1. These two miscellaneous execution appeals are connected cases and arise under the following circumstances:--
2. Heerachand and Mst. Umrao Kanwar filed a suit tor the sale of the mortgage-property against Mishrimal and obtained a preliminary decree on 5-7-57. They had also obtained another decree for Rs. 2159/13/- on 20-8-54. Before they obtained a preliminary decree on the mortgage-debt, it is alleged that they had assigned the mortgage-debt along with the decree of Rs. 2159/13/- to Pukhraj and others (hereinafter called the assignees). Heerachand and Mst. Umrao Kanwar (hereinafter called the assignors) got the final decree in the mortgage-suit on 11-3-58. Before that on 19-10-57 the assignors had also assigned both the decrees to the assignees. Mishrimal had filed a suit against the assignors in the Court of District Judge, Balotra on 20-9-1957. That suit was decreed on 31-5-58 and the decree for Rs. 17083.12nP was passed in favour of Mishrimal against the assignors. Mishrimal applied for the execution of his decree dated 31-5-58 and prayed for the attachment of the decrees dated 11-3-58 and 20-8-54 obtained by the assignors and further prayed that these decrees being cross-decrees may be set off against each other.
To this the assignees objected. The main ground that has been urged on their behalf is that the assignors had, lost all interest in the assigned decrees and the decree against the assignors cannot be set off against the decrees of the assignees. The learned Senior Civil Judge, Sirohi, by his order, dated 16-4-59, held that Mishrimal was entitled to set off the cross-decrees under Order 21 Rule 18 of the Code of Civil Procedure. The assignees have filed Civil Execution First Appeal No. 13 of 1959 against this order. Thereafter on 28-9-59 the learned Senior Civil Judge, in pursuance of his order dated 16-4-59, ordered that satisfaction be recorded in the decrees referred to above in accordance with the provisions of Order 21, Rule 18 of the Code. D. B. Miscellenous Execution First Appeal No. 18 of 1959 has been preferred by the assignees against the said order.
3. The main points that have been urged on behalf of the appellants are that on 19-10-57 when the decrees were assigned by the assignors to the assignees, there was no decree in existence in favour of Mishrimal against the assignors and the lower Court was wrong in holding that under Section 49 of the Code of Civil Procedure, decrees of the assignees were subject to equitable set off which Mishrimal could enforce against the assignors in respect of his decree.
4. On behalf of Mishrimal, it has been urged in reply to this argument that the trial Court has rightly held that as on the date of assignment Mishrimal had filed a suit which resulted in the decree in his favour on 31-5-58 against the assignors, under Order 21, Rule 29, C.P.C. he could have prayed for the stay of the execution of the decrees obtained against him by the assignors until the pending suit was decided and this was the equity which was available to Mishrimal as against the asignees as well. It is also contended that under Order 21, Rule 18 the date of the assignment is immaterial and in case there are applications before a Court for the execution of the cross-decrees between the same parties and capable of execution at the same time, the Court is bound to enter satisfaction of the decrees of the assignees. In this connection, Sub-rule (2) of Rule 18 is referred to, which makes the principle of equitable set off applicable even to cases where either the parties are assignees of one of the decrees and also in respect of judgment-debts due by the original assignor. It is urged that the original assignors were liable to Mishrimal for the payments of the decretal amount obtained by him ton 31-5-58 and their judgment-debts can be set off against the decrees which the assignees executed against him.
5. We first take into consideration the provisions of Order 21, Rule 18 of the Code and examine the second contention raised on behalf of Mishrimal. Though the language of Sub-rule (2) is capable of carrying this interpretation, but Sub-rule (2) must be read along with Section 49 of the Code which lays down that every transferee of a decree shall hold the same subject to such equities, if any, as the judgment-debtor might have enforced against the original, decree-holder. A claim to equity which a judgment-debtor can enforce against the original decree-holder must have arisen before the transfer of the decree and must be present at the time of the transfer. A decree must be subject to The equitable burden, if it may be so called, at the date of transfer, but if after the transfer of the decree there has arisen any equitable interest of the judgment-debtor against the original decree-holder, there is no warrant to hold that any such equity can be enforced against the transferee.
Section 49 of the Code is based on the general principle that no ,one can transfer a title better than he himself has. Putting in the reverse form, the principle is that a transferee always takes the property subject to the burden which it carries at the date of the transfer. If at the date of the assignment it is not subject to any burden, it cannot be said that the original transferor can impose upon it any burden after the transfer or any burden can be imposed on the transferee on account of any act of the transferor or on account of the fact that the transferor has become liable to a certain liability. Sub-rule (2) of Order 21, Rule 18 must be applied in respect of judgment-debt due by the original assignor only if such judgment-debt was in existence at the time of the assignment. To adopt any other rule of law would be contrary to the general principles of law that a property can be made subject to any burden not only by the owner thereof but by other persons as well who had no interest in the property or had lost all interest therein. This will be destructive of the principle that the owner has the sole right to the property after he has acquired it.
We may in this connection refer to Section 132 of the Transfer of Property Act which is also based on the same principle. It clearly says that 'the transferee of an actionable claim shall take it subject to all the liabilities and equities to which the transferor was subject in respect thereof at the date of the transfer.' It is true that such liabilities and equities to which the actionable claim was subject must not have been known to the assignee, but they must exist on the date of transfer. In this view of the matter, we are of the opinion that Mishrimal cannot take advantage of Order 21 Rule 18 of the Code.
6. The lower Court, however, has also applied Order 21, Rule 29 to the case and has held relying on Gurushantappa Shankerappa v. Nagappa Bandappa, AIR 1938 Bom 253 that Mishrimal had filed the suit before the date of the assignment against the assignors and the decrees assigned were subject to the equitable right available to Mishrimal to obtain the stay of the execution of the decrees assigned untill the suit was pending. To meet this argument, the learned counsel for the appellants has contended that the assignors had applied for execution in the court of Civil Judge, Sirohi, while the suit of Mishrimal was pending in the court of the District Judge, Balotra and the two courts being different, the provisions of Order 21, Rule 29 of the Code were not applicable.
It is further urged that the Bombay case is distinguishable on facts. In the Bombay case Revansiddappa and Shridramappa obtained a decree on an award against Gurushantappa for Rs. 27,940/- on 14-12-25 in a partition suit. By the same decree Gumshantappa had been awarded certain property. Revansiddappa and Shridramappa did not give that property to Gurushantappa as provided in the decree and he sued for rent and mesne profits and obtained a decree for Rs. 15,249/-. During the pendency of the suit, Revansiddappa and Shriramappa assigned their rights to recover Rs. 27,940 from Gurushantappa to one Nagappa Bandappa Kadadi. Nagappa filed an execution application. Gurushantappa's claim for set off was rejected and an appeal was taken to the High Court. Wassoodew J. held that there was no equity existing at the date of the assignment and mere pending suit cannot be called equity. He observed as follows:--
'It seems to me illegitimate to construe the term 'equity' in Section 49 as an equity not existing at the time of the assignment and in my view, a pending suit, is not such an equity. The appellant's construction is bound to lead to unfair result. The transferor might defeat the assignee by creating claims after the assignment, either collusively or otherwise. It is true that in certain respects the assignee would be in a better position than the assignor, and that the transferor might fraudulently and collusively defeat the Judgment-debtor's claims if future and possible equities were not enforced against the transferee. As against fraudulent and collusive transfer, the law provides a remedy, and I do not think that that should be a ground for incorporating in the section words which are not there.'
On Letters Patent Appeal, the Division Bench agreed with the view taken by Wassoodew J. that Gurushantappa must fail if he has nothing but a legal set-off to plead. But it was further of the opinion that Gurushantappa had an equity inasmuch as he could have asked the Court for stay of the execution of the decree obtained by Revanshiddappa and Shidramappa till he obtained his decree and that his claim was no more than that they should be compelled to give full effect to the partition decree by paying him mesne profits in respect of his share which they had wrongfully withheld with them and no Court of equity could have rejected his request. Taking this view of the matter, the appeal was allowed by the Division Bench. That casa is, however, distinguishable on facts and also on the ground that in that case it was held by their Lordships that Nagappa must have neglected to make inquiries about the existence of the claim of Gurushantappa and he could not be given any relief on the ground that they were bona fide purchasers for value without notice. There is no such consideration present before us and we have to examine Order 21, Rule 29 unfettered by any such consideration. Order 21, Rule 29 runs as follows:
'Where a suit is pending in any Court against the holder of a decree of such Court, on the part of the person against whom the decree was passed, the Court may, on such terms as to security or otherwise, as it thinks fit, stay execution of the decree until the pending suit has been decided.'
This rule is based on the principle that a judgment-debtor may not be harassed if he has a substantial claim against the decree-holder which is pending for decision of the Court executing the decree. The Court, which is examining the claim of the judgment-debtor, has before it all the material on which the claim of the judgment-debtor is based, if the Court is of the view that there is some substance in ,the claim, it may order for the stay of the execution filed by the defendant in that case and that too upon such terms of security or otherwise. It is clear from the wordings of Rule 29 of Order 21 that the power given to the Court is discretionary and in exercise of that power the Court may impose any condition as to security or otherwise which it may think fit. The only right available to, the judgment-debtor is to make an application drawing attention of the Court that his suit is pending and praying for stay of the execution filed by his defendant.
In our opinion, it is very difficult to hold that Order 21, Rule 29 by itself operates as vesting some equity in the judgment-debtor. The equity, if any, may arise after the Court has passed an order for stay of the execution, but till such order is passed by the Court, the mere fact that the judgment-debtor has filed a suit against tne person who holds a decree against him could not have the effect of vesting any equity in favour of that person so as to affect the assignment of the decree obtained by the defendant. Under section 49 of the Code of Civil Procedure, the transferee is subject to the equities which the judgment-debtor enjoys against the original decree-holder and on our interpretation, such equities must exist at the date of the transfer. We do not think it is possible for us to hold that Mishrimal had any such equity at the date of the transfer by virtue of Order 21, Rule 29. This provision is further not available to Mishrimal as his suit was pending in a court different from the one in which the decree was being executed.
7. Learned counsel for Mishrimal has relied on Kristo Ramani Dassee v. Kedarnath Chakravarti, ILR 16 Cal 619. Their Lordships in that case observed as follows:
'A right to set off the amount of one decree against another was repeatedly referred to, as an equity affecting the latter decree, in the decisions of this Court prior to the Code of 1877, which for the first time enacted section 233. In whatever mode that equitable right could be made to operate as against the holder of the decree, we think it must be allowed to operate against his assignee with notice of the existence of the pending suit.'
These observations can only support Mishrimal in case it is held that the assignees had the notice of the existence of the pending suit. With great respect, we may, however, mention that for reasons, which we have already set forth above, it is not possible for us to accept the law laid down in that case as correct.
8. As a result of the aforesaid discussion, we are of opinion that the view taken by the lower Court is erroneous. We, therefore, set aside the orders passed by the lower Court on 16-4-59 and 28-9-59.
9. The appeals are allowed. Costs are allowed to the appellants only in appeal No. 13 of 1959.