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TMI Blog1929 (3) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... plicants are secured creditors and are entitled to payment first in preference to other creditors of the said company. On the appellant's counsel being asked what security his client claims, we elucidated after considerable trouble, that this particular claimant had never attached anything except an engine. Accordingly, before us his claim was reduced to ranking as a secured creditor of the engine. It was further stated at the bar that he would value his security and prove for the balance, but that he was not in a position are present to say what was the value of the security. 3. In passing, I may observe that the claim originally put forward was obviously misconceived because, in any event, his right was necessarily to be paid in preference to all other creditors of the company. If he was a secured creditor he could do one of three things. He could either rely on his security and ignore the liquidation proceedings. Or, he could value his security and prove for the balance. Or, he could surrender his security and prove for his whole debt. But his affidavit does nothing of the sort. Further, as regards his claim to be paid in priority to all other creditors this could at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the provisions of the Code which in terms makes the attaching creditor a secured creditor or creates any charge or Hen in his favour over the property attached. But an attaching creditor acquires, by virtue of the attachment, a right to have the attached property kept in custodia legis for the satisfaction of his debt, and an unlawful interference with that right constitutes an actionable wrong. 7. As authority for part of that proposition the Madras Full Bench case of Kristnamwmy MudaUar v. Official Assignee of Madras I.L.R. (1903) Mad. 673 is cited where it is said (p. 678):- In our judgment the making of an order of attachment in favour of a judgment-creditor obtained under-Section 268 of the Code of Civil Procedure only operates so as to give the judgment-creditor certain rights in execution. It does not operate, when there rights are not exercised before the presentation of a petition in insolvency, so a to create in favour of the judgment creditor a title which prevails against that of the Official assignee under a vesting order in insolvency made after the order of attachment. 8. I quite appreciate that that was a case of an insolvency of an individual, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Court in a case of that sort were recognized by Sir Lawrence Jenkins in Amrita Lal Kundu v. Anuhul Chandra Das I.L.R.(1915) Cal. 586 although there the Court refused to stay the attachment levied before the resolution for the voluntary winding up. 14. Nest following on the dismissal of that application of the liquidator there was an order for sale, but previously there was an arrangement by which the applicant's darkhast No. 763 of 1922 was in a way to stand over and the sale was to proceed under darkhast No. 26 of 1923 taken out by the other creditor, Mangaldas, to whom I have already referred. There is an application with certain documents, which is called Exhibit 12, but which appears to be Exhibit 16 in the present case, under which Mangaldas applied that the whole property should be sold together, because if the present applicant's engine was sold alone, the other property might fetch a worse price. Accordingly on March 14, 1924, the learned Judge directed that the whole property should be put up for sale, and that the value of the engine should be assessed separately. This course was not opposed by Mr. Ranjitbhai who was the pleader for the present applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13, 1925, to Mr. P.M. Bhatt, the First Class Subordinate Judge at Ahmedabad headed in the matter on the company and of the company's winding up and asked that the Nazir, who was in possession of the property under the attachment, should be directed to hand over all the property to the liquidator of the company. The endorsement made on the next day, February 14, 1925, by Mr. P.M. Bhatt, as Judge is as follows:- The Nazir is directed to comply with the request of the Liquidator forthwith. 18. It does not appear that notice was given to either of the attaching creditors. On the other hand the order was carried out at once, because the endorsement of the official liquidator on February 17 is, Received according to the inventory. However, neither of the attaching creditors took any steps to set aside this order. Consequently, in fact the attachment was raised and the Court seals, which the liquidator says were on the property, must have been removed. 19. Farther, when we come to the two darkhasts we find that this is what took place. As regards the appellant's darkhast No. 763 of 1922 we find this endorsement on January 30, 1926 :- This Darkhast is disposed of beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struck off or removed from the file. It is there stated:- An attachment is not necessarily at an end because the execution case is struck off or removed from the file. The effect of such a proceeding depends on the circumstances of each case. 24. We regret then to find that this obsolete form of order was adopted in the present case. We think that the learned Subordinate Judge should have dealt with the case as provided by the Code and that he should have dismissed the darkhast or else adjourned it, if sufficient cause was shown. The course actually adopted by him was an erroneous one, and we think that this may be brought to the attention of the learned District Judge so that he may take the necessary steps to ensure that the Subordinate Judges in his District observe the correct procedure in future. 25. As regards the remaining history of the case there is little to be said. There was an affidavit of claim made by the present claimant on September 13, 1925, many months after the property had been given up to the liquidator. And then on August 25, 1926, his claim was admitted to a certain extent, viz., ₹ 22,248-15-9, but his claim to rank as a secured creditor wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, if the matter had come before me sitting as the Judge in winding-up and there had been an application by the Company, either before the actual winding-up order or after it, to stay further proceedings by the decree holder under this decree, I am quite satisfied after examining the authorities on the subject in England, that it would have been my duty to have allowed the execution to proceed.... If a sale were shown to be likely to be ruinous to the goodwill or assets of the Company the creditor would, according to the English practice, be restrained from selling but allowed a first charge on the assets of the Company in the winding-up for his debt and costs as a condition of granting the stay. 30. So, too, in In re Richards Co. (1879) H Chi I. 676. Mr. Justice Fry says (p. 679):- Therefore I am of opinion that if there had been a winding-up the Court would nevertheless have given leave for this execution to be issued, and it follows that I ought not now to sanction the arrangement which would be inconsistent with such leave, unless the Judicature Act has altered the practice. 31. On the other hand, in Westbury v. Twigg Co, (2) [1892] 1 Q.B. 77 the Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preclude the applicant from making any application that he may be advised to make for liberty to proceed with his execution, but, on the other hand, having regard to what I have already said, I can hold out no hopes that any such application will be attended with any more success than his present unsuccessful application. S.J. Murphy, J. 36. The appellant's contention has been all along that he is a secured creditor in connection with the insolvency of the Electric Metal Refining Company, Ltd, Ahmedabad, and that the District Judge Ahmedabad's order holding that he is not such a creditor is wrong. 37. The facts are that the appellant and another decree-holder against the company had attached its engine, and its immovable property respectively, and proceedings went on in the First Class Subordinate Judge's Court in Ahmedabad in execution, the appellant's application being, apparently by consent, more or less amalgamated with that of his fellow decree-holder, the order being that the proclamation should be issued in the other decree-holder's proceedings, viz, No. 26 of 1953. This was done to enable the property as a whole to be sold and so to get a bett ..... X X X X Extracts X X X X X X X X Extracts X X X X
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