The Tata Iron and Steel Company Ltd. vs Baidyanath Laik and another

Dawson Miller, C.J.—In this case Maheshwar Ghosal obtained a decree for money on the 21st February 1921 against the Tata Iron and Steel Co., Ltd. who are the appellants before us in this appeal. On the 26th May the same year Maheshwar Ghosal assigned by registered deed to Baidyanath Laik the decree which he had obtained against the appellants. Baidyanath Laik is the respondent in the appeal before us to-day. On the 18th June 1921 Baidyanath filed an execution petition for executing the decree which lie had purchased from the decree-holder. No notice of that execution petition was served upon the judgment-debtors, the appellants before us, until the 29th June and on the 28th June the judgment-debtors apparently having no notice of the assignment had deposited in Court the decretal amount in favour of the original decree-holder Maheshwar Ghosal. Notice of that deposit does not appear to have been served upon the decree-holder or upon his assignee. Upon the same day as the money was paid into Court the judgment-debtor applied for an attachment of the fund as security before judgment in respect of a claim for which they had sued the original decree-holder. When the execution case came before the executing Court on the 19th December last the learned Judge considered that the judgment-debtors having had no notice of the assignment when they paid the decretal amount into Court on the 28th June had satisfied the decree and that therefore the execution case could no longer proceed and he accordingly dismissed it. It was drawn to his notice at that time that an application for attachment of the money paid in had been brought by the judgment-debtors and he-stated at the end of his judgment that proper orders would be passed in disposing of the application of the judgment-debtors for attachment of the money in question in suit No. 830 of 1920.

From that order dismissing the execution case the respondent, the assignee of the decree, appealed to the District Judge and the District Judge set aside the order of the executing Court and held that the petitioner for execution was entitled to claim that the execution should proceed and he accordingly allowed the appeal and ordered the execution case to proceed.

In my opinion the teamed District Judge was right in ordering the execution case to proceed because at that time there were many questions arising between the parties to that execution proceeding which had to be determined but the judgment-debtors have appealed and the reason for their appeal is that the learned District Judge has given certain reasons for allowing the execution to proceed which ought not to stand and which are not justifiable.

The view which the learned District Judge took was that although the judgment-debtors had deposited the decretal amount in Court in favour of the original decree-holder on the 28th June before they had any notice of the assignment that payment into Court was not in fact complete until notice of the payment had been given as prescribed by Order 21, Rule 1 sub rule (2) of the CPC which provides that where any payment is made under clause (a) of sub-rule (1) notice of such payment shall be given to the decree-holder and having thus arrived at the conclusion that the deposit was not effective until such notice had been served and as no such notice was served until after the 29th June when notice of the execution case had been served on the judgment-debtors whereby they received notice of the assignment it must be taken that the payment into Court was constructively at all events a payment into Court after notice of the assignment of the debt and that therefore that payment was not valid as against the assignment. I am unable to take this view. It seems to me that in the case of an assignment of a debt the assignment is not valid as against the debtor until the debtor in fact has notice of the assignment and therefore any payment by the debtor of the debt due from him to his original creditor is valid as against the assignee until notice of the assignment is given. There can be no doubt that payment into Court in satisfaction of a decree creates a valid discharge of the judgment debt. We are not concerned at present with the question whether after payment into Court and before notice of such payment to the judgment-creditor any further interest is still claimable from the judgment-debtor. That may or may not be so but in any case the payment into Court of the full amount then due is a valid discharge of the debt incurred up to the date of the payment in Court and the judgment-debtors having paid the money into Court on the 28th June without having had any notice of the assignment must be taken to be released from the debt at all events up to that day and no further sum in respect of the debt which had accrued up to that time can be claimed from him either by the original judgment-debtor or by his assignee no notice of the assignment having been given to the judgment-debtors. At the same time it is necessary, as the learned Judge bordered that this execution case should be heard and determined. All the parties, that is to say the original decree-holder, his assignee and the judgment-debtors are parties to the execution case and they are all before the Court and in a position to put forward their claims whatever they may be to the money at present remaining in Court. There are many questions which arise between them and about this it may be necessary to call evidence. As between the original decree-holder and his assignee there can be no doubt that the assignee has a prior claim to the money paid into Court but there has been an application in another suit for attachment of this sum paid in and the judgment-debtors have themselves claimed that that attachment takes priority over the rights both of the original decree-holder and of his assignee. These facts will have to be considered and gone into at the time when the execution case is tried and the rights and liabilities between the parties will have to be ascertained by the executing Court. Whether this attachment is effective so as to give any priority to the judgment-debtors is a matter about which we have no evidence and in the absence of any evidence we do not know what the actual facts are and therefore it is impossible in the present appeal to determine any such questions but for that reason alone it is necessary that this execution case should proceed and be determined by the executing Court so that the Court can say finally who is entitled to the money paid in.

A further point has been stated and again about this we have no evidence. It is that the transfer from the decree-holder to his assignee was merely a collusive transaction and done with the intention of defeating the right of the judgment-debtors who were at that time also creditors of the decree-holder and that that transfer is therefore not valid as against them. As all the parties are before the Court and can call evidence upon these matters it seems to me desirable and necessary that the whole of these questions should be considered in the executing Court before any final order is made as to the payment out of the sum deposited or as to any further liability upon the part of the judgment-debtors or as to the rights of the parties inter se.

Perhaps I ought to add that the rights as between the judgment-debtors who are now the ''attaching creditors and the other parties in the present proceeding can only be determined after the attachment proceedings which are pending in suit No. 830 of 1920 have been heard and it may be necessary in the present case for the learned Judge of the executing Court to postpone the hearing of the questions now arising until that matter has been decided, When I stated that it would be necessary for him to consider these questions I ought to have at the same time said what I have just mentioned namely, that the rights between the parties in this respect will be determined in the other case and then having been determined it will be for the executing Court to deal with the sum deposited in Court. The appeal in form is dismissed and the order directing the execution to proceed is affirmed but as the real question in dispute was one which arose upon the reasons given by the learned Judge and as the appellants have to some extent succeeded in that respect we think that the proper order to make in this appeal is that both parties shall bear their own costs.

Kulwant Sahay, J.

I agree.