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Ramchandra And Another Judgment-Debtors v. Ram Lal And Another Decree-Holders
Structured Summary of the Opinion
Factual and Procedural Background
This appeal arises out of competing appeals against the same decision of the Civil Judge of Fatehgarh dated 17 November 1936. Two first appeals were filed because the appellants were uncertain whether the appeal lay to this Court or to the District Judge; one appeal was later transferred and connected with the other.
The appellants in the appeal before this Court are Ram Chandra and Ramesh Chandra (described as purchasers/garnishees) and the respondents are Ram Lal and Nathu Lal (decree-holders). On 31 January 1927 Rohan Lal and his son Ram Lal obtained a money decree against Gulzari Lal and Gendan Lal. Execution began on 5 March 1927 and, on 11 February 1928, the execution was transferred to the Collector under Section 68 CPC; the zamindari property was attached.
On 29 April 1929 Gulzari Lal and Gendan Lal sold the attached zamindari property to Ram Chandra and Ramesh Chandra for Rs. 8,600. Out of the sale consideration, approximately Rs. 4,400 remained in the hands of the purchasers for payment to the decree-holders (Rohan Lal and Ram Lal). The sale deed was attested by Ram Lal.
The execution proceedings before the Collector were struck off on 27 June 1929. Subsequent attempts to proceed (including applications of 19 March 1932 and 15 May 1933) were made. Proceedings aimed at Ram Chandra (not Ramesh Chandra, who was a minor) included an attempt to arrest Ram Chandra; that attempt was held improper and the District Judge remanded the matter with the direction that garnishee proceedings under Order 21, Rule 131 et seq. CPC should be started against Ram Chandra.
The application of 29 September 1936 (which led to the present appeal) sought garnishee proceedings against Ram Chandra and Ramesh Chandra under Order 21, Rule 131 CPC. The Civil Judge issued the notice, Ram Chandra raised objections (including limitation and that any debt, if existing, was secured by a charge), and the trial Court dismissed Ram Chandra's objections and directed a garnishee order to be prepared. Both purchasers appealed to this Court.
Legal Issues Presented
- Whether a debt was created by the sale deed of 29 April 1929 (i.e., unpaid purchase money owing from the purchasers to the vendors) and therefore could be the subject of enforcement.
- Whether any such debt was barred by limitation when the garnishee application was filed on 29 September 1936, or whether acknowledgments revived/extended the period.
- Whether the transfer of 29 April 1929 was invalid because the property was under the control of the Collector and the Collector could exercise powers conferred by paras. 1–10 of Schedule 3 (para. 11 of Schedule 3 referenced), thereby affecting the validity of the sale.
- Whether the debt (if any) constituted a "charge" within the meaning of Order 21, Rule 131 CPC (and related provisions) such that garnishee proceedings were inappropriate because the debt was secured by a charge on the property held by the purchasers.
- Whether garnishee proceedings were the proper remedy (as opposed to other execution proceedings, including arrest) against Ram Chandra.
Arguments of the Parties
Appellants' Arguments (Ram Chandra and Ramesh Chandra)
- There was no debt due from them to Gulzari Lal and Gendan Lal arising out of the sale.
- If a debt did arise, it was barred by limitation (the sale was on 29 April 1929; the applicable limitation period for a debt evidenced by a registered document is six years).
- The sale of 29 April 1929 was void/incompetent because, at the time, the property was under the control of the Collector and para. 11 of Schedule 3 (and the Collector's powers under paras. 1–10) made such transfer invalid.
- If a debt came into existence it was secured by a charge; hence garnishee proceedings under Order 21, Rule 131 CPC would not be applicable because the debt was secured.
- Ramesh Chandra additionally pleaded minority at the time of the sale (he was a minor at the time) and therefore no liability could be enforced against him under the contract of sale.
Respondents' Arguments (Ram Lal and Nathu Lal / their counsel)
- The lower Court and the District Judge were correct that a debt in the shape of unpaid purchase money arose and could be dealt with in execution; the District Judge directed garnishee proceedings against Ram Chandra.
- The plea of limitation was not argued in the same manner below; moreover, there was material (an application of Ram Chandra dated 17 May 1933) from which acknowledgment of liability within the limitation period could be inferred, potentially extending the period.
- It was open to the decree-holders to ignore the private transfer under Section 64 CPC (i.e., a private transfer contrary to attachment is void as against claims enforceable under the attachment), and thus the attaching creditor could proceed under the attachment.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| 16 All 286 (1894) (1894 AWN 84) | Establishes that where money is due by a vendee to his vendor, the vendor's claim against the vendee may be attached and sold in execution of a decree against the vendor as a debt under the CPC. | The Court relied on this authority to support the conclusion that the sale covenant creating unpaid purchase money constituted a debt recoverable in execution (i.e., a vendor's claim against the vendee is attachable). |
| AIR 1938 P.C. 281 (Privy Council) | Principle of statutory construction: the Court cannot put into an Act words which are not expressed and which cannot reasonably be implied; courts must not legislate by adding or substituting words. | The Court invoked this principle to reject any judicial restriction limiting the word "charge" in Order 21, Rule 131 CPC to charges created only by acts of parties; the Court held that one must not add words to a statute without justification. |
Court's Reasoning and Analysis
The Court proceeded through a sequence of analytical steps, grounded in the facts and the statutory scheme:
- Existence of Debt: The Court held that the sale deed of 29 April 1929, by which Ram Chandra covenanted to pay approximately Rs. 4,400 out of the sale consideration to the decree-holders, created a debt (unpaid purchase money). The lower Appellate Court had previously taken the same view and remanded for garnishee proceedings. The Court cited 16 All 286 to support the proposition that such vendor's claims against purchasers are attachable.
- Limitation Issue: The appellants argued the debt was time-barred (six-year limitation from 29 April 1929). The trial Court had framed an issue on whether the right to proceed against Ram Chandra personally was time-barred, but the Court below decided the matter by saying the garnishee application was in time without addressing whether the debt itself was barred. This Court noted that the respondents pointed to material (an application by Ram Chandra dated 17 May 1933) in which Ram Chandra acknowledged that he held Rs. 4,400 in deposit for payment to the decree-holders. The Court concluded that it would be unfair to hold the debt irrecoverable by lapse of time on 29 September 1936 because acknowledgments within time (e.g., 17 May 1933) could operate to revive or extend the limitation period, and the point had not been argued below on that footing. Consequently, the Court refused to accept the appellants' contention that the debt was time-barred.
- Invalidity of Transfer Under Schedule 3: The appellants' contention that the transfer of 29 April 1929 was invalid because the property was under the Collector's control (and paras. 1–10 of Schedule 3 applied) was not raised before the lower Court or in the grounds of appeal. The Court refused permission to argue this point because introducing it at this late stage would prejudice the respondents who had been prevented from adducing evidence on it; the Court characterized the question as a mixed question of law and fact that should have been raised earlier.
- Meaning of "Charge" and Applicability of Garnishee Proceedings: The crucial contest was whether the debt was secured by a "charge" within Order 21, Rule 131 CPC, which would take the debt outside the scope of garnishee proceedings. The lower Court had confined the meaning of "charge" to charges secured by instrument or by act of parties (i.e., contemporaneous contractual charges), excluding charges created by operation of law. The present Court examined the definition of "charge" in Section 100 of the Transfer of Property Act and rejected any judicial restriction that would limit "charge" in Rule 131 to only those charges created by the act of the parties. Applying elementary principles of statutory construction (and invoking AIR 1938 P.C. 281 to underline that courts must not add words to statutes), the Court held there was no warrant for restricting the word "charge" in the Rule to charges created solely by parties' act. It also considered the submission about Section 55(4)(b) of the Transfer of Property Act (seller's charge for unpaid purchase money where ownership has passed) and the respondents' reliance on Section 64 CPC (that the attaching creditor could ignore the transfer). The Court found it not permissible for an attaching creditor to selectively accept parts of a private transfer (accepting covenants but treating the transfer as void as to other consequences). The Court concluded that a charge contemplated by Order 21, Rule 131 did arise in connection with the debt.
- Conclusion on Appropriate Remedy: Because the debt was secured by a charge (within the meaning of the Rule and statutory definitions), garnishee proceedings under Order 21, Rule 131 CPC were not applicable. On that basis the Court allowed the appeal and set aside the order below directing a garnishee order to be prepared.
Holding and Implications
Holding:
APPEAL ALLOWED. The order of the Court below directing that a garnishee order be prepared was set aside, and the application of Ram Lal and Nathu Lal for garnishee proceedings was dismissed with costs.
Implications:
- The direct effect is that garnishee proceedings as directed by the trial Court are not to proceed; the application by the decree-holders for garnishee relief is dismissed.
- The Court determined that the covenant in the sale deed created unpaid purchase money and that a charge (including charges arising by operation of law) can fall within the ambit of Order 21, Rule 131 CPC such that garnishee proceedings are inappropriate where a charge exists.
- No broader binding precedent was expressly announced beyond the application of the cited authorities and the statutory construction applied. The decision resolves the parties' dispute by setting aside the garnishee order and dismissing the garnishee application with costs.
Decision rendered by Bajpai, J. — "Appeal allowed."
Bajpai, J.:— This appeal is connected in a sense with First Appeal No. 164 of 1938. First Appeal No. 38 of 1937 was filed in this Court against the decision of the Civil Judge of Fatehgarh dated 17th November, 1936. Appeal No. 161 of 1938 was filed in the Court of the District Judge of I Farrukhabad against the same decision of the Civil Judge. Presumably, the appellants were in doubt as to whether the appeal lay to this Court or to the Court of the District Judge and that is why they filed two appeals, but later they moved this Court that the appeal pending in the Court of the District Judge be transferred to this Court and be connected with the first appeal pending in this Court. This prayer was granted and that is why we have two first appeals before us, but both of them, as we said before, are against the same decision. One judgment therefore will govern both the first appeals; as a matter of fact, there is necessity of delivering only one judgment in the appeal pending in this Court, the other appeal will require under the circumstances of the case no order whatsoever. The appeal before us is by two persons Ram Chandra and Ramesh Chandra who are described as garnishees and the respondents are Ram Lal and Nathu Lal who are described as decree-holders. On 31st January 1927 Rohan Lal and his son Ram Lal obtained a simple money decree against Gulzari Lal and Gendan Lal. This decree was put into execution on 5th March, 1927 against the judgment-debtors, and on 11th February, 1928 execution was transferred to the Collector under Section 68 of the CPC, because the proceedings were aimed against the ancestral property of the judgment-debtors. The zamindari property was attached.
2. On 29th April, 1929 Gulzari Lal and Gendan Lal sold the attached zamindari property to Ram Chandra and Ramesh Chandra for a sum of Rs. 8600 and, out of this sum, Rs. 4400 odd were left in the hands of Ram Chandra and Ramesh Chandra vendees for payment to the decree-holders of Gulzari Lal and Gendan Lal, namely Rohan Lal and Ram Lal. This sale deed was attested by Ram Lal and we shall not be far wrong in assuming that Ram Lal the decree-holder was a consenting party to the sale because he thought that the vendees would satisfy the decretal amount. The execution case before the Collector was struck off on 27th June, 1929. There was another infructuous application of 19th March, 1932 and after that there was another application of 15th May, 1933 where proceedings were aimed against Ram Chandra and Ramesh Chandra, the purchasers of the zamindari property belonging to Gulzari Lal and Gendan Lal. The prayer of the decree-holders was that the decretal amount should be realized by the arrest of Ram Chandra. Nothing was said about Ramesh Chandra because he was a minor. On 17th May, 1933 Ram Chandra was brought before Court under arrest and then he made several objections to the application of Rohan Lal and Ram Lal, the decree-holders. These objections were upheld by the Civil Judge on 22nd September, 1933. There was an appeal by the decree-holder and the learned District Judge agreed with the Court below on the validity of the objections raised by Ram Chandra, but he was of the opinion that the proper proceedings that ought to have been taken by the decree-holders were garnishee proceedings as contemplated by O. 21, R. 131 and subsequent Rules of the Code of Civil Procedure and not by means of a direct attempt to arrest Ram Chandra. He, therefore, remanded the case to the trial Court with the direction “that garnishee proceedings may be started against Ram Chandra.”
3. We now come to the application of 29th September, 1936 — the application which has given rise to the present appeal. By this time Rohan Lal had died and his second son Nathu Lal was brought on the record as a decree-holder. Ram Lal and Nathu Lal respondents before us moved the Court of the Civil Judge to issue a notice to Ram Chandra and Ramesh Chandra under O. 21, R. 131 of the CPC, calling upon them to appear before the Court and show cause why they should not pay the debt due Page: 502from them to Gulzari Lal and Gendan Lal in Court so that the amount may be paid to Ram Lal and Nathu Lal and thus their decree against Gulzari Lal and Gendan Lal may be satisfied. When the Court below issued such a notice and when Ram Chandra and Ramesh Chandra appeared in Court to show cause, they said that no debt was due by them to Gulzari Lal and Gendan Lal, and if there was a debt it was secured by a charge and was outside the scope of O. 21, R. 131. They further said that they were not personally liable and the debt, if any, due to Gulzari Lal and Gendan Lal was barred by time. The minor Ramesh Chandra raised a further plea that he was a minor at the time of the sale deed of 29th April, 1929 and therefore no liability under the contract of sale could be enforced against him in any shape or form. The Court below did not decide the objections of Ramesh Chandra at all because it appears that the garnishee proceedings in the Court below were confined to Ram Chandra alone and we have, therefore, not got to decide the objections of Ramesh Chandra. The order that has been passed by the Court below is that the objection of Ram Chandra be dismissed and a garnishee order be prepared as prayed and a garnishee order seems to have been prepared against Ram Chandra alone. Both Ram Chandra and Ramesh Chandra have appealed and learned counsel on their behalf has taken four points before us. He once again says that there is no debt due from his clients to Gulzari Lal and Gendan Lal and that even if there was any debt, the debt was barred by time. He further contends that the debt arose out of certain void proceedings, namely the sale of 29th April, 1929, and this sale was incompetent because of the provisions of para. 11 of Sch. 3 inasmuch as the Collector could exercise in respect of the judgment-debtors' immovable property the powers conferred on him by paras. 1 to 10 of Sch. 3. Finally, it was contended that if a debt came into existence the debt was secured by a charge and garnishee proceedings could not be taken.
4. We have no doubt whatsoever that when under the sale deed Ram Chandra covenanted to pay Rs. 4400 odd out of the entire sale consideration to the decree-holders of the vendors, a debt in the shape of unpaid purchase money was created. This was the view of the lower Appellate Court on 28th July, 1936 when that Court remanded the case to the trial Court for starting garnishee proceedings. If authority were needed for this proposition, it is to be found in 16 All 286 (’94) 16 All 286 , 1894 AWN 84, where it was held that where money was due by a vendee to his vendor the vendor's claim against the vendee may be attached and sold in execution of a decree against the vendor as a debt under the Code of Civil Procedure. It was then said by the appellants that, if this debt was a simple money debt, it was barred by time. The submission is that it came into existence on 29th April, 1929 and could be recovered within six years of that date (the debt was evidenced by a registered document and therefore the period of limitation applicable is six years). The present application was filed on 29th September, 1936, more than six years after the creation of the debt and, as such, was not recoverable. The Court below did frame an issue on this point. The issue was:
Whether the right of the judgment-debtor to proceed against the objector Ram Chandra personally is barred by time?
5. When however that Court proceeded to determine the issue it decided a different matter altogether. It said that the original garnishee application was filed in time and without discussing the point as to whether the debt due from the garnishees was barred by time or not decided the question in favour of the decree-holders by saying that the garnishee application was in time. Mr. Awasthi on behalf of the appellants has a grievance against the manner in which the plea of limitation was decided by the Court below. It is however contended by Mr. Pathak on behalf of the respondents that the point was never argued before the Court below in the way in which it has been argued here, because, if it had been so argued, there is no reason why the learned Civil Judge should not have given a finding on the point. Even here Mr. Awasthi at one Btage said that the application of the decree-holders was barred by time which implied that the garnishee application was not filed in time. It is pointed out by learned counsel for the respondents that is the only way in which the matter was put before the Court below. Mr. Pathak then contends that there is abundant material on the record from which it could be shown that Ram Chandra acknowledged the liability and that the acknowledgments were made within time. Our attention is drawn to an application of Ram Chandra printed at p. 3 of our record. In this application Page: 503Ram Chandra says that Gulzari Lal and Gendan Lal sold certain property to Ram Chandra and out of the sale consideration, a sum of Rs. 4400 was left in deposit with him. This application was made on 17th May, 1933 within six years of 29th April, 1929 and the present application is within six years from 17th May, 1933. We have come to the conclusion that under the circumstances of the case it would not be fair to the respondents to hold that the debt due from Ram Chandra had become time-barred on 29th September, 1936 when the present application for garnishee proceedings was made. There might be several such acknowledgment land there might be some oral evidence on the point to connect the acknowledgment with the liability under the debt and as the point does not seem to have been argued on this footing in the Court below, we are not prepared to accede to the contention advanced on behalf of the appellants that the debt against them had become irrecoverable by lapse of time.
6. The third point that the transfer of 29th April, 1929 was invalid because it was made during the time that the property was under the control of the Collector, who could perform the powers conferred on him by paras. 1 to 10 of Sch. 3 of the CPC, was not taken in the Court below or in the grounds of appeal before us. We refused permission to Mr. Awasthi to argue this point because we are convinced that it would have seriously prejudiced the other side inasmuch as they were prevented from giving evidence on this point owing to the attitude adopted by the appellants. It is now too late in the day to take this point and say that this involves only a pure question of law not dependent on facts. The question is a mixed question of fact and law and ought to have been taken up in the Court below. We now come to the last and perhaps the most important question in the case. The contention of the appellants is that if a debt was created by she sale deed of 29th April, 1929, a debt by which Ram Chandra became a debtor and Gulzari Lal and Gendan Lal became creditors, then the debt was secured by a charge. The learned Judge of the Court below repelled this contention on the ground that the word ‘charge’ mentioned in R. 131 relates to charges secured by instruments, that is charges arising out on a contract simultaneously with the debt in question. It cannot relate to charges which arise subsequently under certain circumstances by subsequent conduct of the parties, according to law.
7. He is of the view that a charge created by operation of law is not within the purview of R. 131 and that Rule covers only such charges which are the result of the act of parties. Now ‘charge’ is defined by Section 100 of the Transfer of Property Act, and it is said there that where immovable property of one person is by act of parties or operation of law made security for the payment of money and the transaction does not amount to a mortgage, the latter person is said to have charge on the property etc. etc. There does not seem to be any warrant for restricting the word ‘charge’ in R. 131 to a charge created by act of parties only. One of the elementary rules of construction of statutes is that nothing is to be added to or to be taken from a statute unless there are adequate grounds to justify the inference that a Legislature intended something which it omitted to express. In AIR 1938 P.C 281 (’38) 25 AIR 1938 PC 281 , 178 IC 472 , 66 IA 1 , ILR (1939) Kar 1 , ILR (1939) 1 Cal 222 (PC), their Lordships observed:
The Court cannot put into an Act words which are not expressed and which cannot reasonably be implied on any recognized principles of construction. That would be a work of legislation, not of construction and outside the province of the Court.
8. We can see nothing in the words of R. 131 or anything in the principle underlying the garnishee orders which would justify us in holding that the word ‘oharge’ occurring in that Rule is limited to a charge created by act of parties. Reliance is placed by the appellants on Section 55(4)(b) of the Transfer of Property Act, and it is argued that, where the ownership of the transferred property has passed to the buyer before payment of the whole of the purchase money, the seller is entitled to a charge upon the property in the hands of the buyer for the amount of the purchase money or any part thereof remaining unpaid, and the submission is that there was a charge on the property, a charge which was available to Gulzari Lal and Gendan Lal against the purchasers Ram Chandra and Ramesh Chandra to the extent of the purchase money that was left in the hands of the buyers for the payment of the decree and that charge could be enforced against the property in the bands of the buyers. Learned counsel for the respondents then said that it was open to the decree-holders Ram Lal and Nathu Lal to ignore the transfer made by Gulzari Lal and Gendan Lal under the provisions of Section 64 of the CPC. This undoubtedly is true, but if the transfer is ignored the debt is also cancelled. It is, however, contended that all that Section 64 of the CPC, enjoins is that the private Page: 504transfer contrary to the attachment is void as against all claims enforceable under the attachment and is not void absolutely. It is, therefore, permissible to the attaching creditor to take advantage of the covenants contained in the private transfer and to say that if those covenants are fulfilled, the private transfer will not be challenged by the attaching creditor.
9. We cannot agree with this contention because that would imply that the attaching creditor can accept the transfer for certain purposes and can ignore it for other purposes. The argument amounts to this that as the transfer is illegal there was, therefore, no charge so far as unpaid purchase money was concerned, and yet because the transferee undertook to pay some money to the transferor that money was available in garnishee proceedings to the decree-holder. All that Section 64 of the CPC, provides is that claims enforceable under the attachment will remain unaffected by the private transfer and the attaching creditor can proceed to enforce his claim under the attachment irrespective of the transfer.
10. It is not open to the attaching creditor to say that a private transfer does not bring about all the consequences which it does ordinarily bring about and at the same time certain covenants in the sale deed are binding and can be taken advantage of by the attaching creditor. The result of what we have said is that a charge, such as is contemplated by O. 21, R. 131 of the CPC, did arise in connexion with the debt and therefore garnishee proceedings were not applicable. We, therefore, allow this appeal and set aside the order of the Court below directing that a garnishee order be prepared. The application of Ram Lall and Nathu Lal is dismissed with costs throughout.
D.S/R.K
11. Appeal allowed.
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