# ]ugalkisho;e ·saraf v. Raw Cotton Co. Ltd

- **Citation:** [1955] 1 S.C.R. 1369
- **Court:** Supreme Court of India
- **Decided:** 1955
- **Bench:** S. R.' DAs, Bhagw4Ti, · Imam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ugalkisho-e-saraf-v-raw-cotton-co-ltd-347
- **Pages:** 59

## Headnote

Code 'of Civil Pr6cedure (Act' V ~f 1908), s. 146; Order XXI,
rule 16-Debt transferred pending ·suit thereon-Decree not mentioned
in deed-Execution of decree-Application by transferee-Applicability .of, Or_det: XX!, rule .16 . and s. · 146-Equitable principles-:-
Transfer of Property, Act (IV ,of 1882), ss. 3, 5, 8. and 1~0.
H si. S filed a suit against th~ appellant for recovery of money
and during the. pendency of the .suit a document was executed on the
7th f'.ebruary, 1949,. wher~.by. H
& S transferred to the respondents
all book and othe,r debts . due to them together with all. securities for
the debts and all other property to which they were entitled in connection with their ,.b:usiness. in. Bombay. One· of the book debts was
the subject matter of .the suit, but there was no mention in that
·docu~ent of the , sirit pr . th~ decree to. be passed in the suit.. The
respondents did. not .take. any .steps under Order XXII, rule 10, of
the Code of Civil Procedure. to get themselves substituted as plaintiffs
in the place of H. & S, but allowed the 'suit to be continued in the
name of .the original plaintiffs, and on the 15th December, 1949, a
decree was passed, in favoμr of H & S against the appellant. On the
25th April, 1951, the rcospondents filed 1n. the City Civil Court, Bombay, an application for execution of the decree under Order XXI,
rule· 11 of the Code, and a notice under Order XXII, rule 16 was
issued by the Court calling. upon H & S and the appellant to' show
cause why the decree' ~hould not be executed by the transferees, the
respondents. The appellant contended inter . alia that as the respondents were only the assignees of the debt which was the subjectmatter of .the suit .and not of the decree itself they were not entitled
to execute the decree. ·
· Held, that the respondents as the transferees of the debt which
was the subject-matter of the suit were entitled to make an application for execution of .the decree under section 146 of the Code of
Civil Procedure as persons claiming under the decree-holder.
The effect of the expression "save as otherwise provided In th'is
Code" contained in section 146 is that a person cannot make an
application under section 146 if other provisions of the Code are
applicable to it.
Per DAs
and IMAM
J).,
BHAGWATI
J. · dissenting.-Order
XXI, rule 16, by the first alternative, contemplates the actual trans-
"fer by an assignment in writing of a decree after it is passed
and while a transfer of or an agreement to transfer a decree that
may be passed in future may, in equity, entitle the transferee to
claim the beneficial interest in the decree after it is passed, such
·1955
111arch 7
1955
]ugalkisho;e ·saraf
v.
Raw Cotton
Co. Ltd.
1370
SUll!YEMii: C0URT REPORTS
[J1)55]
equitable transfer does ;q.o~1 ren.4er I ~he: ,1'a.ns.~ree 1 a transferee of the
decree by assignment in writing within the ffieaning of Order XXI,
rule 16.
·,
'.· , ,,. .· .. 1
··~ .,
1
f.
,
,
Per DAs J.-The transfer in writing of I a property which is
the subject-matter of a su.it wi~o~t. in terms transferring the decree
passed or to be passed in the 'sUit does ndt entitle the' transferee to
apply £@r ·irxecution of the .decre~ .uqder Order._ ~XI,, ~ule . .l~, as a
tr;insferee. o~ the decree._Py .;in assignment in,Vfriting.
·
If :by ·reason· of any provision of law,
st<~tu,tory or ·other\visc!,
interest in property passes from · one person . to another, ·. tliere is a
transfer of ·the property by oper.ition of law; There is no warrant
for confining transfers "by operation of law',' to the three cases of
de;:i.th, devolution or sutcession ·or' to transfers bY opera!ioh ·of statutory lJ.ws only. If the dOcurrient ·i_n question'; could be" ConStrued
to be .f transfer of or an .agfeement to transfer the· deCree ·to' be ·passed
iri future~ then on the decree beiD;g passed, by opetation Of·.equity,
the fespondellts would .become the 'trarisferees of the' dCcree ·by
operation of law within the mfaning of Order XXI, rule· i6

## Text

_Characters 0–39,670 of 134,353. This is a partial read: ask again with offset=39670 for what follows._

-
S.C.R.
SUPREME COURT REPORTS
1369
JUGALKISHORE SARAF
1. ,.!
' v:
RAW COTTON CO. LTD.
[S. R.' DAs,' BHAGW4TI and· IMAM JJ.]
Code 'of Civil Pr6cedure (Act' V ~f 1908), s. 146; Order XXI,
rule 16-Debt transferred pending ·suit thereon-Decree not mentioned
in deed-Execution of decree-Application by transferee-Applicability .of, Or_det: XX!, rule .16 . and s. · 146-Equitable principles-:-
Transfer of Property, Act (IV ,of 1882), ss. 3, 5, 8. and 1~0.
H si. S filed a suit against th~ appellant for recovery of money
and during the. pendency of the .suit a document was executed on the
7th f'.ebruary, 1949,. wher~.by. H
& S transferred to the respondents
all book and othe,r debts . due to them together with all. securities for
the debts and all other property to which they were entitled in connection with their ,.b:usiness. in. Bombay. One· of the book debts was
the subject matter of .the suit, but there was no mention in that
·docu~ent of the , sirit pr . th~ decree to. be passed in the suit.. The
respondents did. not .take. any .steps under Order XXII, rule 10, of
the Code of Civil Procedure. to get themselves substituted as plaintiffs
in the place of H. & S, but allowed the 'suit to be continued in the
name of .the original plaintiffs, and on the 15th December, 1949, a
decree was passed, in favoμr of H & S against the appellant. On the
25th April, 1951, the rcospondents filed 1n. the City Civil Court, Bombay, an application for execution of the decree under Order XXI,
rule· 11 of the Code, and a notice under Order XXII, rule 16 was
issued by the Court calling. upon H & S and the appellant to' show
cause why the decree' ~hould not be executed by the transferees, the
respondents. The appellant contended inter . alia that as the respondents were only the assignees of the debt which was the subjectmatter of .the suit .and not of the decree itself they were not entitled
to execute the decree. ·
· Held, that the respondents as the transferees of the debt which
was the subject-matter of the suit were entitled to make an application for execution of .the decree under section 146 of the Code of
Civil Procedure as persons claiming under the decree-holder.
The effect of the expression "save as otherwise provided In th'is
Code" contained in section 146 is that a person cannot make an
application under section 146 if other provisions of the Code are
applicable to it.
Per DAs
and IMAM
J).,
BHAGWATI
J. · dissenting.-Order
XXI, rule 16, by the first alternative, contemplates the actual trans-
"fer by an assignment in writing of a decree after it is passed
and while a transfer of or an agreement to transfer a decree that
may be passed in future may, in equity, entitle the transferee to
claim the beneficial interest in the decree after it is passed, such
·1955
111arch 7
1955
]ugalkisho;e ·saraf
v.
Raw Cotton
Co. Ltd.
1370
SUll!YEMii: C0URT REPORTS
[J1)55]
equitable transfer does ;q.o~1 ren.4er I ~he: ,1'a.ns.~ree 1 a transferee of the
decree by assignment in writing within the ffieaning of Order XXI,
rule 16.
·,
'.· , ,,. .· .. 1
··~ .,
1
f.
,
,
Per DAs J.-The transfer in writing of I a property which is
the subject-matter of a su.it wi~o~t. in terms transferring the decree
passed or to be passed in the 'sUit does ndt entitle the' transferee to
apply £@r ·irxecution of the .decre~ .uqder Order._ ~XI,, ~ule . .l~, as a
tr;insferee. o~ the decree._Py .;in assignment in,Vfriting.
·
If :by ·reason· of any provision of law,
st<~tu,tory or ·other\visc!,
interest in property passes from · one person . to another, ·. tliere is a
transfer of ·the property by oper.ition of law; There is no warrant
for confining transfers "by operation of law',' to the three cases of
de;:i.th, devolution or sutcession ·or' to transfers bY opera!ioh ·of statutory lJ.ws only. If the dOcurrient ·i_n question'; could be" ConStrued
to be .f transfer of or an .agfeement to transfer the· deCree ·to' be ·passed
iri future~ then on the decree beiD;g passed, by opetation Of·.equity,
the fespondellts would .become the 'trarisferees of the' dCcree ·by
operation of law within the mfaning of Order XXI, rule· i6.
'
Per BHAGWAT! ).-Section 5 Of the Transfer of Property Act
defines a "transfer of property" ·as ·an act by which the t'.t;insferor
conveys property in present or in future to the transferee or' transferees. The Words "in preserit ·or in future" qualify the ·word "conveys" and not the word '
1pr'operty" in the. section. A' transfer o'f
property that is not in existence qperates as a coiltract to· be performed in the future
v.~,hich may be Specifically' enforced as soon as
the property 'comes into existence. It is only by the operation oi
this equitable principle that as soOn as "the property comes int'o ex~st
ence and is capable of being identified, equity· taking as done that
which 'ought to be done, fasteris upon: the property and the contract
to assign becomes a compete equitable assignment. There is ·Iloihing in
the provisions of the Code of Civil Procedure or any other law Which
prevents the operation of th~s equitable principle, and an assignment
in Writing of a decree to be passed in future would bCcome a ·complete equitable assignment on the decree being passed· and would fall
within the "assignment in writing" cc>qtemplated by : Order XXI,
rule 16 of the Code.
A mere transfer of property as such does not by itself spCU out
a transfer of a decree which has been passed or ·may be passed in
respect -of that property and it would require an assignm,ent of such
decree .in order. to effectuate the transfer. But where the pro~rty
is an actionable claim within the meaning of the definition in section 3 Of the Transfer of Propert}r Act and is transferred by lneans
of an instrument in writing, the transferee could by virtue Of section
130 of the .Transfer of Property Act step. into the shoes. of the
transferor .and· claim to be th~ transferee of the decree and apply for
execution of. the decree under Order XXI, rule 16 .of the Code of. Civil
Procedure.
Per IMAM;. J.~There ~Ust be· a decree 'irl .~xistence ~hic:h is
transfCrred before the tran'sferee" can benefit from 'the Provisions
+
-
...
s:c.R.
Sl'.!PR'EME C<DURT. REP~RTS
:1371
<>f rule :16. The 01:dinary .. and natural meaning i>'f the words·.of. •rule
16 can oarry np other, interpretation and, the question of.a· strict. and
narrow ip.~erpr~tation of .its pr<!Y~sion,s qoes. 1wt ~rise..
'
. ,
Case-law rev.lewed. · ·
CrviL · · AP~ELLA'i'E.
No. 212 <?f 1$4,
1uRISDICoqON :
. '
'Civil' .·A. ' eal
. ,.PP
Appeal ftom· the Judgment· and Decree dated the
10th day of November 1953 of the High'· Court of
Judicature at· Bombay in Appeal No. 8 of · 1953 under
the Letters ·Patent, against · the ·decree dated · tlte 23rd
day of September 1952 of the said High . Court in Appeal No. 67 of 1952 from Original Decree arising out
of Order dated the 20th November 195~ of the City
Civil Court, Bombay, in Summary Suit No. 233 of
1948.
R. Subramania Iyer and K. R. Choudhry, for the
:appellant.
H. /. Umrigar, /. B. Dadachanji and Rajinder
Narain, for the respondent.
1955. March 7. The following Judgments were
delivered. ·
DAs J.-The facts leading up to this appeal are
few and simple. Two persons named Mahomedali
Habib and Sakerkanoo Mahomedali Habib used
to
carry on business as merchants and pucca adatias in
bullion and cotton at Bombay under the name. and
style of Habib & Sons. In .1948 that firm instituted
a suit in the Bombay City Civil Court, being Summary Suit No. 233 of 1948, against the present appellant Jugalkishore Saraf, a Hindu inhabitant carrying
on
business at Bombay, for. the
recovery of Rs.
7,113-7-0 with interest at 6 per cent. per annum said
to be due by him ·to the firm in respect of certain
transactions in gold and silver effected by the firm as
pucca adatias. On the 7th Febmary, 1949 when that
summary suit was
stiU pendii;ig a document was
exe~uted whereby it. was agreed that the two partners
would transfer ·and
Messrs
Raw
Cotton Company,
Limited, (hereinafter called the, respondent company)
1955
Jugalkishore Saraf
.,,
Raw Cotlmt
Co. Ltd.
1955
Jugalkishore Saref
v.
Raw Cotwn
Co. Ltd.
Das
1372
SUPREME q!)URT REPORTS
[1955}
would accept the transfer of, inter alia, all. book and,
other debts due to them in connection with their business in Bombay and full benefit of all securities for
the debts and all other property to which they were
. entitled in connection with the said business. The respondent company did not take steps under, 0. XXII, r.
10 of the Code of Civil Procedure to get themselves substituted as plaintiffs in the place and stead of Habib
& Sons, the plaintiffs on record, but allow.ed the suit
to be continued in the name of the original plaintiffs.
Evidently, the two partners migrated f,rom India to
Pakistan. and their properties vested in the. Custodian
0£ ·Evacuee Property. On the 15th December 1949 a
decree . was passed in the summary suit for the sum of
Rs. 8,018-7-0 for the debt and interest and the sum of
Rs. 410 for costs of the suit, aggregating to Rs.
8,428-7-0, and for further interest . at 4 per cent. per
annum from the date of the decree until paymertt.
Habib & Sons being the plaintiffs on record the decree
,.
was passed in their favour.
·
On the 11th December 1950 the Custodian of Evacuee Property, _Bombay, informed the respondent mmpany that by an order made on the 2nd August·H50
the Additional Custodian of Evacuee Property
had
confirmed "the transaction of transfer" of the business
of Habib & Sons to the respondent company.
On or about the 25th April, 1951 the· respondent company presented before the Bombay City Civil Court a
tabular statement purporting to be an application for
execution under Order XXI, rule 11 of the Code of
Civil Procedure. In the last column of the tabular
statement, under the heading "Th~ mode
in which
the assistance of the Court is required", the respondent company prayed that the Court ''be pleased
tc,>
declare the Applicants the assignees of the decree as
the decretal · debt alc,>ng with c,>ther debts hatl been
transferred by
the plaintiffs to
the Applicants
by
a deed of assignment dated the 7th February 1949
which was confirmed by the Custodian of Evacuee
Property, Bombay, and order them to be substituted
for the plaintiffs". There was, in that column,. no (
specific~tion of any of the modes in which the assist-"" -\
•
•
-
,
.-<
•
~.
•
•..
.,
S.C.R.
SUPREME COURT REPORTS
1373
ance of the Court might be required
as indicated in
clause (j) of Order XXI, rule 11 of the Code. On the 10th
May 1951 the Bombay City Civil Court issued a notice
under Order XXI, rule 16 of the Code to Habib & Sons,
who were the decree-holders on record,
and Jugalkishore Saraf, who was the defendant judgment-debtor,
requiring them to show cause why the decree passed in
the suit on the 15th December 1949 in favour of the
plaintiffs
and by them transferred to the
respondent
company, should not be executed by ·the said transferees
against the
said
defendant
judgment-debtor.
The defendant
judgment debtor
showed cause
by
filing an affidavit affirmed by him on the 15th June
1951. Amongst other things, he denied that the document in question had been executed or that the document transferred the decree to the respondent company.
The matter was tried on evidence and the execution
of the document was proved by the evidence of an attesting witness which has been accepted by the executing Court. The executing Court, however, rejected
the second contention
and made
the
notice absolute
with costs and gave leave to the respondent company
to execute the decree against the judgment-debtor. The
judgment-debtor filed an appeal before the High Court.
The appeal was heard by Dixit, J. Before him the execution of the document was not challenged and nothing
further need be said about that.
The only substantial question raised was whether the respondent company were the transferees of the decree within the
meaning of Order XXI, rule 16. The learned Judge
answered
the question
in the
affirmative
on
the
authority of the decisions of the Bombay High Court
in Purmananddas f ivandas v. V allabdas W allji (1 ) and in
Chimanlal Hargovinddas v. Ghulamnabi(2) and affirming the order of the executing Court dismissed
the
appeal.
The
judgment-debtor
preferred a Letters
Patent Appeal before the High Court which was dismissed by Chagla, C.J., and Shah, J., following the
two earlier decisions mentioned above. They, however,
(1)
[1877] I. L. R. 11 Bom. 506.
'(2) I.L.R.[19°46]Bom. 2;6.
13-90 S. C. India/59
1955
Jugalkishore Saraf
v.
Raw Cotton
Co. Ltd .
DasJ.
1955
'Jugalkishore Saraf
v.
Raw Cotton
Co. Ltd.
1374
SUPREME COURT .REPORTS
[1955]
•granteil, under article 133(1) (c) ·of the Constitution, a
certificate of fitness for appeal to this Court. The
prillcipal .question mged before us is as to' whether the
·respondent company .can .claim to be 'the· 'transferees
CJf ·the decree within .the meaning of Order XXI, rule
16 of .the .Code of Civil Procedure.
Order XXI, rule 16 of ·the Code of Civil Procedure,
.omitting the local ·amendments which are not material
for our .present purpose, ·provides :-
"16. Where a ilecree or, if a 'decree has been
passed jointly in favour .CJf two or more persons,
the
interest of any .decree-holiler in the decree is transferred
by assignment in writing or by operation of law, ·the
transferee may apply for 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 transferor 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
ttansforred to . one of them, it shall not be executed
against the others".
The first thing that strikes the reader is the sequence
of events contemplated by this
rule. It postulates,
first,
that a decree has 'been
passed and, secondly,
that that decree has been transferred (i) by assignment in writing 0r (ii) by operation of law. The cardinal rule of construction of statutes . is to read the
statute literally, that is by giving to the words used
rby the legislature their ordinary, natural and grammatical meaning. If, however, such a reading leads to
absurdity and the words are susceptible of another
meaning the Court may adopt the .same. But'if no
such alternative construction
is
possible, 'the Court
must adopt the ordinary rule of li~era1 interpretation.
In the present case a literal construction · of the rule
,_J
\
•.
S.C.R.
SUPREME COURT R~PQ;RTS
1375
leads to no apparent absurdity and, therefore, there
can be no compelling reason for departing from that
golden rule of construction. It is quite plain that if
Order XXI, rule 16 is thus construed the respondent
company canot possibly contend that ¢e the decree
now sought to be executed by them wa$, after ,.its
passing, transferred to them by. an assignment ir:t writing within the meaning of that rule, for the document
in question was' executed .on the 7th February 1949
but the decree was passed subsequently on die 15th
December 1949. Whether
they can claim to
have
become the
transferees of the decree after it was
passed by operation of Jaw within the meaning of
this
rule or to have otherwise become entitled to
the benefit of it is a different matter which will be
considered later on.
For the moment it is enough
to say that there .had been no transfer of the decree
to the respondent company by any assignment in writing executed after the decree was passed,
as contemplated and required by Order XXI, rule .16. Indeed,
Dixit, J. conceded-
"If the language of Order XXI, rule 16 is striCtly
construed, it seems to me that the Respondents
have
no case".
And so did Chagla, C.J., when he said-
" .... and it is perfectly clear that if one were to
construe rule 16 strictly there is no assignment of the
decree in favour of the first respondent".
The learned Chief Justice, like Dixit, J., however,
departed from the rule of strict or literal construction
as they felt pressed by the fact
that the Bombay
High Court had consistently taken the view that there
might be an equitable assignment of a decree which
would constitute the assignee an assignee for the purpose of rule 16 and that what the Court must consider
is not merely a legal assignment but also an assignment which operates in equity. The equitable principle relied upon by the Bombay High Court is what
had been enunciated by Lord Westbury in Holroyd v.
Marshall(1) in the following words:
(1) [1862] 10 H.L.C. 191, 2rn, 211.
1955
Ju,galkishore ·Saraf
v.
Raw Cotton
Go. Ltd.
Das].
1955
Jugalkishore SaraJ
v.
Raw Cotton
Co.Ud.
Das].
1376
SUPREME cou1tr REPORTS
[1955]
"It is quite true ·that a deed which professes
to·
convey property which is not in existence at the time
is as a conveyance void at law, simply because ·there
is· nothiiig to convey. So in equity a contract which
engages to transfer ·property, which is not in existence,
cannot operate
as
an
immediate alienation
merely
because there is nothing to transfer.
But if a vendor or mortgagor agrees to sell or
mortgage property, real or personal, of which he is
not possessed at the time, and he receives the consideration
for
the
contract,. and afterwards becomes
possessed of property
answering the
description in
the contract, there is no doubt that a Court of Equity
would compel him to perform the contract, and that
the contract
would, in equity, transfer the beneficial
interest to the mortgagee or purchaser immediately
on .the property being acquired. This, of course,
assumes that the supposed contract is one of that class
of which a Court of Equity would decree the specific
performance".
The
same
principle was
thus reaffirmed by Jessel,
M.R., in Collyer v. Isaacs('):
"A man can contract to assign property which is
to come into existence in the future, and when it has
come into existence, equity,
treating as
done
that
which ought to be done, fastens upon that property,
and the contract to assign thus be.comes a complete
assignment".
Applying the above principles to the facts of the
instant case the High Court came to the conclusion
that the document of the 7th February, 1949, on a
proper reading of it, constimted an assignment of the
decree.
The reasoning, shortly put, is : that on a true
construction the document in question amounted to a
transfer of the decree that was expected to be passed
in the pending suit, that as the decree . was not in
existence at the date of the document it operated as
an agreement to transfer the decree when it would be
passed,
that such an agreement could be enforced by
.~ suit for specific performance as indicated by the
(1) L. R. 19 Ch. D. 342, 351.
{
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4
s.c.R.
SUPREME COURT REPORTS
.
"·
-
.
•
.'1
1377
Privy Council in Raja Sahib Perhlad v. Budhoo(1),
that as . soon 'as a decree
was passed
equity, treating
as done what ought to be done, fastened upon the
decree
and the agreement for transfer became .. the
transfer of the decree and the transferee became a
transferee of the decree within the meaning of Order
XXI, rule 16. It is to be noted that to attract the application of this equitable principle there must be an
agreement to
transfer
the decree to be passed in
future. As soon as the decree is passed equity fastens
upon it and, by treating as
done what · ought to be
done, that is by assuming that the transferor has executed a deed transferring the decree to the transferee
as in all conscience he should do equity regards. the
transferee as the beneficial owner of the after-acquired
decree.
The equitable principle we are considei:ing
only implements or effectuates
the agreement of
the
parties. This equity ·does not, however, take upon
itself the task of making any new agreement for the
parties either by filling up the lacuna or gap in their
agreement or otherwise.
If, therefore,
there
is
no
agreement between the parties to transfer the future
decree the equitable
principle referred to above cannot come into play at all. In order, therefore, to test
the propriety of
the application of
this
equitable
principle to the facts of the present case we have to
enquire whether
there
was here any agreement between the parties to transfer the decree to be passed
in the then pending suit. This necessarily leads us
to scrutinise the terms of the document in question
and ascertain its true meaning and import.
No point has been taken before us that the document of the 7th February
1949 is only an executory
agreement and not a deed
of transfer. Indeed, the
argument
has
proceeded before us,
as
before the
Court below, that the document in question · 1s a
completed . deed of transfer.
This relieves us of the
task of closely examining the. form of. the document.
For our present purpose we have, therefore, only to
consider what properties were covered by the document. The High . Court has. held that the decree to be
(1) [1869) 12 )\,{. I. A. 275; 2 B.L.R. 111.
1955
:Jugalkishbre Sarqf
v •
. Raw Cotton
co. Ltd.
Das :J.
·~:;:;
JugDJ!cisho;:e ·sara.f
v.
Raw CottOn
Co. £td,
Das];
1378
SUPREME COURT REPORTS
[1955]
pas~ed was also indutlecl 'in this document. The reasonmg appears to be' this. : Clause f
of the 'document
comprised six several · items · of proprieties. Each of
these
items referred to' '.'the•' said'. Iridian business".
The Fourth· .item was "All' the book and other debts
due"to the vendors in cciri'n'edion' with' the' said Indian
business and the foll'. benefits of· all' securities for the
debts". and· the'last ap.d. residuary' item· was' "All other
property', to w)iich the vendors · are' ·entitled iri connection ·with' the··sliid' Indian business". ·One' of the·
book debts was the siibject:matter' . of the pending suit.
The decree that the· pl~iritiff · · woiild obtain · in that
suit \Yould, therefore, .be propertf or· 'right ''.in connection with the! said Indian b'usiness". Therefore, as
they were transferring all · property' · in 'connection· with
their :business ·they .must have intended to transfer the
foture · decree als'o. Therefore, it must Ile· regarded as
cove'red · by the dod1mem: · I am unable· to accept this
lirie of reasonirig. 'It cannot' be" overlooked that there
was' ho mention. in that . docilmenf of any suit or
decree: to be' passed in that suit · as · one would have
expected if . t~e parties . really . intended to
transfer
the foture decre.e · also. Ih this connection it · is significant" that the·· ~esiduary item covered· "All properties
to wl\.ich the' vendor{ dre' erititled"' arid not all
pri>-
perties' to · which they might iri' foture become entitled.
Reference. may :ilso be'. niade to the provisions of the
Transfer · of Property Act: Under' section 8 of that
Act tlie trarisfe:r of property' passes· to the transferee
all the· int:'eresr which the transferor . is then· capable
of
passing
in the
propert'y · :ind · in· the · · · 1egal
incidents · thereof; and if d1e property transferred is
a debt ·or actionable • • clafoi, also the ·securities therefor.
It• is• urged" that· a·s ·.•the respondent ·company
thus becanie entitled, by' ·VirtUe·• of· this document read
in· the "light• of section 8; to all the rights and· remedies
iricluding the right··· ·to prosecute the pehdihg suit' and
to• obtain' a-' decree· the•.: decree that was eventually
passed>" autortiatie:i.lly add immediately upori .. .its passing 'mu~t be taken ·as having been •transferred ·by ·this
very. dotumemi.: ·This' I 1arguthent
ilppear~~ tci . me" to
really
amount to a beg'gihg · of the quesrioh. The
• ..
...
.
"
..
-
S.C.R.
SUPREME: COURT REPORTS
1379
transfer· of the debt passed' all the interest which the
transferors were then capable of passing in the . debt
and in the· legal incidents
thereof. There was then
no decree in existence and, therefore, the transferors
could not then pass. any ·interest in the non-existing
decree. Therefore, section 8 of the Transfer of Property Act does · not assist the
respondent .company
Upon the assignment of the debt the respondent company undoubtedly became entitled· to get themselves
substituted- under Order. XXII,, rule 10 as plaiiltiffs in
the pending suit but they. did not choose to do so and·
allowed the
transferors. to
continue the. _suit and a·
decree to be passed in their favour. The true . position, therefore, is that at the date of the transfer of
the debt to the. respondent company the transferors
could not transfer the decree, because. the decree did
not exist. On a true construction of the document
the transferors' agreed only
to
transfer,. besides .. the
five items. of spectified properties, ·"All other properties
to which· the .vendors .are entitled", that is to• sav, all'
properties to· which at the ·date of the docoment: they
were en'titled.
At the date of the document they had
the right· to proceed with the · suit and to get · such
relief as the . Court by its decree. might award but no.
decree had yet been passed in that suit and, therefore,
property to which they- -were then entitled could.· not
include any decree that might in• future be passed. It
is significant that there was, in the document, no provision purporting in terms
to· transfer· any ·. ·future
decree.
Section 8 of · the Transfer of· Property· Act
does not operate to pass any future · property; .. for that
section .passes all interest which the
transferor
can
then, i.e., at the date of the transfer, pass. There was
thus no agreement for .transfer and much less a transfer of a future decree oy this. document. All that W{lS
done by the
transferors by . that document
was
to
transfer ·only
the
properties . mentioned in
clause 1
together •With ·all .·legaL ·incidents and· remedies. 'The
properties·. so». transferred .. included book debts. A book
debt which was·· made: the. subject-matter 0f: the. pend"
ing suit did not, for that reason, c:ease to. be a. book
debt and,
therefore, it was also
transfei:'red '. ·bur no
1955
:fogalkishore Saraf
v •.
Raw Cotton
Co. Ltd.
Das]:
1955
Jugalkishor1 Saraf
v.
Raw CotW'fl
Co. Ltd.
Da,J.
1380
SUPRE.ME COURT REPORTS
[1955]
decree to. be passed in respect of that book debt was
in terms transferred. In such a situation. there was
no room or scope for the application of the equitable
principle at all. The transfer in writing of a property
which is the subject-mater· of a suit without in terms
transferring the decree passed or to be passed in the
suit in relation to that ·property does not entitle . the
transferee to
apply for execution of
the decree as a
transferee of the decree by an assignment in writing·
within the meaning of Order XXI, or 16 See Hansrai
Pal v. Mukhrai Kunwar( 1 ) and Vithal v. Mahadeva (').
In my judgment
the decree was not
transferred or
agreed to be transferred to the respondent company
by the document under consideration and the latter
cannot claim to be transferees of the decree by an
assignment in writing as contemplated by Order XXI,
rule 16.
•
The matter, however, has been argued before us at
length on the footing that the decree had been transferred or . agreed to be transferred by this document
and therefore, the equitable principle came into play
and that as . soon as the decree was passed the respondent company became the transferees of the decree
by assignment in writing within the meaning of Order
XXI, rule 16., As considerable legal learning has been
brought to bear on the question of the application of
the equitable principle and its effect on the
prior
written agreement and as the different decisions of
the High Court are not easily reconcilable, I consider
i: ;·i;·.ht to record my views on that question.
I shall, then, assume, for the purposes of this part
of the argument, that the document of the 7th February 1949 was a completed deed of transfer covering
the decree. to be passed in future in the then pending
suit.
Under the Transfer of Property Act there can
be no transfer of property which is not in
existence
at the date of the transfer. Therefore, the purported
transfer of the decree that might .. be· passed in future
could only operate. as a contract to transfer the decree
to be performed in future;, i.e., . after the. passing of the
(1) [1908] I. L. R: 30 All. 28.
(2) [1924] 26 Bo"1· L.R. 333.
. '-Ir
..
-
-
•,
S.C.R.
SUPREME COURT REPORTS
1381
decree. The question then arises : What is the effect
1955
of the operation of the equitable principle on the
Juga/kishore Saraf
decree as and when it is passed? Where there is a '
Raw vCotton
contract for the transfer of property which is not in
Co. Ltd.
existence at the date of the contract, the intending
transferee may, when the property comes into existence, enforce the contract by specific performance,
provided the contract is of the kind which is specifically enforceable in equity. It is only when the
transferor voluntarily executes a deed of transfer as
in all conscience he should do or is compelled to do
so by a decree for specific performance that the legal
title of the transferor in that property passes from
him to the transferee. This transfer of title is brought
about not by the prior agreement for transfer but by
the subsequent deed
of
transfer.
This process
obviously involves
delay,
trouble and
expenses.
To
obviate these difficulties equity steps in again to short
circuit the process. Treating as done what . ought to
be done, that is to say, assuming that the intending
transferor has executed a deed of transfer in favour
·of the intending transferee immediately after the property came into existence, equity fastens upon the
after-acquired property and treats the beneficial interest therein as transferred to the intending transferee.
The question for
consideration is : Is
this transfer
brought about by the earlier document whereby the
property to be acquired in future was transferred or
agreed to be transferred ? In other words, can it be
said, in such a situation, that the after-acquired property
had
been transferred, proprio vigore, by the
earlier document? Does that document operate as an
assignment in writing within the meaning of Order
XXI, rule 16?
Learned counsel for
the respondent
company contends that the answer to these questions
must be in the affirmative. He relies on several cases
to which reference may now be made .
. In
Purmananddas
Jivandas
v.
Vallabdas
Wallji
(supra) the facts were these.
In May
1859 one R
died leaving his properties to executors in trust for
the appellant. In August 1868 the execl,ltors filed , a
suit in the Original Side of the Bombay High Court
DasJ.
1382
SUFREME COURTi REPORTS
[1.955]:
•955
against Luckmidas· Khimji• for recovery of mtmey lent
;JUgal/dshore· Sara:.
to him as manager of Mahajan Wadi.
During the
v.
• pendency ·of. the: suit,. the. executors on the 11th May
Raw Cottiln
1870 assigned · in· very wide and general terms all the
Co. Ltd.
properties of the: testator to the· appellant including
Das]i
·'all movable. property,. debts claims and things. in
action· whatsoever vested in them as such. executors" ..
The. appellant ·was not . .brought on the record bμt the
suit proceeded. in the ·name of.. the executors; On · the
23rd
January· 1873 a decree
was · passed
for the.
plaintiffs on• the ,, record; i.e .. the . executors; for Rs.
31,272-13-5 which .:was made a. first· charge on: . the
Wadi properties. · The appellant.
thernupon• ·applied
for execution. "0£ ·the:· decree -under -.seGtion 232 of the
Code· of 1882 · (con-esponding .t-0 · our Order. XXl, rule.
16), as' transferee of the. decree. The Chamber Judge
dismissed the application· .. Qn appeal Sargent,. C.J .. ,. and
Bayley;. J., . held· that the appellant was competent. to.
maintain the application. After ·pointing:- 011.t that . the
assignment . was in the. most general .terms, Sargent,.
C.J.,·. observed.:~: ·
·" .... : .. . •: .- .. , .. •.:· .... and the effect of this assignment.
was, in .. ·equity,,.•to vest in Purmananddas the whole
interest in· . the• decree -which . was afterwards ·,obtained.
But ·it has been suggested that Purmananddas .. is not
a transferee · of.· the- decree .under section. 232 of the
Civil Procedure Code,. because· the decree has. nat. been
transferred to him "by assignment in writing or by
operatian of law", ··and: that, therefore, he is not entitled to apply ·for execution .. There. is no doubt that,
in:· a· Court. of equity, -in .England -the decree . would be
regarded-. as assigned· to' Purmanartddas, and. he would
be .-allowed to· proceed in exerntion in .. the -name of the
assignors. Here there is· ·no distinction between· "law"
and .. .'~equity";· and by the expression .1by ... operatiou of
law'. tnust. ·be, understood .the , operation: of law as
administered in these Coufts. We ·think : under , the
circumstances .that we must hold that this ... decree has
been. transferred .. to ,Furmananddas .. 'by operation- . of
law''\ ... --·
,,.
·· ,,1 ·
"'
q..
•,P• ,, .,'
Th~" -'last , ·sentence i:n the · abo'Ve · 'qu6tati6n;" ·.standing
by•· ·."ihdf;' i ·'quitei ·"'dearly indic'aii!s • "tfo1r• 'the learned
·\
S.C.R.
SUPREME COURT :REPORTS
1383
Chief')ustice ·was of the view that as the benefit of
the decree became available to tlic:; appellant by operation of the equitable principle it had to be held that
the decree had been transferred to the · appellant "by
operation of law" rather than by ' an assignment in
writing and that is how it was understood by the_ reporter who framed' the head-note. The learned ' Chief
Justice, however, immediately after that last sentence
added:-
··
"In the present 'case 'the· decree has been transferred by an· ·assignment in . · writing as construed in
the~e · Courts".
This senteace . prima f acie appears to be somewhat inconsistent
with the sentence immediately preceding
and it 1has. given rise
t<,> a good. deal of co~merits . in
later , cases .. The learned. Chi.ef Justice has no.t referred
to any case . in which . the Bombay . High Court had
adopted ' such a constructfon.
'
' ' , '
Th~. case' 0£ A~~nd~ .Af.ohon Roy v. Pro~oiha . Nath
Ganguli-( 1 )
. follows . μie· decision of the Bombay High
Court in . Purmanan;ddas Tivandas v. Vallabdas W allji
(supra). It sliould be : noted, . however, that, in.· this
Calcutt.a \,'.ase the decree was . obtained and . the transfer was ,tμade on the' same day and it' was held that
though there was . no :J,Ssignment of the decree in so
many, words the property with all ;irrears of rent having . been , assigned to the mortgagee
simultaneously
with the passing. of the <decree . th,e assignment p"ssed
the decree also.
The case• of Chimanlal Hargovinddas v. Ghulamnabi {supra)· has been strongly relied upon. In that
case a ·shop was ·held by A· and B as •tenants-inc
common. In May 1936 A agreed to sell· his half. share
to C. As per arrangement A· filed a partition· suit on
the 16th January · 1937 to recover his share·.- The -disputes' in the suit were referred to arbitration· by order
of ·Court and eventually the umpire ·made hiS award
on· the 16th January 1939 declaring that · A· was• entitled1 to; a half share. .A then; on -·the· · 7th· March,
1939; stild'-ali· his riglits ;under the award (which1 was
· f1) [ig2b] 25 c.W.'N.'a63; A.1.R. '19~1 ea1. 14~·
' ' •' ·" · '· · ·
19,55
Jugalkishore Saraf
v.
Raw Cotton
Co.Ltd.
Das].
'955
."J?Jgo/Jcishor~ Saraf
v.
Raw Cotton
Co. LJd.
-.
Das
1384
SUPREME COURT REPORTS
.
.
'
[_1955]
called a decree) to C by a registered deed. C did not
apply for substitution of his name on the· recoid of
the suit. The Court passed a decree upon the. award
on the 1st September, 1939. On · the 24th November
1939 C applied ·for execution of the decree. Ii: was held
that C was entitled to execute the decree under Order
XXI, rule 16, for what had been transferred to him was
not merely A's half share in the property but all his
rights under the award including the right to .take a
decree. In this case, having regard to the terms of
the previous agreement and the fact that the parties
were treating the award as a decree the intention was
quite clear that by the subsequent deed of sale both
the award and the decree upon it had been transferred. It was quite clearly recognised by the Full
Bench that if the sale deed transferred only A's half
share in the property or only his right to take a· decree
C could not apply under Order XXI, rule 16.
Reading the three cases relied on by learned counsel. for the respondent company it seems to me that
they
proceeded on the footing that the equitable title
related back to the earlier agreement in writing ·and
converted the agreement to transfer the future decree
into art assignment in writing of that decree as soon
as it was passed. Some support is sought to be derived
bv learned counsel for this doctrine of relation back
from the above quoted observations of Lord· Westbury
in
Holroyd v.
Marshall (supra) "that
the
contract
would, in equity, transfer the beneficial interest" and
of Jessel, M.R., in Collyer v. Isaacs (supra) that "the
contract to
assign thus becomes a
complete assignment". I
find
consider.able. difficulty
in . accepting
this argument as sound. In the first place the Lord
Chancellor and the Master of the Rolls were not concerned with the question of relation qack in the form
in which it has arisen before us.
In the next place it
must not be . overlooked that the equitable principle
herein alluded ,to is not a rule of .. construction of documents but is a
substantive
rule which
confers
the
benefit of the after-acquired property on the person to
w horn the transferor . had, by his agreement, promised
to transfer the same, Thus, by .treating as done that
.... '
S.C.R.
SUPREME COURT REPORTS
1385
which ought to be done, equity fastens upon the afteracquired · property and
brings about a
transfer of it.
The implication
of this
principle, to
my mind,
is
clearly
that
the agreement, by
itself and proprio
vigore, does not
transfer
the property
when it
is
subsequently acquired but that instead of putting the
intending transferee to the
trouble and
expense
of
going to Court for getting a decree for specific performance directing the promisor to execute a deed of
transfer which when executed will transfer the afteraquired property, equity
intervenes
and
places
the
parties in a position relative to each other in which
by the prior agreement
they were
intended to
be
placed as if a deed of transfer had been made. As I
apprehend the position, it is by the operation of equity
on the subsequent event, namely, the actual acquisition of the property on its coming into existence that
the beneficial interest therein is
transferred
to
the
promisee. This transfer, to my mind, is brought about
by operation of equity which is something dehors the
prior agreement. It is true that that agreement makes
the application of the equitable principle possible or
I may even say that it sets the equity in motion but,
nevertheless, it is equity alone which denudes
the
transferor of his
interest in
the
after-acquired
property and passes it to the intending transferee.· That
being the true position, as I think it is, the afteracquired property cannot, logically and on principle,
be said to have been
transferred to
the
intending
transferee oy the agreement in writing. I do not see
on what principle this transfer can be said to relate
back to the previous agreement. I
am fortified in my
view by the observations of Lord Cave in the case of
Performing Right Society v. London Theatre of Varieties (1).