JUDGMENT
The Officiating Chief Justice. — Only two points have been raised in appeal. It is contended that where rateable distribution has been ordered under Sect. 73 of the Code of Civil Procedure, the exception to Sect. 51(1) of the Provincial Insolvency Act only applies to the amount credited in favour of the attaching decree-holder and not to the amounts rateably distributed to the other decree-holders under the section. No authority is quoted and we can find nothing in the wording of Sect. 51 to support such a view; nor is any reason suggested for such a differentiation. The learned Counsel for appellant wished to refer to various English Rulings dealing with Sect. 45 of the English Bankruptcy Act of 1883; but the difference between this section and Sect. 51 of the Indian Act are so great that we feel unsafe in taking them as a guide. The other contention is that the amounts lying in Court should be treated as still the money of the insolvent, which the Official Receiver can claim for the benefit of the general body of the creditors. This contention also we feel bound to negative. The last of the orders for rateable distribution was passed more then six years before the Insolvency, and the respondent was only prevented from drawing out the sums to which he was entitled thereunder, by reason of litigation instituted by other creditors of Nataraja Iyer, which was carried up to this Court and ultimately proved infructuous. It seems to me that from the time of the order of rateable distribution, the money must be treated as belonging not to the judgment-debtor, Nataraja Iyer, but to the decree-holder in whose favour the order was passed. Mr. Devadoss for appellant contended that the effect of a rateable distribution order is merely to allocate, the money to the different suit, without affecting its ownerships. The latter, he says, still rests in the judgment-debtor by the sale of whose property it was allocated. I do not think this is so. The section does not speak of distribution to the credit of the different decrees, but of distribution among the decree holders. The latter are entitled to draw it cut at will; and the judgment-debtor most certainly is not. I think the money in this case must be treated as the property of the decree-holder, the present respondent, and that the Official Receiver could no more recover it from Court, than he could recover from the respondent, if it had actually been paid out to him by Court. Mr. Devadoss eventually admitted that he could not recover the money in the circumstances of the present case, if it had passed into respondent's possession.
I would dismiss the appeal with costs.
Odgers, J.—The first point raised is on Sect. 51 of the Provincial Insolvency Act, as to whether the proceeds of execution held by various Courts, as detailed in the District Judge's judgment, are “assets” realised or not. In the absence of authority the executing decree-holder cannot be held to be solely entitled.
It was said there is a difference between Sect. 73 Civil Procedure Code and Sect. 51 (1) Provincial Insolvency Act on this point. Mr. Devadoss points to Sect. 40 of the Bankruptcy Act of 1883, to show that completion of execution in England means a different thing to what it does here. The Indian section is by no means identical with the statute; in fact, it differs from it in many material respects and it seems to be not only unnecessary, but dangerous to hold that there may be a distinction between the meaning of execution in these two sections. The point fails.
The second and more important point is this. It is said that the moneys held in Court as payable to the judgment-creditors are still the property of the judgment-debtor, so as to vest in the Official Receiver on the insolvency of the former, and the fact that these sums have not yet been distributed may give the Official Receiver the right to go behind the decrees in satisfaction of which they have been paid and to see whether or not the transactions are founded on good consideration etc. This may be so, unless the order for rateable distribution (which was admittedly made 6 years before the adjudication in 1919) removes the money, the subject of the order, from the operation of the Insolvency Act altogether.
Cases have been cited to the effect that if a judgment-creditor wants to prove in insolvency, his claim may be subject to scrutiny by the Court, or the Official Receiver, or Trustee in Bankruptcy; but if the matter is wholly outside the Insolvency law, it is clear that whether the Insolvency Court under its officers has any such power. In my opinion such is the case here. Sect. 51 provides that where execution has issued, assets realised in the course of the execution by sale or otherwise, before the date of the admission of the petition shall be protected from the operation of the Insolvency Act and the case in Howatson v. Durrant(1) shows that an order for rateable distribution stands on the same footing. It would therefore appear that the transaction sought to be impeached by the Official Receiver stands outside the operation of the Insolvency Act and he cannot either scrutinise its legality, or have it set aside for the benefit of the general body of creditors. The judgment-creditor entitled to the rateable distribution is in this respect in the same position, as if he had actually been paid, out of money which was realised in execution and that being so, the Official Receiver has no right to it. The appeal must be dismissed with costs.
S.SAppeal dismissed.