Indian Kanoon - Search engine for Indian Law

10. The Acts of 1877 and 1882 took away the priority of the first attaching creditor and in place of Sections 270 and 271 of the old Code enacted Section 295 which provided for rateable distribution between all decree-holders who prior to the realization of assets had applied to the Court for execution and had not obtained satisfaction.

11. Though the position of decree-holders who were entitled to rateable distribution in case the attachment culminated in a sale was fairly clear, questions arose as to what was to happen if there was a private alienation during the existence of an attachment which was put an end to either by satisfaction of the decree or was raised owing to other reasons. In Ganga Din v. Khushali (1885) I.L.R., 7 All., 702, the judgment-debtor sold attached property and paid off the decree-holder who attached it. Decree-holders who would have been entitled to rateable distribution if the attachment had not been put an end to objected to the removal of the attachment but their objection was overruled on the ground that their claims were not protected by Section 276 they having no right to anything till there was an actual sale and realization of assets, and applications for execution, though entitling the decree-holder to rateable distribution under Section 295, were not equivalent to an attachment under Section 276. The same view was taken in Manohar Das v. Ram Autar Pande (1903) I.L.R., 25 All., 431. In Umesh Chunder Roy v. Raj Bullabh Sen (1832) I.L.R., 8 Calc., 279 at p. 281, where an alienation was made pending an attachment, it was held that the attachment ceased on the decree being paid off and that the assignment was good against a subsequent attachment by the same party in execution of another decree.

16. It was in this state of the authorities that the legislature enacted Section 64 of the present Code (Act V of 1908). An explanation was added to Section 64 to the effect that for the purposes of that section claims enforceable under the attachment included claims for rateable distribution. As pointed out in Jetha Bhima & Co. v. Lady Janbai (1913) I.L.R., 87 Bom., 138, the effect of the explanation is to give legislative approval to the extended meaning given to the words "claims enforceable under the attachment" in Sorabji Edulji Warden v. Govind Ramji, F.N. Wadia and another (1892) I.L.R., 16 Bom., 91. In this view a reference to the authorities as they stood prior to the passing of the new Act would be relevant. It will be useful to consider in this connexion the other relevant provisions of the Code. In Section 73 which corresponds to Section 295 of the Act of 1882 the words used are "where assets are held by a Court and more persons than one have, before the receipt of assets, made application" instead of "whenever assets are realized by sale or otherwise in execution of a decree, and more persons than one have, prior to the realization, applied to the Court" in Section 295 of the old Code. In Order XXI, Rule 55, which corresponds to Section 275, a clause is added providing that the attachment shall be deemed to be withdrawn and for notification of such withdrawal by proclamation at the place where the property is situate. The only amount to be paid in order to get the attachment withdrawn is the amount decreed with costs and all charges and expenses resulting from the attachment and Clauses (b) and (c) only refer to satisfaction and reversal of the decree in execution of which the property is attached. Order XXI, Rule 57, which is new, provides for the determination of the attachment if the execution application is dismissed owing to the decree-holder's default. Order XXI, Rule 69, which corresponds to Section 291 of the Act of 1882, provides that the sale shall be stopped if before the lot is knocked down the debt and costs including the costs of sale are tendered to the officer conducting the sale or proof given that the amount has been paid into Court. Order XXI, Rule 89, corresponding to Section 310A, requires that only the amount specified in the proclamation of sale less any payment subsequently made should be paid into Court with 5 per cent of the purchase money. Form 8 of Appendix E to the Code specifies the sum due and authorizes attachment and direct the officer to hold the same until further order of the Court unless the amount specified is paid and similarly the prohibitory order specifies the amount for which the decree has been passed. Form 24 which relates to attachment of immoveable property under Order XXI, Rule 54, also gives the amount of the decree in execution of which the attachment is made. It is clear from the rules and forms above referred to that the attachment ceases to have any force as soon as the decree in execution of which the property has been attached is satisfied or the execution application is dismissed owing to the decree-holder's default. It is significant that the last clause of Order XXI, Rule 55, and the whole of Rule 57 are new and that no reference is made to the claims of persons who would be entitled to rateable distribution. In contrast with this Order XXI, Rule 90, which relates to the setting aside of sales for irregularity which corresponds to Section 311 of the old Code contains the words "entitled to share in a rateable distribution of assets" not found in Section 311. Reference was made in the course of argument to Lakshmi v. Kuttunni (1887) I.L.R., 10 Mad., 57, Athappa Chetti v. Ramakrishna Nayakan (1898) I.L.R., 21 Mad., 51, Chakrapani Chettiar v. Dhanji Settu (1901) I.L.R.,24Mad., 311 and Ayodhya v. Nani (1893) I.L.R., 15 All, 318, which decided that the term "decree-holder" included a person entitled to rateable distribution for the purpose of Section 311 and Rule 90 has incorporated the result of the decisions. If the legislature intended the attachment to enure for the benefit of all persons entitled to rateable distribution it would similarly have declared that the attachment should cease only on all their claims being satisfied or that the cesser of the attachment should be without prejudice to their rights. That the difficulty created by Rules 55 and 57 of Order XXI is real will be clear from the fact that the existence of a valid attachment is necessary in order to bring the property to sale and if the attachment ceases when the decree-holder who attaches is paid off a re-attachment will be necessary which will be of no avail if it is subsequent to the alienation, see Gobind Singh v. Zalim Singh (1884) I.L.R., 6 All., 33 and Mina Kumari Bibi v. Bijoy Singh Dudhuria (1917) I.L.R., 44 Calc., 662 (P.C.). In order to get over this difficulty we shall have to read into all the rules in Order XXI relating to the raising of the attachment and in Rule 89 the words "the amount due to decree-holders who would be entitled to rateable distribution prior to the private alienation." It is difficult to see under what rules of construction such a wholesale addition to the rules can be made.

17. It is contended for the appellant with some force that Section 64 enacts that the alienation pending attachment shall be void as against all claims for rateable distribution of assets, that claims for rateable distribution are not dependent on the attachment but on Section 73 that the claim for rateable distribution would have been enforceable if the properties had been allowed to be sold, that the legislature in enacting the explanation to Section 64 intended to make an attachment by one decree-holder to enure for the benefit of all persons entitled to rateable distribution (the policy of the law being to prevent multiplicity of attachments) that the decree-holder who actually attaches and who under the law would have no priority in case the assets were realized by sale ought not to be allowed to defeat the rights of the other decree-holders and that by sanctioning the alienations of property behind their back and paying off the attaching creditor he will virtually get priority. It is also contended that though under Rules 55 and 57 the attachment ceases on payment of the decree-debt of the attaching creditor yet a fresh attachment by those entitled to rateable distribution should be treated as a continuation of the original attachment and that in any event Section 64 should be read as making the alienation void as against subsequent attachment by those who would if the execution have been allowed to proceed would have been entitled to rateable distribution.

21. There can be little doubt that Section 64 as it stands at present can protect decree-holders entitled to rateable distribution against private alienation, only where assets have been realized in which case they will be entitled to share the proceeds in preference to the alienee. This can happen only in a very limited class of cases, e.g., where the garnishee pays the attached amount into Court. In the numerous and important class of cases relating to attachment of immoveable property the amendment would be of no use to decree-holders entitled to rateable distribution. Assuming that the legislature intended the attachment under Section 64 to enure for the benefit of all persons entitled to rateable distribution who had applied for execution prior to the private alienation it has not gone far enough when it introduced the explanation to Section 64 worded as it is and made no provision for the continuance of the attachment in Order XXI in cases where the attaching creditor was paid off. The result is not very happy, but the remedy is in the hands of the legislature.