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Opinion Summary: Revision Application by Decree-Holders (Rachhpal Singh, J.)

Factual and Procedural Background

The decree-holders obtained a decree from the Calcutta High Court against Messrs P.L. Jaitly & Co. and the Budaun Electric Supply Co. for Rs. 54,211-10-9. The decree was transferred to Budaun District and an application for execution was filed in the Court of the Subordinate Judge, Budaun, seeking attachment of property owned by the Budaun Electric Supply Co. as listed in the execution application. Notices were issued to both judgment-debtors.

One Mr. Raghunath Prasad Tandon (who had been appointed local manager of the Budaun Electric Supply Co. by Messrs Jaitly & Co., and who, with Government permission, was carrying on the business) came forward and filed objections, asserting that the company's property should not be attached for reasons set out in his application. The decree-holders opposed, arguing that because no attachment had yet been made, Mr. Tandon was not entitled to object and the objections were premature. The learned Subordinate Judge allowed the objections, citing that the case was peculiar and circumstances were somewhat extraordinary. The decree-holders challenged that order by filing this revision application.

Background facts relevant to the dispute: Messrs Jaitly & Co. had secured a licence from the Local Government to supply electric energy in Budaun and formed The Budaun Electric Supply Co. Ltd., with Jaitly & Co. as managing agent. The plant could not be received in time and the Government revoked the licence. Messrs Kishore Chand Shiva Charan Lal advanced a large sum and undertook to carry on the business; the Government decided the licence should be granted to that firm, negotiations and a proposed sale of assets were ongoing, but no sale had been completed, leaving that firm in the position of creditors or prospective purchasers.

Legal Issues Presented

  1. Whether the learned Subordinate Judge was correct in allowing objections by a third party before any attachment of the property had been made in execution proceedings.
  2. Whether Section 28 of the Electricity Act (9 of 1910) or the need for government permission to carry on the electrical undertaking affected the right of decree-holders to seek attachment of the company's property.

Arguments of the Parties

Decree-holders' Arguments

  • The decree-holders maintained they were entitled to execute the decree against the Budaun Electric Supply Co. and had properly applied for attachment of the company's property.
  • They argued that, because no attachment had yet been made, Mr. Tandon (or any third party) had no locus standi to file objections and that such objections were therefore premature and should be rejected.

Objector's (Mr. Raghunath Prasad Tandon / Messrs Kishore Chand Shiva Charan Lal) Position

  • Mr. Tandon filed objections asserting that the property of the Budaun Electric Supply Co. should not be attached; the opinion records that these objections were argued in the application, but the specific legal particulars of his title or grounds (beyond the general factual context) are not detailed in the text.
  • The learned Subordinate Judge (in allowing the objections) expressed concern that attachment might stop the undertaking from working and thereby cause great inconvenience to the general public — this formed the practical basis for permitting pre-attachment objections in the lower court.

Respondent Counsel's Position in Revision

  • Respondent's counsel urged that this Court should not interfere with the order of the Court below in revision, relying on authorities cited in Mulla on the Civil Procedure Code (Edn. 10, p. 391), and contending that the Court of Revision should not overturn an order merely because it was irregular or technically wrong.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court began by identifying the controlling procedural rule: a third party may object to an attachment only after an attachment has been made, by bringing objections under R.58, O.28 of the Code of Civil Procedure. The Court emphasized that the Code contains no provision permitting a third party to file objections prior to attachment.

The Court explained the reason for this rule: until an attachment is made there is no act done that gives a third party a cause of action to approach the Court; the right to contest arises only when the property is actually attached and the third party can then demonstrate his title or other grounds to oppose the attachment.

Applying this principle to the present facts, the Court concluded that because no attachment had been effected at the time Mr. Tandon filed objections, the learned Subordinate Judge was wrong to permit those objections; they should have been rejected for lack of locus standi. The Court noted the Subordinate Judge was aware of the general rule but permitted the objections on the grounds of peculiarity and potential public inconvenience if the undertaking were to stop functioning.

The Court rejected that practical basis. It observed that no one had suggested that the decree-holders, without Government permission, should carry on the electric supply business, nor had any specific instance of public suffering from attachment been demonstrated. The Court held that such practical questions (for example, whether permission would be obtained to carry on the business, whether receivers should be appointed, or whether an agreement might be reached among parties) could only arise after an attachment had been made and are therefore premature at the pre-attachment stage.

The Court further examined Section 28 of the Electricity Act (9 of 1910), quoted in the opinion, and concluded that that provision did not affect the present application for attachment at the pre-attachment stage: "No occasion for the application of this section has arisen." The Court made clear that possible interactions with the Act (such as the need for sanction to carry on the business) could be addressed after attachment, if and when they become relevant.

Addressing the respondent's submission that the matter was merely technical and thus not fit for interference in revision, the Court held the question to be substantive. The refusal to allow attachment affected the substantial rights of the decree-holders, who have a right to seek attachment of judgment-debtors' property in execution of their decree. Because the Subordinate Judge's procedure allowed a third party to litigate before attachment, the Court found the ruling to be wrong and ultra vires, and therefore appropriate for interference in revision.

The Court expressly refrained from deciding the merits of any claim the objectors might have (for example, whether they as debenture-holders had any rights in the property). That question was left to be determined, if necessary, after an attachment is made and appropriate proceedings under the Code are followed.

Holding and Implications

Final Ruling: The Court allowed the revision application, set aside the order of the Subordinate Judge permitting objections before attachment, and directed that the prayer of the decree-holders for attachment should be granted so that execution may proceed according to law.

Direct consequences on the parties:

  • The Subordinate Judge's order allowing pre-attachment objections is set aside and the case is remitted to the Court below with directions to order attachment of the property identified in the execution application.
  • The execution proceedings are to proceed in accordance with law after attachment.
  • The decree-holders are awarded their costs against the objectors Messrs Kishore Chand Shiva Charan Lal.
  • The injunction previously issued by this Court is discharged.

Scope limitation: The Court did not determine whether the objectors (for example, as debenture-holders or prospective purchasers) have any proprietary right in the property; that question remains for determination after attachment if contested.

Disposition

The revision application was allowed. The order of the Subordinate Judge was set aside and the matter remitted with directions to grant attachment and continue execution according to law. Costs awarded to the decree-holders against the objectors; injunction discharged.

    Radha Kishen Beni Prasad v. P.L. Jaitly & Co.

    Rachhpal Singh, J.:— This is a revision application by the decree-holders arising out of execution proceedings. The decree-holders obtained a decree against Messrs P.L Jaitly & Co., and the Budaun Electric Supply Co., for a sum of Rs. 54,211-10-9. This decree was passed by the Calcutta High Court. The decree-holders got the decree transferred to Budaun District and then put in an application for execution in the Court of the Subordinate Judge of Budaun. The prayer was that the property owned by the Budaun Electric Supply Co., mentioned in a list attached to the application for execution should be attached. The Court ordered that notices should be issued to both the judgment-debtors. It appears that one Mr. Raghunath Prasad Tandon came forward and filed objections and pleaded that the property of the Budaun Electric Supply Co., should not be attached for the reasons given by him in his application. The decree-holders opposed this application. The plea taken by the decree-holders was that as no attachment had taken place. Mr. Tandon was not entitled to file any objection and therefore those objections were premature. The learned Subordinate Judge allowed the objections on the ground that it was a peculiar case and the circumstances were somewhat extraordinary. Against that order the decree-holders have preferred this revision application.

    2. Before we proceed to discuss the question about the correctness or otherwise of the order passed by the Court below, it is necessary to state here very briefly the circumstances under which Mr. Tandon came forward with his objections. It appears that Messrs Jaitly & Co made an application to the Local Government asking that they should be granted a license for supplying electric energy to the town of Budaun. This application was granted and a license was issued to Messrs Jaitly & Co. This firm started a company styled “The Budaun Electric Supply Co. Ltd.” Messrs Jaitly & Co., became its managing agent. Somehow or other the plant could not be received in Budaun within time, and therefore the Government revoked the license which had been issued by them. The firm of Messrs Jaitly & Co., made certain representations to the Government asking that the license should be renewed, but in that attempt they were unsuccessful. Under some arrangements the firm styled “Messrs Kishore Chand Shiva Charan Lal” advanced a large sum of money and undertook to carry on the business of the Electric Supply Co. This arrangement was made by this firm with Messrs Jaitly & Co., under which a large sum of money was advanced. Eventually the Government decided that the license should be granted to the firm of Messrs Kishore Chand Shiva Charan Lal. Negotiations are still going on and the proposed sale of the assets of the Budaun Electric Supply Co., has not yet been made in favour of the firm of Kishore Chand Shiva Charan Lal. Mr. Raghunath Prasad Tandon had been appointed the local manager of the Budaun Electric Supply Co. by Messrs Jaitly & Co. With the permission of the Government be is now carrying on the business there. As no sale has been made as yet in favour of the firm Messrs Kishore Chand Shiva Charan Lal, their position is that of creditors of the company to whom they have advanced some money.

    3. The question for our consideration is whether the learned Subordinate Judge was right in allowing the objections of Mr. Tandon. We have heard the learned counsel on both sides and we are clearly of opinion that the view taken by the learned Subordinate Judge is not correct. Admittedly the decree-holders obtained a decree against the Budaun Electric Supply Co., and they were entitled to execute that decree. They had made an application asking for the attachment of the property belonging to one of their judgment-deb-tors, that is, the Budaun Electric Supply Co. The Court was bound to allow this prayer and to attach the property. If the property did not belong to, the judgment-debtor, then it was open to the person claiming to be the owner of the property to come forward and file objections. The only method by which a third person can object to an attachment is to file objections after the attachment had been made. Her can come to Court and file objections under the provisions of R. 58, O. 28 of the CPC. There is nothing in the Code of Civil Procedure, which allows & third party to come forward with objections before an attachment has been made. The reason is very obvious. So long as an attachment has not been made, no one can come forward and say that anything has been done which gives him a cause of action to come to Court. It is only after the property has been attached in pursuance of an application for attachment made by the decree-holder that a third party would have the right to come forward and say that the property should not have been attached on the ground that it belonged to him and not to the judgment-debtor. At this stage it is altogether unnecessary to consider what the position of the opposite parties is they might be mortgagees or they might be debenture-holders or they might be purchasers of the assets of the Budaun Electric Supply Co. This question can only be determined after an attachment has been made. If then the objectors come forward, they will be required to show what their title is and then the applicants will have the right to show on what ground they seek to enforce the attachment against the attached property. Then the matter will be judicially determined. In the present case as no attachment had been made, the learned Subordinate Judge was clearly wrong in permitting objections to be filed. They should have been thrown out on the ground that there had been no attachment and therefore the objectors had no locus standi to come forward and make an application to the Court. The learned Subordinate Judge, as would appear from his order, was aware of this difficulty. In his order he states that it is true that

    “ordinarily an objector is to come to Court after the attachment of the property has taken place, but the present matter is not so ordinary.”

    4. The rule of law is, as we have already Explained, that objections can only be filed after an attachment has taken place and we have not been shown any law or decided cases in which it might have been laid down that in certain cases it may be open to an objector to come and file his objections before an attachment has taken place. The reason which led the learned Subordinate Judge to allow the objections is mentioned by him in his judgment and it is that nobody can work the undertaking who is not permitted to do so by the Local Government. He remarks that if the attachment, were made:

    “it might be that the undertaking would have come to a standstill thus causing great inconvenience to the general public.”

    5. We do not think that he was right in taking this view. Nobody suggests in this case and no occasion has arisen as yet for making a suggestion of this kind that the decree-holders should be permitted without the permission of the Local Government to carry on the business of the Budaun Electric Supply Co., nor is there any question of public suffering or any inconvenience by the attachment. This question may arise when the property has been attached and the decree-holders ask for the sale of the property. But unless an attachment has been made, no such question can arise. It may not eventually be at all necessary for the decree-holders to put the property to sale. But they can insist that their interest should be safe-guarded against any subsequent dealings by the judgment-debtors and apply for an order of attachment. If an order of attachment is passed, it protects their interest and therefore the decree-holders are certainly entitled to ask that the property; should be attached. Section 28 of the Electricity Act (9 of 1910), does not in any manner affect the application before us. It lays down that:

    “no person other than, a licensee shall engage in the business of supplying energy except with the previous sanction of the Local Government and in accordance with such conditions as the Local Government may fix in this behalf and any agreement to the contrary shall be void.”

    6. No occasion for the application of this section has arisen. It is quite possible that after the attachment the decree-holders may successfully obtain permission from the Government to carry on the business. It is equally possible that they may ask the Court below to appoint the firm of Messrs Kishore Chand Shiva Charan Lal, to act as receivers in the case. That would, in no way, interfere with the work of the company and at the same time the interest of the decree-holders would be protected. There is also the third possibility that after the attachment the parties may come to an agreement under which their differences may be settled. However all these questions can only arise after the attachment and we are therefore of opinion that the Court below should have passed an order of attachment.

    7. The learned counsel appearing for the respondents has strongly urged before us that we should not interfere-with the order passed by the Court below in revision. He has relied on certain authorities cited by Mulla in his Civil Procedure Code, Edn. 10, p. 391, and has contended that this Court I should not interfere merely because the Court below has acted with some irregularity or where the order of the Court below is only technically wrong.

    8. If the matter had been merely technical, we would have certainly agreed with, his contention, but in our opinion the question is not purely technical. It affects substantially the rights of the decree-holders. A decree-holder has a right to ask that the property of the judgment-debtors should be attached in execution of his decree and without any adequate reason whatsoever the Court below has disallowed that prayer. It cannot be said that the matter is purely technical. Then we find that the procedure adopted by the Court below in allowing the objections of a third party before the attachment had been made was altogether wrong and ultra vires. In our opinion the case is one in which wet should interfere in revision.

    9. We wish to make it clear that in our opinion the attachment of the property alleged to be the property of the judgment-debtors would not in any way, be contrary to the provisions of the Electricity Act. Nor do we wish, to decide the question as to whether the objectors as debenture-holders, have any right in the property, the attachment of which, is sought by the decree-holders. For the reasons given above, we allow this application in revision, set aside the order passed by the Court below and send back the case to it with directions that the prayer of the decree-holders for attachment should be granted and then the execution should proceed according to law. The decree-holders will get their costs from the objectors Messrs Kishore Chand Shiva Charan Lal. The injunction issued by this Court is discharged.

    K.S

    10. Order accordingly.

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    Radha Kishen Beni Prasad v. P.L. Jaitly & Co.
    (Dec 11, 1934)