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PETITIONER: DHANI RAM GUPTA & ORS.

       Vs.

RESPONDENT: LALA SRI RAM & ANR.

DATE OF JUDGMENT07/12/1979

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) KRISHNAIYER, V.R. PATHAK, R.S.

CITATION:  1980 AIR  157            1980 SCR  (2) 469  1980 SCC  (2) 162

ACT:      Code of  Civil Procedure  1908 (V  of 1908),  Order XXI Rule 16-Assignment  of decree-Application  for execution  of decree by  assignee-Adjustment between  judgment-debtor  and original decree-holder  after notice  of  such  application- Execution of decree whether barred.

HEADNOTE:      The appellants  who were  the assignees of a decree for specific performance  of an  agreement to reconvey property, filed an application for execution of the decree under Order XXI, rule  16 of  the Code of Civil Procedure. Notice of the application was  issued to the respondent-judgment-debtor as well as  the  original  decree-holder.  The  judgment-debtor filed objections  contending that  the execution application was not  maintainable. The  application was  adjourned  from time to  time. In  the meanwhile  the original decree-holder and the judgement-debtor moved the executing court to record full satisfaction  of the  decree,  stating  that  they  had entered into  a compromise  and that the decree was proposed to be  satisfied by payment of a fixed sum of money in cash. The money  was paid  in cash  by the  judgment-debtor to the original decree-holder in open court and satisfaction of the decree was  recorded  by  the  Executing  Court  which  also observed that  the compromise  would  not  have  any  effect whatsoever on  the rights, if any, of the transferee decree- holder who  had  already  filed  the  execution  application pursuant  to   the  deed   of  assignment.   The   execution application filed  by the appellants was thereafter taken up and dismissed  on the ground that the assignees had no right to  execute   the  decree   after  the  judgment-debtor  had satisfied the  original decree-holder  by  entering  into  a compromise with him.      In  the  appeal,  the  District  Court  held  that  the appellants had  the right  to execute  the decree  and  that their  right   could  not   be  defeated  by  the  collusive compromise entered  into between the judgment-debtor and the original decree-holder  subsequent to the date of assignment and with notice of assignment.      In  the  further  appeal  to  the  High  Court  by  the judgment-debtor, it was held that the assignee of the decree

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had no  right to execute the decree until the assignment was recognised by the Court and until that was done, it was open to the original decree holder to put the decree in execution and it  was also  open to the judgment-debtor to satisfy the decree fully  by payment  to the  decree holder  or by other adjustment.      In the  appeal to  this Court  by the  assignees of the decree on  the question whether the adjustment of the decree between the judgment debtor and the transferor-decree-holder barred execution of the decree by the transferee: ^      HELD: 1.  The High  Court was wrong in holding that the adjustment between  the judgment-debtor  and the transferor- decree-holder even after notice 470 of the  application under Order XXI, rule 16 had been served on the  transferor and  the judgment debtor barred execution of the decree by the transferee. [475 D]      2. Property  in a  decree must  pass to  the transferee under a  deed of  assignment when the parties to the deed of assignment intend  such property to pass. It does not depend on the  Court’s recognition  of the transfer. Order XXI rule 16  neither  expressly  nor  by  implication  provides  that assignment of  a decree does not take effect until rcognized by the Court. [473 D]      3. While  Order XXI  rule 16  enables the transferee to apply for  execution of  the decree,  the first  proviso  to Order XXI  rule 16  enjoins that  notice of such application shall be given to the transferor and the judgment debtor and that the  decree shall  not be  executed until the court has heard their objections, if any, to its execution. [473 E]      4. The  transfer as  between the original decree-holder and the transferee is effected by the deed of assignment. If the judgment-debtor has notice of the transfer, he cannot be permitted to defeat the rights of the transferee by entering into an  adjustment with  the transferor.  If the  judgment- debtor has  no notice  of the  transfer and  enters into  an adjustment with  the transferor before the transferee serves him with  notice under Order XXI Rule 16 the judgment-debtor is protected. [473 G]      In the instant case, the original decree-holder and the judgment-debtor had  colluded to  deprive the  appellants of their rights  under the deed of assignment and the Executing Court tacitly  gave  its  seal  of  approval  by  permitting satisfaction of  the decree  to be  entered despite the fact that the  decree had  already been assigned to the knowledge of the  judgment-debtor. The  process of the Court cannot be reduced to  a mockery  and the  procedure prescribed  by the Code of  Civil Procedure  does not  permit this  to be done. [472 C]      Dwar Buksh  Sirkar v. Fatik Jali I.L.R. 26 Calcutta 250 @ 253,  254; Avrapalli Ramrao v. Kanumarlapudi Ranganayakulu and others  AIR 1964  A.P. 1; Sadagopa Chariar v. Raghunatha Chariar ILR 33 Mad. 62, approved.      Puthiandi Mammed  v. Avalil  Moidin ILR  20  Mad.  157, disapproved.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1113 of 1976.      Appeal by  Special Leave  from the  Judgment and  Order dated 16-4-1976  of the  Allahabad High  Court in  execution Second Appeal No. 2162 of 1974.

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    J. P. Goyal and S. K. Jain for the Appellants.      P. G. Gokhale and B. R. Agarwala for the Respondents.      The Judgment of the Court was delivered by      CHINNAPPA REDDY, J.-Rattan Lal sold certain land to Sri Ram for  Rs. 10,000/-  under a registered sale deed dated 31 March, 1960.  On April 4, 1960 Sri Ram executed an agreement to reconvey the 471 property for  a sum  of Rs. 15,000/- if paid within a period of two  years. Rattan  Lal filed  suit No. 18 of 1961 in the Court of  First Additional  Civil Judge, Meerut for specific performance of  the agreement  to reconvey  and  obtained  a decree on April 17, 1962. The decree was confirmed in appeal by the  High Court  of Allahabad  on September  5, 1963.  On April 25,  1963 Rattan  Lal assigned the rights which he had under the  decree in favour of the present appellants, Dhani Ram Gupta  and another.  The appellants filed an application for execution  of the decree under Order XXI, Rule 16 of the Code of  Civil Procedure  on December  10, 1963.  Notice  of application was  issued to  Sri Ram,  the judgment debtor as well as  the original  decree-holder Rattan  Lal. Rattan Lal kept quiet but on March 7, 1964, the judgment debtor Sri Ram filed objections  contending that  the execution application was not  maintainable. The  application was  adjourned  from time to  time. Meanwhile,  on May  26, 1964,  Rattan Lal the original decree-holder  and Sri  Ram,  the  judgment  debtor moved the Executing Court to record full satisfaction of the decree. It  was stated  that the  parties had entered into a compromise and  that the decree was proposed to be satisfied by payment  of a  sum of  Rs. 7,000/-in cash by the judgment debtor to the original decree-holder. The amount was paid in open Court  and satisfaction of the decree was duly recorded on May  27, 1964  by  the  Executing  Court,  who,  however, observed that  the compromise  would  not  have  any  effect whatsoever’ on  the rights,  if any,  of Dhani  Ram, who had already filed  an execution application pursuant to the deed of  assignment   dated  April   25,  1963.  Thereafter,  the execution application  filed by  the appellants was taken up and was dismissed on October 9, 1964, on the ground that the assignee had  no right  to  execute  the  decree  after  the judgment debtor  had satisfied the original decree-holder by entering into  a compromise  with him. On appeal the learned Additional District  Judge, Meerut  held that  the appellant assignees had the right to execute the decree and that their right could  not be  defeated by  the  collusive  compromise entered into  between the  judgment debtor  and the original decree holder  subsequent to the date of assignment and with notice of  assignment. One  of the contentions raised before the learned Additional District Judge was that the so called deed of  assigned  did  not  in  fact  have  the  effect  of assigning the  decree to the appellants. That contention was also negatived  by the  learned District  Judge. On  further appeal to the High Court by the Judgment debtor, it was held that the  assignee of the decree had no right to execute the decree until  the assignment  was recognised  by the  Court. Until that  was done,  it was  held,  it  was  open  to  the original decree  holder to  put the  decree in execution; it was also open to the judgment debtor to satisfy the 472 decree fully  by payment  to the  decree-holder or  by other adjustment. The  High Court  however, did  not  express  any opinion on  the question  whether the deed of assignment did assign the right of the decree-holder to the appellants. The assignees of  the decree  have preferred  this appeal  after obtaining  special   leave  under   Article   136   of   the

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Constitution.      Even the  bare statement  of the facts is sufficient to show how  the original decree-holder and the judgment debtor have colluded  to deprive  the appellants  of  their  rights under the  deed of  assignment and  how the  Executing Court tacitly gave its seal of approval by permitting satisfaction of the decree to be entered despite the fact that the decree had already  been assigned  to the knowledge of the judgment debtor. The  process of  the Court  cannot be  reduced to  a mockery and we do not think that the procedure prescribed by the  Code  of  Civil  Procedure  permits  this  to  be  done notwithstanding the  argument of  Shri D.  V. Patel and Shri Govind Dass,  learned Counsel for the judgment-debtor to the contrary, in  support of  the judgment  under appeal.  Their submission was  that the  assignee of a decree had no rights until  the  assignment  was  recognised  by  the  Court.  In substance, the  submission of  the learned  Counsel was that the recognition  by the  Court it  was  that  completed  the assignment and gave the right to the assignee to execute the decree.      Let us  examine if  the provisions of the Code of Civil Procedure justify  the submission  of the  learned  counsel. Section 2(3)  defines "decree-holder" as meaning "any person in whose favour a decree has been passed or an order capable of execution  has been  made". Section  51 provides that the Court may,  on the  application of  the decree  holder order execution of  the decree  by various  methods.  Section  146 provides  that   where  any   proceeding  may  be  taken  or application  made   by  or  against  any  person,  then  the proceeding may be taken or the application may be made by or against any person claiming under him. Order XXI of the Code of Civil  Procedure deals  with  execution  of  decrees  and orders and  Orders XXI  r.  2  in  particular  provides  for payment or  adjustment out of Court and for the recording of satisfaction of  the decree by the Court in whole or in part as the  case may  be. Order  XXI r.  16 with  which  we  are primarily concerned is as follows:           "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 473      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 decree-holder:           Provided that,  where the decree, or such interest      as  aforesaid,  has  been  transferred  by  assignment,      notice of  such  application  shall  be  given  to  the      transferred 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."           "(Explanation-omitted)".      We are unable to read Order XXI r. 16 as furnishing any foundation for  the basic  assumption of the learned counsel for the  respondent that  property in a decree does not pass to the transferee under the assignment until the transfer is recognised by  the Court.  Property in a decree must pass to the transferee  under a  deed of assignment when the parties to the  deed of  assignment intend such property to pass. It

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does not  depend on the Court’s recognition of the transfer. Order  XXI  r.  16  neither  expressly  nor  by  implication provided that  assignment of  a decree  does not take effect until recognised  by the  Court. It is true that while Order XXI r. 16 enables a transferee to apply for execution of the decree, the  first proviso  to Order  XXI r. 16 enjoins that notice of  such application shall be given to the transferor and the  judgment-debtor and  that the  decree shall  not be executed until the Court has heard their objections, if any, to its execution. It is one thing to say that the decree may not be  executed by  the transferor  until the objections of the transferor  and the  judgment-debtor are heard, it is an altogether different  thing to say that the assignment is of no consequence  until the  objections are heard and decided. The transfer  as between  the original decree-holder and the transferee is  effected by  the deed  of assignment.  If the judgment debtor  has notice  of the  transfer, he  cannot be permitted to defeat the rights of the transferee by entering into an  adjustment with  the transferor.  If  the  judgment debtor has  no notice  of the  transfer and  enters into  an adjustment with  the transferor before the transferee serves him with  notice under  Order XXI r. 16, the judgment-debtor is protected.  This in  our view  is no more than plain good sense. In Dwar Buksh Sirkar v. Fatik Jali, the decree holder represented to the Court that the 474 judgment debtor  had satisfied  the decree  by  payment  and wanted  his   execution  application   to  be   disposed  of accordingly.  Before   satisfaction  could   be  recorded  a transferee of  the decree  from the  original  decree-holder intervened  and  claimed  that  satisfaction  could  not  be recorded as  there was a valid transfer of the decree in his favour prior  to the  alleged payment by the judgment debtor to the  original decree holder. The argument before the High Court was  that the assignee could not prevent the recording of the  satisfaction of  the decree  as he  had not filed an execution application  and got  the assignment in his favour recognised. The High Court of Calcutta observed:           "The  only   provision  in   the  Code   referring      expressly to the assignment of a decree is contained in      section 232,  and that  no doubt contemplates a case in      which the  assignee applies  for execution.  In such  a      case the  Court may,  if it thinks fit, after notice to      the decree-holder  and the  judgment-debtor, allow  the      decree to  be executed  by the  assignee. If, how ever,      there is an assignment pending proceedings in execution      taken by  the decree-holder,  I see nothing in the Code      which debars  the Code  from recognising the transferee      as  the  person  to  go  on  with  the  execution.  The      recognition of  the Court  is no doubt necessary before      he can  execute the  decree,  but  it  is  the  written      assignment and  not the recognition which makes him the      transferee in  law. The  omission of the transferee, if      it was  an omission,  to make  a formal application for      execution, was  merely an  error of  procedure and does      not        affect         the         merits         of      the.............................................It   is      argued for  the respondent  that the transferee’s title      was not  complete as express notice of the transfer had      not been  given  to  the  judgment-debtor.  As  already      observed, the  transfer, as  between transferor and the      transferee, is  effected by  the written assignment. If      the judgment-debtor  had no  notice of the transfer and      being otherwise  unaware of  it paid  the money  to the      decree-holder, the  payment  was,  of  course,  a  good

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    payment, and  he cannot  again be  held liable  to  the      transferee". We express  our agreement  with the observations made by the Calcutta High Court.      In one  of the  cases cited  by the learned counsel for the respondent,  namely Arvapalli  Ramrao  v.  Kanumarlapudi Ranganayakulu and others, a Full Bench of the Andhra Pradesh High  Court   disagreeing  with  the  observations  made  in Puthiandi Mammed v. Avalil 475 Moidin,  and agreeing with the observations made in Sadagopa Chariar v.  Raghunatha Chariar  held that  when a decree was transferred by  an assignment in writing the property in the decree passed  to the  transferee at  the time of assignment and that  recognition of  the Court  was  not  necessary  to complete the  transaction of  assignment but was required to enable  the  assignee  decree-holder  to  proceed  with  the execution. We agree.      The learned  counsel for  the  respondent  relied  upon Kadir Mira  Sahib v. Peer Mohd., Ch. Mohd. Ishrat Ali & Ors. v. Molvi  Sayed Raza  and Duvvuru  Balasubramanya  Reddy  v. Duvvruru Munuswami  Reddy &  Ors. We do not think that it is necessary for  us to refer in any detail to these cases. The basic assumption  in Ch.  Mohd. Ishrat  Ali &  Ors. v. Molvi Sayed Raza  and  Duvvuru  Balasubramanya  Reddy  v.  Duvvuru Muniswami and  Ors. (supra)  and was  that the  transfer was complete only  on recognition  by the Court. We have pointed out that  it is  not so.  In Ch.  Mohd. Ishrat Ali & Ors. v. Molvi Sayed  Raza (supra)  there are some observations which are helpful  to the  respondent but  the question  presently under consideration  did not  arise and  we need say no more than that.      We are  of the  view that  the High  Court was wrong in holding that  the  adjustment  of  the  decree  between  the judgment-debtor and  the transferor decree-holder even after notice of  the application  under Order  XXI, r. 16 had been served on  the transferor  and  the  judgment-debtor  barred execution of  the decree  by the  transferee.  The  question whether there  was any transfer of the decree under the deed of assignment  was not  decided by  the High  Court and  we, therefore, allow the appeal and remit the matter to the High Court for  decision upon  this question  only. The appeal is allowed with costs as indicated. N.V.K.         Appeal allowed. 476