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Dhirendra Nath Roy v. Kamini Kumar Pal

Calcutta High Court
Jan 11, 1924
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Concise Analytical Summary of the Opinion (per provided text)

Factual and Procedural Background

Two rival decree-holders (referred to in the opinion as the petitioner and the opposite party) obtained decrees against the same judgment-debtor. The petitioner first attached the judgment-debtor's property in execution of his decree. Subsequently, the opposite party executed his decree, attached the same property and brought it to sale.

The petitioner initially applied to the Maunsif conducting the opposite party's execution to have the property resold on the ground of an inadequate price and also sought rateable distribution of the assets under section 73 of the Civil Procedure Code, and distribution after any resale. The Maunsif intimated an intention to reject this application and the petitioner withdrew it. The petitioner then proceeded to execute his own decree, caused the property to be sold and purchased it himself.

The petitioner later applied under Order XXI, rule 90, Civil Procedure Code, to set aside the opposite party's sale on the ground of material irregularity and alleged collusion. The lower Courts examined whether, having withdrawn his earlier application, the petitioner remained a person entitled to make an application under Order XXI, rule 90; they held that he was not. The present opinion considers that ruling.

Legal Issues Presented

  1. Whether an attaching creditor, as such, is entitled to maintain an application under Order XXI, rule 90, Civil Procedure Code (i.e., whether "a person whose interests are affected by the sale" includes an attaching creditor).
  2. Whether the word "interest" in rule 90 must be limited to proprietary or possessory interests in the property sold, or whether it includes other interests (for example, pecuniary interests arising from attachment or entitlement to rateable distribution).
  3. Whether the petitioner's prior withdrawal of an application for rateable distribution eliminates his locus to move under Order XXI, rule 90 to set aside the sale carried out by the opposite party.

Arguments of the Parties

Petitioner's Arguments

  • The petitioner contended that, although he had withdrawn an earlier application regarding rateable distribution, he remained a person whose interests were affected by the sale and therefore was entitled to apply under Order XXI, rule 90 to have the opposite party's sale set aside on the ground of material irregularity and collusion.
  • He alleged material irregularity and collusion in the present sale: the property had previously been sold in execution of the petitioner's decree for a higher price which had been set aside on the judgment-debtor's application; the present sale fetched a much lower amount and the judgment-debtor had not challenged it.

Opposite Party's Arguments

  • The opposite party (and the lower Courts) argued that because the petitioner withdrew his earlier application seeking rateable distribution, he forfeited his right to share and thus was not a person entitled to make an application under Order XXI, rule 90.
  • It was further argued that an execution (attaching) creditor is not a person "whose interests are affected by the sale" unless he possesses a proprietary or possessory title to the property; in other words, "interest" should be confined to proprietary/possessory interests.
  • The opposite party also contended that if attaching creditors were included within the class of persons entitled to apply under rule 90, the specific phrase "any person entitled to share in a rateable distribution of the assets" in the rule would be rendered superfluous.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Asmatunnessa Begum v. Ashruff Ali Referenced as a reason why the Legislature changed the wording of the corresponding provision in the revised rule (i.e., indicating an intention to widen the scope). The court treated the decision as background for the legislative change: the altered wording in the new rule was seen as deliberate to widen the class of persons who may apply under rule 90.
Jogendra Nath Chatterjee v. Manmatha Nath Ghose Held that a plaintiff who had attached immoveable property before judgment did not have such an interest as would entitle him to apply under Order XXI, rule 90 (as interpreted in that case). The court noted that the learned Judges in that case distinguished between pre-judgment attaching creditors and decree-holders who attach in execution; the present court relied on that distinction to support widening rule 90 to include attaching decree-holders.
Sankaralinga Reddi v. Kandasami Tevan Established that an attaching creditor acquires a right to have the property kept in custodia legis for satisfaction of his debt and that interference with that right is actionable (demonstrating that attaching creditors have a real interest). The court relied on this case to show that an attaching creditor has a real, enforceable interest (not merely theoretical) in the property or in its preservation, supporting the conclusion that such a creditor's interests can be affected by an irregular or collusive sale.

Court's Reasoning and Analysis

The Court—through the separate but concurring opinions of Suhrawardy, J. and Page, J.—analyzed whether the phrase in Order XXI, rule 90, "a person whose interests are affected by the sale" includes an attaching creditor and whether the petitioner's prior withdrawal of an application defeated his locus to apply under rule 90.

Suhrawardy, J. — Key steps in analysis:

  • Identified the central question: whether an attaching creditor, as such, is entitled to maintain an application under Order XXI, rule 90.
  • Observed that the wording of the old provision (section 311 of the Code of 1882) used language limited to "any person whose immoveable property has been sold," whereas the new rule uses the broader phrase "a person whose interests are affected by the sale." He inferred the Legislature's intention to widen the scope (also noting Asmatunnessa Begum as context for the change).
  • Compared rule 90 to rule 89: rule 90's phrase "a person whose interests are affected by the sale" is even wider than rule 89's "any person either owning such property or holding an interest therein by virtue of a title acquired before such sale." This comparison supported a broader interpretation for rule 90.
  • Rejected the argument that an attaching creditor has no interest: the attaching creditor acquires at least a vestige of title or an enforceable interest in having the property preserved (custodia legis) for satisfaction of his debt; interference with that right is actionable (citing Sankaralinga Reddi).
  • Considered Jogendra Nath Chatterjee v. Manmatha Nath Ghose, noting it dealt with pre-judgment attachments and that the Judges in that case distinguished such attaching creditors from decree-holders who attach in execution.
  • Addressed the opposite party's contention that including attaching creditors would make the phrase "any person entitled to share in a rateable distribution of the assets" superfluous; he accepted that this argument had some force but reasoned the clauses could be read as covering particular classes as well as a general class—i.e., the first clause referring to a specific class and the second being of general application.
  • Found the petitioner's allegations of material irregularity and collusion not necessarily groundless (noted prior sale for higher price, the judgment-debtor's successful challenge to that earlier sale, and the present lower sale amount), and held that such circumstances could affect an attaching creditor's interests.
  • Concluded that the petitioner, as an attaching/decree-holder who had attached the property, had an interest (including pecuniary interest) affected by the sale and therefore was entitled to apply under rule 90; accordingly, the rule ought to succeed.

Page, J. — Key steps in analysis and concurrence:

  • Agreed with the ultimate conclusion and provided a complementary factual analysis: he doubted that the petitioner had in fact abandoned a substantive claim to share in the particular sale's proceeds, since the petitioner had only withdrawn an application that was conditional (relating to a particular bidding scenario) and not necessarily a general surrender of his right to rateable distribution.
  • Adopted the textual/legislative approach: the substitution in rule 90 of "persons whose interests are affected by the sale" for the older phrase in section 311 demonstrates an intention to enlarge the class of persons entitled to apply under rule 90.
  • Recognized that while a decree does not by itself create a charge or lien, attachment in execution gives the decree-holder a real interest in the property because it enables enforcement of the decree against that property. A collusive or irregular sale can reduce the amount available to satisfy the attaching decree-holder (either by reducing his share in a rateable distribution or by diminishing assets available to satisfy his decree).
  • Held that the applicant's interests were or might be seriously affected by the sale and therefore he should be permitted to have his rule 90 application heard on the merits.

Holding and Implications

Holding: Rule made absolute; case remanded to the Court of first instance for disposal on merits.

Implications:

  • The court explicitly held that an attaching creditor (in execution of his decree) may be a "person whose interests are affected by the sale" within the meaning of Order XXI, rule 90, and therefore can maintain an application under that rule to set aside an irregular or collusive sale.
  • The direct practical effect on the parties is that the petitioner's application under rule 90 must be heard on its merits by the Court of first instance (the case was remanded accordingly) and costs will "abide the result" (i.e., costs to be decided after final disposal).
  • The opinion emphasizes a broad interpretation of "interests" in rule 90 — not confined to proprietary or possessory title but including pecuniary and enforceable interests arising from attachment — and therefore enlarges the class of persons who can invoke the protection of rule 90 as compared with the older wording; however, the court did not state that it was creating a binding novelty of law beyond deciding the present rule—its holding was applied to the facts and sent back for merits. The opinion does not explicitly declare that it sets a new binding precedent beyond the decision in this matter.

Disposition recorded in the opinion: "Rule absolute; case remanded." Costs to abide the result.

Show all summary ...

Suhrawardy, J.:— This rule raises an important question, viz., whether an attaching creditor, as such, is entitled to maintain an application under Order XXI, rule 90, Civil Procedure Code. The facts of this case are that the opposite party and the petitioner are two rival decree-holders having obtained decree against the same judgment-debtor. The petitioner at first attached the judgment-debtor's property in execution of his own decree. Thereafter the opposite party executed his decree, attached the property and brought it to sale. Thereupon the petitioner applied to the Maunsif in whose Court the decree was being executed to have the property resold on the ground that it was sold for a very inadequate price. He further applied to here the assets distributed, rate ably under section 73, Civil Procedure Code, and also for such distribution of the assets after the resale. The Court having intimated its intention to reject his application he withdrew it. The effect of this withdrawal was that he gave up his right to the rateable distribution. He subsequently proceeded to execute his decree, and brought this property to sale and purchased it himself. He now applied to have the sale by the opposite party set aside under Order XXI, rule 90, on the ground of material irregularity. The Courts have proceeded upon an examination of one question, whether he is a person who is still entitled to a share in the rateable distribution of the assets. They have held that the plaintiff having withdrawn his application in which he prayed for rateable distribution he is not a person entitled to make an application under Order XXI. rule 90. It has been argued before us that the view taken by the lower Courts is wrong; and further that though the petitioner has lest his right to share in the rateable distribution of the assets he is a person whose interests are affected by the sale and therefore he is entitled to maintain this application. In my opinion this contention has great force. The corresponding words in section 311 of the Code of 1882 were any person whoso immoveable property has been sold.” The change of wording in the new Act indicates that the Legislature thought it proper in view of the decision in Asmatunnessa Begum v. Ashruff Ali, to widen the scope of the section. It may be profitable to note that the words that occur in rule 90, namely, “a person whose interests are affected by the sale” are even, wider than the words that are to be found in rule 89, namely, “any person either owning such property or holding an interest therein by virtue of a title acquired before such sale.” This clearly shows that the person who has get a vestige of title in the property sold may apply under rule 89 to have the sale set aside. But a person who is entitled to apply under rule 90 to have the sale set aside may be a person whose interests are such (not necessarily in the property) as may be affected by the sale. It cannot be said that an attaching creditor has no interest in the sale of the property, or if I may go further, in the property itself. There is no authority directly in point, but from the observations made in several cases, some support may be found to the view that I have adopted. Reference may be made to the case of Jogendra Nath Chatterjee v. Manmatha Nath Ghose. There the question was whether the plaintiff who had attached immoveable property before judgment had such interest as would entitle him to apply under Order XXI, rule 90, to set aside the sale of the property in execution of another person's decree. The learned Judges held that he had not. But in coming to that conclusion they drew a distinction between a person who had obtained attachment before judgment and a decree-holder who had attached the property sold in execution of his decree. Reference may also be usefully made to the case of Sankaralinga Reddi v. Kandasami Tevan. There it has been held that an attaching creditor does not acquire any such charge on the attached property which will give him priority over another creditor but he acquires a right to have the property kept in custodia legis for the satisfaction, of his debt, and an intentional interference without justification with such right is an actionable wrong for which an action would lie. In that case a moveable property was attached in execution of a decree. It was removed by a third party. It was held that the attaching decree-holder may maintain a suit for the recovery of that property from the third party. If he had no interest in the property, it is difficult to see how he can maintain, a suit for its recovery. It is argued on behalf of the opposite party that if the attaching creditor is a person whose interests are affected by the sale then the expression “any person entitled to share in a rateable distribution of the assets” in the rule is superfluous. On the face of it this argument assumes some importance. But it is arguable that the first clause has reference to a particular class of persons, while the latter is of general application. Now, what are the interests which the petitioner has which are affected by the sale of the property by the opposite party? His case is that the property is liable, to be resold because there was material irregularity and that the sale was brought about in-collusion with the judgment-debtor. I cannot say that such contention is groundless. It appears that the property was previously sold in execution of the decree of the petitioner for a higher price than that fetched at the present sale. The judgment-debtor applied under Order XXI, rule 90 and had that sale set aside. The present sale is for a much lesser amount but the judgment-debter has not taken any step to challenge it. It is further submitted to us on behalf of the opposite party that the effect of allowing the petitioner to contest the present sale is that in the event of his success in setting aside the present sale; his own sale would stand and the opposite party would have no further remedy. I am not concerned with what may be the effect of having the sale set aside. The only question with which we have to deal at present is whether the petitioner is a person who can maintain an application under Order XXI, rule 90. It has also been urged with great deal of emphasis that the word “interest” in rule 90, must be interest in property; that is interest which must be some soft of proprietary or possessory title. I am not prepared to restrict the meaning of a plain word so as to exclude all other interests such as pecuniary interest. In my opinion, the present petitioner is a person whose right to the property, however insignificant it may be, is affected by the sale. In this view of the law I am of opinion that the Rule ought to succeed.

The result is that this Rule is made absolute and the case sent, back to the Court of first instance for disposal on merits. Costs will abide the result.

Page, J.:— I am of the same opinion. The issue in this case is whether the applicant was entitled, to apply to the Court to set aside the sale of the property brought about by the opposite party. It is conceded, having regard to the facts of this case, that the applicant was entitled to share in a rateable distribution of the assets realised by the sale under Order XXI, rule 90, but it is said that he has lost his right to share in a rateable distribution of the assets because he applied that the assets which resulted from the sale should be rateably distributed, and afterwards withdrew that application. If that were so, I should be disposed to think that his right to share in the rateable distribution of the assets has gone. But I am not satisfied that this was what really happened. What happened was that when the sale took place the applicant applied to the Court that the bid of the execution creditor No. 1 should not be accepted, and that the sale should go on, in which case, he stated that he would be willing to offer Rs. 700 for the property, the bid of the execution creditor No. 1 being only Rs. 145. He further applied that if an order was made that the sale should proceed on the terms suggested the assets realised by the sale should be rateably distributed, and that in that distribution the applicant should be entitled to share. The first application was refused, and the applicant then withdrew the second one, and thereafter proceeded to purchase the property at a subsequent sale which was brought about at his instance. If that was what happened, in my opinion, the applicant never did make or withdraw an application for a share in the rateable distribution of the proceeds of a sale in which the execution creditor, No. 1's bid was accepted. All that he withdrew was an application to share in the proceeds of the sale made on the assumption that he was entitled to bid when the property was put up for sale; and if the occasion, hereafter arises, it may be, if the proceedings to set aside the sale are dismissed, that it will still be open to the applicant to apply to share in a rateable distribution of the assets. As to that I express no opinion.

But there is another ground upon which the applicant contends that he is entitled to apply to set aside the sale under Order XXI, rule 90; namely, that the sale being an irregular or a fraudulent one his interests were thereby affected. The opposite party contends that an execution creditor who has obtained a writ of attachment is not a person whose interests are affected by the sale because in his contention the only persons connoted by the words “those whose interests are affected by the sale” are persons who possess a proprietary or possessory title to the property which forms the subject matter of the sale, and whose title will be destroyed if the sale is allowed to remain effective. In support of that contention the learned vakil for the opposite party cited certain cases which had been decided under the corresponding provisions in the old Code (section 311). But it is to be observed that the words in section 311 were “any persons whose immoveable property has been sold”, and that in rule 90 there have been substituted the following words, viz. “any persons whose interests are affected by the sale. The intention of the Legislature, in my opinion, when making this amendment of the language of the rule, was “to enlarge the class of persons who would be entitled to apply under rule 90. In my opinion, “persons whose interests are affected by the sale” is an expression which is not limited to persons whose proprietary or possessory title is affected by the sale. Now, is an execution creditor who has attached immoveable property a person whose interests are affected by a fraudulent or irregular sale? In my opinion, he is. It may well be that a decree in itself does not create a charge or a lien in favour of the decree-holder over the property of the judgment-debtor, and it also may be a sound contention that the attachment of property in execution of a decree does not of itself create in the decree-holder any title to such property, but, in my opinion, it gives him an interest in the property, and a very real interest, because the effect of obtaining a decree, and attaching immoveable property in execution of that decree, is that the decree-holder becomes entitled to enforce the right which he has obtained under his decree against that property. Now, if the sale by another decree-holder is in fact collusive, it affects the right of the execution creditor who has attached the property, at any rate to this extent, that if he is entitled to a share in the rateable distribution of the proceeds of the sale, he will receive a lesser amount than he would have obtained if the property had been sold for a fair and proper price, or again, if he is not entitled to share in the rateable distribution of the proceeds of the sale, there will be a less sum available after payment of the decree holder's judgment-debt for the purpose of liquidating the decretal amount to obtain which he has attached the property. In my opinion, the interests of the applicant were or might be seriously affected by the sale; and, in my judgment, he is entitled to have his application under rule 90 heard upon the merits. For these reasons, I agree with the order, proposed by my learned brother.

A.S.M.A
Rale absolute; case remanded.