KESSERBAI; BILASRAI LAXMINARAYAN Vs. KAKU VALLABHDAS RAVJI; KARSONDAS DAMODAR AND CO

JUDGEMENT

(1.) This is a summons taken out by the plaintiff in Suit No. 3163 of 1920 for directions, as to whether the plaintiff in Suit No. 1664 of 1918 is entitled to priority over the other creditors of the firm of Messrs. Karsondas Darnodar & Co. by reason of the charging order dated October 7, 1925, and for costs. [His Lordship after setting out the facts as above continued :]

(2.) I made the charging order on October 7, 1925, as Chamber Judge following a long- standing practice of this Court whereby such charging orders are made whenever execution is sought against assets in the hands of a receiver appointed by the Court. The practice was started by Macleod J. as Chamber Judge, and has been followed by succeeding Chamber Judges. The older practice of issuing in such cases a notice to the officer concerned in the manner provided by Order XXI, Rule 52, was abrogated and the party seeking execution was required instead to obtain a charging order from the Judge. The practice of this Court in such cases has, since the institution of these charging orders, been to order pro rata distribution of the net assets in the hands of the receiver among all the creditors of the partnership notwithstanding the charging orders so granted.

(3.) Our charging orders are taken from the one formulated by Kay J. in Kewney V/s. Attrill (1886) 34 Ch. D. 345. In that case after judgment had been pronounced in a Chancery action for dissolution of a partnership, and a receiver had been appointed, a creditor obtained judgment in the Queen's Bench Division against the firm for the amount of his debt and costs. He applied in the Chancery action for leave to execute his decree against the assets in the hands of the receiver. Kay J. made an order giving the judgment-creditor a charge for his debt and costs on all the partnership monies come or coming to the receiver; he, the creditor, undertaking to deal with the charge according to the order of the Court, In making the charging order Kay J. made his intention clear as follows (p. 846):- ...If there is a bankruptcy the trustee in bankruptcy will take subject to prior equities and therefore subject to a charge. I give the Applicants, the judgment creditors, a charge now on the moneys which are in the hands of or may be taken possession of by the receiver, and they must undertake to deal with the charge according to the order of the Court. The charge will be for the judgment debt and costs and interest at four per cent., and the costs in Chambers and here. The intention of the Court is to preserve to the Applicants all the rights which they would have had if they had issued execution and the sheriff had seized and sold the assets to-day.