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Present: Fisher C.J. and Jayewardene A.J.
SHAW & SONS v. SULA1MAN et at.
69—D. C. (Inty.) Colombo, 26,143.
Concurrence—Seizure of money in Court—Order by attaching Court—Appropriation in pursuance of direction—Civil Procedure Code,88. 282 and 262.
Aj* execution-creditor, who has seized money lying to thecredit of his judgment-debtor in another case, is not entitled toresist a claim for ooncnrrence unless he has obtained) prior to suchclaim, an order of the attaching Conrt directing that the money bepaid over to itself.
The mere issue of a notice under section 232 does not amountto realization. To shut out a judgment-creditor who applies forexecution, realization must have reached the stage of appropriationto another decree-holder.
^ PPEAL from the order of the District Judge of Colombo.
H. V. Perera, for plaintiff, appellant.
.Hayley, K.G. (with Navaratnam), for 5th, 6th, and 7th respondents.
H. H. Bartholomeusz (with Bajapakse), for 1st and 2nd defend-ants, respondents.
July 10, 1928. Jayewardene A.J.—
In this case judgment was entered for the plaintiff for a sum ofBs. 24,007.82 with interest and costs against the defendants,as prayed for, on February 8, 1928.
On February 11 the plaintiff applied for execution by issue of writagainst the properties of the deceased testator, and this applicationwas allowed. According to the journal entries, writ was issued onFebruary 11. On February 13 the Proctor for the plaintiffs madethe following motion: “As a sum of Es. 24,607.82, belonging to thedefendants above named, out of the estate of the late S. L. NainaMarikar Hadjiar, and lying in testamentary proceedings No. 3,189 ofthis Court, has been seized under the writ issued in this action, Imove that the said sum of Bs. 24,607.82 be transferred from thesaid proceedings No. 3,189 to this action to the separate account ofthe plaintiffs above named.1’
On this motion the learned Judge endorsed as follows: —
" Vide order in D. C. 3,189 " and “ Vide order on Mr. Akbar'smotion in D. C. 3,189."
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The plaintiff Bays that he obtained a transfer of the amount seizedto the credit of this ease, and that subsequently to the transfer,the respondents (8 to 14) purported to seize the money lying to thecredit of this case under writs issued against the defendants. Theplaintiff complains that the learned Judge has refused his applicationfor an order of payment in his favour.
The Code draws a sharp distinction between attachment andrealization.
As regards the attachment or seizure of money in Court, the CivilProcedure Code enacts-^-
“ If the property is deposited in, or is in the custody of any Courtor public officer, the seizure shall be made by a notice tosuch Court or officer, requesting that such property and anyinterest or dividend becoming payable thereon may beheld subject to the further orders of the Court from whichthe writ of execution authorizing the seizure issues."(Section 232.)
and as to realization—
“ Whenever assets are realized by sale or otherwise in executionof a decree, and more persons than one having, prior to therealization, applied to the Court by which such assets areheld for execution of decree for money against thejudgment-debtor, and have not obtained satisfactionthereof, the assets, after deducting the costs of realization,shall be divided rateably among all such persons."(Section 352.)
(The Court in whose custody the money is will hereafter be calledthe " custody Court,” and the Court issuing execution, the attachingCourt.)
In this case the attaching Court issued a notice under section 232requesting the custody Court, D. C. Testamentary 3,189, to hold asum of Bs. 24,607.82, subject to the further orders of the attachingCourt.
The mere issue of a notice under section 232 does not amountto realization. To shut out a judgment-creditor who applies forexecution, realization must have reached the stage of appropriationto another decree, holder. (Soysa v. Wirakoon. *)
In Suppramanium Chetty v. Mohatnadu Bhai,x it was held thatboth seizure and realization were not effected by the single act of theCourt or of the Fiscal in issuing a notice under section 232, butthere must be a further act of the Court directing the money to be .brought to the credit of the case before there can be realization,
where the properly is money.
1 (1893) 2 O. L. B. 178.
* (1926) 27 N. L. B. 425.
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The same view has been adopted in India, both under the oldCode (Sirinivasa Ayyangar v. Seetharam Ayyar l) and under thepresent Code.
In Vievanathan Ghetty v. Arunachalam Ghetty,2 Wallis C.J. heldthat it was only when the Court ordered the money to be transferredto the credit of the first attaching creditor's suit which it is engagedin executing, that there can be said to be receipts of assets and thata rateable distribution can be made.
Section 73 of the present Indian Code uses the words 44 beforethe receipts of assets " in place of the words “ prior to realizationof section 295 of the older Indian Code and section'352 of our Code,but the principle is unaffected.
It was further held in this case that when the attaching Courtand the custody Court are the same, an order should be made bythe Court as attaching Court for transferring the money from thesuit in which it came into Court to the suit in which the attachmenttook place, and it is only when this is done that the Court, asattaching Court, can properly be said to have received the assetsand to hold it within the meaning of section 73, ready for rateabledistribution.
According to Woodroffe and Ameer Alit9 section 295 of the IndianCode was intended to prevent multiplicity of procedure and thescramble by several judgment-creditors which used to take place.It was also meant to secure an equitable administration of theproperty of the judgment-debtor by placing all the decree-holderson the same footing, and making the property divisible among them,instead of allowing one to exclude all the others, merely because hehappened to be the first who seized and sold the immovable propertyor attached the money of the judgment-debtor.
It was held by the Privy Council in Mina Kurnari Bibi v. BijoySingh Dudhuria* that certain conditions were necessary in order tobring section 295 into play, and one of them was that there shouldbe assets held by the Court.
An examination of the Indian Code shows that there is aprogressive tendency to favour rateable distribution and to restrictthe rights of the first applicant.
In Umma Venkataratnam & Co. v. Adamji Usman & Go. 9 Sesha-giri Ayyar J. said: 44 The first enunciation of the rule on this sub-ject is to be found in sections 270 and 271 of Act 8 of 1839. Section270 distinctly declares that a person who first takes out execution ofhis decree is entitled to be first paid out of the proceeds of the sale.Section 271 introduced the principle of rateable distribution withregard to the surplus proceeds that may be left after the first
1 (1895) 19 Mad. 72.
« (1920) 44 Mad. 100.
« (1919) 42 Mad. €92.
• Shaw <9Sons p.Sidaiman
3 G. P. C. 310.
* (1917) 44 Cal. €62.
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Shaw dbSons v.Sulaiman
attaching creditor had satisfied himself. Apparently under thisCode the person who attached the property and brought it to solewas regarded as having claim to priority over other creditors. Inthe next two Codes of Civil Procedure, namely, those of 1877 and1882, a further change was introduced in favour of rateabledistribution. The priority of the attaching creditor was abolishedand the rule was stated to be that where assets are realized by saleor otherwise in execution of a decree and where more persons thanone had, prior to the realization, applied to the Court by which suchassets are held, the assets shall be divided rateably amongst all suchapplicants. In the Act of 1908 another change in favour of rateabledistribution was introduced by omitting the words * realized bysale or otherwise ’ and substituting for them the words * are heldby the Court.’ But the essential condition was retained, namely,that persons applying for distribution pari passu must have madeapplications to the Court for execution of decrees before the receiptof assets.”
The attaching Court must first direct the money to be paid over toitself. It is only after assets have been realized by such an orderthat the assets can be said to have been realized for the benefit ofone or all the judgment-creditors.
The question arises whether there is an order of the attachingCourt directing the money to be brought to the credit of this case.
On the application for the transfer of the sum of Ms. 24,607.82from D. C. 3,189 to this action to the separate account of the plaintiffthe learned Judge has, as I have already observed, made twoendorsements: —
” Vide order in D. C. 3,189 ” and ” Vide order on Mr. Akbar’smotion in D. C. 3,189.”
These endorsements merely draw attention to two orders madein D. C. 3,189. They cannot, in my opinion, be construed as ordersat all. They are far from orders directing any money to be broughtto the credit of this case, so as to prejudice other creditors and tobar any claims they may have to concurrence. An order is definedin section 5 of the Civil Procedure Code as the formal expression ofany decision of a Civil Court, which is not a decree. There is noexpression, formal or otherwise, of any decision, to be gathered fromthese endorsements. They do not constitute a step or orderin execution of the attaching Court. The fact that a sum ofMs. 24,607.82 was actually transferred to this case from D. C. 3,189on February 13 does not, to my mind, affect the question. Themoney has been transferred on the order on Mr. Akbar’s motion inD. C. 3,189 as shown by the Journal entry^dated February 13, 1928,in this case. There was no order for the transfer made in thepresent Court, that is in the attaching Court. The last effective
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order in the process of execution was the order allowing writ, ofexecution on February 11. That order effected the seizure, and Wthe absence of any subsequent order directing the money to bebrought into Court, there has been no realization, and the plaintiffis not entitled to an order of payment in his favour of the sum ofRs. 24,607.82, and his application has been rightly refused. Iwould dismiss this appeal with costs.
Shaw <ftSans ^Svlaiman
Fisher C.J.—I agree.