SOMAVARAPU BALARAMI REDDI Vs. OFFICIAL RECEIVER

JUDGEMENT

(1.) This appeal raises a question of some importance. It relates, to the interpretation of the word benefit occurring in Section 51(1) of the Provincial Insolvency Act. The facts which have led to this appeal are that one Konjeti Seshiah filed a suit (O.S. No. 65 of 1931) for the recovery of money against Duvvur Rami Reddy and Subrarni Reddi. This was decreed on 7 October, 1932; but before the decree-holder could bring his judgment-debtor's property to sale in execution, an application for their adjudication was presented. This was admitted shortly after. The decree-holder nevertheless proceeded with his application for execution and brought the judgment-debtors property to sale. Before the property was sold and money deposited in Court some other creditors who had also secured decrees against these judgment-debtors applied for execution and rateable distribution under Section 73, Civil Procedure Code. In spite of the pendency of the Insolvency Petition, the property was sold and the attaching creditors and the other decree-holders succeeding in drawing their proportionate shares out of the sale proceeds of their judgment-debtors property from the executing Court. After an order of adjudication was passed against these judgment-debtors, the Official Receiver applied for refund of the money drawn by the attaching creditors and the other decree-holder. This petition was allowed by the learned District Judge who, following a Madras case, permitted the attaching creditor to retain the costs out of the money realised by him. The same treatment was not accorded to the other decree-holders and they were ordered to refund the whole of the money drawn by them. One of these decree-holders has appealed and it has been contended on his behalf that it was wrong for the lower Court to draw a distinction between the attaching decree-holder at whose instance the property was sold in execution and the other decree-holders who were held entitled to rateable distribution. An attempt was made to support this contention by certain observations made in Official Receiver of Tanjore V/s. Venkatarama Iyer (1921) 42 M.L.J. 361. The facts have not been fully given in the report of that case but a distinction appears to have been attempted to be drawn on behalf of the appellant between the assets realised by the attaching creditor and those which were distributed among the other decree-holders rateably. It was claimed on behalf of the Official Receiver that the attaching creditor alone was entitled to retain the money realised by him under Section 51 of the Provincial Insolvency Act and the other decree-holders who shared the balance of the sale proceeds rateably were not entitled to do the same. This contention was repelled by the learned Officiating Chief justice in the following words: It is contended that where rateable distribution has been ordered under Section 73 of the Civil P. C. the exception to Section 51(1) of the Provincial Insolvency Act only applies to the amount credited in favour of the attaching decree-holder and not to the amounts rateably distributed to the other decree-holder under the section. No authority is quoted and we can find nothing in the wording of Section 51 to support such a view; nor is any reason suggested for such a differentiation.

(2.) This would show that the point which the learned Judges were called upon to decide in that case was entirely different from what has to be decided now. The observation that there was nothing in the words of Section 51 of the Provincial Insolvency Act which would entitle a Court to differentiate between an attaching creditor and other decree-holders is relevant, but it must be admitted that it was made in that case with a different object.

(3.) The main ground of attack on behalf of the appellant relates to the interpretation of the words the benefit of the execution used in Section 51(1) of the Provincial Insolvency Act. The section reads as follows: Where execution of a decree has issued against the property of a debtor, no person shall be entitled to the benefit of the execution against the receiver except in respect of assets realised in the course of the execution by sale or otherwise before the date of the admission of the petition.