chettiar Vs. The Hon''ble B. Raja Rajeswara Sethupathi

Alias Muthuramalinga Sethupathi Avergal, to which we have just referred and cites that very passage obviously with approval. The effect of both

these cases does not seem to be very difficult. It amounts to nothing more than this that it is a question of investigation in each case as to whether it

was intended that a charge should be given on any property. If it is found that the property is charged and is security to the decree-holder, then it is

not available for rateable distribution to third parties. 41 Mad 327 has been followed in another decision of this High Court in Janaki Nagaswami v.

Ramaswami AIR 1920 Mad 409. There does not therefore seem to us to be any room for difficulty. But some difficulty has been raised in this

matter by Mr. Sampath Iyengar who has argued this case on behalf of respondent 1 because he says that in a Madras decision, in Gopalaiyar v.

Thiruvengadam Pillai AIR 1918 Mad 1158 , the Bench, while accepting the position that money may be made security for a decree debt, queried

whether the same principles may be applicable to Immovable property. At p. 505 the following appears:

The case may be different, though it is not necessary to express any opinion with regard to that question, if what is furnished as security is specific

property such as land. In such a case it might be possible to contend that the defendant is not in fact the owner of the property but somebody else

and that the title of the real owner would not be lost. But money stands on a different footing.

In that case a complication had arisen because the money given as security belonged to a joint family. But the query raised by the learned Judges

in that case is in our opinion entirely disposed of by all the three authorities to which we have referred and it is clear from them that those learned

Judges at least found no difficulty in accepting the position that Immovable property can be made security under circumstances such as these

equally as in the case of money. It is suggested that Section 73, Civil P.C., presents a difficulty here. Proviso (c) is not applicable because

Immovable property in this case was not sold in execution of the decree ordering its sale for the discharge of an incumbrance thereon. Therefore,

says Mr. Sampath Iyengar, the plain words of the section apply and the assets have to be distributed to all persons having any claims thereto. That

appears to us to beg the question because that argument must be on the basis that land cannot be given as security. Indeed we think that Mr.

Sampath Iyengar was bound to take up the attitude that the decisions to which we have referred are wrong; otherwise the answer which they give,

viz., that the property is not available for rateable distribution is clearly an answer to the very wording of Section 73(1). The whole question when

considering rateable distribution in a matter of this kind is to consider whether the property is open to the other decree-holders and the effect of the

authorities to which we have referred is that if it is charged as security for a specific decree it is not so open.

The result of these conclusions is that this Civil Revision Petition will be allowed with costs. We only desire to add one further word. This matter

originally came before a single Judge and on the representations of the respondent it was posted before a Bench. The result is that it has not

reached us for a very long time. It was admitted in February and was referred to a Bench last September and now comes up to us for disposal, in

January 1937. Ordinarily we should have referred the petitioner to his remedy of a suit u/s 73 but under the specific circumstances we considered

it would be a hardship for us to do so and it is only under those special circumstances that we have decided to deal with the matter u/s 115, Civil

P.C.