Jugalkishore Saraf Vs. Raw Cotton Co. Ltd. [1955] INSC 13 (7 March 1955)

DAS, SUDHI RANJAN BHAGWATI, NATWARLAL H.

IMAM, SYED JAFFER

CITATION: 1955 AIR 376 1955 SCR (1)1369

ACT:

Code of Civil Procedure (Act V of 1908), s. 146, Order XXI, rule 16-Debt transferred pending suit thereon-Decree not. mentioned in deed-Execution of decree-Application by transferee-Applicability of Order XXI, rule 16 and s. 146Equitable principles Transfer of Property Act (IV of 1882), ss. 3, 5, 8 and 130.

HEADNOTE:

H & S filed a suit against the appellant for recovery of money and during the pendency of the suit a document was executed on the 7th February, 1949, whereby H & S transferred to the respondents all -book and other debts due to them together with all securities for the debts and all other property to which they were entitled in connection with their business in Bombay. One of the book debts was the subject matter of the suit, but there was no mention in that document of the suit or the decree to be passed in the suit. The respondents did not take any steps under Order XXII, rule 10, of the Code of Civil Procedure to get themselves substituted as plaintiffs in the place of H & S, but allowed the suit to be continued in the name of the original plaintiffs, and on the 15th December, 1949, a decree was passed in favour of H & S against the appellant.

On the 25th April, 1951, the respondents filed in the City Civil Court, Bombay, an application for execution of the decree under Order XXI, rule 11 of the Code, and a notice under Order XXI, rule 16 was issued by the Court calling upon H & S and the appellant to show cause why the decree should not be executed by the transferees, the respondents.

The appellant contended inter alia that as the respondents were only the assignees of the debt which was the subject: matter of the suit and not of the decree itself they were not entitled to execute the decree.

Held, that the respondents as the transferees of the debt which was the subject-matter of the suit were entitled to make an application for execution of the decree under section 146 of the Code of Civil Procedure as persons claiming under the decree-holder.

The effect of the expression " save as otherwise provided in this Code" contained in section 146 is that a person cannot make an application under section 146 if other provisions of the Code are applicable to it.

Per DAs and IMAM JJ., BHAGWATI J. dissenting.-Order XXI, rule 16, by the first alternative, contemplates the actual transfer by an assignment in writing of a decree after it is passed and while a transfer of or an agreement to transfer a decree that may be passed in future may, in equity, entitle the transferee to claim the beneficial interest in the decree after it is passed, such 1370 equitable transfer does not render the transferee a transferee of the decree by assignment in writing within the meaning of Order XXI, rule 16.

Per DAS J.-The transfer in writing of a property which is the subject-matter of a suit without in terms transferring the decree passed or to be passed in the suit does not entitle the transferee to apply for execution of the decree under Order XXI, rule 16, as a transferee of the decree by an assignment in writing.

If by reason of any provision of law, statutory or otherwise, interest in property passes from one person to another, there is a transfer of the property by operation of law. There is no warrant for confining transfers "by operation of law" to the three cases of death, devolution or succession or to transfers by operation of statutory laws only. If the document in question could be construed to be a transfer of or an agreement to transfer the decree to be passed in future, then on the decree being passed, by operation of equity, the respondents would become the transferees of the decree by operation of law within the meaning of Order XXI, rule 16.

Per BHAGWATI J.-Section 5 of the Transfer of Property Act defines a "transfer of property" as an act by which the transferor conveys property in present or in future to the transferee or transferees. The words "in present or in future" qualify the word "conveys" and not the word "property" in the section. A transfer of property that is not in existence operates as a contract to be performed in the future which may be specifically enforced as soon as the property comes into existence. It is only by the operation of this equitable principle that as soon as the property comes into existence and is capable of being identified, equity taking as done that which ought to be done, fastens upon the property and the contract to assign becomes a complete equitable assignment. There is nothing in the provisions of the Code of Civil Procedure or any other law which prevents the operation of this equitable principle, and an assignment in writing of a decree to be passed in future would become a complete equitable assignment on the decree being passed and would fall within the "assignment in writing" contemplated by Order XXI, rule 16 of the Code.

A mere transfer of property as such does not by itself spell out a transfer of a decree which has been passed or may be passed in respect of that property and it would require an assignment of such decree in order to effectuate the transfer. But where the property is an actionable claim within the meaning of the definition in section 3 of the Transfer of Property Act and is transferred by means of an instrument in writing, the transferee could by virtue of section 130 of the Transfer of Property Act step into the shoes of the transferor and claim to be the transferee of the decree and apply for execution of the decree under Order XXI, rule 16 of the Code of Civil Procedure .

Per IMAM J.-There must be a decree in existence which is transferred before the transferee can benefit from the provisions 1371 of rule 16. The ordinary and natural meaning of the words of rule 16 can carry no other interpretation and the question of a strict and narrow interpretation of its provisions does not arise.

Case-law reviewed.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 212 of 1954.

Appeal from the Judgment and Decree dated the 10th day of November 1953 of the High Court of Judicature at Bombay in Appeal No. 8 of 1953 under the Letters Patent, against the decree dated the 23rd day of September 1952 of the said High Court in Appeal No. 67 of 1952 from Original Decree arising out of Order dated the 20th November 1951 of the City Civil Court, Bombay, in Summary Suit No. 233 of 1948.

R.Subramania Iyer and K. R. Choudhry, for the appellant.

H.J. Umrigar, J. B. Dadachanji and Rajinder Narain, for the respondent.

1955. March 7. The following Judgments were delivered.

DAS J.-The facts leading up to this appeal are few and simple. Two persons named Mahomedali Habib and Sakerkhanoo Mahomedali Habib used to carry on business as merchants and pucca adatias in bullion and cotton at Bombay under the name and style of Habib & Sons. In 1948 that firm instituted a suit in the Bombay City Civil Court, being Summary Suit No 233 of 1948, against the present appellant Juga-lkishore Saraf, a Hindu inhabitant carrying on business at Bombay, for the recovery of Rs. 7,113-7-0 with interest at 6 per cent. per annum said to be due by him to the firm in respect of certain transactions in gold and silver effected by the firm as pucca adatias. On the 7th February,. 1949 when that summary suit was still pending a document was executed whereby it was agreed that the two partners would transfer and Messrs Raw Cotton Company, Limited, (hereinafter called the respondent company) 1372 would accept the transfer of, inter alia, all book and other debts due to them in connection with their business in Bombay and full benefit of all securities for the debts and all other property to which they were entitled in connection with the said business. The respondent company did not take steps under 0. XXII, r. 10 of the Code of Civil Procedure to get themselves substituted as plaintiffs in the place and stead of Habib & Sons, the plaintiffs on record, but allowed the suit to be continued in the name of the original plaintiffs. Evidently, the two partners migrated from India to Pakistan and their properties vested in the Custodian of Evacuee Property. On the 15th December 1949 a decree was passed in the summary suit for the sum of Rs. 8,018-7-0 for the debt and interest and the sum of Rs. 410 for costs of the suit, aggregating to Rs. 8,428-7-0, and for further interest at 4 per cent. per annum from the date of the decree until payment. Habib & Sons being the plaintiffs on record the decree was passed in their favour.

On the 11th December 1950 the Custodian of Evacuee Property, Bombay, informed the respondent company that by an order made on the 2nd August 1950 the Additional Custodian of Evacuee Property had confirmed "the transaction of transfer" of the business of Habib & Sons to the respondent company.

On or about the 25th April, 1951 the respondent company presented before the Bombay City Civil Court a tabular statement purporting to be an application for execution under Order XXI rule 11 of the Code of Civil Procedure . In the last column of the tabular statement, under the heading "The mode in which the assistance of the Court is required", the respondent company prayed that the Court "be pleased to declare the Applicants the assignees of the decree as the decrement debt along with other debts bad been transferred by the plaintiffs to the Applicants by a deed of assignment dated the 7th February 1949 which was confirmed by the Custodian of Evacuee Property, Bombay, and order them to be substituted for the plaintiffs". There was, in that column, no specification of any of the modes in which the assistance of the Court might be required as indicated in clause(j)of Order XXI rule 11 of the Code. On the 10th May 1951 the Bombay City Civil Court issued a notice under Order XXI, rule 16 of the Code to Habib & Sons, who were the decree-holders on record, and Jugalkishore Saraf, who was the defendant judgment-debtor, requiring them to show cause why the decree passed in the suit on the 15th December 1949 in favour of the plaintiffs and by them transferred to the respondent company, should not be executed by the said transferees against the said defendant judgment-debtor. The defendant judgment-debtor showed cause by filing an affidavit affirmed by him on the 15th June 1951. Amongst other things, he denied that the document in question had been executed or that the document transferred the decree to the respondent company.

The matter was tried on evidence and the execution of the document was proved by the evidence of an attesting witness which has been accepted by the executing Court. The executing Court, however, rejected the second contention and made the notice absolute with costs and gave leave to the respondent company to execute the decree against the judgment-debtor. The judgment-debtor filed an appeal before the High Court. The appeal was heard by Dixit, J. Before him the execution of the document was not challenged and nothing further need be said about that. The only substantial question raised wag whether the respondent company were the transferees of the decree within the meaning of Order XXI, rule 16. The learned Judge answered the question in the affirmative on the authority of the decisions of the Bombay High Court in Purmananddas Jivandas v. Vallabdas Wallji(1) and in Chimanlal Hargovinddas v. Ghulamnabi(2) and affirming the order of the executing Court dismissed the appeal. The judgment-debtor preferred a Letters Patent Appeal before the High Court which was dismissed by Chagla, C.J., and Shah, J., following the two earlier decisions mentioned above. They, however, (1) [1877] I.L.R. 11 Bom. 506. (2) I.L.R. [1946] Bom. 276.

1374 granted, under article 133 (1) (c) of the Constitution, a certificate of fitness for appeal to this Court. The principal question urged before us is as to whether the respondent company can claim to be the transferees of the decree within the meaning of Order XXI, rule 16 of the Code of Civil Procedure .

Order XXI, rule 16 of the Code of Civil Procedure , omitting the local amendments which are not material for our present purpose, provides:"16. Where a decree or, if a decree has been passed jointly in favour of two or more persons, the interest of any decree-holder in the decree is transferred by assignment in writing or by operation of law, the transferee may apply for execution of the decree to the Court which passed it; and the decree may be executed in the same manner and subject to the same conditions as if the application were made by such 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:

Provided also that, where a decree for the payment of money against two or more persons has been transferred to one of them, it shall not be executed against the others".

The first thing that strikes the reader is the sequence of events contemplated by this rule. It postulates, first, that a decree has been passed and, secondly, that decree has been transferred (i) by assignment in writing or (ii) by operation of law. The cardinal rule of construction of statutes is to read the statute literally, that is by giving to the words used by the legislature their ordinary, natural and grammatical meaning. If, however, such a reading leads to absurdity and the words are susceptible of another meaning the Court may adopt the same. But if no ,such alternative construction is possible, the Court must adopt the ordinary rule of literal interpretation. In the present case a literal construction of the rule 1375 leads to no apparent absurdity and, therefore, there can be no compelling reason for departing from that golden rule of construction. It is quite plain that if .Order XXI, rule 16 is thus construed the respondent company cannot possibly contend that the decree now sought to be executed by them was, after its passing, transferred to them by an assignment in writing within the meaning of that rule, for the document in question was executed on the 7th February 1949 but the decree was passed subsequently on the 15th December 1949.

Whether they can claim to have become the transferees of the decree after it was passed by operation of law within the meaning of this rule or to have otherwise become entitled to the benefit of it is a different matter which will be considered later on. For the moment it is enough to say that there had been no transfer of the decree to the respondent company by any assignment in writing executed after the decree was passed, as contemplated and required by Order XXI, rule 16. Indeed, Dixit, J., conceded" If the language of Order XXI, rule 16 is strictly construed, it seems to me that the Respondents have no case".

And so did chagla , C,J.; when he said;

"........ and it is perfectly clear that if one were to construe rule 16 strictly there is no assignment of the decree in favour of the first respondent".

The learned Chief Justice, like Dixit, J., however, departed from the rule of strict or literal construction as they felt pressed by the fact that the Bombay High Court had consistently taken the view that there might be an equitable assignment of a decree which would constitute the assignee an assignee for the purpose of rule 16 and that what the Court must consider is not merely a legal assignment but also an assignment which operates in equity. The equitable principle relied upon by the Bombay High Court is what had been enunciated by Lord Westbury in Holroyd v. Marshall(1) in the following words:

(1) [1862] 10 H.L.C. 191, 210, 211. 176 1376 "It is quite true that a deed which professes to convey property which is not in existence at the time is as a conveyance void at law, simply because there is nothing to convey. So in equity a contract which engages to transfer property, which is not in existence, cannot operate as an immediate alienation merely because there is nothing to transfer.

But if a vendor or mortgagor agrees to sell or mortgage property, real or personal, of which he is not possessed at the time, and he receives the consideration for the contract, and afterwards becomes possessed of property answering the description in the contract, there is no doubt that a Court of Equity would compel him to perform the contract, and that the contract would, in equity, transfer the beneficial interest to the mortgagee or purchaser immediately on the property being acquired. This, of course, assumes that the supposed contract is one of that class of which a Court of Equity would decree the specific performance".

The same principle was thus reaffirmed by Jessel, M.R., in Collyer v. Isaacs (1):

"A man can contract to assign property which is to come into existence in the future, and when it has come into existence, equity, treating as done that which ought to be done, fastens upon that property, and the contract to assign thus becomes a complete assignment".

Applying the above principles to the facts of the instant case the High Court -came to the conclusion that the document of the 7th February, 1949, on a proper reading of it, constituted an assignment of the decree. The reasoning, shortly put, is: that on a true construction the document in question amounted to. a transfer of the decree that was expected to be passed in the pending suit, that as the decree was not in existence at the date of the document it operated as an agreement to transfer the decree when it would be passed, that such an agreement could be enforced by a suit for specific performance as indicated by the (1) L.R. 19 Ch. D. 312, 351.

1377 Privy Council in Raja Sahib Perhlad v. Budhoo(1), that as soon as a decree was passed equity, treating as done what ought to be done, fastened upon the decree and the agreement for transfer became the transfer of the decree and the transferee became a transferee of the decree within the meaning of Order XXI, rule 16. It is to be noted that to attract the application of this equitable principle there must be an agreement to transfer the decree to be passed in future. As soon as the decree is passed equity fastens upon it and, by treating as done what ought to be done, that is by assuming that the transferor has executed a deed transferring the decree to the transferee as in all conscience he should do equity regards the transferee as the beneficial owner of the after-acquired decree. The equitable principle we are considering only implements or effectuates the agreement of the parties. This equity does not, however, take upon itself the task of making any new agreement for the parties either by filling up the lacunas or gap in their agreement or otherwise. If, therefore, there is no agreement between the parties to transfer the future decree the equitable principle referred to above cannot come into play at all. In order, therefore, to test the propriety of the application of this equitable principle to the facts of the present case we have to enquire whether there was here any agreement between the parties to transfer the decree to be passed in the then pending suit. This necessarily leads us to scrutinize the terms of the document in question and ascertain its true meaning and import.

No point has been taken before us that the document of the 7th February 1949 is only an executory agreement and not a deed of transfer. Indeed, the argument has proceeded before us, as before the Court below, that the document in question is a completed deed of transfer. This relieves us of the task of closely examining the form of the document. For our present purpose we have, therefore, only to consider what properties were covered by the document. The High Court has held that the decree to be 2(1) [1869] 12 M.I.A. 275; 2 B.L.R. 111.

1378 passed was also included in this document. The reasoning appears to be this: Clause 1 of the document comprised six several items of properties. Each of these items referred to "the said Indian business". The Fourth item was "All the book and other debts due to the vendors in connection with the said Indian business and the full benefits of all securities for the debts" and the last and residuary item was "All other property to which the vendors are entitled in connection with the said Indian business". One of the book debts was the subject-matter of the pending suit. The decree that the plaintiff would obtain in, that suit would, therefore, be property or right "in connection with the said Indian business". Therefore, as they were transferring all property in connection with their business they must have intended to transfer the future decree also. Therefore, it must be regarded as covered by the document. I am unable to accept this line of reasoning. It cannot be overlooked that there was no mention in that document of any suit or decree to be passed in that suit as one would have expected if the parties really intended to transfer the future decree also.

In this connection it is significant that the residuary item covered "All properties to which the vendors are entitled" and not all properties to which they might in future become entitled. Reference may also be made to the provisions of the Transfer of Property Act. Under section 8 of that Act the transfer of property passes to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof, and if the property transferred is a debt or actionable claim, also the securities therefore. It is urged that as the respondent company thus became entitled, by virtue of this document read in the light of section 8, to all the rights and remedies including the right to prosecute the pending suit and to obtain a decree the decree that was eventually passed automatically and immediately upon its. passing must be taken as having been transferred by this very document. This argument appears to me to really amount to a begging of the question, The 1379 transfer of the debt passed all the interest which the transferors were then capable of passing in the debt and in the legal incidents thereof. There was then no decree in existence and, therefore, the transferors could not then pass any interest in the non-existing decree. Therefore, section 8 of the Transfer of Property Act does not assist the respondent company. Upon the assignment of the debt the respondent company undoubtedly became entitled to get themselves substituted under Order XXII, rule 10 as plaintiffs in the pending suit but they did not choose to do, so and allowed the transferors to continue the suit and a decree to be passed in their favour. The true position, therefore, is that at the date of the transfer of the debt to the respondent company the transferors could not transfer the decree, because the decree did not exist. On a true construction of the document the transferors agreed only to transfer, besides the five items of specified properties, "All other properties to which the vendors are entitled", that is to say, all properties to which at the date of the document they were entitled. At the date of the document they had the right to proceed with the suit and to get such relief as the Court by its decree might award but no decree had yet been passed in that suit, and, therefore, property to which they were then entitled could not include any decree that might in future be passed. It is significant that there was, in the document, no provision purporting in terms to transfer any future decree. Section 8 of the Transfer of Property Act does not operate to pass any future property, for that section passes all interest Which the transferor can then, i.e., at the date of the transfer, pass. There was thus no agreement for transfer and much less a transfer of a future decree by this document. All that was done by the transferors by that document was to transfer only the properties mentioned in clause 1 together with all legal incidents and remedies. The properties so transferred included book debts. A book debt which was made the subject-matter of the pending suit did not, for that reason, cease to be a book debt and, therefore, it was also transferred but no 1380 decree to be passed in respect of that book debt was If in terms transferred. In such a situation there was no room or scope for the application of the equitable principle at all.

The transfer in writing of a property which is the subject matter of a suit without in terms transferring the decree passed or to be passed in the suit in relation to that property does not entitle the transferee to apply for execution of the decree as a transferee of the decree by an assignment in writing within the meaning of Order XXI, r.

16. See Hansraj Pal v. Mukhraj Kunwar(1) and Vithal v. Mahadeva(2). In my judgment the decree was not transferred or agreed to be transferred to the respondent company by the document under consideration and the latter cannot claim to be transferees of the decree by an assignment in writing as contemplated by Order XXI, rule 16.

The matter, however, has been argued before us at length on the footing that the decree had been transferred or agreed to be transferred by this document and therefore., the equitable principle came into play and that as soon as the decree was passed the respondent company became the transferees of the decree by assignment in writing within the meaning of Order XXI, rule 16. As considerable legal learning has been brought to bear on the question of the application of the equitable principle and its effect on the prior written agreement and as the different decisions of the High Courts are not easily reconcilable, I consider it right to record my views on that question.

I shall., then, assume, for the purposes of this part of the argument, that the document of the 7th February 1949 was a completed deed of transfer covering the decree to be passed in future in the then pending suit. Under the Transfer of Property Act there can be no transfer of property which is not in existence at the date of the transfer. Therefore, the purported transfer of the decree that might be passed in future could only operate as a contract to transfer the decree to be performed in future, i.e., after the passing of the (1) [1908] I.L.R. 30 All. 28.

(2) [1924) 26 Bom. L R. 333.

1381 decree. The question then arises: What is the effect of the operation of the equitable principle on the decree as and when it is passed? Where there is a contract for the transfer of property which is not in existence at the date of the contract, the intending transferee may, when the property comes into existence, enforce the contract by specific performance, provided the contract is of the kind which is specifically enforceable in equity. It is only when the transferor voluntarily executes a deed of transfer as in all conscience he should do or is compelled to do so by a decree for specific performance that the legal title of the transferor in that property passes from him to the transferee. This transfer of title is brought about not by the prior agreement for transfer but by the subsequent deed of transfer. This process obviously involves delay, trouble and expenses. To obviate these difficulties equity steps in again to short circuit the process. Treating as done what ought to be done, that is to say, assuming that the intending transferor has executed a deed of transfer in favour of the intending transferee immediately after the property came into existence, equity fastens upon the after acquired property and treats the beneficial interest therein as transferred to the intending transferee. The question for consideration is: Is this transfer brought about by the earlier document whereby the property to be acquired in future was transferred or agreed to be transferred? In other words, can it be said, in such a situation, that the after-acquired property had been transferred, proporio vigore, by the earlier document? Does that document operate as an assignment in writing within the meaning of Order XXI, rule 16? Learned counsel for the respondent company contends that the answer to these questions must be in the affirmative. He relies on several cases to which reference may now be made.

In Purmananddas Jivandas v. Vallabdas Wallji (supra) the facts were these. In May 1859 one died leaving his properties to executors in trust for the appellant. In August 1868 the executors filed a suit in the Original Side of the Bombay High Court 1382 against Luckmidas Khimji for recovery of money lent to him as manager of Mahajan Wadi. During the pendency of the suit, the executors on the 11th May 1870 assigned in very wide and general terms all the properties of the testator to the appellant including "all movable property, debts claims and things in action whatsoever vested in them as such executors". The appellant was not brought on the record but the suit proceeded in the name of the executors. On the 23rd January 1873 a decree was passed for the plaintiffs on the record, i.e. the executors, for Rs. 31, 272-13-5 which was made a first charge on the Wadi properties. The appellant thereupon applied for execution of the decree under section 232 of the Code of 1882 (corresponding to our Order XXI, rule 16), as transferee of the decree. The Chamber Judge dismissed the application. On appeal Sargent, C. J., and Bayley, J., held that the appellant was competent to maintain the application. After pointing out that the assignment was in the most general terms, Sargent, C. J., observed:"........................ and the effect of this assignment was, in equity, to vest in Purmananddas the whole interest in the decree which was afterwards obtained. But it has been suggested that Purmananddas is not a transferee of the decree under section 232 of the Civil Procedure Code, because the decree has not been transferred to him "by assignment in writing or by operation of law", and that, therefore, he is not entitled to apply for execution. There is no doubt that in a Court of equity, in England the decree would be regarded as assigned to Purmananddas, and he would be allowed to proceed in execution in the name of the assignors. Here there is no distinction between "law" and "equity", and by the expression 'by operation of law' must be understood the operation of law as administered in these Courts. We think under the circumstances that we must hold that this decree has been transferred to Purmananddas 'by operation of law' The last sentence in the above quotation, standing by itself, quite clearly indicates that the learned 1383 -Chief Justice was of the view that as the benefit of the decree became available to the appellant by operation of the equitable principle it had to be held that the decree had been transferred to the appellant "by operation of law" rather than by an assignment in writing and that is how it was understood by the reporter who framed the head-note.

The learned Chief Justice, however, immediately after that last sentence added:"In the present case the decree has been transferred by an assignment in writing as construed in these Courts".

This sentence prima facie appears to be somewhat inconsistent with the sentence immediately preceding and it has given rise to a good deal of comments in later cases.

The learned Chief Justice has not referred to any case in which the Bombay High Court had adopted such a construction.

The case of Ananda Mohon Roy v. Promotha Nath Ganguli(1) follows the decision of the Bombay High Court in Purmananddas Jivandas v. Vatllabdas Wallji (supra). It should be noted, however, that in this Calcutta case the decree was obtained and the transfer was made on the same day and it was held that though there was no assignment of the decree in so many words the property with all arrears of rent having been assigned to the mortgagee simultaneously with the passing of the decree the assignment passed the decree also.

The case of Chimanlal Hargovinddas v. Ghulamnabi (supra) has been strongly relied upon. In that case a shop was held by A and B as tenants-in-common. In May 1936 A agreed to sell his half share ,to C. As per arrangement A filed a partition suit on the 16th January 1937 to recover his share. The disputes in the suit were referred to arbitration by order of Court and eventually the umpire made his award on the 16th January 1939 declaring that A was entitled to a half share. A then, on the 7th March, 1939, sold all his rights under the award (which was (1) [1920] 25 C.W.N. 863; A.I.R. 1921 Cal. 74, 177 1384 called a decree) to C by a registered deed. C did not apply for substitution of his name on the record of the suit. The Court passed a decree upon the award on the 1st September, 1939. On the 24th November 1939 C applied for execution of the decree. It was held that C was entitled to execute the decree under Order XXI, rule 16, for what had been transferred to him was not merely A's half share in the property but all his rights under the award including the right to take a decree. In this case, having regard to the terms of the previous agreement and the fact that the parties were treating the award as a decree the intention was quite clear that by the subsequent deed of sale both the award and the decree upon it had been transferred. It was quite clearly recognised by the Full Bench that if the sale deed transferred only. A's half share in the property or only his right to take a decree C could not apply under Order XXI, rule 16.

Reading the three cases relied on by learned counsel for the respondent company it seems to me that they proceeded on the footing that the equitable title related back to the earlier agreement in writing and converted the agreement to transfer the future decree into an assignment in writing of that decree as soon as it was passed. Some support is sought to be derived by learned counsel for this doctrine of relation back from the above quoted observations of Lord Westbury in Holroyd v. Marshall (supra) "that the contract would, in equity, transfer the beneficial ' interest" and of Jessel, M.R., in Collyer v. Isaacs (supra) that "the contract to assign thus becomes a complete assignment". I find considerable difficulty in accepting this argument as sound.

In the first place the Lord Chancellor and the Master of the Rolls were not concerned with the question of relation back in the form in which it has arisen before us. In the next place it must not be overlooked that the equitable principle herein alluded to is not a rule of construction of documents but is a substantive rule which confers the benefit of the after-acquired property on the person to whom the transferor had, by his agreement, promised to transfer the same. Thus, by treating as done that 1385 which ought to be done, equity fastens upon the after acquired property and brings about a transfer of it. The implication of this principle, to my mind, is clearly that the agreement, by itself and proprio, vigore, does not transfer the property when it is subsequently acquired but that instead of putting the intending transferee to the trouble and expense of going to Court for getting a decree for specific performance directing the promisor to execute a deed of transfer which when executed will transfer the after acquired property, equity intervenes and places the parties in a position relative to each other in which by the prior agreement they were intended to be placed as if a deed of transfer had been made. As I apprehend the position, it is by the operation of equity on the subsequent event, namely, the actual acquisition of the property on its coming into existence that the beneficial interest therein is transferred to the promisee. This transfer, to my mind, is brought about by operation of equity which is something dehors the prior agreement. It is true that that agreement makes the application of the equitable principle possible or I may even say that it sots the equity in motion but, nevertheless, it is equity alone which denudes the transferor of his interest in the after-acquired property and passes it to the intending transferee. That being the true position, as I think it is, the after acquired property cannot, logically and on principle, be said to have been transferred to the intending transferee by the agreement in writing. I do not see on what principle this transfer can be said to relate back to the previous agreement. I am fortified in my view by the observations of Lord Cave in the case of Performing Right Society v. London Theatre of Varieties(1). In that case, in 1916 a firm of music publishers, being members of the plaintiff society, assigned by an indenture of assignment to the society the performing right of every song, the right of performance of which they then possessed or should thereafter acquire, to be held by the society for the period of the assignor's membership.

Subsequently, a certain (1) L.R. [1924] A.C. 1.

1386 song was written, and the copyright in it, together with the right of performance, was assigned by the author to the said firm, but there was no fresh assignment in writing by the firm to the plaintiff society such as was required by section 5(2) of the Copyright Act, 1911. The defendants, who were music hall proprietors, permitted this song to be publicly sung in their music hall without the consent of the plaintiff society. The plaintiff society then sued the defendants for infringement of their performing rights and claimed a perpetual injunction. The defence was that as there was no assignment in writing of the copyright subsequently acquired by the firm to the plaintiff society the latter was not the legal owner and, therefore, was not entitled to a perpetual injunction. Discussing the nature of the right acquired by the plaintiff society under the indenture of 1916 and its claim to the after-acquired copyright secured by the firm and referring to section 5, sub-section (2) of the Copyright Act, 1911, Viscount Cave, L.C., observed at p. 13:"There was on the respective dates of the instruments under which the appellants claim no existing copyright in the songs in question, and therefore no owner of any such right;

and this being so, neither of those instruments can be held to have been an assignment "signed by the owner of the right within the meaning of the section. No doubt when a person executes a document purporting to assign property to be afterwards acquired by him, that property on its acquisition passes in equity to the assignee: Holroyd v. Marshall, 10 H.L.C. 191; Tailby v. Official Receiver, 13 A.C. 523; but how such a subsequent acquisition can be held to relate back, so as to cause an instrument which on its date was not an assignment under the Act to become such an assignment, I am unable to understand. The appellants have a right in equity to have the performing rights assigned to them and in that sense are equitable owners of those rights; but they are not assignees of the rights within the meaning of the statute. This contention, therefore, fails", 1387 The above observations, to my mind, completely cover the present case. On a parity of reasoning the respondent company may have, by operation of equity, become entitled to the benefit of the decree as soon as it was passed but to say that is not to say that there has been a transfer of the decree by the document of the 7th February 1949. And so it has been held in several cases to which reference may now be made.

In Basroovittil Bhandari v. Ramchandra Kamthi(1) the plaintiff assigned the decree to be passed in the pending suit. The assignee was not brought on the record under section 372 of the 1882 Code corresponding to Order XXII, rule 10 of the present Code but the suit proceeded in the name of the original plaintiff and a decree was passed in his favour. The assignee then applied for execution of that decree claiming to be a transferee decree-holder under section 232 of the 1882 Code. That application was dismissed. White,C.J., observed:"We are asked to hold that in the event which happened in this case the appellant is entitled to be treated as the transferee of a decree from a decree holder for the purposes of section 332, notwithstanding that at the time of the assignment. there was no decree and no decree-holder. It seems to us that we should not be warranted in applying the doctrine of equity on which the appellant relies, which is stated in Palaniappa v. Lakshmanan, I.L.R. 16 Mad. 429, for the purpose of construing section 232 of the Code. We think the words "decree-holder" must be construed as meaning decree-holder in fact and not as including a party who in equity may afterwards become entitled to the rights of the actual decree-holder, and that the words of the section relating to a transfer of a decree cannot be construed so as to apply to a case where there was no decree in existence at the time of the agreement".

It is true that the case of Purmananddas Jivandas v. Vallabdas Wallji (supra) was not cited in that case but the case of Palaniappa v. Lakshmanan() which (1) [1907] 17 M.L.J. 391, (2) [1898] I.L.R. 16 Mad. 429.

1388 adopted the equitable principle enunciated by Jessel, M.R., in Collyer v. Isaacs (supra) on which that Bombay case bad been founded was brought to the notice of the Court.

In Dost Muhammad v. Altaf HUsain Khan(1) one M instituted a suit for recovery of some immovable property. During the pendency of the suit M transferred his interest in the property to the respondent. The respondent did not apply to bring himself on the record and the suit went on in the name of M as the plaintiff. By a compromise decree M was awarded a portion of the property. After the decree was passed the respondent applied to execute the decree as the transferee of the decree. The Munsiff rejected the application but the District Judge reversed his order. On second appeal Chamier, J., found it impossible to treat the respondent as the transferee of the decree, for the document on which he relied was executed before the decree was passed.

Peer Mahomed Rowthen v. Raruthan Ambalam(2) may also be referred to. In that case the Madras High Court followed its earlier decision in Basroovittil Bhandari v. Ramchandra Kamthi (supra).

The case of Thakuri Gope V. Mokhtar Ahmad(3) does not carry the matter any further, for it only follows the three earlier cases herein before mentioned.

Mathurapore Zamindary Co. Ltd. v. Bhasaram Mandal(4) represents the view taken by the Calcutta High Court. In that case Hennessey and his brothers, who were Zamindars, instituted rent suits against their tenants. Pending those suits Hennessey and his brothers transferred the Zamindari to the appellant company. The appellant company did not get themselves substituted as plaintiff but allowed the suits to proceed in the names of the original plaintiffs who were the transferors. Eventually, decrees were passed in favour of Hennessey and his brothers. The appellant company then applied for execution. The executing Court and the lower appellate Court held that (1) [1912] 17 I.C. 512. (2) [1915] 30 I.C. 831.

(3)[1922] C.W.N. (Patna) 256; A.I R. 1922 Pat. 563.

(4) [1924] I.L.R. 51 Cal. 703.

1389 the appellant company was not a transferee of the decree.

The appellant company thereupon preferred, this second appeal to the High Court. it was held that the appellant company could not apply under Order XXI, rule 16, for that rule could not properly cover a case where there was no decree at the date of the assignment of the property and the term "decree holder" could not cover a party who, in equity, might afterwards have become entitled to the rights of the actual decree holder. The case of Ananda Mohon Roy v.

Promotha Nath Ganguli (supra) was explained as being based really on the construction that was put upon the conveyance, namely, that it covered a decree which had been passed "simultaneously with, if not before, the execution of the conveyance". After pointing out that in Purmananddas Jivandas v. Vallabdas Wallji (supra) the transferor and transferee stood in the position of trustee and cestui que trust and that that circumstance might have attracted the application of the equitable principle the Court could not assent to the broad proposition supposed to have been laid down in that case that the transferee in equity became a transferee of the decree by the prior agreement so as to come under Order XXI, rule 16 and preferred to follow the decision of the Madras High Court in Basroovittil Bhandari v. Ramchandra Kamthi (supra) and the other decisions to which reference has been already made.

In Pandu Joti Kadam v. Savla Piraji Kate(1) one Tuljaram obtained a decree on a mortgage against the appellant Pandu Joti. Later on, the respondent Savla brought a suit against the appellant Pandu and Tuljaram. In that suit a decree was passed directing Tuljaram to transfer the mortgage decree' to Savla. The respondent Savla thereupon without having obtained, amicably or by execution of his decree, an actual assignment of the mortgage decree sought to execute that decree. It was held that although Savla had a legal right, by executing his own decree, to compel his judgment-debtor Tuljaram to assign to him the mortgage decree obtained by Tuljaram, such (1) [1925] 27 Bom. L.R. 1109.

1390 right alone, without an assignment in writing, did not make him a transferee of the mortgage decree so as to be entitled to execute that decree.

Even the Bombay High-Court (Fawcett and Madgavkar, JJ.) in Genaram Kapurchand Marwadi v. Hanmantram Surajmal(1) followed the decision of the Madras High Court in Basroovittil Bhandari v. Ramchandra Kamthi (supra). The question came up for consideration in connection with a plea of limitation. There in February 1914 the appellant obtained an assignment of the rights of the plaintiff in a pending suit which was thereafter continued by the original plaintiff. In November 1914 a decree was passed in favour of the original plaintiff. The appellant made several applications for execution of the decree in 1916, 1917, 1920 and 1921 all of which were dismissed. In November 1923 the appellant obtained a, fresh assignment in writing from the plaintiff and made a fresh application for execution. The judgment-debtor pleaded that the earlier applications were not in accordance with law and did not keep the decree alive. It was held that although the appellant was entitled, in equity, to the benefit of the decree he did not, before he actually obtained an assignment of the decree in 1923, become a transferee of the decree by an assignment in writing within Order XXI, rule 16 and, therefore, the applications made by him prior to 1923 were not made in accordance with law and, therefore, the last application was barred by limitation. This decision clearly proceeded on the ground that Order XXI, rule 16 contemplated only the transfer of a decree after it had been passed.

The case of Abdul Kader v. Daw Yin(2) does not ,assist the respondent company, for in that case the Court took the view that, on its true construction, the deed under consideration in that case actually transferred the decree that bad already been passed.

In Prabashinee Debi v. Rasiklal Banerji(3), Rankin, C.J., considered the previous cases and preferred to (1) A.I.R. 1926 Bom. 406; 28 Bom. L.R, 776.

(2) A.I.R. 1920 Rang. 308.

(3) [1931] I.L.R. 59 Cal. 297.

1391 follow the case of Mathurapore Zamindary Co. Ltd. v. Bhasaram Mandal (supra).

The case of Purna Chandra Bhowmik v. Barna Kumari Debi(1) does not, when properly understood, afford any support to the contention of the respondent company. There the defendant No. 1 had executed a mortgage bond in favour of the plaintiff assigning by way of security the decree that would be passed in a pending suit which he, the defendant No. I had instituted against a third party for recovery of money due on unpaid bills for work done. After this mortgage a decree was passed in that suit in favour of the defendant No. 1 who bad continued that suit as the plaintiff. The plaintiff claiming to be the assignee by way of mortgage of that decree instituted this suit against two defendants. The defendant No. 1 was the plaintiff in the earlier suit who had mortgaged to the plaintiff the decree to be passed in that suit and the defendant No. 2 was a person who claimed to be a transferee of the same decree under a conveyance subsequently executed in his favour by the first defendant. The judgment-debtor under the decree in the first suit was not made a party defendant in this suit. The first defendant did not contest this suit and it was only contested by the second defendant. One of the points raised by the contesting defendant was that this subsequent suit which was one for a, pure declaration of title was bad under section 42 of the Specific Relief Act inasmuch as the plaintiff did not pray for consequential relief in the shape of a permanent injunction restraining him, the contesting defendant, from executing the decree.

In repelling that argument as manifestly untenable Mukherjea, J., as he then was, said:"All that the plaintiff could want possibly at the present stage was a declaration that she was an assignee of the decree and if she gets a declaration it would be open to her to apply for execution of the decree under Order XXI, rule 16, of the Code of Civil Procedure . No other consequential relief by way of (1) I.L.R. [1939] 2 Cal. 341. 178 178 1392 injunction or otherwise could or should have been prayed for by the plaintiff in the present suit".

It will be noticed that the construction of Order XXI, rule 16, was not in issue at all. The question was not between the person claiming to be the transferee of the decree and the judgment-debtor. Indeed, the judgment-debtor was not a party to this suit at all. The simple question was whether the suit was maintainable under section 42 by reason of the absence of a prayer for consequential relief. In view of the facts of that case the observation quoted above appears to me to be a passing one not necessary for the decision of the question then before the Court and not an expression of considered opinion on the meaning, scope and effect of Order XXI, rule 16.

All the cases, except the three cases relied on by learned counsel for the respondent company, quite clearly lay downand I think correctly-that Order XXI, rule 16, by the first alternative, contemplates the actual transfer of the decree by an assignment in writing executed after the decree is passed And that while a transfer of or an agreement to transfer a decree that may be passed in future may, in equity, entitle the intending transferee to claim the beneficial interest in the decree after it is passed, such equitable transfer does not relate back to the prior agreement and does not render the transferee a transferee of the decree by an assignment in writing, within the meaning of Order XXI, rule 16.

Learned counsel for the respondent company then contends that even if the respondent company did not, by force of the prior agreement in writing read in the light of the equitable principle alluded to above or of the provisions of the Transfer of Property Act, become the transferees of the decree by an assignment in writing, they, nevertheless, became the transferees of the decree "by operation of law" within the meaning of Order XXI, rule 16. That phrase has been considered by the different High Courts in numerous cases but the interpretations put upon it are not at all uniform and it is difficult to reconcile all of them.

1393 In this judgment in the present case the executing court expressed the view that the phrase could only mean that the rights had been transferred "on account of devolution of interest on death, etc". In delivering the judgment in the Letters Patent Appeal, Chagla, C.J., said:"The operation of law contemplated by Order XXI, rule-16 is not any equitable principle but operation by devolution as in the case of death or insolvency".

The learned Chief Justice does not give any reason for the view expressed by him but assumes the law to be so. The genesis for such assumption is probably traceable to the observations of Sir Robert P. Collier who delivered the judgment of the Privy Council in Abedoonissa Khatoon v.

Ameeroonissa Khatoon(1). The question arose in that case in this way. One Wahed sued his father Abdool for possession of certain properties. The trial Court dismissed the suit and Wahed appealed to the High Court. During the pendency of the appeal Wahed died and his widow Abedoonissa was substituted in the place of Wahed for prosecuting the appeal. The High Court allowed the appeal and by its decree declared that Wahed was in his lifetime and those who became his heirs were entitled to recover the properties in suit.

Abedoonissa applied for execution of the decree for herself and for one Wajed who was said to be the posthumous son of Wahed born of her womb. Objection was taken, inter alia, that Wajed was not the legitimate son of Wahed. This objection was overruled and it was held that Abedoonissa was entitled to execute the decree for herself and as the guardian of Wajed. Then the judgment-debtor Abdool died.

Abdool's widow Ameeroonissa filed a suit for a declaration that Wajed was not the legitimate son of Wahed and for setting aside the last mentioned order. Abedoonissa took the point that the matter was concluded by principles of res judicata. To that Ameeroonissa's reply was that the proceeding in which the question of the legitimacy of Wajed was decided was wholly incompetent so far as (1) [1876] L.R. 4 I.A. 66; I.L.R. 2 Cal. 327.

1394 Wajed was concerned because, the decree being in favour of Abedoonissa, Wajed was not a transferee of the decree within the meaning of section 208 of Act VIII of 1859 corresponding to Order XXI, rule 16 of the present Code and could not apply for execution and that being so any adjudication on his status in such proceeding was not binding at all. The question for decision in the suit was whether Wajed was a transferee of the decree within the meaning of section 208 of the Code of 1859. It was in that connection that Sir Robert P. Collier in delivering the judgment of the Privy Council, after quoting that section, observed:"It appears to their Lordships, in the first place, that,, assuming Wajed to have the interest asserted, the decree was not, in terms of this section, transferred to him, either by assignment, which is not pretended, or by operation of law, from the original decree-holder. No incident bad occurred, on which the law could operate, to transfer any estate from his mother to him. There had been no death; there bad been no devolution; there had been no succession. His mother retained what right she had; that right was not transferred to him; if he had a right, it was derived from his father;

it appears to their Lordships, therefore, that be is not a transferee of a decree within the terms of this section".

The above observations seem to put upon the phrase by operation of law" an interpretation which, in the language of Chakravartti, J., in his judgment in Sailendra Kumar v. Bank of Calcutta(1) "suggests that it would apply only in cases where certain events, not connected with any act on the part of anybody towards making a transfer, happen and the law, operating on those events, brings about a transfer". Some of the decisions of certain High Courts to be presently cited seem to assume that their Lordships of the Privy Council were out to give an exhaustive enumeration of the cases of transfer of property by operation of law but I find myself in agreement with Chakravartti, J., that there is no reason for making (1) I.L.R. [1948] 1 Cal. 472.

1395 such an assumption and treating these observations as the text of a statute.

In Dinendranath Sannyal v. Ramcoomar Ghose(1) Sir Barnes Peacock pointed out the great distinction between a private sale in satisfaction of a decree and a sale in execution of a decree. One of the principal distinctions so pointed out was:"Under the former the purchaser derives title through the vendor, and cannot acquire a better title than that of the vendor. Under the latter the purchaser notwithstanding he acquires merely the right, title and interest of the judgment-debtor, acquires that title by operation of law adversely to the judgment-debtor, and freed from all alienations or encumbrances effected by him subsequently to this attachment of the property sold in execution".

Here the act of the decree-holder in seeking execution by attachment and sale and the act of the Court in directing attachment and sale cannot possibly be said to be the happening of an event unconnected with the act of making a transfer such as death or devolution or succession referred to in Abedoonissa's case (supra) could be said to be. By the act of applying for execution the decree-holder quite clearly desires that the judgment-debtor should be stripped of all his right, title and interest in the property attached and sold and the order of the Court has the effect of so denuding the judgment-debtor and of passing his right, title and interest to the purchaser of the property at the Court sale. This transfer 'of property is not by any assignment in writing executed by the transferor in favour of the transferee but is brought about by the operation of the statutory-provisions relating to and governing execution of decrees. Thus this Privy Council decision itself shows that transfers "by operation of law" were not intended by it to be confined to the three cases of death, devolution or succession.

More often than not transfers "by operation of law" will be found to be brought about by the opera(1) [1889] L.R. 8 I.A. 65, 75.

1396 tion of statutory law. Thus when a person dies testate there is a devolution of his properties to his legal representatives by operation of the law of testamentary succession which is now mainly statutory in this country.

When a person is adjudged insolvent his properties vest in the official assignee and that transfer is brought about by the operation of the insolvency laws which have been codified. Court sale of property in execution of a decree vests the right, title and interest of the judgment-debtor in that property in the auction-purchaser thereby effecting a transfer by operation of the law embodied in the Code of Civil Procedure . Likewise, statutes in some cases provide for the forfeiture of property, e.g. property in relation to which an offence has been committed, namely, illicit liquor or opium, etc., and thereby effect a transfer of such property from the delinquent owner to the State. It is neither necessary nor profitable to try and enumerate exhaustively the instances of transfer by operation of law.

Suffice it to say that there is DO warrant for confining transfers "by operation of law" to transfers by operation of statutory laws. When a Hindu or a Mohammaden dies intestate and his heirs succeed to his estate there is a transfer not by any statute but by the operation of their respective personal law. In order to constitute a transfer of property "by operation of law" all that is necessary is that there must be a passing of one person's rights in property to another person by the force of some law, statutory or otherwise.

Reference has already been made to the case of Purmananddas Jivandas v. Vallabdas Wallji (supra) where, by applying the equitable principle, Sargent, C.J., upheld the appellant's right to maintain the application for execution. In the beginning the learned Chief Justice founded his decision on the ground that the appellant had become the transferee of the decree "by operation of law". This view appears to me to be logical, for it was by the operation of the equitable principle that the right, title and interest of the transferor in the after-acquired decree became the property of the appellant, In other words, 1397 it was equity which operated on the decree as soon as it was passed and passed the interest of the decree-, holder to the appellant. The result of this transmission was to transfer the property from the decree holder to the appellant and this transfer was brought about by the operation of the equitable principle discussed above which is as good as any rule of law. The actual decision in Purmananddas Jivandas v. Vallabdas Wallji (supra) may well be supported as an instance of transfer by operation of law and indeed Sargent, C.J., himself first described the transfer in that case as being one by operation of law. The same remarks apply to the other two cases of Ananda Mohon Roy v. Promotha Nath Ganguli (supra) and Chimanlal Hargovinddas v. Ghulamnabi (Supra) relied on by learned counsel for the respondent company.

In Abdul Kader v. Daw Yin (supra) in July 1928 the plaintiff obtained a decree that a certain sale deed be set aside on payment of a certain sum and for possession of the properties and mesne profits. In August 1928, i.e., after the passing of the decree the plaintiff executed a deed for the sale of the properties to the appellant who by the terms of the deed was to obtain possession of the properties through Court on payment of the amount mentioned therein.

The plaintiff deposited the necessary amount and applied for execution of the decree but she died shortly thereafter.

Thereupon the appellant applied for execution of the decree.

On a construction of the terms of the sale deed the Court came to the conclusion that the sale deed covered the decree and, therefore, the appellant was a transferee of the decree by assignment in writing. This was sufficient to dispose of the case but the learned Judges tried to reconcile some of the earlier cases by deducing two propositions:

(1) that the words "by operation of law" cannot be invoked so as to make an assignment operative to transfer the decree and the right under it which would upon the true construction of its terms, otherwise, be inoperative in that regard; and (2) that although in certain cases principles of equity may be relied on, e.g., in the case of a transfer 1398 by trustees and a beneficiary, such principles cannot be considered as rendering a transfer valid "by operation of law".

It is difficult to appreciate the implication of the first proposition. When on a true construction of the deed it actually operates to transfer a decree then in existence, no equ