THORNTON et al. v. EMANUEL et al

022-NLR-NLR-V-35-THORNTON-et-al.-v.-EMANUEL-et-al.pdf


Thornton v. Emanuel.
133
1933Present: Macdonell C.J. and Driefeerg J.THORNTON et al v. EMANUEL et al.
127—D. C. (Inty.) Jaffna, 5,408.
Administration—Estate of person with foreign assets—Power of Ceylon Courtto give preference to Ceylon creditors—Concurrence—Seizure of moneyin administration case—Assets realized in execution—Preference—CivilProcedure Code, s. 352.
Where administration is granted in Ceylon to the estate of a personwho was also possessed of assets in a foreign country, which were beingadministered in that country,—
Held, that the Ceylon Court was not entitled to give. priority tocreditors in Ceylon unless the foreign court' gave preference to creditorsof its nationality.
The eleventh respondent obtained judgment in D. C., Colombo,No. 18,062, against the estate of one S for Rs. 16,000. He applied forexecution and on April 23, 1928, seized money in deposit in the testa-mentary case of the District Court of Jaffna, sufficient to meet theclaim. The seizure was effected by a notice under section 232 of theCivil Procedure Code to the District Court of Jaffna requesting thatthe money be held subject to the further orders of the District Court ofColombo. Oh May 20, 1929, the Jaffna Court was requested by theColombo Court to bring the money to the credit of D. C, Colombo,No. 18,082. The appellants obtained judgment against the same estateon November 29, 1929, in D. C. No. 24,796, but had not proceeded toexecution at the time the claim of the eleventh respondent wasconsidered.
Held (in an application for concurrence by the appellants), that theeleventh respondent was entitled to preference.
A
PPEAL from an order of the District Judge of Colombo, made intestamentary proceedings of the intestate estate of A. R. A. R. S. M.
Somasunderam Chetty who died in India on July 31, 1923. Letters ofadministration were granted to the attorneys of his two sons, whowere in India, and the administration being unsatisfactory, they were
134Thornton v, Emanuel.
eventually granted to the first respondent, the Secretary o£ the DistrictCourt of Jaffna.•
The sons of the intestate who carried on business in Colombo andIndia under the same vilasam were adjudged insolvent and the adminis-tration of their insolvent estate was in the hands of the official assigneeof Madras. While the estate of the intestate was being administeredunder letters granted by the District Court of Jaffna, a last will executedby Somasunderam was found in India and administration with the willannexed was granted by the High Court of Madras to the official assignee.The appellants who are the attorneys of the official assignee appliedfor grant of administration with the will annexed to the District Courtof Jaffna. The District Judge held that the appellants were entitledto administration but on condition that the Ceylon creditors should begiven preference.
Hay ley, K.C. (with him Subramaniam and Batuwantudawe), forpetitioners, appellants.—English law is clear that there is no distinctionbetween local and foreign creditors. There is one proviso, viz., if it isfound that a foreign court owing to peculiar law differentiated foreignfrom English creditors, then English law will intervene to protect itsown subjects. See In re Kloebe1; Hay v. Administrator of Estate ofMinors; Kwrukulasekera v. de Silva*.
Our general law of administration is the English law. An administra-tor is entitled to pay creditors as he chooses. See Littleton v. Cross
[Dhieberg J.—Here he is an executor.]
The same principle applies to both executors and administrators.See Williams on “ Executors ”, 11th Ed., Vol. 1., p. 793.
The Court has disciplinary powers over an administrator who mis-behaves. Here, the Judge has exaggerated his powers. It is theadministrator who has to administer the estate, not the Court. Theadministrator can decide priority in cases of creditors’ claims. On thatbasis there is nothing to prevent him choosing himself.
H. V. Perera (with him Navaratnam), for executors of the last willof the eleventh respondent.—The question of priority has to be decidedby the District Judge of Jaffna. The law always favours the vigilantcreditor. The Insolvency Ordinance protects creditors who seizeproperty before petition of sequestration. In England, the provisionsof the law are different. The section of the Indian Civil Procedure Codeis similar to ours.
Hay v. Administrator of Estate of Minor (supra) indicates the position of acreditor who obtains decree and seizes. A pure decree does not give theright, but the seizure does. Section 352 applies. The point of . time isthe seizure.
Even if the estate is in fact, insolvent, the Court has no control withoutinsolvency proceedings first being instituted. There is no law whichsays that one might wait until other creditors obtain decrees and applyfor execution.
In administration suits, it is the Court which controls very largely
the functions of executors or administrators.
» (1880) 28 Ch. D. 175.
•9N. L. R. 161..
3 8 C. IV. fi. 78.
* 3 B. and Gr. 317 »<. 382.
DRIEBERG J.—Thornton v. Emanuel.
135
Our Courts have held that immediately a creditor has done everythinghe ean do with regard to enforcing his decree there is realization. Thelaw states that where assets are realized at the instance of A, he mustshare it with others who have put their writs in the hands of the fiscal.Seizures under one writ are available for other writs (Supramanian Chettyv. Mohamed Bhai'). Creditors can come in and claim concurrence onlywhere there is a joint seizure (42 Mad. 692). There is no realization aslong as the money is held to the credit of the debtor. Money lying inCourt does not mean that the money is realized.
Under English law, the jurisdiction of the Bankruptcy Court isextended to the case of estates of deceased insolvents. Our own Ordi-nance implies insolvents who are alive. Counsel cites Perera v. Palani-appa Chetty1 and Shaw v. Sulaiman *.
Thyagarajah (with him Pandita Gunawardene), for second to tenthcreditors, respondents.
Hayley, K.C., in reply.
April 13, 1933. Drieberg J.—
This appeal is from an order of the learned District Judge of April 9,1930, dealing with several matters, among them an inquiry into theconduct of the official administrator of the estate. The intestate,A. R. A. R. S. M. Somasunderam Chetty died in India on July 31, 1923,and letters of administration were granted to Subha Naidu and Letchimanas attorneys of his sons who were in India; administration by themhaving proved unsatisfactory, the Secretary of the District Court, thefirst respondent to this appeal, was appointed administrator to act .jointly with them. Subha Naidu died, Letchiman it is said has dis-appeared from the case, and the first respondent had complete chargeof the administration of the estate. The sons of the intestate whocarried on a considerable business in Colombo and India under the samevilasam of A. R. A. R. S. M. were adjudged insolvent, and the adminis-tration of their insolvent estate is in the hands of the official assignee ofMadras. While the estate of the intestate was being administered underletters granted by the District Court of Jaffna, a last will executed bySomasunderam was found in India, and administration with the willannexed was granted by the High Court of Madras to the official assignee.
The official assignee by his attorney, the second petitioner, thenapplied that his grant be resealed under the provisions of OrdinanceNo. 7 of 1921; it was held that that course was not open to him and laterthe appellants as his attorneys applied for a grant of administrationwith the will annexed in the usual way to the District Court of Jaffna.
This application was one of the matters dealt with in the order ofApril 9, 1930. The appellants were held entitled to a grant of administra-tion but on condition that the Ceylon debts, by which I understand ismeant debts due to Ceylon creditors, should be paid first, payment offoreign debts being postponed until these were settled. Another conditionwas that all money recovered should be deposited in Court and that nopayment should be made out of estate money without leave of Court.
' 27 N. 1.. ft. 425.2 16 N. L ft. 508.
2 29 N. L. ft. 481; 30 N. L. ft. at p. 460.
136
DRIEBERG J.—Thornton v. Emanuel.
The appellants ask that this limitation on the grant to them of bringingall money into Court and not paying out without leave of Court be removed.
It appears to me that it is best that this limitation should be retained.The administration of this estate up to this stage has been most unsatis-factory. The learned Judge says that the grant to the appellants isnecessary to wind up the estate rapidly and to deal with the intestate’slands in Galle; estates in Jaffna have to be sold and debts have stillto be recovered. The administration hitherto being by the Secretaryof the Court was subject to special powers of control by the Judge; Itake it he is of opinion that he should continue this control, and thishe cannot exercise unless all money is paid into Court and payments outmade only by its leave. It cannot be said that the District Judge hasnot the power to impose these conditions, and no sufficient reason hasbeen shown why we should question his discretion.
The appellants also complain oi the order that Ceylon debts shouldbe paid before foreign debts. The official assignee, representing thecreditors of the insolvent estate of the sons in India and in Ceylon, hasobtained judgment against Somasunderam’s estate in case No. 24,796of the District Court of Colombo for Rs. 182,724.47 and has a specialinterest in this question. I understand that there are more debts dueto creditors not residing in Ceylon.
The learned District Judge was influenced in making his order by areference to In re de Penny, de Penny v. Christie ‘ in Williams on Executorsand Administrators. That was a case of conflict regarding the adminis-tration of the estate of de Penny who was bom in Scotland and livedand died in Bolivia. His widow procured from the Bolivian Court adeclaration of her intestacy and of her right to his movables, includinghis personal estate in England. His next of kin in Scotland procuredex parte from the Court of Aberdeen a confirmation of their title appointingthem executrices dative of the deceased. The confirmation was sealedin England. There was a considerable sum of money in the hands ofde Penny’s agents in London. The widow brought an action againstthe executrices and de Penny’s agents to restrain them from payingthe money to the., executrices or from otherwise parting with it except toher. Chitty J. said: “It has been the practice of the Courts in allcountries to retain assets within their jurisdiction for the purpose ofensuring payment of the debts of creditors within the jurisdiction, andnot to permit the assets to be taken away until such creditors are paid,and only after they are paid to allow the surplus assets to be remittedto the principal administrator in a foreign country.” There is noquestion here of the removal of assets from the jurisdiction of the JaffnaCourt; so far as claiming payment is concerned, if their claims are beforethe Court in a form in which they can be recognized by our law, foreigncreditors stand on the same footing as those of this country. In thecase of In re Kloebe, Kannreuther v. Ceiselbrecht5 Pearson J. said, “ Ican find no case in which the Court in distributing assets has made aninquiry into the nationality of different creditors, or ordered that Englishcreditors should be paid in priority to others …. On the otherhand the rule is that they are all to be treated equally, subject to what1 (1691) S Ch. D. 63.1 (1885) 28 Ch. D. 115.
DRIEBERG J.—Thornton v. Emanuel.
137
priorities the law may give them.” A Court however has power whenthe foreign court gives preference to creditors of its nationality to adopta similar policy in the case of local creditors so as to equalize payments;it is not suggested that this is the case here and that Ceylon creditorshave not received equal treatment with Indian creditors in the insolvencyproceedings in India. The order of the learned Judge on this pointcannot stand.
The appellants also object to the order allowing the claim of theeleventh respondent, Sir P. Ramanathan, to be paid the entire amountof his decree. The eleventh respondent, who has since died and isrepresented by his executors, obtained* judgment on December 13, 1926,in D. C. Colombo, No. 18,082, against the estate of Somasunderam forRs. 16,000. He applied for execution, writ w$s issued, and on April 3,1928, money in deposit in this case sufficient to meet his claim wasseized. The seizure was effected under section 232 of the Civil ProcedureCode by a notice to the District Court of Jaffna requesting that themoney be held subject to the further orders of the District Court of■Colombo. This notice was signed and served by the Fiscal under theauthority of the writ of execution, section 233. Under section 232questions of priority would have to be decided by the District Court ofJaffna. On May 20, 1929, the Jaffna Court was requested by the ColomboCourt to bring the money to the credit of D. C. Colombo, No. 18,082,and the Jaffna Court on May 30, 1929, ordered that notices shouldissue to the official assignee to show cause why the money should not beremitted to the District- Court of Colombo and directed that the noticeof the District* Court of Colombo should be acknowledge and thatCourt be informed of the order made.
The appellants did not get judgment in D. C. No. 24,796 untilNovember 29, 1929, and had not proceeded to execution at the timewhen the claim of the eleventh respondent was considered. They saythat the eleventh respondent is not entitled to preference by reason ofhis seizure and that they are entitled to share rateably with him.
Before the introduction of the Civil Procedure Code in 1890 a creditorwho had proceeded to execution acquired no preference over othercreditors, and so long as the proceeds of execution had not been givenover tc him other creditors were entitled to concurrence even thoughthey had not obtained judgment against the execution-debtor ; Bayard C.J.in Raheem v. Yoosoof Lehbe *, and Thomson’s Institutes of the Laws ofCeylon, Volume I., page 456. In Konamalai v. Sivakulanthu *, the FullBench held that section 352 of the Code had superseded the Roman-Dutch law regulating the concurrent claims of creditors upon the execu-tion proceeds of a common debtor’s property. .This ruling has beenapproved in later cases. In Raheem v. Yoosoof (supra), LayardC.J. saidthat the judgment in Konamalai v. Sivakulanthu (supra) had always beenfollowed for the last nineteen years and declined to have it submitted forreconsideration. Even after the difficulty of applying section 352 wasrealized, the ruling in Konamalai v. Sivakulanthu (supra) was approved bythe Full Court, Mendis v. Peris The only case to the contrary is Pererau. Palaniappa Chetty4, to which I shall refer later.
(1902) 6 N, L. R. 169 on p. 170.3 (1915) 18 N. L. R. 310.
(1891) 9 S. C. C. 203.4 (1913) 16 N. L. R. 508.
138
DRIEBERG J.—Thornton v. Emanuel.
This case presents a difficulty which frequently arises from the factthat section 352 is very limited in its scope and it is not applicable tomany cases of competition between judgment-creditors. .
Section 352, which was taken from the Indian Code of 1882, section295, provides that “ whenever assests are realized by sale or otherwisein execution of a decree, and more persons than one have, prior to therealization, applied to the Court by which such assets are held forexecution of decrees for money against the same judgment-debtor, andhave not obtained satisfaction thereof, the assets, after deducting thecosts of the realization, shall be divided rateably among all such persons. ”It will be seen that the section is limited to those who hold decrees ofthe Court which holds the assets, for it speaks of those who have appliedto that Court for execution. This created no difficulty in India for therethe holder of a decree can apply to another Court for execution of it,but here application for execution must be made to the Court whichpassed the decree and that Court alone can execute it.
Further, the section is limited to assets realized by “ sale or otherwisein execution of a decree ” ; it was held in Indian cases that “ otherwise ”meant some process of Court in execution expressly provided by theCode. The words do not extend as they should, if the section is to be ofreal use, to all assets of a judgment-debtor held by a Court. Thisdifficulty was met in the Indian Code of 1908 by substituting for the oldprovisions section 73 which is as follows:—“Where assets are held by aCourt and more persons than one have before the receipts of such assets,made application to the Court for the execution of decrees for the paymentof money passed against the same judgment-debtor and have notobtained satisfaction thereof, the assets, after deducting the costs ofrealization shall be rateably distributed among all such persons. ”
The insufficiency of section 352 to meet many cases of competitionbetween judgment-creditors was pointed out as long ago as 1904, seeMirando v. Kiduru Mohamaduand in 1915 Shaw J. in Mendis v.Peris {supra) drew attention to the urgent need for its amendment.
In the present case the money in Court is not the proceeds of execution;it was not realized by sale or by any process of execution provided in theCode. The administration was by the Secretary who was directed tobring all money belonging to the estate into Court, and a considerablesum has accumulated in Court. This circumstance and the fact that theDistrict Court of Jaffna, which holds the money, is not the Court whichpassed the decrees in favour of the appellants and of the eleventhrespondent place the case outside the scope of section 352. The questionbefore us is how competing claims are to be decided in such a case asthis, to which section 352 is not applicable.
Our Courts have determined the claims of creditors to concurrenceand preference on the principle in section 352, that is to say, givingpreference to those who have applied for execution over those who havenot, in cases which do not fall within section 352. Where a case is notwithin the section for the reason only that the competing decrees arenot ox the Court which holds the assets, no difficulty arises in applyingthe other test in the section, namely, whether a creditor had applied forexecution before realization. For example, in Mendis v. Peris (supra)
> (1904) 7 N. L. 11. 280.
DRIEBERG J.—Thornton v. Emanuel.
139
property was sold in execution of the decree in D. C. Kalutara, No. 5,402,the Fiscal, having in his hands at the time writs in two cases of the Courtof Requests of Gampola against the same judgment-debtor, issued at theinstance of another creditor, the appellant. The proceeds of sale weredeposited in the Kalutara Kachcheri on September 30 and on someday in October to the credit of the D. C. Kalutara case. They weretherefore proceeds of execution held by that Court. Subsequentlyto this, the appellant, who had another writ against the same debtorobtained in a case of the District Court of Kandy, sent it to the Fiscalfor execution. The case was heard by a Bench of three Judges, andWood Renton C.J. and Shaw J. held that the appellant was entitled toconcurrence with the creditor in the D. C. Kalutara case only in respectof his writs in his Court of Requests Gampola cases, but not in respect ofhis writ in the D. C. Kandy case as that writ was not in the hands of theFiscal at the date of sale. It will be seen that on a strict requirementof the conditions of concurrence prescribed by section 352 the appellantcould not have got concurrence for his two writs of the Court of Requestsof Gampola, for though he had satisfied one condition, namely, thatthey were in the hands of the Fiscal before realization by sale of theproperty, he could under section 352 only get concurrence if his writswere of the Kalutara Court. Shaw J. was of opinion that section 352was applicable only when the Court had before it holders of decreespassed by itself, but the importance of the decision lies in the rulingthat holders of decrees of other Courts are not barred for that reasonfrom concurrence, and further, that their right to concurrence is notbased on the Roman-Dutch law, which would have given concurrenceeven to creditors without judgments, but on the right of a creditor who isvigilant to preference over one who is not, the test of vigilance beingwhether he had proceeded to execution—the application of what BurnsideC.J., in Konamalai v. Sivakulanthu (supra), said was the commonsensemaxim of vigilantibus non dormientibus equitas subvenit. The judgmentof Wood Renton C.J. is of special interest, for he referred to his judgmentin Suppramaniam Chetty v. Rawther Naina Mute1 in which the circum-stances were similar to this case. He pointed out that the Full Courtin Konamalai v. Sivakulanthu (supra) had held that the Civil ProcedureCode had superseded the Roman-Dutch law regulating the concurrent claimsof creditors upon the execution proceeds of a common debtor’s propertyand he allowed the appellants concurrence for his C. R. Gampola writson the ground that they were in the hands of the Fiscal at the time ofsale, and refused concurrence for the D. C. Kandy writs on the groundthat it was not in the hands of the Fiscal at the time of sale.
Suppramaniam Chetty v. Muhamadu Bhai5 was a case of money seizedin the hands of a public officer on a writ issued in D. C. Kandy, No. 33,020.The appellants claimed concurrence for writs issued in two cases of theCourt of Requests of Kandy. One of the conditions of section 352 waspresent, namely, that the money so seized and paid into Court fell withinthe description of “ assets realized by sale or otherwise in execution ofa decree”; the other condition was absent, namely, that the decrees
' 60 (Inti/.) D. C. Testamentary Negombo, No. 1,420, Supreme Court Minutes May SI, 1915.
* (1026) 27 N. L. B. 425.
140
DRIEBERG J.—Thornton v. Emanuel.
should be of the same Court, the Court of Requests mid the DistrictCourt of Kandy being different Courts. Though the cases for this reasondid not fall within section 352, it was held that the creditors of bothCourts were entitled to concurrence if their writs were in the hands ofthe Fiscal at the date of realization. It was possible in that case todetermine the date of realization. On August 5 the money was seizedin the hands of the Government Agent by the notice under section 233.On August 19 notice issued to him to show cause why he should not paythe money into Court. On August 24 the Government Agent informedthe Court that there was a sum of Rs. 407 due to the judgment-debtorand that the Government had no claim to it. On August 31, the Courtordered the Government Agent to deposit the money in Court and he didso on October 10. The appellants seized the money on their writs onAugust 27. It was held that they were entitled to concurrence on theground that the realization took place when “ the assets were broughtinto this case by the order of August 31 ”, Jayewardene A.J. on page 429.
When money held by a public officer is by a process of executionbrought into Court and made available to creditors, it can fairly bedescribed as assets realized in execution of a decree, for something inthe nature of conversion has occurred by its being rendered availableto creditors; the position is similar to where a debtor of the judgment-debtor to whom alone he owes the money is compelled by a garnisheeorder under section 230 to pay the money into Courts where it would beliable to the demands of the creditor who procured the order as well asothers entitled to concurrence. But in the case of assets of an intestatedeposited in court in the course of administration, at what stage, if atall, can they be said to be “ realized ” by some process of execution ?
There are three cases in which conflicting claims of judgment-creditorsto money in deposit in testamentary cases have come before the Court;Perera v. Palaniappa Chetty (supra), 60 (Inty.) D. C. Negombo, Testamen-tary No. 1,420 (supra), and Shaw & Sons v. Sulaiman'.
In Shaw & Sons v. Sulaiman (supra) it was held that realization does notoccur until the attaching Court directs the Court which holds the assets topay the money over to it, and that “it is only after such an order thatthe assets can be said to be realized for the benefit of one or all of thejudgment-creditors”. The money was seized under the appellant’s writin a case of the District Court of Colombo; it was lying to the credit of atestamentary case in the same Court. It was held that no order hadbeen made in the case in which writ issued for a transfer to that case ofthe money in the testamentary case and that there was no realization.
In the case under consideration such an order was made before May 30,1929, this is the date of the receipt of the notice by the District Court ofJaffna; the record in the journal of this action under date May 20,1929, is as follows : —“ Notice received from the District Judge, Colombo,requesting to bring to the credit of case No. 18,082, D. C. Colombo,the sum of money seized under the writ issued in that case out of themoney lying in deposit to the credit of this case.” On the authorityof this case the eleventh respondent is entitled to preference over theappellants who at that date did not even have a judgment.
1 {1928) 29 N. /.. It. 481 and 30 ,V. 1.. It. 460.
DRIEBERG J.—Thornton v. Emanuel.
141
It was contended for the appellants that there could be no realizationuntil the Jaffna Court paid over the money to the attaching Court.Under section 232, all claims to priority would have to be decided by theDistrict Court of Jaffna and the money could not be paid over untilthose claims were decided. If the stage of realization is not reacheduntil the money is paid over to the Colombo Court, which in effect ispayment to the eleventh respondent, it follows that the Jaffna Courtwould be obliged to entertain and allow any claims made until thatstage was reached, and in the result a diligent creditor who proceededto execution would have to take concurrently with any creditors whomight come in with claims at any time before the money was transferredto the Court of his action. This would place him in the same positionas an execution-creditor before the Code.
In Meyappa Chetty v. Weerasooriya1 the question arose of a claim toconcurrence by a creditor who came in with his writ between the purchaserat a sale in execution giving to the Fiscal a cheque for the balancepurchase money and the deposit of the proceeds of that cheque in theKachcheri; the money was deposited in the Kachcheri twenty daysafter the sale. It was held .that realization took place at the momentof the sale and not when the money was paid to the Kachcheri. Shaw J.said, referring to the contention that realization did not take place untilthe deposit in the Kachcheri, “ such a construction of the words ‘ realizedby sale ’ as is contended for on behalf of the appellants would, in myopinion, defeat the object of the legislation and revive the old evilsit was intended to remedy. It would enable a creditor to stand by and' then to come in and defeat, to a large extent at any rate, the originalexecution-creditor’s claim.”
There can be no doubt that if it is possible to do so we should take aview which would secure to a creditor the fruits of his vigilance.
In Perera v. Palaniappa Chetty (supra) Pereira J. held that the case didnot fall within section 352. The reason is not stated but I gather it wasso by reason of the nature of the claims of the creditors and there beingno proper seizure. He held that this being so, the rights of parties toconcurrence and preference should be governed by the “ general law ofthe land ”, which I take it is the law as it existed before the Code. Thiscase was relied on by the appellants to support their claims to concurrence.
It is not possible now to hold that the matter can be decided in this -manner. I have referred to the many cases in which it has been heldthat the old law has been superseded and where the principle on whichpreference is allowed under section 352 has been applied in cases whichdid not fall within that section.
In 60 (Inty.) Negombo Testamentary No. 1,420 (supra), the administratorof the intestate sold property by order of Court and the proceeds weredeposited in the testamentary case; the respondent, a decree holder,thereafter seized the proceeds; the appellant, a creditor who' had notobtained a judgment but whose claim was admitted by the administrator,claimed concurrence with the respondent. Wood Renton C.J. heldthat the case did not fall within section 352 as the respondent’s seizurewas after realization. He said that “ in Konamalai v. Sivakulanthu (supra)it was held by a Bench of three Judges that the Civil Procedure Code had
• (1916) in N. L. R. 79.
142
DRIEBERG J.—Thornton v. Emanuel.
superseded the Roman-Dutch law regulating the concurrent claims ofcreditors to the execution proceeds of a common debtor’s property, andthat section 352 enacts substantive as well as adjective law in cases towhich it is applicable. In Raheem v. Yoosoof (supra) Sir Charles LayardC.J., with whom Moncrieff J. agreed, said that, with reference to claims inconcurrence, the judgment in Konamalai v. Sivakulanthu (supra) had alwaysbeen followed for the last nineteen years. Now it is true that section 352deals specifically with cases in which there had been an application to theCourt prior to the realization, but it seems to me that the respondentis entitled to the benefit of the rule of substantive law which it enacts.”
TTor my part, I incline to the opinion that in the case before us the moneywas at no stage assets realized in execution of a decree that it is one ofthose cases, not of that description, which the Indian Code of 1908sought to include by the words assets held by a Court. It was moneyin Court available for payment to any creditor who could establish aright to payment. It was always so available and at no time was itconverted or changed so as to be available to creditors, and it is not" easy to see at what stage it was realized. But even if this is so and thecase is not within section 352 for that reason, on the principle laid downin 60 (Inty.) D. C. Negombo, Testamentary No. 1,420 (supra), the eleventhrespondent should have preference, for when their claims came to beconsidered in March, 1930, he had proceeded as far as he could with theexecution of his decree, while the appellants only held a judgment.
If, however one has to find at what stage realization, or what correspondsto it in such a case as this, took place, I think it must be when the DistrictCourt of Jaffna received on May 30, 1929, a notice from the ColomboCourt requesting that the money should be brought to the credit of theColombo case. The seizure did not constitute realization and I havepointed out the impossibility of holding that realization does not takeplace until all the claims are decided. If it does occur, it must occurat some intermediate stage and I think it can be regarded, on theauthority of Shaw & Sons v. Sulaiman (supra), as having taken place whenthe Jaffna Court was requested to pay over to the Colombo Court. Themoney passed at that stage definitely from the control of the administra-tor, and from money available generally to creditors of the estate itbecame money marked off as available to those creditors who undersection 352 could establish a right to be paid out of it, that is to say,creditors who before that date had proceeded to execution. Thelearned District Judge was right in giving preference to the eleventhrespondent, and the appeal on this point must fail.
It was suggested that the estate of Somasunderam should be adminis-tered as an insolvent one under the provisions of section 199 of the CivilProcedure Code. It is sufficient to state that the Judge finds that the estatewas solvent when Somasunderam died. Apart from this, this procedureis not available in such a case as this, Shaw & Sons v. Sulaiman (supra).
In the petition of appeal objection is taken to the giving of preferenceto another creditor Kandiah, the creditor in D. C. Jaffna, No. 21,060 ;this creditor is not a party to the appeal and it is not necessary to dealwith his claim.
DRIEBERG J.—Lebbe v. Lebbe.
143
The order appealed from is varied by deleting the direction that thedebts of Ceylon creditors should be paid before those of foreign creditors;subject to this, the appeal is dismissed. The appellants will pay thecosts of the appeal of the eleventh respondent, and the second to tenthcreditors-respondents will pay the costs of the appellant.
Macdonell C.J.—I agree.
Decree varied.
♦