Paniharam Sitharamaiah vs Gubba Archiah and Others

Narasimham, J.—This is an appeal preferred under the Letters Patent against the Judgment of our learned brother Srinivasachari, J. in S.A. 778 of 1956, affirming the judgment of the lower appellate court, and raises the question as to the right of an assignee of the decree-holder, whose assignment has not been recognised by the executing court, as against the right of an attaching creditor of the decree-holder-assignor.

The facts involving this question are these: The appellant herein is the assignee of the decree-holder, the second respondent in this appeal. The second respondent Mohd. Ismail will hereinafter be referred to as the decree-holder. A decree was passed in his favour in O. S. 95/51 on the file of the sub court, Tenali for Rs. 2600/- realizable with interest thereon, and a charge was created against certain immovable properties for the realisation of the said amount. The decree-holder then transferred the decree by an assignment deed D/- 27-8-52, Ex. A. 2 in favour of the present appellant. After the assignment, the appellant (who will be referred to as the assignee) did not apply to the court for recognition of the assignment, and execution of the decree under the provisions of O. 21, R. 16 C.P.C .

While so, the first respondent (herein referred to as the attaching creditor) obtained a money decree against the decree-holder in SC 355 of 1952 on the file of the district Munsiff''s Court, Tenali and attached the decree in O. S. 95 of 1951 in favour of the Decree-holder on 11-10-52. He then executed the decree. The charged property was sold in execution and purchased by the third respondent (who will be referred to as the auction purchaser).

Before the sale of the charged property in O. S. 95 of 51, the assignee preferred a claim in C.A. 225 of 1954. That claim was dismissed, whereupon he preferred a claim suit, O. S. 201/54 in the court of the Dist. Munsif, Tenali, to set aside the adverse order passed on the claim petition.

It would appear that it was conceded that the assignment was true and supported by consideration.

The District Munsif, Tenali, who tried the claim suit, O. S. 201 of 1954, found that unless the assignee applied to the court for recognition and execution of the decree under the provisions of O. 21, Rule 16, he would have no right to question the attachment and sale of the property and, in that view, dismissed the suit.

The learned subordinate Judge, Tenali, in the appeal preferred by the assignee, agreed with that view and dismissed the appeal.

The second appeal preferred to this court was also dismissed by our learned brother Srinivasachari, J., agreeing with the view of the courts below. But, he granted leave. The matter is before us in Letters Patent Appeal.

The short question, as we have indicated, is the right of an assignee of the decree-holder, who has not applied to the court for recognition of the assignment and for execution of the decree vis-a-vis the right of an attaching creditor.

Sri Suryanarayana Murthy for the appellant-assignee argued for the position that when there is an assignment, the property which is the subject-matter of the assignment, passed to the assignee, and that any attachment effected thereafter, would not confer any rights on the attaching creditor. His contention is that O. 21, R. 16, C. P. C. is a rule of procedure and would not interfere with the substantive rights of the parties. Be it noted that in the present case the attachment (D/- 11-10-52) by the creditor was subsequent to the assignment (D/- 27-8-52). For this proposition, he has relied on Sadagopachariar v. Raghunathachariar, ILR 33 Mad 62 which was followed by a Division Bench of the Rangoon High Court in Co-operative Town Bank of Padigon v. Raman Chettiyar, ILR 5 Rang 595. (AIR 1928 Rang 25).

The Madras decision pertains to a suit by the assignee to recover the original debt repudiating the assignment. It would appear that subsequent to the assignment D/- 28-1-1904, the decrees were attached by a creditor of the decree-holder assignor. The assignee did not apply for the execution of the decree till 1905. One of his applications for execution was dismissed on 27-3-1905 on the ground that the decree had been attached. Another application was dismissed as not pressed.

On 27-7-1905, the assignee repudiated the assignment and brought a suit to recover his debts which formed the consideration for the assignment of the decrees.

The learned Judges discussed about the maintainability of the suit, and held that the suit was not maintainable in the view that unless the assignee had at least preferred a claim to the attaching court and that had been rejected, the assignee was not entitled to treat the assignment as ineffectual. In the course of the judgment, there is reference to an earlier Madras decision in Puthiandi Mammed v. Avalil Moidin, ILR 20 Mad 157, where it was held by a Division Bench that by an assignment of a decree there was no complete transfer until it was recognised by the Court. It would appear to have been contended on the strength of that decision that the property in the decree had not passed prior to the attachment, because there was no such recognition. The learned Judges expressed therein their disagreement with that view and went on to say that as they could read the relevant provision the completion of the transfer did not depend upon any recognition by the court. The ultimate decision in the case was undoubtedly, adverse to the assignee, on the ground that he had not preferred a claim to the attaching court.

But, these observations are canvassed for the proposition that the property in the decree had passed to the assignee on the assignment, that no further recognisition by the Court was necessary, and if that was the correct position, the property attached subsequent to the assignment cannot be proceeded against by the attaching creditor to the property of assignor-decree-holder.

The Rangoon case presented similar facts. That was a case where an attaching creditor executed the decree and realised Rs. 2700/-. There was an assignment of the decree prior to the attachment in favour of a co-operative town Bank of Padigon. The assignee claimed to recover the amount realised by the attaching creditor. The learned Judges took the view that such a suit for recovery of the money was maintainable. In the course of the Judgment, the learned Judges referred to ILR 20 Mad 157 and in the view that this decision was dissented from by their Lordships in the case of ILR 33 Mad 62 they agreed with the view taken by the latter bench. The opinion expressed in Sadagopachariar v. Raghunath Chariar and others ILR 33 Mad 62 appears to have been followed in Nichalsing v. Vishenji Goverdandas, AIR 1928 Sindh 71.

In Peary Lal Vs. Allahabad Bank Ltd., a single Judge expressed the opinion that in a case where there is an assignment prior to the attachment, an enquiry fell within the provisions of O. 21, R. 58 C.P.C., and that the order thereon was final, subject to the result of the suit.

Chillaloor Veera Musala Reddi v. P. Ramiaya, 5 Ind Cas 1010 (Mad), is another case where it was indicated that the remedy open to an assignee of a decree, which was attached by a creditor of the assignor, was to prefer a claim to the attaching court. The two latter rulings do not refer to the conflict of views in ILR 20 Mad 157 and ILR 33 Mad 62. They seem to indicate only a remedy of an assignee. As it is, there appears to be some difference in view between ILR 20 Mad 157 and ILR 33 Mad 62, both of which are Division Bench decisions expressing divergent views.

The learned counsel for the respondents, Sri Surya Rao argued for the position that the assignee has to apply for recognition and execution under O. 21, R. 16 C.P.C. before he could question the attachment effected by an attaching creditor and that the view expressed in ILR 20 Mad 157 has been consistently adopted in subsequent cases decided in Madras and other High Courts.

He has further argued that it is not for the executing court to embark on enquiries as to the right to execute, but must allow the execution to proceed on the basis of the decree-holder on record. This proposition is supported by Peda Yelligadu v. Venkata Kumara Mahipathi Surya Rao 29 Mad LJ 693: (AIR 1915 Mad 914) and Ari Chetty v. Theerthamalai Chetty, AIR 1917 Mad 691 (2) and Hari Krishnamurthi v. Suryanarayanamurthi, 38 Mad LJ 271: (AIR 1920 Mad 135).

Nayinsikh Jayanarayana Vs. Seerapu Polayya and Others, Considered the earlier decisions with regard to the position of an original decree-holder vis-a-vis to assignee of the decree debt, who had not taken steps to get himself recognised as the transferee decree-holder and ruled that: (at p. 394) (of Mad LJ): (at p. 384 of AIR):

The only person in whose favour the decree was on the face of it, was the original decree-holder and the executing court was bound to regard him as the person entitled to execute the decree and could regard no other person as such.

The prior decisions have been reviewed exhaustively by the Division Bench.

This ruling was followed in Paddisetti Rangayya Setti Vs. Guduru Venkata Subba Reddi and Others,

In Kunchaparti Venkatachellam Vs. Vemuri Subrahmanyam and Another, Patanjali Sastri, J. referred to ILR 33 Mad 62 and expressed that

a transfer of decree by an instrument in writing takes effect from the date of such transfer and the transferee is entitled to apply for executing the decree under O. 21, R. 16 of the Code. The court, before ordering execution has, no doubt, to issue notice of such application to the transferor and the Judgment debtor and hear their objections, if any.

It is seen, therefore, that there is consistent authority for the position that an assignee has to apply to the court under O. 21, R. 16, C.P.C. and get his assignment recognised before he could execute the decree.

It would appear, that this view is also shared by other High Courts as well. Reference is made to Umrao Singh Vs. Pahlad Singh, where the learned Judges, have observed (at p. 1001) thus:

On the face of the decree, Pahlad Singh is the person entitled to execute it. Private transactions outside the Court cannot be recognised by the execution court when the alleged assignee has not come forward to claim such rights and get her name substituted. If this were allowed, the result would be that an execution court would be compelled to go behind the decree in many cases and start an investigation as to the way in which interest has devolved on other persons not before it. It is significant that under Order 21, R. 10 C.P.C. when the holder of a decree desires to execute it, he shall apply to the court which passed the decree whereas with reference to transferees, O. 21, R. 16 merely says that where the interest of any decree-holder in a decree is transferred by assignment, the transferee may apply for execution of the decree to the court which passed it. There is nothing in the provisions of O. 16, which debars the original decree-holder whose name appears on the face of the record, from executing the decree merely because there has been some assignment out of Court which has not yet been recognised by the execution Court.

To the same effect is Anath Nath Bose Vs. Monmotha Nath Bose and Others,

Mohd. Ishrat Ali v. Sayed Raza, AIR 1945 Oudh 225 propounded the same view. It was observed in the course of the discussion with reference to the case-law, that: (at P. 226).

there is a long string of cases which lay down that so long as a transferee''s right to execute a decree is not recognised by the court, it is the original decree-holder who can make an application for execution.

A recent ruling of our High Court in Duvvuru Balasubramanya Reddy minor by guardian Varalakshamma Vs. Duvvuru Munuswami Reddy and Others, has also adopted this view.

We consider that the consensus of judicial authority supports the view that an assignee-decree-holder cannot arrest or impede execution of the decree till he applies for and obtains recognition of the assignment in his favour by the court.

A careful study of the relevant provisions would lead us to the same conclusion. Law permits the assignment of a decree. By reason of the assignment, the assignee could apply for the execution of the decree under O. 21 R. 16 C.P.C. Till he applies to the court and obtains recognition, obviously, the court has no power to go behind the decree and enter into questions beyond the scope of the decree. There is a principle involved viz. that of sanctity of decrees. Further, Order 21, Rule 53, sub-rule (3) is in these terms:-

The holder of a decree sought to be executed by the attachment of another decree of the nature specified in sub-rule (1) shall be deemed to be the representative of the holder of the attached decree and to be entitled to execute such attached decree in any manner lawful for the holder thereof.

The attaching Decree-holder, thus, steps into the shoes of the original decree-holder and could execute the decree.

This result which is independently achieved and which is also borne out by consensus of judicial authority, does not conflict or affect any substantive rights. O. 21, R. 16 regulates the procedure and does not affect substantive rights. It is perfectly consistent with the hypothesis that a transfer as between the assignor and the assignee might operate as an assignment, but so far as the execution of the decree is concerned, the assignee has to conform to the procedure prescribed to enforce the right that he had obtained by the assignment.

An assignee cannot merely rest on his assignment without resorting to the procedure for the enforcement thereof.

Salmond has lucidly brought out the distinction is his jurisprudence (11th Edn. 1957 at page 504, in Chapter 22) thus,

Whether I have a right to recover certain property is a question of substantive law, for their determination and the protection of such rights are among the ends of the administration of justice; but in what courts and within what time I must institute proceedings are questions of procedural law, for they relate merely to modes in which the courts fulfil their functions.

The executing Courts are, by law, bound to execute decrees as they stand and without going behind the decrees. An instance in point is under O. 21, R. 2(3), where it is expressly stated that a payment or adjustment which has not been certified or recorded (as aforesaid), shall not be recognised by any court executing the decree.

These and other rules of the kind are meant to safeguard the sanctity of decrees.

On a review of the several aspects bearing on this question we have no hesitation in expressing our view that the assignee, without applying under O. 21, R. 16, cannot question the attachment of the property in question and the sale thereof.

In this view, the courts below and our learned brother Srinivasachari, J. are right in dismissing the appellant''s suit.

Sri Suryanarayana Murthy has urged that, as a last plea, he might be permitted to treat the suit as an application under O. 21, R. 16.

We do not consider that this could be permitted, as different considerations would prevail with regard to an application under O. 21, R. 16, which contemplates art application for execution of the decree to the court which passed it.

We, therefore, affirm the decision of our learned brother Srinivasachari, J.

The Letters Patent Appeal fails and is dismisses

with costs of R. 1.