Bombay High Court
The Presidency Industrial Bank Ltd. vs The Hindustan Leather Industries Ltd. ... on 18 December, 1967
Equivalent citations: AIR1969BOM84, (1968)70BOMLR373, AIR 1969 BOMBAY 84, 1969 MAH LJ 49 70 BOM LR 373, 70 BOM LR 373
ORDER
1. This is an application dated 29th October 1964 for execution of a decree dated 12th December 1932 of the Court of the Civil Judge, Senior Division, Poona. in Special Civil Suit No. 84 of 1952. The application has been filed by the Bank of Karad Ltd. because by an order dated 26th April 1962 made by the Reserve Bank of India under Section 44A(4) of the Banking Companies Act. 1949, the judgment creditors, the Presidency Industrial Bank Ltd., were amalgamated with the applicants. The amount claimed is Rs. 28,997.75 and costs. The mode in which the assistance of the Court is required is by issue of notices under Order 21, Rules 16 and 22 of the Code of Civil Procedure and by attachment and sale of certain properties of the judgment-debtors. Pursuant to a chamber order dated 7th May 1965 the execution application was amended by substituting the names of the two sons of the judgment-debtor No.2 R. G. Vijayakar as his legal representatives in his place, on the allegation that the said R. G. Vijayakar was dead and by seeking attachment and sale of certain properties of the said Vijayakar in the hands of the said legal representatives.
2. The applicants have stated that the decree was registered on 11th March I 953. The applicants have stated in the execution application that the first application, being Civil Application No. 160 of 1953 for execution, was made by the judgment-creditors on 16th July 1953 to the Court of the Civil Judge, Senior Division. Poona. and the said application was decided on 15th September 1953 by transfer of the decree to this Court for execution. Pursuant to that transfer, an application for execution was made in this Court in November 1953, but in the meanwhile, the first judgment-debtor company had been ordered to be wound up, the application for execution in this Court was abandoned and treated as filed on 2nd November 1965. The second application for execution of the decree was made to the Court of the Civil Judge, Senior Division. Poona, on 3rd November 1955, being Darkhast No.251 of 1955. The said application was dismissed on 13th June 1956. The said execution application was made against the judgment-debtor No. 7 only. and the Court held that the decree could not be executed against any of the judgment-debtors until the judgment-creditors had exhausted all their remedies against the property of the first judgment-debtor which was charged with the payment of the amount under Clause (5) of the consent decree. The third application for execution was made to the learned Civil Judge, Senior Division, Poona, on 22nd February 1958 and was disposed of on 14th April 1958. Thereafter on 1st April 1964 the present applicants made an application to the Civil Judge, Senior Division, Poona, for transfer of the decree to this Court for execution and on 12th September 1964 the decree was ordered to be transferred to this Court. The present execution application was filed on 29-10-1964. On the present application notices were ordered to be issued under Rules 16 and 22 of Order 21 of the Civil Procedure Code.
3. Notices under O. 21, R. 16 were dismissed by my learned brother Kantawala J. on 22nd November 1965 stating that "Dismissed with costs as the application is not made to the Court which passed the decree". It is the notice under O.21, R. 22 of the Civil Procedure Code that has been argued before me.
4. The first objection to the execution taken by all the judgment-debtors and the legal representatives of the second judgment-debtor Vijayakar is that the present applicants are not entitled to execute the decree as being transferees by operation of law. they must first apply to the Court which passed the decree for execution of the decree and that they have not done so, therefore, they are not entitled to apply for execution to this Court. On behalf of the applicants it is contended that the application for transfer of the decree made to the Poona Court under Section 39 C. P. C. on 1st April 1964 was such an execution application by the present applicants. I am afraid, this contention is not correct. It has been held by the Privy Council in the case of Banku Behari Chatterji v. Narain Das Dat an application for transmission of a decree from one Court to another was not by itself a revival of the decree within the meaning of the Indian Limitation Act, inasmuch as an order thereon is a ministerial act of an officer of the Court, and not the judicial act of a judge.
5. It is next contended by Mr. Desai for the applicants that O.21, R. 16 C. P. C. does not apply in the present case as the assets of the Presidency Industrial Bank Ltd. were vested in the applicants neither by an act of the parties nor by operation of law, but by an order of the Reserve Bank of India, under S. 44A (4) of the Banking Companies Act, 1949. Reliance has been placed on the case of Sailendra Kumar Roy v. Bank of Calcutta Ltd. . This was a case where the amalgamation had taken place under S.153A of the Indian Companies Act, 1913. The Calcutta High Court held that where a Court acting under Section 153A, Companies Act, sanctions a scheme of amalgamation of one company with another company and further, acting under sub-section (2) of that section, orders the transfer of the assets belonging to the former to the latter, the transfer takes place by virtue of the order passed by the Court and that such transfer is not by assignment or operation of law within the meaning of the proviso to O.21, R. 16 and the latter company need not proceed under Order 21, Rule 16 C. P. C. It is not necessary for me to state whether I agree with this judgment in so far as it decides about vesting of assets under S.153A of the Indian Companies Act, 1913. I am not called upon to do this. because in the present case the vesting took place under Section 44A(6) of the Banking Companies Act, 1949. There is a material difference between the two provisions. Under S. 153A of the Indian Companies Act, 1913, where a Court sanctions a scheme of amalgamation, it also by a separate order provides for the transfer and vesting of the assets of the company which is amalgamated in the company with which it is amalgamated. In that case, the transfer does take place by an order of the Court. Whether such a transfer is or is not a transfer by operation of law, it is not necessary for me to decide. But under Section 44A(6) of the Banking Companies Act, 1949, on the sanctioning of a scheme of amalgamation by the Reserve Bank, the property of the amalgamated banking company shall by virtue of the order of sanction be transferred to and vest in the banking company which under the scheme of amalgamation is to acquire the business of the amalgamated banking company. While under Section 153A(2) of the Indian Companies Act. 1913 the vesting takes place by a separate order of the Court, under sub-section (6) of Section 44A of the Banking Companies Act, 1949, once the Reserve Bank sanctions a scheme of amalgamation, the transfer takes place by operation of law and no vesting order is made or is required to be made by the Reserve Bank of India. Therefore, in case of a transfer or vesting of the kind which I have before me, the provisions of Order 21, Rule 16 are applicable and the applicants have failed to comply with the said provisions and are not entitled to execute the decree in this Court
6. It has been held in the case of Kirtilal Jivabhai V. Chunilal Manilal, reported in 47 Bom LR 728=(AIR 1946 Born 27) that decree-holder entitled to execute a decree as such must appear to be a decree-holder on the face of the decree. The executing Court can only execute the decree provided his name appears as decree-holder on the face of the decree itself. The executing Court cannot look to anything outside or beyond the decree in order to satisfy itself that the person who is applying is the decree-holder. The judgment in the said case further provides that O. 21, R. 16 contemplates two cases of a transfer of a decree, one by assignment in writing and other by operation of law. If the transfer is by assignment in writing, it is obligatory upon the Court to give a notice of the application to the transferor and the judgment-debtor, and the decree cannot be executed until the Court has heard their objections, if any. The application must be made to the Court which passed the decree and it must be an application for execution. No separate application need be made under Order 21, Rule 18. All that the rule requires is that the transferee must apply for execution to the Court that passed the decree. Although Order 21, Rule 16 does not in terms require that on an application for execution under the said rule the Court should pass an order that the applicant is the transferee of the decree, it is desirable that ordinarily such an order should be made. But even with out the passing of a formal order, there must be a recognition by the Court that the person who has applied for the execution of the decree is a transferee with in the meaning of O.21. R. 16. But for such recognition the person who applies for execution would be a stranger to the decree and would not be entitled to maintain the application. In my opinion, this expression of opinion applies equally well to a transfer by operation of law as this kind of transfer is also provided for by Order 21, Rule 16, C. P. C.
7. However, these questions really do not arise in view of the fact that a notice under Order 21, Rule 16 has been dismissed by my learned brother Kantawala J. on 22nd November 1965 on the ground that the application was not made to the Court which passed the decree. The applicants have not gone in appeal against the said order. Principles of res judicata apply to execution applications also. I, therefore, hold that the applicants are not entitled to apply to this Court for execution of the decree.
8. The next objection of the judgment-debtors and the legal representatives of judgment-debtor No.2 Vijayakar to the execution is that the decree is not executable before the judgment-creditors have exhausted all the remedies against the property of the judgment-debtor No. 1, which was charged by the consent decree with the payment of the decretal amount and that para 5 of the consent decree expressly provides for execution in the first instance against the said property and for recovery from the said property. Para 4 of the plaint in the suit reads as under:
"4. The Defendant No.1 company has pledged her machinery, goods, documents, all kinds of securities, furniture, and assets etc., with the plaintiff for her loan as collateral security, and on 31st of March 1949 gave a letter of hypothecation in the name of plaintiff bark by the Defendants Company and by all the defendants, and has given that machinery assets in the possession of the plaintiff and are being used by the defendant No. 1 with plaintiff's permission. Due to this letter of hypothecation or due to any other reasons plaintiff's right is not affected and plaintiff is entitled to recover his whole amount due from defendants jointly and severally or from any one of them."
9. The decree is a consent decree and term (5) thereof provides as under:
"Defendant No.1 "The Hindusthan Leather Industries Ltd." is the registered company under the Indian Companies Act, and all assets and moveable properties of defendant No.1 company are pledged with the plaintiff and the plaintiff has got first priority of its dues on the pledged assets and moveable properties, and these dues of the plaintiff are kept till the realisation of the amount as per decree; and the charge has been kept on the assets and moveable property under this decree, and the same is kept permanent. Plaintiff do recover amount in the first instance from the said charged property; if all the dues are not recovered from the charged property plaintiff is entitled to recover the residues from the other defendants".
The second execution application filed by the judgment-creditors against the judgment-debtor No, 7 in the Court of the Civil Judge, Senior Division, at Poona was dismissed on 13th June 1956. The order dismissing the said application states:
"The decree is being sought to be executed against the 7th defendant. He naturally contends that as per the decree D. H. ought to first exhaust his remedies against the charged property of the J. D. No.1 and against the J. D. No.1. It is contended for the D. H. that the J. D. No.1 has gone in liquidation. Assuming without proof that it is so, Mr. Khire for the D. H. could not dispute that he could still have his remedy against the J. D. No. 1. That being the position unless that remedy is exhausted the balance is struck, the D. H. could not proceed against the 7th or any other J. D. ORDER "The execution falls and the application is dismissed. Darkhast is disposed of, Costs on D. H. D. H. to pay the costs of J. D. No.7".
It may be noticed that although the said execution application was against the judgment-debtor No. 7 only the order states that unless remedies are exhausted against the property of the judgment-debtor No. 1, the decree-holder, could not proceed against the 7th or "any other judgment-debtor". Although the learned Judge was not called upon to decide what the position was with regard to the judgment-debtors other than the judgment-debtor No. 7 and the decision will not be res judicata with regard to the other judgment-debtors, the observation of the learned Judge is correct that the decree could not be executed even against the other judgment-debtors.
10. No account has been given by the applicants as to what steps they or Judgment Creditor took to exhaust, their remedy against the said property before filing this execution application. I am afraid, they have not complied with condition No. 5 of the consent decree and the applicants are not entitled to maintain the present execution application on this ground also.
11. The applicants have contended before me that this property which was charged with the payment of the decretal amount was not available to them at the time of the suit as well as at the tune of the consent decree. The applicants offered to lead evidence before me to prove this. I, however, informed Mr. Desai appearing for the applicants that an executing Court or for the matter of that even the Court which passed the decree is not entitled to go behind the decree which is sought to be executed and It was not open to the applicants either to lead evidence on this point or to contend that the statements in the plaint as well as the consent decree are false and that the property charged with the payment of the decretal amount was not at the relevant point of time avail-able for satisfaction of the judgment-creditors' claim. However, to enable them to place the facts as to the non-availability of this property on record, I permitted them to set out the said facts in an affidavit The applicants have thereafter filed the affidavit of Madhav Murlidhar Inamdar dated 13th December 1967 indicating that this property has not been available to the judgment-creditors from 1946. In para 13 of the said affidavit, it is stated as follows:
"I say that the properties hypothecated to the Presidency Industrial Bank Ltd. could not be proceeded against in execution of the decree herein in the circumstances aforesaid and the said properties remained all along in the possession of the New Citizen Bank of India Ltd. from the date of the hypothecation in its favour in the year 1946 till the appointment of the Court Receiver in the year 1953, and the said property was the subject matter of a prior encumbrance in favour of the New Citizen Bark of India Ltd. for Rs. 26,000 odd. Besides, the charge in favour of the Presidency Industrial Bank Ltd, was not registered with the Registrar of companies under the provisions of Sectic Companies Act, 1913, and the decree-holders were advised that in the circumstances the property charged could be successfully followed. The applicants therefore were obliged to proceed against the other defendant to recover the amount of the said decree, and for that purpose they took various proceedings in execution, I say that the applicants should be allowed to lead this evidence in these proceedings".
12. I am afraid, I cannot go behind the terms of the consent decree and find that even at the date of the decree contrary to the provisions of the consent decree, the property was not available. However, this contention of the applicants is falsified by the affidavit of D. M. Shinde, the judgment-debtor No. 5, made on 18th November 1965, wherein he has stated that the property charged was in the possession of the Official Liquidator of judgment-debtor No. 1 and that the Official Liquidator has sold the said property and sale proceeds thereof to the extent of about Rs. 50,000 are in the hands of the Official Liquidator. I am also informed that the applicants have not filed any claim with the Official Liquidator. I, therefore, hold that the applicants have not complined with and carried out condition No. 5 of the consent decree and are not entitled to execute the decree against the judgment-debtors and the legal representatives of Vijayakar.
13. Mr. Desai for the applicants made a feeble attempt to argue that as the decree had not been registered with the Registrar of Companies under S. 109 of the Indian Companies Act, 1913, the charge created on the property was void and, therefore, no recourse could be had to the property and the applicants were entitled to execute the decree against judgment-debtors other than Judgment Debtor No. 1. There is, however, no substance in this contention as the said property was in terms of the consent decree in the possession of the judgment-creditors or persons on their behalf and it has not been made out that the charge was challenged by the liquidator or any other creditor of the company or that the liquidator has taken possession of the said property from the judgment-creditors on the ground that the charge against him was void.
14. The next objection of the judgment-debtors and the legal representatives of Vijayakar, the deceased judgment-debtor No. 2 is that the execution application is time barred. The decree was passed on 12th December 1952. The present execution application was filed on 29th October 1964 within 12 years of the passing of the decree. Article 136 of the Indian Limitation Act, 1963, provides a period of 12 years for the execution of any decree from the time when the decree becomes enforceable. The present Limitation Act has considerably changed the law and while under the old Act an application for execution had to be made within a period of three years or, if the decree was registered, within a period of six years, under the present Act even the first execution application can be filled within a period of 12 years. The execution application is, therefore, in my opinion, not barred by the law of limitation as against the judgment-debtors. The position of the legal representatives of judgment-debtor No. 2 is, however, different and I shall deal with it presently.
15. The legal representatives of the deceased judgment-debtor No. 2 Vijayakar object to the application on the ground that the execution application is time barred against them. The present execution application was filed on 29th October 1964. In the application, execution was sought against the deceased judgment-debtor No. 2 Vijayakar. He had died on 31st July 1959. The execution application was, therefore, filed against a dead person and was, in my opinion, a nullity so far as the said judgment debtor was concerned. It has been held in the case of Gulabsingh v. Nathu, reported in ILR (1944) Nag 419=(AIR 1944 Nag 145) that an application according to law. By a Chamber order dated 7th May 1965, the legal representatives were joined. In any case, the execution application against them could only be deemed to have been filed on that day. This date was beyond the period of 12 years of the passing of the decree. In my opinion, the execution application is barred by Article 136 of the Indian Limitation Act 1963 in so far as the legal representatives of the deceased judgment-debtor No. 2 Vijayakar are concerned.
16. The legal representatives have also objected to the execution on the ground that the applicants have not applied for execution against them to the Court which passed the Decree under the provisions of Section 50 C. P. C. which provides that where a judgment-debtor dies before the decree has been fully satisfied, the decree-holder may apply to the Court which passed it to execute the same against the legal representatives of the deceased. This provision has to be read, with Order 21, Rule 22 C. P. C. which provides that where an application for execution is made against the legal representatives of a party to the decree shall issue a notice to the person against whom execution is applied for requiring him to show cause, on a date to be fixed, why the decree should not be executed against him. There are, therefore, two requirements of an execution application against legal representatives. One is that the execution application must be made to the Court which passed the decree and the second is that the notice of execution must be issued to the legal representatives. I have already observed that transfer application under S. 39 C. P. C. is not an execution application, as has been held in AIR 1927 PC 73. In the said case, it has also been observed that usually no notice of an application under S.39 of the Civil Procedure Code is issued to any other parties. Rule 22 of Order 21 makes such notice compulsory. Assuming, therefore, that in the application for transfer the names of the legal representatives had been mentioned, even so, the said application would not be an execution application. I am afraid, the applicants have not alleged that they made any other application to the Poona Court for the execution of the decree. I must, therefore, hold that as the applicants have not made any application for execution against the legal representatives to the Court which passed the decree, the present application is not maintainable on this ground also.
17. A meaningless controversy has arisen whether in the original transfer application filed in Poona Court, names of the legal representatives were or were not mentioned. The legal representatives contend that the original transfer application in Poona Court Is missing. The applicants have produced a certified copy purporting to be a certified copy of reconstructed record. It is alleged that it has been made from a copy of the transfer application in the possession of the applicants' advocate in Poona. Uchgaonkar, an Advocate of the Poona Court, has made an affidavit dated 24th February 1966 stating that the original transfer application had been lost and that the copy in his possession from which the record has been reconstructed and certified copy issued mentions the names of the legal representatives. The legal representatives deny that the original application filed in the Poona Court mentions their names. The contentions of the legal representatives appear to me to be correct, because, firstly, papers transmitted to this Court by the Poona Court do not mention the names of the legal representatives, secondly, names of legal representatives were brought on record in this Court by a Chamber order dated 7th May 1965, and thirdly, in three affidavits of M. M. Inamdar dated 30th April 1965, 16th October 1965 and 13th December 1965, it has been stated that neither the applicants nor the said Inamdar were aware of the death of judgment-debtor No. 2 Vijayakar until after the filing of the present execution application in the Bombay Court. If this is correct, the names of the legal representatives could not have been mentioned in the transfer application in Poona. However, in view of the fact that the transfer application itself is not sufficient compliance with the provision of S. 50 and O.21, R. 22 C. P. C. this controversy is not material for deciding the point in issue.
18. In the result, I dismiss the execution application against all the judgment-debtors and the legal representatives of the deceased judgment-debtor No.2 Vijayakar with costs In three sets. The costs are quantified at Rs. 500 for the legal representatives of the judgment; debtor No. 2, Rs. 250 for judgment debtor No.4, and Rs. 250 for judgment-debtor No. 5.
19. Execution application dismissed