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Kalka Prasad Vs. Chandan Singh and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad High Court
Decided On
Judge
Reported in(1888)ILR10All20
AppellantKalka Prasad
RespondentChandan Singh and ors.
Excerpt:
.....act), section 2, 17-act iv of 1882 (transfer of property act), section 3, 54--small cause court suit--suit for enforcement of hypothecation against moveable property--act xi of 1865 (small cause courts act), section 6--transfer of debt--act iv of 1882, section 131--notice to debtor. - - the court, having jurisdiction in a suit for the recovery of such property, has clearly jurisdiction to enforce a contract pledging such property. 6. as to the second question, i have already cited the somewhat conflicting rulings upon which the learned pleaders for the parties have relied, and without expressing any personal opinion of my own upon the particular question, i need only say that, sitting here as a single judge, i do not think i should, without very strong reasons to the contrary,..........that the plaintiff, not having proved that he or his vendor gave notice of the transfer to the debtor chandan, the transfer itself was void. this view seems to me to be erroneous in law. in the common law of england the assignee of a debt was in old days bound to sue in the name of his assignor, a procedure which was inconsistent with the fact of the transfer, and inconsistent also with the rules of equity applicable to such matters.8. what the doctrines of equity required was that a debtor, when the obligation which he owed to his obligee had been transferred by the latter to another person, should be entitled to a notice of such transfer in order to be protected from having to pay the money in fulfilment of the obligation over again to the assignee, after having paid to the.....
Judgment:

Mahmood, J.

1. Pandit Sundar Lal, in supporting this second appeal, has contended in an able argument that the judgments of both the lower Courts are erroneous, because, in the first place, what was hypothecated in the bond of the 17th July 1885, was not the land, but only the sugar-cane crop of the field, and the hypothecation therefore related only to moveable property within the meaning of cl. (6) of Section 2 of the General Clauses Act (I of 1868), and Section 3 of the Registration Act (III of 1877), and Section 2 of the Transfer of Property Act (IV of 1882), and that therefore no registration of the document was required either by Section 17 of the Registration Act, or Section 54 of the Transfer of Property Act, so far as the endorsement of the 13th October 1885, transferring the bond to the plaintiff, was concerned.

2. Before proceeding further, I may at once say that no question arises as to the absence of stamp upon that endorsement, because a penalty thereon has already been taken under Section 34 of the Stamp Act, and the validity of such penalty cannot be questioned in appeal at this stage under the same section.

3. A preliminary objection has been taken by Mr. Lalta Prasad, on behalf of the respondents, to the hearing of this appeal, upon the ground that even if the appellant's contention in this Court be valid, and the property hypothecated in the bond now sued upon be taken to be only the crops, and, as such, moveable property, no such suit can be made the subject of second appeal, as it is of the nature of a Small Cause Court suit within the meaning of Section 586 of the Civil Procedure Code; and, in support of this contention, the learned pleader relies upon a ruling of the Madras High Court in Appavu Pillai v. Subraya Muppen, 2 Mad. H. C. Rep., 474, where Scotland, C. J., and Holloway, J., said: ' There is nothing, in our opinion, in the Small Cause Courts Act to prevent the pledgee enforcing his security on moveable property. The Court, having jurisdiction in a suit for the recovery of such property, has clearly jurisdiction to enforce a contract pledging such property.' On the other hand, Pandit Sundar Lal contends that the suit is not of the nature of the Small Cause Court suit contemplated by Section 6 of Act XI of 1865, and in support of this view he cites the case of Ram Gopal Shah v. Ram Gopal Shah, 9 W. R., 136, and also a recent ruling of this Court in Surajpal Singh v. Jairamgir I. L. R., 7 All, 855, where my brethren Straight and Tyrrell concurred in holding that a suit Which sought to recover a sum of money by enforcement of hypothecation of certain cattle by their attachment and sale was a suit not cognizable by the Small Cause Court, and, as such, could be made the subject of an appeal. In this state of authority, before I can consider the remaining part of the case, I haye to determine first: Whether the bond of the 17th July 1885 hypothecated the sugar-cane crops only or also the land; secondly--If the hypothecation related only to the crops, whether the present appeal is maintainable at all as a second appeal, within the meaning of Section 586 of the Civil Procedure Code, considering that the amount claimed is below Rs. 500.

4. Upon the first of these questions, I am of opinion, having read the original deed, that what was intended to be hypothecated was not the field itself, but only the crops of that field, and Pandit Sundar Lal's contention is sound that such crops are moveable property, and that the deed, therefore, did not require registration. It seems to me that in the expression ' khet-naishakar,' the word khet, which means field, was intended to indicate simply a measure such as in the expression ' a pint of milk: ' the pint is used simply as a measure, and not as a physical pint by which such measurement is made. ' Khet-naishakar' means the particular field specified in the deed whereon the naishakar or sugar-cane which was hypothecated under the bond was standing.

5. This conclusion is supported by the circumstance that Chandan Singh is only a tenant in the village, the present plaintiff is representing the zamindar in that same village, and the executant of the bond was not to be expected to be dealing with the field or hypothecating the land. This being so, the hypothecation was of moveable property and not of immoveable property.

6. As to the second question, I have already cited the somewhat conflicting rulings upon which the learned pleaders for the parties have relied, and without expressing any personal opinion of my own upon the particular question, I need only say that, sitting here as a single Judge, I do not think I should, without very strong reasons to the contrary, depart from a Division Bench ruling of this Court, such as that of my brothers Straight and Tyrrell, in Surajpal Singh v. Jairamgir I. L. R., 7 All, 855, and I therefore follow it and hold that this was not a Small Cause Court suit within the meaning of Section 6 of Act XI of 1865, and that, therefore, this second appeal did lie to this Court, not withstanding the provisions of Section 586 of the Civil Procedure Code.

7. I now proceed to deal with the case itself, having taken cognizance of it in second appeal. In doing so I have to consider the provisions of Chapter VIII of the Transfer of Property Act (IV of 1882). I have already shown that the Court of First Instance was wrong in dismissing the suit simply for want of registration of the endorsement of the 13th October 1885, whereby the bond of the 17th July 1885 was sold to the present plaintiff. The Lower Appellate Court's view virtually amounts to holding that the plaintiff, not having proved that he or his vendor gave notice of the transfer to the debtor Chandan, the transfer itself was void. This view seems to me to be erroneous in law. In the common law of England the assignee of a debt was in old days bound to sue in the name of his assignor, a procedure which was inconsistent with the fact of the transfer, and inconsistent also with the rules of equity applicable to such matters.

8. What the doctrines of equity required was that a debtor, when the obligation which he owed to his obligee had been transferred by the latter to another person, should be entitled to a notice of such transfer in order to be protected from having to pay the money in fulfilment of the obligation over again to the assignee, after having paid to the original assignor. That rule. has found formulation in our statute law in Section 131 of the Transfer, of Property Act, which says: 'No transfer of any debt or any beneficial: interest in moveable property shall have any operation against the debtor or against the person in whom the property is vested, until express notice of the transfer is given to him, unless he is a party to, or otherwise aware of, such transfer, and every dealing by such debtor or person, not being a party to or otherwise aware of, and not having received express notice of a transfer, with the debt or property shall be valid as against such transfer.'

9. This is the quintessence of what Courts of equity in England have repeatedly held, and the effect of this section is clear enough, and it would govern the transfer of the bond of the 17th July 1885, under the endorsement of the 13th October 1885, purporting to sell the same bond to the present plaintiff. It is necessary to bear in mind in the first place, that although this section expressly renders necessary the giving of express notice to the debtor, and although it suspends the operation of such a transfer as against such a debtor up to the time when such notice is given to the debtor, it contains no provisions invalidating such transfer when no such notice is given. That is to say, in other words, there is nothing in this section which would justify the contention that the transfer is ab initio void for want of such notice as that section contemplates.

10. All that that section requires is that when an obligation is transferred by the obligee to another person, the obligor who has to fulfil such obligation is not to he subject to any liability thereunder at the instance of the transferee without such debtor having received notice of the transfer. As to the notice itself, the section does not limit that to ' express notice,' but to the broader doctrine of notice as understood in equity, because the words of the section are: ' unless he is a party to or otherwise aware of such transfer.' The last phrase is broad enough to bring under the purview of the section all cases in which the knowledge of the transfer in an ascertainable form has reached the debtor. The latter part of the section is, of course, intended to protect a debtor who, without, knowledge of the transfer of the obligation by the obligee to another person, fulfils the obligation, and is subsequently sued by the assignee of such an obligee as fraudulently accepts the fulfilment not withstanding such assignment; and the same rule is also applied to persons other than the debtor himself, and those who, being bond fide persons, acquire rights or any beneficial interest in moveable property in the absence of any kind of notice of the transfer of the debt by the original obligee to another person.

11. These views are applicable to the present case; because the mere absence of any express notice to Chandan on the one hand would not vitiate the endorsement of the 13th October 1885, whereby the bond was sold to the present plaintiff, Kalka Prasad, although the operation of such transfer, as against Chandan, would be regulated in accordance with the time when the said Chandan obtained knowledge as to such transfer. Similarly, even if Chandan had notice of the transfer, and sold the moveable property subject to the plaintiff's bond to Mendu Khan, defendant No. 3, and Imam Ali, defendant No. 4, these two persons in the Position of bona fide transferees for value without notice either of the charge which the bond of the 17th July 1885 may have created upon the crops or of the transfer of that bond in favour of the plaintiff, would undoubtedly be protected from any liability arising out of the action of Chandan in selling the sugar-cane to them under such circumstances.

12. But the pleadings of the parties in this case raised questions of fact which required determination before the case could have been finally disposed of. First of all it was pleaded by Chandan Singh, the original obligor of the bond of the 17th July 1885, that he had paid up the amount due under the bond to the original obligee, Muhammad Husain, and that the transfer of the 13th October 1885, was not a real but simply a colourable transaction in which no consideration passed, and that Kalka Prasad was not the real purchaser of the bond, and, as such, not entitled to maintain the action. There was no allegation as to any information having been given to Chandan Singh in respect of the alleged transfer, and the suit appears to have been brought without any kind of notice having been issued as required by Section 131 of the Transfer of Property Act.

13. The lower Courts, however, taking the erroneous view of law which they have done in the case, have not gone into the merits. The view of the Lower Appellate Court as to the absence of notice is itself based upon a misapprehension of the interpretation of Section 131 of the Transfer of Property Act. I have already said that that section does not vitiate the transfer of a debt, but that it only postpones its operation in accordance with the date of the knowledge of such transfer reaching the debtor. In a recent case, Lala Jugdeo Sahai v. Brij Behan Lal I. L. R., 12 Cal., 505, a Division Bench of the Calcutta High Court had to consider the exact effect of that section, and the learned Judges there held, in conformity with the cases cited in White and Tudor's Leading Cases, 4th edition, Vol. II, pp. 776-777, as notes to the leading case of Ryall v. Bowles that whilst notice is not a condition precedent to the validity of a transfer of a debt such as contemplated by Section 131 of the Transfer of Property Act, the section only fixes the time with reference to notice when such transfer would come into operation as against the debtor. The case before the learned Judges was one where an assignee of a mortgagor brought a suit on the mortgage against the mortgagor and the mortgagor, and no notice of the assignment had been given to the mortgagor under Section 131 of the Transfer of Property Act. The learned Judges held that the Court was wrong in dismissing the suit merely on the ground that no notice was served, as after the suit was instituted the mortgagor became aware of the assignment, and the transfer accordingly came into operation on the date when he thus became aware of it. I agree in this view of the law, and I hold that in the present case the mere absence of an express notice having been served by the plaintiff would not render the action unmaintainable.

14. Under these circumstances, I hold that neither of the Courts below has tried the case upon the merits, and in my opinion the proper course is to decree this appeal, to set aside the decrees of both the lower Courts, and to remand the case for trial de novo on the merits, with reference to the observations which I have made. The remand will be under Section 562 of the Civil Procedure Code, and under the last part of that section I may point out that the Court should try, in the first place, whether the assignment of the 13th October 1885 was a real and genuine assignment or not; and in the second place, whether Chandan Singh actually had paid the money due on the bond of the 17th July 1885 to Muhammad Husain, either before such assignment or thereafter at a time when he had no notice of the assignment. Thirdly, whether the defendants Mendu Khan and Imam Ali, Nos. 3 and 4, had no notice either of the sugar-cane crops being hypothecated under the bond of the 17th July 1885, or of that bond having been transferred by Muhammad Husain to the present plaintiff, and whether their action in purchasing the crops was bona fide or not.

15. The costs will abide the result.


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