LexKOTAK & CO. versus STATE OF U.P.
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KOTAK & CO. A v. STATE OF U.P. A JANUARY 8, 1987 B [M.P. THAKKAR AND B.C. RAY, JJ.) Civil Procedure Code, 1908-s. 73-Rateable distribution-Order 'r passed by Court~Rights of parties are crystalized-State cannot claim statutory priority after Court has made its order. On the question whether from the point of time an order for 1 c rateable distribntion is paMed by the executing Court the monies in question cease to be the property of the judgment-debtor and become the property of the decree-holder, regardless of whether or not actual )" payment pursuant to the said order is made: D Allowing the Appeal, HELD: I. As soon as the question of rateable distribution bet- ween the decree-holders and the State having statutory priority is determined, and the Court passes an order as to how to appropriate the assets of the judgment-debtor, the rights of the parties become crys- E talized and the monies in question cease to be the .property of the ---\ judgment-debtor and becomes the property of the decree-holder, regardless of whether or not actual payment pursuant to the said order is made. [930A-B) Official Receiver of Tanjorn. M.R. Venkatarama Iyer, AIR 1922 F Madras p. 31, Murli Tahilram v. T. Asoomal & Co., AIR 1955 ' Calcutta p. 423, Basanta Kumar Bhattacharjee v. Panchu Go pal Dutta & Ors., AIR 1956 Cakuttap. 23and Income-tax Officer, Ward C. Sangli ~ & Anr. v. Chandanbai Balaram Doshi & Ors., AIR 1957 Bombay p. 91, approved. G 2.1 The rights of the respective decree-holders or claimants are governed by the order for rateable distribution passed by the Court as a result of the adjudication and determination made by the Court. Nothing further remains to be done by the Court, in the judicial sphere thereafter. The order partakes of the character of a judgment and decree passed by the Court. [930B-C) H 926 ~-. KOTAK & CO. v. STATE OF U.P. (THAKKAR, J.) 927 2.2 Thereafter the officials of the Accounts and Cash department A are only required to carry out the command of the Court by implement- ing or giving effect to the order. [930C-D] 2.3 The test which is to be applied is whether the said officials can refuse to implement the order by refusing to make payment once the Court has passed the order. Obviously and undoubtedly they c8llllot. ~ Therefore, nothing turns on whether or not actual payment pursuant to the order of the Court is made. The Court officials make payment to the decree-holder because the property in the said monies has vested unto them by virtue of the order of distribution passed by the Court. What is being paid by the officials of Accounts and Cash Sections will be the decree-holder's money, it having ceased to belong to the judgment- C debtor the moment the order for distribution was made, even though actual disbursement was made later. [930D-F] 3. If the State lays its claim after the order for distribution is made by the Court, it will be or no avail, as the property would have gone beyond the reach or the State, it having cewd to be the prnpa ty al D the debtor against whom the State had a claim. No question of priority can arise in that situation-the state having missed the bus. [930F-G] 4. In the present case, the High Court was in error in reversilig the order passed by the executing Court. The order of the High Court is set aside and that of the executing Court restored in so far as the E appellant is concerned. [930H] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1295 of 1973 From the Judgment and Order dated 14.12. 1972 of the Allaha- F bad High Court in Civil Revn. Petition No. 1572 of 1969. P.H. Parekh and Suhail Dutt for the Appellant. Prithvi Raj, Mrs. Shobha Dikshit and Sudhir Kulshreshta for the Respondent. G The Judgment of the Court was delivered by THAKKAR, J, The proposition canvassed by the appellant, namely, that from the point of time that an order for rateable distribu- tion is passed by the executing court the monies in question cease Jo be -~ • A B c D E 928 SUPREME COURT REPORTS [1987] 1 S.C.R. the property of the judgment-debtor and ·become the property of the decree-holder, regardless of whether or not actual payment pursuant to the said order is made, is supported by the decisions of three High Courts namely, Madras, Calcutta and Bombay: As early as in 1922 the Madras High Court in Official Receiver of Tanjore v. M.R. Venkata- rama Iyer, AIR 1922 Madras p. 31 has taken the view canvas
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