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The Presidency Industrial Bank Ltd. Vs. the Hindustan Leather Industries Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil;Limitation
CourtMumbai High Court
Decided On
Case NumberPoona Special Suit No. 84 of 1952
Judge
Reported inAIR1969Bom84; (1968)70BOMLR373; 1969MhLJ49
ActsLimitation Act, 1908 - Schedule - Article 183; Code of Civil Procedure (CPC), 1908 - Sections 11, 38, 39, 47 and 50 - Order 21, Rules 6, 11, 16 and 22; Banking Companies Act, 1949 - Sections 44-A and 44-A(6); Companies Act, 1913 - Sections 109 and 153-A(2); Limitation (Amendment) Act, 1963 - Schedule - Article 136
AppellantThe Presidency Industrial Bank Ltd.
RespondentThe Hindustan Leather Industries Ltd. and ors.
Appellant AdvocateS.A. Desai and ;Purandare, Advs.
Respondent AdvocateA.H. Kirtikar, ;S.A. Kirtikar, ;V.N. Ramnathan and ;G.D. Moghe, Advs.
Excerpt:
.....vesting order is made or is required to be made by the reserve bank. therefore, in the case of a transfer or vesting in the banking company which under the scheme of amalgamation is to acquire the business of the amalgamated banking company, the provisions of order xxi, rule 16 are applicable.;sailendra kumar v. bank of calcutta [1948] a.i.r. cal. 131, referred to. - - therefore, in case of a transfer or vesting of the kind which i have before me, the provisions of order 21, rule 16 are applicable and the applicants have failed to comply with the said provisions and are not entitled to execute the decree in this court 6. it has been held in the case of kirtilal jivabhai v. in my opinion, this expression of opinion applies equally well to a transfer by operation of law as this kind of..........i 953. the applicants have stated in the execution application that the first application, being civil application no. 160 of 1953 for execution, was made by the judgment-creditors on 16th july 1953 to the court of the civil judge, senior division. poona. and the said application was decided on 15th september 1953 by transfer of the decree to this court for execution. pursuant to that transfer, an application for execution was made in this court in november 1953, but in the meanwhile, the first judgment-debtor company had been ordered to be wound up, the application for execution in this court was abandoned and treated as filed on 2nd november 1965. the second application for execution of the decree was made to the court of the civil judge, senior division. poona, on 3rd november 1955,.....
Judgment:
ORDER

1. This is an application dated 29th October 1964 for execution of a decree dated 12th December 1932 of the Court of the Civil Judge, Senior Division, Poona. in Special Civil Suit No. 84 of 1952. The application has been filed by the Bank of Karad Ltd. because by an order dated 26th April 1962 made by the Reserve Bank of India under Section 44A(4) of the Banking Companies Act. 1949, the judgment creditors, the Presidency Industrial Bank Ltd., were amalgamated with the applicants. The amount claimed is Rs. 28,997.75 and costs. The mode in which the assistance of the Court is required is by issue of notices under Order 21, Rules 16 and 22 of the Code of Civil Procedure and by attachment and sale of certain properties of the judgment-debtors. Pursuant to a chamber order dated 7th May 1965 the execution application was amended by substituting the names of the two sons of the judgment-debtor No.2 R. G. Vijayakar as his legal representatives in his place, on the allegation that the said R. G. Vijayakar was dead and by seeking attachment and sale of certain properties of the said Vijayakar in the hands of the said legal representatives.

2. The applicants have stated that the decree was registered on 11th March I 953. The applicants have stated in the execution application that the first application, being Civil Application No. 160 of 1953 for execution, was made by the judgment-creditors on 16th July 1953 to the Court of the Civil Judge, Senior Division. Poona. and the said application was decided on 15th September 1953 by transfer of the decree to this Court for execution. Pursuant to that transfer, an application for execution was made in this Court in November 1953, but in the meanwhile, the first judgment-debtor company had been ordered to be wound up, the application for execution in this Court was abandoned and treated as filed on 2nd November 1965. The second application for execution of the decree was made to the Court of the Civil Judge, Senior Division. Poona, on 3rd November 1955, being Darkhast No.251 of 1955. The said application was dismissed on 13th June 1956. The said execution application was made against the judgment-debtor No. 7 only. and the Court held that the decree could not be executed against any of the judgment-debtors until the judgment-creditors had exhausted all their remedies against the property of the first judgment-debtor which was charged with the payment of the amount under Clause (5) of the consent decree. The third application for execution was made to the learned Civil Judge, Senior Division, Poona, on 22nd February 1958 and was disposed of on 14th April 1958. Thereafter on 1st April 1964 the present applicants made an application to the Civil Judge, Senior Division, Poona, for transfer of the decree to this Court for execution and on 12th September 1964 the decree was ordered to be transferred to this Court. The present execution application was filed on 29-10-1964. On the present application notices were ordered to be issued under Rules 16 and 22 of Order 21 of the Civil Procedure Code.

3. Notices under O. 21, R. 16 were dismissed by my learned brother Kantawala J. on 22nd November 1965 stating that 'Dismissed with costs as the application is not made to the Court which passed the decree'. It is the notice under O.21, R. 22 of the Civil Procedure Code that has been argued before me.

4. The first objection to the execution taken by all the judgment-debtors and the legal representatives of the second judgment-debtor Vijayakar is that the present applicants are not entitled to execute the decree as being transferees by operation of law. they must first apply to the Court which passed the decree for execution of the decree and that they have not done so, therefore, they are not entitled to apply for execution to this Court. On behalf of the applicants it is contended that the application for transfer of the decree made to the Poona Court under Section 39 C. P. C. on 1st April 1964 was such an execution application by the present applicants. I am afraid, this contention is not correct. It has been held by the Privy Council in the case of Banku Behari Chatterji v. Narain Das Dat that an application for transmission of a decree from one Court to another was not by itself a revival of the decree within the meaning of the Indian Limitation Act, inasmuch as an order thereon is a ministerial act of an officer of the Court, and not the judicial act of a judge.

5. It is next contended by Mr. Desai for the applicants that O.21, R. 16 C. P. C. does not apply in the present case as the assets of the Presidency Industrial Bank Ltd. were vested in the applicants neither by an act of the parties nor by operation of law, but by an order of the Reserve Bank of India, under S. 44A (4) of the Banking Companies Act, 1949. Reliance has been placed on the case of Sailendra Kumar Roy v. Bank of Calcutta Ltd. : AIR1948Cal131 . This was a case where the amalgamation had taken place under S.153A of the Indian Companies Act, 1913. The Calcutta High Court held that where a Court acting under Section 153A, Companies Act, sanctions a scheme of amalgamation of one company with another company and further, acting under sub-section (2) of that section, orders the transfer of the assets belonging to the former to the latter, the transfer takes place by virtue of the order passed by the Court and that such transfer is not by assignment or operation of law within the meaning of the proviso to O.21, R. 16 and the latter company need not proceed under Order 21, Rule 16 C. P. C. It is not necessary for me to state whether I agree with this judgment in so far as it decides about vesting of assets under S.153A of the Indian Companies Act, 1913. I am not called upon to do this. because in the present case the vesting took place under Section 44A(6) of the Banking Companies Act, 1949. There is a material difference between the two provisions. Under S. 153A of the Indian Companies Act, 1913, where a Court sanctions a scheme of amalgamation, it also by a separate order provides for the transfer and vesting of the assets of the company which is amalgamated in the company with which it is amalgamated. In that case, the transfer does take place by an order of the Court. Whether such a transfer is or is not a transfer by operation of law, it is not necessary for me to decide. But under Section 44A(6) of the Banking Companies Act, 1949, on the sanctioning of a scheme of amalgamation by the Reserve Bank, the property of the amalgamated banking company shall by virtue of the order of sanction be transferred to and vest in the banking company which under the scheme of amalgamation is to acquire the business of the amalgamated banking company. While under Section 153A(2) of the Indian Companies Act. 1913 the vesting takes place by a separate order of the Court, under sub-section (6) of Section 44A of the Banking Companies Act, 1949, once the Reserve Bank sanctions a scheme of amalgamation, the transfer takes place by operation of law and no vesting order is made or is required to be made by the Reserve Bank of India. Therefore, in case of a transfer or vesting of the kind which I have before me, the provisions of Order 21, Rule 16 are applicable and the applicants have failed to comply with the said provisions and are not entitled to execute the decree in this Court

6. It has been held in the case of Kirtilal Jivabhai V. Chunilal Manilal, reported in 47 Bom LR 728=AIR 1946 BoM 27 that decree-holder entitled to execute a decree as such must appear to be a decree-holder on the face of the decree. The executing Court can only execute the decree provided his name appears as decree-holder on the face of the decree itself. The executing Court cannot look to anything outside or beyond the decree in order to satisfy itself that the person who is applying is the decree-holder. The judgment in the said case further provides that O. 21, R. 16 contemplates two cases of a transfer of a decree, one by assignment in writing and other by operation of law. If the transfer is by assignment in writing, it is obligatory upon the Court to give a notice of the application to the transferor and the judgment-debtor, and the decree cannot be executed until the Court has heard their objections, if any. The application must be made to the Court which passed the decree and it must be an application for execution. No separate application need be made under Order 21, Rule 18. All that the rule requires is that the transferee must apply for execution to the Court that passed the decree. Although Order 21, Rule 16 does not in terms require that on an application for execution under the said rule the Court should pass an order that the applicant is the transferee of the decree, it is desirable that ordinarily such an order should be made. But even with out the passing of a formal order, there must be a recognition by the Court that the person who has applied for the execution of the decree is a transferee with in the meaning of O.21. R. 16. But for such recognition the person who applies for execution would be a stranger to the decree and would not be entitled to maintain the application. In my opinion, this expression of opinion applies equally well to a transfer by operation of law as this kind of transfer is also provided for by Order 21, Rule 16, C. P. C.

7. However, these questions really do not arise in view of the fact that a notice under Order 21, Rule 16 has been dismissed by my learned brother Kantawala J. on 22nd November 1965 on the ground that the application was not made to the Court which passed the decree. The applicants have not gone in appeal against the said order. Principles of res judicata apply to execution applications also. I, therefore, hold that the applicants are not entitled to apply to this Court for execution of the decree.

8. The next objection of the judgment-debtors and the legal representatives of judgment-debtor No.2 Vijayakar to the execution is that the decree is not executable before the judgment-creditors have exhausted all the remedies against the property of the judgment-debtor No. 1, which was charged by the consent decree with the payment of the decretal amount and that para 5 of the consent decree expressly provides for execution in the first instance against the said property and for recovery from the said property. Para 4 of the plaint in the suit reads as under:

'4. The Defendant No.1 company has pledged her machinery, goods, documents, all kinds of securities, furniture, and assets etc., with the plaintiff for her loan as collateral security, and on 31st of March 1949 gave a letter of hypothecation in the name of plaintiff bark by the Defendants Company and by all the defendants, and has given that machinery assets in the possession of the plaintiff and are being used by the defendant No. 1 with plaintiff's permission. Due to this letter of hypothecation or due to any other reasons plaintiff's right is not affected and plaintiff is entitled to recover his whole amount due from defendants jointly and severally or from any one of them.'

9. The decree is a consent decree and term (5) thereof provides as under:

'Defendant No.1 'The Hindusthan Leather Industries Ltd.' is the registered company under the Indian Companies Act, and all assets and moveable properties of defendant No.1 company are pledged with the plaintiff and the plaintiff has got first priority of its dues on the pledged assets and moveable properties, and these dues of the plaintiff are kept till the realisation of the amount as per decree; and the charge has been kept on the assets and moveable property under this decree, and the same is kept permanent. Plaintiff do recover amount in the first instance from the said charged property; if all the dues are not recovered from the charged property plaintiff is entitled to recover the residues from the other defendants'.

The second execution application filed by the judgment-creditors against the judgment-debtor No, 7 in the Court of the Civil Judge, Senior Division, at Poona was dismissed on 13th June 1956. The order dismissing the said application states:

'The decree is being sought to be executed against the 7th defendant. He naturally contends that as per the decree D. H. ought to first exhaust his remedies against the charged property of the J. D. No.1 and against the J. D. No.1. It is contended for the D. H. that the J. D. No.1 has gone in liquidation. Assuming without proof that it is so, Mr. Khire for the D. H. could not dispute that he could still have his remedy against the J. D. No. 1. That being the position unless that remedy is exhausted the balance is struck, the D. H. could not proceed against the 7th or any other J. D.


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