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Bhupati Mohan Das Vs. Phanindra Chandra Chakravarty and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata
Decided On
Reported inAIR1935Cal756
AppellantBhupati Mohan Das
RespondentPhanindra Chandra Chakravarty and anr.
Cases ReferredMahamaya Debi v. Haridas Haldar
Excerpt:
- .....policy no. 533114 for rupees 5,000 with the sun life assurance of canada and in the provident fund money under the university of dacca accrued and to be accrued thereafter until the debt on the hand-note would be fully liquidated. under clause 2, section 2, dacca university act, the governor-general in council extended the provisions of the provident fund act in 1925 by notification no. 844 of 19th april 1927 to the provident fund constituted by the dacca university. defendant 1 obtained a simple money decree against defendant 2 on 16th february 1929 for rs. 2,759-10-0 and in execution of the said decree attached the money standing to the credit of defendant 2 in the provident fund. the plaintiff preferred a claim under order 21, rule 58, civil p. c, on 5th march 1929. the claim was.....
Judgment:

1. This appeal arises out of a suit for a declaration that the plaintiff is the assignee from defendant 2 of a sum of money specified in the schedule attached to the plaint and as such is entitled to get the said sum from defendant 1 who realised the same in execution of a decree obtained by him against defendant 2. The plaintiff's case briefly stated is as follows:

2. Defendant 2, formerly a reader of English literature of the Dacca University, borrowed Rs. 4,200 on a hand-note from the plaintiff on 11th April 1926. On the same day by way of collateral security he assigned to the plaintiff his right, title and interest in his 20 years endowment policy No. 533114 for Rupees 5,000 with the Sun Life Assurance of Canada and in the provident fund money under the University of Dacca accrued and to be accrued thereafter until the debt on the hand-note would be fully liquidated. Under Clause 2, Section 2, Dacca University Act, the Governor-General in Council extended the provisions of the Provident Fund Act in 1925 by Notification No. 844 of 19th April 1927 to the provident fund constituted by the Dacca University. Defendant 1 obtained a simple money decree against defendant 2 on 16th February 1929 for Rs. 2,759-10-0 and in execution of the said decree attached the money standing to the credit of defendant 2 in the provident fund. The plaintiff preferred a claim under Order 21, Rule 58, Civil P. C, on 5th March 1929. The claim was disallowed on 22nd March 1929. Out of the provident fund money standing to the credit of defendant 2 the Dacca University deposited Rs. 2,773-11-3 in the executing Court on 11th March 1929. Defendant 1 withdrew the said sum of money on 23rd March 1929. The plaintiff thereafter obtained a decree on the hand-note executed by defendant 2 in his favour for Rs. 8,383-10-1 on 25th April 1929 and in execution of the said decree realised Rs. 6,902.2.0 by attaching the balance left in the Provident Fund deposit. On 22nd March 1930 the plaintiff instituted the suit out of which this appeal arises with the following prayers: (1) that the plaintiff may be declared to be entitled to the sum of money which defendant 1 withdrew from the executing Court on 23rd March 1929 by virtue of the assignment by way of collateral security on 11th April 1926; (2) that the order dated 22nd March 1929 disallowing the plaintiff's objection be set aside; (3) that the plaintiff may be declared to be entitled to get the sum of money by way of restitution and that defendant 1 may be asked to refund the said money to Court.

3. Defendant 1 alone contested the suit. His defences so far as they are material for the purposes of the present appeal are: (1) that the Provident Fund money being an actionable claim, the plaintiff is not entitled to get any relief in this suit as he is a legal practitioner; (2) that the present suit is not maintainable. The Courts below have overruled the defences of defendant 1 and have decreed the plaintiff's suit. Hence this second appeal by defendant 1. The first point for determination in this appeal is whether the Provident Fund money is an actionable claim. By Section 3, T.P. Act, actionable claim has been defined as a claim to any debt other than a debt secured by a mortgage of the immovable property or by the hypothecation or pledge of movable property or to any beneficial interest in movable property not in the possession either actually or constructive of the claimant which the civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent. The word 'debt' has not been defined in the Transfer of Property Act. In Bancharam Majumdar v. Adyanath Bhattacharjee (1969) 36 Cal 936 it has been laid down that a debt is a sum of money which is now payable or will become payable in future by reason of a present obligation. Debt is nothing more than the benefit of an obligation to pay money. It is

in law as in fact a very different thing from a sum of money in a man's own possession:... see Williams on Personal Property, 18th Edn, p. 184.

4. If a man owns a pound in his pocket the pound in the pocket is a thing (res, chose) in possession. If the pound is not in his pocket but is due from the debtor it is a chose or a thing in action or an actionable claim. In Roman Law the person entitled to the benefit of an obligation was called a creditor while the man who was bound by it called debtor. So long as a coin is in a man's possession he is the owner of the coin. This ownership is however subject to a limitation. This limitation is based

on the inconvenience which would ensue if a valid title could not be obtained by the transfer of current coin in the ordinary course of circulation:... see Williams on Personal Property, p. 25.

5. Section 76, Contract Act, lays down that the word 'goods' means and includes every kind of movable property. By Section 2, Clause 7, Sale of Goods Act, 'Goods' means every kind of movable property other than actionable claims and money.

Money is necessarily excluded from the definition not only because it constitutes the price in exchange for which the goods are sold, but because it is governed by wholly different principles of law owing to its being currency. It is therefore not regarded as a chattel but as something sui generis.... It does however partake in a limited manner of the nature of a chattel when a definite sum is entrusted to another to use or lay out in a particular manner on behalf of the person who so entrusted it. In such a case the latter may treat the equivalent of the sum so entrusted as his property and not merely as a debt due to him from the person to whom he entrusted it. He may therefore follow it if it is lent or given away to another or otherwise dealt with contrary to his instructions. For instance he may claim as his own or obtain a charge upon any property purchased with it but when once it has passed in currency it cannot be followed:... see Pollock and Mulla's Commentary on the Indian Sale of Goods Act, p. 16,

Money or cash paid into a Bank to a customer's account is a simple contract debt. The property in the particular coins paid in the Bank passes to the Banker who merely becomes bound to repay an equal amount. The relation of a Banker to a customer is therefore, so long as the customer's account is in fund, that of a debtor to his creditor, with a super added obligation on the Banker to honour his customer's cheques so long as the balance to the holder's credit is sufficient to meet them;... see Williams on Personal Property, 18th Edn., p. 255.

6. If an employee receives his pay and keeps the money in his own possession, the ownership of the money is with that man. If however he leaves a portion of his salary with his employer, or if the employer makes any contribution to make provision in his interest under a scheme of compulsory and to a large extent voluntary thrift, he cannot be said to be the owner of the money standing to his credit in the same sense as he is the owner of the money in his pocket. 'Provident Fund' means a fund in which subscriptions or deposits of any class or classes of employees are received, and held on their individual accounts. It also includes any contributions, that is, any amount credited in the Provident Fund by any authority administering the fund by way of addition to, a subscription to, or deposit or balance at the credit of an individual account in the fund: see Section 2,Cls. (e) and (b), Provident Funds Act, 1925. The moneys standing to the credit of a subscriber or depositor are not certain specific coins or promissory documents representing them earmarked and kept separately from the other moneys in the fund. The sum is only payable out of the Provident Fund. It is not entrusted to be used or laid out in a particular manner on behalf of the subscriber or depositor. It is a sum standing to the credit of any subscriber or depositor payable to him by reason of an obligation arising out of the rules of the fund in accordance with the conditions prescribed. Again under certain circumstances a succession certificate is necessary for collecting Provident Fund money after the death of the subscriber or depositor. In Atul Chandra Sen v. Sm. Kaunammal, 1935 Cal 271 it was not disputed that the Provident Fund money was a debt within the meaning of Succession Certificate Act. It is very difficult to distinguish in principle any particular sum of money standing to the credit of a subscriber in a Provident Fund from a balance standing to the credit of the depositor in a Bank. The depositor to the fund cannot claim ownership to the particular coins which he deposits. The moneys which are deducted out of the pay of an employee or which are contributed by the employer are not certain specific coins which are in deposit with the employer. It is true that owner of a movable property may continue to be the owner though he may be deprived of its possession against his consent or may voluntarily part with its possession. Coins are no doubt movable properties. But the law puts a limitation on the ownership of money or coins in view of the inconvenience which would ensue if a valid title could not be obtained by its transfer. As soon as a man parts with the possession of the coins or the money and the money passes in currency it cannot be followed. If a man lends certain coins to another he cannot get back the identical coins which he lent, but he is entitled to claim equivalent of the coins so lent. In other words the money becomes a debt due to him from the person to whom he lent it.

7. I am therefore of opinion that the right of defendant 2 to the Provident Fund money was simply a right to get a definite sum out of the Provident Fund from the Dacca University arising out of an obligation created by the rules of the Provident Fund. His right to receive that money out of the fund is not the same as the right which he has in his cattle, clothes, coins, furniture, carriages and other tangible movable things in his possession. It is therefore a debt or actionable claim as defined in the Transfer of Property Act. The second question for determination is what is the nature of right which the plaintiff acquired by virtue of the assignment of the Provident Fund money by way of collateral security on 11th April 1926. Section 6, T.P. Act, lays down that

Property of any kind may be transferred except as otherwise provided by this Act or by any other law for the time being in force.

8. An actionable claim is property within the meaning of the Transfer of Property Act:... see Rudra Perkash Misser v. Krishna Mohan (1887) 14 Cal 241 at p. 244. The transfer of an actionable claim is effected by the execution of an instrument in writing signed by the transferor and it is completed upon an execution of such instrument. Upon such transfer all the rights and remedies of a transferor vest in the transferee whether such notice of the transfer has been given or not: see Section 130, T.P. Act. This transfer includes not only an absolute assignment but also conditional assignment. An actionable claim may be transferred for securing the payment of an existing or future debt.... See Illus. (ii), Section 130, T.P. Act. It is therefore clear that even if the transfer be not an absolute assignment but only a conditional one, the transferee stands in the shoes of the transferor and is entitled to sue the debtor for recovery of the debt in his own name without obtaining the transferor's consent to such a suit and without making him a party thereto (sea Clause 2, Section 130, T.P. Act). In Mulraj Khatan v. Viswanath Prabhuram Vaidya (1913) 37 Bom 198 at p. 210, their Lordships of the Judicial Committee have observed that:

The section covers transfers by way of security as well as absolute transfers. When a creditor 'purports to create a lien or a charge' on the debt due to him' in favour of another person, the words 'lien or charge' had no meaning except as giving to the latter a right to recover the debt from the debtor. The transaction in reality is one whereby the owner of what in English law is called a chose in action transfers it to another.

9. Also Ardesir Bejonji Surti v. Sirdar Ali Khan (1909) 33 Bom 610 at p. 628 and Ramaswami Pillai v. Muthu Chetti (1911) 34 Mad 53. Section 134, T.P. Act, also contemplates a transfer of an actionable claim for the purpose of securing an existing or future debt. When an actionable claim is mortgaged or charged for the purpose of securing a debt, the assignee stands in the shoes of the assignor and is entitled either to realise the debt from the debtor or to sue him for recovery of the debt if the debtor does not pay it when it becomes due. The plaintiff therefore by virtue of the assignment in question acquired all the rights which defendant 2 had in the Provident Fund money. But the difficulty of the plaintiff does not end here. Ha is a legal practitioner and consequently by Section 136, T.P. Act, he is precluded from enforcing his right in Court. The third point for determination is whether the present suit is maintainable. By Order 2, Rule 2, Civil P. C, an obligation and a collateral security for its performance must be taken to constitute but one cause of action.

A personal claim for the mortgage money under a mortgage and the enforcement of the security for the debt are to be regarded as one and the same cause of action. That provision (Explanation to Order 2, Rule 2) is in marked distinction to the law of this country where a mortgagee had liberty to appoint a receiver under his deed to sue for the debt and to take proceedings for sale or foreclosure independently and at the same time. It is important therefore in considering the effect of the Code to bear in mind that its obvious intention is to establish a rule of law different from that accepted here... See Kishan Narain v. Palamal, 1922 PC 412 at p. 117.

10. It is conceded by the learned advocate for the respondent that the assignment was not a pledge. If the Provident Fund money was a movable property other than actionable claim, the assignment was the hypothecation of a movable property. The Contract Act is wholly silent on the hypothecation of movables. This Act made provision for absolute sale of goods and for pledges of goods. The Transfer of Property Act has not also made any provision for hypothecation of movables. From the mere silence of the legislature on the hypothecation of movables it is not to be inferred that such transactions are invalid in this country: See Ghose on Mortgage, Edn. 4, p. 108. In the case of hypothecation or mortgage of movables the remedy of the creditor or mortgagee is to foreclose the mortgage: see the case of Mahamaya Debi v. Haridas Haldar, 1915 Cal 161. In the case of Basivireddi v, Kamaraju, 1933 Mad 241, Madhavan Nair, J. observed:

If a mortgagee of chattels is entitled for foreclosure quite as much as mortgagee of immovable property, I do not see any reason why a mortgagee of movable property is not entitled to a right of sale quite as much as the mortgagee of immovable property.

11. If therefore the Provident Fund money is not an actionable claim but a tangible movable property, the proper remedy of the plaintiff was to enforce that charge in the suit which he brought for recovery of the debt for payment of which the Provident Fund money was hypothecated. If however the assignment was only an assignment of an actionable claim by way of security he cannot claim any right on the basis of the said assignment as he is a legal practitioner. If he would not have been hit by Section 136, T.P. Act, he could recover the debt from the Dacca University and he could sue the Dacca University as well as the defendant who realisad a portion of the Provident Fund money with notice of the assignment for recovery of the money due to him. He however did not do so. He elected to sue defendant 2 only on the basis of a hand-note obviously to avoid the bar under Section 136 and obtained a decree for the whole amount due on the promissory note against defendant 2 only. He attached the Provident Fund money in the hands of the University as a debt under the provisions of the Civil Procedure Code and realised under 0, 21, Rule 46 of the Code the balance standing to the credit of defendant 2 by execution. There cannot be any doubt that the plaintiff abandoned his rights under the deed of assignment in view of the legal difficulties when he instituted the suit on the hand-note against defendant 2 and got a decree for the whole amount due on that hand-note against defendant 2 personally. For the above reasons I am of opinion that the present suit is not maintainable. The result therefore is that this appeal is allowed, the judgments and decrees of the Courts below are set aside and the suit is dismissed with costs throughout.

Henderson, J.

12. I agree.


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