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Namdeo Digamber Gaikwad v. Vijaykumar Ramchandra Shaha
Structured Summary of the Opinion (Patel, J.)
Factual and Procedural Background
This appeal under Letters Patent challenges the summary dismissal by Mr. Justice Tarkunde of the execution appeal of judgment-debtors Nos. 8 to 10 under O. XLI, r. 11, Civil Procedure Code. The material facts (as recited in the opinion) are:
- On 17 February 1923 Ramachandra Raoji Shaha advanced Rs. 2,500 on mortgage to the Dixit family and later filed suit No. 626 of 1936. Accounts were taken under the Deccan Agriculturists Relief Act, 1879.
- A decree dated 6 April 1937 was passed for Rs. 5,000-5-3 with costs Rs. 497-5-0, payable by annual instalments of Rs. 800, first instalment due 31 March 1938; default would attract interest at 6% p.a. and mortgagees could sell under s.15-B of the Act. No instalments were paid.
- On 31 March 1941 Ramachandra Shaha filed Darkhast No. 541 of 1941 for recovery by execution of four instalments then due. The defendants contended the decree should be sent for execution to the Collector under Schedule III; papers were forwarded to the Collector and thereafter to the Board under the Bombay Agricultural Debtors Relief Acts (1939 then 1947), and ultimately returned to the Court.
- On 2 August 1946 the decree-holder assigned the decree by registered deed in favour of Ganpatrao Deshmukh. Ramachandra Shaha died 16 March 1947. The assignee applied under O. XXI, r. 16 (2 September 1947) to be brought on record and to execute the decree.
- The judgment-debtors contended the assignment was a benami transaction (assignee acting for them) and that the assignee had no right to execute; they also said Rs. 1,700 had been accepted in full satisfaction by the decree-holder (paid by the assignee) subject to an arrangement that the assignee would not execute.
- The executing Court (14 April 1949) found the assignment had been taken by the assignee as benamidar for the judgment-debtors and upheld that the benamidar could not execute the decree. The assignee's appeal to Mr. Justice Vyas was dismissed (22 September 1950). A Letters Patent Appeal (Appeal No. 51 of 1950) was dismissed by Mr. Justice Bhagwati and Mr. Justice Dixit (24 January 1952), upholding the findings that Rs. 1,700 was paid by the assignee on behalf of the judgment-debtors and that the assignee was a benamidar who could not execute the decree.
- Subsequently the present appellants purchased the property from the original judgment-debtor. The heirs of the decree-holder filed successive Darkhasts for execution (12 March 1953, 11 October 1954, and 15 April 1958). The earlier Darkhasts were dismissed; the fourth Darkhast (15 April 1958) is the subject of the present appeal. The purchasers (judgment-debtors Nos. 8, 9 and 10) contested execution asserting (inter alia) that because of the assignment the decree-creditors could not execute, and raising estoppel, limitation and s. 48 CPC objections.
- The trial Judge rejected the contentions about assignment and estoppel, partly upheld the limitation point, construed the decree such that instalments (including interest) last payable by 31 March 1953, allowed an amount and interest in execution, and directed the Darkhast to proceed for Rs. 8,449-2-9. The judgment-debtors' appeal was dismissed at trial level.
Legal Issues Presented
- Whether s. 48 of the Civil Procedure Code renders the fourth Darkhast unexecutable (i.e., whether execution is barred by that provision and/or limitation).
- Whether, in view of the registered assignment of the decree (and findings in earlier proceedings that the assignee acted as benamidar and that Rs. 1,700 was paid on behalf of the judgment-debtors), the decree-holder (or the decree-holder's heirs) is entitled to execute the decree against the judgment-debtors.
Arguments of the Parties
Judgment-debtors (appellants; purchasers referred to as judgment-debtors Nos. 8, 9 and 10)
- Contended that because of the prior assignment and the circumstances surrounding it (the assignee acted as benamidar and had undertaken not to execute), the decree-creditors (heirs of the original decree-holder or the assignee) were not entitled to execute the decree against them.
- Asserted estoppel arising from the prior adjustment and payment of Rs. 1,700 (paid by the assignee on their behalf).
- Raised a limitation objection and invoked s. 48 CPC to contend that the Darkhast was unexecutable.
Assignee (Ganpatrao Deshmukh) and/or Decree-holder's Heirs
- The assignee applied under O. XXI, r. 16 to be brought on record and to execute the decree; implicitly relied on the registered assignment to assert execution rights.
- The heirs, at one point, contended that their father (original decree-holder) had been deceived into making the assignment deed and that the assignee did not obtain rights to execute the decree under its terms; they offered to repay Rs. 1,700 to the assignee reserving their rights regarding execution.
- On later proceedings the decree-holder's heirs pursued execution by filing successive Darkhasts, asserting their entitlement to execute the decree as decree-holders or successors.
Other or Secondary Arguments Noted in the Opinion
- Counsel (Mr. Albal) argued that the earlier decisions in the proceedings involving the assignee must be read as invalidating the assignment, thereby reviving the right of the decree-holder to execute the decree.
- A point was observed in a prior judgment (Justice Bhagwati) that because the Rs. 1,700 adjustment was not certified on the decree the decree-holder might be entitled to execute and then seek damages against the decree-holder—this was characterized by the court as a passing observation, not a decision on the right to execute.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Banarsi Das v. Maharani Kuar, 1882 I.L.R. 5 All. 27 | The Court may, where the statute is silent, import considerations of equity and substantive law in applying procedural rules; procedural rules should be applied consistently with substantive law and equity. | The Court invoked this approach to justify applying substantive principles (equity/merger) in determining whether a decree could be executed where rights and liabilities had merged or where equitable considerations made execution inappropriate. |
| Degumburee Dabee v. Eshan Chunder Sein, 1868 9 W.R. 230 (F.B.) | Where one judgment-debtor satisfies the decree and assigns it to himself, he is not entitled to execute the decree but must seek contribution by suit. | The Court relied on this authority to support the proposition that acquisition of the decree by a person whose liability is also on the decree leads to exclusion of execution rights and requires recovery by other remedies (e.g., suit for contribution). |
| Mt. Asia Bibi v. Malik Azir Ahmad, [1932] A.I.R. All. 704 | Where the rights of the decree-holder and the liability of the judgment-debtor become united in the same person, merger occurs. | The Court cited this case to underpin the doctrine of merger: when creditor and debtor rights unite, the decree is merged and cannot be executed against the person in whom both rights and liabilities unite. |
Court's Reasoning and Analysis
The Court's analysis followed a sequence of legal and factual determinations grounded in the record and prior findings:
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Validity and Binding Effect of the Assignment:
The Court observed the assignment by Ramachandra Shaha was a registered deed and therefore prima facie valid and binding on him and his legal representatives unless set aside for reasons that invalidate contracts; no such avoidance had been established. Consequently, the assignment bound the decree-holder (Shaha) and his heirs unless invalidated on recognized legal grounds, which had not occurred.
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Prior Findings on Benami and Payment:
The executing Court had expressly found—and the Division Bench in the Letters Patent Appeal had upheld—that Rs. 1,700 was paid by the assignee on behalf of the judgment-debtors as part of an adjustment and that the assignee acted as a benamidar who had undertaken not to execute the decree. Those findings were binding on the parties and were not set aside.
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Principle of Merger and Substantive Law:
The Court emphasized that procedural provisions (including transferee execution rights under the present Code) must be applied in harmony with substantive law and equity. It accepted authorities (Banarsi Das; Degumburee Dabee; Mt. Asia Bibi) supporting the rule that where the rights of a decree-holder and liabilities of a judgment-debtor come together in the same person, merger occurs and the decree cannot be executed against that person.
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Application to Benami Situation:
The Court reasoned that the benamidar (assignee) possessed merely the legal title while the real title and interest effectively vested in the real owners (the judgment-debtors). Under the merger principle, where the interests of judgment-creditor and judgment-debtor merge (or where the assignee holds as benamidar for the judgment-debtors), execution is inappropriate and the decree is effectively exhausted.
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Interpretation of O. XXI, r. 16 and its Proviso:
The Court treated the second proviso to O. XXI, r. 16 as an extension of the merger principle but rejected any interpretation that would allow the original decree-holder (or his heirs) to execute the decree merely because one judgment-debtor could not; such an interpretation would produce unjust and inconvenient results and generate unnecessary litigation.
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On Earlier Observations by Justice Bhagwati:
The Court declined to treat a passing observation by Justice Bhagwati (that the decree-holder might, because the Rs. 1,700 was not certified on the decree, be able to execute and thereafter claim damages) as a decision on the execution-right issue. The opinion emphasized that the point was neither argued fully nor decided between the parties in the earlier proceedings and thus remained open; the observation did not constitute a binding ruling permitting execution by the decree-holder's heirs.
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Relevance of Procedural Objections:
The Court noted that although s. 48 and limitation were argued, it was unnecessary to decide s. 48 once the second (assignment) point sufficed to dispose of the execution proceedings.
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Nature of the Point on Appeal:
The Court characterized the controverted point as a pure question of law requiring no factual investigation and held that the trial Judge's reliance on the High Court having negatived the assignee's right to execute (to justify allowing the decree-holder to execute) was, in view of the Court's reasoning, untenable.
Holding and Implications
Holding:
Darkhast dismissed. The Court directed that the darkhast must be dismissed with no order as to costs throughout (paragraphs 15–16 of the opinion).
Implications (direct consequences as discussed in the opinion):
- The Court concluded that because the assignment was valid and the earlier findings established that the assignee acted as benamidar and that Rs. 1,700 had been paid on behalf of the judgment-debtors, the decree-creditors (i.e., the decree-holder's heirs) cannot execute the decree against the judgment-debtors.
- The decision rested on established substantive principles (notably merger of creditor and debtor rights where they unite in the same person or where the assignee holds merely as benami for the judgment-debtors), and the Court applied those principles to bar execution in this factual context.
- The order dismissing the Darkhast is final in this proceeding, and the Court specifically directed dismissal with no order as to costs throughout.
Patel, J.:— This is an appeal under Letters Patent against the summary dismissal of the execution appeal of the judgment-debtors Nos. 8 to 10 by Mr. Justice Tarkunde under O. XLI, r. 11, of the Civil Procedure Code.
2. The facts necessary for the decision of this appeal are as follows: On February 17, 1923, one Ramachandra Raoji Shaha advanced on mortgage a sum of Rs. 2,500 to Dixit family. After this he filed a suit, being suit No. 626 of 1936. As the defendants were agriculturists, accounts were taken under the provisions of the Deccan Agriculturists Relief Act, 1879 and eventually a decree dated April 6, 1937, was passed for a sum of Rs. 5,000-5-3 and costs of the suit, the costs being a sum of Rs. 497-5-0. The decretal amount was payable by annual instalments of Rs. 800 each, the first instalment being payable on March 31, 1938. The decree also provided that if there was default in the payment of any instalment, the judgment-debtors do pay interest on the balance due to the plaintiff at the rate of 6 per cent per annum from the date of default and that the mortgagees be entitled to sell the property under s. 15-B of the Act. It is accepted that no instalment was paid. An application was, therefore, made by Ramchandra Shaha on March 31, 1941, being Darkhast No. 541 of 1941, for recovery by execution, of four instalments which then had fallen due. The defendants judgment-debtors contended that the decree should be sent for execution to the Collector under the provisions of Schedule III of the Civil Procedure Code. The papers were forwarded to the Collector. Immediately within a short time the Bombay Agricultural Debtors Relief Act, 1939, came into force and after the Board was constituted for this area, all the papers were forwarded to the Board at the request of the judgment-debtors for settlement of the debt due under the decree. The papers were sent to the Board on April 22, 1942. After that, that Act was replaced by another Act, being Bombay Agricultural Debtors Relief Act, 1947 and the matter stood transferred to the Court. The Court returned a finding that the case was not governed by the B.A.D.R Act and, therefore, directed the execution proceedings to be sent to the regular side and proceeded with. This order was made on March 13, 1947 and the papers were actually transferred to the regular Court on August 29, 1947. In the meantime the decree-holder on August 2, 1946, assigned the decree by a registered assignment deed in favour of one Ganpatrao Deshmukh. Within a short time after the execution of the assignment deed, Ramchandra Shaha died on March 16, 1947. The heirs of the decree-holder did not come forward to prosecute the darkhast. But on September 2, 1947, the assignee made an application under O. XXI, r. 16 for being brought on record and allowed to execute the decree. When notice of this proceeding was issued to the judgment-debtors, they took up the contention that the assignment in favour of Ganpatrao Deshmukh was as a benamidar for themselves and, therefore, he had no right to execute the decree against them. They contended that the decree-holder settled the matter by accepting Rs. 1,700 in full satisfaction of the decree. As they had not got that amount with them, they requested Ganpatrao Deshmukh to pay the same to the decree-holder which he paid and as security for the fulfilment of a contract of sale of certain land to him for the amount so paid he took this assignment deed but it was agreed that he was not to execute the decree against them. In this application notice was also sent to the heirs of the decree-holder who appeared in those proceedings. They seem to have contended that their father was deceived into making the assignment deed and that the assignee did not obtain any rights to execute the decree under the terms thereof. They also offered to pay back Rs. 1,700 to the assignee reserving their rights and remedies regarding execution of the decree against the judgment-debtors. The executing Court by its judgment and order dated April 14, 1949, upheld the contention of the judgment-debtors that the assignment was taken by the assignee as benamidar for the judgment-debtors with an understanding that the decree was not to be executed. It did not give any finding on the contention raised by the son of the decree-holder—and naturally so. The plea of deceit was very vague and no particulars thereof were given. As has been often pointed out such plea is no plea. The party relying on fraud or deceit must give the facts on which such allegation is founded. No issue was also pressed on that point. The assignee came to this Court in appeal which was heard by Mr. Justice Vyas on September 22, 1950, who dismissed it. Against this judgment the assignee filed an appeal under the Letters Patent, being Appeal No. 51 of 1950 which was dismissed by Mr. Justice Bhagwati and Mr. Justice Dixit on January 24, 1952. They upheld the findings of both the Courts that Rs. 1,700 were paid by the assignee on behalf of the judgment-debtors to the decree-holder and that the amount was paid for and on behalf of the judgment-debtors as part and parcel of adjustment which was not certified. They also upheld the contention that the assignee was acting as the benamidar of the judgment-debtors and on this ground the Court held that the benamidar could not execute the decree against the judgment-debtors. It may also be mentioned that on the same date on which the executing Court dismissed the application of the intervener assignee, (April 14, 1949) it also dismissed the darkhast filed by Ramchandra Shaha on the ground that the heirs of the decree-holder had not come forward to execute the decree. There was no appeal from that order and that order to-day stands as final.
3. After this, it seems the present appellants purchased the property from the original judgment-debtor. The heirs of the decree-holder after the proceedings ended in the High Court filed a new Darkhast for execution on March 12, 1953. It was dismissed on September 30, 1953. A third Darkhast was filed on October 11, 1954, which was dismissed on June 20, 1956. The fourth Darkhast from which the present appeal arises was filed on April 15, 1958. Naturally the heirs of the original judgment-debtor did not bother about the execution proceedings. The purchasers (referred to as judgment-debtors Nos. 8, 9 and 10), however, contested the execution proceedings. They contended that because of the assignment the judgment-creditors were not entitled to execute the decree, that there was estoppel and that the execution was barred by the law of limitation and by s. 48 of the Civil Procedure Code.
4. The learned trial Judge negatived the first two contentions and upheld the last partially. He construed the decree to mean that the principal amount had to be returned by instalments of Rs. 800 and the subsequent interest payable because of the default also became payable by instalments and therefore the last date for payment of instalments would be March 31, 1953. Accordingly he held that Rs. 5,299-2-0 were allowable in execution proceedings. He also allowed interest on this amount. He directed the Darkhast to proceed in respect of Rs. 8,449-2-9. The appeal of the judgment-debtors was dismissed.
5. It is firstly contended that s. 48 applies to the case and that the Darkhast must be held as unexecutable. It is contended secondly that in view of the assignment the decree-holder is not entitled to execute the decree. In our view, it is not necessary to decide the first point since it is sufficient to dispose of the execution proceedings on the second point.
6. Now, it is clear that the assignment by Ramchandra Shaha being by a registered deed is perfectly valid. The only method of getting over that document is to have it avoided for any of the reasons which make a contract not binding on a party. It has not so far been avoided on any such ground. The assignment, therefore, must necessarily bind the decree-holder. As pointed out by us in the earlier part of the judgment, the trial Court expressly held that there was an adjustment for which Rs. 1,700 were paid, that this was paid on behalf of the judgment-debtors and that the assignee was their benamidar and had undertaken not to execute the decree. This finding was in terms confirmed by the Division Bench finally in the Letters Patent Appeal. It has not been declared to be invalid on any of the grounds on which the decree-holder relied. One must, therefore, be driven to the conclusion that so far as the assignment deed is concerned it is binding on Ramchandra Shaha and his legal representatives i.e his sons.
7. The decree holder has his title in the decree. section 222 of the old code gave a discretion to the Court to allow the transferee to execute the decree. But under the present Code the transferee is entitled as of right to execute the decree. In such a case when transfer is complete and effective the decree-holder though formally the “holder” cannot be allowed to execute the decree. In the present case the title to the decree having vested in the judgment-debtors the decree becomes exhausted. In Banarsi Das v. Maharani Kuar . 1882 I.L.R 5 All. 27. Mahmood, J. said in connection with the acquisition of the rights of the decree-holder by one of the judgment-debtors (p. 32):
“…Whilst in a matter of this kind we are bound to consider the language of the Civil Procedure Code, we do not think that the rules of adjective law should be administered regardless of the fundamental principles of substantive law and equity. Where the language of the statute itself is silent upon any special point, the Courts in applying the rules of procedure will import such considerations as will render the application of those rules consistent with equity and substantive law.”
8. In Degumburee Dabee v. Eshan Chunder Sein . 1868 9 W.R 230, F.B, Peacock C.J held that when one of the judgment-debtors satisfied the decree and got it assigned to himself he was not entitled to execute the decree but must recover contribution by a suit. In Mt. Asia Bibi v. Malik Azir Ahmad . [1932] A.I.R All. 704. the learned Judges said (p. 706):
“…Where the rights of a decree-holder and the liability of a judgment-debtor become united in one and the same person there would obviously be merger.”
9. In such a case it is held that the decree cannot be executed. In our view the principles of substantive law ought to be applied and it must be held that where the interests of the judgment-debtor and the judgment-creditor merge the decree cannot be executed. Since the benamidar has merely the legal title but the real title vests in the real owner the same result must follow in the present case. The second proviso to O. XXI, r. 16 is merely an extension of this principle and cannot be construed to mean that because one of the judgment-debtors cannot execute the decree the original decree-holder should in spite of the assignment be entitled to execute it. To hold so would bring about inconvenient and unjust results and would create unnecessary litigation. In our view, therefore, the decree-holder's heirs cannot execute the decree.
10. It was argued by Mr. Albal that the decision in the earlier proceeding raised by the assignee must be held to invalidate the assignment and therefore the right of the decree-holder to execute the decree survives. If one reads the judgments of all the three Courts in those proceedings, it is impossible to uphold the contention.
11. Our attention was also invited to the last paragraph of the judgment of Mr. Justice Bhagwati where he says:
“A peculiar situation has arisen…The decree-holder would be entitled to execute the decree for the whole of the amount because the sum of Rs. 1,700/- paid by the assignee to him and which he admits to have received from the assignee has not been certified on the decree and if and when the decree-holder proceeds to execute the decree against the judgment-debtors the judgment-debtors presumably will have to pay the whole of the decretal amount and they would be relegated only to their remedy for damages, if any, against the decree-holder.”
12. The learned Judge visualizes what would happen as a result of that judgment. It is no one's case that this point could have been argued before the learned Judges by any of the parties before the Court. The only question before the learned Judges was whether or not because of the assignment deed the assignee was entitled to execute the decree against the judgment-debtors, being their benamidar. As to what would happen subsequently could never be a matter of decision between the parties. At no time was such an issue raised and no decision sought on it. He only says that because the adjustment was not certified the decree-holder would be entitled to disregard it and ask for execution of the decree, that the assignee had paid Rs. 1,700 for which judgment-creditor was not even bound to give credit in the execution proceedings and that all the trouble and litigation would certainly have been avoided if the proceedings brought by the assignee could have been disposed of within a stated time. This observation has nothing to do with the right of execution of the decree-holder. In this connection it must be remembered that the Darkhast filed by the decree-holder was dismissed because the heirs did not choose to proceed with the execution and no appeal was filed against that order. The learned Judge was answering a passing argument on behalf of the assignee. Moreover both the decree-holder's heirs and the judgment-debtors were co-respondents i.e in the position of co-defendants and that question not being in dispute between them the finding could not be conclusive. That question, therefore, could not have been decided by the learned Judges and they have not actually decided it. The question, therefore, is still open.
13. It is argued that this point was not taken in the trial Court in express terms and, therefore, in the Letters Patent Appeal it should not be allowed to be taken.
14. It is a pure question of law and no facts are required to be investigated. The only ground on which the learned Judge directed execution was that the High Court had negatived the right of the assignee to execute the decree and that the decree-holder was, therefore, entitled to execute the decree. This ground in view of our judgment as above is not tenable.
15. In the result the darkhast must be dismissed with no order as to costs throughout.
16. Darkhast dismissed.
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