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Civil Revision Application No. 192 of 1955, decided on 2nd January 1959.
Civil Procedure Code (V of 1908), S. 73‑Words "assets held by Court"‑Connotation of‑Money paid for speck purpose -----Whether beyond purview of section.
There is no reason for limiting the connotation of "assets held" to cases where .money is not paid for a specific purpose. If a judgment‑debtor were to deposit money in Court for the purpose of satisfying particular decree then that money' is money put in for a specific purpose. Yet it could not be argued that because this is for a specific purpose section 73, C. P. C.' does not apply.
Lalchand Radhakisan and others v. Ramdayal Ramnarayan and others A I R 1939 Bom. 112 dissented from.
H. S. Pardasani and others v. T. K. Jeshwani and others A I R 1930 Sind 300 distinguished.
M. M. Mahumdi for Appellant.
S. M. Shafi for Respondents.
Date of hearing : 2nd January 1959.
The decision of the question that arises in this revision application turns upon the interpretation of section 73 of the Civil Procedure Code. The facts are that Hafiz Ziauddin the applicant in this revision filed Suit No. 1416 of 1953 in the Small Causes Court for a sum of Rs. 1,100 against Muhammad Ismail opponent and at the same time applied for attachment before judgment. Certain buffaloes were in fact attached and on 16th November, 1953 Muhammad Ismail deposited cash security in accordance with Order XXXVIII, rule 5, C. P. C., as a result of which the attachment was raised. While the suit was pending, Muhammad Abdullah opponent filed two suits Nos. 53 and 54 of 1954 in the Small Causes Court against Muhammad Ismail and secured decrees on 16th January, 1954. He applied for attachment of the amount of cash security which had been deposited under Order XXXVIII, rule 5 in the suit filed by the applicant and 'obtained an order of attachment on 24th March, 1954. The suit filed by the applicant was also decreed on 14th December, 1954 and on the 1st of February 1955 the applicant applied for the execution of his decree. The applicant contended before the Small Causes Court that he alone was entitled to the amount deposited as cash security. This contention has been repelled by the Small Causes Court which has held that the cash security has to be rateably distributed between the applicant and Muhammad Abdullah opponent.
Section 73, C. P. C. runs:
"73 :‑(1) Where assets are held by a Court and more persons than one have, before the receipt of such assets, made application to the Court for the execution of decrees for the payment of money passed against the same judgment‑debtor and have riot obtained satisfaction thereof, the assets, after deducting the costs of realisation, shall be rateably distributed among all such persons:
Provided as follows :‑
(a) where any property is sold subject to a mortgage or charge, the mortgagee or incumbrancer shall not be entitled to share in any surplus arising from such sale ;
(b) Where any property liable to be sold in execution of a decree is subject to a mortgage or charge, the Court may, with the consent of the mortgagee or incumbrancer, order that the property be sold free from the mortgage or charge, giving to the mortgagee or incumbrancer the same interest in the proceeds of the sale as he had in the property sold ;
(c) where any immovable property is sold in execution of a decree ordering its sale for the discharge of an incumbrance thereon, the proceeds of sale shall be applied first, in defraying the expenses of the sale ; secondly, in discharging the amount due under the decree ; thirdly, in discharging the interest and principal monies due on subsequent incumbrances (if any); and fourthly, rateably among the holders of decrees for the payment of money against the judgment‑debtor, who have, prior to the sale of the property, applied to the Court which passed the decree ordering such sale for execution of such decrees, and have not obtained satisfaction thereof.
(2) Where all or any of the assets liable to be rateably distributed under this section are paid to a person not entitled to receive the same, any person so entitled may sue such person to compel him to refund the assets.
(3) Nothing in this section affects any right of the Crown".
In accordance with this section assets which are held by a Court are to be distributed amongst all the decree‑holders who have applied for execution of their decrees. The assets held' by a Court obviously mean assets which a Court has received as,an executing Court. This is apparent even from the marginal note to the section which reads "proceeds of execution sale to be rateably distributed among decree‑holders" and is not. disputed. The contention of learned counsel for the applicant before me is that section 73, C. P. C. has no application to .the case where money is received by a Court not as an executing Court but for a specific purpose and he relies for this contention on Lalchand Radhakisan and others v. Ramdayal Ramnarayan and others (A I R 1939 Bom. 112). I have no quarrel with the proposition as put forward. Section 73 obviously would be applicable only if assets were received by the Court as an executing Court but this does not advance the case of the applicant. To the cash security which was deposited, section 73 would not be applicable unless the Court acting as an executing Court has attached the amount of security but till there is an attachment the amount would not be liable to be paid to any person at all. In the present case for instance the appli cant had to get this amount attached in execution of his own decree before he became entitled to any part of it. In any case he had to apply for execution of his decree. He could not become entitled to this amount just because it had been deposited as security under Order XXXVIII, rule 5, C. P. C.. The assets therefore, were obviously assets received by the Court as an executing Court.
In A I R 1939 Bom. 112 an application had been filed for execution of an ex parte decree. The judgment‑debtor applied for the stay of the execution and the stay was granted on terms that security be furnished for the performance of the decree. A surety bond was executed. The ex parte decree was set aside but later a decree was passed in the same suit in the presence of the defendant and according to the terms of the surety bond the surety became liable for the payment of the decretal amount. The decree‑holder applied for execution and the surety paid the amount of the bond in Court. At this another decree‑holder of the same judgment‑debtor applied for rateable distribution and the question arose as to whether the amount deposited by the surety was liable to be distributed. The learned Judges held that section 73, C. P. C., was inapplicable and the other decree‑holders were not entitled to any portion of the amount deposited by the surety. Their reasons will appear from the following extract of the judgment.
" Section 73, Civil P. C. provides that where assets are held by a Court and more persons than one make application for execution of decrees, the assets are to be distributed rateably. The first question which arises is what is the exact meaning of the expression " assets held by a Court ". Under S. 295 of the old Code the expression was " when assets are realized by sale or otherwise in execution of a decree ". No doubt the expression in the present Code is wider, but it is plain that some limitation must be put upon the generality of the expression. It is, I think, apparent from a consideration of the terms of the section, and its position in the Code, that the words " assets held by a Court " must be assets received in execution. The section plainly does not apply to moneys paid into Court in a suit when no question of execution arises. I think that all the High Courts in India are in agreement that the expression " assets held by a Court " means assets received in execution, though there has been some difference of opinion as to the exact 'effect of these words. I think also that we must apply to the words one other limitation, and that is, that when the assets have been paid in for a specific purpose, they cannot be applied generally in execution so as to defeat the specific purpose. It seems to me clear that if a Court receives money on terms that it is to be applied for payment of the debt of A, it cannot apply the money in payment of the debt of B. The Court cannot commit what would be in substance a breach of trust."
I am with all respect unable to agree that for a specific purpose it is beyond the purview of section 73, C. P. C. Let us take the very case with which I am dealing. Suppose instead of the defendant furnishing security under Order XXXVIII, r. 5, C. P. C. the buffaloes had remained attached. It is admitted that in that case any other decree‑holder would be entitled to a share in the proceeds of the sale of the buffaloes if he applied in time. I do not see why a different rule should apply if the defendant instead of allowing his property to be attached deposits cash security or otherwise furnishes security for the production of the attached property or its value. It will be convenient to quote here Order XXXVIII, r. 5, C. P. C.
" Rule 5 (1) where, at any stage of a suit, the Court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him,
(a) is about to dispose of the whole or any part of his property, or
(b) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court,
the Court may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Court, when required, the said property or the value of the same or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security.
(2) The plaintiff shall, unless the Court otherwise directs, specify the property required to be attached and the estimated value thereof.
(3) The Court may also in the order direct the conditional attachment of the whole or any portion of the property so specified ".
It will be observed that there is an option to the defendant to furnish security for the production of the property or its value. The effect of his furnishing security is only this that he is bound to produce the property or its value in Court when called upon. Truely speaking if he furnishes cash security it is not the amount itself which is liable to be attached. He can withdraw that amount if he produces the property, or he can withdraw that amount and produce in Court the value of the property that has been attached. There may be difference in value but even if there is not it is technically the amount which is produced in Court in accordance with the undertaking that is liable to be attached. If section 73 applies in case it is only either the original attached property or the equivalent value of that property which is to be proceeded against I see no reason why there should be any difference in treatment in a case where security is furnished.
If a judgment‑debtor were to deposit money in Court for the purpose of satisfying a particular decree then that money is money put in for a specific purpose. Yet it could not be argued that because this is for a specific purpose section 73, C. P. C. does not apply. If there is previous to the deposit at the same time an undertaking on his part that he will deposit the amount of the decree I do not think it should make any difference. If we were to hold otherwise the result would be that the mere fact of a stay being granted would affect the right of other decree‑holders to a share in the assets. If a decree holder applies for execution and the judgment debtor applies for stay because he intends to file an appeal and the judgment debtor furnishes security for the performance of any decree that is passed, then the amount which he or the surety deposits in Court in accordance with this undertaking, should not according to the view be liable to be distributed and would have to be paid entirely to the decree holder in whose application for execution. the security was furnished. I may also point out that a collusive judgment‑debtor could easily defeat, the other decree holders by simply applying for the stay of the execution on some grounds and furnishing security for the performance of the decree.
According to section 145, C. P. C. a person who becomes a surety for the performance of a decree or for the payment of my money payable under any order of a Court, is to be pro ceeded against as a judgment‑debtor. Section 73, C. P. C. does not create any exception in respect of the proceedings taken against a surety under section, 145, C. P. C. If the interpretation suggested in A I R 1939 Bom. 112 were to be accepted then in all cases where a person becomes a surety for the perfor mance of the decree or for the payment of money, and did deposit the amount in Court, section 73, C. P. C. would be inapplicable because he would be paying money for a specific purpose. If this were the intention section 73 C. P. C. would expressly say so. I see no reason for limiting the connotation of " assets s held " to cases where money is not paid for a specific purpose.
H. S. Pardasani and others v. T. K. Jeshwani and others (A I R 1930 Sind 300) was also cited before me but that case instead of supporting the applicant goes against him. It was held therein that when money is paid into Court by the judgment‑debtor under Order XXI, r. 55, C. P. C. for the purpose of avoiding attachment that money is like any other assets held by the executing, Court and is liable to distribution among the decree‑holders.
This revision application is dismissed with costs.
K. B. A. Application dismissed.
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