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Madras High Court
Kommachi Kather vs Pakker And Ors. on 20 November, 1896
Equivalent citations: (1897) 7 MLJ 66


1. The facts of the case are correctly stated in paragraph 8 of the District Munsif’s judgment.

2. The District Munsif, assuming that the plaintiff had a “decree for money” within the meaning of Section 295, Civil Procedure Code, still dismissed the suit on the ground that it was incapable of execution, except as against the mortgaged property at the time when.the plaint property was sold at the instance of the first defendant.

2. The District Judge confirmed the District Munsif’s decree for two reasons: firstly, because Section 295(c) in his opinion barred the plaintiff’s decree, and, secondly, because the plaintiff’s decree was not “a decree for money” within the meaning of Section 295, Civil Procedure Code.

3. The plaintiff appeals and we think with good reason. The District Judge is manifestly in error in supposing that clause (c) of Section 295 governs the case. That clause refers only to property sold “in execution of a decree ordering its sale for the discharge of an encumbrance thereon.” In the present case the property sold by first defendant was not encumbered property, but other property of the judgment-debtor.

4. The plaintiff and defendant had respectively a first and a second mortgage over other property of the same mortgagor, but neither of them held any encumbrance on the property sold by first defendant. It seems to us that the plaintiff and first defendant were in exactly the same position with regard to this property and each was equally entitled to a rateable share of the sale-proceeds.

5. The District Judge is, in our opinion, wrong in holding that the present decree is not “a decree for money” within the meaning of Section 295, Civil Procedure Code. No doubt, his view is supported by the language used in Ram Gharan Bhagat v. Sheobarat Rai (1894) I.L.R., 16A., 418 but the opposite view was held by the Calcutta High Court in Hart v. Tara Prasanna Mukherji I.L.R. 11 C., 718. The exact terms of the decree in the Allahabad case are not reported, nor is the Calcutta case referred to therein; but in our opinion the law is correctly stated in the latter case.

The decree before us runs as follows:–“That the defendants do pay plaintiff within two months from this date Rs. 2,500 with interest and costs and that, in default, plaintiff do recover the same by sale of the plaint property, and the balance, if any, from first to six defendants. It seems to us that this is a decree for mondy, and that it does not lose this character, because the decree declares the mode and the order of the procedure by which it is to be realised.

The first paragraph of Section 295 runs as follows:–“Whenever assets are realized by sale or otherwise in execution of a decree, and more persons than one have, prior to the realization, applied to the Court by which such assets are held for execution of decrees for money against the same judgment-debtor, and have not obtained satisfaction thereof, the assets, after deducting the costs of the realization, shall be divided rateably among all such persons.

6. It is under this paragraph that the plaintiff claims the right to” a rateable share of the property. Formerly, the creditor who. first attached property had a prior claim to have this decree satisfied out of the sale-proceeds to the exclusion of other creditors, hut now all judgment-creditors who apply to the Court, prior to realization, are entitled to share rateably, and under the penultimate paragraph of the section, if any of such assets be wrongly paid to any person, a judgment-creditor entitled to a rateable share may sue to recover the same from the person wrongly paid. It is under this paragraph that the plaintiff brings his suit. In the words of the Calcutta case already referred to–” The object of the section appears to us to be to provide for the rateable distribution of the assets of a judgment-debtor among all persons who have obtained decrees ordering the payment of money to them from the judgment-debtors and the fact that a person who has obtained such a decree also holds security or is entitled to any other relief under the decree, is immaterial. There is, therefore, we think, nothing in the section which takes away the right of a mortgagee, who has obtained a decree upon his mortgage, to proceed in the same suit against property of the mortgagor, not subject to the mortgage when there are other creditors–nothing which shows that the only persons entitled to share rateably in the proceeds of sale of property sold in execution of a decree are those who have obtained decrees for money only. We think, therefore, that every decree, by virtue of which money is payable, is to that extent a “decree, for money ” within the meaning of the section, even though other relief may be granted by the decree; and that the holder of such a decree is entitled to claim rateable distribution with holders of decrees for money only. If it were held Otherwise, it Would often result-that the .insufficiently-secured creditor might find himself worse off than the wholly-unsecured but more prompt and pressing creditor, and an inducement would exist for that scramble for first attachment which the; recent alteration’s of the law were designed to remove; The unsecured creditor is not placed at an unfair disadvantage, since he advanced his money on the faith of the debtor’s general credit apart from the property mortgaged, and it is always open to such a creditor to compel the sale of mortgaged property if it is likely to yield any surplus over and above the mortgaged money’

7. It remains to consider the ground on which the District Munsif dismissed the suit, viz., that the plaintiff’s decree was incapable of execution against anything save the mortgaged property, at the time when the first defendant attached the other property. It is true that at that time the plaintiff was not in a position to immediately execute his decree, but neither was the first defendant, nor the decree in favour of the latter was subject to precisely the same limitation as the plaintiff’s decree. The property ought not, therefore, to have been sold and the money paid to the first defendant until the mortgaged property had been sold and had been found to be insufficient to pay his debt. His title to receive payment out of the property sold did not arise until the mortgaged property was found to be insufficient, and the plaintiff’s title arose at precisely the same time. The payment of the whole of the sale-proceeds to the first defendant was, therefore, wrong, as the plaiptiff was entitled to a rateable share.

8. In this view, we must set aside the decree of the Courts below and give judgment for plaintiff as sued-for with costs throughout.

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