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Lala Sri Ram Vs. Dhani Ram Gupta and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad High Court
Decided On
Case NumberEx. Second Appeal No. 2162 of 1974
Judge
Reported inAIR1976All504
ActsCode of Civil Procedure (CPC) , 1908 - Order 21, Rule 16
AppellantLala Sri Ram
RespondentDhani Ram Gupta and ors.
Appellant AdvocateR.P. Agarwal, Adv.
Respondent AdvocateR.C. Saksena, Adv.
DispositionAppeal allowed
Excerpt:
civil - execution - order 21 rule 16 of code of civil procedure, 1908 - right of the decree holder to execute the decree intact till the recognition of the assignee's right - when right of assignee is defeated - assignee can proceed against the assignor for breach of contract or to get any other remedy permissible by law - remedy is by regular suit and not in execution proceedings. - - thereafter this appellant filed objection in the first execution case saying that because the decree had been satisfied, no execution by the so-called assignees was maintainable. under the old code the term 'decree-holder' was defined in such a way as to include a transferor as well but in the new code a decree-holder does not include the assignee. if the right to execute the decree remains intact, it..........of 26-4-1963. the notice of this application was issued to the appellant and also to the original decree-holder. the appellant filed an objection on 17-3-1964 but the decree-holder, namely, ratan lal did not put in appearance. the hearing of this objection was started in the executing court but was not completed. during the pendency of these execution proceedings, ratan lal, the original decree-holder, moved another application of execution being execution case no. 35 of 1964 on 25-5-1964. in this execution case, a compromise was arrived at between the appellant and ratan lal on 26-5-1964 and this compromise was recorded by the court on 27-5-1964. by this compromise a complete satisfaction of the decree was recorded. thereafter this appellant filed objection in the first execution case.....
Judgment:

G.D. Srivastava, J.

1. This appeal arises out of an order passed by VI Additional District Judge, Meerut in Execution Case No. 72 of 1963. The relevant facts are that Ratan Lal, respondent No. 5, transferred plot Nos. 335, 336, 337 and 338 to this appellant under a registered sale deed dated 25-3-1960 for a sum of Rupees 10,000/-. On 5-4-1960, an agreement of reconveyance was executed whereby this appellant agreed to reconvey the said plots to Ratan Lal for a sum of Rupees 15,000/- within a period of two years. For the enforcement of this agreement, Ratan Lal filed Suit No. 18 of 1961, which was decreed by the First Additional Civil Judge, Meerut on 17-4-1962. Appeal against this decree was filed in the High Court and during the pendency of this appeal, Ratan Lal transferred his rights in the decree to Dhaniram Gupta, respondent No. 1 and respondents 2 to 4 by means of a registered deed of assignmentdated 26-4-1963 for a sum of Rs. 45,375/-. A sum of Rs. 15,000/- was left with Dhaniram and others for payment to this appellant. The appeal was, however, dismissed by the High Court on 5-9-1963. On 17-12-1973, Dhaniram Gupta and others moved an application for execution in the Court of First Additional Civil Judge, Meerut under the provisions of Order 21, Rule 16, Civil Procedure Code. They claimed to be the assignees of the decree for Ratan Lal on the basis of the aforesaid deed of 26-4-1963. The notice of this application was issued to the appellant and also to the original decree-holder. The appellant filed an objection on 17-3-1964 but the decree-holder, namely, Ratan Lal did not put in appearance. The hearing of this objection was started in the Executing Court but was not completed. During the pendency of these execution proceedings, Ratan Lal, the original decree-holder, moved another application of execution being execution case No. 35 of 1964 on 25-5-1964. In this execution case, a compromise was arrived at between the appellant and Ratan Lal on 26-5-1964 and this compromise was recorded by the court on 27-5-1964. By this compromise a complete satisfaction of the decree was recorded. Thereafter this appellant filed objection in the first execution case saying that because the decree had been satisfied, no execution by the so-called assignees was maintainable. The learned Civil Judge accepted this objection and dismissed the first execution started by Dhaniram Gupta and others by his order dated 9-10-1964. Dhaniram Gupta etc., went up in appeal against this order and the learned Additional District Judge by his order dated 8-10-1974 allowed the appeal and set aside the order of the executing court. He has said in the order that the execution shall be restored and registered to its original number, and the executing court shall forthwith execute the decree according to its terms and conditions. Now the order of the Additional Dist. Judge is being challenged by the judgment-debtor in this Court.

2. On behalf of the appellant, the main contention was that the view of law taken by the Additional District Judge was incorrect and it was also contended that the deed dated 26-4-1963 did not at all amount to assignment of the decree. The line of reasoning which has been adopted by the Lower Appellate Court is that after assignment the original decree-holder had no locus standi to enter into any compromise with the judgment-debtor. It has also been observed that it was not open to the original decree-holder to defeat the assignment by means of such a fraudulent and collusive compromise. Now, therefore, the short legal question which is really to be answered in this appeal is whether the original decree-holder by entering into a compromise had any right to give a valid discharge to the judgment-debtor after the assignment and what is that stage when the right of the original decree-holder after the assignment ceases. A reference should first be made to the provisions of Order 21, Rule 2 which say that if the payment or adjustment has been made outside the court, the decree-holder shall certify such payment or adjustment and the Court shall record the same accordingly. A plain reading of Rule 2 will thus make it clear that if the payment of adjustment is certified by the decree-holder the executing Court has no option but to record the same. Ordinarily speaking the executing Court is not expected to go into the question whether the decree-holder had or had not a right to certify such payment or adjustment in the instant case, of course, the adjustment was by compromise filed in the court and the same was recorded accordingly. The question now is whether after assignment, the right of decree-holder to accept payment or adjustment or to enter into a compromise ceases as soon as he executes a deed of assignment. For the present, I presume that the deed of 26-4-1964 does amount to an assignment. The learned Additional District Judge seems to have accepted this legal position that if no application for execution by the assignee is made, the original decree-holder can proceed with the execution. He has observed that the right of original decree-holder will remain intact till the assignment is found valid or if the assignee was sleeping over his rights and did not come forward to the court to execute the decree. If the assignment is not valid, then, of course, the assignee has no right. But if the assignee does not move the executing court for recognition of his right, the original decree-holder is allowed to execute the decree not because the assignee is sleeping over his right or because of his negligence but on the principle that the executing court will not ordinarily go behind the decree. It is settled law that a judgment-debtor will not be heard to say that the right in the decree has been transferred to anybody else. In other words, the executing court will execute the decree as passed and itwill not go behind the decree unless the assignee comes forward to enforce his right. There is thus no doubt about the proposition that if the assignee does not come forward, the right of the original decree-holder to execute the decree remains intact.

3. The next question now is at what stage the right of original decree-holder really comes to an end after the assignment assuming, however, that the assignment is valid. For this purpose, the relevant proviso of Order 21, Rule 16 may be reproduced as follows:--

'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.

Under the old Code the term 'decree-holder' was defined in such a way as to include a transferor as well but in the new Code a decree-holder does not include the assignee. The right of assignee has been recognised only by Order 21, Rule 16, Civil Procedure Code, The rule gives the assignee a right to execute the decree but there is a condition namely that the decree shall not be executed unless the notice has been given to the judgment-debtor and the original decree-holder and their objections have been heard. In, my opinion, due emphasis should, be laid on the words 'decree shall not be executed until the court has heard their objections (if any) to its execution'. A plain reading of these words will indicate that the right of an assignee to get the decree executed gets recognition only when the notice of such assignment has been given to the judgment-debtor and the original decree-holder. If none of them comes forward, the right of the assignee, of course, automatically gets recognition. But if objection has been filed by any of them, the right of assignee to execute the decree will operate only after the objection has been heard and it has been found that the assignee has such a right. Now, therefore, this proviso makes it quite clear that unless such objections have been heard and: decided, the assignee does not get a right to execute the decree. In the present case an objection by the judgment-debtor had been filed and it was pending. Prima facie, therefore, it must follow that until this objection had been decided, the assignee had not acquired any right to exe-cute the decree. To my mind, this position off law is perfectly clear and there can be no doubt about it.

3. 'Now the other important point is whether the original decree-holder had a right to give valid discharge to the judgment-debtor before the right of the assignee was recognised as provided by Rule 16. The learned lower appellate court seems to be of the opinion that the right of the original decree-holder was lost immediately after he had transferred the decree and that thereafter he had no authority to enter into the compromise and give any valid discharge to the judgment-debtor. In the opinion of the learned District Judge this amounted to a fraud. It has been seen above that so long as the assignee does not come forward to put an his claim the right of the original decree-holder to execute the decree remains intact. The other question will be whether this right of the original decree-holder continues even after the assignment and if so, at what stage will it carne to an end. To my mind, the right to execute the decree cannot remain in suspension. If the legal position is that the assignee gets a right to execute the decree only when his rights have been recognised as provided by Rule 16, till that time then the right of the original decree-holder will remain intact. The learned counsel for the contesting respondents argued that the right of the original decree-holder to execute the decree might have continued but he had no right to enter into the compromise. In my opinion, this argument is rather self contradictory. If the right to execute the decree remains intact, it cannot be said although the original decree-holder had a right to execute the decree and yet he bad no right to give a valid discharge. A similar situation arose in the case report-fid as Puvvuru Balasubramanya Reddy v. Puvvuru Munnaswami Reddy : AIR1960AP305 . The learned Judges who decided this case held that unless an assignment is recognised by law, the judgment-debtor can make payment to the original decree-holder who can give a valid discharge. In the opinion of the learned Judges it would not make any difference even if the judgment-debtor had notice of this assignment. In the instant case also the notice of the application put in by the assignee was given to the original decree-holder but the judgment-debtor had questioned that assignment and if the legal position is that tillthat time the right of the assignee to execute the decree did not exist, the judgment-debtor and the decree-holder could enter into a compromise for satisfaction of the decree. In this reported case the learned Judges held that the assignment of a decree was not the same thing as a transfer under the Transfer of Property Act. It has been pointed out that according to Section 54 of the Transfer of Property Act, the title vests in the transferee as soon as the deed is registered. Similarly in the case of transfer of moveable property the transfer is complete as soon as the property is delivered to the vendee but in the case of an assignment of a decree, the position is not the same. Rule 16 of Order 21 C. P. C. clearly says that the assignee shall not have a right to execute the decree unless the provisions of law have been complied with. In other words, till the compliance of this provision, the right of the assignee will not be deemed to have been recognised by the court. Thus the right of the assignee ceases to have operation unless it has been recognised by the court. The lower appellate court has also realised that this ruling fully supports the case of the present appellant. He has, however, placed reliance on two rulings of the Supreme Court reported as Jugal Kishore v. Raw Cotton Co., (AIR 1955 SC 376) and Loon Karan Seth v. E. John Co. : [1969]1SCR122 . In the first reported case the real question was whether the assignment in question really amounted to a transfer of an interest or not because the deed purported to transfer a decree which was not then in existence. The first case has been followed in the second case. In the second, case also the same point was involved. I have not been able to find out how the learned District Judge has taken the help of these two rulings to arrive at a conclusion to which he did. If once it is held that the right of the decree-holder to execute the decree was intact till the recognition of the assignee's right, the question whether there was any fraud or collusion between the original decree-holder and the judgment-debtor is completely out of consideration. It was argued on behalf of the contesting respondents that if this be the position, it would always be open to the original decree-holder to defeat the assignment by means of a collusive compromise with the judgment-debtor. For this it will be sufficient to say that if a person takes transfer of a decree, he also runs with this risk. It is needless, to say that ifthe right of such assignee is defeated he can proceed against the assignor for breach of contract or to get any other remedy permissible by law. The remedy of such assignee will be by means of a regular suit and not in execution proceedings. The fact that the execution of the assignee was prior in time or that the judgment-debtor and the decree-holder had notice of such execution application will not make any difference. The learned counsel for the contesting respondents contended that the executing court should not have permitted two simultaneous executions of the same decree. The executing court is not expected to have knowledge of all the executions which are pending. If the original decree-holder and the judgment-debtor came forward with a compromise, the court was bound to record the same and it could not go behind the decree. It was argued that such a thing was possible even after the right of the assignee had been recognised. I think, after the recognition of the assignee's right such a compromise will not be permitted and even if it is recorded it will be deemed to be ineffective. The reason for this is quite clear. After the rights of the assignee had been duly recognised, the right of the decree-holder to execute the decree and to give a valid discharge comes to an end. Whatever the decree-holder does after such recognition, therefore, has no binding effect. In the case of N.M. Kadir Meera Saheb Tare-ganar v. N. M. Pir Mohd. Tareganar, (AIR 1933 Mad 523), it has been held that it is not open to the executing court to go into the question whether the satisfaction was intended to defraud or defeat the rights of some third party who is not before the court. Reliance was also placed by the learned counsel for the contesting respondents on Krishnan Chettiar v. Minor Lakshmanan Chettiar, (AIR 1948 Mad 6) in which it has been held that if the decree detained by the father fell into the share of the son in a family partition the subsequent satisfaction by the original decree-holder is of no value. In this ruling the provisions of Order 21, Rule 16, were not considered. This ruling also indicates that it was found as a fact that no money was really paid and receipt was brought into existence only to defraud the assignee. It may not be necessary that there should be a specific order by the executing court recognising the right of the assignee but, in my opinion, it is evident that the right of the assignee does not come into operation unless theobjection of the assignor or of the judgment-debtor has been decided in his favour or no such objection is filed. The mere execution of a deed of transfer does not by itself convey a right to execute the decree, A reference was also made to Section 49, Civil Procedure Code. But this section deals with the rights and liabilities of a transferee of a decree in relation to the judgment-debtor. It does not speak of the rights and liabilities of an assignee in relation to the original decree-holder. This section has, therefore, no application to the facts of the instant case. In my opinion, therefore, the view of law taken by the lower appellate court is erroneous and this appeal will, therefore, have to be allowed. In the circumstances I do not think it necessary to give any decision on other points involved in this appeal.

5. In the result, the appeal is allowed and the order of the lower appellate court dated 8-10-1974 is hereby set aside and the order of the First Additional Civil Judge, Meerut dismissing the application of Dhaniram Gupta and others is hereby restored. The parties are directed to bear their own costs throughout.


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