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1940 Supreme(SC) 27
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD ROMER, SIR GEORGE RANKIN AND MR. M. R. JAYAKAR.
RADHAKISSEN CHAMRIA - Appellant
Versus
DURGA PROSAD CHAMRIA - Respondents
On appeal from the High Court at Calcutta.
Decided On : June. 3. 1940.
Solicitors for the appellants: A. J. Hunter & Co.
Solicitors for the first respondent: W. W. Box & Co.
Solicitor for the second respondent: The Solicitor, India Office.
An attaching creditor, deemed a representative of the decree-holder for execution purposes, lacks the authority to adjust or compromise the attached decree for a lesser amount, as this legal fiction is limited to execution and does not grant the rights of an assignee.
Headnote:(A) Code of Civil Procedure, 1908 - Order XXI, Rules 2 and 53 - Public Demands Recovery Act - Section 19 - Attachment of decree - Power of attaching creditor to adjust decree - Whether the statutory fiction of being a "representative" of the decree-holder allows the attaching creditor to compromise or adjust the decree for a sum smaller than the decretal amount - The representative character is limited to the purpose of execution, i.e., enforcing the decree by process of the court to satisfy the attaching creditor's own debt - Attaching creditor is not an assignee of the decree and cannot exercise powers that would prejudice the original decree-holder by accepting a lesser amount in full satisfaction. (Paras 140-142)
(B) Order XXI, Rule 2 - Recording of payment - Payment made to an attaching creditor, though not part of a valid adjustment, may be recorded as a part-payment to protect the judgment-debtor from the decree-holder's failure to certify previous payments. (Para 144)
Facts of the case:
A decree-holder failed to certify several payments made by the judgment-debtors. Subsequently, an attaching creditor attached the decree to recover arrears of tax. The attaching creditor agreed to accept a sum significantly lower than the face value of the decree in full satisfaction and sought to record the adjustment. The original decree-holder challenged the competence of the attaching creditor to adjust the decree, contending that the power was limited to execution only.
Findings of Court:
The attaching creditor is a representative of the decree-holder only by legal fiction for the limited purpose of execution. This does not equate to being an assignee of the decree. Consequently, the attaching creditor cannot adjust the decree to the prejudice of the original decree-holder by accepting a smaller sum in full satisfaction.
Issues: Whether the power given to an attaching creditor under the law to execute an attached decree includes the power to adjust the decree with the original judgment-debtor for a sum less than the amount due.
Ratio Decidendi: The term "representative" in the context of attachment of decrees is a legal fiction intended only to allow the attaching creditor to enforce the decree through the court to satisfy their own claim. It does not transfer title or all rights of the decree-holder to the attaching creditor. Allowing an attaching creditor to compromise the debt would unfairly prejudice the original decree-holder, who would lose the balance of the decretal amount.
Result: Appeal dismissed; decree of the High Court confirmed, subject to the direction that the payment made be recorded as a part-payment.
Legal Category Hierarchy
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practice and procedure
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civil procedure
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execution of decrees
- attachment of decrees
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execution of decrees
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civil procedure
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administrative law
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tax recovery
- public demands recovery act
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tax recovery
Judgement
Appeal (No. 71 of 1938) from a judgment and order of the High Court (April 9, 1937) which reversed a judgment and order of the First Subordinate Judge of Howrah (January 28, 1935).
The first respondent obtained a decree for a large sum against the appellants. Certain payments were made towards the discharge of the decree which were not certified and recorded and there remained on the face of the decree a sum of Rs.3,32,373. As there was a sum of Rs.3,86,000, arrears of income-tax, due from the first respondent, the income-tax authorities, acting under the Bengal Public Demands Recovery Act, attached the decree and applied for execution. The appellants alleged payments had been made towards the discharge of the decree and the real balance outstanding was only Rs. 1,60,000 and the authorities agreed to accept this sum in full satisfaction of the decree. The appellants paid this sum and applied to the Court to record the adjustment of the decree.
The first respondent, who was made a party to the proceedings, contended that it was not competent to the income-tax authorities to adjust the decree
The Subordinate Judge held that the income-tax authorities were competent to adjust the decree.
The High Court (Nasim Ali and R. C. Mitter) reversed that finding.
The facts are more fully stated in the judgment of the Judicial Committee.
1940. April 25, 29. L. P. E. Pugh K.C., and J. M. Pringle for the appellants. An attaching creditor is the representative of the decree-holder for all purposes Unao Commercial Bank, Ld. v. Mohan Gobinda Roy (A. I. R. ( 1930) All. 659.); Ramcharan Singh v. Jangbahadar Singh (A. I. R. ( 1924) Pat.696.); Brojo Nath Saha v. Sandari Dassya (( 1906) 6 C. L. J. 141.); and Chatterton v. Watney .(( 1881) 16 Ch. D. 378.) He is not bound to put the attached property up for sale. He can receive payment in money out of court. If he can receive payment in full, he can compound for a lesser amount. If he can receive payment out of court, he must be able to have the payment recorded. Here, admittedly, Rs.1,60,000 Was paid out of court by the appellants. The payment should be recorded otherwise the appellants would lose that sum, for, if the payment is not recorded the appellants would be prohibited from proving the payment in execution. The agreement to receive the payment in full discharge of the decree should also be recorded as having taken place. It need not be recorded as an adjustment finally discharging the decree. Any question as to the effect of the agreement could be left to be determined in future proceedings.
If I am wrong in my contention that the attaching-creditor is competent to adjust the decree, then, as an alternative, I now ask that the payment be recorded as a part-payment. I give up my right to get the money back, but I submit that the agreement to accept the payment in full discharge of the debt should also be recorded and my right to contend that no more was really due on the decree than I have paid should be kept open.
Pringle followed. The sole question in the case is whether the statutory power given to the attaching-creditor under Order XXI., r. 53, sub-r. 3, extends to adjusting the decree with the original judgment-debtor. If it does, it is immaterial what the quantitative relation between the attached decree and the attaching-creditors decree is on the result of the adjustment between the attaching-creditor and the original decree-holder. The Court has to be satisfied that an adjustment has been made between the judgment-debtor and the decree-holder, or one who stands in his shoes, and has been
36 Law. Rep. 67 Ind. App. 360 ( 1939- 1940) Radhakissen C hamria V. Durga Prosad Chamria
138
accepted by the latter. Being satisfied on these points, the Courts duty is then the purely ministerial one of recording the adjustment. If the original decree-holder is dissatisfied, if he alleges fraud or collusion, he can challenge the adjustment in a separate suit; he cannot do it under s. 47 of
