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Parameswaran Nair v. Ayyappan Pillai .
Judgment Summary — N.V. Iyengar, J.
Factual and Procedural Background
This appeal was filed by the 6th defendant (appellant in the present appeal) challenging a decision that precluded him from objecting to the delivery in execution of items 1 to 4 to the 3rd plaintiff (assignee). The 3rd plaintiff had obtained an assignment of items 1–4 from the 2nd plaintiff, the original decree-holder/auction-purchaser. The 6th defendant asserted that he had advanced the purchase money for the assignment and that the 3rd plaintiff was a benamidar (nominal purchaser) for him; the 3rd plaintiff denied benami status and challenged the maintainability of the objection.
Procedurally, the executing court and the District Court found in favour of the 6th defendant (refusing delivery). On second appeal, however, Nandana Menon, J. held that the 6th defendant was debarred from maintaining his objection because of alleged acquiescence at an earlier stage. The 6th defendant obtained leave to appeal to the present court.
Background events relevant to the dispute: the disputed items originally belonged to the ancestor of defendants 1–5. The 6th defendant had earlier filed suit on an encumbrance, obtained decree in O.S. 271 of 1108, and purchased the properties at execution sale on 27-6-1109. He initially took delivery of items 1–4 and left two items to defendants 1–5 on their promise to discharge a prior encumbrance; that promise failed and subsequent steps followed. To protect his interest the 6th defendant caused the 3rd plaintiff to purchase items 5 and 6 at a later execution sale (3-12-1115) and, on 15-4-1116, the 3rd plaintiff obtained an assignment as to items 1–4.
At the date of that assignment the buyer’s court sale in favour of the assignor (2nd plaintiff) had not yet been confirmed because of pending petitions under Order XXI, rule 87. The 2nd and 3rd plaintiffs filed E.P. No. 419 of 1116 for recognition of the assignment or of the decree; after notice and no opposition the court on 29-4-1116 ordered impleading of the 3rd plaintiff but reserved further orders until the petitions under Order XXI, rule 87 were disposed of. The petitions were dismissed and the sales confirmed on 9-8-1116, while E.P. No. 419 was struck off the same day. The 3rd plaintiff subsequently obtained delivery of items 5 and 6 (after proceedings in which the 6th defendant received notice but did not object). Only on 5-8-1119 did the 3rd plaintiff move for delivery of items 1–4 and the 6th defendant objected.
Legal Issues Presented
- Whether the earlier recognition/impleading of the 3rd plaintiff (on 29-4-1116) operated as a final decision (res judicata or constructive res judicata) that precluded the 6th defendant from objecting to the delivery in execution of items 1–4 to the 3rd plaintiff.
- Whether the 6th defendant could attack the earlier order or recognition on the ground of collusion (i.e., by reliance on Section 44 of the Evidence Act) in order to avoid the binding effect of that earlier decision.
Arguments of the Parties
Appellant's Arguments (6th defendant)
- The 6th defendant contended he had actually advanced the purchase money for the assignment and that the 3rd plaintiff was a benamidar — a mere nominal purchaser for him.
- He argued that even if there had been an implied decision in favour of the assignment, it could not be final between the 3rd plaintiff and himself because they had colluded to obtain that recognition; therefore he could prove the true nature of the transaction. He relied on Section 44 of the Evidence Act to show that a decree obtained by fraud or collusion can be impeached.
- He further argued that no plea in bar of delivery had been put forward at the time of the recognition and that the question of enforcement of the assignment for delivery did not arise until the execution application; thus an implied decision on that point could not be said to have been made earlier.
Respondent's Arguments (3rd plaintiff / respondent)
- The respondent argued that on 29-4-1116 the court had, after giving opportunity to the 6th defendant to object, recognised the 3rd plaintiff as assignee. That recognition implied a decision on the validity of the assignment which had become final as against the 6th defendant.
- As a necessary consequence of that recognition, the respondent asserted the right to take steps in execution for delivery of the items and that the 6th defendant was not entitled to object at the later stage when execution for delivery was sought.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Sahib Rai v. Bahari Rai, A.I.R. 1927 All. 494 | That a third party can avoid a decree on ground of collusion, but a party to a collusive decree cannot avoid it; a party cannot plead his own collusion to impeach a decree. | The court relied on this principle to reject the appellant's contention that he could avoid the earlier recognition by showing collusion; the court held that a party to a decree cannot plead his own collusion to nullify that decree. |
| Saralabala Devi v. Shyam Prosad, A.I.R. 1953 Cal. 765 | That principles of res judicata (including constructive res judicata) apply to execution proceedings but the conditions of Section 11, C.P.C. must be complied with; Explanation IV requires a matter would have to have been capable of being raised. | The court cited this authority to emphasize caution in extending constructive res judicata to execution proceedings and to support the conclusion that the earlier interlocutory order did not necessarily constitute a decision on enforceability of assignment for delivery. |
| Abinash Chandra v. Madusudan Majumdar, A.I.R. 1952 Cal. 673 | Authority for the proposition that courts applying principles analogous to res judicata must comply with conditions in Section 11, C.P.C., so that Explanation IV's requirements are respected. | Cited (within the Saralabala Devi discussion) to show that constructive res judicata must satisfy the conditions of Section 11 and cannot be invoked to override those conditions; used to support the court's caution in treating prior interlocutory orders as having decided matters not explicitly adjudicated. |
Court's Reasoning and Analysis
The court addressed two linked questions: first, whether the appellant (6th defendant) could impeach the earlier recognition of the assignment on the ground of collusion; and second, whether the earlier order of recognition constituted an implied, final decision that precluded the 6th defendant from objecting in execution.
On the collusion point the court held that the appellant's plea could not succeed. While Section 44 of the Evidence Act permits a party to show that a judgment was obtained by fraud or collusion, the court read the phrase "any party to a suit or other proceeding" restrictively. The court followed the authority in Sahib Rai v. Bahari Rai to the effect that a party to a collusive decree cannot avoid it by pleading his own collusion; only a third party (someone other than those who participated in the collusion) can impeach a decree on grounds of collusion. Allowing a party to impeach on his own collusion would open the door to false and opportunistic pleas and would be contrary to public policy.
On the res judicata / implied decision point, the court examined the order of 29-4-1116 when the 3rd plaintiff was impleaded after notice and no objection. The court found that the impleading order was expressly made subject to further orders after petitions under Order XXI, rule 87 were disposed of. At the time of that application the confirmation of the sale was uncertain and the application itself was framed in the alternative (for recovery of properties or the decree amount depending on whether the sale was confirmed). Accordingly, the court concluded that the order for impleading did not imply a conscious adjudication on the enforceability of the assignment for the purpose of delivering the properties; the matter was expressly deferred until confirmation of the sale.
The court emphasised that constructive res judicata must be applied cautiously in execution proceedings and only where the conditions of Section 11, C.P.C. (including Explanation IV) are satisfied. Explanation IV deems a matter constructively in issue only if it might or ought to have been raised in the earlier proceedings; the court required that the earlier order must demonstrate the court was conscious of the question and intended to decide it against the party. Interlocutory orders made in furtherance of execution do not necessarily amount to such a conscious adjudication.
The court further observed that the later delivery of items 5 and 6 to the 3rd plaintiff (after notice to the 6th defendant) was not relevant to the dispute over items 1–4 because those later items had been bid for directly by the 6th defendant and were unrelated to the assignment under challenge.
Holding and Implications
HOLDING: The appeal is allowed. The court held that the 6th defendant is not precluded from objecting to the delivery in execution of items 1–4 to the 3rd plaintiff.
Consequent Orders and Direct Effects:
- The court restored the order of the executing court which had disallowed the 3rd plaintiff's application for delivery of items 1–4.
- The appellant (6th defendant) was awarded the costs of this appeal and of the earlier second appeal in this court, to be paid by the respondent.
Broader Implications: The judgment emphasises the limited and cautious application of constructive res judicata in execution proceedings: an interlocutory order that impleads an assignee and reserves further consideration cannot be treated as a conclusive decision on enforceability for delivery unless the earlier order shows the question was specifically and consciously put in issue and decided. The court expressly noted that, in view of its construction of the earlier order, it was unnecessary to consider the many authorities cited by the parties. The decision does not purport to lay down a wider novel principle beyond this application of existing doctrine.
The Judgment of the Court was delivered by
N.V Iyengar, J.:— This appeal is by the 6th defendant-respondent in S.A 729 of 1953 on the file of this court.
2. The matter arises out of an objection filed by the appellant-6th defendant under section 47 C.P.C against the delivery in execution, of items 1 to 4, to the respondent additional 3rd plaintiff. These items had been obtained assignment of by the 3rd plaintiff from the 2nd plaintiff original decree-holder-auction-purchaser. It was the case of the 6th defendant that he alone had advanced the purchase money in respect of the assignment and the 3rd plaintiff who had married his daughter since deceased, was a mere benamidar for him in the matter. The 3rd plaintiff denied that he was a benamidar and further objected to the maintainability of the objection on various grounds. The executing court as well as the District Court in appeal by the 3rd plaintiff found concurrently in favour of the 6th defendant on both aspects of benami and maintainability and refused delivery. In second appeal, by the 3rd plaintiff, however, Nandana Menon, J. held that the 6th defendant was debarred from maintaining his objection, in view to his acquiescence at earlier stage. Hence this appeal by the 6th defendant and with leave therefor. The 4 items in dispute along with two others, viz., 5 and 6 originally belonged to Ibrahim the ancestor of defendants 1 to 5. On foot of an encumbrance charging all the 6 items in his favour, the 6th defendant filed suit and obtained decree in O.S 271 of 1108 against defendants 1 to 5 and in due course of execution, purchased them himself on 27-6-1109. He took delivery however of the present items 1 to 4 leaving the two other items to the defendants 1 to 5, in consideration of their understanding to pay off the prior encumbrance in favour of the original plaintiffs 1 and 2 in this suit. According to the 6th defendant, the failure of defendants 1 to 5 to fulfil their undertaking led to this suit and decree and with a view to safeguard his interests it was, that he got the 3rd plaintiff to purchase on his behalf, items 5 and 6 at the execution sale on 3-12-1115 and later, on 15-4-1116 he obtained the assignment as regards the items 1 to 4.
3. At date of the assignment, of the items 1 to 4, the court sale in favour of the assignor 2nd plaintiff was yet unconfirmed in view of the pendency of petitions under Order XXI, rule 87 corresponding to Order XXI, rule 90 (Indian) filed by both defendants 1 to 5 and also the 6th defendant. So on 20-4-1116 a joint petition was filed as E.P No. 419 of 1116 by the second and third plaintiffs for recognition of the assignment of items 1 to 4 or of the decree. After notice on this application to the defendants 1 to 5 and also the 6th defendant and in the absence of any objection from them, the court on 29-4-1116 directed immediate impleading of the 3rd plaintiff, the office however to take further orders after the petitions under Order XXI, rule 87 were disposed of. These petitions were rejected and the court sales confirmed on 9-8-1116 but on the same day the E.P No. 419 of 1116 was struck off. On 13-10-1116, the 3rd plaintiff applied for delivery of items 5 and 6 alone as against defendant 1 to 5. Vide E.P No. 817 of 1116. The 6th defendant to whom also notice was issued on this application did not appear or object. The defendants 1 and 5 raised certain objections but these were overruled and the 3rd plaintiff was placed in possession of items 5 and 6 on 3-4-1117, though he had to file a fresh E.P on 30-2-1117 the prior E.P 807 of 1116 having been rejected in the interval on 21-11-1116. It was about two years later on 5-8-1119 that the 3rd plaintiff started the present proceedings for delivery of items 1 to 4 and the 6th defendant came forward with his objections.
4. Now the respondent's contention in bar of the 6th defendant's objection was based upon the fact that long early on 29-4-1116 the third plaintiff had, after opportunity afforded to the 6th defendant to object if he desired, been recognised by the court as the assignee of the items concerned. This implied a decision of the court, now become final as against the 6th defendant, or the validity of the assignment in favour of the 3rd plaintiff. The right to take steps in due course of execution for delivery from 6th defendant of the items 1 to 4 was only a necessary consequence and this he was not entitled to object at later stage as now. The question is whether this contention which found favour with Nandana Menon, J., is not acceptable.
5. Mr. K.P Abraham appearing for the appellant urged before us to begin with, that assuming there was an implied decision upholding the assignment as contended for, it could not be final as between the 3rd plaintiff and the 6th defendant, because they had “colluded?” to bring it about and it was open to the 6th defendant then to prove the real nature of the transaction and he referred to section 44 of the Evidence Act.
S. 44. “Any party to a suit or other proceeding may show that any judgment, order or decree which is relevant under section 40, 41 or 42, and which has been proved by the adverse party was delivered by a Court not competent to deliver it, or was obtained by fraud or collusion”.
6. This plea cannot, in our opinion, sustain. To avoid a plea of res-judicata a judgment or an order or a decree can under the section, no doubt be shown to be obtained by fraud or collusion. But it will not be open to a party to plead his own collusion for the purpose. The expression ‘any party to a suit or other proceeding’ occurring in the section must be given a restricted meaning and must be limited to a person or persons other than the one who asserts the fraud or collusion. As observed by Sulaiman, J., as he then was, in Sahib Rai v. Bahari Rai, A.I.R 1927 All. 494,
“A third party can undoubtedly avoid a decree on the ground that it has been obtained collusively, but a party to a collusive decree cannot avoid it on that ground”.
7. For, as the learned Judge went on to point out,
“If parties to a decree or their representatives were allowed to nullify a decree by pleading their own fraud or collusion the result would be disastrous and would open a wide door for urging false and convenient pleas”.
8. But the question still is, whether the implied decision as to the validity of the assignment as against the 6th defendant involved also a decision against a plea in bar of delivery at his instance. According to Mr. Abraham it is difficult to conceive a decision by implication of this kind in this case. For no such plea had been raised at any stage before the present application for execution, and such plea did not also arise until then. We think this argument is entitled to succeed. At the time when the 3rd plaintiff along with the 2nd plaintiff applied to court for recognising the assignment, the position as we saw was one of uncertainty as to whether the court sale of item 1 to 4 may at all be confirmed. So the prayer in the application was definitely worded in the alternative so as to allow a recovery of the properties or of the decree amount depending upon the confirmation of the sale or otherwise. And consistently, the court while ordering impleadment of the 3rd plaintiff as assignee-decree-holder nevertheless reserved further consideration of the application, obviously from the point of view of delivery of the properties until after the sale stood actually confirmed. The order for impleading could not therefore be said to involve by implication a decision as to the enforceability of the assignment in the matter of delivery of the properties covered thereby. It was only when the petitions under Order XXI, rule 87 were dismissed that the enforcement of the sale sannad rights regarding the items 1 to 4 could fall to be considered but, as it happend, no such consideration took place because the execution application was itself simultaneously struck off. The extension of the principle of constructive res judicata to matters in execution must be cautiously undertaken particularly when the principle rests upon Explanation IV to Section 11, C.P.C that is, it relates to a matter which might and ought to have been urged so that it may be deemed to have been a matter directly and substantially in issue in such proceedings. The actual decision cannot also be carried further than the circumstances warrant. The matter must have been put in issue and only then the precise point so put and solemnly judged against the party is deemed to be finally decided. We must be able to say from the court's order that it was conscious of the question and intended to decide it against the judgment-debtor for, every interlocutory order in furtherance of the execution proceedings cannot imply a conscious adjudication of the question. In the face of the specific order passed at the time of the recognition of the assignment, it is perfectly clear the court did not give any decision as between the 3rd plaintiff and the 6th defendant concerning the enforcement of the sale sannad right by further process in execution. The later order for delivery to the 3rd plaintiff of items 5 and 6, after notice to the 6th defendant relied on by the learned Judge and also pressed before us is of no significance in the present matter. Those items he had bid for directly and had nothing to do with the assignment.
9. We may refer in this connection to the observation in Saralabala Devi v. Shyam Prosad, A.I.R 1953 Cal. 765.
“It is undoubtedly true that the principles of res judicata apply to proceedings other than suits including proceedings in execution. It must be taken, as held by the Supreme Court, that the principles of constructive res judicata are also applicable to execution proceedings. But the conditions of applicability of the principles of res judicata actual or constructive contained in S. 11 Civil P.C must be complied with in such cases as far as possible. It is not the law that when a court applies the principles analogous to res judicata, that Court can override the conditions specified in S. 11 Civil P.C These conditions must be fulfilled as far as possible: see Abinash Chandra v. Madusudan Majumdar, A.I.R 1952 Cal. 673. One of the explanations appended to S. 11 is Explanation IV. Explanation IV requires that a matter would be regarded as constructively in issue if such a matter might or ought to have been raised in the suit or the proceedings”.
10. We hold therefore that the 6th defendant is not precluded from objecting as here, to the delivery from him, of items 1 to 4. In the light of the conclusion reached by us as to the construction of the order relied on by the respondent, we have found it unnecessary to deal with the large number of cases referred to by either side. The appeal succeeds in the result and we restore the order of executing court disallowing the application of the 3rd plaintiff. The appellant will get his costs of this appeal and of the second appeal in this court from the respondent.
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