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Vishnu Ram vs Bank Of Bihar Through Babu Baij ...

High Court Of Judicature at Allahabad|12 October, 1945


JUDGMENT Bennett, J.
1. This revision application raises a legal question which has in various forms been the subject of controversy in numerous cases, chiefly of the Bombay and Madras High Courts. The applicant, Vishnu Earn, and the opposite party, the Bank of Bihar, obtained decrees against the same judgment-debtors, the applicant's decree being for some amount exceeding Rs. 1200, the exact figure is not given in the paper before us and that of the opposite party for Rs. 7000 odd. Execution proceedings on Vishnu Eam's decree were taken in the Court of the City Munsif, Benares, and on the other decree in the Court of the Additional Civil Judge, Benares. Vishnu Earn attached a house in execution of his decree on 9th February 1942, and purchased it himself for Rs. 1200 on 12th November 1942. The sale was confirmed on 1st February 1943. The Munsif permitted him to set off the purchase money against the amount due under the decree in accordance with the provisions of Rule 72(2) of Order 21, Civil P.C. and the execution proceedings were struck off, the decree being partially satisfied.
2. Prior to the sale, namely, on 27th April 1942, the Bank of Bihar got the same property attached in execution of its decree and eventually purchased it on 17fch December 1942, for Rs. 1400. The bank applied to the Additional Civil Judge to request the Munsif to direct Vishnu Earn to deposit the sum of Rs. 1200 for which the property had been sold to him, in his Court, so that it might be rateably distributed between them. The provisions of the Code applicable to such an application are contained in Sections 63 and 73, and Rule 72(2) of Order 21. On a consideration of these provisions, the Additional Civil Judge allowed the bank's application. To facilitate examination of the question whether this order was warranted by these provisions we show them below:
Section 63. (1) Where property not in the custody of any Court is under attachment in execution of decrees of more Courts than one, the Court which shall receive or realize such property and shall determine any claim thereto and any objection to the attachment thereof shall be the Court of highest grade, or, where there is no difference in grade between such Courts, the Court under whose decree the property was first attached.
(2) Nothing in this Section shall be deemed to invalidate any proceeding taken by a Court executing one of such decrees.
Section 73. (1) (omitting the proviso) 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 rateably distributed among all such persons....
(2) Where all or any of the assets liable to be rateably distributed under this Section are paid to a person not entitled to receive the same, any person so entitled may sue such person to compel him to refund the assets.
Order 21, Rule 72(2) (as modified by the Allahabad High Court : there are no sub-rules):
Rule 72, Where a decree-holder purchases property sold, the purchase-money and the amount due on the decree may, subject to the provisions of Section 73, be set off against one another, and the Court executing the decree shall enter up satisfaction of the decree in whole or in part accordingly.
3. The points on which controversy has arisen chiefly are : (1) whether the provision in Sub-section (2) of Section 63 is subject to the qualification in Rule 72 that the set-off shall be subject to the provisions of Section 73; and (2) whether after a set-off has been allowed by one Court the assets can be said to be held (within the meaning of Section 73) by a Court of higher grade so as to enable them to be made available for rateable distribution under this section. The cases to which our attention has been directed are : Shidappa Laxmanna v. Gurusangaya Akhandaya ('31) 18 A.I.R. 1931 Bom. 350, Dhirendrarao Krishnarao v. Virbhadrappa ('35) 22 A.I.R. 1935 Bom. 176, Dandayutha Pani Devasthanam v. Muthayanswami Chetti ('30) 17 A.I.R. 1930 Mad. 699, Murugappa Chettiar v. Ramaswami Chettiar ('35) 22 A.I.R. 1930 Mad. 893, Ramaswami Ayyar v. Krishnasa & Sons ('35) 22 A.I.R. 1935 Mad. 904, Thanmull Sowcar v. Krishnaswami Reddiar ('35) 22 A.I.R. 1935 Mad. 988 and Megraj Iswardas v. Corporation of Madras ('36) 23 A.I.R. 1936 Mad. 797 . It is in Shidappa Laxmanna v. Gurusangaya Akhandaya ('31) 18 A.I.R. 1931 Bom. 350 (of the year 1930) that the learned Counsel for the applicant mainly relies, for it was held in that case that the words "any proceedings" in Section 63(2) would include an order made under Order 21, Rule 72 for set off, and that in circumstances very similar to those of the present case a superior Court which directed refund of a decretal amount which had been ordered to be set off against the purchase money "exercised a jurisdiction which was not vested in it by law in view of the provisions of Sub-section (2) of Section 63, Civil P.C.
4. The later Bombay case Dhirendrarao Krishnarao v. Virbhadrappa ('35) 22 A.I.R. 1935 Bom. 176 (of 1934) did not expressly dissent from Shidappa Laxmanna v. Gurusangaya Akhandaya ('31) 18 A.I.R. 1931 Bom. 350; indeed the judgment of Beaumont C.J. purports to follow it, but there are observations in the judgment which are difficult to reconcile with the earlier ruling. The learned Chief Justice observed that:
all that the order allowing such set oft means is that the decree-holder can exercise his right by setting off the amount of his decree against that portion of the proceeds of sale to which he is entitled. He cannot set off against a portion of the sale which belongs to other parties.
Further that:
Sections 63 and 73 must be read together and Section 63 does not determine the principle on which the Court is to act in determining the claims; it only lays down which Court is to decide the question.
5. The matter was considered at greater length in the Madras cases of 1935 and 1936. Dandayutha Pani Devasthanam v. Muthayanswami Chetti ('30) 17 A.I.R. 1930 Mad. 699 was a single Judge decision and-it supports the applicant, for it was held that although a superior Court is competent to call for assets in the hands of an inferior Court in consequence of a sale in execution of the decree of the inferior Court against the same judgment-debtor, so as to render them available for rateable distribution among the decree-holders of superior Courts, if the inferior Court has paid out the amount or ordered satisfaction of the decree in ignorance of the decree of the superior Court, the superior Court has no jurisdiction to order restitution and rectify the error ex debito justifies. Of the three Madras cases of 1935 the first cited Murugappa Chettiar v. Ramaswami Chettiar ('35) 22 A.I.R. 1930 Mad. 893, was a single Judge decision. There was apparently no conflict between an inferior and a superior Court in that case. The principle laid down for determining competing claims of different decree-holders went rather further than that approved in later cases. It was that the only amount that the purchaser decree-holder was bound to bring into Court was the sum due to those decree-holders whose execution applications were pending on the date of the sale. In the Bench case of Ramaswami Ayyar v. Krishnasa & Sons ('35) 22 A.I.R. 1935 Mad. 904 and the single Judge case in Thanmull Sowcar v. Krishnaswami Reddiar ('35) 22 A.I.R. 1935 Mad. 988 the principle approved was that a decree-holder who had attached the property prior to the sale in favour of the other decree-holder was entitled to rateable distribution. In both these cases which came on appeal to the Madras High Court (not on revision) the execution proceedings in question had been before different Courts. In Thanmull Sowcar v. Krishnaswami Reddiar ('35) 22 A.I.R. 1935 Mad. 988 (decided by Madhavan Nair J.) the Subordinate Judge had called upon the Munsif's Court to send the sale proceeds and the Munsif had replied that a set-off had been allowed in favour of the other decree-holder and that there were no sale proceeds available for the other decree-holder. A revision application to the High Court against this order was dismissed and the aggrieved decree-holder then filed a civil suit under Section 73(2). His suit was decreed and the decree was upheld in first and second appeals. It is not shown why the revision application was dismissed, but the principles on which the decree was upheld would appear to apply to proceedings in execution as much as to a suit. Madhavan Nair J. considered at some length the construction of Section 63(2) and we are in entire agreement with the conclusion which he expressed as follows:
Is there any need to construe Clause (2) of Section 63 in a way which will limit the right to rateable distribution, when the object of the enactment seems to have been only to hold that the proceedings in execution and the sale are not invalid? I think in a case like the present, by refusing to recognise the validity of the set off, Courts will be enabled to adjust the rights of the parties on a more correct footing by giving effect to a fact (attachment) of which the inferior Court was unaware when it passed the order allowing the set off, which order, if it knew, it would not have passed.
The learned Judge also held that a superior Court which bad attached the property at an earlier date, than the date of sale, is entitled to call for the proceeds lying in the inferior Court. And further that:
in a case to which Section 63 applies, the receipt of assets by one of the Courts contemplated in that section amounts to a constructive receipt of assets by each of such Courts, and, if so, the attaching decree-holders in each of them are entitled to a rateable distribution in the assets in the actual custody of one of them.
6. The ruling of the Bench in Megraj Iswardas v. Corporation of Madras ('36) 23 A.I.R. 1936 Mad. 797 is substantially to the same effect. The learned Counsel for the applicant contended, though not very strongly, that the remedy of the aggrieved decree-holder lies only by way of suit under Section 73(2), but he could cite no authority in support of the proposition and the cases which we have considered seem to repel it. The only case of this Court to which we were referred Ram Chand v. Sher Singh ('33) 200 A.I.R. 1933 All. 666, was a case of a suit. There one of the decrees had been transferred to the Collector for execution; an order allowing rateable distribution was not communicated to the Collector; property was sold and purchased by the decree-holder whose decree had been transferred; he was allowed to set off the purchase-money against the decretal amount due to him, and the other decree-holder then instituted a suit under Section 73(2). The suit was dismissed by the trial Court and the first appeal against the dismissal failed, but on second appeal the suit was decreed by a Bench of this Court, it being held that Section 73 is applicable not only where sale is made by the Court but also to cases in which execution of a decree is transferred to the Collector and sale is made by him. It was not apparently contended in that case that a suit was barred because relief could have been obtained in execution - the converse to the present contention - but that possibility was considered by Niamatullah J. in his judgment. He observed:
In the case before us, if the Collector's attention had been drawn to the circumstance that the appellant had previously applied for execution of his decree and that the Court had passed an order allowing rateable distribution, he Would have disallowed set off, at any rate to the extent of the amount due to the appellant on rateable distribution.... The question is whether his omission to invite the attention of the Collector to his own right deprives him of his right to obtain rateable distribution in a regular suit.... We see no reason why the equities between the parties should not be worked out at this stage.
7. We have no doubt that it is primarily for the execution Courts to deal with a matter of this kind and that their jurisdiction is in no way excluded by the provision in Section 73(2) under which an aggrieved party can agitate his claim in a regular suit. We hold that the Additional Civil Judge rightly allowed the Bank's application and we dismiss this application with costs.
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Vishnu Ram vs Bank Of Bihar Through Babu Baij ...


High Court Of Judicature at Allahabad

12 October, 1945