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  • Section 2, sub-section (3) of the CPC
  • Article 182, Cl. (5) of Sch. 2, Lim. Act.
  • Article 182, Cl. (5)], Sch. 2, Lim. Act.
  • provisions of Order 21,
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Cites
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Citation Codes
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citation codes
Case Number
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  • Section 2, sub-section (3) of the CPC
  • Article 182, Cl. (5) of Sch. 2, Lim. Act.
  • Article 182, Cl. (5)], Sch. 2, Lim. Act.
  • provisions of Order 21,
Smart Summary

Case Summary — Extracted from the Provided Opinion

Factual and Procedural Background

The appeal arises from an application for execution filed by the appellant in the Second Class Subordinate Judge's Court at Bulsar on 20 April 1933 (darkhast No. 272 of 1933). The appellant had obtained a deed of assignment in 1929 from a firm which had earlier obtained a decree against respondent No. 1 in 1924. The appellant initially filed an application for execution on 7 January 1930, asserting that he was an assignee of the decree-holder. Notices were issued under Order 21, Rule 16, but because no process fee was paid and the appellant took no steps to serve the notices on the judgment-debtors, the 1930 darkhast was disposed of on 15 July 1930.

The controlling legal point for determination before the higher court was whether the 1930 execution application constituted a "step-in-aid of execution" within the meaning of Article 182, Clause (5) of Schedule 2 to the Limitation Act. The Subordinate Judge held that it was a step-in-aid; on appeal the District Judge concluded otherwise. The District Judge's reasoning centered on the status of a transferee as a decree-holder only after being recognized by the Court and on the necessity of notice under O.21, R.16 as a condition precedent to jurisdiction; he also noted the appellant had not taken steps to establish his assignment and doubted the bona fides of the appellant's conduct.

Legal Issues Presented

  1. Whether the appellant's execution application of 7 January 1930 constituted a "step-in-aid of execution" within the meaning of Article 182, Clause (5), Schedule 2, Limitation Act.
  2. Whether a transferee (an alleged assignee of a decree) must be recognized by the Court before he can be regarded as a decree-holder entitled to take steps-in-aid of execution under Order 21, Rule 16, CPC.

Arguments of the Parties

Appellant's Arguments

  • The appellant filed the application in the proper Court under Order 21, Rule 16, and the validity or propriety of that application should not depend on subsequent proceedings (for example, the result of objections or recognition by the Court).
  • If the application was properly filed in the proper Court, it should be regarded as a step-in-aid of execution for the purposes of the Limitation Act.
  • The appellant relied on prior decisions (including 47 Mad 641, 31 Mad 234 and 29 All 301) where similar applications by transferees were treated as steps-in-aid of execution and were held to save limitation or be applications in accordance with law.

Respondents' Arguments (as presented by Mr. Choksi)

  • A person who claims to be an assignee of a decree remains a stranger to the decree until he is recognized by the Court; hence the transferee is not a decree-holder until recognition.
  • The word "transferee" in Order 21, Rule 16 should be read to mean one who has been proved or held to be a transferee; consequently, the right to apply for execution only arises after recognition.
  • Reliance was placed on authorities such as 37 Bom 426 (Chandavarkar J.) and other Bombay decisions indicating that if the person applying is not entitled, the application is not in accordance with law; other decisions were invoked to show that an assignee remains a stranger until he brings himself on the record.
  • The District Judge emphasized requirements of notice under O.21, R.16 and noted the appellant had not taken steps to have his assignment proved; the District Judge also expressed concern about the bona fides of the appellant's intention to proceed.

Lower Courts' Findings (as stated in the opinion)

  • The Subordinate Judge held that the 1930 application was a step-in-aid of execution.
  • The District Judge held to the contrary: he interpreted the definition of decree-holder under Section 2(3) CPC to mean a transferee is not a decree-holder unless recognized by the Court, treated notice under O.21, R.16 as a condition precedent to jurisdiction and held that failure to give notice rendered execution proceedings void as against the assignor and judgment-debtor, and found the appellant had taken no steps to prove the assignment.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
61 IA 62 Cited for the proposition that it was not necessary to go into whether the application was made with bona fide intention to proceed. The court noted the respondents' concession that the bona fides question need not be examined in this appeal, citing this authority.
47 Mad 641 (also citing 12 MLJ 348) Held that an application by transferees for recognition of transfer and for execution was a step-in-aid of execution and saved limitation. The court relied on this authority to support the proposition that an application by a transferee filed in the proper court may be a step-in-aid of execution.
31 Mad 234 An application under the provision corresponding to O.21, R.16 by transferee was a step-in-aid of execution and an application in accordance with law within the meaning of the Limitation Act provision corresponding to Article 182, Cl. (5). The court relied on this decision as supporting the view that such applications constitute steps-in-aid of execution.
29 All 301 An application by a transferee asking for substitution of name on the record was a step-in-aid of execution within the Limitation Act. The court cited this case among those that led it to conclude that a transferee's application can be a step-in-aid.
37 Bom 426 (Chandavarkar J.) Held that if a person other than one entitled applied for execution, or the person entitled applied for relief outside the decree, the application was not in accordance with law. The respondents relied on this decision to argue a transferee remains a stranger until recognized; the court considered but rejected the strict reading urged by respondents.
39 Bom LR 540 (B. J. Wadia J.) Held that the transferee must apply under O.21, R.16 and pray the usual notice; after objections and notice being made absolute, the transferee must (in that view) again apply under O.21, R.11 for execution; conceded transferee must apply under O.21, R.16 and not merely for recognition. The court discussed this authority, noting Wadia J.'s formulation, but concluded the Code does not require two separate applications and that the transferee's application under O.21, R.16 may itself be the means to seek execution.
48 Mad 553 (Srinivasa Ayyangar J.) Explained the scheme of the Code: a transferee files an application for execution stating his title in the application or affidavit and the Court then orders execution or rejects it; "transferee" means the person claiming to be such. The court expressly adopted this view as supporting the meaning of "transferee" as the person claiming to be such and as supporting a single-application approach under O.21, R.16.
37 Bom LR 489 Held that an assignee did not become a holder of the decree within the meaning of O.21, R.16 and Section 2 of the CPC unless he applied to bring himself on the record in place of the judgment creditor. The court observed that while an assignee is a stranger in the absence of such an application, that status does not continue after the assignee has made the application under O.21, R.16.
14 Lah 744 Held that the person appearing on the face of the decree was the person entitled to execution, and that the executing Court was bound to allow execution at the instance of the transferor even after the date of the transfer until the transfer was recognized by the Court. The court noted this authority but held it did not override the express provisions of Order 21, Rule 16 which confer the right to apply on the transferee.
36 Bom 58 Held that attachment of property by a transferee before hearing objections (i.e., before recognition) was unlawful (not merely irregular). The court relied on this authority to distinguish between what actions are unlawful (e.g., attachment before hearing) and what may still constitute steps-in-aid of execution (e.g., filing the application itself).
47 Bom 643 (Sir Norman Macleod C.J.) Held that an application by an assignee under O.21, R.16 is heard by the Court which passed the decree not as an executing Court but as a Court which passed the decree; until the Court orders that execution may proceed at the instance of the transferee, the transferee cannot execute the decree. The court cited this decision to support the distinction between the stage when actual execution can proceed and the stage when steps facilitating execution (such as filing the transferee's application) may properly be taken.

Court's Reasoning and Analysis

The court proceeded step-by-step and tied its reasoning closely to the provisions of the Code of Civil Procedure (CPC) and the Limitation Act as well as to the authorities cited.

  1. The court accepted that the appellant had made an application under Order 21, Rule 16 to the Court which passed the decree and recorded that the respondents conceded the court need not examine the bona fides of the application for the purposes of the appeal.
  2. The respondents' principal contention — that the transferee is a stranger to the decree until recognized by the Court, and therefore cannot be a decree-holder entitled to make steps-in-aid of execution — was examined. The court rejected the strict reading that "transferee" must mean only one already proved or held to be a transferee prior to making any application.
  3. The court reasoned that if the respondents' restrictive meaning was correct, the statutory procedure would require a transferred party first to apply only for recognition and then, upon recognition, to make a separate application for execution. The court found no such two-step mandatory process in the Code.
  4. The court found support in decisions (notably 48 Mad 553 and 39 Bom LR 540 as interpreted) for the proposition that a person claiming to be a transferee may file an application under O.21, R.16 which sets out the claim of transfer (in the application or in supporting affidavit) and that the Court can then either order execution or reject the application.
  5. The court distinguished between: (a) acts that constitute actual execution (for example, attaching the judgment-debtor's property), which require a prior decision after objections are heard that the transferee is indeed entitled to execute; and (b) steps that facilitate or precede execution (for example, lodging the transferee's application), which may be regarded as steps-in-aid of execution even before the transferee has been finally recognized.
  6. Applying these principles to the facts, the court concluded that the appellant's 1930 filing under O.21, R.16 — which the appellant was statutorily entitled to make and which was filed in the proper Court — must be regarded as a step-in-aid of execution within the meaning of Article 182, Clause (5) of Schedule 2 to the Limitation Act.
  7. The court relied on the line of authorities (47 Mad 641, 31 Mad 234 and 29 All 301) in reaching this conclusion and found the District Judge's contrary reasoning unsustainable.

Holding and Implications

Holding: APPEAL ALLOWED. The court held that the execution application made by the appellant (the transferee) under Order 21, Rule 16 constituted a "step-in-aid of execution" within the meaning of Article 182, Clause (5), Schedule 2 of the Limitation Act, and accordingly set aside the order of the District Judge.

Immediate consequences and directions:

  • The order of the learned District Judge (which had held that the 1930 application was not a step-in-aid and had dismissed the execution claim on that basis) was set aside.
  • Issues 2 and 3 of the Appellate Court were directed to be decided by the trial Court after taking evidence (and not merely on affidavits); the case was remanded to the trial Court for that purpose.
  • The appellant was awarded costs in this Court and in the lower Appellate Court. The costs in the trial Court were ordered to abide the eventual result of further proceedings in that Court.

Broader legal implication recorded by the court: an application filed by a person claiming to be transferee under Order 21, Rule 16 is to be regarded as a step-in-aid of execution for the purposes of the Limitation Act, although the court emphasized that actual execution (for example, attachment) cannot lawfully proceed at the transferee's instance until objections are heard and the transferee is held entitled to execute.

Disposition: Appeal allowed.

    Dayalbhai Ramji Kunbi v. Dayabhai Dulachand And Others

    Sen, J.:— This appeal arises out of an application for execution made by the appellant in the Court of the Second Glass Subordinate Judge at Bulsar on 20th April 1933. The appellant got a deed of assignment in 1929 from a firm which had obtained a decree against respondent 1 in 1924. The appellant filed an application for execution on 7th January 1930, alleging that he was an assignee of the decree-holder. Notices were issued under O. 21, R. 16, but no process fee having been paid and no steps having been taken by the appellant to serve the notices on the judgment-debtors the darkhast was disposed of on 15th July 1930. The present application, being darkhast No. 272 of 1933, was filed on 20th April 1933. The point that arose for consideration was whether the execution application of 1930 was a step-in-aid of execution within the meaning of Article 182, Cl. (5) of Sch. 2, Lim. Act. The learned Subordinate Judge held that it was a step, in aid of execution, but in appeal the learned District Judge came to the contrary conclusion. The learned District Judge first considered the definition of a decree-holder under Section 2, sub-section (3) of the CPC wherein a decree-holder is defined as any person in whose favour a decree has been passed or an order capable of execution has been made, and held that the transferee of a decree was not a decree, holder unless he was recognized as such by the Court. He next held that under O. 21, R. 16, the giving of a notice of the application to the assignor and the judgment-debtor was an indispensable condition precedent to jurisdiction and that the failure to give such a notice rendered all the proceedings in execution void as against them. He further held that it was only after the assignment had been held to be valid that further proceedings in execution could begin, that in the present case the alleged assignee took no steps to have his alleged assignment proved, and that till it had been decided that he was legally entitled to maintain a darkhast no proceedings taken by him would be a step-in-aid of execution. Lastly, he considered the conduct of the appellant and apparently thought that there was a want of bona fide intention to proceed with his application.

    2. It is admitted that the appellant made his application to the proper Court under O. 21, R. 16. It is also conceded by the learned advocate for the respondents that it is not necessary to go into the question whether the application was made with the bona fide intention of proceeding against the judgment-debtor: 61 IA 62.1 O. 21, R. 16, requires the transferee to apply for the execution of the decree to the Court which passed it. It is contended by the learned advocate for the appellant that the propriety or validity of such application is not dependent on subsequent proceedings, and that if it is a proper application it should be regarded as a step-in-aid of the execution. In 47 Mad 6412 in which an application made by the transferees of a decree for recognition of their transfer and for execution was dismissed owing to the execution itself being stayed, it was held following 12 MLJ 3483 that such an application was a step-in-aid of execution and saved limitation. In 31 Mad 2344 an application purporting to be under section 232 of the cpc (corresponding to the present O. 21, R. 16) was made by the transferee of a decree, praying to be recognized as assignee plaintiff in the suit and stating that when so recognized, he would file an execution petition, i.e when the Court passed an order as prayed for, and the defendant did not appeal against such order; and it was held that such application was a step-in-aid of execution and an application in accordance with law within the meaning of Article 179, Cl. (4) [corresponding to the present Article 182, Cl. (5)], Sch. 2, Lim. Act. In 29 All 3015 an application was made by the transferee of a decree asking that his name might be substituted on the record for that of the original decree-holder, and it was held that the application was made to the proper Court to take some steps-in-aid of execution within the meaning of Article 179, Sch. 2. Lim. Act.

    3. The learned advocate for the appellant relies on these cases and contends that it is not necessary that the transferee's application should actually result in the Court's Order recognizing him to be a transferee and allowing the execution to proceed, and that it is enough for such application to be filed in the proper Court in order to be a step-in-aid of execution. Mr. Choksi for the respondents has argued however that a person who claims to be an assignee of the decree must be regarded as a stranger to the decree till he is recognized as such, and that it is only after such recognition that he is clothed with the right of the decree-holder. He relies on 37 Bom 426 in which Chandavarkar J. held that if a person other than one entitled to apply, applied for execution, or if the person entitled applied for execution in a mode and for a relief outside the decree, the application was not in accordance with law. Mr. Choksi in effect contends that though O. 21, R. 16 gives the right to the transferee to apply for execution, the word “transferee” in this Rule can only mean one who has been proved or held to be a transferee. It does not appear to us that this contention is correct. We think that if that was the meaning of the word “transferee,” the procedure prescribed for a person claiming to be a transferee would have been that he should first apply to be recognized as such a transferee, and that after such recognition he should be entitled to apply for execution. A somewhat similar view appears to have been taken by B.J Wadia J. in 39 Bom LR 540.7 He held that the transferee must first apply under O. 21, R. 16 for execution and pray that the usual notice do issue; and that after the objections had been heard and the notice was made absolute, the transferee must then again apply for execution of the decree under O. 21, R. 11, specifying the mode or modes in which the assistance of the Court was required. Wadia J. however concedes that the transferee, i.e the person claiming to be such, must first apply under O. 21, R. 16 for execution and not merely for recognition as the transferee. We do not however think that it is necessary under the Code of Civil Procedure that the transferee should make two separate applications, one under O. 21, R. 16 followed by another application under O. 21, R. 11. We agree with the observations of Srinivasa Ayyangar J. in 48 Mad 5538 that the scheme of the Code is that the transferee by assignment in writing or by operation of law merely files his application for execution of the decree setting out, either in it or in an affidavit he has filed in support thereof, that he is the transferee either by operation of law or by any particular instrument in writing and that thereupon the Court orders the application for execution or rejects it. Thus there can be no doubt that the word “transferee” in O. 21, R. 16 means the person claiming to be such.

    4. Reference was also made by Mr. Choksi to 37 Bom LR 4899 in which it was held that the assignee of the decree did not become a holder of the decree within the meaning of O. 21, R. 16, and section 2 of the cpc, unless he applied to the Court to bring himself on the record in place of the judgment creditor. There is no doubt that in the absence of such an application an assignee would remain a stranger to the decree, but this does not mean that he would remain a stranger even after he has made such application. Mr. Choksi also relies on 14 Lah 74410 in which it was held that the person appearing on the face of the decree as the decree-holder was the person entitled to execution, and that the executing Court was bound to allow execution at the instance of the transferor even after the date of the transfer, till the transfer was recognized by the Court. This view however does not override the provisions of Order 21, R. 16, under which the right to apply for execution of the decree has been expressly conferred on the transferee.

    5. In the present case, the assignee did make an application under this Rule and it cannot be said that he did so as a stranger to the decree, i.e as a person having no rights at all in respect of the decree. There is no doubt however that as the objections to the assignee's application had not been heard, the decree could not be executed at the instance of the transferee. Any proceedings taken for the purpose of actually executing the decree, for instance, attachment of the judgment, debtor's property, must necessarily be preceded by a decision of the Court, after the objections have been duly heard, that the person claiming to be the transferee of the decree is actually such transferee. Thus, in 36 Bom 58,11 in which the transferee of a decree having preferred a darkhast for execution, the judgment-debtor's property was attached in his shop by seizure before hearing his objections, it was held that such attachment was unlawful, not merely irregular. It seems however to us that saying that she decree cannot be executed is not the same thing as saying that no action can be taken which may be regarded as a step-in-aid of execution. In 47 Bom 643,12 Sir Norman Macleod C.J held that an application by an assignee of a decree under O. 21, R. 16, would (p. 647) be heard by the Court, not as a Court which was executing the decree, but as a Court which passed the decree, and it seems clear to me that until an order is made by the Court which passed the decree that execution may proceed at the instance of the transferee, it is not open to the transferee to execute the decree, nor is there any Court which is executing a decree.

    6. Without expressing any opinion as to whether the Court in such a position can be regarded as the executing Court or not, it seems that the distinction pointed out shows that a stage in which the execution of a decree, properly so called, cannot proceed, is not necessarily one in which, or prior to which, no step can be taken which may be regarded as a step facilitating the execution of the decree. In our opinion, the application made by the transferee in the present case, which he was statutorily entitled to make by the terms of O. 21, R. 16, must be regarded as a step-in-aid of execution within the meaning of Article 182, Cl. (5).

    7. In arriving at this decision we have relied on the lines of reasoning followed in 47 Mad 641, 31 Mad 234 and 29 All 301. We do not think that the arguments advanced in the judgment of the learned District Judge are sustainable and think that the contentions of the learned advocate for the respondents must also fail. In the result therefore the appeal is allowed and the order of the learned District Judge is set aside.

    8. We think that Issues 2 and 3 of the Appellate Court should be decided by the trial Court after taking evidence and not merely on affidavits. The case will therefore go back to the trial Court for this purpose. The appellant will get his costs in this Court and the lower Appellate Court. The costs in the trial Court will abide the result of further proceedings in that Court.

    Divatia, J.:— I agree.

    D.S/R.K

    9. Appeal allowed.

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    Dayalbhai Ramji Kunbi v. Dayabhai Dulachand And Others
    (Oct 18, 1937)