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Section 622 of the Code of Civil Procedure

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Concise Analytical Summary of the Opinion

Factual and Procedural Background

The matter arises from the insolvency of Mahomed Marakayar, against whom several decrees had been obtained in the District Court of Coimbatore. In Original Suit No. 11 of 1886, decree-holder Parasurama Ayyar obtained an order for sale of certain immoveable property belonging to the judgment-debtor. After that order but before the sale, Mahomed Marakayar filed a petition in insolvency in the High Court and a vesting order was made, vesting the insolvent's property in the Official Assignee.

The Official Assignee opposed the proposed sale, but the District Judge overruled his objections and allowed the sale to proceed. Before the sale took place, Seshu Ayyar (the original appellant/petitioner in these proceedings) made simultaneous applications in two suits in which he held decrees (Original Suits Nos. 18 and 29 of 1887). In each suit he filed two applications on the same day: (a) for execution by attachment and sale of the insolvent's immoveable property; and (b) alternatively, for a rateable distribution between himself and Parasurama Ayyar of the proceeds of the sale that had been ordered in Parasurama Ayyar's suit.

The District Judge rejected the attachment-and-sale execution applications on the stated ground that the vesting order "bars any further proceedings in execution when there has been no order for sale," and he rejected the companion applications for rateable distribution on the ground that their orders must follow the orders on the execution applications. Appeals (Civil Miscellaneous Appeals Nos. 138 and 139 of 1888) and revision petitions (Civil Revision Petitions Nos. 312 and 313 of 1888) followed.

The High Court considered the appeals and revisions. It dismissed the appeals concerning execution by attachment on the ground that the vesting order divested the judgment-debtor of the property so there was no property of his to attach and sell. The High Court, however, entertained the possibility that the separate applications for rateable distribution might be maintained, directed the District Judge to produce the order (if any) passed on the Official Assignee's objections and to report further proceedings, and ultimately made an order directing Parasurama Ayyar to refund proceeds he had received so that a rateable distribution could be made. Parasurama Ayyar sought review; the review was heard and the High Court reconsidered the points raised and confirmed its prior orders, with directions as to refund, distribution and costs.

Legal Issues Presented

Whether a vesting order in insolvency bars further proceedings in execution (specifically attachment and sale) of the judgment-debtor's immoveable property.
Whether a creditor who seeks a rateable distribution of sale proceeds (from property sold in execution of another creditor's decree) can be refused that relief by the Court on the ground of pendency of insolvency proceedings and the vesting order.
Whether the High Court may interfere by revision under Section 622 of the Code of Civil Procedure where the District Judge, by reason of a mistaken view of the effect of insolvency proceedings, declines to exercise a jurisdiction vested in him.
Whether, for purposes of entitlement to a rateable distribution, the applicant's proceeding qualifies as a pending application for execution within the meaning of the authorities cited.

Arguments of the Parties

Petitioner (Seshu Ayyar) — arguments as reflected in the opinion

Seshu presented two applications (attachment and for rateable distribution) in the prescribed form on the same day; the application for rateable distribution is an independent application for execution and should be treated as pending.
Because the District Court had already decided against the Official Assignee's right to oppose the sale (ordering the sale to go on), the pendency of insolvency proceedings and the vesting order did not affect the rights of judgment-creditors to a rateable distribution of the proceeds of that sale.
Consequently, the District Judge's dismissal of the rateable distribution applications was incorrect and deprived the applicant of a jurisdiction vested in the Court to order rateable distribution.

Respondent / Counter‑petitioner (Parasurama Ayyar) — arguments as reflected in the opinion

He initially contended he had been a non-party to the District Court proceedings out of which the revision arose and that no order could therefore be made against him; the Court noted, however, that he had been aware of proceedings and had been a joint applicant in one petition and subsequently had full notice of the High Court proceedings.
It was argued that the High Court could not interfere in revision under Section 622 CPC because there was no question of jurisdiction in the District Judge's order.
It was also argued that the vesting order and the insolvency proceedings precluded any rateable distribution, on the basis that insolvency/pending vesting automatically prevented further execution and distribution in the civil Court.
Relying on authority (Tiruchittambala Chetti v. Seshayyangar), it was argued that there could be no rateable distribution because there was no execution application on the Court's file that remained pending and undisposed of.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Manisha Eradi v. Siyali Koya I.L.R., 11 Mad., 220	Cited for the construction of Section 622 of the Code of Civil Procedure — that this Court can interfere by revision where a lower Court has failed to exercise a jurisdiction vested in it.	The Court relied on this authority to hold that the District Judge's refusal to entertain the rateable distribution application (because of his mistaken view as to the effect of the insolvency proceedings) amounted to a failure to exercise jurisdiction and justified interference under Section 622.
Tiruchittambala Chetti v. Seshayyangar I.L.R., 4 Mad., 383	Authority addressing the requirement that an application for execution be pending/undisposed of to support entitlement to rateable distribution.	The Court applied this authority to conclude that Seshu Ayyar's separate application for rateable distribution (filed the same day as the attachment application) qualified as a pending application for execution, and therefore supported his right to share in a rateable distribution of the sale proceeds.

Court's Reasoning and Analysis

The High Court addressed the issues in stages and explained the legal reasoning as follows:

On the question of execution by attachment and sale: the Court accepted the District Judge's result (that the attachment-and-sale applications should be rejected) but corrected the District Judge's stated reason. The Court held that it is not strictly correct to say that a vesting order "bars all further proceedings in execution." Rather, the proper legal position (as the Court articulated) is that the vesting order divests the judgment-debtor of the property, so there is, as a matter of fact and law, no property of the judgment-debtor available to be attached and sold. For this reason the execution applications for attachment and sale were rightly dismissed.
On the separate question of rateable distribution: the Court stressed that applications for a rateable distribution are distinct from applications for attachment and sale, and the dismissal of the attachment application on the ground that the judgment-debtor no longer owned the property did not necessarily dispose of the separate application for a rateable distribution of proceeds from property that had been ordered to be sold in Parasurama Ayyar's suit.
The Court examined whether insolvency proceedings and the vesting order automatically prevented the District Judge from ordering a rateable distribution. The Court found the District Judge's reasoning flawed in that it assumed the vesting order by itself prevented any distribution. The High Court pointed out that the Official Assignee had in fact applied to stay the sale but the District Court refused that application and the Official Assignee did not appeal. Consequently, there remained no interlocutory dispute between the Official Assignee and the judgment-creditors as to that sale and the pendency of the insolvency proceedings could not be a lawful reason for refusing the statutory duty of the Court to make a rateable distribution and thereby permit one creditor to take the whole proceeds.
Regarding the High Court's jurisdiction to interfere: Parasurama argued that Section 622 CPC could not be invoked because there was no question of jurisdiction. The Court disagreed, applying Manisha Eradi v. Siyali Koya to hold that the District Judge had failed to exercise a jurisdiction vested in him by law (by declining to order rateable distribution on the mistaken view about the effect of the vesting order), and therefore revision under Section 622 was appropriate.
On the contention that no pending application for execution existed (relying on Tiruchittambala Chetti), the Court found that Seshu had filed two separate applications the same day: one seeking attachment of immoveable property, the other seeking to share in a rateable distribution of proceeds. Although the attachment application was rightly dismissed because of the vesting order (no property of the judgment-debtor to attach), the separate application for rateable distribution remained an application for execution in which the judgment-debtor was a party and must be treated as pending for the purpose of the authority relied on. Thus Tiruchittambala Chetti supported Seshu's entitlement.
Procedurally, the High Court initially called for the District Judge's orders and report on the Official Assignee's objections; after the return and further argument (including review applications by Parasurama), the High Court reaffirmed its prior orders, set aside the District Judge's orders that had refused rateable distribution, directed Parasurama to refund amounts he had received so that a rateable distribution could be made, and made a costs direction in the review phase (petitioner to pay costs of counter-petitioners).

Holding and Implications

Holding:

The Court set aside the District Judge's orders refusing the applications for rateable distribution, directed that Parasurama Ayyar refund the sale proceeds he had received so that a rateable distribution may be made between the judgment-creditors, and dismissed the appeals against the refusal of execution by attachment and sale on the ground that the vesting order divested the judgment-debtor of property to attach.

Immediate consequences and practical effects:

The execution applications for attachment and sale were dismissed because the vesting order vested the insolvent's property in the Official Assignee and left no property of the judgment-debtor to attach.
The separate applications for rateable distribution were held not to be barred by the insolvency proceedings or the vesting order where the District Court had already overruled the Official Assignee's opposition to the sale; the District Judge's orders refusing rateable distribution were set aside and the court directed refund and subsequent rateable distribution.
On review, the High Court confirmed its prior orders and directed that the petitioner (in the review proceedings) pay the costs of the counter-petitioners.

Broader implications:

This opinion confines itself to applying established principles to the facts at hand; the Court applied prior authorities (named in the opinion) and corrected the District Judge's reasoning without purporting to lay down any novel or general rule beyond those applications. The opinion does not claim to establish a new precedent beyond its application of existing authorities to the facts before it.

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Viraraghava And Ors v. Parasurama

1. These appeals and petitions arise out of the insolvency of one Mahomed Marakayar against whom decrees had been passed in several suits in the District Court of Coimbatore.

2. The decree-holder, Parasurama Ayyar, in one of these suits (Original Suit No. 11 of 1886) obtained an order for sale of certain immoveable property of the judgment-debtor. Subsequent to the date of that order, but before sale, Mahomed Marakayar filed his petition in insolvency in the High Court and a vesting order was made.

3. The Official Assignee opposed the sale, but the District Judge overruled his objections and allowed the sale. Before the sale under that order took place, Seshu Ayyar, the original appellant and petitioner in the present appeals and petitions, made a double application to the District Court in each of two suits in which he had obtained decrees against Mahomed Marakayar (Original Suits Nos. 18 and 29 of 1887).

4. All four applications were filed on the same day. In two of these he applied in the two suits for execution by attachment and sale of the immoveable property of Mahomed Marakayar and in the other two, apparently as an alternative in case the other two applications were refused, he applied in the two suits for a rateable distribution between himself and Parasurama Ayyar of the proceeds of sale of the immoveable property which had been ordered to be sold in Parasurama Ayyar's suit.

5. The District Judge has rejected the applications for execution by attachment and sale of immoveable property of Mahomed Marakayar on the ground that the vesting order " bars any further proceedings in execution when there has been no order for sale," and he has also rejected the two applications for a rateable distribution on the ground that the orders on these applications must follow the orders on the applications for execution by attachment and sale of the immoveable property of the judgment-debtor.

6. Appeals Nos. 138 and 139 of 1888 are against the orders rejecting the applications for execution by attachment and sale of the immoveable property of the judgment-debtor. Petitions Nos. 312 and 313 of 1888 are for revision of the orders rejecting the applications for a rateable distribution of the proceeds of sale in Parasurama Ayyar's suit.

7. As to the orders appealed against, we think the District Judge was right in his conclusion, but not precisely upon the grounds upon which he puts it. It is not strictly correct to say that the vesting order bars all further proceedings in execution. The more correct way of putting it is, we think, that the vesting order divests the judgment-debtor of the property, and, therefore, there is no property of his which can be attached and sold. On this ground the applications for execution by attachment and sale of Mahomed Marakayar's immoveable property might rightly have been rejected, and, on this ground, we dismiss the Civil Miscellaneous Appeals Nos. 138 and 139 of 1888.

8. But we are not satisfied that it follows that the simultaneous application, for a rateable distribution of the proceeds of sale of the property ordered to be sold in Parasurama Ayyar's suit must also be rejected. These are distinct applications for execution of the decree in this way. We are informed that the District Court had already decided against the Official Assignee's right to oppose that sale and had ordered the sale to go on. If this is so, it may be that there is no further question in regard to that sale between the Official Assignee and the judgment-creditors, and the vesting order and other proceedings in insolvency have no effect upon the rights (if any) of the judgment-creditors to a rateable distribution of the proceeds of that sale. Before disposing of these revision petitions, we shall request the District Judge to furnish us with a copy of the order (if any) passed upon the Official Assignee's objections to the sale of the property of Mahomed Marakayar in execution of Parasurama Ayyar's decree, and also to report what further proceedings have been taken in reference to that sale.

9. After the return called for in the above order had been made the case came on again for disposal.

10. Bhashyam Ayyangar for Petitioner.

11. The Court made the following order:

12. Petitioner Seshu Ayyar having applied to the Court which realized the assets prior to realization for execution of his decree was entitled to a rateable distribution of the assets.

13. The orders of the Distinct Judge are set aside, and he is directed to give effect to this order by calling on Parasurama Ayyar, plaintiff in Original Suit No. 11 of 1886, who appears to have received the entir? sale-proceeds, to refund the amount he has received and on this being done, the District Judge will proceed to make a rateable distribution.

14. Under the circumstances we make no order as to costs of these petitions. Parasurama Ayyar preferred petitions for the review of this order.

15. Weir, J., having left the High Court, the petitions came on for disposal ' before Muttusami Ayyar and handley, JJ.

16. Mr. K. Brown and Ramachandra Ayyar for Petitioner.

17. Bhashyarn Ayyangar for Respondent.

18. These are applications for review of judgment in Civil Revision Petitions Nos. 312 and 313 of 1888. The facts are fully set out in the order of this Court of 9th May 1890. By that order certain information was called for from the District Judge, on receipt of which the final order of this Court was passed, setting aside the orders of the District Judge, which were the subject of these revision petitions, and directing the District Judge to call upon Parasurama Ayyar to refund the amount he had received and upon this being done to proceed to a rateable distribution. Parasurama Ayyar was named in Civil Revision Petitions Nos. 312 and 313 of 1888 as a counter-petitioner, but it appears that owing to some mistake, notice was not served upon him, and the final order was consequently made in his absence. On this ground, a review was admitted, and the case has now been argued on his behalf.

19. The first point raised by his counsel is that as he was no party to the proceedings in the District Court, out of which these petitions arose, no order can be made against him on these petitions. As to this, it is true that he received no notice of Seshu Ayyar's application for a rateable distribution of the proceeds of sale of the property ordered to be sold, because the District Judge dismissed it on the preliminary point that the vesting order shut out Seshu Ayyar from any claim to a rateable distribution, but he must have been fully aware of the proceedings for he was a joint applicant with Seshu Ayyar in one of the petitions. But, however this may be, the High Court in directing the District Judge to order Parasurama Ayyar to refund the amount he had received was merely putting matters in the same state as they were when what was held to be the erroneous order of the District Judge was passed. After that, strictly speaking, notice would have to be given to him to show cause why the amount should not be rateably distributed. He has had full notice now however and his counsel waives any further notice, and the question whether the rateable distribution asked for by the original petitioner Seshu Ayyar can now be ordered has been fully argued and may now be decided.

20. It is next argued that this is not a case in which this Court can interfere in revision under Section 622 of the Code of Civil Procedure as there was no question of jurisdiction. The order passed on the two applications for rateable distribution out of which the present petitions arose, was that the order must follow that on the application for execution on which it was based. We must look to the latter order, therefore, to ascertain what was the decision of the Court. The general order made on several applications for execution by attachment and sale of the judgment-debtor's property was:--

" The vesting order has been received. It clearly bars any further proceeding in execution when there has been no order for sale. This application must, therefore, be rejected."

The District Judge, therefore, declined to entertain the application, and to make the rateable distribution, which he was bound by law to make, because he considered he was precluded from doing so by the proceedings in the insolvency and the vesting order. In so declaring, assuming as we shall show afterwards that he was wrong in his view of the effect of the insolvency proceedings, we think he failed to exercise a jurisdiction vested in him by law, and that this Court has power to interfere under Section 622. In so holding, we consider that we are following the principles laid down as to the construction of that section in the case of Manisha Eradi v. Siyali Koya I.L.R., 11 Mad., 220.

21. Then it is contended for Parasurama Ayyar that the Judge was right, and he was precluded by the proceedings in insolvency and the vesting order from proceeding to a rateable distribution of the proceeds of sale of property attached and sold in execution of a decree against the insolvent judgment-debtor. The fallacy, as it appears to us, of this contention, and of the District Judge's view, is that it assumes that because the Official Assignee may come in and apply for stay of proceedings in execution, the insolvency and the vesting order have of themselves the effect of staying such proceedings. In the present case, the Official Assignee did, subsequently to the order now in question, apply to the District Court to stay the sale of the property, to which these orders refer, and his application was refused, and he did not appeal against that order as appears in the present case, though served with notice. There was, therefore, as pointed out in this Court's order of 9th May 1890, no further question between the Official Assignee and the judgment-creditors as to this property and the pendency of proceedings in insolvency could be no reason for the District Court's refusing to make the rateable distribution ordered by law and allowing one creditor to walk off with the whole proceeds of sale of the attached property.

22. Lastly, it is argued on the authority of Tiruchittambala Chetti v. Seshayyangar I.L.R., 4 Mad., 383, that there could be no rateable distribution in the present case, because there was no application for execution on the file of the Court pending and undisposed of.

23. The facts are that Seshu Ayyar presented apparently on the same day two applications for execution in the prescribed tabular form. In one the entry in the last column headed " mode in which the assistance of the Court is required " asked for attachment of immoveable property of the judgment-debtor; in the other it asked that the applicant might share in the rateable distribution of the proceeds of sale of the property attached by Parasurama Ayyar when it should be sold.

24. By the order of this Court of 5th May 1890, it is ruled that the application for attachment of the immoveable property was rightly dismissed by the District Judge, not on the ground on which he put it that the proceedings in insolvency were a bar to execution, but because the vesting order vested the property of the insolvent judgment-debtor in the Official Assignee, and there was therefore no property of the judgment-debtor to be attached. But this ruling did not affect the application for a rateable distribution which was also an application for execution to which the judgment-debtor was a party, as well as an application for rateable distribution, and, therefore, as this Court holds that the latter application was wrongly dismissed by the District Judge, it must be treated as pending within the meaning of Tiruchittambala Chetti v. Seshayyangar I.L.R., 4 Mad., 383, for the purpose of supporting Seshu Ayyar's right to share in a rateable distribution of the proceeds of sale of the property attached and sold in execution of Parasurama Ayyar's decree.

25. We see no reason to doubt the correctness of the orders of this Court of 5th May 1890 and 12th August 1890, and we pass a fresh order accordingly in terms of the latter order.

26. Petitioner must pay the costs of counter-petitioners of these applications.

Viraraghava And Ors v. Parasurama

Concise Analytical Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner (Seshu Ayyar) — arguments as reflected in the opinion

Respondent / Counter‑petitioner (Parasurama Ayyar) — arguments as reflected in the opinion

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Viraraghava And Ors v. Parasurama

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