GUMMIDELA ANANTAPADMANABHASWAMI Vs. OFFICIAL RECEIVER OF SECUNDERABAD

JUDGEMENT

(1.) This is an appeal from a decree of the High Court of Judicature at Madras dated 2 October, 1930, which set aside a judgment and order dated 23 April 1929, made by the same Court in its original civil jurisdiction. The appellant is in right of a money decree for Rs. 53,230-9-0 dated 15 June 1926, made in the Bombay High Court in favour of the appellant's father against three persons, who may be conveniently referred to as the judgment-debtors. At that time the judgment-debtors were the plaintiffs in a suit then pending in the Madras High Court for partition of certain joint family property between the plaintiffs' and the defendants' branches of the family. The Madras partition suit had been instituted in 1922, and on 5 December 1922 a preliminary decree by consent had been made, declaring inter alia certain properties and business assets involved in the suit to be the exclusive properties of the plaintiffs' branch and directing certain interim payments of money to be made by the defendants to the plaintiffs. The decree further directed certain arbitrators to take the joint family account and to partition the joint family property between the two branches of the family in two equal shares. The arbitrators failed to come to any final decision and the matter was referred to the Official Referee of the Court by consent. On 20 December 1926, the preliminary decree in the Madras suit was attached in the Madras High Court by the present appellant's father, in execution of the decree in the Bombay suit, the execution proceedings having been transferred from the Bombay High Court to the Madras High Court. In September 1928 the defendants in the Madras suit applied for a final decree in terms of a compromise entered into between them and the plaintiffs on 5-08-1928, and, on 21 September 1928, the High Court of Madras passed an order for a final decree in the partition suit in terms of the compromise but upon certain conditions, one of which was that the defendants should first pay into Court the amount of money due to the present appellant under the Bombay decree in respect of which the attachment had been made. That order has not been carried out and, in fact, is now under appeal in the Madras High Court.

(2.) On 15 September 1928 an order was made by the District Court at Secunderabad, on a creditors' petition, adjudging as insolvents two of the plaintiffs in the Madras partition suit, who are also the judgment- debtors (the third plaintiff having died leaving his widow as his legal representative). The Official Receiver of Secunderabad, who is trustee in the bankruptcy, is a respondent in the present appeal. On 4 March 1929 the appellant's father took out a Judge's summons in the High Court of Madras and started the present proceedings against the parties to the Madras partition suit, for leave to execute the decree attached by him. The proceedings were opposed by the defendants in the partition suit and by the Official Receiver of Secunderabad, who was then made a party plaintiff to the partition suit in substitution of the insolvents, the two surviving plaintiffs in that suit, and who is the active respondent in the present appeal. It is first necessary to consider whether, in the Madras Court, the adjudication order is to be regarded as the order of a foreign Court. Both the Courts below have held that it is to be so regarded and their Lordships agree with that conclusion. It is not suggested that the position of Secunderabad has altered from that stated by the Foreign Office to the Court, and referred to in the judgment, in Hossain Ali Mirza V/s. Abid Ali Mirza, (1893) 21 Cal 177 at p. 179. That reply makes clear that the British Contonment in Secunderabad still remains part of the Hyderabad State and the property of the Nizam. The administration of justice according to British enactments by the District Court established there does not render the orders of that Court anything but the orders of a foreign Court in relation to the Courts of British India.

(3.) There remains the question of what effect is to be given by the Madras Courts to the adjudication order of a foreign Court in competition with the prior attachment of a decree in the Madras Court. The learned trial Judge held, under the principles laid down in Galbraith V/s. Grimshaw, (1910) AC 508 that the present respondent could only take subject to the present appellant's rights of attachment, and made an order continuing the attachment until the further orders of the Court, and giving the appellant leave to execute the preliminary decree in the partition suit. The appellate Court set aside that order and dismissed the present appellant's application in substance on the ground that an attachment under the Civil Procedure Code is purely prohibitory and does not operate to create any title, lien or security in favour of the attaching creditor which, according to British Indian law, could prevail over the receiver in insolvency, and that it made no difference that the adjudication order was made by a foreign Court. Their Lordships do not agree with the reasoning or conclusion of the appellate Court. The question is one of comity between States and not one of the municipal bankruptcy codes of either country. The rule of private international law is clearly laid down in Galbraith v. Grimshaw, (1910) AC 508, as regards moveable estate, for it is settled that no adjudication order is recognized as having the effect of vesting in the receiver any immovables in another country. The reason for the rule is stated in the speech of Lord Dunedin in Galbraith V/s. Grimshaw, (1910) AC 508 (at p.513): "Now so far as the general principle is concerned it is quite consistent with the comity of nations that it should be a rule of international law that if the Court finds that there is already pending a process of universal distribution of a bankrupt's effects it should not allow steps to be taken in its territory which would interfere with that process of universal distribution; and that I take to be the doctrine at the bottom of the cases of which Goetze V/s. Aders, (1874) 2 R 150 is only one example."