Hirjee and Sons v Damji and Another (C.C. 320/1929) [1929] EACA 68 (1 January 1929)

Full Case Text

## ORIGINAL CIVIL.

Before SIR JACOB BARTH, C. J.

## WALJEE HIRJEE AND SONS $\overline{v}$ .

## PITAMBER DAMJI AND RAMJI KARA. C. C. $320/1929$ .

The Civil Procedure Ordinance (No. 3 of 1924).

Section 46-property attached in execution of decrees of several Courts.

Section 50-proceeds of execution to be rateably distributed among decree holders.

Held: —That in the case of attachments issued by the Supreme Court and a Subordinate Court prior to the receipt of the assets, the attaching creditors are entitled to share pro rata in the proceeds if defeated by reason of the fact that they have not transferred their decrees to the Supreme Court.

The Ruling was made on a reference by the Registrar which reads as follows:-

I desire to submit certain questions which have arisen in this and other cases in which the above-named Ramji Kara is the judgment-debtor, regarding the principle of pro rata distribution.

In the following cases of this and the Resident Magistrate's Court, attachments were ordered on the dates mentioned:-

$\sim$

$\alpha$

| | | | | Sh. Cis. | | |--------------|----------------|------------------------------------------------------|-----------------|---------------------|-------------| | 20/11/29. | R. M. $3705/29$ | Waljee Hirjee & Sons | $\ldots$ | 619 | 13 | | $22/11/29$ . | S. C. $320/29$ | Waljee Hirjee & Sons | $\cdots$ | 1194 | -19 | | 29/11/29. | S. C. $325/29$ | Shamji Harji | | 1656 | 40 | | $29/11/29$ . | R. M. 3956/29 | $T. C. Purohit \qquad \dots \qquad \dots \qquad 619$ | | | 80 | | $29/11/29$ . | R. M. $3767/29$ | N. S. Kotak $1108$ | | | -30 | | $4/12/29$ . | R. M. 4035/29 | Dr. A. Ribero $\mathcal{L}_{\mathcal{L}}$ | | $\ldots \qquad 618$ | $\rm _{03}$ | | $4/12/29$ . | R. M. $3697/29$ | Kashibhai Dwarkadass | $\cdots \cdots$ | 845 | $^{23}$ | | $5/12/29$ . | R. M. 4033/29 | Chunibhai B. Amin | $\mathcal{L}$ | $1121$ | 89 | | $6/12/29$ . | R. M. 4025/29 | Kachra Jivraj $540$ | | | $^{47}$ | | | | | | | | | | | | Sh. | 8323 | $^{44}$ |

On 6th December, 1929, as the result of the attachment in the first-mentioned case, a sum of Sh. 619/13 was paid into Court by the Court Broker, and later, on 16th December, by

virtue of the attachment in the present case (S. C. $320/29$ ) a further sum of Sh. 1372/50 was paid into Court, making in all a total of Sh. 1991/63. The attachments which were ordered as above set forth, all prior to the receipt of the assets on 6th December, 1929, aggregate Sh. 8323/44.

Section 50 (1) of the Code of Civil Procedure provides that " 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 not obtained satisfaction thereof, the assets ... shall be rateably distributed among all such persons."

In Civil Case No. 71 of 1929 in this Court, it was held by His Honour Mr. Justice Sheridan that where assets had been realized by virtue of attachments of this court, attaching creditors of the Resident Magistrate's Court were not entitled to share pro rata with the attaching creditors in this Court, notwithstanding that the orders for attachment of the lower Court were made prior to "the receipt of such assets." So far as I can gather His Honour's reason for this roling was that only those creditors were entitled to share whose attachment orders emanated from this Court and the implication is therefore that. before they can share with decree-holders of the Supreme Court. judgment-creditors of the lower Courts must transfer their decrees to the Supreme Court. In this connexion-vide the note at page 334 (first para.) of Woodroffe's Code of Civil Procedure, 1908, 2nd Edition.

In the present case all attachments were ordered before the assets came into the Supreme Court. The first amount paid in was the result of the attachment of the Resident Magistrate's Court in C. C. 3705/29. That amount was received into the Supreme Court by virtue of section 46 (1) of the Civil Procedure Ordinance, as there were several attachments prior to the date of payment-in. and as this Court is the Court of highest grade.

I have referred to the notes to section 73 of the Code of Civil Procedure of 1908 (which does not apply and never applied to this Colony) where the phraseology is identical to section 50 of the Kenya Ordinance. In Woodroffe's 2nd Edition at page 332 it is stated "that the object of the (new) section is two-fold. Firstly, to prevent unnecessary multiplicity of proceedings; to obviate in a case where there are many decree-holders, each competent to execute his decree by attachment and sale of a particular property, the necessity of each and every one separately attaching and separately selling that property. The object is to secure an equitable administration of the property by placing all the decree-holders upon the same footing, and making the property rateably divisible among them. . . .

Prior to the present Ordinance the practice of this Court was to divide rateably the proceeds of realization from attachments among those creditors who had transferred their decrees to the Court of highest grade where more than one Court was represented, or among those creditors who had levied attachments from the same Court prior to the sale of the property. (Sce section 295 of the 1877 Code).

I rather hesitate to quote the ruling of His Honour Mr. Justice Pickering in Civil Case 183 of 1925, of the Supreme Court at Mombasa, as that ruling was delivered upon the authority of His Honour's interpretation of section 295 of the 1877 Code, but at the same time I believe that ruling has a bearing on the principles to be decided in this case. In the present case there are only two attaching creditors in the Supreme Court and seven in the Resident Magistrate's Court. There is nothing to show that the latter even knew of the Supreme Court attachments, and in fact one of them attached before any attachment emanated from the Supreme Court. It appears therefore to me that if I follow the ruling of SHERIDAN, J., without further enquiry, injustice will accrue to the creditors who, by virtue of the amounts of their claims, had, by operation of law, to go to the Magistrate's Court for relief.

The following are therefore the points on which a ruling is $\operatorname{requested} :=$

1. Where attachment orders have issued from the Supreme Court and the Resident Magistrate's Court prior to the receipt of assets, should the attaching creditors share pro rata?

2. In the previous case are the rights of the attaching creditors in the lower Court defeated if they do not transfer their decrees to the Supreme Court?

3. If the answer to the first question is in the negative, how are the creditors in the lower Court to be informed that a Supreme Court attachment has issued. Are they to withdraw their first attachment, apply to the lower Court for transfer of their decrees to the Supreme Court and rank for rateable distribution?

4. Where an attachment issues from the Resident Magistrate's Court and thereafter an attachment issues from the Supreme Court, does this fact vitiate the attachment proceedings. in the Resident Magistrate's Court if the assets are not paid in before the Supreme Court attachment issues?

Directions as to the distribution of the assets available. $5.$ in the present case and the other cases wherein attachments. were made prior to the receipt of the assets now held by me.

RULING (dated 15-2-30).—This is a reference by the Registrar for a ruling on the principle to be applied in the distribution of assets the result of a number of attachments against the same debtor in the cases set out in the reference. The judgments are in some cases in the Supreme Court and in some cases in the Resident Magistrate's Court. The relevant sections of the Civil Procedure Ordinance, 1924, are sections 46 (1) and 50 (1). Section 46 $(1)$ provides that when property is under attachment in execution of the derees of more Courts than one the Court which. shall receive and realize such property and shall determine any claim thereto and any objection to the attachment thereof shall be the court of the highest grade, or where there is no difference in grade between such Courts the Court under whose decree. the property was first attached. Section 50 (1) of the Ordinance enacts that 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 not obtained satisfaction thereof, the assets after deducting the costs of realization shall be rateably distributed among all such persons.

It appears clear that the provisions apply the principle of rateable distribution of the assets procured by attachment and sale among decree holders who have applied for attachment before such assets are received by a Court.

A question which arises is the construction which is to Does "the Court" mean the be placed on section 50 $(1)$ . Court which is to receive the assets (c.f. section 46 (1))? If so must the decrees of a Court of lower jurisdiction be transferred to it for execution before a holder of such a decree can be entitled to share in the distribution of such assets? This question was before SHERIDAN, J., who, by an order of 4th May, 1929, in Civil Case No. 71 of 1929 of the Supreme Court, held that decree holders of the Resident Magistrate's Court, who had applied in that Court for execution before the receipt of the assets by the Supreme Court on an order for attachment in respect of its own decrees but who had not transferred their decrees for execution to the Supreme Court, were not entitled to share in such assets. I have myself held under section 295 of the Indian Code of Civil Procedure, 1882, which then applied, in applications by decree holders in a subordinate court to share rateably in the assets realized by an attachment of a superior court (Salch Vali Dharsi & Co., v. Ismail Rahim, 3, E. A. L. R., 46) that the subordinate court decree holders could not so share. $\ln$ that case, however, the decree holders in the subordinate court had not obtained orders of that Court for the execution of their decrees.

In the case dealt with by SHERIDAN, J., no reference was apparently made to section 46 of the C. P. O. and its effect on the facts of that case was not considered.

1 am clearly of opinion that in section 50 of the C. P. O. the expression "the Court" means the Court holding the assets and that to share in such assets under the section by way of rateable distribution application to that Court must be made before the receipt of such assets for the execution of the decree held. The decree must necessarily be an original decree of the Court holding the assets or one transferred to it for execution (e.f. section 30, C. P. O.). Although the matter is not free from doubt as shown by the conflicting decisions of the Indian Courts on a similar provision in the Indian Codes of Civil Procedure of 1882 and 1908, in my view section 46 of the C. P. O. governs the facts of the present reference. Under that section in the case of attachments in execution of decrees of more Courts than one the Court of the highest grade has the duty of receiving and realizing the property attached and of determining any claim thereto and any objection to the attachment thereof. In my opinion "any claim thereto" must include the claims of all the attaching creditors whether their decrees are in the Court of the highest grade or in a Court of lower grade. It would certainly be a hardship if decree holders in subordinate Courts who had obtained attachments in execution were obliged to transfer their decrees to a superior Court and again apply for execution before they could share rateably in the proceeds realized by attachment and sale.

There is no reason why the creditors presumably for larger amounts who have obtained decrees in the superior Court should. have priority in the distribution of assets which have been attached by the superior Court and by a subordinate Court. As SALE, J., observes in Clark $v$ . Alexander (XXI Cal., at page 203): "It certainly would be a remarkable result if, where property is attached under section 285 the superior Court while required by that section to consider the rights of all attaching creditors irrespective of the Courts by which the attachments were made should at the same time be restricted so as to have no alternative but to apply the rule of exclusion contained in section 295 to all creditors except those who have applied to the superior Court prior to realization and so come strictly within the terms of that section. Such a result cannot have been intended and may be avoided if sections 285 and 295 be read together and due effect given to each."

In my judgment the two sections which are now represented by sections 46 and 50 of the C. P. O. deal with two entirely different sets of circumstances. Section 50 deals with the case of a number of attachments against the same debtor in the same Court and section 46 deals with a number of attachments against the debtor in different Courts.

This being my view the answer to the questions referred. are as follows: -

1. In the case of attachments by the Supreme Court and Resident Magistrate's Court prior to the receipt of the assets the attaching creditors should share pro rata in the proceeds if the property covered by each such attachment is the same.

The rights of the attaching creditors in the subordinate $2. \quad$ Court are not defeated if they do not transfer their decrees to the Supreme Court.

$3.$ The answer to the first question being in the affirmative, the circumstances referred to in the third question do not arise.

The answer to the fourth question is in the negative. $4.$

The rule of distribution in the case referred and in other $5.$ similar cases is that given in the answer to the first question.