Vishnubhotla Ramayya vs Sajja Namayya and Others

Alfred Henry Lionel Leach, C.J.—These appeals have been heard together. The facts are the same in each case and they both raise the

same question of law, namely, whether Section 64 of the CPC applies in the circumstances. Happell, J., who heard the second appeals out of

which these appeals arise was of the opinion that it did not. Being appeals filed under Clause 15 of the Letters Patent we are only concerned with

the legal question.

In 1927 one Chalasani Anjaneyalu filed a suit in the Court of the Subordinate Judge of Masulinatam against two defendants, named

Lakshminarayana and Chalasani Ramayya respectively. The plaintiff failed to establish his case and consequently his suit was dismissed with costs,

each defendant being given one set. On the 16th April, 1930, Lakshminarayana transferred his decree for costs to the appellant. Chalasani

Ramayya filed E.P. No. 42 of 1932 to enforce payment of the costs decreed to him and in these proceedings attached on the 22nd July, 1932,

immovable properties belonging to the judgment-debtor. On the 20th March, 1933, the Court sold by public auction the properties attached, but

before the sale was confirmed the judgment-debtor deposited the amount of the decree plus the solatium of five per cent. required by Order 21,

Rule 89, and on the 29th July, 1933, the sale was set aside under Order 21, Rule 92.

On the 1st March, 1933, the appellant filed E.P. No, 32 of 1933 to enforce payment of the amount due from the judgment-debtor to him as the

assignee of Lakshminarayana''s decree. He asked for the attachment of the properties which Chalasani Ramayya had attached and for rateable

distribution. On the 1st April, 1933, the Subordinate Judge passed an order recognising the appellant as the assignee of Lakshminarayana''s decree

and his right to rateable distribution, but made no order of attachment on this petition. The judgment-debtor had objected to the appellant being

permitted to proceed in execution because he challenged the validity of the assignment of the decree. As the result of the order passed by the

Subordinate Judge on the 1st April, 1933, the judgment-debtor appealed to this Court. His appeal was allowed and the case remanded to the

Subordinate Judge with instructions to hear the judgment-debtor''s case on its merits. This the Subordinate Judge did and came to the conclusion

that the judgment-debtor''s opposition was groundless. The result was that on the 7th December, 1936, he passed a similar order to the one which

he had passed on the 1st April, 1933.

On the 23rd June, 1933, the appellant filed another application asking for the attachment of the properties belonging to the judgment-debtor. An

order of attachment was passed on the 30th June, 1933, but was discharged on the 31st October, 1935.

On the 12th May, 1933, that is during the attachment effected by Chalasani Ramayya of the judgment-debtor''s properties, the judgment-debtor

sold a portion of them to one Namayya. This sale provided him with the money to pay into Court the amount due to Chalasani Ramayya under his

decree, plus the solatium payable to the auction-purchaser. The judgment-debtor had previously sold another portion of the attached properties to

a person named Sundaramma. That sale took place on the 30th July, 1932, eight days after Chalasani Ramayya had obtained the order of

attachment. Sundaramma bequeathed the property bought by her to one Sowbhagyamma under a will dated 1st April, 1934. On the 10th March,

1934, Namayya filed a petition under Order 21, Rule 58, objecting to the attachment which had been effected by the appellant on the properties

of the judgment-debtor on the 30th June, 1933. Namayya''s petition was dismissed and accordingly he brought O.S. No. 128 of 1935 in the

District Munsiff''s Court of Gudivada under Order 21, Rule 61, to establish the right which he claimed. It is out of this suit that L.P.A. No. 15 of

1941 arises. The attachment effected by the appellant on the 30th June, 1933, caused Sowbhagyamma also to file a petition of objection. This was

likewise dismissed and consequently she filed O.S. No. 129 of 1935, which has given rise to L.P.A. No. 16 of 1941.

The two suits were tried together. The question at issue was whether the alienations were void u/s 64 of the Civil Procedure Code. The

appellant, who was the 1st defendant, claimed that Section 64 applied and as the alienations in favour of the plaintiffs had been made after the

attachment effected by Chalasani Ramayya on the 22nd July, 1932, they were void as against him, he being entitled to rateable distribution as the

result of his application of the 1st March, 1933. He could not rely on the order of attachment made on his application of the 23rd June, 1933, as

that had been passed after the alienations, and moreover the attachment had been discharged. The District Munsiff held that as the result of

Chalasani Ramayya''s attachment the alienations were void u/s 64 and consequently dismissed the two suits. Appeals followed to the District Judge

of Kistna. The District Judge agreed with the District Munsiff and this led to the plaintiffs appealing to this Court. They were heard by Happell, J.,

who allowed them, as he considered that the alienations were not void u/s 64 of the Code of Civil Procedure. The basis of his decision was that as

the sale had been set aside under Order 21, Rules 89 and 92, the appellant could not claim rateable distribution because there was nothing to

distribute.

It cannot be denied that as the result of the setting aside of the sale which took place on Chalasani Ramayya''s petition the attachment came to

an end. The decree-holder got the decretal amount which the judgment-debtor had paid into Court, the auction-purchaser received back the

money which he had paid into the Court as the purchase consideration, plus the solatium of five per cent. and the judgment-debtor remained in

possession of his property free from any liability to Chalasani Ramayya.

Section 64 of the CPC states:

Where an attachment has been made, any private transfer or delivery of the property attached or of any interest therein and any payment to the

jndgment-debtor of any debt, dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the

attachment.

Explanation : -For the purposes of this section, claims enforceable under an attachment include claims for the rateable distribution of assets.

When one decree-holder has attached property belonging to his judgment-debtor in execution of his decree another person holding a decree

against the same judgment-debtor can apply to the Court Tinder Section 73 for rateable distribution of the assets realised in the execution

proceedings instituted by the first decree-holder and when he applies before the assets are realised, that is brought into Court, he is entitled to

rateable distribution. Section 64 and Section 73, allow the second decree-holder to come in on the same terms as the first decree-holder, provided

he moves the Court in time. He cannot apply for rateable distribution after the assets have been realized, see Nana Rao v. Arunachalam Chettiar

(1940) 1 M.L.R. 482 : ILR (1940) Mad. 526 This means that any alienation made by the judgment-debtor after the attachment is void as against a

creditor who has applied for rateable distribution in time.

The appellant says that as he applied in time for rateable distribution the alienations made by the judgment-debtor in favour of the plaintiffs must

be deemed to be void u/s 64. In our opinion Section 64 does not help the appellant. Section 64 does not say that the alienations shall be void,

absolutely. What it says is that they shall be void as against all claims enforceable under the attachment. When the attachment is set aside by reason

of the decree-holder having been paid in full, the attaching decree-holder has no claim against the judgment-debtor and therefore there is no claim

enforceable under the attachment. The appellant was not paid and he had a claim against his judgment-debtor, but as the attachment had been set

aside it was not a claim which could be enforced under the attachment and unless it was enforceable under the attachment Section 64 could not

apply. Happell, J., has based his decision on the fact that when the decree-holder was paid and the auction-purchaser withdrew his money from

Court there was nothing to distribute. That is true, but we prefer to put it on the ground that the Court was no longer concerned with the alienations

in favour of the plaintiffs because these alienations were only void against the appellant u/s 64, so long as he had a claim which was enforceable

under the attachment. He had no such claim when these suits were brought and the alienations could not be challenged under that section. It

follows that we agree with the opinion expressed by the Bombay High Court in Khushalchand v. Nandram Sahebram ILR (1911) Bom. 516. that

the moment the attachment ends all claims which were enforceable under it cease to be enforceable. Whether the alienations can be challenged

here on another ground is a different matter. Other issues were raised in the suits and the learned Judge has remanded them for trial on the merits.

As we consider that the learned Judge was right in holding that Section 64 did not apply we dismiss the appeals with costs.