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Lala Jugdeo Sahai Vs. Brij Behari Lal and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Judge
Reported in(1885)ILR12Cal505
AppellantLala Jugdeo Sahai
RespondentBrij Behari Lal and ors.
Cases ReferredByall v. Bowles
Excerpt:
transfer of property act (iv of 1882), section 131 - transfer of debts--notice of transfer--assignment of mortgage--mortgagor, liability of, to assignee of mortgagee when no notice of assignment given. - .....enable the assignee to maintain the suit. it was contended that, as between the assignee and the debtor, notice is not necessary, and that even if it is, then the suit was sufficient notice. section 131 of the transfer of property act is as follows:'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.' the subordinate judge says: 'primarily the obligor.....
Judgment:

Mitter and Agnew, JJ.

1. The plaintiff in this case sued as the assignee of a bond executed by the first party defendants in favour of the second party defendant. The defence was that there was no legal consideration for the bond, and that the suit was not maintainable as no notice of the assignment had been given to the first party defendants under Section 131 of the Transfer of Property Act (IV of 1882). The Munsif found that there was good consideration for the bond; but he dismissed the suit upon the ground that it was not maintainable as no notice of the transfer had been given. The Subordinate Judge was also of opinion that notice was necessary and dismissed the appeal. Two points have been argued before us. One that, as the bond was executed before the Transfer of Property Act came into force, the Act is not applicable. The assignment, however, was after the Act came into force, and we think, therefore, that the provisions of the Act are applicable to this case. The other point was as to whether notice of the assignment was necessary in order to enable the assignee to maintain the suit. It was contended that, as between the assignee and the debtor, notice is not necessary, and that even if it is, then the suit was sufficient notice. Section 131 of the Transfer of Property Act is as follows:

'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.' The Subordinate Judge says: 'Primarily the obligor remains liable to the obligee alone upon such a contract. The notice provided for by the section is meant to extend this liability further and make the obligor privy to the transfer to a third party. The force of the word 'any' in the first part of the section cannot be lost sight of, and the meaning of the word 'operation' is sufficiently clear. The illustration refers to the second, part of the section, and it is not exhaustive. The second part of the section is, I think, explanatory, and it does not in any way limit the meaning and effect of the first part of the section. Section 133 provides that on receiving; such notice the debtor shall give effect to the transfer. He is not bound to recognize the transfer unless he is a party or privy to it before the receipt of the notice provided for in Section 132. It is sufficiently clear, therefore, that the notice enjoined by Section 132 is essential to bind the debtor and to compel him to recognize or give effect to the transfer. Without such a notice the transfer has no operation.' No doubt, at first sight, it does appear as if under Section 131 a transfer is of no effect at all unless notice of it has been given to the debtor. But this is a view so entirely opposed to the law as it existed before the Act came into force that we do not think that we should adopt it unless we are absolutely bound to do so, and unless the words of the section will not bear an interpretation which will make them consonant with the previous law.

2. The Act is an Act 'to define and amend certain parts of the law relating to the transfer of property by act of parties.' And the law so to be dealt with is based upon the English law. Now it is well settled according to English law that it is not necessary to the validity of an assignment of a debt as between the assignor and assignee that notice should be taken to the debtor see the cases referred to in the notes to Byall v. Bowles 2 W. and T.L.C. pp. 777--779 4th ed. The assignment, therefore, is perfectly valid though no notice is given. But the title of the assignee as against third persons is not complete until he has given notice, and the reason is this : As between the debtor and assignor the liability on the part of the debtor is still subsisting, and the debtor may pay the assignor, or the assignor may afterwards assign to a third party who gives notice and so acquires priority. Notice, therefore, ought to be given by the assignee to protect himself and for this purpose only. It is immaterial to the debtor whether he pays his money to the original creditor or to some third person claiming through the creditor so long as he gets a discharge for his debt. If he pays the assignor, having no notice of an assignment, he is protected. The assignment does not in any way affect the liability of the debtor to discharge his debt, but the assignee should take care to let the debtor know that it is he and not the original creditor who is entitled to be paid. It is, therefore, only for the protection of the assignee that notice ought to be given. That being the state of the English law on the subject, can the section be so read as to agree with it?

3. We think that the first branch of the section fixes the time when the assignment comes into operation, and the other branch provides for the protection of the debtor if he deals with the debt before that time. The words of the first branch, viz., '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' indicate the time when the transfer comes into operation.

4. In the first place if the debtor is no party to the transfer or not aware of it, the transfer comes into operation when the notice mentioned in it is given. If he is himself a party to the transfer, the transfer comes into operation immediately. If he be not a party to the transfer, but becomes aware of it subsequently, the transfer comes into operation at the time when he becomes aware of the transfer. That is the meaning of the first branch of the section. Putting that construction upon it, it seems to us that, after the suit was instituted, the debtor became aware of the transfer, and the transfer consequently came into operation on the date when he thus became aware of it.

5. We are, therefore, of opinion that the lower Courts were not right in holding that, although the assignment was proved, and although it was established that the plea put forward in the defence was not correct, still the plaintiff is not entitled to a decree.

6. We, therefore, reverse the decision of the lower Courts and decree the plaintiff's suit and with costs.


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