Decided on September 24,1963


Referred Judgements :-


Cited Judgements :-



- (1.)In execution of a decree, the appellant judgment creditor, attached a debt due to the judgment debtor, a bank, from the respondent. On the motion of the appellant, notice under O.21 R.46A was served on the respondent on the 10th February, 1955. The respondent entered appearance, and at his instance the case was adjourned to the 4th March, 1955; on that day, the respondent's prayer for a period of six months being allowed to him to deposit the amount of the debt, was disallowed. On the 1st April 1955, the court passed an order under O.21 R.46B and directed warrant to issue to the respondent. Upon this, the respondent made an application on the 6th October, 1955, for exemption from personal execution. While this was pending, the bank was ordered to be wound up on the 7th November, 1956, upon a petition presented on the 17th September, 1956. The respondent then applied for stay of proceedings purporting to be under S.446 of the Companies Act, 1956. The two courts have allowed the application.
(2.)S.446 sub-s.(1) has enacted :
"When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with against the company, except by leave of the Court and subject to such terms as the Court may impose."

The question for decision is whether, when the final order under O.21 R.46B was passed before the winding up proceedings commenced, the execution of that order can be considered to be a proceeding against the company so as to be within the ban imposed by S.446. O.21 R.46A of the Travancore - Cochin Civil Procedure Code, which was in force at the material time, provided for an order nisi by the issue of notice to the garnishee calling upon him to pay the debt due from him to the judgment debtor or so much thereof as may be sufficient to satisfy the decree or to appear and show cause why he should not do so. O.21 R.46B provided for the order nisi being made absolute. It: is useful to quote this Rule :--

"Where the garnishee does not forthwith or within such time as the Court may allow, pay or deliver into Court the amount due from or the property deliverable by him to the judgment debtor or so much thereof as is sufficient to satisfy the decree and the costs of execution, or does not appear and show cause in answer to the notice, the Court may order the garnishee to comply with the terms of such notice, and on such order being made, execution may issue as though such order were a decree against him."

The concluding part of the Rule is what is important. The final order is to be deemed to be a decree against the garnishee and necessarily in favour of the judgment creditor; if so, it is logical to hold that the further proceedings are in execution of that decree and against the garnishee. But for this special procedure, the time honoured method of proceeding against the attached debt by sale, and of realisation thereof by suit, would have to be resorted to. Such a" proceeding by way of suit is against the garnishee; this is avoided by the shortcut invented by O.21 R.46B. I see great force in the contention of the learned counsel for the appellant, that the proceedings which are now stayed by the court below, were not proceedings against the bank but were against the respondent. It seems to me to be of no relevance, that this proceeding had a nexus with the decree against the judgment debtor and later with the attachment.

(3.)In English Law, where the garnishee does not appear and contest his liability, the order is may be made absolute, and execution may be levied against him. The effect of an order absolute is stated thus, in 16 Halsbury's Laws of England, third edition page 90, paragraph 136:
"Upon the order being made absolute, the garnishee becomes liable to pay to the judgment creditor the amount due from him to the judgment debtor, or as much as may be sufficient to pay the judgment debt and the costs of the garnishee proceedings.

Payment may be enforced by execution, or, where execution cannot be issued, by an action on the order ........ His (the judgment creditor's) right to the debt is further qualified by the fact that he takes it subject to all rights and equities attaching to it in the hands of the garnishee. If money has been ordered to be paid into court, the judgment creditor is entitled to take it out.

........ Hence an order absolute will prevent the judgment debtor after its date from issuing execution or serving a bankruptcy notice in respect of the debt, if he has already obtained judgment upon it."

As to the service of the order nisi, it is stated thus at page 86, paragraph 128, of the same volume :

"The service of the order binds the debts specified in the hands of the garnishee, if they are debts capable of being attached at the date .......... The judgment creditor does not thereby become a creditor of the garnishee in respect of such debts; but he at once acquires a right over them, entitling him to prevent the garnishee from paying his creditor, though he cannot, until the order is made absolute, insist on payment to himself."

From this it would follow, that upon the passing of the order absolute the judgment creditor is entitled to "insist on payment to himself" by the garnishee. This supports the view I have indicated above. "


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