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Present: Lyall Grant J. and Maartensz A.J.
SEENA SOONA YANA & CO. v. ASSIGNEE OFINSOLVENT CASE OF SEGTJ MOHAMADU.
126—D. C. (Inty.) Colombo, 30,964.
Insolvency—Seizure of money in Court—Adjudication of judgment-debtor as insolvent—Attachment of money—Payment to judgment-creditor—Ordinance No, 7 of 1863, ss. 66 and 111.
Where money, lying in Court to the credit of a person, is seizedin execution of a decree against him in another action, such seizurewill not be effective against an assignee in insolvency of the judg-ment-debtor until the money is drawn by the attaching creditor.
PPEAL from an order of .the District Judge of Colombo:The facts appear from the judgment.
Thiagalingam* (with Rajapakse), for appellant.
Weerasooria, for respondent.
October 18, 1929. Maabtensz A.J.—
The plaintiff in this action sued the defendant for the recoveryof a sum of Rs. 1,039.41 and obtained judgment on February 18,1929.
On a writ issued the same day the Fiscal forwarded a writtennotice under section 229 of the Civil Procedure Code to the .DistrictJudge of Colombo to withhold from paying the judgment-debtora sum sufficient to satisfy the amount of the writ out of the moneylying to the credit of case No. 30,395 of the District Court of Colombo.
The judgment-debtor was adjudicated an insolvent on the samedate.
The plaintiff, having obtained a return to his writ on the day itissued, moved the Court in this'case to transfer a sum of Rs. 1,123.11from case No. 30,395 to the credit of. this case. This motionshould properly have been made in case No. 30,395. But in viewof. the conclusion I have come to it is immaterial in' which case themotion was made, nor is it material whether the seizure was effectedbefore or after the judgment-debtor was adjudicated insolvent.
The motion was opposed by the assignee, and the plaintiff appealsfrom the order of the District Judge disallowing his application.
The contention in appeal shortly stated was that neither section 56nor section 111 of the Insolvency Ordinance applied to the seizureas the money could not be sold in execution * and that the money,therefore, became immediately on seizure the property of theplaintiff.
I am unable to accept this contention.. Section 70 of the InsolvencyOrdinance, 1853, enacts that:“ When any person shall have
been adjudged an insolvent, all his personal estate and effects.
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present and future, wheresoever the same may be found or known,and all property which he may purchase, or which may revert,descend, be devised or bequeathed, or come to him before he shallhave obtained his certificate, and all debts due or to be due to himwheresoever the same may be found or known, and the property,right, and interest in sucli debts, shall become absolutely vestedin the assignee for the time being, for the benefit of the creditorsof the insolvent, by virtue of their appointment.”
Section 56 enacts that:.and all executions unci
attachments against the lands of any insolvent bona fide executedby seizure, and all executions and attachments against the goodsand effects of any insolvent bona fide executed and levied by seizureand sale before the date of the filing of such petition, shall bedeemed to be valid notwithstanding any prior act of insolvencyby such insolvent committed, provided the person so dealing withor paying to or being paid by such insolvent, or at whose suit or onwhose account such execution or attachment shall have issued,had not at the time of such payment, conveyance, contract, dealing,or transaction, or a.t the time of such execution or levying suchexecution or attachment, or at the time of making any sale there-under, notice of any prior act of insolvency by him committed ”
Section 111 enacts that: “ No creditor having security for hisdebt, or having made any attachment of the goods and effectsof the insolvent, shall receive upon any such security or attachmentmore than a rateable part of such debt, except in respect of anyexecution served and levied by seizure and sale upon or anymortgage of or lien upon any part of the property of such insolventbefore the date of the filing of a petition for sequestration of hisestate.” It is clear from these provisions that a mere seizure ofgoods and effects does not deprive an assignee of the rights createdby section 70. The seizure must be followed up by a further step,that step is a sale.
In the absence of any enactment that the seizure of a debt due tothe insolvent entitles the execution-creditor to the amount seized Iwould hold that section 70 of the Ordinance applies to the debt andthat it therefore vests in the assignee for the benefit of the creditors.
Appellant’s Counsel’s argument that as the money seized couldnot be sold the attachment Was completed by seizure of the debtwas the very argument pressed upon the Court and adopted byBacon C.J. in case of Ex parte Pillers in re Curtoys.1 The factsare as follows:On August 14 Curtoys committed an act of
bankruptcy. On August 30 Targart recovered judgment againstCurtoys for £167. 11s. 8d. and on September 1 obtained a garnisheeorder nisi against King attaching all debts due to Curtoys in King’shand. It was served on King on September 2 and made* absolute(Vi September 15.
1 (1881) 17 Gh. Div. 653.
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Pillers filed a'bankruptcy petition against Curtoys on September 3and be was adjudicated a bankrupt on September 25. Pillers wasappointed trustee and moved for a declaration that the garnisheeorder was void and of no effect against him.
The Act in force was the Bankruptcy Act of 1869.
Sections 94 and 95 of the Act correspond to and are verysimilar to section 111 of our Ordinance. The relevant sub-seotionis sub-section (3) of section 95—it provides that notwithstandingany prior act of bankruptcy “Any execution or attachmentagainst the goode of any bankrupt executed in good faith byseizure and sale before the date of the order of adjudication, if theperson on whose account such execution or attachment was issuedhad not at the time of the same being executed by seizure and sale,notice of any act of bankruptcy committed by the bankrupt andavailable against him for adjudication.
Bacon C.J. said: “ In the very words, then, of the 3rd sub-seotionof the 95th section, I find in this case that there was an attachmentagainst the goods of the man who has become bankrupt. I havenot heard it doubted or questioned that it was an executionin good faith by seizure. The property is incapable in its natureof being dealt with by sale. There may be executions and attach-ments which cannot be effected by sale; this is one of them, andit took place before the date of the order of adjudication. Thestatute, therefore, seems .to me completely to cover the case,” anddismissed the application.
In appeal the application was allowed. Lush L.J. said in thecourse of his judgment “ The words ‘ goods ’ may well include debts,and I think we ought to take it as including debts. If it does notinclude debts, they are not within sub-section (3) at all. But, if thewords do apply to debts, then I think the fallacy of the respondent’sargument consists in treating the debt attached as having been thedebt ofthe bankruptat the time whenthegarnishee orderwas
served.By virtue ofthe adjudication ofthebankruptcy andthe
relationback of thetrustee’s title, alltheproperty whichthe
bankrupt had at the time when he committed the act of bankruptcyis vested in the trustee and becomes divisible among the creditors.The debt had, therefore, ceased to be due to the bankrupt and hadbecome due to the trustees. Then this clause was inserted for theprotection of a creditor who, after the commission of an act ofbankruptcy of which he had no notice, a secret act of bankruptcy,,had pursued his remedy, but it protects him only upon certain-conditions. Goods seized under a fi. /o, goods in the ordinarypopular sense of the word, must not only have been seized, butsold, before the adjudication. The intention was that so longas the execution remained only a security for- the debt, it was notto be protected, something more must have beer, done; there must
Sttna HooiufVana <b Co.
Seena SoonaVana d,Co.
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have been an actual conversion of the security into money. AndI think we must find some equivalent for that in the case of anattachment under a garnishee order. What is the equivalent ?The security must have been realized before there can be anyprotection. How can the garnishor realize the debt which he hasattached? The debt cannot be sold, and he can only realize it byobtaining payment o£ it from the garnishee, either voluntarily orby means of an execution on his goods. Till that has been doneI think there is no protection. It is true the words “ executed byseizure and sale ” have no application to the case. But I thinkthey do show what was the meaning. of the Legislature clearlyenough to enable us to apply the principle, and if for want ofappropriate words in the section we were to say it does not applyto a garnishee order we should be incurring the censure which isimplied in the maxim ‘ qui haeret in litera haeret in cortice.* I am ofopinion that the only equivalent for an actual sale of goods whichwill satisfy the words of the act in the case of a garnishee order is anactual receipt of the attached debt by the garnishor. Till that hasbeeri done the attachment is only a security, and it is not protectedby section 95.” ■
Statutory force was given to this decision in subsequentBankruptcy Acts. It is part of sub-section (2) of section 40 of theBankruptcy Act, 1914,1 which provides that an attachment of adebt is completed by receipt of the debt.
In view of the history of the clause I cannot accede to theargument that because there is no corresponding clause in ourOrdinance we must hold that the .• attachment of a debt is completedby seizure.
The case of Garolis Appuharny et al. v. Ramanathan Chetty 2 is notan authority applicable to this case. In that case the propertyseized was a decree held by insolvent judgment-debtor, and in myopinion the decision turned on the provisions of secton 254 of theCivil Procedure Code, which provides that ” When the propertyseized is a decree of Court the judgment-creditor at whose instancethe seizure is made shall be deemed the assignee thereof underassignment as of the date of the seizure, made by the person againstwhom he is executing the writ of execution, so far as that person'sinterest extends', and he may realize the decree in the mannerhereinafter provided for the execution of a decree by an assigneethereof. ’'
The effect of this section is to substitute the seizing judgment-creditor for the holder of the decree on seizure of the decree and theattachment is therefore completed by seizure.
I respectfully agree with the reasoning of Lush L.J.. and for thesame reasons hold that the seizure of the debt did not give thei d & 5 Geo, V. c. 592 5 C. L. R. 206.
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plaintiff the protection accorded by section 111 to an executionand attachment of the goods and effects of an insolvent bona fide•executed and levied by seizure and sale. '■
I accordingly dismiss the appeal with costs.
Xyall Grant J—
I have had the advantage of reading the judgment of mybrother Maartensz, with which I agree.
Seena SoonaVerna 4b Co .