ARMUGHA MUDELIAR Vs. YAGAMBA BAI AMMANI

JUDGEMENT

(1.) This appeal arises out of an application for execution of the Subordinate Judge s Court of Tanjore in Original Suit No. 13 of 1903. The application was dismissed by the Subordinate Judge. The appellant is the assignee of the decree under a document dated 5th July 1909. The decree was for possession of certain lands, mesne profits and costs. The appellant obtained an assignment only so far as the award of mesne profits and costs was concerned. Prior to the assignment, the decree had been attached by several persons who had, obtained decrees against the assignor, Yogamba Boyi Ammani. Of these, the 16th respondent made the attachment in execution of his decree in Small Cause Suit No. 905 of 1903, on the file of the Subordinate Judge s Court of Tanjore; his attachment was in October 1904. The 17th respondent was the decree-holder in Original Suit No. 53 of 1905, on the file of the District Munsif s Court of Tiruvadi; his decree was transferred for execution to the Tanjore District Munsif s Court, and the attachment was made by the latter Court on the 5th August 1905. The 18th respondent was the decree-holder in Original Suit No. 313 of 1905, in the Tiruvadi District Munsif s Court, who got his decree transferred to the District Munsif s Court of Tiruvalur which attached this decree on 13th March 1909. The assignor of the decree is the 1st respondent. She did not appear to contest the appellant s application. The judgment-debtors resisted the petition on the ground that the assignment was fraudulent and unsupported by consideration. The attaching decree-holders also contested the appellant s right to execute the decree and supported the contentions of the judgment-debtors. The amount due to the assignor under the decree at the time of the assignment was about Rs. 3,500. The consideration for the assignment was Rs. 2,500 of which Rs. 2,000 was due to the assignee from the assignor on account of the decree obtained by the appellant against her in Original Suit No. 60 of 1905 on the file of the Tiruvadi District Munsif s Court and a sum of Rs. 230 was paid by the assignee to one Ismalsa Rowther on the assignor s account. The remaining amount of Rs. 270 has been found by the Subordinate Judge not to have been paid to the appellant. He apparently was not willing to pay it until his assignment was recognised by the Court executing the decree. The Subordinate Judge held that Yogamba Boyi Ammani, the assignor, was heavily indebted to various persons at the time of the assignment and that, besides the decree in question, her property consisted of only 10 velis of land, her life-interest in which was of precarious value. He was of opinion that there must have been some secret arrangement between Yogamba Boyi Ammani, and the appellant and that the consideration set forth in the assignment deed was not, to use his own words, the real consideration or the whole consideration for it," and that the assignment was made with a view to defeat the rights of all those who had already attached the decree under the impression that the attachments already made were legally defective and might be successfully impeached. He held that the assignment deed did not evidence a bona fide transaction, and that it was not supported by real or proper consideration.

(2.) I am unable to understand what the Subordinate Judge means by the observation that the consideration was not real, in the face of his finding that the assignee had a decree for Rs. 2,000 against the assignor and that he paid a further sum of Rs. 230 for the assignment. The non-payment of the remaining sum of Rs. 270 would not invalidate the assignment as between the appellant and Yogamba Boyi Ammani and the latter s right would only be to recover it from the appellant. If there was any secret understanding that she should be entitled to receive from the appellant any further amount subsequently, it may possibly be that she would be entitled to recover that also. But all this would not entitle her to dispute the validity of the assignment. What the Subordinate Judge apparently means is, that the difference between the real value of the decree and the consideration for the assignment was intended to go to Yogamba Boyi Ammani, and that she and the appellant combined to defeat the rights of her creditors. It is clear that the consideration was inadequate and that the object was to benefit Yogamba Boyi Ammani to the extent of Rs. 1,000 or thereabouts, at the expense of her creditors by converting the decree which would be easily available to the creditors for execution into cash which she could easily conceal from them. Such a transaction must be held to be fraudulent and invalid as against the creditors and would not affect their rights to proceed against the decree as being still the property of Yogamba Boyi Ammani. See Chidambaram Chettiar v. Samy Iyer 30 M. 6 : 16 M.L.J. 427 : 1 M.L.T. 351 and Ishan Chunder Das Sarkar v. Bishu Sardar 24 C. 825 : 1 C.W.N. 665. But the appellant is entitled against the creditors to a charge for the amount actually paid by him. If the attachments in question, which were all prior in date to the assignment, are valid, his charge would be subject to the rights of the attachers. Mr. Seshagiri Aiyar, who appears for some of the attaching creditors, contends that the assignee is not entitled to take out execution and relies on the judgment of this Court in Thiruvengadam Pillai v. Doredla Subbiah (1912) 1 M.W.N. 176 : 11 M.L.T. 144 : 13 Ind. Cas. 659. That case, no doubt, seems to support his contention. There, the assignment was prior to the date of the attachment of the decree. Benson and Abdur Rahim, JJ., held that, according to Order XXI, Rule 53, Clause (2) of the Civil Procedure Code, only an attaching creditor or his judgment-debtor, i.e., the original holder of the decree attached, was entitled to execute the attached decree. With all deference, I am unable to agree with this ruling. Rule 16 of the Order entitles an assignee in writing of a decree to apply for execution and proceeds to state: "The decree may be executed in the same manner and subject to the same conditions as if the application were made by such decree-holder." That recognises the indubitable principle that the assignee has the same rights as the assignor. There is no reason to suppose that the attachment of a decree in any way curtails the rights of the assignee of it. In the case before the learned Judges, the assignment was prior to the attachment so that the attacher had nothing which he could validly attach in law. Assuming that an assignee of a decree has not, in all cases, an absolute right to enforce his right by execution and that there may be complicated equities arising out of the assignment which could not properly be made the subject matter of execution proceedings, see Yakoob Ali Chowdry v. Ramdoolal 13 C.L.R. 272 that does not in any way affect the rights as between the assignee and the attaching creditor. When the assignment is after an attachment, it will, of course, be subject to the rights of the attacher just as the assignor s right itself would be; but it is difficult to see why this should interfere with the assignee s right to stand in the shoes of the assignor and as, according to Rule 53, Clause 2 of Order XXI of the Code of Civil Procedure, a person, whose decree has been attached, may apply for execution notwithstanding the attachment, his assignee must be held entitled to have the same right. According to Section 273 of the repealed Code, the attacher alone apparently could apply for execution of the attached decree. See Thuchakovil Unni Koya v. Arapayil Pathuthi Umma (1911) 1 M.W.N. 187 : 9 M.L.T. 312 : 9 Ind. Cas. 786 : 21 M.L.T. 577 although Maclean, C.J., even there held that the holder of an attached decree could apply for execution. See Adhar Chandra Das v. Lal Mohan Bass 24 C.778 : 1 C.W.N. 676. But, Order XXI, Rule 53, of the present Code, clearly recognises the right of the attacher s judgment-debtor also to execute his decree. Whichever of the two may take out execution, he must, of course, hold the proceeds realised in execution in trust for the satisfaction of the rights of the attacher in the first instance and the balance for the benefit of the holder of the attached decree. I must, therefore, overrule the contention that, in consequence of the attachment, the assignor became incompetent to execute the decree. I have already found that the assignment in this case was in fraud of the assignor s creditors. Does this disentitle him to take out execution? As already observed, his assignment is perfectly good against the assignor. It must also be valid against the judgment-debtors of the assignor; they have no right to say that only the assignor and not the assignee should have execution against them. The assignment, no doubt, will not prevent the creditors from proceeding against the decree as if it still remained the property of the assignor. What is the legal result of such a state of affairs? I think, it must be taken to be that the assignment, though valid as between the parties to it, is subject to the rights of creditors, including both these who may have already attached the decree and other creditors who might proceed against the decree notwithstanding the assignment. But the assignee may, like the assignor, himself take out execution against the judgment-debtors; the proceeds of execution will, however, be subject in his hands to a trust for the creditors whose rights were sought to be defeated by the assignment. The assignor himself having parted with all his rights is no longer entitled to the benefit of the decree. There is no principle on which he can be held to be the legal owner and a trustee for his assignee whose rights are perfect as against himself. There is, therefore, no reason for holding that the assignee is altogether disentitled to execute.

(3.) The appellant contends that he is entitled to an order for execution without any determination of the rights of the attaching creditors-respondents and that they have no right to intervene at all in these proceedings. I do not think that this contention should prevail. It does not appear that any of the attaching creditors has yet applied for execution of the attached decree. But if their attachments are valid, they have obtained substantial rights in the decree and they are interested in resisting the appellant s right to execution and in getting their own rights to payment out of the proceeds of execution recognised in priority to appellant s rights. If the property in question were not a decree but, say, immoveable property, they would, according to the recognised procedure, be entitled to attach it notwithstanding a fraudulent alienation by their judgment-debtor and the alienee would have to assert his right to the property by a claim petition and any order passed on such a petition would be subject to the right of the unsuccessful party, whether the assignee or the attaching creditor, to establish his right by a regular suit. As the property in question is a decree, both the assignee and the attaching creditor are, according to the Civil Procedure Code, persons entitled to apply for the execution of the decree. They must, therefore, both be entitled to get an adjudication as to whether either has a right to execute and what their rights of priority are. An assignor, as well as an attaching creditor, is a representative of the original decree- holder; and when the attaching creditor impeaches the right of the assignee to execute, he is entitled to urge his objection in execution proceedings to the assignee s right to take out execution. I cannot, therefore, hold that the attachers had no right to intervene in these proceedings.