P L D 1960 Dacca 141 (PLP)

7. It appears to me that the contentions of the learned counsel for the Official Liquidator must prevail. A secured creditor has, of course, not been defined in the Companies Act but, by reason of the provisions of section 229 of the Companies Act, a secured creditor under the Companies Act must mean the same thing as under the Provincial Insolvency Act, 1920, for, by the said section for the winding up of insolvent companies, the same rules shall prevail and be observed as may be in force for the lime being under the law of insolvency with respect to the estates of persons adjudged insolvent.

8. Under the Provincial Insolvency Act of 1920, a secured creditor has been defined in section 2, subsection (1), clause (e), to mean " a person holding a mortgage, charge or lien on the property of the debtor or any part thereof as a security for a debt due to him from the debtor ". A decree‑holder, having a simple money decree, does not come within this definition, for, he does not by virtue of his decree acquire any mortgage, charge, or lien over any property of the judgment -debtor. The question, however, is whether an attaching creditor acquires any such mortgage, charge or lien over the attached property. So far as the law in India is concerned, it appears that an attachment under the Civil Procedure Code has only the effect of preventing a transfer of the property attached or of any interest therein. Even any attachment, therefore, does not create, in favour of the judgment‑creditor, any mortgage, charge or lien over the attached property which would entitle the judgment‑creditor to claim to be a secured creditor in respect of the attached properties. This is abundantly clear from the language of section 64 of the Civil Procedure Code and authorities are also not wanting in support of this view. In the case of Krishnaswami Mudaliar v. Official Assignee of Madras (I L R 26 Mad. 673 (F B)) a Full Bench of the Madras High Court considered the position of an attaching judgment‑creditor vis‑a‑vis the Official Assignee appointed under the Insolvency Act and came to the conclusion that: " 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 debtor certain rights in execution. It does not operate, when these 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 a vesting order in, insolvency made after the order of attachment ". Their Lordships of the Madras High Court also relied for this view, on a decision of the Privy Council in the case of Matilal v. Karra Buldin (I L R 25 Cal. 179 (P C)). Their Lordships of the Madras High Court also observed in the concluding portion of the judgment as follows :‑ " If, under the provisions of the present Code, an attaching creditor does not obtain a charge or lien on the attached property, no question, as it seems to us, of the property vesting subject to any equity, in favour of the attaching creditor really arises ".

9. Again, in the case of Goverdhandas Vallabhdas v. Official Liquidator, Electro‑Metal Refining Co., Ltd., (A I R 1930 Bom. 16), the position of an attaching creditor under the Companies Act fell to be considered, and Chief Justice Marten and Murphy, J., came to the conclusion, after a review of a large number of both English and Indian decisions, that the bulk of authority in India appeared to be that technically an attaching creditor is not a secured creditor, although he may have certain rights by reason of his attachment. According to Murphy, J., further more, the law in India with regard to thi3 was well settled and under that law " an attachment creates no charge in favour of the attaching creditor, and that it merely prevents and avoids alienations, and confers no right on the attaching creditor ".

10. In my view, if I am right in my reading of section 229 of the Companies Act, then the position would be the same also by reason of the provisions of section 51 of the Provincial Insolvency Act where it is provided as follows :‑ " (1) Where execution of a decree has issued against the property of a debtor, no person shall be entitled to the benefit of the execution against the receiver except in respect of assets realised in the course of the execution by sale or otherwise before the date of the admission of the petition. (2) Nothing in this section shall affect the rights of a secured creditor in respect of the property against which the decree is executed. (3) A person who in good faith purchases the property of a debtor under a sale in execution shall in all cases acquire a good title to it against the receiver ". According to this, if as a result of the attachment the assets have not already been realised by sale or otherwise in the course of execution before the date‑in the present case‑of the admission of the petition for winding‑up, the attachment would not have the effect of creating any higher right in the judgment‑creditor and he would not be entitled to the benefit of his execution.

11. The learned Advocate appearing for the petitioner Company drew my attention in this connection to a decision of the Chancery Division in re Roundwood Colliery Company, Lee v. Roundwood Colliery Company ((1897) 1 Ch. D 373), where it appears that distress for rent had been levied by the land‑lord between the passing and confirmation of a special resolution for a voluntary winding‑up, and in those circumstances it was held in that case that though the distress had not been completed by sale it would be inequitable not to allow the distress to go on in the absence of any special reasons. The law in India, however, as I have indicated earlier in this judgment, is different. In India, it seems clear that the attaching creditor does not acquire any charge or lien over the attached property, nor does the obtaining of a decree give to the judgment‑creditor any higher right than that of another unsecured creditor.

12. In this view of the matter, the learned Counsel for the Official Liquidator urges that permission to continue the execution proceedings should not be granted, because, if that is done, then it would, in effect, amount to turning an unsecured creditor into a secured creditor after the winding‑up. Accord ing to him, a rigid line is to be drawn up at the date of the winding‑up, and creditors should not be allowed to change their position after that date. In support of this latter con tention, the learned Counsel has relied on the decision in re North Yorkshire Iron Company ((1878) 7 Ch. D 661) and on the case of Maneklal Mansukhbai v. Saruspur Manufacturing Co., Ltd. (A I R 1927 Bom. 167). The case in re North Yorkshire Iron Company does not, in my view, have any application to the facts of the present case. That was a case where leave was given to the lessors to distrain for rent accrued due after the commencement of the winding‑up but such permission was refused in the case of rent accrued due before that time. The case reported in A I R 1927 Bambay 167, however, does support the learned Counsel, and there permission under section 171 was refused in a case where per mission was sought to continue a suit for enforcement of a mortgage, the particulars whereof had not been filed with the Registrar in accordance with section 109 of the Companies Act. But the learned Chief Justice Marten therein indicated that if an applicant elected to confine his suit to a money claim and gave an undertaking that he will not enforce against the company without the leave of the winding‑up Court, permission to continue the suit may be given.

13. Lastly, it is urged on behalf of the petitioner‑company that it would suffer great hardship if it is not permitted to execute the decree it has obtained, as it is itself a trading company and cannot wait indefinitely to recover its decretal dues, particularly since the Official Liquidator does not appear to be taking any steps whatsoever in the matter even though the winding‑up order was made as long ago as the 23rd of June, 1955. It is pointed out to me that under the Companies Act the list of creditors should have been settled within six months of the winding‑up order. In these circumstances the petitioner-Company offers to furnish security in the shape of immovable property, as also to give an undertaking that, if it is permitted to continue with the execution, then if it is ultimately found that the amount that the petitioner‑Company has realised is in excess of the amount that it would be entitled to share in the ultimate distribution of the assets of the Company the excess so found would be refunded by the petitioner‑Company.

14. In the present case, it is true that although the winding up order was made as long ago as the 23rd of June 195, no steps have been taken as yet by' the Official Liquidator for settling the list of creditors or contributories. But nevertheless, in the present state of things, I don't think that I would be justified in granting the permission sought for by the petitioner Company at this stage. In fairness, however, to the creditors of the Company under liquidation, I do feel that steps should immediately be taken by the Official Liquidator to expedite the process of winding‑up.

15. The order, therefore, that I make on this application is to dismiss this application without any order for costs but I also give permission to the petitioner‑Company to renew its prayer by a fresh summons for permission to proceed with the execution of the said decree of no steps are taken by the Official Liquidator for the settlement of the list of creditors and contributories within a period of three months from to‑day. K. B. A . Application dismissed.