Suraj Lal Bal Krishna Das v. Padrauna Raj Krishna Sugar Works

Mukerji, J.:— These five connected applications in revision arose out of a single controversy in which the five applicants were equally interested: the applications having arisen out of the same order of the Court below, namely, an order dated the 17th October 1955. The applications in revision were connected in this Court and have been listed together, and I propose deciding them by this Judgment.

2. A few facts need be stated in order to appreciate the points in controversy between the patties. The Padrauna Raj Krishna Sugar Works Limited, Padrauna, appears to have fallen on evil days, and, thus got into financial difficulties, with the result that several decrees came to be made against this Sugar Mills. As was natural, each decree-holder attempted to get his decree satisfied, and to that end he took the steps he thought would further his end in getting satisfaction of his decree. The Padrauna Raj Krishna Sugar Works Limited, however, had their own difficulties to face and those difficulties also, in a sense, became difficulties for the judgment-creditors. The Padrauna Raj Krishna Sugar Works Limited owed large sums of money to the State which were recoverable from the Sugar Works Limited as arrears of land revenue by the Collector. The result was that the Collector took action under the law and had the mills put up for sale and the mills were actually sold for about Rs. 26 lacs. This amount of Rs. 26 lacs was more than enough to pay up the Government dues in respect of which the mills had been sold, with the result that a large balance remained in the hands of the Collector, an amount which could legitimately be made available for distribution to creditors for liquidating their debts. The creditors came to know of this, and some of the creditors moved in the matter very swiftly and had the moneys attached, in the hands of the Collector of Deoria, who held the money. At the instance of one of the creditors (this fact I have taken from Mr. Kunzru) the money which was held by the Collector, as balance, was brought over to the Court of the Civil Judge Deoria. It may be mentioned here that before this money came to the Court of the Civil Judge at Deoria several executions were pending in the Court of the Civil Judge—some of these applications had originated, in the Court of the Civil Judge, Deoria, while others came to that Court on transfer from other Courts.

3. The aggregate claim of the decree holders entitled to rateable distribution came to Rs. 6,40,534/25 np. while the amount which was received by the Civil Judge from the Collector of Deoria as surplus of the sale proceeds of the Padrauna Raj Krishna Sugar Works Ltd., Padrauna, was Rs. 3,30,726/32 np. only. That being the position, the decrees of the creditors could only be paid up proportionately and not fully, and consequently it became necessary for the Court to determine whether the money received in the Court of the Civil Judge was to be rateably distributed, and, if so, between-which of the creditors. The learned Civil Judge came to the conclusion that the amount which had been received from the Collector was liable to rateable distribution under the provisions of Sec. 73, C.P.C The learned Judge further held that distribution of the assets was to be made amongst the first forty-seven creditors whom he set out in a list annexed to his order. He directed that a chart showing the amounts payable to the various decree holders should be put up on the Notice Board and that anyone wishing to object in regard to any matter shown in this chart could file such objections by the 31st October 1958. The order of the learned Judge was made on the 17th October 1958, and the chart was put up on the Notice Board in accordance with the Judge's direction on that very date.

4. In revision two preliminary objections were raised on behalf of the opposite parties. The first objection raised was that the order against which the revision has been filed was an interlocutory order and, therefore, there was no “case decided” within the meaning of Sec. 115, C.P.C The second objection that was taken was that the revision was defective in form, because all the creditors had not been made parties to the revision. It was contended in this connection that any order made in the revision by which a variation was to take place in any of the particulars set out in the Chart was likely to affect all the creditors, and, therefore, every creditor should have been made a party to the revision.

5. Mr. Kunzru, who led on behalf of the applicants in these revisions; met the second preliminary objection by putting in applications in all the five revisions praying for the addition of all the creditors as parties to each revision application. Copies of these applications were served on the other side—those creditors who were represented in the revisions. A prayer for time was made on behalf of the opposite parties for meeting the prayer made in these applications. I, however, postponed the consideration of this question till after I had heard the petitions on the other points raised, because if I came to the conclusion that the five revisions were to fail on the merits, then, in my view, it appeared unnecessary to delay the disposal of these revisions just to enable the opposite parties to the revisions to make objections in regard to the addition of parties.

6. Reverting to the first preliminary objection, namely, whether the order against which these revisions have been filed came within the ambit of the phrase “case decided” or not, I have come to the conclusion that it did for we know that the phrase “case decided” had a wide meaning and that, its meaning was not co-extensive with “suit decided.” Broadly speaking, the ratio of decisions on this question is that where by an order any right of a party has been determined and such determination could not be reagitated at any other stage, or in appeal, then the decision made would amount to a “case, decided” within the meaning of the section. Applying the above lest to the order made by the Court below, we find that by the order the Court below did determine a very important question affecting the right of certain parties to the cause. The decision of the Court below had the effect of negativing the claim of the applicants to have the money which was in the Court of the Civil Judge and which had come to that Court from the Court of the Collector, Deoria, the matter determined by the Court below, therefore, was a matter affecting the right of a party. Further, there was no stage subsequent, at which any of the parties could reagitate this, matter. The fact that the learned Judge permitted objections to be filed against the chart which he had drawn up did not, in my view, entitle any prospective objector to raise any of the questions which the learned Judge had already decided. Therefore, the order dated the 17th October 1958 against which the revisions had been filed was in the nature of a final order. I, therefore, over-rule this preliminary objection and proceed to determine the case on the merits.

7. The main controversy in this revision centered round the question as to whether or not it was obligatory for decree-holders who claimed rateable distribution under Sec. 73, C.P.C to specifically apply for such rateable distribution or whether decree holders, who had their decrees under execution prior to the Court getting the assets of the judgment-debtors in its hands, were entitled to such rateable distribution.

8. On behalf of the applicants it was contended by Mr. Gopinath Kunzru that a separate application for rateable distribution had to be made and that unless there was such an application before a Court the Court could not allow rateable distribution to a judgment-creditor even though he had put his decree under execution before the assets of the judgment-debtor had been received by the executing Court. On behalf of the opposite parties Mr. Kanhaiya Lal Misra, the learned Advocate-General, contended that there was nothing in the words of the section which required a separate application by a decree-holder claiming rateable distribution.

9. The relevant portion of Sec. 73 of the Code is in these words:—

“(1) 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 payment of money passed against the same judgment-debtor and have obtained satisfaction thereof, the assets, after deducting the costs of realization, shall be rateably distributed among all such persons:

Provided as follows:—

(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.

(3) ………..”

10. An analysis of Sec. 73(1) gives the following result:—

(1) that the assets of the judgment-debtor are held by a court;

(2) that more persons than one have claims against those assets of the judgment-debtor because of their being judgment-creditors and that the judgment-debtor is the same person in each case;

(3) that before the assets of the judgment-debtor came to be held by the Court applications in execution had been made against the judgment-debtor; and

(4) that the decrees of the creditors were still outstanding.

11. The object of the section is fairly clear, namely, to prevent multiplicity of execution proceedings and at the same time to ensure that there was equitable distribution of the assets of the judgment-debtor among the various decree-holders who had the right to have their decrees satisfied at a particular point of time: this was so stated in the Full Bench decision in Hoti Lal v. Chatura Prasad . I.L.R 1941 All. 77. In Shanker Sarup v. Mejomal . I.L.R 23 All. 313 at p. 322. their Lordships of the Privy Council held that the scheme of Sec. 295 (that was the section which had equivalent provisions to Sec. 73) was to “enable the Judge as a matter of administration to distribute the price according to what seem at the time to be the rights of the parties without the distribution importing a conclusive adjudication on those rights, which may be subsequently readjusted by a suit……” In Biswambar Biswas v. Aparna Char an Mohary . A.I.R 1935 Cal. 290. a Full Bench of the Calcutta High Court held that an execution Court under Sec. 73 was only concerned with those matters which were set out as being conditions necessary for the participation in the benefits conferred on just creditors by the section.

12. It was contended by Mr. Kunzru that it could never have been the intention of the legislature that the Court should go delving into its record to find out as to how many decree-holders had presented applications for execution against any particular judgment-debtor whose assets were held by the court. The further contention raised was that when once a creditor specifically applied for attachment of a particular sum of money and got that sum over to the executing Court then in respect of such a sum no other creditor could claim rateable distribution. The basis of this argument appears to have been that once an attachment of a money took place then the attaching creditor obtained a kind of priority lien on that money and that it was not possible thereafter to treat that money as the asset of a judgment-debtor which could be available for distribution to creditors. This argument may have had substance if there was not Sec. 73 in the Code. It appears that Sec. 73 was put in the Code just to discountenance this kind of an argument and was, if I may say so, an exception to a general rule on which the aforementioned argument on behalf of the applicants appears to have been founded. In Mt. Deoraji Kuer v. Jadunandan Rai . A.I.R 1931 All. 92 it was held that when an application for rateable distribution is made after attachment has already taken place the attachment really enures to the benefit of all claimants and is as effective as if it had been brought about separately by each creditor, provided they had, before the assets were realised, applied for execution of their respective decrees. It was further held that Sec. 73 did not require a separate application for claiming rateable distribution. The prayer for execution of a decree has in it, inherent a prayer for rateable distribution.

13. In Hargobind Das v. Raja Moti Chand . 1933 A.L.J.R 336. a Bench of this Court had held that under Sec. 73, C.P.C it was not necessary for the decree-holder to make a specific application for rateable distribution. It was held that all that was necessary was that he should have applied for execution and should not have received satisfaction of his decree. Earlier in 1932 a Bench of this Court in Pt. Sidh Nath Tewari v. Tej Bahadur Singh and others . A.I.R 4932 All. 411 had also held that Sec. 73 did not say that before the receipt of such assets an application for rateable distribution must be made to the court. In this case their Lordships laid down certain pre-requisites for the application of Sec. 73. This is what they said:—

“The first step that is necessary in these cases is that there must be assets held by the Court. The next step is that there must be a decree-holder who has a decree for the payment of money passed against the same judgment-debtor. That decree-holder must not have obtained satisfaction and he must have made an application to the Court for the execution of his decree before the receipt of the aforesaid assets. Having satisfied all those conditions he can then claim to come in and have a rateable distribution of assets held by the court.”

14. Reliance was placed by Mr. Kunzru on the decision in Ramayya v. Namayya . A.I.R 1943 Mad. 165. wherein their Lordships had said that when one decree-holder had attached properties belonging to his judgment-debtor in execution of his decree another person holding a decree against the same judgment-debtor could apply to the Court under Sec. 73 for rateable distribution of the assets to realise in execution proceedings instituted by the first decree-holder and when he applies before the assets are realised then he is entitled to rateable distribution. The above decision was made in a case where the question that has arisen for determination in the instant case did not arise for determination, and, therefore, their Lordships were not called upon to pronounce upon the question whether Sec. 73 required a separate application to be made by a decree-holder seeking rateable distribution or not. In my view, therefore, this case was not an authority for the proposition for which Mr. Kunzru contended.

15. The observation of their Lordships of the Privy Council in M.L Mahalingam Chattiar v. Ramanathan Chettiar . A.I.R 1940 P.C 173 at page 176 was as follows:—

“The fact that there may be other attaching creditors in the same position is immaterial. Any money recovered by the execution creditor will be held by the Court and be subject to the provisions of Sec. 73 of the Code.”

16. The observations of their Lordships of the Privy Council do not suggest that a creditor entitled to rateable distribution, if the other conditions of Sec. 73 are fulfilled, has to make an application for rateable distribution.

17. In Suikeena Katum Sahiba v. Mahomed Abdul Aziz . A.I.R 1916 Mad. 792. it was held that an application for execution of a decree did not give priority by virtue of attachment by a creditor and that the fund in a Court which was attached was distributable on the principle followed by a court in the administration of assets of a deceased person, that is to say, rateably amongst the creditors who have put in claims thereto.

18. Reliance was also placed by Mr. Kunzru on Kaviraj Bimala Nanda Tarakatirtha v. Dhirendra Nath Chandra . A.I.R 1937 Pat. 92. to support his contention that an application claiming rateable distribution under Sec. 73 was essential. As I read the aforementioned decision I do not think that the learned Judges decided anything like what was contended for by Mr. Kunzru. The fact that in Bimala Nanda Tarakatirtha's case there was an application for rateable distribution did not mean that their Lordships of the Patna Court expressed the view, that such an application was necessary before a prayer for rateable distribution could be entertained.

19. From what I have stated above I have come to the conclusion that it was not necessary to make an application for rateable distribution by a judgment-creditor in order to enable him to get the benefit conferred by Sec. 73 on judgment-creditors; I am further of the opinion that attachment of a sum of money and having that money brought over to an executing Court does not confer any special rights in regard to priority on the creditor who moves in the matter and has the money brought over to an executing court, for once any money comes to an executing court then the money must be deemed to be assets of the judgment-debtor held by a Court within the meaning of Sec. 73 and as such it must be distributable rateably amongst all such judgment-creditors as had applied for execution prior to the assets coming to the Court.

20. By its order the Court below directed parties to file objections to a chart which had been prepared under the directions of the court below by the 31st October 1958. The applicants having come up in revision to this Court did not file the objections which they could have. It may be that certain other creditors also refrained from filing objections by the 31st October in the belief that the revisions in this Court may succeed and thereby upset all the priorities that had been worked out and set down in the Chart. Under such circumstances I consider it desirable that I should direct the Court below to give such creditors as did not file any objections to the chart an opportunity to do so within one month from a date to be notified by the Court below: those creditors who had filed objections will, however, not be entitled to claim benefit under this direction of mine and make a second objection.

21. Under an order of this Court creditors were restrained from taking away the moneys to which they were shown to be entitled in the chart drawn up by the Court below, while the applicants were not so restrained. Since these revisions have failed I have seen no justification at all for permitting any restraint to continue on the right of the decree-holders to take away the amounts to which they may be held entitled under a rateable distribution under Sec. 73.

22. For the reasons given above I dismiss the applications in revision but under the circumstances of the case I direct the parties to bear their own costs of the revisions in this Court.

23. The records would be sent down to the Court below forthwith.

Revision dismissed.