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1945 Supreme(SC) 2
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD RUSSELL OF KILLOWEN, LORD MACMILLAN, LORD SIMONDS, SIR MADHAVAN NAIR AND SIR JOHN BEAUMONT.
LYALLPUR BANK, LIMITED - Appellant
Versus
RAMJI DAS (DECEASED), THROUGH HIS SONS, - Respondents
On appeal from the Chief Court of Oudh:
Decided On : Jan. 18. 1945.
Solicitor for appellant: Harold Shephard.
Solicitors for the respondent the Punjab National Bank, Ld.: Douglas Grant & Dold.
An order for payment of money made under Section 186 of the Indian Companies Act, 1913, is enforceable as a decree. Therefore, the holder of such an order is entitled to rateable distribution of assets under Section 73 of the Code of Civil Procedure.
Headnote:(A) Code of Civil Procedure, 1908 - Section 73(1) and Section 36 - Indian Companies Act, 1913 - Sections 186(1) and 199 - Rateable distribution of assets - Execution of orders - Whether an order for payment of money made under the Companies Act is treated as a decree for the purpose of rateable distribution - Section 199 of the Companies Act provides that orders made under the Act may be enforced in the same manner as decrees - Section 36 of the Code of Civil Procedure deems that provisions relating to the execution of decrees apply to the execution of orders - A company holding an order for payment may resort to any procedure for enforcement open to a decree-holder, including rateable distribution under Section 73 of the Code.
(B) Interpretation of Statutes - Narrow construction of the term "decree" would deprive a party of effective enforcement methods available through more elaborate suit procedures, which contradicts the intent of providing a simplified procedure under special legislation.
Facts of the case:
Assets of a judgment-debtor were held by a court. Multiple decree-holders applied for rateable distribution of these assets under the Code of Civil Procedure. One claimant sought a share in the distribution based on an order for payment made under the Companies Act. The lower courts disallowed the claim on the ground that the order was not a "decree" as defined by the Code of Civil Procedure, and therefore the claimant did not fall within the class of persons entitled to rateable distribution.
Findings of Court:
The court found that the lower courts had adopted too narrow a view. By considering the combined effect of the Companies Act and the Code of Civil Procedure, it was determined that an order for payment is enforceable in the same manner as a decree.
Issues: Whether the provisions of Section 73 of the Code of Civil Procedure, which provide for rateable distribution of assets held in court among holders of decrees, apply also to holders of orders made under Section 186 of the Indian Companies Act, 1913.
Ratio Decidendi: Section 199 of the Companies Act and Section 36 of the Code of Civil Procedure collectively ensure that orders made under the Companies Act are treated as decrees for the purpose of execution. Consequently, an application for the execution of such an order must be treated as an application for the execution of a decree for the purposes of Section 73 of the Code, allowing the holder to participate in the rateable distribution of assets.
Result: Appeal allowed.
Legal Category Hierarchy
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practice and procedure
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execution of decrees
- rateable distribution
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execution of decrees
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company law
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winding up
- contributories
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winding up
Judgement
Appeal (No. 61 of 1942) from a judgment and decree of the Chief Court (December 1, 1939) which affirmed an order of the District Judge of Unao (August 6, 1936) who had decided that the appellant bank was not entitled to share rateably under s. 73 of the Code of Civil Procedure in a distribution of the assets held by the court of a judgment-debtor, one Shanti Lal.
The following facts are taken from the judgment of the Judicial Committee The
points involved in this appeal turned on the true construction of s. 73, sub-s. I, of the Code of Civil Procedure (V. of 1908) which is in the following terms— "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 realisation, shall be rateably distributed among " all such persons." It was common ground that at all material times there was held by the District Court, Unao, assets of one Shanti Lal amounting to a sum of Rs. 49,166 or thereabouts, and that before the receipt of those assets various decree-holders had made application to the court for the execution of decrees for the payment of money passed against the said Shanti Lal and had not obtained satisfaction thereof. They accordingly claimed to be entitled to a rateable distribution of the said sum under the above section. Their claims were allowed by the District Judge, Unao, who by an order, dated August 6, 1936, ordered that the balance of the amount in deposit (after satisfying in full a claim of the Secretary of State for India) should be rateably distributed among the holders of seventeen decrees.
The present appellant had made an application for the execution of the order hereinafter mentioned, and had not obtained satisfaction thereof. It according claimed a share in the rateable distribution, its claim being based on an order which had been made in its favour under s. 186, sub-s. 1, of the Indian Companies Act (VII. of 1913) which runs thus "The court may, at any time after making a winding up order, make an order on any contributory for the time being settled on the list of contributories to pay, in manner directed by the order, any money due from him or from the estate of the person whom he represents to the company exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act." The order in favour of the appellant, dated March 27, 1935, was made by the District Judge, Lahore, in the following terms — "Upon the application of the official liquidators of the above-named company and upon reading orders passed thereon to-day, it is ordered under s. 186 read with s. 160 of the Act that Shanti Lal son of Lala Jairam Das, c/o Lala Kundan Lal, Eastern Electric Works, Cawnpore, do pay to the official liquidators of the said company the sum of Rs. 1,37,557/10/3 (one lac, thirty-seven thousand, five hundred and fifty-seven, annas ten and pies three) only with costs due from his late father Lala Jairam Das, the original contributory in respect of a pronote dated July 1, 1928, for Rs. 1,11,500/8/-, in favour of the above said Bank, which still remains unpaid.
"This order of payment may be enforced as a decree under the provisions of ss. 199, 200 and 201 of the Act against the estate, if any, of the deceased contributory in the hands of " the above said Shanti Lal."
That order was sent for execution to the Chief Court of Oudh, and was by that court forwarded to the District Judge, Unao, in a letter addressed by the deputy registrar of the court to the said District Judge in the following terms— "I am directed to forward to your court for execution and necessary action, the order of the District Judge in charge liquidation work at Lahore, which has been certified by this honourable court on January 27, 1936, in the case noted on
