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Judgment
Ramesam, J.—The facts of this Second Appeal may be briefly stated. The 2nd defendant is a contractor who entered into a building
contract in respect of the Vellore Municipal Hospital works with the P.W. Department. By September 1914 a sum of Rs. 2,156-8-1 was due to
him. At that time he owed Rs. 1,600 to the 3rd defendant. When the 3rd defendant demanded the payment of his debts, he executed certain letters
intending (I, assume this in favour of 3rd defendant) to transfer Rs. 1,600 out of the amount due to him from the P.W.D. In December, 1914, he
owed Rs. 6,750 - to the plaintiffs and intending to transfer the whole of this said amount, he executed similar letters. The documents that came into
existence in September and December respectively may be shown in a tabular form as follows:
From the table below, it is seen that on; each occasion, the scheme was the same, consisting of (1) a letter from assignor to assignee as an
instrument of transfer (2)
3rd Defendant Plaintiffs
dated 22-9-14 dated 10-12-14
2nd Defendant to assignee. Latter not Exhibit C.
exhibited
2nd Defendant to the Ex-
ecutive Engineer I "" E.
Assignee To Executive
Engineer III "" D.
Reply by Executive
Engineer to Assignee II Endorsement on
D.
a letter from assignor to Executive Engineer being the notice intended by Section 130 of the Transfer of Property Act. The letter of transfer to the
3rd defendant though referred to in Exhibit III is not forthcoming. It is not admitted to be unstamped (D.W. 1.) and no secondary evidence can be
given of its contents : Rajah of Bobbili v. Inuganti China Sitaramaswami Guru (1900) 23 Mad. 40. In the written statement of 3rd defendant, it was
''alleged (paras 3 and 5 ""When the second defendant was demanded payment, he gave this defendant a letter of authority asking him to draw Rs.
1,600 from the amount due to him for the Pentland Hospital works and also he sent a letter to the Executive Engineer, North Arcot, asking him to
pay the said amount to this defendant. This was on or about the 22nd September 1914. The alleged assignment referred to in para 4 of the plaint is
a fraud and not sustainable in law when the second defendant had already gives latter of assignment to this defendant to draw the amount, referred
to in para 3 of this statement."" It is therefore clear that the only assignment to the 3rd defendant pleaded by him is the letter addressed to him of
which no secondary evidence can be given. As the assignment to 3rd defendant cannot be proved, it follows that there is no assignment in his
favour and the appeal must fail on this ground. Mr. Anantakrishna Iyer contends that, apart from the assignment intended by the missing letter,
Exhibit I only is enough to prove an assignment. In the first place, this is opposed to the pleadings in which the letter of 29-9-1914 other than
Exhibit I was described as the letter of assignment and the plea cannot be allowed to be raised. In the second place, to allow the plea to be raised
is an evasion of Section 91 of the Evidence Act and of the Stamp Law and the principle of ruling in Rajah of Bobbili v. Inuganti China
Sitaramaswami Guru (1900) 23 Mad. 40. A perusal of Exhibits I and III only or of even I alone leaves in one''s mind the impression that something
like a transfer was intended. It is so easy to infer the transfer but to allow such an inference to be made and to give effect to it is to allow secondary
evidence of the letter of assignment to be given.
For the sake of argument, I will leave these two considerations aside and consider the question whether Exhibit I by itself amounts to an
assignment. In my opinion, if the matter is dealt with, apart from the English decisions to be considered lower down, it does not. There must be
words of transfer in the instrument. A notice to the debtor not containing words of transfer nor referring to a transfer is not an instrument of
transfer. Otherwise every order of payment is a transfer. Every cheque or bill of exchange is a transfer. In the first place one would expect that an
instrument of transfer should, in general, be an instrument executed in favour of the assignee. I say ''in general'', for there is the well recognised
exception of a transfer effected by an endorsement on the bond or other paper evidencing the debt sought to be transferred. The case in Rama
Iyer v. Venkatachellam Pattar [1907] 30 Mad. 75 is an example. So also is the decision in Harding v. Harding [1886] 17 Q.B.D. 442. In civilised
communities, such an endorsement ordering the debtor to pay, has been always considered as a transfer, an idea borrowed from the law and
practice of negotiable instruments and the intention is given effect to by recognising endorsement as a transfer. But, apart from such cases, I would
expect an instrument of transfer to be addressed to the assignee. The settlement of acoounts containing the entry in Seetharama Iyer v.
Narayanasami Pillai [1916] 47 I.C. 749 was between the assignor and assignee and must be regarded as addressed to the assignee. But assuming
that the instrument may be addressed to the debtor, there must be words operating as a transfer.
In England, the matter has been complicated by the history of the law relating to the assignment of choses of action. At common law, except in
oases of annuity, a chose in action cannot be assigned at all. The inconvenience of the rule was avoided by permitting the assignee to sue in the
name of the assignor (see reference in foot note (a) to Section 780 of Halsbury, Vol. IV). The case where the debtor consents and a novation is
effected is really not an assignment. But Courts of Equity recognised equitable assignments from the earliest times Ryall v. Rowles 1 W. & T.L.C.
The assignment may be verbal (Halsbury Volume IV, Section 796). An agreement to assign is enough : see Tudsbory on Equitable
Assignments pp. 53 and 54 and Ryall v. Rowles 1 W. & T.L.C. 111. An agreement may be made out from a course of dealing between the
parties. (Halsbury, Vol. IV, Section 796). An order to pay will be enough provided the intention is clear. W. Brandt''s Sons & Co. v. Dunlop
Rubber Co. Ltd. [1905] A.C. 454. Then came the Judicature Act, Section 25(6). The Act created no new rights but enabled the assignee to sue
in his own name. It has not made assignable contracts which were not assignable in equity before. Nor does it impair the efficacy of equitable
assignments which would previously have been valid. (Halsbury Vol. IV, Section 783). Mr. Anantakrishna Iyer also contended that no particular
form of assignment under the Statute is required, and relied on Halsbmy, Vol. IV, Section 788 where it is said ""A direction or order by the creditor
to pay the amount is sufficient"" and reference is given to Harding v. Holding [1886] 17 Q.B.D. 442 and Brice v. Bannister [1878] 3 Q.B.D. 569.
In the former (not a case of debt) the assignor George Hardinge writes the instructions to pay at the foot of the account furnished by the trustees.
The case is similar to Rama Iyer v. Venkatachalam Pattar [1907] 30 Mad. 75 and recognises that before the Judicature Act, it would have been
impossible to give a legal title to Laura Hardinge so as to enable her to sue in her own name in respect of this right of action; she could have
maintained a suit in equity but the legal title could not have been completed in her. Now it can be done. He then points out that the trustees
assented to the assignment. It seems to me that the fact carries us a step further and imports into the case another doctrine of equity. Lord
Alverstone, C.J., in Brandt''s Son & Co. v. Dunlop Rubber Co. [1904] 1 K.B. 387 thinks this is the real ground of the decision, a remark not
affected by the reversal of the decision by the House of Lords in (1905) A.C 454 as I shall show lower down. In Brice v. Bannister [1878] 3
Q.B.D. 569 the only point argued and decided was that there can be a good equitable assignment of a future debt. It is true that Lord Coleridge,
C.J., regarded as a good assignment under the statute, but on appeal, this position was attacked and the counsel for the respondent supported the
judgment on the ground that there was good assignment in equity. Cotton, L.J, opened his judgment by saying that there was a good equitable
assignment. Brett, L.J., who dissented discusses, the case only on that footing. None of the Lord Justices refers to the statute. This has been
pointed out by Chitty, L.J., Durham Brothers v. Robertson [1898] 1 Q.B. 765. It is necessary to refer to Brice v. Bannister [1878] 3 Q.B.D. 569
Lord Coleridge held that the assignment was within the 25th section, The Court of Appeal decided the case quite apart from the Act. Cotton L.J.,
expressly decided the case on the ground of equitable assignment. Bramwell, L.J. reluctantly assented to this view, Brett, L.J. dissented but on
general principles, So soon as it was ascertained that there was a good equitable assignment with power to give a discharge, it became
unnecessary to consider whether it fell within the Act or not. In (1905) A.C. 454 Lord Macnaghten says p. 461) ''With the utmost deference to the
Court of Appeal, I have great difficulty in following their reasoning, The plaintiff''s case was put'' in two ways. It was presented as a case within
Sub-sec. 6 of Section 25 of the Judicature Act. It was also presented as a simple case of equitable assignment perfected by notice. Unfortunately
the stress of the argument was laid on the Judicature Act."" The Court of Appeal devoted almost the whole of their attention to it. The substantial
question, the only question worth considering, was all but ignored. It was treated as subordinate to the question on the statute and bound up with it.
The Lord Chief Justice, with whom the other members of the Court agree says, ""I come to the conclusion that this document does not fulfil that
which is necessary in order to entitle the plaintiff to sue, on the ground that it is not an absolute assignment or an assignment at all within that
section."" Why that which would have been a good equitable assignment before the statute should now be invalid and inoperative because it fails to
come up to the requirements of the statute, I confess I do not understand. The statute does not forbid or destroy equitable assignments, or impair
their efficacy in the slightest degree. When the rule of equity and the rules of the Common Law conflict, the rules of equity are to prevail. Before the
Statute, there was a conflict as regards assignment of debts and other choses in action. At law it was considered necessary that the debtor should
enter into some engagement with the assignee. That was never the rule in equity, In certain cases, the Judicature Act places the assignee in a better
position than he was before, Whether the present case falls within the favoured class may be doubted, But, says the Lord Chief Justice ""The
document does not, on the face of it purport to be an assignment or use the language of an assignment.
Now the Privy Council in Mulraj v. Viswanath Babhuram Vaidya [1913] 37 Bom. 198 say ""The error arose from the learned judges not having
appreciated that the positive language of the section precluded the application in India of the principles of English Law on which they based their
decision.
Mr. Ananthakrishna Iyer referred me to Nandubai v. Gan [1902] 27 Bom. 150 There Chandavarkar, J., relies on a sentence from Leake on
Contracts 3rd edition, page 1005. The passage also occurs in the 8th edition at page 881, and runs thus : ""But an order for payment out of a debt
accruing due under a contract, as for goods sold, or for work and labour, or the like, is an assignment of a debt which must be stamped as a
transfer of property."" Buck v. Robson [1878] 3 Q.B.D. 686 is cited as an authority. On an examination of the case I find that the letter is not an
order of payment but contains express words of assignment. It runs ""I hereby assign to Messrs. R & Son. etc."" It was held that the letter was not
an order for payment of money. The point discussed was that the letter related to a debt that may accrue due in future. The Court following Brice
v. Banister [1878] 3 Q.B.D. 569 and differing from Exparte Shellard. In re. Alans [1873] 17 Eq. 109 Bacon, V.C. held that it was an assignment
and it was admitted to evidence on payment of penalty. I do not think that the case supports the statement in Leake or the decision in the
Nandubai v. Gan [1902] 27 Bom. 150.
I may point out that there are other difficulties in the Way of holding Exhibit 1, to be an assignment for the letter Ex. 1 to operate as an equitable
assignment; the fund out of which the payment was to be made should be specified and if no fund is specified, the order does not operate as an
equitable assignment : Halsbury, Vol. IV. Section 801, p. 378 citing Percival v. Dunn [1885] 29 Ch. D. 128 where the order was handed over to
the third party as is the ease before me. Ryall v. Rowes 1 W. & T.L.C. 112 citing Rodick v. Gandell 43 E.R. 893. But a more formidable difficulty
is that the assignment of a debt must be of the whole debt. It is true that the word ""absolute"" in the English statute does not occur in the Transfer of
Property Act. But the effect of the word ""absolute"" is that it should not be by way of charge Durham Bros. v. Robertson [1898] 1 Q.B. 765 and
the omission of the word permits an assignment of the debt by way of security Mulraj Khatan v. Vishwanath [1913] 37 Bom. 198. see also
Venkatachalam Iyer v. Subramanya Iyer [1912] 11 M.L.T. 245. But the distinction between absolute transfers and transfers by way of security
has nothing to do with the question whether the assignment should be of the whole or may be of a part. In my opinion the assignment of the debt
must be of the whole and cannot be of part. The observation of Chitty, L.J. in Durham Bros. v. Robertson [1898] 1 Q.B. 765 are pertinent. ""It
does not say of any part of a debt or chose in action. It appears to me, as at present advised, to be questionable whether an assignment of part of
an entire debt is within the enactment. If it be, it would seem to leave it in the power of the original creditor to split up the single legal cause of the
action for the debt into as many separate legal causes of action as he might think fit. The right of assignment is not a common law right and is the
creation of the Act and I do not think the Act ought to be construed so as to cause such obvious inconvenience to the debtor."" Darling, J.
expresses a similar doubt in Jones v. Humphreys [1902] 1 K.B. 10 Lord Alverston, C.J., uses words to the same effect in William Brandts Sons
& Co. v. Dunlop Rubber Co. Ltd. [1904] 1 K.B. 387 and the reversal by the House of Lords in William Brandts Sons & Co. v. Dunlop Rubber
Co. Ltd. [1905] A.C. 454 does not affect this portion of the Lord Chief Justice''s judgment. The different opinion of Darling, J. in (1902) 1 K.B.
14 does not convince me, the decision being reversed by the Court of Appeal (on another point) as the reasons given do not meet the difficulties
pointed out by Chitty, L.J. in Durham Bros. v. Robertson [1898] 1 Q.B. 765. He deduces his conclusions from the fact that a future debt may be
assigned. In Subjan Sahib v. Abdul Aziz Sahib [1917] 42 I.C. 684 Seshagiri Iyer, J., makes an observation that the omission of the word
absolute"" is used in contrast to ''by way of security'' and has nothing to do with the point now raised. An assignment may be of the whole debt by
way of security and though when the security is worked out, a part only may suffice. There may be a series of assignments each of the whole debt
by way of security. The assignees will then be in the position of a number of mortgagees. I am therefore of opinion for all these reasons, that Exhibit
I is not an assignment or a valid assignment. The appeal fails and is dismissed with costs of respondents 1 to 4 (plaintiffs).