Ramjas Agarwala Decree-Holder, v. Guru Charan Sen Opposite Party.

We are invited in this rule to discharge an order made on the 11th March 1909 by the Court below under sec. 295 of the Code of Civil Procedure of 1882. The circumstances under which the order in question was made are not disputed and may be briefly stated. On the 6th October 1907 the Petitioner, Ramjush Agarwalla, obtained a decree for money against Insan Bewa and others in the Court of the Subordinate Judge of Faridpore. Shortly after, he applied for execution and on the 29th April 1908 obtained an order for attachment of certain immoveable properties of the judgment-debtors, which were directed to be sold on the 28th July 1908. The sale, however, did not take place on that date and leave was granted to the decree-holder on the 20th August 1908 to bid at the sale to be held on the 21st November following. On the latter day, the properties were sold by auction and many of them were purchased by the decree-holder. The amount realized by the sale was set off against the decree and the sale was confirmed on the 9th March 1909. Meanwhile Guru Charan Sen, the Opposite Party, had on the 8th August 1908 obtained a decree for money against the same judgment-debtors in the Court of the Munsif of Goalundo. On the 27th August 1908, Guru Charan Sen made an application for execution in the Goalundo Court which directed attachment of the properties previously attached by the order of the Faridpore Court and the 20th November 1908 was fixed for the sale of the properties. On the 19th September 1908, Guru Charan applied to the Subordinate Judge of Faridpore for an order on the Munsif of Goalundo not to sell the properties; in this petition he further prayed for rateable distribution of the assets which might be realized by sale in the Faridpore Court. The Subordinate Judge rejected the first prayer and directed that the second prayer might be considered when the assets were realized. Guru Charan then applied on the 17th November 1908 to the Goalundo Court for transmission of his execution case to the Faridpore Court. This application was refused. A similar application was made to the District Judge on the 20th November and was equally unsuccessful. On the 21st November, the Goalundo Court proceeded to sell the attached properties and to distribute the sum realized rateably between Guru Charan and another decree-holder of the same judgment-debtors. Subsequently the sale and the order for distribution made by the Goalundo Court were set aside, apparently on the ground that the properties had been attached and sold by the Faridpore Court and could not be sold a second time. On the 22nd December 1908, Guru Charan applied to the Faridpore Court for rateable distribution of the sum realized by the sale of the 21st November 1908 at the instance of the present Petitioner. The latter objected to any order for rateable distribution, but his objection was overruled and on the 16th February 1909 the Subordinate Judge held that Guru Charan was entitled to an order for rateable distribution. This was followed by the order of the nth March 1909 which directed the present Petitioner to refund the sum which had already been applied in satisfaction of his own decree. This is the order the legality of which we are now invited to consider.

In support of the order, it has been contended by the learned Vakil for the Opposite Party that although Guru Charan had not got his decree transferred from the Goalundo Court to the Faridpore Court and had not at any time applied for execution to the latter Court so as to bring the case within the scope of sec. 295, C.P.C, yet he was entitled to the benefit of sec. 285 of the Code and the order which is now called in question may be treated as one made under the latter section. To establish this position, reliance has been placed upon the cases of Clark v. Alexander and Har Bhagat v. Anandram. Reference has also been made to the case of Madden v. Chappani(3) to show that the Court had jurisdiction to make the order for refund if the assets realized by the sale were found to have been improperly applied in satisfaction of the decree of the Petitioner. On the other hand, the order in question has been assailed on the ground that it could not be made under sec. 295, C.P.C, and that sec. 285 had no possible application to the case; and in support of this view reliance has been placed upon the cases of Nimbaji v. Vadia(4), Andanapa v. Bhimrao Annaji(5) and Bejoy Singh Dhudhuria v. Hukum Chand(6). The question raised is one of considerable importance and not altogether free from difficulty, and it is necessary to examine closely the provisions of the Code so that a correct conclusion may be reached on the subject.

Sec. 295 of the Civil Procedure Code of 1882 deals with the question of the rateable distribution of the proceeds of the execution sales among decree-holders. As was observed by Strachey, C.J, in Bithal Das v. Nand Kishore(7) the object of the section is two-fold. “The first object is to prevent multiplicity of execution proceedings, to obviate in a case where there are many decree-holders competent to execute their decrees by attachment and sale of a particular property, the necessity of each and every-one separately attaching and separately selling that property. The other object is to secure an equitable administration of the property by placing all the decree-holders in the position described, upon the same footing, and making the property rateably divisible among them instead of allowing one to exclude all the others merely because he happened to be the first who had attached and sold the property.” To entitle a decree-holder to be placed in this position and to participate in the assets realized, the following conditions must be present.

(a) The decree-holder claiming a share in the rateable distribution should have applied for execution of his decree to the Court which holds the assets realized;

(b) Such application should have been made prior to the realization of the assets;

(c) The assets must have been realized by sale or otherwise in execution of the decree;

(d) The attaching creditors as well as the decree-holder claiming to participate in the assets should be holders of decree for payment of money;

(e) Such decrees should have been obtained against the same judgment-debtors.

No rateable distribution can be claimed under the section unless all the conditions enumerated above are present. In the case before us, no question arises as to conditions (c), (d) and (e). The sole question in controversy is as to the effect of failure to comply with conditions (a) and (b).

It cannot be disputed that no application was made by Guru Charan to the Faridpore Court, which held the assets realized, for execution of his decree. The only application which he made to the Faridpore Court prior to the realization of the assets was the application of the 19th September 1908 for an order on the Goalundo Court not to sell the properties and for rateable distribution. This application cannot by any stretch of language be deemed to be an application for execution of his own decree. In the first place the application if treated as one for execution, did not comply with the requirements of sec. 235. In the second place, as the decree had been made by the Goalundo Court, any possible application under sec. 235 to the Faridpore Court could be made only after an order for transfer had been obtained under sec. 223 read with sec. 230. In the third place, although as pointed out in the case of Baij Nath Goenka v. Holloway(8), a decree may be executed in more than one Court, a decree cannot be executed simultaneously against the same property in more than one Court and as Guru Charan proceeded with the execution of his own decree in the Goalundo Court, he could not very well proceed with execution against the identical properties in the Faridpore Court, even if he had got his decree transferred to the latter Court in strict accordance with law. It is manifest, therefore, that conditions (a) and (b) were not fulfilled by Guru Charan and he was consequently not entitled to the benefit of sec. 295 of the Code of Civil Procedure.

It has been strenuously contended, however, that the identical relief which the decree-holder Guru Charan was not competent to claim under sec. 295, C.C.P, could be indirectly obtained by him under sec. 285, and in support of this position reliance has been placed upon the cases of Clark v. Alexander and Har Bhagat v. Anandram. Now, sec. 285 provides that where property not in the custody of any Court has been attached 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 the highest grade, or where there is no difference in grade between such Courts, the Court under whose decree the property was first attached. It is to be observed that all that the Court is competent to do under these provisions of the law, is to determine, first, any claim to property attached in execution of decrees of more Courts than one and, secondly, any objection to the attachment thereof. Now, it is clear that in the case before us, no application was made by Guru Charan, the present Opposite Party, under sec. 285, C.C.P The only applications which he made to the Faridpore Court were those of the 19th September 1908 and the 22nd December 1908. Both these applications were for rateable distribution of sale-proceeds. Neither of these, applications was intended to be an application under sec. 285. It seems to us to be fairly clear that an application for rateable distribution cannot, without violence to the language of the Code, be deemed to be an application for determination of any claim to attached property or of any objection to the attachment thereof. But even if the two applications were treated as made under sec. 285, it is manifest that there was no objection taken by Guru Charan to the attachment of the properties by the Faridpore Court, nor did he set up any claim to the properties attached. The question of the true meaning of the words “shall determine any claim thereto and any objection to the attachment thereof,” has been recently considered by the Chief Court of Burma in the case of Chokalingum v. Muthia Chetty, in which Mr. Justice Ashton pointed but that sec. 285 is governed by the immediately preceding sections with which it must be read, and that the words to which we have just referred, mean any claim or objection of the sort which can be summarily enquired into and decided in execution proceedings as provided in the immediately preceding sections or elsewhere in the Code as in secs. 278 to 281. It is difficult to appreciate how a question of the rateable distribution of sale-proceeds realized in execution can be treated as a question of any claim to the attached property or any objection to the attachment thereof. In fact, the party who seeks rateable distribution does not object to the attachment nor does he set up a claim adverse or superior to the title of the judgment-debtor. He proceeds on the assumption that the property has been rightly realized as the property of the judgment-debtor, and that, on the equitable grounds recognised in sec. 295, C.P.C, he is entitled to a share of the sale-proceeds. In our opinion, if a different construction were put upon sec. 285, the result would be to make it inconsistent with the provisions of sec. 295, to this extent, that if even the conditions prescribed in the latter section are not fulfilled and a decree-holder is consequently not entitled to the benefit of rateable distribution thereunder, he may nevertheless reap precisely the same advantage under sec. 285. In our opinion, this could never have been intended by the legislature. We have been pressed by the learned Vakil for the Opposite Party to hold that this view is inconsistent with that taken in the case of Clark v. Alexander and Har Bhagat v. Anandram. So far as the latter case is concerned, the report is very meagre and the facts are not set out in the brief judgment of this Court. But so far as we can gather, the learned Judges appear to have proceeded on the assumption that there was an actual application under sec. 285, C.P.C In so far as the former case is concerned, it requires closer examination. In that case, Mr. Justice Sale appears to have held that under sec. 285, where that section applies, it is the duty of the Superior Court to consider and determine all the rights of the attaching creditors whether they have applied for execution of their decrees to the Superior Court or not. If the decision is limited as stated in this passage of the judgment, it is obvious it has no application to the facts of the present case, because, as we have already pointed out, there was no application under sec. 285 by Guru Charan and, so far as we can gather from the materials on the record, no such application was possible. But if Mr. Justice Sale intended to lay down as a rule of universal application that although a creditor may not be entitled to the, benefit of rateable distribution under sec. 295 either because he did not apply for execution to the Court which held the assets realized or because such application had been made, subsequent to the realization of the assets, yet he is entitled to precisely the same benefit under the garb of sec. 285, we are unable to accept his decision as consistent with the provisions of the Code. In fact one of the cases to which Mr. Justice Sale refers, namely, Gopee Nath Acharje v. Achcha Bibee(10) is undoubtedly an authority for the contrary view. But as was pointed out by Mr. Justice Ashton in Chokalingum Chetty v. Muthia Chetty, the case of Clark v. Alexander may, perhaps, be distinguishable on another ground. There the attachment by the Inferior Court had been made before the attachment by the Superior Court, although this was not brought to the notice of the Superior Court till after the order obtained for realization of the money and before actual realization. If so, Mr. Justice Ashton suggests that the question might perhaps be treated as one for determination of an objection (by the creditor who had obtained the earlier attachment in the Inferior Court) to the subsequent attachment (by the Superior Court) of the money deposited in Court or for the determination of a claim thereto. Mr. Justice Ashton puts forward the following line of reasoning in support of his suggestion: as “an execution creditor who has first got the property attached is not to get less than a rateable share of the assets merely because his execution proceedings are not taken in the Court which actually realised the assets and he accordingly makes no application under sec. 295 before realization in the latter Court, the Court holding the assets may, without transferring the prior attaching decree-holder's decree to itself for execution and without any application being made before the realization of the assets, give recognition to the above extent of the claim of the prior attaching creditor as a claim contemplated by one or other of the sections preceding sec. 285, such for instance as secs. 279, 280 or 282, by deciding under sec. 285 to release and hold, for the satisfaction of the prior attaching creditor's decree, on the proper steps, being taken for it to be so executed a rateable share of the assets already realized.” But we need not express any opinion upon the question whether the decision in Clark v. Alexander, may or may not be justified on the grounds suggested, nor need we discuss whether that decision may not require reconsideration, when another case precisely similar to it on the facts arises. In the present case it is quite clear that the attachment effected at the instance of the Petitioner by the Faridpore Court took place on the 24th April 1908, whereas the attachment effected at the instance of the Opposite Party by the Goalundo Court did not take place till the 27th August 1908. In other words, the attaching creditors in the inferior execution Court obtained his attachment long after the attaching creditor in the Superior Court had obtained his attachment. This ground alone is sufficient to differentiate the case before us from the decision in Clark v. Alexander. In no sense can, in the circumstances, the application to the Superior Court by the subsequent attaching creditor in the Inferior Court, be deemed to embody a claim to the attached property or an objection to the attachment of that property within the meaning of sec. 285, C.P.C In our opinion, the order for rateable distribution cannot be supported. The view we take is amply supported by the cases of Dattatraya v. Rahimtulla(11), Nimbaji v. Vadia Andanapa v. Bhimrao Annaji, Bejoy Singh Dhudhuria v. Hukum Chand. The cases of Bykant Nath v. Rajendro Narain(12) and Bhugwan Chunder Kritiratno v. Chundra Mala Gupta(13) are not really opposed to this view. They are authorities for the proposition that if in contravention of sec. 285 the Inferior Court has in ignorance of the proceedings pending before the Superior Court proceeded with execution and brought the property to sale, the Superior Court can adopt the proceedings as if they were taken by itself and is competent to determine any claim for rateable distribution of the assets realized by the sale. No question was raised in these cases as to whether, under the circumstances, it would be competent to the Superior Court to make an order under sec. 285 when such an order could never have been made in favour of the decree-holder by reason of his failure to comply with the requirements of sec. 295. On these grounds we must hold that the order made by the Court below Cannot be supported and must be discharged. The rule is therefore made absolute. Under the circumstances we make no order as to costs either in this Court or in the Court below.

Rule made absolute.