K.N Sampath Mudaliar v. Sakunthala Ammal.

This civil miscellaneous second appeal arises out of execution proceedings, and it serves as an illustration of the difficulties of a judgment creditor, who, after the decree in his favour, finds himself from the frying pan to the fire. The elaborate provisions of the Civil Procedure Code in the execution chapter are designed to prevent the decree-holder from snatching the property of the judgment-debtor, but in actual operation, they have the unintended effect of keeping the decreeholder at bay and away from the fruits of his decree. Not unoften, the process of execution occupies more time than the duration of the suit, the reason being that it is the last ditch for the judgment debtor to offer resistance and that the Statute gives him full assistance in that endeavour. But that is law, and the duty of the Court is only to administer it.

The following facts bring out the present contest between the parties. One Somasundara Mudaliar, who was the owner of an item of property, forming the subject matter of this appeal, filed a suit against the present appellant, Sampath Mudaliar, and two others, for recovery of possession on the footing that the appellant was a tenant of that property. The appellant was impleaded as the third defendant in that suit, which is O. S. No. 630 of 1941, on the file of the District Munsif's Court, Poonamallee. The suit ended in a compromise, which took the shape of a joint endorsement made by the parties. A decree in terms of the joint endorsement followed. The decree was that the first defendant in that suit should deliver possession of the property to the plaintiff, that he should pay the arrears of rent, and, damages for use and occupation claimed by the plaintiff, and that the appellant and the 2nd defendant in that suit should be given six months' time to vacate the property. It appears that, notwithstanding the fact that Somasundara had an executable decree in his favour for recovery of possession, the appellant third defendant continued to be in possession. Somasundara, however, agreed to convey the property in favour of a certain Sakuntalammal, the respondent herein, for consideration. Sakuntalammal instituted a suit O. S. No. 202 of 1955 on the file of the District Munsif's Court, Poonamallee, claiming specific performance of the contract in her favour, and eventually obtained a decree. That was also a decree based upon compromise between the parties. Somasundara undertook to execute and register a sale deed in favour of Sakuntalammal conveying the property. Actually Somasundara executed a registered conveyance on 24th February 1960 in favour of Sakuntalammal. The sale deed expressly mentioned that the vendee, Sakuntalammal, should get herself impleaded as a party in the proceedings in O. S. No. 630 of 1941 and get possession by delivery through Court. Thereafter, Sakuntalammal, filed M. P. 1095 of 1960 in O.S. No. 630 of 1941, praying for delivery of possession, on the ground that she had become entitled to execute the decree by virtue of the sale deed in her favour. The executing Court impleaded her as a party in that suit and directed delivery of possession. No notice of that proceeding was, however, given to the third defendant in that suit, namely, the appellant herein. This order was passed on 8th August 1960. But Sakuntalammal appears to have been unable to take possession of the property. The appellant filed E. A. 1766 of 1961 in O. S. 630 of 1941, an application purporting to be under S. 47, S. 151 and O. 21, R. 16, C.P.C., praying for cancellation of all the execution proceedings commencing from the impleading of the respondent as a party and for other appropriate reliefs. He contended that the order impleading the respondent as a party to the execution proceedings in O. S. 630 of 1941 was illegal, if not null and void, as such an order has been passed without notice to him. He pointed out that the application of the respondent was, in substance, one under O. 21, R. 16, and that provision was quite mandatory in stating that notice should go not merely to the original decreeholder but also to the judgment debtor. He, further, contended that he must be deemed to be a tenant entitled to the benefits of the Madras Buildings (Lease and Rent Control) Act, and that he could not be evicted through process of Court in execution proceedings, as the proper authority to evict would only be the statutory authority under the special enactment. This application was resisted by the respondent, who submitted that the earlier proceedings were not under O. 21, R. 16, C.P.C., but were only under S. 146 C.P.C., that there was no relationship of landlord and tenant between her and the appellant, that therefore the Buildings Lease and Rent Control Act could not be invoked, and that the application should be dismissed. But the learned District Munsif, Poonamallee, the executing Court, and the learned District Judge, Chingleput, have now concurrently held that the contentions raised by the appellant are without substance and are not well founded. Hence this civil miscellaneous second appeal by the aggrieved judgment debtor in O. S. 630 of 1941.

I may at once state that there is no substance in the contention that the appellant can be evicted only under the machinery of the Buildings Lease and Rent Control Act and not by way of execution. I am clearly of opinion that the terms of the joint endorsement, “that defendants 2 and 3 do pay plaintiff Rs. 3 per mensem from today for their occupation for the six months and the same will be recovered in execution of this decree” do not constitute the jural relationship of landlord and tenant, which is the first essential requisite for calling in aid the Act. This contention was rightly overruled by the Courts below.

The important question, however, is whether it can be said that M. P. 1095 of 1960 filed by the respondent seeking relief by way of delivery of possession can be deemed to be an application under S. 146 C. P. Code and not one under O. 21, R. 16. The relevant provisions are as follows:

S. 146: “Save as otherwise provided by this Code or by any law for the time being in force, where any proceeding may be taken or application made by or against any person, then the proceeding may be taken or the application may be made by or against any person claiming under him.”

Order 21, R. 16: Where a decree or, if a decree has been passed jointly in favour of two or more persons, the interest of any decree-holder in the decree is transferred by assignment in writing or by operation of law, the transferee may apply for execution of the decree to the Court which passed it; and the decree may be executed in the same manner and subject to the same conditions as if the application were made by such decree-holder;

Provided that, where the decree, or such interest as aforesaid has been transferred by assignment, notice of such application shall be given to the transferor and the judgment debtor, and the decree shall not be executed until the Court has heard their objections, if any, to its execution.”

(the second proviso omitted).

O. 21, R. 16 C. P. Code is a special provision which enables an assigned decree-holder to step into the shoes of the original decreeholder and to execute the decree. A person can become an assignee of a decree either by operation of law or as a result of transfer in his favour by assignment in writing from the transferor, namely, the original decreeholder. There cannot be a transfer inter vivos of a decree except by an instrument in writing. The subject matter of the transfer must also be a decree, which must, of course, be in existence on the date of the transfer. An assignee who falls within the terms of O. 21, R. 16 can only proceed under that provision to work out his rights in respect of the decree, and he cannot circumvent it by resorting to any general provision under the Code. S. 146 is certainly a comprehensive provision which enacts that proceedings that may be taken by any body may also be taken by a person claiming under him. It must be remembered that S. 146 significantly uses the words, “save as otherwise provided by this Code.” This Court has always taken the view that the word “decreeholder” in O. 21, R. 16 means the actual decreeholder on the date of the assignment and not a person, who may, after the so-called assignment, get a decree in his favour ( Basroovittil Bandari v. Ramachandra Kamthi 17 M.L.J. 391. and Kangati Mahanandi Reddi v. Panikalapati Venkatappa (1941) 2 M.L.J. 631=54 L.W. 429.The Calcutta High Court has also taken the same view [ Mathurapore Zamindari Co. Ltd. v. Bhasaram Mandal 51 Cal. 703. and Prabashinee Devi v. Rasiklal Banerji 59 Cal. 297.]. The Bombay High Court has, however, taken a contrary view [ Purmanandas Jiwandas v. Vallabadas Wallji 11 Bom. 506. and Chimanlal Bargovinddas v. Gulamnabi I.L.R. 1946 Bom. 276.]. The Bombay High Court followed the equitable principle laid down by Jessel, M. R. in Collyer v. Isaacs 19 Ch. P. 342. in these terms:

“A man cannot in equity, any more than at law, assign what has no existence. A man can contract to assign property which is to come into existence in the future, and when it has come into existence, equity, treating as done that which ought to be done, fastens upon that property, and the contract to assign thus becomes a complete assignment.”

A proper and harmonious construction of these two provisions of the Civil Procedure Code, the one general and the other special, would, in my opinion, be that, while O. 21, R. 16 applies to a case of a transfer by assignment in writing or by operation of law of an actual existing decree, S. 146 would apply to a case where mere rights are transferred before they culminate and merge into a decree in favour of the transferor. If, at the time of the transfer, the subject matter is only a right over property, the transferee gets transferred to him that right absolutely in his favour together with the future rights which may accrue to the transferor in respect of that property. After the transfer, the transferor is effaced, and the transferee is substituted in his place. The benefits attaching to the transferred right, which include future benefits also automatically fasten upon the subject matter of the transfer, and should enure only in favour of the transferee. S. 146 actually embodies an equitable principle that equity treats that as done which ought to be done, and that a person clothed with certain rights would not merely be free to enjoy those rights, as they stood on the date of the transfer, but also the future incidents or consequences of those rights.

I do not feel called upon to discuss the question as regards the precise scope and ambit of these two relevant provisions at any great length, in view of the decision of the Supreme Court in Jugalkisore Saraf v. Raw Cotton Co. Ltd.(1955) 1 M.L.J. 220 (S.C.).The Courts below have, no doubt, referred to this decision, but have, in my opinion, not correctly understood its clear import. The facts in that case were these. Two Muslims Mohomedali Habib and Sakerkhaneo Mohamedali Habib, were carrying on business as merchants and pucca adatias in bullion and cotton in Bombay under the name and style of Habib & Sons. In 1948, that firm instituted a suit in the Bombay City Civil Court against the appellant before the Supreme Court, Jugalkishore Saraf, who was himself a merchant in Bombay, for recovery of Rs. 7113 and odd. On 7th February, 1949, when that suit was still pending, a document was executed whereby it was agreed that the partners of Habib & Sons would transfer all the assets and liabilities of the firm to a company called the Raw Cotton Co. Ltd. (respondent before the Supreme Court). The transferees thus got assigned to them all book debts due to the firm of Habib & Sons with the full benefit of all the securities as regards those debts. The company did not take steps to get itself impleaded in the pending suit. That suit proceeded to trial, and eventually ended in a decree in favour of Habib & Sons. The two partners of the firm, thereafter, migrated to Pakistan and their property vested in the Custodian of Evacuee Property. On 15th December, 1949 a decree was passed in the suit. On 11th December, 1950 the Custodian of Evacuee Property informed the respondent-company that he had confirmed the transaction of transfer of the business effected by Habib & Sons. On 25th April, 1951, the respondent-company filed an execution petition in the Bombay City Civil Court, seeking to execute the decree in favour of Habib & Sons. Notice was issued to the judgment debtor Jugalkishore and he raised a contest. The only substantial question raised by him was whether the respondent-company was a transferee of the decree within the meaning of O. 21, R. 16. The learned Judges of the Bombay High Court answered the question in the affirmative, on the authority of the previous decisions of that Court. On a certificate, having been granted under Art. 133 (1) (c) of the Constitution the matter was heard by the Supreme Court. The Supreme Court held that there was no bar to the transferees of the debt making an application for execution under S. 146, if they satisfied the other requirement of that section, namely, that they were claiming under the decree-holder. What is to be specially noted is that was a case where the transfer was not of a subsisting decree but was only of a debt which had been sued upon. The decree was passed long after the transfer of the debt. It was under these circumstances that their Lordships of the Supreme Court held that the case would rather be governed by S. 146 and not by O. 21, R. 16. The learned Counsel for the respondent drew my attention to the following passage in the judgment of the Supreme Court and contended that the transferee could obtain the benefit of the decree without being an actual assignee of that decree.

“A person may, conceivably, become entitled to the benefits of a decree without being a transferee of the decree by assignment in writing or by operation of law. In that situation the persons becoming the owner of the decree may well be regarded as a person claiming under the decree holder and so it has been held in Sitaramaswa v. Lakshminarasimha 41 Mad. 510 = 8 L.W. 21. although in the earlier case of Dost Mohamed v. Altaf Hussain 17 1. C. 512. it was held otherwise. The case of Kangati Mahanandi Reddi v. Panikalapati Venkatappa (1941) 2 M.L.J. 631 = 54 L.W. 429. also held that the provisions of O. 21, R. 16 did not prevent execution of the decree under S. 146. In that case it was held that the applicant could not execute the decree under O. 21, R. 16 but he could execute the same under S. 146.”

In my opinion, there is not the slightest doubt that the Supreme Court did not hold, that, after the passing of a decree, any transfer, though not in form a transfer of the decree, would yet enable the transferee to proceed under S. 146 by-passing the provisions of O. 21, R. 16. I may refer to the following observation of Das J., (as he then was) at page 233:

“When on a true construction of the deed it actually operates to transfer a decree, then in existence, no equitable principle need be invoked, for in that case, the transfer is by the deed itself and as such is by an assignment in writing. It is only when the deed does not effectively transfer the decree because, for instance, the decree is not then in existence, but constitutes only an agreement to transfer the decree after it is passed that the invocation of the equitable principle become necessary and it is in those circumstances that equity fastens and operates upon the decree when it is passed and effects a transfer of it.”

The true principle is that a decree cannot be executed by anybody other than the decreeholder, except by an assignee who satisfies the requirements of O. 21, R. 16. S. 146 C.P.C., cannot have the effect of overriding the provisions of O. 21, R. 16. If that were to be the correct position, any assignee of a decree can ignore O. 21, R. 16, and execute the decree without notice to the original decreeholder and without notice to the judgment-debtor. A person may allege to claim under a decree-holder, but that may be a fraudulent claimant. Can he behind the back of the decreeholder realise the fruits of the decree, keeping the decreeholder in the dark? It seems to me that such a position is inconceivable. Where rights are transferred at a point of time when there is no actual decree qua those rights, it may be that the transferee does not fall within the rigour of O. 21, R. 16, for the simple reason that it is not a transfer of the decree as such; but he would be entitled to the benefits of the decree, as a result of the antecedent transfer of rights which later on converge into a decree. I am satisfied that, in the present case, the conveyance operates as an assignment in writing and that therefore the only mode by which the respondent could have proceeded to levy execution was under O. 21, R. 16. That not having been done, the order for delivery in her favour has to be set aside. The result may be unfortunate, but it cannot be helped. Though the appellant has managed to continue in possession for a long number of years despite a decree against him and though his resistence to execution may not be justified, he is yet entitled to invoke the statutory provisions in his favour without any relaxation in favour of the decreeholder. In the result, the civil miscellaneous second appeal is allowed, and the decree of the Courts below are hereby set aside. The ex parte delivery order in favour of the respondent is also cancelled. M. P. 1095 of 1960 filed by her should be restored to file and be treated and dealt with as a substantive application under O. 21, R. 16 C.P.C. The execution petition in which M. P. 1095 of 1960 has been preferred will also be revived, so that if ultimately the respondent were to satisfy the Court that she is entitled to come on record as an assignee under O. 21, R. 16, there may not be any further difficulty in the way of her getting delivery of the property. The parties will bear their respective costs in all the Courts. No leave.