Case: Seth Loon Karan Sethiya Vs. Ivan E. John

equitable assignment of the amount due under the decree or so much of that amount as is necessary for discharging the debts due to it. That rule is recognised in Watson v. Duke of Wellington, (1880) 39 ER 231. Therein the plaintiff, executors of Mr. Sims, had advanced a large sum of money to Marquis of Hastings on the joint bond of the Marquis and a surety. The sum due on the bond exceeded 9,000. Towards the end of 1825, the Marquis having returned from India to England, the plaintiffs made repeated applications to him for payment of the debt. The Marquis represented that he was about to receive a large share of the Deccan prize-money; promised that their demand should be paid out of that fund; and begged that, in the meantime, no proceedings might be taken against him or the assets of his surety. On February 6, 1826, Mr. Allen, the solicitor of the plaintiff, again waited on the Marquis, who then stated that he had directed Col. Francis Doyle, whom he had empowered to receive his share of the prize-money, to pay the debt and costs due to the executors of Mr. Sims; and at the same time the Marquis wrote and delivered to Mr. Allen a letter addressed to Col. Doyle directing him that the executors of Mr. Sims were claimants on that fund for a bond debt with interest. From these facts the Court of Chancery came to the conclusion that there was an equitable assignment in favour of the executors of Mr. Sims of a portion of the prize-money sufficient to meet the debts due to the estate of Mr. Sims by the Duke of Wellington. To the same effect is the decision in Burn v. Carvalho, (1839) 41 ER 265. Therein the Court of Chancery held that in equity, an order given by a debtor to his creditor upon a third person having the assets of the debtor to pay the creditor out of such fund is a binding equitable assignment of so much of the fund.8. The courts in India, which administer both law as well as equity, have followed the rule laid down in the above decisions. In this connection reference may be made to the decision of the Bombay High Court in Jagabhai Lallubhai v. Rustamji Nasarwanji, (1885) ILR 9 Bom 311, and of the Patna High Court in Prahlad Pd. Modi v. Tikaitni Faldani Kumari, AIR 1956 Pat 233 . In the latter case, the Patna High Court held that a transaction similar to the one we are concerned in this case, in substance amounted to allocation of fund to be appropriated towards the debt and therefore it is an equitable assignment. No decision taking a contrary view has been brought to our notice. We think that the rule laid down in the above decisions is a sound rule as it advances the interest of justice. We accordingly adopt that rule.9. There was great deal of controversy as to whether on the strength of the equitable assignment in its favour, the Bank could execute the decree, even when the decree-holder (appellant) does not want that it should be executed.Shri Chagla argued that an executing court cannot go behind the decree; it has to execute the decree as it stands; so far as that court is concerned, the only person who can execute the decree is he whose name is shown in the decree as the judgment-creditor; unless the decree has been transferred, and the transfer in question recognised under Order 21, Rule 16 of the Code of Civil Procedure, the court has no power to execute the decree when the judgment creditor does not want it to be executed. He urged that as the decree was not transferred to the Bank either in writing or by operation of law, nor was there any recognition by court of such a transfer, the Bank was incompetent to execute the decree in its own right. He was emphatic that the only method by which an assignee of a decree can execute the decree is by having recourse to Order 21, Rule 16. As the Bank cannot avail of that provision the execution cannot be proceeded with. In support of those contentions Shri Chagla invited our attention to various decisions. It is not necessary for us to go into those controversies in view of the decision of this Court in Jugulkishore Saraf, (1955) 1 SCR 1369 = (AIR 1955 SC 376 ). Therein this Court held that an equitable assignee of a decree who cannot have the benefit of Order 21, Rule 16 can still execute the decree under S. 146 of the Code of Civil Procedure. Shri Chagla contested the correctness of that decision and desired that the question of law should be reconsidered by a larger Bench. We are bound by that decision and no compelling circumstances were made out for its reconsideration.10. It is true that the execution application shows that the applicant is the appellant and the Bank is merely acting as his agent. In other words, the Bank did not purport to execute the decree in its own name or in exercise of its own right. When the execution application was filed, there was no dispute between the appellant and the Bank. Hence the Bank levied execution of the decree in the name of the appellant as provided in the power of attorney. The controversy between the parties arose during the pendency of the execution. It is only thereafter that it became necessary for the Bank to assert its own right. It serves no useful purpose to direct the present application to be closed merely because it was made in the name of the appellant. In view of our earlier conclusions it will be still open to the Bank to levy fresh execution of the decree. It will be in the interest of the appellant as well as the Bank to allow the present application to go on.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]We are unable to spell out the meaning of these observations. It is seen from the grounds of appeal filed before the High Court that the appellant had contendedthere being no transfer or assignment of the decree in its (Banks) favour, the Bank of Jaipur Limited, had no legal right or locus standi to execute the decree and the executing court had no jurisdiction to entertain the execution application and to continue the executionhad also contended that the execution court cannot go behind the decree, and the execution case must proceed according to the provisions in the Code of Civil Procedure. Obviously the contention of the appellant was that as the decree stood in his name, his agent cannot proceed with its execution as he desired to take into his own hands the execution proceedings. The above contentions of the appellant were purely legal contentions; if they are valid, they go to the root of the matter and therefore the High Court was not right in brushing aside those contentions on the ground that those contentions had not been taken in the pleadings or urged before the executingof the questions presented for decision are not free from difficulty. But it is not necessary for us to pronounce on those questions as we are of the opinion that the power of attorney in question is a power coupled with interest, and hence the same is not revocable. Further, the transaction entered into under that document amounts to an equitable assignment of the decree in favour of the Bank to the extent necessary to discharge appellants debts to the Bank and on the basis of the rule laid down by this Court in Jugulkishore Saraf v. Raw Cotton Co. Ltd., (1955) 1 SCR 1369    = (AIR 1955 SC 376   ), it is open to the Bank to execute the decree in its own right. Lastly, we attach no importance to the form of the execution, which form was necessitated because of the terms of the power of attorney, looking to the substance of the matter and not being unduly weighed down by the form, we are of opinion that the Bank has been executing the decree in its own right. We shall elaborate our reasons in support of these conclusions presently. In view of our above conclusion we have not thought it necessary to go into the other questions of law raised at the hearing.5. There is hardly any doubt that the given by the appellant in favour of the Bank is a power coupled with interest. That is clear both from the tenor of the document as well as from its terms. S. 202 of the Contract Act provides that where the agent has himself an interest in the property which forms theof the agency the agency Cannot, in the absence of an express contract, be terminated to the prejudice of such interest. It is settled law that where the agency is created for valuable consideration and authority is given to effectuate a security or to secure interest of the agent, the authority cannot be revoked. The document itself says that the power given to the Bank is irrevocable. It must be said in fairness to Shri Chagla that he did not contest the finding of the High Court that the power in question wasthose terms it is not possible to come to the conclusion that there was any transfer of the interest of the appellant in the decree to the Bank. In that document there are no words of transfer. The document specifically says that the Bank should execute the decree on behalf of the appellant. As per the terms of the document the appellant continues to be the owner of the amount due under the decree, the Bank was merely authorised to act as his agent; and therefore it is not possible to hold that in law the Bank was an assignee of the decree, The interest of the appellant under the decree cannot be said to have been transferred to the Bank either in writing or by operation ofthe power of it attorney it is clear that the amount under the decree was specifically earmarked for discharge of the debts due to the Bank. It was constituted as a special fund for the said purpose. The power to realise that fund was made over to the Bank with the further authority to set off the amount realised towards the debts due to it. In other words, the power of attorney is an engagement to pay out of the particular fund the debt due to the Bank and hence the same constitutes an equitable assignment of the amount due under the decree or so much of that amount as is necessary for discharging the debts due to it.8. The courts in India, which administer both law as well as equity, have followed the rule laid down in the above decisions. In this connection reference may be made to the decision of the Bombay High Court in Jagabhai Lallubhai v. Rustamji Nasarwanji, (1885) ILR 9 Bom 311, and of the Patna High Court in Prahlad Pd. Modi v. Tikaitni Faldani Kumari, AIR 1956 Pat 233   . In the latter case, the Patna High Court held that a transaction similar to the one we are concerned in this case, in substance amounted to allocation of fund to be appropriated towards the debt and therefore it is an equitable assignment. No decision taking a contrary view has been brought to our notice. We think that the rule laid down in the above decisions is a sound rule as it advances the interest of justice. We accordingly adopt thatsupport of those contentions Shri Chagla invited our attention to various decisions.It is not necessary for us to go into those controversies in view of the decision of this Court in Jugulkishore Saraf, (1955) 1 SCR 1369    = (AIR 1955 SC 376   ). Therein this Court held that an equitable assignee of a decree who cannot have the benefit of Order 21, Rule 16 can still execute the decree under S. 146 of the Code of Civil Procedure. Shri Chagla contested the correctness of that decision and desired that the question of law should be reconsidered by a larger Bench. We are bound by that decision and no compelling circumstances were made out for its reconsideration.10. It is true that the execution application shows that the applicant is the appellant and the Bank is merely acting as his agent. In other words, the Bank did not purport to execute the decree in its own name or in exercise of its own right. When the execution application was filed, there was no dispute between the appellant and the Bank. Hence the Bank levied execution of the decree in the name of the appellant as provided in the power of attorney. The controversy between the parties arose during the pendency of the execution. It is only thereafter that it became necessary for the Bank to assert its own right. It serves no useful purpose to direct the present application to be closed merely because it was made in the name of the appellant. In view of our earlier conclusions it will be still open to the Bank to levy fresh execution of the decree. It will be in the interest of the appellant as well as the Bank to allow the present application to go on.