T.M. Narasimhachariar vs V. Krishnamachariar

Wallis, J.—This case raises a question of some difficulty and importance as to the effect of Section 63, Civil Procedure Code, which

provides that when property not in the custody of any Court is under attachment in execution of decrees of more courts than one, the court to

receive or realize the property and to determine the claims thereto and objections to the attachment thereof shall be the court of highest grade, or

where there is no difference in grade, the court which first attached. The section whilst conferring on the court in question exclusive jurisdiction not

only to receive the attached property but also to determine claims thereto and objections to the attachment thereof even if such objection be to an

attachment in one of the other courts does not say to what extent if any the court which receives or realizes the assets is to take account of the

attachments in execution of the decrees in the other courts and different views have been taken as to this question. In the present case a debt due

to the judgment-debtor by the Public Works Department and attached in execution of several decrees against the judgment-debtor in several

courts has been paid into this Court u/s 63 and Order XXI, Rule 36 CPC by the Executive Engineer who has at the same time forwarded a list of

the attachments served on him up to that time, one of which was prior in date to the attachment by this Court. The case then came before me sitting

alone, when the prior attaching creditor who has not transferred his decree to this Court, claimed to be paid in priority to the decree-holder in this

Court, or at least to be entitled to rateable distribution; and in view of the importance of the question and the conflict of decisions, I directed the

case to be posted before a Bench and notice to be served upon all the creditors mentioned by the Executive Engineer as having attached before

payment into this Court; and they have now appeared and preferred their claim to rateable distribution.

The right to rateable distribution is conferred by Section 73 upon holders of decrees for money who have made application to the court holding

the assets for the execution of their decrees before the receipt of such assets. This right was conferred as to the assets realized by sale or otherwise

in execution of a decree by Section 295 of the Code of 1877, whereas under Code of 1859 the first decree-holder who attached in execution of

his decre was entitled to be paid in full as under the writ of fieri facias at common law and the principle of rateable distribution was only made

applicable as against subsequent attachments. It appears to me that under this section both under the old Code and the present Code a substantive

right as decided in Sankaralinga Reddy v. Randasami Tevan ILR (1907) M. 113 apply for a rateable distribution of the assets is conferred upon

decree-holders who fulfil the prescribed conditions, though under Sub-section (2) such assets may be recovered back in a suit if it be shewn that

the decree-holder was not entitled to receive them as where his debt was only colorable or the assets were subject to a prior charge Shankar

Sarup v. Mejo Mai ILR (1901) A. 313. In this view every holder of a money decree who attaches property of the judgment-debtor in execution

thereby acquires a right to share equally with other creditors in the assets arising therefrom when subsequently realized or received by the Court.

The nature of the right which cannot be called a vested right is discussed in Sankaralinga Reddy v. Kandaswami Thevan ILR (1907) M. 413.

What however where the attachments are in different courts and the property is received or realized by the Court of the higest grade u/s 63. In

such a case there is no receipt at all by the other courts unless the receipt by the Court of the highest grade can be deemed to be a receipt by the

other creditors as well. In my opinion this is the correct view and it is only for purposes of convenience that the highest Court is made the collecting

Court and the Court to adjudicate on claims and objections, and the property received or realized must be deemed to have been received or

realized by or on behalf of all the Courts in which there have been attachments in execution of money decrees prior to the actual receipt of the

assets. If this be so, then the decree-holders in the other Courts are entitled to rateable distribution under the very terms of Section 73. There

seems no reason to suppose that it was the intention of the legislature to prefer the decree-holder whose decree happened to be in the court of the

highest grade over other decree-, holders who may have attached earlier and for large amounts. The difficulty is obviated if the payment into the

Court of the highest grade is treated as payment into Court in all the suits and this in my opinion is the true construction of Section 63 which does

not in terms confer any preference on the decree-holders in the highest court and indeed says nothing as to how after claims and objections to

attachments have been dealt with the money realized is to be disposed of. This is quite natural if such disposal is governed by Section 73. On the

other hand if that section does not apply and the decree of the Court of the highest grade is to be first satisfied, there is no provision as to how any

balance is to be dealt with. According to the ordinary rule of construction a section like Section 63 which merely deals with procedure should not

be construed as affecting the substantive rights inter se of the decree-holders in the different courts. The construction of Section 63 above adopted

seems to be supported by the authority of Wilson J. in the unreported case referred to by Sale J in Clark v. Alexander ILR (1863) C. 200 where

property attached in execution of a decree of the High Court was subsequently acquired under the Land Acquisition Act and the compensation

money representing the property, whilst in the hands of the Collector was attached in execution of the decree by the Alipore Court, and was paid

by the Collector into the High Court at its request. Though of opinion that in the circumstances of that case the money had been paid into the High

Court irregularly and not strictly in accordance with Section 285 now Section 63, the learned Judge was of opinion there it must be deemed to

have been "" realized in all the suits"" and rateably distributed. The same conclusion would have followed a fortiori if the money had been paid into

the High Court regularly u/s 285 now Section 63. In this view all the holders of money-decrees who have attached in execution in any court before

the actual receipt of the assets by the Court of the highest grade are entitled to share in the rateable distribution on application to such Court and

without getting their decrees transferred to it. This has also been held by Sale J. in Clark v. Alexander ILR (1893) C. 200 and of O. Kinealy, J.

and another learned Judge in Har Bhagat v. Anandaram 2 C.W.N. 126.

These two decisions have been doubted in Ramjets Agarwala v. Guru Charan Sen (1909) 14 C.W.N. 395. Where however the point did not

arise for decision, and it has been suggested that decree-holders whose attachments were subsequent in date to that of the decree-holder attaching

in the Court of the highest grade were not entitled to claim rateable distribution against him but that a decree-holder who had attached in another

court before the date of his attachment might object to it and the Court might dispose of his objection under the express terms of Section 63 and

prefer the creditor whose attachment was prior in date. For the reasons already given I am unable with great respect to adopt this view of the

sections.

There is no doubt a decision of this Court in Muttalagiri Nayak v. Muttayyar ILR (1883) M. 357 that the decree-holder in the Court of the

lowest grade must get his decree transferred to the court of the highest grade before he can claim rateable distribution though Section 285 now

Section 63 was mentioned in the argument, it is not referred to in the judgment or in the three cases cited in the judgment.

Muttalagiri Noyak v. Muttayyar ILR (1883) M. 357 has been dissented from on this point by Krishnasami Aiyar, J. in Arimuthu Chetty v.

Vyapuri Pandamm ILR (1919) M. 588 : 21 M.L.J. 505 following Clark v. Alexander ILR (1893) C. 200 and Har Bhagat v. Anandaram (1897)

C.W.N. 126 but earlier in the judgment the learned Judge is reported to have laid down that he was bound to hold on the authority of Muttalagiri

Nayak v. Muttayyar ILR (1883) M. 357 that an application to the Court of the highest grade for execution before the receipt of the assets was an

essential pre-requisite of a general claim to rateable distribution. No such proposition was to be found in the judgment, nor is there anything in the

sections themselves as I construe them to support it. For these reasons I think all the decree-holders who attached the money in question in

execution of their money-decrees before it was paid into this Court by the Executive Engineer are entitled to rateable distribution. The rateable

distribution will be effected by this Court and the monies attached to creditors who have attached through the Courts other than High Court will be

transferred by the Registrar to that Court.

Bakewell, J.

I agree.