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CASE NO.: Appeal (civil)  2078 of 2007

PETITIONER: MOHIT BHARGAVA

RESPONDENT: BHARAT BHUSHAN BHARGAVA & ORS

DATE OF JUDGMENT: 20/04/2007

BENCH: S.B. SINHA & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  

CIVIL APPEAL NO. 2078       OF 2007 (Arising out of SLP(C) No.3756 of 2006) WITH  CIVIL APPEAL NO. 2079        OF 2007 (Arising out of SLP(C) No.7742 of 2006)

P.K. BALASUBRAMANYAN, J.

Leave granted.

1.               While the judgment debtor challenges the order of  the High Court in a petition filed by him under Article 227 of  the Constitution of India to the extent it rejects his prayers,  the decree holder has also challenged the same order to the  extent it upheld an objection of the judgment debtor.  The  decree holder and the grand father of the judgment debtor  among others, were partners in a firm.  A notice of dissolution  was issued by some of the partners to the grand father of the  judgment debtor.  Ultimately, the decree holder filed a suit in  the District Court of Gwalior for dissolution of the partnership  and for rendition of accounts.   On 27.4.1981 the court passed  a preliminary decree declaring that the partnership firm stood  dissolved with effect from 20.6.1978 and directing that  accounts be taken to settle mutual rights and liabilities.  A  receiver who had been appointed pending the suit was  directed to continue.

2.              The father of the judgment debtor pre-deceased the  grand father of the judgment debtor.  It is said that on  26.3.1985, the grand father executed a will bequeathing the  properties to his grand son, the judgment debtor.  At the  relevant time, the judgment debtor, the legatee, was a minor.   Provisions were made regarding the management of the  properties during the minority of the judgment debtor.  On  19.11.1985, the grand father of the judgment debtor died.  The  final decree proceedings continued and the Commissioner  submitted his report after scrutinising the accounts on  27.8.2002.  On 29.11.2002, the District Court Gwalior, passed  a final decree in the suit for dissolution.  Under the final  decree, the judgment debtor was liable to pay to the plaintiff a  sum of Rs.6,66.292.50 and a total sum of Rs.10,83,757/- to  other partners and a sum of Rs.5,000/- as his share of fees to  the Commissioner.  According to the judgment debtor, he has  filed an appeal against this final decree, but due to objections  raised by the Registry of the High Court regarding the court

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fee payable, further orders are awaited in the appeal on that  question.

3.              On 2.1.2003, the decree holder, the plaintiff in the  suit, filed an execution petition in the District Court of Gwalior  for execution of the decree.   In other words, the execution  petition was filed in the court which passed the decree.   Meanwhile, it is said that the will executed by the grand father  designating the judgment debtor as the legatee was probated.   On 19.3.2003, the decree holder moved the executing court for  an injunction restraining the person holding the building said  to have been bequeathed to the judgment debtor by his grand  father, from handing over possession of the same to the  judgment debtor and from handing over the documents of title  to him.  He also sought a direction restraining the bank  holding an account of the estate from permitting the judgment  debtor to operate the accounts.  The executing court passed  an order on 19.3.2003 directing the occupant of the building  as well as the bank not to transfer to the judgment-debtor the  properties enumerated in the list submitted by the decree  holder.  The person holding the building moved the executing  court praying that he be relieved from the responsibility of  managing the property.  He also produced certain documents  in the executing court with a prayer that he be relieved of his  obligations.  On 7.7.2003, the executing court, after taking  notice of the documents produced by the occupant of the  building concerned, directed that the documents be kept in  safe custody of the court.  On 26.7.2003, an application was  moved by the decree holder submitting that he had received  an offer for the purchase of the building in question, which  was situate at 14, Bakshi Colony, Indore, and praying that the  said property may be sold by way of auction and the amount  received be apportioned among the decree holder and other  partners.  Though the judgment debtor had not then and there  challenged the orders dated 19.3.2003 and 7.7.2003, he now  raised an objection in the executing court that the executing  court lacked territorial jurisdiction to order the sale of the  property situate in Indore lying outside its territorial  jurisdiction.  The application was made under Section 39 read  with Order XXI Rule 3 of the Code of Civil Procedure (for short  ’the Code’).  The judgment debtor also filed an independent  objection to the prayer of the decree holder for sale of the  property at 14 Bakshi Colony, Indore.  On 6.4.2004 the  executing court rejected the objections from the judgment  debtor.  It held that it had territorial jurisdiction to proceed  with the execution.  It also passed an order directing that the  house at No.14, Bakshi Colony, Indore be sold by public  auction after due publicity.  Feeling aggrieved by the last order  and belatedly feeling aggrieved by the earlier orders dated  19.3.2003 and 7.7.2003, the judgment debtor approached the  High Court originally by way of a revision under Section 115 of  the Code, but on its being held that a revision is not  maintainable, later by way of a motion under Article 227 of the  Constitution of India challenging all the orders.   The High  Court held that the executing court, the District Court at  Gwalior, lacked territorial jurisdiction to continue the  execution especially in respect of properties outside its  jurisdiction or to order sale of building No. 14 Bakshi Colony,  Indore and consequently set aside the order dated 6.4.2004  and transferred the execution to the concerned court at Indore  for proceeding with the execution.  But the High Court repelled  the challenge to the earlier orders of restraint dated 19.3.2003  and 7.7.2003 passed by the executing court at Gwalior.   Feeling aggrieved by the non-interference with the orders  dated 19.3.2003 and 7.7.2003, the judgment debtor has

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approached this Court.  Feeling aggrieved by the upholding of  the objection of the judgment debtor to jurisdiction, the decree  holder has come up to this Court.

4.              We shall first deal with the objection of the decree  holder to the transfer of the execution to the court at Indore  having jurisdiction over the property sought to be brought to  sale.   The decree holder who appeared in person as also the  counsel who was appearing on his behalf in Petition for  Special Leave to Appeal (Civil) No. 7742 of 2006 argued that  Section 39(4) of the Code as amended in 2002, was not  attracted since this was not a case to which Section 39(1) was  applicable.  It was contended that the court which passed the  decree had the jurisdiction to execute the decree and the  decree holder had approached that court for execution of the  decree.  There was no defect in jurisdiction in seeking to  enforce the decree through the court which passed the decree.   It was submitted that the decree was being executed by the  present court at Gwalior only because of the abolition of the  court before which the execution petition was originally filed  and the High Court misunderstood the factual position while  coming to the conclusion that Section 39(4) was attracted.  On  behalf of the judgment debtor it was pointed out that though  normally it is correct to say that the court which passed the  decree has the jurisdiction to execute the decree, the moment  the decree holder sought to execute such a decree against  property lying outside the jurisdiction of that court, Section  39(4) of the Code was attracted and the court was obliged to  transfer the decree for execution to the proper court.   Section  42 of the Code was referred to.  Counsel further contended  that earlier, in terms of Section 39(1) of the Code, a discretion  was vested in the court, either to proceed with the execution of  the decree or to transfer the same to another court as  understood by some of the decisions. There was a conflict of  judicial opinion.  The legislature had therefore stepped in with  an amendment in the year 2002 curtailing that discretion and  introducing sub-section (4) in Section 39 of the Code making it  clear that any attempt of the court to proceed with the  execution against a property outside the jurisdiction of that  court, would be one without authority and this legislative  intent had been properly understood by the High Court when  it transferred to the decree to another court.  Both sides  brought to our notice Salem Advocate Bar Association, T.N.  Vs. Union of India [2005 (6) S.C.C. 344) with particular  reference to paragraphs 22 to 24 dealing with Section 39 of the  code.   

5.              In that decision, clarifying the fields of operation of  Order XXI Rule 3, Order XXI Rule 48 and Section 39 of the  Code, this Court stated:  "Section 39 does not authorise the court to  execute the decree outside its jurisdiction but  it does not dilute the other provisions giving  such power on compliance with the conditions  stipulated in those provisions.  Thus, the  provisions, such as, Order 21 Rule 3 or Order  21 Rule 48 which provide differently, would  not be affected by Section 39(4) of the Code."  

6.              There cannot be any dispute over the proposition  that the court which passed the decree is entitled to execute  the decree.  This is clear from Section 38 of the Code which  provides that a decree may be executed either by the court   which passed it or by the court to which it is sent for  execution.  Section 42 of the Code indicates that the transferee

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court to which the decree is transferred for execution will have  the same powers in executing that decree as if it had been  passed by itself.  A decree could be executed by the court  which passed the decree so long as it is confined to the assets  within its own jurisdiction or as authorised by Order XXI Rule  3 or Order XXI Rule 48 of the Code or the judgment debtor is  within its jurisdiction, if it is a decree for personal obedience  by the judgment debtor.  But when the property sought to be  proceeded against, is outside the jurisdiction of the court  which passed the decree acting as the executing court, there  was a conflict of views earlier, some courts taking the view  that the court which passed the decree and which is  approached for execution cannot proceed with execution but  could only transmit the decree to the court having jurisdiction  over the property and some other courts taking the view that it  is a matter of discretion for the executing court and it could  either proceed with the execution or send the decree for  execution to another court.  But this conflict was set at rest by  Amendment Act 22 of 2002 with effect from 1.7.2002, by  adopting the position that if the execution is sought to be  proceeded against any person or property outside the local  limits of the jurisdiction of the executing court, nothing in  Section 39 of the Code shall be deemed to authorise the court  to proceed with the execution.  In the light of this, it may not  be possible to accept the contention that it is a matter of  discretion for the court either to proceed with the execution of  the decree or to transfer it for execution to the court within the  jurisdiction of which the property is situate.

7.              Pending a suit, the court approached with the suit,  may have jurisdiction to order attachment of a property even  outside its jurisdiction.  In execution, under Order XXI Rule  54 of the Code, it may also have jurisdiction to order  attachment of the property prohibiting the judgment debtor  from transferring or charging the property in any way when it  exercises its jurisdiction over the judgment debtor though not  over the property itself.  It could in such a case issue a percept  in terms of Section 46 of the Code and thereupon, the court to  which the percept is sent, has to actually attach the property  in the manner prescribed.  Section 136 of the Code provides  for an order of attachment in respect of a property outside the  jurisdiction of the court and sending the order of attachment  to the district court within whose local limits the property  sought to be attached, is situate as provided for therein.  But  Section 136 clearly excludes execution of decrees from within  its purview.  An execution against immovable property lying  outside the jurisdiction of the executing court is possible in  terms of order XXI Rule 3 of the Code which governs a case  where the particular item of immovable property, forms one  estate or tenure situate within the local limits of jurisdiction of  two or more courts, and one of those courts is approached for  execution of the decree against that property.  In a case where  Order XXI Rule 3 has no application, the position seems to be  that if a decree holder wants to proceed against a property  situate outside the jurisdiction of the court which passed the  decree, he has to get the decree transferred to the appropriate  court for execution on moving the executing court in that  behalf.  Whatever doubts there might have been earlier on this  question, must be taken to have been resolved by the  introduction of sub-section (4) of Section 39 of the Code which  is a mandate to the executing court to desist from proceeding  against a property situate outside its jurisdiction, unless it be  a case coming under Order XXI Rule 3 of the Code.

8.              In the case on hand, the property that is sought to

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be sold in execution of the decree for dissolution is not a  property of the partnership.  It is not a partnership asset held  by the court Gwalior or within the jurisdiction of the court at  Gwalior.  Order XXI Rule 50 of the Code is, therefore, not  attracted.  What is sought to be done by the decree holder is to  seek the sale of  a property belonging to the judgment debtor  so as to realise the fruits of his decree.  Since that property  lies outside the jurisdiction of the court at Gwalior, the  executing court was not correct in over ruling the objection of  the judgment debtor regarding the absence of jurisdiction in  the Gwarlior court to order sale of the property outside its  jurisdiction.  The High Court was, therefore, justified in  interfering with that order and in transferring the decree to the  court having jurisdiction over the property that is sought to be  proceeded against by the decree holder.  We, therefore, see no  infirmity in that part of the order of the High Court sought to  be challenged before us by the decree holder.

9.              Now coming to the challenge of the judgment debtor  to the refusal of the High Court to interfere with the orders  dated 19.3.2003 and 7.7.2003, we find no merit in it.  First of  all, the judgment debtor had not challenged those orders at  the appropriate time and had allowed them to operate until he  chose to challenge them while challenging the rejection of his  objection to jurisdiction raised later.  Of course, his argument  is that once it is found that the court has no jurisdiction to  proceed, the orders passed by it earlier should also  automatically fall to the ground.  We cannot agree.  By order  dated 19.3.2003 what the executing court did was, to direct a  third party, who had subsequently acceded to the jurisdiction  of the executing court, not to handover possession of the  building in question and the documents concerned, to the  judgment debtor.  It is seen that the third person submitted to  the jurisdiction of the court and surrendered the documents in  his possession to the executing court and prayed to that court  that he be relieved from the responsibility of managing the  property in the circumstances stated by him in his  application.  It was in that context that the executing court  passed another order dated 7.7.2003 that the documents  produced by the third party be kept in safe custody of the  court.  These two orders are certainly within the jurisdiction of  the court which passed the decree since they are only orders  of restraint being issued to a person from handing over a  property in his possession to the judgment debtor along with  the concerned documents and keeping the documents in safe  custody.  They are in the nature of a "freezing order" or a  "Mareva injunction" and an order akin to an Anton Piller  order, orders that can be issued even if the property or the  person concerned is outside the jurisdiction of the court.  In  the circumstances, especially since the judgment debtor never  bothered to question those orders as and when they were  passed, we are of the view that the High Court was not in error  in refusing to interfere with those orders.  But since the High  Court has quashed the order dated 6.4.2004 and directed the  transfer of the decree to the court at Indore, the direction  dated 11.5.2004 by the court at Gwalior for sale of the house  at No.14, Bakshi Colony, Indore by public auction must  necessarily fall to the ground.  Only to that extent, if at all, a  clarification is needed.  It will be open to the decree holder,  now that the decree has been transmitted to the court at  Indore, to move an application in the executing court at Indore  for sale of the property in question.

10.             In the result, the challenge by both sides to the  order of the High Court is rejected except to the extent of the

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clarification as above regarding the order dated 17.12.2000.

11.             The appeal is, therefore, dismissed subject to the  above clarification.   However, there will be no order as to  costs.