Exemption Properties Sales Attachment

Exemption of properties from sale and attachment in case of execution of decree

Introduction

The execution of a decree is generally through attachment and sale of property. The legislatures felt a need for exempting some properties from attachment and sale. These have been enumerated in Sec. 60 and Sec. 61.

Section 60(1) authorises, subject to certain exceptions, the attachment and sale of the property of the judgement-debtor. In the main paragraph of this subsection, after enumerating property liable to attachment, a general principle is enunciated, where under, broadly speaking, saleable property which belongs to the judgement debtor or over which he has a disposing power exercisable for his own benefit is attachable. The proviso to section 60(1) enumerate certain properties as exempt from attachment.

The primary object of attachment of property is to give notice to the judgement debtor not to alienate the property to anyone as also to the general public not to purchase or in any other manner deal with the property of the judgement debtor attached in execution proceedings.

Principles behind the exceptions-

At first sight it may appear that the exceptions are enumerated randomly but there are certain principles behind the enumeration of these exceptions. The exemptions are attributable to one or more of the following broad principles-

1. The principle of necessity-

The item mentioned in clause (a) of the proviso is based on this principle.

2. The principle of protecting the means of livelihood-

This justifies the exemptions in clause (b), clause (c) and clause (d).

3. The principle of leaving money required for subsistence- This explains clauses g,h,I,1a,j and l

4. The principle of thrift-

That the state should encourage thrift is the principle behind clause k.

5 The principle of non- transferability of the property-

The property which is not transferable by act of parties should also not be attachable under legal process. This principle justifies the exemptions in clause e, f, m and n.

6. The principle of harmony with other laws-

This principle accounts for the exemptions in clauses c and p

Judicial Decisions On Sec. 60: Expanding The Scope Of The Properties Enumerated

Many disputes arose as to the extent and meaning of the items enumerate for exemption under section 60. Judiciary through its decisions have tried to allay these disputes. Some of these are being discussed in this part of the project, clause wise. One common point which can be extracted from these judicial decisions is that these clauses should be liberally interpreted.

Clause (a)

Cooking vessels-

Court has held that cooking vessels are not only the vessels in which the food is actually cooked, but also other vessels necessary for cooking operations, such as thali and gagra.

Ornaments- ornaments of a Hindu wife, forming part of her stridhan, cannot be attached in execution of a decree against the husband, even though the Hindu law concedes him a personal right of usage. The mangalsutra, a neck ornament which is worned by a Hindu wife during the life time of her husband without ever removing it, is also exempted from attachment.

Clause b Tools of artisans-

In Ramachandran Ayyar v. Sesha Ayyangar, it was observed that “the word artisan had a well-recognised meaning and is roughly synonymous with craftsman and mechanic. Even tools of complicate character such as those of a goldsmith would fall within the proviso. A lathe, a drilling machine and a weeding machine operated by electricity will also fall within it. It is not necessary that they should be in use at the time of attachment. It is sufficient that they can be used when required. The following are not artisans: a surgeon or a doctor, a musician, a firm.

A person who doesn’t himself use the lathe machine is not an artisan, if the machine is used by his employees. In Bindeshari v. Banshilal, an extended meaning was given to the word artisan as including a person who works in the production of commodities and it was held that a soap boiler who practised making soaps was and artisan and the paraphernalia of his soap factory were the tools of an artisan.

Rajasthan High Court in Kanhayalal v. Muthu swami achari held that a halwai wala was not an artisan but a shopkeeper who purchased commodities and processed them and that accordingly utensils used by him were not exempt from attachment under this proviso. I disagree with this opinion of the court because most of the artisans buy raw materials and then process them, just like a halwaiwala, if these other people are exempted under these clause then logically halwai wala should also be exempted and should be included in the definition of artisan.

Clause (b) : implements of husbandry-

The principle underlying clause (b) is that artisans who depend for their livelihood on the tools which they possess or the implements of husbandry which they, as agriculturist, require to earn their livelihood then such implements should be exempted and that the word ‘livelihood’ in the clause connotes the idea of means of living and subsistence.

Charaks, kadhais, and planks of timbers used by an agriculturist for extracting sugar juice from sugarcane, which he has grown on his field, and is used by him for turning cane into jiggery, are implements of husbandry within the meaning of clause (b). It has been held that a motor tractor cannot be held to be an implement of husbandry because it is not indispensable to agriculture. So the general rule is that any equipment which is indispensable for earning basic livelihood are exempted under this clause.

Clause (c)-

Under this clause, the main residential building and all the other building attached to it, belonging to agriculturist, labourer or a domestic servants, are exempted from sale and attachment in execution of a decree. When the whole building is used for residential purpose, the fact that there is a shop on the ground floor will not take it outside exemption. The exemptions enumerated in sec. 60 are applicable to proceedings by way of attachment and sale by the official receiver in exercise of his powers under the provincial insolvency Act, 1920. It has been held that special provisions in favour of agriculturists don’t offend Art. 14 and 15 of the constitution. The Amendment Ac t of 1976 has extended the benefit to labourers and domestic servants. Both terms “labourers” and “domestic servants” are used in their ordinary meaning and not in any technical sense. Immunity from attachment with regards to residential house is not available to debtor unless he establishes connection between the agricultural operations carried on by him and the house sought to be attached.

Judiciary has held that the term ‘agriculturist’ includes persons engaged in cultivating the soil for remuneration although they may have no interest in the soil either as proprietor or tenant. For the application of this clause an agriculturist includes a small holder who tills the soil and cultivates it and does not include a large landed proprietor, even though his sole income is from agriculture. The term includes a person who personally engages himself in tilling the soil and whose livelihood depends upon the proceeds derived from the tillage of land. The meaning of the word “agriculturist” came up for consideration before Supreme Court in Appasaheb. V. Bhalchandra and it was held that before a person could claim to be an agriculturist “he must at least show that he was really dependant for his living on tilling the soil and was unable to maintain himself other -wise.” Thus the true test is whether a man personally engages in tilling and whether this occupation is essential to his maintenance. It was accordingly held that a person who had a substantial income from lands other than those cultivated by him as home farms and also cash allowances was not an agriculturist and that a building constructed by him was not exempted from attachment. In the case of a minor, if it is shown that his main income is derived from agriculture, it is immaterial that his land is cultivated by labourers engaged for that purpose.

If a house occupied by an agriculturist is specifically mortgaged, then it is not protected from sale in execution of a decree upon the mortgage. Clause (c) doesn’t prohibit the sale of property specifically mortgaged, although it may be occupied by an agriculturist as such, unless he is prohibited by law from mortgaging or selling it.

Clause (e) Right to sue for damages.

“Mesne profit” is in the nature of damages, and the right to sue for mesne profits is a right to sue for damages. Such a right cannot therefore be attached and sold in execution of a decree against the person entitled to the right. Thus if, A is entitled to claim mesne-profit from B for wrongful dispossession of his lands, A’s right to claim mesne-profits from B cannot be attached and sold in execution of a decree against A.

A vritti is a right to receive certain emoluments as a reward for personal services, and is therefore exempt from attachment and sale. But a priests share in uptat or net balance of the offering to a deity may be attached or sold.

Clause (g) : Gratuities allowed by government or local authority or any other employer –

The gratuity referred to in this section is a bonus allowed by government to its servants in consideration of past service. It may be allowed to one who is not a “pensioner” or it may be allowed to a pensioner in addition to his pension. In either case it is exempt from attachment. The amount earned by a deceased employee which has become payable to his legal representatives, is not exempt from attachment. Gratuity payable to an employee under the gratuity Act is also exempt from attachment and sale.

Private pensions, as distinguished from government pensions, are not exempt from attachment and they may be attached either as ‘debts’ or as ‘property belonging to the judgement debtor’ within the meaning of this section. But they neither constitute ‘debts’ nor ‘property belonging to the judgement debtor’ until they have become due and payable. Hence, they cannot be attached before they have become due and payable. Pensions granted by Railway Companies was held to be private pensions.

Clause (h) Wages of labourers-

A labourer is a person who earns his daily bread by personal manual work, or in occupations which require little or no art, skill or previous education. A weaver in a textile mill is a labourer within this proviso but not a clerk. A winchman working under the Calcutta Dock labour board is not a labourer since before he could be engaged he had to undergo training prescribed by rule 21 of the Calcutta dock workers Scheme. There is a conflict of judicial opinion on the question whether wages includes bonuses declared and payable to labourers. One view is that bonus is held by the SC a payment contingent on the earning of the profits and is ex gratia and it is therefore not wages and is liable to attachment. On consideration of the definition of gratuity in different enactments and the broad analogy of the term with bonus, gratuity, payable on retirement to a labourer has been held to be “wages”; so also bonuses.

Clause I, salary:

This clause doesn’t apply to arrears of salary. Dearness allowance has been held to be part of salary and should be taken into account in calculating the attachable amount. It has been held that when salary has become exempt from attachment under the proviso to this clause, it would not be legal to appoint a receiver therefore as that would defeat the underlying principle.

Clause m; expectancy of succession

The interest which a Hindu reversioner has in the immovable property of a deceased Hindu on the death of the deceased‘s widow, is “an expectancy of succession by survivorship”; in other words, it is an interest expectant on the widow’s death to which the reversioner can only succeed if he survives the widow. The interest in the pre-empted property of a successful pre-emptor who has not yet paid the pre-emptive price fixed by his decree is a merely contingent interest which cannot be attached. But the interest which a coparcener has in money awarded to him on partition is vested interest although payment is deferred. It has been held by the privy council that the words “ or other merely contingent or possible right or interest” in this subsection cannot be constructed as applying only to such possible rights or interest as are ejusdem generis with an expectancy of succession by survivorship, that is to say, with a spes successionis. A contingent interest though transferable is not attachable ; it is only vested interest that can be attached.

Clause n. Right to future maintenance-

If A is entitled to a monthly maintenance allowance under an agreement, the allowance cannot be attached until after it has become due. It cannot be attached prospectively, that is, before it becomes due. So long as maintenance granted under sec. 488 of the CrPC is not realised it continues to be a right of future maintenance. A hereditary grant of an allowance of paddy out of the melwaram of certain land is not a right to future maintenance so as to be exempted from attachment under this section.

On the question whether it was open to the judgement-debtor to waive the benefit of the exemptions under the proviso to subsection 1, the authorities were divided: some holding that they could be waived and some taking the view that they cannot be waived. This conflict has been allayed by enacting sub section 1A in favour of the latter view that no such waiver is legal and valid.

Vide section 61 the State Government may, by general or special order published in the Official Gazette, declare that such portion of agricultural produce, or of any class of agricultural produce, as may appear to the State Government to be necessary for the purpose of providing until the next harvest for the due cultivation of the land and for the support of the judgment–debtor and his family, shall, in the case of all agriculturists or of any class of agriculturists, be exempted from liability to attachment or sale in execution of a decree.

The words “be exempted from liability to attachment or sale” are wide enough to include agricultural produce which has been hypothecated.

Changes Made By 1976 Amendment

Clause c to the provision to sub section 1 has been amended so as to extend the exemption from attachment and sale to houses and other buildings belonging to not only an agriculturist but also to a labourer or a domestic servant.

Clause g to the provisio to sub sec. 1 has been amended so as to extend the exception to stipends and gratuities allowed to pensioners of a local authority or any other employer.

Clause I has been amended to enlarge the exception as to salary to the extent of the first four hundred rupees and two third of the remainder. THE new proviso does away with the distinction between judgement debtors who are government servants or railway employees and other salaried judgement debtors.

Clause j has been substituted so as to extend to all persons to whom the Navy Act, 1957 applies.

The new clause (kb) extends the exception from attachment to moneys payable under life insurance policies.

The new clause (kc) exempts from attachment interest of tenants in a residential building governed by Rent Acts.

Conclusion

Judiciary through its decisions have explained and even expanded the meaning and scope of the terms used in sec 60 and 61. Legislature through 1976 amendment Act has removed many anomalies present in these sections. Government used periodically review these provisions so as to keep them in accordance with the need of the time.

Bibliography

Books

PM Bakshi, Mulla on the Code of Civil Procedure Act, 15th ed. Vol. 1 (NM Tripathi Private Limited, New Delhi, 1995)

SC Sarka, Law of Civil Procedure,9th ed., vol.1 (Wadhwa and Company, new delhi, 2000)

Justice C.K. Thakker, Civil Procedure Code,5th ed. (Eastern Book Company , Lucknow,2004)

Code of Civil Procedure (Professional Book publishers New Delhi, 2004)

Dr. T.P. Tripathi, The Code of Civil Procedure,2nd ed. (Allahabad Law Agency, Allahabad, 2008)

Reports

Law commission Of India 54th report on The Code of Civil Procedure, 1908

Cases

Bindeshwari v. Bansi lal (1932) 54 All 399

Appana v. Tagamma (1885) 9 Bom. 106

Champaklal v. Swastik Bharat Kala Kendra (1960) AB 276

Aruamugha v. K Marappa, 1973 AM. 46

Paruchuru Narasimha rao v. Nune pandu ranga rao AIR 1994 AP 197

Appasaheb. V. Bhalchandra 1961 (2) S.C.R. 163

Bhagwandas v. Kashibai (1880) 4 Bom. 25

Shyam chand v. Land mortgage Bank (1883) 9 cal. 695

Muniswami v. Viswanatha 1957 (2) MLJ

Pestonji v. Anderson (1939) Bom. 36