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1986 Supreme(AP) 285
Andhra Pradesh High Court
Judges : B.P.JEEVAN REDDY, M.N.RAO
SAMMAC ENTERPRISES, A REGISTERED FIRM REP.BY ITS MANAGING PARTNER, MUDUMBAI PADMAVATHI - Appellant
Versus
RAVULA VEERA RAGBAVA RAO - Respondent
Decided On : 07-28-86
An attachment levied by one creditor enures for the benefit of all claims enforceable under that particular attachment only. Subsequent creditors who have not levied an attachment cannot take advantage of the attachment levied by another creditor for avoiding the rights of secured creditors.
Headnote:
ATTACHMENT - SECTION 64 CPC - ENURES FOR THE BENEFIT OF ATTACHING CREDITOR ONLY - SUBSEQUENT CREDITORS CANNOT TAKE ADVANTAGE - CLAIMS OF SECURED CREDITORS PREVAIL OVER UNSECURED CREDITORS - ATTACHMENT BY ONE CREDITOR DOES NOT ENURE FOR THE BENEFIT OF OTHER NON-ATTACHING CREDITORS.
Fact of the Case:
A property was attached by a creditor (3rd respondent) before judgment in respect of a building belonging to the judgment debtor (1st respondent). Subsequent to the attachment, the property was sold and the sale proceeds were deposited into court. The petitioner, a subsequent creditor, filed an application under Section 73 of the Transfer of Property Act, 1882 for payment of the balance amount in discharge of two mortgage deeds after deducting the amount due to the attaching creditor and the first mortgagee. The State Bank of Hyderabad, the first mortgagee, also filed an application for payment of the decretal amount due on the mortgage debt. The petitioner's application was dismissed on the ground that Section 73 of the Transfer of Property Act was not attracted and that Section 73 of the Civil Procedure Code was applicable, which required the application to be filed before the sale proceeds were received into court. The applications of other subsequent creditors for rateable distribution under Section 73 CPC were granted.
Finding of the Court:
The court held that under Section 64 of the Civil Procedure Code, an attachment levied by one creditor enures for the benefit of all claims enforceable under that particular attachment only. In the present case, none of the subsequent creditors who applied for rateable distribution under Section 73 CPC had levied an attachment. Therefore, they were not entitled to take advantage of the attachment levied by the attaching creditor for avoiding the rights of the mortgagees-petitioners. The court further held that the claims of the secured creditors (mortgagees) must prevail over the claims of the unsecured creditors who took no care to attach the properties themselves.
Issues: 1. Whether an attachment levied by one creditor enures for the benefit of other non-attaching creditors of the judgment-debtor who apply for execution before realization of the assets of the judgment-debtor? 2. Whether the claims of secured creditors (mortgagees) prevail over the claims of unsecured creditors who took no care to attach the properties themselves?
Ratio Decidendi: 1. Section 64 of the Civil Procedure Code provides that any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment-debtor of any debt, dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the attachment. 2. The Explanation to Section 64 CPC clarifies that claims enforceable under an attachment include claims for the rateable distribution of assets. 3. The language of Section 64 CPC is clear and unambiguous and does not permit non-attaching judgment creditors to take advantage of the attachment brought by another creditor. 4. The rights of secured creditors (mortgagees) are protected under Section 73 of the Transfer of Property Act, 1882, which provides for priority to the mortgagee in respect of the sale proceeds.
Final Decision: The court allowed both the revision petitions and held that the petitioner in CRP No. 5063/78 was entitled to receive payment from out of the surplus sale proceeds lying with the court below only after the claims of the prior mortgagee, the petitioner in CRP No. 227/81, were satisfied. The court also directed that the order of the court shall be suspended for a period of two months to enable the respondents to approach the Supreme Court.
( 1 ) 1. These two revision petitions concern with Section 64 of the Civil procedure Code and they have come before us on a refererence by our learned brother Ramanujulu Naidu, J. The order of reference reads :"in these two revision petitions the question raised is whether a attachment of a certain property at the instance of one creditor enures for the benefit of other subsequent creditors of the judgement-debtor who apply for execution before realisation of the assets of judgement-debtor by the attaching Court so as to defeat the rights of the inte vening mortgagees. In other words, the scons of the explanation appended under Section 64 of the Code of Civil Procedure fills for examination and determination. As the question raised bafors me is of frequent occurrence and the executing Courts are invariably called upon to deal with the claims arising under Section 64 of the Code of Civil Procedure i am of the opinion that an authoritative pronouncement onihis question by a Division Bench of this Court is necessary".
( 2 ) BOTH the civil revision petitions arise out of a conmon order made by the learned 1 Addl Subordinate Judge, Vijayawada in a batch of applications disposed of on 17-8-1978. For the sake of convenience the parties are referred to as arrayed in CRP 5063/78. The 3rd respondent obtained a decree on 30-8-1962 in O. S. No. 30/61 on the file of ths Sub-Court, Bapatla, against the first respondent for Rs. 4,000/ -. She leived attachment before judgement in respect of a building belonging to the first respondent. Subsequent to the decree the property was brought to sale on 24-2-1975 and sold for rs. Rs. 30,000/ -. The sale was confirmed on 14-8-1975. The first respondent- judgement debtor executed a simple mortgage subsequent to the attachment before judgement, in respect of the building in question, in favmr of the state Bank of Hyderabad, Vijayawada, the 2nd respondent. O S No. 58/73 was the suit filed by the State Bank of Hyderabad in the court of the Subordinate judge, Vijayawada in which a decree was granted against the first respondent-judgement debtor. Subsequent to the said mortgage in favour of the state Bank of Hyderabad the first respondent-judgment debtor executed two mortgage deeds in fivouor of the revision petitioner in respect of the same building: one on 25-6-71 for Rs. 45,000/- and the other on 28-6-71 for Rs. 25000/- The revision petitioner filed O. S. 119/75 on the file of the Sub-Court, Vijayawada and obtained a decree on 5-8-75 for Rs. I,24,291/~. Besides the a foresaid two creditors, some other persons including respondents 4, 5 and 6 obtained simple money decrees against the Judgement-debtor. E. P. 334/73 was the execution petition filed by the 3rd respondent (attaching judgement creditor) to realise the decretal amount of Rs. 4,000/- in O. S. No. 30/61. After the sale was effected and the proceeds deposited into court, the petitioner herein filed E. A. No. 1244/75 under Section 73 of the TRANSFER OF PROPERTY ACT, 1882. in E. P. No. 334/73 for payment of the balance amount in discharge of the two mortgage deeds after deducing the amount due to the 3rd respnde nt-decree-holders and the 2nd respondentstate Bank of Hyderabad, the first mortgagee. The State Bank of Hyderabad filed E. A. No. 1244/75 in 3rd respondent s suit O. S. 30/61 for payment of the decretal amount due on the mortgage debt decreed in O S. No. 58/73. The 4th respondent P. Venkata Subbarao who obtained simple money decree in O. S. No. 56/70 on the file of the Sub-Court, Narsapur against the judgement-debtor and which was transferred to the Court of the J Additional subordinate Judge, Vijayawada filed E. P. No. 64/75 for rateable distribution under Sec. 73 of the Civil Procedure Code. The 5th respondent g. Sambasivarao who obtained a simple money decree in O. S. No. 207/12 against the judgement-debtor filed E. A. No. 657/75 in the 3rd respondent suit O. S. No 30/61 for rateable distribution under Section 73 CPC. The 6t
