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Chimanlal Hargovinddas Vs. Gulamnabi - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtMumbai
Decided On
Case Number Second Appeal No. 228 of 1942
Judge
Reported inAIR1946Bom272; (1946)48BOMLR16
AppellantChimanlal Hargovinddas
RespondentGulamnabi
DispositionAppeal allowed
Excerpt:
civil procedure code (act v of 1908), order xxi, rule 26-decree-execution-transferee of decree-transfer of property act (iv of 18s2), section 43.;the owner of a moiety in certain property having agreed to sell his share filed a suit to recover possession of his share on partition. the suit was referred to arbitration through court, and the arbitrators awarded possession on partition. the owner then sold the property as well as his right under the award to the purchaser, who was not made a party to the suit. a decree was subsequently passed in terms of the award. the purchaser next applied to execute the decree; it was contended that he could not do so owing to the provisions of order xxi, rule 16, of the civil procedure code, 1908:-;that the purchaser was entitled to execute the decree,..........same year. the court passed a decree in terms of the award on september 1, 1939, and under that decree najubhai was held entitled: to a half share in the property. it may be noted that the present, appellant had not filed any application in the lower court for being brought on the record on account of his assignment, but after the decree was passed he applied on november 24, 1939, for execution of the decree stating that he had taken the assignment of the decree from the decree-holder najubhai. the judgment-debtor, i.e. present respondent, challenged the appellant's right to execute the decree inasmuch as he was not a transferee of the decree under order xxi, rule 16, of the civil procedure code, and also on the ground that the deed of assignment taken by him was fraudulent and.....
Judgment:

Divatia, J.

1. [Here not only is the property transferred but the rights under the award are transferred, What will be the effect of that ?]

2. The right under the award is not the right under a decree. The right under an award does not open until a decree is passed. Award is an intermediate stage which is short of a decree. Further the document of transfer in this case does not purport to convey the future rights that may be obtained under the decree. In that respect the document is silent. It does not purport to transfer the decree which may be passed in future in favour of the vendor. A decree is something different from an award and what was transferred was what the vendor had already got, that is a mere award, and not the decree, which he obtained after the transfer.

3. The right under an award is similar to a right under a bond, and until a final adjudication is made on the rights under the bond, there can be no transfer of a decree. Similarly there can be no transfer of a decree, until one is passed on the award. The real point at issue is as to the method by which rights are to be enforced and not whether a right is proved. Even assuming that there is an equitable assignment, the transferee is not entitled to execute a decree by becoming the holder of the decree under an equitable assignment. For instance, suppose there is an oral sale of the decree and the price is also paid. That does not entitle the transferee to execute that decree until an assignment is actually effected in favour of the assignee.

4. The decision in Vatsavaya's case 'does not decide that the transferee would be entitled to execute the decree, and it is not an authority on the point in dispute here.

5. Under Order XXI, Rule 16, the Legislature excluded the right of those who got an assignment in any way other than by the two prescribed methods, viz. assignment by writing and by operation of law. See Genaram v. Hanumcmtram (1925) 28 Bom. L.R. 761 Bhandari v. Ramackandra (1906) 17 M.L.J. 391, Mathuvapare Zamindary Co., Ltd. v. Bhasaram Mandal I.L.R (1924) Cal. 703 and Prabhashinee Debee v. Rasiklal Banerji I.L.R (1931) Cal. 297.

6. The equitable considerations will apply only between parties to the document, and the cases in which that doctrine is applied are cases between the parties themselves. But where a third party is concerned, that equitable doctrine will not apply. The decision hi Purmananddas Jiwandas v. Vallabhdas Wallji I.L.R (1897) Bom. 506 illustrated what we contend. In fact in that decision it was left ambiguous whether the transfer was by assignment in writing or by operation of law.

Divatia, J.

7. [They treated it as both.]

8. This decision is referred to in Mathurapore Zamindary Co.'s case, and discussed, and it was pointed out that it must be confined to the facts of the case. It was also discussed in Bhandari v. Ramachandra and Prabhashinee Debee v. Rasiklal Sanerji.

9. We therefore submit that any transferee during the pendency of a suit has to proceed under Order XXII, Rule 10; otherwise the provisions of Order XXI, Rule 16, will become redundant. Section 146 does not help the appellant because until the assignment is made it could not be said that the appellant was claiming under Najubhai, his vendor. The decision in Vithal v. Mahadev : (1924)26BOMLR333 has pointed out the inapplicability of Section 146. For construction of the words ' by operation of law ' see Mahadeo v. Anandrao : AIR1933Bom367 In Asundi v. Virappa (1938) 41 Bom. L.R. 371 a decree-holder had signed the application. In Pandu v. Savla : AIR1925Bom172 an assignment in writing was subsequently obtained. But even then, it was held that that did not validate the defect in the tile of the darkhastdar. In considering the authorities it is clear that the scheme of the Civil Procedure Code is that a transferee must first proceed under Order XXII, Rule 20, and if he does not resort to that provision of law, he cannot come under Q. XXI, Rule 16. A person becoming entitled to a decree other than under an assignment by writing or by operation of law would not get a right to execute a decree.

10. J.C. Shah, in reply.

Divatia, J.

11. This second appeal has been referred to a full bench on account of an apparent conflict between two decisions of this Court. The material facts on which the point for decision arises are shortly these: One Najubhai and Gulam Nabi were cousins. The suit property, which consisted of a shop, was held by them as tenants-in-common. On May 24, 1936, Najubhai agreed to sell his half share in the property to one Chimanlal, who is the present appellant, for Rs. 1,350. Rs. 300 were paid at the time of the agreement and Najubhai was to file a suit and obtain partition and thereafter execute a conveyance to the appellant. According to that arrangement Najubhai filed a partition suit against his cousin Gulam Nabi on January 16, 1937. The suit was referred to the arbitration of two persons through Court, The arbitrators did not agree and the matter was, therefore, referred to an umpire. The umpire gave his award on January 16, 1939. He held that Najubhai was entitled to a half share in the property and was also entitled to a certain amount of mesne profits and future mesne profits at a certain rate. Thereafter, on March 7, 1939, Najubhai sold alibis rights under the award which was called a decree to the present appellant by a written deed which was registered on August 4 of the same year. The Court passed a decree in terms of the award on September 1, 1939, and under that decree Najubhai was held entitled: to a half share in the property. It may be noted that the present, appellant had not filed any application in the lower Court for being brought on the record on account of his assignment, but after the decree was passed he applied on November 24, 1939, for execution of the decree stating that he had taken the assignment of the decree from the decree-holder Najubhai. The judgment-debtor, i.e. present respondent, challenged the appellant's right to execute the decree inasmuch as he was not a transferee of the decree under Order XXI, Rule 16, of the Civil Procedure Code, and also on the ground that the deed of assignment taken by him was fraudulent and without consideration. The learned Judge held on the first issue that by virtue of the deed of assignment, which the appellant had taken from Najubhai, he had become the transferee of the decree itself, and that he was, therefore, entitled to file the darkhast and after making that finding, he fixed the darkhast for evidence to be led on the second issue about the alleged fraudulent and nominal character of the assignment. Thereafter, Gulam Nabi appealed against the order of the trial Judge, and the learned District Judge held that although the present appellant had taken the deed of assignment of the property which would have fallen to the share of Najubhai, he had not taken an assignment of the decree itself under Order XXI, Rule 16, and that he was not, therefore, entitled to file the darkhast. The learned Judge referred to two decisions of this Court, one in Pwrmananddas Jiwandas v. Vdlabhdas Wallji I.L.R (1887) Bom. 506 and the other in Genaram v. Hanmantram (1925) 28 Bom. L.R. 761. According to him there appeared to be some conflict between these two decisions and he preferred to follow the later decision in Genaram v. Hanmmfram especially because it was in accordance with the decisions of the Calcutta High Court' in Mathurapore Zamindary Co., Ltd. v. Bhasaram Mandal I.L.R (1924) Cal. 703 and Prttbashinee Debt v. Rasikld Banerji I.L.R (1931) Cal. 297. He was of the opinion, following the decision in Genaram v. Hanmantram, that it was not enough for the present appellant to take an assignment of the property, but' he ought to have thereafter taken a transfer of the decree itself, because under Rule 16 of Order XXI the only persons who can apply for execution of the decree are either the decree-holder himself or the persons who have become transferees from the decree-holder either by operation of law or by assignment in writing, arid that the appellant did not come under any of these three classes. The learned Judge thought that but for the decision in Genaram v. Hanmantram in which however the previous decision in Purmananddas's case was not referred to, he would have followed the latter decision. He was also of the opinion that the decision in Purmmmddas's case depended on its own facts. There the persons who had passed the deed of assignment in favour of one Purmananddas were his trustees and by the will of Purmananddas's father they were directed to transfer all his property with the rights connected therewith to Purmananddas when he came of age. The latter attained majority while a litigation in connection with one of the properties was pending, and the assignment by the trustees in favour of Purmananddas during the pendency of the litigation was held to be operative in equity as an assignment of the decree itself which was passed in favour of the trustees. In the present case, according to the opinion of the learned Judge, there was no question of equity, and the matter was, therefore, governed by the principle of the decision in Genaram v. Hanmantram, according to which even though the property was assigned during the pendency of the suit, it would not entitle the transferee to apply in execution unless he became the transferee of the decree itself. Accordingly the learned District Judge allowed the appeal and dismissed the darkhast with costs.

12. The darkhastdar has now filed the present appeal, and Mr. J. C. Shah on his behalf has contended that the learned Judge below was wrong in holding that what was sold by the assignment was only the property itself and that it ought to have been held that the decree, which was ultimately passed in the litigation, was itself transferred by the deed of assignment. He further contended that even if it be held that he was not the transferee of the decree by operation of law or by assignment in. writing, he was by virtue of the provisions of Section 146 of the Civil Procedure Code entitled; to file this darkhast because he claimed through the original decree-holder. A large number of authorities have been, cited before us By both the learned Counsel. In my opinion, however, it is not necessary to refer to all of them, because most of them can be distinguished on the construction which I place on the terms of the deed of assignment. There is a distinction between the assignment of the property in the suit and the assignment of an award' with all the rights thereunder. Moreover, in the present case the terms of the-sale-deed are to the effect that the vendor transfers the decree itself in favour of the present appellant. It appears that both the parties were under the impression that the award passed by the umpire was itself a decree, and it is expressly stated at two places in the sale-deed that a decree had been passed in favour of Najubhai and that he purported to convey to the present appellant all the rights .which he had obtained under that decree. In the operative part of the deed the vendor says ' I have sold my half undivided share in the same according to the decree passed in suit No. 58 of 1937 including all the rights under the said order, absolutely to you for an amount of Rs. 1,350', and at, the end of the document, he says further ' I have assigned the right under the said decree also to you together with the sale of my said half share and hence you are the owner of the same.' It is, therefore, clear that Najubhai intended to sell the decree in favour of the appellant who also intended that he was purchasing Najubhai's right under the decree. As a matter of fact, there was no decree of the Court at that time. It was an award made by the umpire which ripened into a decree later on.

13. Mr. Shah on behalf of the appellant has contended that on these facts the principle underlying the decision of this Court in Purmananddas's case applies. It was there held on equitable grounds that although the decree was, passed subsequent to the deed of assignment by the trustees in favour of Parmananddas, the latter must be deemed to be the transferee of the decree. Sargent C. J. observed (p. 511):-

By the deed of assignment the trustees transfer to Purmananddas 'all moveable property, debts, claims, and things in action whatsoever vested in them,' which would include the claim which was the subject-matter of the then pending suit; and the effect of this, assignment was, in equity, to vest in Punmananddas the whole interest in the decree which was afterwards obtained.

The learned Chief Justice further proceeded to state (p. 512)':-

There is no doubt that, in a Court of equity, in England the decree would be regarded as assigned to Purmananddas, and he would be allowed to proceed in execution in the name of the assignors. Here there is no distinction between 'law' and 'equity', and by the expression 'by operation of law' must be understood the operation of law as administered in these Courts. We think under the circumstances that we must hold that the -decree has been transferred to Fuitmanandas by operation of law. In the present case the decree has been transferred by an assignment in writing as construed in these Courts.

14. This case has been criticised by the Calcutta High Court in Matkurapore Zaminary Co., Ltd. v. Bhasaram Mandal I.L.R (1924) Cal. 703 and also by our own Court in Asundi v. Virappa (1938) 41 Bom. L.R. 371. The criticism in the latter case mainly proceeds on the ground that it is not quite Correct to say that the transfer is both by operation of law as well as by assignment in writing. There is no doubt something to be said in favour of the view that the transfer cannot be by operation of law which can, only mean that the rights have been transferred on account of devolution of interest on death, etc. This criticism does not however affect the decision that in equity a decree, which was subsequently passed, may. be regarded as already having been transferred during the pendency of the litigation, and that, therefore, the decree had been transferred by assignment in writing within the meaning of that expression in Section 232 of the Civil Procedure Code of 1882, which corresponds to Order XXI, Rule 16, of the present Civil Procedure Code.

15. The other decision of our Court on which the learned Judge below has relied, viz. Genaram v. Hanmantram can, in my opinion, be distinguished from the facts of the present case on the ground that what was transferred in that case was the property itself and not the vendor's right in the award. It is no doubt true that where only property is assigned and nothing more, a deed of transfer of the decree would be necessary. But, in my opinion, what was transferred in the present case was not merely a half share of the vendor in the shop but all his rights under the decree, meaning thereby the award and all the rights which were appurtenant to the award including the right to take a decree on its terms. In my opinion, the equitable principle, which is embodied in Purmanddas's case though on somewhat different facts, would also apply, to the present case, It is true that the decree was passed after the deed of assignment was made, but the rights which were conveyed to the present appellant were the rights under the award which the parties treated as a decree. There is no doubt a distinction between an assignment of a right to take a decree and an assignment of the decree itself, Several authorities have been cited before us to show that where what was said to be transferred was only a right to take a decree, the party cannot apply for execution unless there is a separate deed of transfer of the decree. But the present deed of assignment, which is a registered document and for which the appellant has paid a consideration of Rs. 1,350, i.e. the value of the half share of Naju-bhai's interest in the shop, creates, in my opinion, the same right in favour of the appellant which Najubhai had when the decree was passed. This principle of equity is not entirely foreign to the provisions of the Transfer of Property Act. It has been embodied in Section 43 of the Transfer of Property Act, although that section would operate only where a person fraudulently or erroneously represented that tie (Was authorized to transfer the property. That equitable principle applies to the present case, because the document of assignment is passed for proper consideration and it assigns all the rights which Najubhai would have in the decree which was to be subsequently passed.

16. The same principle of equity has been applied by the Madras High Court in Palaniappa v. Lakshmanan I.L.R (1893) Mad. 429 relying on Collyer v. Isaacs (1881) 19 Ch. D. 342 where it was observed (p. 351):-

A man cam 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.

Acting on this principle, the learned Judges of the Madras High Court observed (p. 434):

As for the contention that such assignment is recognised neither by the Transfer of Property Act nor by the Contract Act, the transaction is not invalidated by either of those enactments and it. falls under the rule of Equity which the Courts have to administer in this country.

It is true that the appellant could have applied, if he liked, under Order XXII, Rule 10, of the Civil Procedure Code, for being brought on the record, but it was not obligatory on him to do so, if he got by transfer all the rights which he would have in the decree.

17. Mr. Chundrigar has relied on the decisions in Vithal v. Mahadev : (1924)26BOMLR333 , Pandu v. Savla : AIR1925Bom172 and Asundi v. Virappa, In the first case it was held that the only persons who can apply for execution are those who fall under Order XXI, Rule 16. We may take it that it is so, but if the present appellant is a transferee of the decree by assignment in;writing as in ray opinion he is, he is entitled to file the darkhast. In Pandu v. Savla, .there was no deed of assignment, but only a right under a decree to obtain an assignment from the holder of another decree. In Asundi v. Virappa the question for decision was whether the words ' operation of law ' in Order XXI, Rule 16, should receive a restrictive interpretation or not. The decision in that case does not touch the point; which is before us, viz. the assignment of all the rights in the litigation including the decree to be passed thereunder.

18. Mr. Shah has relied on a decision of the Calcutta High Court in Purna Chandra Bhowmik v. Barna Kumari Debi [1939] 2 Cal. 341. In that case the defendant had executed a mortgage bond in favour of the plaintiff assigning by way of security the decree that would be passed in a suit; instituted by him against a third party for recovery of money due on unpaid bills for work done. The suit resulted in a decree in favour of the defendant, and the plaintiff thereafter instituted a suit for a declaration that as assignee of the decree passed in favour of the defendant, he was entitled to realise the decretal amount either amicably or by execution. It was held that the plaintiff was not an assignee of a mere right to sue, and the transfer being of a claim to a debt was valid in law, and that though it was in the form of a mortgage the plaintiff was entitled to execute- the: decree. In this case it was held, relying upon the decisions in Holroyd v. Marshall and Collyer v. Isaacs as well as the Indian decision in Palniappa v. Lakskmanan (1861) 10 H.L.C. 191, which I have quoted above, that an assignment of future or non-existing property is valid and the transfer becomes operative as soon as the property comes into existence.

19. The learned District Judge below has relied on the decisions in Mathurapore Zamindary Co., Ltd. v. Bhasaram Mandal and Prabhashinee Debi v. Rasiklal Bmerji. Both those cases were cases of assignment of property itself and not of assignment of the nature which we have in the present case. I do not think, therefore, that those decisions would apply to the present case.

20. I think, therefore, that the present case falls within the equitable principle laid down in Purmananddas's case and Palaniappa v. Lekshmanan and it is not governed by the decision in Genaram v. Hanmantram where only the property in suit was transferred. The appellant is therefore entitled to maintain the darkhast.

21. In view of this decision it is not necessary to refer to the other argument urged by Mr. Shah that in any case he is entitled to maintain the darkhast by virtue of the provisions of Section 146 of the Civil Procedure Code.

22. It appears that the appellant's vendor Najubhai died sometime after the decree was passed. It is the respondent's own contention that he is the only legal representative of Najubhai, and that it is at his instance that the second issue was framed, viz. whether the deed of assignment is fraudulent and without consideration. If Najubhai had been alive, a notice would have been issued to him under Order XXI, Rule 16, and he could have contested the valid nature of the assignment. In the present case as the respondent himself) contends that he is Najubhai's legal representative and as the issue is already framed, he will have an opportunity to contest the assignment taken by the appellant, and I do not think, therefore, that the mere fact that no notice was issued to Najubhai during his lifetime would operate to the prejudice of the respondent. The learned trial) Judge has still to make a finding on that issue, and this matter will, therefore, go back to the trial Court for a finding on the second issue and disposal according to law.

23. As a result the appeal is allowed, the order of the lower appellate Court is set aside, and the case is sent back to the trial Court to be disposed of according to law.

24. The appellant will be entitled to his costs in this Court and in the District Court. Costs in the trial Court] will be costs in the cause.

Sen, J.

25. I agree.

Weston, J.

26. I agree.


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