Frederick Peacock v. Madan Gopal & Ors

Maclean, C.J:— The question referred to us is whether a vesting order made under the Insolvency Act (11 & 12 Vic., c. 21) has or has not the effect of giving the Official Assignee priority over the claim of a judgment-creditor in respect of property attached at the latter's instance previous to the passing of such order.

I am not sure that the question would not have been better framed if it had been whether a judgment-creditor has priority over the Official Assignee in respect of property attached by him previous to the passing of the vesting order, but the distinction is not of much importance.

The reference has arisen from a difference of opinion in the case of A.B Miller… v. Lakhimoni Debi…Decree-Holder, . on the one hand, and of Soobul Chunder Law v. Russick Lall Mitter on the other.

It is worthy of immediate notice that the latter case was not brought to the attention of the Court which decided the case of A.B Miller… v. Lakhimoni Debi…Decree-Holder, . to which decision I was a party.

It seems to me that the first question we have to consider is, whether the judgment-creditor who had attached his debtor's property before the Bankruptcy proceedings has obtained by that attachment any charge or lien upon the attached property.

In the Full Bench case of Anand Chandra Pal v. Panchi Lal Sarnia, it was considered that the judgment-creditor who had obtained an attachment had a charge or lien upon the attached property; and that view is also expressed, at any rate, by one of the Judges in the Full Bench case of Shib Kristo Shaha Chowdhry v. Kishen Chand Golecha. But in the case of Soobul Chunder Law v. Russick Lall Mitter it is distinctly laid down that the attachment creates no charge upon the property and that view is supported by a recent case before the Judicial Committee of the Privy Council, which is Moti Lal v. Karrabuldin, where it is distinctly held that attachment under Chapter XIX of the Code of Civil Procedure merely prevents alienation and does not give title. In advising Her late Majesty their Lordships say thus: “Attachment, however, only prevents alienation, it does not confer any title.”

I think, therefore, it must be taken that the attaching creditor here did not obtain by his attachment any charge or lien upon the attached property, and if so, no question as to the Official Assignee only taking the property of the Insolvent subject to any equities affecting it, can arise. But even if there was such a lien, the law, as it stands now, is different from what it was when the Full Bench case Anand Chandra Pal v. Panchi Lal Sarma was decided. There is a marked distinction between the language of sec. 270 of the Code of 1859 and sec. 295 of the present Code which governs the present case.

Under sec. 270 of the Code of 1859 a creditor obtaining an attachment was entitled to be first paid out of the proceeds of the sale, notwithstanding a subsequent attachment of the same property by any party in execution of his decree: but sec. 295 of the present Code points to a rateable distribution of the proceeds of sale under a decree in certain events and under certain circumstances.

If then the attaching creditor had obtained a charge or a lien upon the attached property, it would have been difficult, having regard to the change in the law, to hold that he was solely entitled as against the Official Assignee to the proceeds of sale under the decree. It is unfortunate that the case of Soobul Chunder Law v. Russick Loll Hitter was not cited to us, when Mr. Justice Banerjee and I decided the case of A.B Miller… v. Lakhimoni Debi…Decree-Holder, . and that the arguments which have been addressed to us to-day, the arguments based upon the difference between sec. 270 of the old Code and sec. 295 of the present, were not called to our attention. Nor was the Privy Council case to which I have referred, cited before us.

On these grounds, I think, that the question referred to us ought to be answered by saying that the judgment-creditor, under the circumstances, has no priority over the Official Assignee in respect of the property attached.

Prinsep, J.:— I am of the same opinion. In my opinion, the case should be decided in accordance with the judgment of the Court in the case of Soobul Chunder Law v. Russick Ball Mitter. There is no priority in a matter of this description. The expression, no doubt, is derived from the terms of sec. 270 of the Code of 1859 which gave the first attaching creditor the right to be paid before other persons could participate in the money realized from the judgment-debtor, but sec. 270 has been repealed and has been re-enacted in an entirely different form in sec. 295 of the present Code. Under sec. 295 all decree-holders who have applied for execution of their decrees for money against the same judgment-debtor before the realization of assets from him are entitled to rateable distribution. If the judgment-creditor in the present case be allowed to execute his decree in spite of the opposition of the Official Assignee who represents him and all the other creditors, only those creditors who may have obtained decrees will be entitled to rateable participation with him in monies realized and the object for which the Official Assignee has been appointed will be frustrated.

I agree in the judgment delivered by my Lord the Chief Justice and the answer which he proposes to give to this reference.

Ghose, J.:— I agree with my Lord. I am clearly of opinion that the attaching creditor did not acquire any title or ‘charge upon the property by reason of the attachment in question; and it seems to me, having regard to the provisions of sec. 295 of the Code, which has already been referred to by the learned Chief Justice, that he cannot claim any priority as against the Official Assignee, who represents not only the Insolvent, but the whole body of the creditors.

Hill, J.:— I agree with my Lord and have nothing to add.

Henderson, J.:— I agree with my Lord the Chief Justice.