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PETITIONER: LOONKARAN SETHIYA

       Vs.

RESPONDENT: STATE BANK OF JAIPUR & ORS.

DATE OF JUDGMENT: 25/04/1968

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. SHELAT, J.M. GROVER, A.N.

CITATION:  1969 AIR   73            1969 SCR  (1) 122

ACT: Indian Contract Act 9 of 1872, s. 202-Debtor giving power of attorney to creditor bank to execute a decree in his favour- It  is power coupled with interest and  irrevocable-Bank  an equitable  assignee--Can execute decree under Code of  Civil Procedure, s. 146.

HEADNOTE: The  appellant  was  indebted to the  respondent  Bank.   He executed a power of attorney in favour of the bank giving it authority  to execute a decree which he had obtained in  his favour.  The bank filed an application for the execution  of the  decree in the appellant’s name, the  application  being signed  by  the  manager of the Bank  as  holding  power  of attorney.The   appellant   object   to   the   execution.His objections were over-ruled  by the, executing court as  well as the High Court In appeal to his court. HELD:(i)  The power given by the appellant in favour of  the Bank was a power coupled with interest and in view of s. 202 of the Indian Contract Act it was irrevocable. [126 D] (ii) The  interest of the appellant under the  decree  could not  be said to have been transferred to the Bank either  in writing  or by operation of law.  But the power of  attorney was an engagement to pay out of the particular fund the debt due to the Bank and hence the same constituted an  equitable assignment of the amount due under the decree or so much  of that  amount as was necessary for discharging the debts  due to it. [127 A C] Watson  v.  The Duke of Wellington, [1830] 39 E.R.  231  and Burn N. Carvalho, [1839] 41 E.R. 265, applied. Jagabhai Lallubhai v. Rustamji Nasarwanji, [1885] I.L.R.  IX Bom.  311 and Prahlad Pd.  Modi v. Tikaitni Faldani  Kumari, A.I.R. [1956] Patna 233, approved. (iii) An equitable assignee of a decree who cannot have  the benefit of O. XXI, r. 16 of the Code of Civil Procedure  can still execute the decree under s. 146 of the Code. [128 F] Jugulkishore  Saraf v. Raw Cotton Co. Ltd. [1955]  1  S.C.R. 1369, affirmed. (iv) Although  the application had been made by the bank  as the appellant’s agent, the bank was also entitled to file it and carry it on in its own right.  It would serve no  useful

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purpose  to  direct  the present application  to  be  closed merely  because  it was made in the name of  the  appellant. [129 A-B]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 644 of 1965. Appeal  by special leave from the judgment and  order  dated July 10, 1963 of the Allahabad High Court in Execution First Appeal No. 26 of 1961. 123 M. C. Chagla, B. Dutta, and O. C. Mathur, for the appellant. C. B. Agarwala and V. D. Mahajan, for respondent No.  8--the State Bank of Jaipur & Ors. The Judgment of the Court was delivered by Hegde, J.-This appeal by special leave arises from the deci- sion  of the Allahabad High Court in execution first  appeal No.  26. of 1961 on its file.  The appellant is the  decree- holder.   The  contesting respondent is the  State  Bank  of Jaipur-to  be hereinafter referred. to as the  Bank-;  other respondents  are  not  interested in the  decision  in  this appeal. The material facts of the case are few.  The appellant  was. indebted  to  the Bank.  On March 27, 1959,  he  executed  a power  of  attorney in favour of the Bank.   That  power  of attorney interalia recited:-               "AND WHEREAS I am very heavily indebted to the               Bank  of  Jaipur Limited, Agra branch  and  my               liability  is partly secured by the pledge  of               my goods and partly by the equitable  mortgage               of  my  and my mother’s  immovable  properties               with the said Bank;               AND WHEREAS a major part of my said  liability               is unsecured;               AND WHEREAS I have agreed to. appoint the Bank               of  Jaipur  Ltd.  ,to be my  true  and  lawful               attorney  to execute the said decree  in  suit               Nos.  76 of 1949 (with which we are  concerned               in this appeal) which may ultimately be passed               in  my  said appeal and to  do  the  following               acts, deeds, matters and things for me, on  my               behalf  and  in my name and to  credit  to  my               account the sum or sums which may be  realised               in execution of or under the said decrees;               NOW KNOW YE ALL men and these presents witness               that  I  do  hereby  irrevocably   constitute,               nominate  and appoint the said Bank of  Jaipur               Limited, and/or any principal officers  and/or               any  other  person  or per-sons  that  may  be               appointed by the said Bank of, Jaipur Ltd.  or               its  assigns from time to time in this  behalf               to, be my true and lawful attorney for me and,               on  my behalf and in my name to  represent  me               therein  and do all acts, deeds,  matters  and               things in connection with the execution of the               said decree in, the Agra suit No.. 76 of  1949               and the decree that may be passed in the, said               appeal, that is to say               1. To proceed in execution of the said  decree               passed’  in the said Agra suit No. 76 of  1949               and to proceed in 124               execution of the decree which may be passed in               the  said, appeal and to realise  and  recover

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             the decretal amounts.               8.   To  withdraw  any  amount  that  may   be               deposited   in  the  courts  at  Agra   and/or               Allahabad or any court of justice in the  said               decree and/or in the decree in the said appeal               and/or  other proceedings in  connection  with               the execution of the said decrees or any other               order  - passed or made therein and/or in  any               Insolvency Court or from the Official Receiver               concerning   Insolvency   of   any   of    the                             defendants. It  may be noted that on the day the power of  attorney  was executed  the  decree passed in favour of the  appellant  in suit  No.  76 of 1949 was under  appeal.   Subsequently.  in appeal  the same was affirmed.  Thereafter the  bank  levied execution  of the ,decree in question on May 8,  1959.   The execution application was filed in the name of the appellant but it was signed by the manager of the Bank as his power,of attorney  holder.  The appellant objected to the  execution. He  contended that the power in question had  been  obtained "by  false  representation  and assurance held  out  to  the deponent  (appellant)  that they (the -Bank)  would  advance large sum of money including for the purpose of John’s  Mill and  improvement  of the same, and for  ’conducting  of  the appeals  and  other  business." He further  averred  in  his counter  statement "that no sum whatsoever at any  time  was advanced  by the Bank against the security of the  aforesaid decree and no sum whatsoever is payable to the Bank  against the  same.   There  is no lien of the  Bank  of  any  nature whatsoever in the aforesaid decree." The objection of the appellant was over-ruled by the execut- ing  court  and  the  execution  was  directed  to  proceed. Against -that order the appellant unsuccessfully went up  in appeal  to the High Court.  The only question considered  by the  High Court was whether the power executed in favour  of the  bank  was a power coupled with interest and  hence  the same  could not be revoked in view of s. 202 of  the  Indian Contract  Act,  1872 (9 of 1872).  The High  Court  answered that question in favour of ,the Bank.  It held that it was a power coupled with interest and therefore the same could not be  revoked by the appellant. In The last paragraph  of  the High Court judgment it is observed               "Mr.Kirti then tried to argue that the  entire               execution  proceedings are ultra vires but  we               cannot  allow  him to argue  an  entirely  new               point.   Sethiya’s application was founded  on               specific grounds which have been 125               rejected  by the court below and he cannot  be               permitted  to  travel  outside  them  in  this               appeal." We   are   unable  to  spell  out  the  meaning   of   these observations.   It is seen from the grounds of appeal  filed before the High Court that the appellant had contended  that "because there being no transfer or assignment of the decree in  its (Bank’s) favour, the Bank of Jaipur Limited, had  no legal  right or locus standi to execute the decree  and  the executing  court  had  no  jurisdiction  to  entertain   the execution   application  and  to  continue   the   execution proceedings." He had also contended that the execution court cannot  go  behind the decree, and the execution  case  must proceed  according  to the provisions in the Code  of  Civil Procedure.   Obviously the contention of the  appellant  was that  ’as  the decree stood in his name,  his  agent  cannot proceed  with its execution as he desired to take  into  his

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own hands the execution proceedings.  The above  contentions of the appellant were purely legal contentions; if they  are valid,  they go to the root of the matter and therefore  the High Court was not right in brushing aside those contentions on the ground that those contentions -had not been taken  in the pleadings or urged before the executing court. In  this appeal we had the benefit of hearing the  elaborate arguments of Shri M. C. Chagla for the appellant and of Shri C.  B.  Agarwala  for the respondent.   From  the  arguments advanced the following questions arise for consideration :               (1)   Whether   the  power  of   attorney   in               question is a power coupled with interest;  if               it is so, whether the same is revocable               (2)   Whether  in view of the said  power  the               Bank  can  beheld  to be an  assignee  of  the               interest  in the decree; if so,  whether  that               assignment   is  a  legal  assignment  or   an               equitable assignment ?               (3)   Whether   the   dispute   between    the               appellant   and  the  Bank  could  have   been               enquired  under  s. 47 of the  Code  of  Civil               Procedure ?               (4)   If  it  is  held that  the  Bank  is  an               assignee of the amount due under the decree or               any  portion thereof, can it because  of  that               interest  execute  the  decree,  despite   the               objection  of the appellant, either  under  O.               XXI  r.  16 or under s. 146 of  the,  Code  of               Civil Procedure ? and               (5)   The  execution application  having  been               filed  in the, name of the appellant, can  the               Bank   now  be  permitted  to   continue   the               execution in its own, right ? 126 Some  of the questions presented for decision are  not  free from  difficulty.   But  it  is  not  necessary  for  us  to pronounce  on those questions as we are of the opinion  that the  power of attorney in question is a power  coupled  with interest, and hence the same is not revocable.  Further, the transaction  entered into under that document amounts to  an equitable assignment of the decree in favour of the Bank  to the  extent necessary to discharge appellant’s debts to  the Bank and on the basis of the rule laid down by this Court in Jugulkishore Saraf v. Raw Cotton Co. Limited,(1) it is  open to the Bank to execute the decree in its own right.  Lastly, we  attach no importance to the form of the  execution,which form was necessitated because of the terms of the power  ,of attorney;  looking  to the substance of the matter  and  not being  unduly  weighed down by the form, we are  of  opinion that  the  Bank  has been executing the decree  in  its  own right.  We shall -elaborate our reasons in support of  these conclusions  presently.  In view of our above conclusion  we have not thought it necessary to go into the other questions of law raised at the hearing. There is hardly any doubt that the power given by the appel- lant in favour of the Bank is a power coupled with interest. That is clear both from the tenor of the document as well as from  its terms.  Section 202 of the Contract  Act  provides that where the agent has himself an interest in the property which  forms  the subject-matter of the agency,  the  agency cannot,   in  the  absence  ,of  an  express  contract,   be terminated to the prejudice of such interest.  It is settled law   that  where  the  agency  is  created  for   -valuable consideration  and  authority  is  given  to  effectuate   a security -or to secure interest of the agent, the  authority

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cannot be revoked.  The document itself says that the  power given  to  the  Bank is irrevocable.  It  must  be  said  in fairness to Shri Chagla -that he did not contest the finding of  the  High  Court  that  the  -power  in  question,   was irrevocable. The next question for decision is whether from the terms  of the power of attorney we can conclude that the appellant had transferred  or  assigned his rights in the  decree  or  any portion thereof in favour of the Bank.  From those terms  it is not possible to come to the conclusion that there was any transfer  of the interest of the appellant in the decree  to the Bank.  In that document there are no words of  transfer. The document specifically says that the Bank should  execute the decree on behalf of the appellant.  As per the terms  of the document the appellant continues to be the owner of  the amount due under the decree; the Bank was merely  authorised to act as his agent;and therefore it is not possible to hold that  in  law the Bank was an assignee of  the,decree.   The interest of the appellant under the decree (1)  [1955] 1 S.C.R. 1369. 127 cannot be said to have, been transferred to the Bank  either in writing or by operation of law. This takes us to the question whether the power given to the Bank amounts in equity to an assignment of the decree or any portion thereof, to the Bank.  From the power of attorney it is  clear that the amount under the decree was  specifically ear-marked  for discharge of the debts due to the Bank.   It was constituted as a special fund for the said purpose.  The power  to realise that fund was made over to the  Bank  with the further authority to set off the amount realised towards the debts due to it.  In other words, the power of  attorney is an engagement to pay out of the particular fund the  debt due to the Bank and hence the same constitutes an  equitable assignment of the amount due, under the decree or so much of that amount as is necessary for discharging the debts due to it.   That  rule  is recognised in Watson  v.  The  Duke  of Wellington(1).   Therein  the plaintiffs, executors  of  Mr. Sims,  had  advanced  a large sum of  money  to  Marquis  of Hastings  ,on  the joint bond of the Marquis and  a  surety. The  sum due on the bond exceeded pound 9000.   Towards  the end  of  1825,  the Marquis having returned  from  India  to England,  the plaintiffs made repeated applications  to  him for  payment of the debt.  The Marquis represented  that  he was  about  to receive a large share of  the  Deccan  prize- money; promised that their demand should be paid out of that fund; and begged that, in the meantime, no proceedings might be  taken  against  him or the assets  of  his  surety.   On February   6,  1826,  Mr.  Allen,  the  solicitor   of   the plaintiffs.  again  waited on the Marquis, who  then  stated that  he  had  directed Col.  Francis  Doyle,  whom  he  had empowered  to receive his share of the prize-money,  to  pay the debt and costs due to the executors of Mr. Sims; and  at the same time the Marquis wrote and delivered to Mr.Allen  a letter  addressed  to  Col.  Doyle directing  him  that  the executors  of  Mr. Sims were claimants on that /fund  for  a bond  debt  with interest.  From these facts  the  Court  of Chancery came to the conclusion that there was an  equitable assignment  in  favour  of the executors of Mr.  Sims  of  a portion of the prize-money sufficient to meet the debts  due to the estate of Mr. Sims by the Duke of Wellington.  To the same effect is the decision in Burn v. Carvalho (2). Therein the Court of Chancery held that in equity, an order given by a  debtor  to his creditor upon a third person,  having  the assets of the debtor to pay the creditor out of such fund is

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a binding equitable assignment of so much of the fund. The  courts in India, which administer both law as  well  as equity,  have  followed  the rule laid  down  in  the  above decisions.  In this connection reference may be made to  the decision of the (1) [1830] 39 E.R.231. (2) [1839] 41 E.R. 265. 128 Bombay   High  Court  in  Jagabhai  Lallubhai  v.   Rustamji Nasarwanji(1)  and  of the Patna High Court in  Prahlad  Pd. Modi  v. Tikaitni Faldani Kunari (2).  In the  latter  case, the Patna High Court held that a transaction similar to  the one we are concerned in this case, in substance amounted  to allocation  of fund to be appropriated towards the debt  and therefore  it  is  ail equitable  assignment.   No  decision taking  a contrary view has been brought to our notice.   We think  that the rule laid down in the above decisions  is  a sound  rule  as  it advances the interest  of  justice.   We accordingly adopt that rule. There  was  great deal of controversy as to whether  on  the strength of the equitable assignment in its favour, the Bank could  execute  the  decree,  even  when  the  decree-holder (appellant) does not want that it should be executed.   Shri Chagla  argued that an executing court cannot go behind  the decree; it has to execute the decree as it stands; so far as that court is concerned, the only person who can execute the decree  is  he  whose name is shown in  the  decree  as  the judgment-creditor;  unless the decree has been  transferred, and  the transfer in question recognised under O.XXI, r.  16 of  the Code of Civil Procedure, the court has no  power  to execute the decree when the judgment creditor does not  want it  to  be executed.  He urged that as the  decree  was  not transferred to the Bank either in writing or by operation of law,  nor  was  there any recognition by  court  of  such  a transfer, the Bank was incompetent to execute the decree  in its  own  right.  He was emphatic that the  only  method  by which an assignee of a decree can execute the decrees is  by having  recourse to O.XXI, r. 16.  As the Bank cannot  avail of  that provision the execution cannot be  proceeded  with. In  support  of those contentions Shri  Chagla  invited  our attention to various decisions.  It is not necessary for  us to  go into those controversies in view of the  decision  of this  Court in Jugulkishore Saraf (3).  Therein  this  Court held that an equitable assignee of a decree who cannot  have the  benefit  of O.XXI, r. 16 can still execute  the  decree under  s. 146 of the Code of Civil Procedure.   Shri  Chagla contested the correctness of that decision and desired  that the  question  of  law should be reconsidered  by  a  larger Bench.   We  are bound by that decision  and  no  compelling circumstances were made out for its reconsideration. It  is true that the -execution application shows  that  the applicant is the appellant and the Bank is merely acting  as his  agent.   In other words, the Bank did  not  purport  to execute the decree in its own name or in exercise of its own right.  When the execution application was filed, there  was no  dispute between the appellant and the Bank.   Hence  the Bank levied execution of the decree in (1)  (1885) I.L.R.IX Bom.311.   (2) A.I.R. 1956 Patna 233. (3)  [1955] 1 S.C.R. 1369. 129 the  name  of  the appellant as provided  in  the  power  of attorney.  The controversy between the parties arose  during the pendency ,of the execution.  It is only thereafter  that it  became necessary for the Bank to assert its  own  right. It   serves  no  useful  purpose  to  direct   the   present

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application to be closed merely because it, was made in  the name  of the appellant.  In view of our earlier  conclusions it will be still open to the Bank to levy fresh execution of the decree.  It will be in the interest of the appellant  as well as the Bank to allow the present application to go on. For  the reasons mentioned above, this appeal  is  dismissed with costs. G.C.               Appeal dismissed. 130