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2004 DIGILAW 113 (AP)

Kamarapu Sivakumar v. Sirimalla Ashok

2004-02-03

G.YETHIRAJULU

body2004
G. YETHIRAJULU, J. ( 1 ) THIS Revision Petition is filed by a third party creditor against the order of the Principal Subordinate Judge, Warangal in Memo S. R. No. 2243/2000 in E. P. No. 44/98 dated 4. 8. 2000. ( 2 ) THE E. P was filed by the first respondent for realization of amount by way of sale of certain property attached in the suit before the judgment. During the pendency of the E. P, the second respondent filed IP No. 4 of 1992 and he was adjudged as an insolvent. The revision petitioner is also one of the creditors of the insolvency proceedings. Subsequent to the adjudication, the properties were entrusted to the Official Receiver and the Official Receiver after sale of the properties of the judgment debtor deposited the sale proceeds in the insolvency court. When the decree holder made an application, covered by i. A. No. 702 of 2000, to send for the amount and to issue a cheque for the amount covered by the E. P, the Official Receiver filed a memo stating that since the decree holder is one of the creditors in the IP and as the amount realized by way of sale of properties of the JDR, has to be distributed among the creditors on proof of debts, the first respondent cannot be treated as a secured creditor. The lower court dismissed the memo through the impugned order. Hence, the third party creditor filed this revision petition questioning its validity and legality. ( 3 ) THE lower court relied on a judgment of a Single Bench of this High Court in VASAVI COMPANY VS. NAMPALLY PADMA AND OTHERS, wherein, the High Court held that the decree holder who obtained attachment is a secured creditor. The lower court also referred to a Full Bench Judgment of the Madras High Court in manickam CHETTAIR VS. INCOME TAX OFFICER, MADRAS AND OTHERS, wherein, a Full bench of Madras High Court held that simply because the decree holder in execution of his decree, has attached judgment debtor s property cannot claim that he is a secured creditor. The Full Bench noted on the judgment of an earlier Full Bench of the Madras High Court in KRISTNASWAMY MUDALIAR VS. The Full Bench noted on the judgment of an earlier Full Bench of the Madras High Court in KRISTNASWAMY MUDALIAR VS. OFFICIAL ASSIGNEE OF MADRAS wherein the Full Bench while considering the scope of Sections 268 and 483 of CPC, 1882 held as follows:"the effect of an attachment under the Code of Civil Procedure is to prevent alienation. It does not confer title. An order of attachment under Section 268 only operates so as to give the judgment-creditor certain rights in execution. It does not operate, when those rights are not exercised before the presentation of a petition in insolvency, so as to create in favour of the judgment-creditor a title which prevails against that of the Official Assignee, under the vesting order in insolvency made after the order of attachment. The Plaintiff in a suit obtained an order for attachment before judgment of a sum of money belonging to the defendant. In due course a decree was obtained, and subsequently to the decree the judgment-debtor was declared an insolvent. The official Assignee then preferred a claim to the money under attachment, contending that the attachment was of no effect as against him and asking that it might be set aside. " ( 4 ) THE lower court also referred to a judgment of a single bench of this high Court in K. SIVANARAYANA VS. G. DURGA SESHARATHANAM, wherein, this court held that when once IP is admitted all properties of insolvent sets pooled up so that if ultimately he is declared as insolvent, further proceedings will be taken up in accordance with provisions of the Act. ( 5 ) THE learned Subordinate Judge without assigning any reason as to why he could not follow the Full Bench Judgment of the Madras High Court, in MANICKAM chettair VS. INCOME TAX OFFICER, MADRAS AND OTHERS which was rendered before formation of Andhra State and a binding precedent on this court, the latest decision of this Court in K. SIVANARAYNA VS. G. DURAGA SESHARATHANAM , relied on VASAVI COMPANY VS. NAMPALLY PADMA AND OTHERS and held that as the decree holder obtained attachment, being a secured creditor he can ignore IP proceedings to realize his decree debt. ( 6 ) AFTER going through the judgment of the Full Bench of the Madras High court in MANICKAM CHETTAIR VS. G. DURAGA SESHARATHANAM , relied on VASAVI COMPANY VS. NAMPALLY PADMA AND OTHERS and held that as the decree holder obtained attachment, being a secured creditor he can ignore IP proceedings to realize his decree debt. ( 6 ) AFTER going through the judgment of the Full Bench of the Madras High court in MANICKAM CHETTAIR VS. INCOME TAX OFFICER, MADRAS AND OTHERS which is directly applicable to the facts of this case, it is established that though the decree holder attached the property prior to the insolvency proceedings, he cannot be treated as secured creditor. Therefore, the lower court went wrong in holding that he is a secured creditor. Therefore, the impugned order is not sustainable under law. ( 7 ) IN the result, the revision petition is allowed and the order of the lower court dated 4. 8. 2000 in Memo S. R. No. 2243/2000 is set aside. No order as to costs. ( 8 ) IT is made clear that the order in this Revision Petition has no effect with the result of the order passed in C. R. P. No. 427 of 2001.