Case title:
Jugalkishore Saraf vs Raw Cotton Co. Ltd
Date of Order:
7 March 1955
Bench:
Das, Sudhi Ranjan
Parties:
Jugalkishore Saraf (Appellant)
Raw Cotton Co. Ltd (Respondent)
SUBJECT
- Mahomedali Habib and Sakerkhanoo Mahomedali Habib filed a lawsuit against Jugalkishore Saraf in 1948 to recover Rs. 7,113-7-0 and 6% annual interest for certain gold and silver transactions. The main question is whether the respondent company can be categorized as the recipients of the court’s judgment.
- The Court determined that the sale deed encompassed the court’s judgment and the appellant was recognized as the transferee of the judgment through a written assignment.
ISSUE RAISED
- The primary issue presented is whether the respondent company can be considered as the recipients of the decree as defined by Order XXI, rule 16 of the Code of Civil Procedure.
IMPORTANT PROVISIONS
- Order XXI, rule 16 of the Code of Civil Procedure pertains to the transfer of a decree. It states that a decree may be transferred by the court to another court within the same jurisdiction or to a court outside the jurisdiction for execution. This rule outlines the procedure for a decree from one court to another for the purpose of executing the decree.
- Section 130 of the Transfer of Property Act, 1882 deals with the transfer of actionable claims. An actionable claim is a claim to any debt, whether it is a legal obligation or a right to recover money. The transfer must be signed by the transferor or his authorized agent, and the transferee is entitled to sue in their own name for the debt or claim.
- Section 5 of the Transfer of Property Act defines “transfer of property” as an action where a transferor conveys property to one or more transferees, either presently or in the future. This agreement can be enforced as soon as the property comes into existence.
OVERVIEW
- Two persons named Mahomedali Habib and Sakerkhanoo Mahomedali Habib ( H & S) used to carry on business as merchants in Bombay under the name and style of Habib & Sons. In 1948, the firm instituted a suit against Jugalkishore Saraf for the recovery of Rs. 7,113-7-0 with interest at 6 per annum for certain transactions in gold and silver.
- The two partners agreed to transfer their debts and full benefit of their securities to the respondent company (Raw Cotton) 1372.
- The company failed to follow the procedure to substitute themselves as plaintiffs instead of Habib & Sons, resulting in their properties being transferred to the Custodian of Evacuee Property. This resulted in their relocation from India to Pakistan.
- On December 15, 1949, a decree was issued in a summary suit ordering the payment of Rs. 8,018-7-0 for the debt and interest, along with Rs. 410 for the suit’s costs. The plaintiffs were Habib & Sons, and the decree was ruled in their favor. On December 11, 1950, the Custodian of Evacuee Property confirmed the “transaction of transfer” of Habib & Sons’ business to the respondent company through an order issued on August 2, 1950.
- The respondent company submitted a tabular statement to the Bombay City Civil Court, claiming it was an application for execution. It requested the Court to declare the Applicants as the assignees of the decree, as the outstanding debt had been transferred from the plaintiffs to the Applicants through a deed of assignment dated February 7, 1949. The company also sought an order for their substitution in place of the plaintiffs.
- The Bombay High Court argued that a deed attempting to convey non-existent property is legally void, and an agreement to transfer non-existent property cannot result in alienation.
- The High Court determined that the document dated February 7th, 1949 constituted an assignment of the decree in the pending lawsuit. The court’s reasoning was that the document amounted to a transfer of the expected decree in the pending lawsuit and could be enforced through a lawsuit seeking specific performance. This agreement could be enforced through a lawsuit seeking specific performance, as indicated by the court.
ARGUMENTS ADVANCED BY THE RESPONDENT
- The respondents submitted an application for the execution of a decree in the City Civil Court in Bombay, invoking Order XXI, rule 11 of the Code. The Court issued a notice requiring both H & S and the appellant to provide reasons why the transferees (the respondents) should not be allowed to execute the decree.
- H & S brought a legal action against the appellant to recover a sum of money. On February 7, 1949, H and S transferred all their outstanding debts, securities, and other assets to the respondents. The respondents chose not to take any action under Order XXII, rule 10 of the Code of Civil Procedure, instead allowing the lawsuit to proceed under the original plaintiffs' names.
ARGUMENTS ADVANCED BY THE APPELLANT
- The appellant argued that the respondents were not authorized to execute the decree, but it was determined that they were eligible to file an execution application for the decree under section 146 of the Code of Civil Procedure.
JUDGEMENT ANALYSIS
- The document dated February 7th, 1949 was a fully executed deed of transfer encompassing the forthcoming decree in the ongoing lawsuit. According to the Transfer of Property Act, it is impermissible to transfer property that does not exist at the time of the transfer.
- The court argued that the equitable title is retroactively connected to the earlier written agreement, transforming it into a written assignment of the future decree. The counsel attempted to justify this doctrine by citing Lord Westbury’s statement in Holroyd v. Marshall and Jessel, M.R.’s remark in Collyer v. Isaacs. However, the court encountered difficulty in accepting this argument as valid.
- Equity is a rule that grants the right to any subsequently acquired property to the individual to whom the transferor had promised to transfer it through their agreement, allowing it to be transferred.
- The agreement enables the application of the equitable principle, but it is only equity itself that transfers the after-acquired property to the intended transferee. Lord Cave’s observations in Performing Right Society v. London Theatre of Varieties further support this view. It is logically and fundamentally incorrect to claim that the after-acquired property has been transferred to the intended transferee through the written agreement.
- The transfer of property in various legal situations such as insolvency, execution of decrees, or commission of certain offenses can occur through the operation of specific laws and provisions. Insolvency laws allow for the transfer of property to the official assignee, while execution of decrees allows for the transfer of the right, title, and interest of the judgment-debtor to the auction-purchaser. Forfeiture laws allow for the transfer of property to the State or relevant authorities in certain cases.
- Hindu and Muslim transfers “by operation of law” are not limited to statutory laws, as they can be based on personal laws. In the case of Purmananddas Jivandas v. Vallabdas Wallji (supra), Chief Justice Sargent upheld the appellant’s right to pursue the execution application by applying equitable principles.
- The Court concluded that the sale deed encompassed the decree, and the appellant was considered a transferee of the decree through a written assignment. However, the judges attempted to reconcile previous cases by deriving two propositions.
