dedol-hf/india-case-legal-rag huggingface dataset:
tion  53  of the Transfer of Property Act  challenging  that
transfer and had actually got a decree declaring that trans-
fer  as fradulent and void as against the creditors  of  the
Raja
577
An  appeal was filed by the Kumars which was pending at  the
date  of the Kobala of January 4, 1939, and, in the  circum-
stances,  it  was considered safer to join the Raja  in  the
last mentioned Kobala in favour of Deva Prasanna.
    On  June 2, 1939, a petition was filed in the  Court  of
the Subordinate Judge, Asansole, on behalf of Deva  Prasanna
as  the decree holder. It was headed "Money  Execution  Case
No.  118  of 1936.  The relevant portions of  this  petition
were as follows;--
    "That  the above execution case was disposed of  on  the
30th  January  1937 with the attachment  of  the  properties
subsisting; since then the decree put into execution in  the
above  case  has been adjusted after remission  of  a  large
amount  of  interest  by the out and  out  sale  of  certain
properties   by  a  registered  Kobala  dated  4th   January
1939  ...  ....................   ........................So
there is no longer any need of the said attachment remaining
subsisting.
    It  is,  therefore, prayed that the  attachment  may  be
withdrawn."
    On  the  same day the following order was made  on  that
petition:--
    " Heard learned pleaders for the parties.  They  jointly
ask me to cancel the attachment (existing by special  order)
in Money Ex. 118 of 1936 though that case was dismissed.
                                Order
    The  said  attachment  is cancelled and  the  decree  in
question is recorded as adjusted as stated by learned plead-
er for the decree-holder and pleader of the  judgment-debtor
according  to the adjustment mentioned but not  detailed  in
this petition of to-day.  Make necessary notes and send this
petition to the District Record Room."
    In  the  remarks column No. 22 in Ex.  F  the  following
entry was made :--
    "The  said  attachment is cancelled and  the  decree  in
question is recorded as adjusted as stated by learned
578
pleader for the D.H. and the pleader of the Judgment  Debtor
according  to the adjustment mentioned but not  detailed  in
this petition of to-day.  Dated 2nd June 1989."
The Raja died in August, 1940, leaving the two appellants as
his sons and legal representatives.  The Bengal Money  Lend-
ers Act, 1940 (Bengal Act X of 1940) hereinafter called  the
Act,  came  into force on September 1, 1940. On  January  2,
1941,  the appellants who, as the legal  representatives  of
the  Raja, became "borrowers" within the meaning of the  Act
filed  the suit out of which the present appeal has  arisen.
The suit was filed by the appellants against the  respondent
under section 36 of the Act praying for reopening the trans-
actions and taking accounts and for release from all liabil-
ities  in excess of the limits specified by law.  In  short,
they  asked the Court to give them relief by exercising  the
powers  given to the Court by section 36 of the  Act.  There
was  also a prayer for reconveyance of the  Senapati  Mahal.
The  respondent  filed his written statement  setting  up  a
variety  of defences rounded on merits as well as  on  legal
pleas in bar.  On May 8, 1941, the Subordinate Judge settled
the issues and fixed June 9, 1941, "for a preliminary  hear-
ing  of the suit and particularly of such of the  issues  as
have been based on the pleas in bar."  Eventually, the  case
was  taken up for preliminary hearing on September 4,  1941,
and  by  his judgment delivered on September  8,  1941,  the
learned Subordinate Judge dismissed the suit on issue No.  2
which was as follows:
 "Does  the plaint disclose a valid cause of action for  the
suit ?"
 The  appellants  preferred an appeal to the High  Court  at
Calcutta.   Although  the High Court (R.C. Mitter  and  K.C.
Chunder JJ.) did not accept all the reasonings on which  the
learned  Subordinate  Judge had based  his  decision,  they,
however,  agreed that the appellants could get no relief  as
the decrees in suit No. 78 of 1922 could not be reopened, as
they were not passed in
579
"a  suit  to which this Act applies" and  consequently  dis-
missed the appeal. The appellants have now come up on appeal
before us after having obtained a certificate from the  High
Court under section 110 of the Code of Civil Procedure.
Learned  Advocate  appearing in support of  this  appeal
before us has contended that the High Court was in error  in
holding  that  the decrees in Suit No. 78 of 1922  were  not
liable to be reopened under the second proviso to section 36
(1). Learned advocate for the respondent while joining issue
on  this point also raised a point which, however,  did  not
find favour with the High Court, namely, that the respondent
as  a bona fide assignee for value of the mortgage debt  was
protected  by  sub-section (5) of section 36.  It  is  quite
clear  that if either of the two points is  decided  against
the appellants, this appeal must fail.
    The main provisions of section 36 (1)are in the  follow-
ing terms :--
    "Notwithstanding  anything contained in any law for  the
time  being in force, if in any suit to which this  Act  ap-
plies, or in any suit brought by a borrower for relief under
this section, whether heard ex parte or otherwise, the Court
has  reason to believe that the exercise of one or  more  of
the  powers under this section will give relief to the  bor-
rower, it shall exercise all or any of the following  powers
as it may consider appropriate namely, shall
    (a)  reopen any transaction and take an account  between
the parties;
    (b)  notwithstanding any agreement, purporting to  close
previous dealings and to create new obligations, reopen  any
account already taken between the parties;
(c)  release the borrower of all liability in excess  of
the limits specified in clauses (t) and (2) of section 30;
    (d) if anything  has been paid or allowed in account  on
or  after the first day of January, 1939, in respect of  the
liability referred to in clause (c), order
580
the lender to repay any sum which the Court considers     to
be  repayable  in respect of such payment  or  allowance  in
account as aforesaid;
    (e)  set  aside either wholly or in part  or  revise  or
alter any security given or agreement made in respect of any
loan, and if the lender has parted with the security,  order
him  to  indemnify the borrower in such manner and  to  such
extent as it may deem just."
It  will  be noticed (a) that the  provisions  of  this
section apply notwithstanding anything contained in any  law
for  the time being in force, (b) that the powers  conferred
on the Court or to be exercised either in any suit to  which
this  Act applies or in any suit brought by a  borrower  for
relief  under the section and (c) that the Court  is  called
upon to exercise all or any of the powers conferred on it by
the  section  if the Court has reason to  believe  that  the
exercise  of one or more of the powers will give  relief  to
the borrower.  In the present case the borrowers have insti-
tuted  a substantive suit for relief under section  36  and,
therefore, if there was nothing also in the section and  the
Court had the requisite belief, the Court could exercise all
or  any  of the powers and give relief to the  borrowers  in
terms of the prayers of the plaint.  There are, however, two
provisions  to sub-section (1) of section 36.  The  relevant
portion  of  the second proviso is expressed  in  the  words
following:
     "Provided  that in exercise of these powers  the  Court
shall not-
(i)         *         *         *         *
(ii) do anything which affects any decree of a  Court, other
than a decree in a suit to which the Act  applies which  was
not  fully  satisfied by the first day   of  January,  1939,
or  *    *    *    *"
      The  proviso makes it quite clear that in exercise  of
the  powers  the Court cannot reopen or otherwise  affect  a
decree of a Court unless such decree is one which was passed
in a suit to which this Act applies and' which was not fully
satisfied by January 1, 1939.  In the light of the  decision
of the Full Bench of the
581
Calcutta  High  Court in Mrityunjay Mitra v.  Satis  Chandra
Banerji(1)  which was approved by the Privy Council in  Jadu
Nath  Roy v. Kshitish Chandra Acharyya(2), it has  not  been
contended, in view of the fact that the personal decree  for
the  balance remained unsatisfied on January 1,  1939,  that
the  decrees  in Suit No. 78 of 1922  were  fully  satisfied
within the meaning of the above proviso. Therefore, the only
thing that remains to be ascertained is whether the  decrees
were passed in "a suit to which this Act applies." Section 2
(22) of the Act is as follows:
    "2.  In this Act, unless there is anything repugnant  in
the subject or context"-
(22) "Suit to which this Act applies "means any suit  or
proceeding  instituted or filed on or after the 1st  day  of
January,  1939, or pending on that date and includes a  pro-
ceeding in execution--
    (a) for the recovery of a loan advanced before or  after
the commencement of this Act;
    (b)  for the enforcement of any agreement  entered  into
before or after the commencement of this Act, whether by way
of settlement of account or otherwise, or of any security so
taken,  in  respect of any loan advanced whether  before  or
after the commencement of this Act; or
    (c)  for the redemption of any security given before  or
after  the commencement of this Act in respect of  any  loan
advanced  whether before or after the commencement  of  this
Act."
    The  words "instituted or filed on or after the 1st  day
of  January, 1939, or pending on that date" have  been  read
and understood as qualifying the words "any suit or proceed-
ing" in the beginning of the definition as well as the words
"proceeding  in execution" occurring further down:  see  per
Spens C.J. in Bank of' Commerce Ltd. v. Amulya Krishna  (3).
Accordingly, it has
(1) I.L.R. 11944) 2Cal. 376; 48 C.W.N. 361.
(2) L.R. 76 I.A. 179 at p. 190.
(3) [1944] F.C.R. 126;A.I.R. 1944 F.C. 18.
582
been  held in Ram Kumar De v. Abhoya Pada Bhattacharjee  (1)
that  where a decree is such that the suit in which  it  was
passed  had terminated before January 1, 1939, and  no  pro-
ceeding in execution was started or was actually pending  on
or  after that date it is not a decree in "a suit  to  which
this Act applies"and cannot be reopened.  The same view  was
upheld  by  a Special Bench of the Calcutta  High  Court  in
Aparna  Kumari  v.  Girish Chandra  (2)which  overruled  two
earlier  decisions  to the contrary.  The  construction  put
upon  section  2 (22)by the Special Bench  and  the  reasons
given by them appear to us to be well-founded.  In the  case
now  before us, the Suit No. 78 of 1922 was  instituted  and
all the three decrees were passed long before the  specified
date.   The only question that has therefore, to be  consid-
ered  is whether any proceeding in execution was pending  on
or after that date.  The answer to this question will depend
on  the  true meaning and effect of the orders made  by  the
executing Court (i) on January 30, 1937, and (ii) on June 2,
1939.
    As to (i)--It is not disputed that the order of  January
30,  1937, was made under Order XXI, rule57, as  amended  by
the Calcutta High Court. Order XXI, rule 57, is expressed in
the following terms :-
    "Where any property has been attached in execution of  a
decree  but  by reason of the  decree-holder's  default  the
Court is unable to proceed further with the application  for
execution,  it shall either dismiss the application  or  for
any  sufficient reason adjourn the proceedings to  a  future
date.  Upon the dismissal of such application the attachment
shall cease."
    The  marginal note of the rule is determination  of  at-
tachment.  The reason why rule 57 was introduced in the Code
of 1908 has been explained by Rank in C.J. in Shibnath Singh
Ray v. Sheikh Saberuddin Ahmad(3) as follows:--
 (1) 46 C.W.N. 557; A.I.R. 1942 Cal. 441.
 (2) 48 C.W.N, 406.
 (3) I.L.R. 56 Cal. 416 at pp. 421-422
583
    "Rule 57 of Order XXI was a new provision introduced  in
1908.   It is evident from the language of the rule  itself,
and  it is still more evident from the  circumstances  under
which  it  was  passed, that it was intended  to  provide  a
remedy  for the grievance or inconvenience which is  apt  to
arise, where, after an attachment in execution, the applica-
tion  for  execution  cannot further be  proceeded  with  by
reason of the decree-holder's default.  This was, and  still
is,  a  very  common  case.  The  decree-holder  makes  some
informal arrangement to give the judgment-debtor time  with-
out obtaining full satisfaction of the decree ;the  applica-
tion  for  execution is not further prosecuted;  it  is  not
withdrawn;  neither party attends.  In these  circumstances,
the  object of the rule is to say that the Court  must  make
either  an order for adjournment or an order  of  dismissal.
The reason why it was necessary to require the Court, if  it
did not adjourn a proceeding to a definite date, to  dismiss
the application for execution formally and definitely can be
amply illustrated from the decided cases.  In the absence of
a definite order of dismissal the files of the Courts became
encumbered with a number of applications for execution which
were water-logged and derelict, and a practice arose whereby
such applications were ordered to be 'struck off.'  This was
a  practice  not justified by the Code and  in  cases  where
attachments  in  execution  had already  been  entered,  the
question arose whether the effect of an order 'striking off'
was that the attachment made upon application for  execution
was itself struck off or whether it remained notwithstanding
such  an order.  Many other awkward and important  questions
arose out of this practice and the object of rule 57 was  to
ensure that this illogical and inconvenient practice  should
be stopped. Applications for execution were to be definitely
dismissed if they were not adjourned to a future date.   The
object  of  the last sentence in rule 57 is  to  settle  the
question  whether,  when  the application  in  execution  is
dismissed any attachment made under that application  should
fall to the ground or should subsist, and
584
the  legislature  has  provided that it is to  fall  to  the
ground."
    The new rule thus' introduced left two distinct  courses
open  to the executing Court in the situation  envisaged  by
the  rule.   Each course had its advantage as  well  as  its
disadvantage.   Thus the adjournment of the  execution  pro-
ceedings  kept  the  attachment alive  without  any  special
direction.   While the adoption of this course  helped  bona
fide   arrangement   between  the  decree-holder   and   the
judgment-debtor as to the time and manner of satisfaction of
the  decree  it was calculated also to  encourage  desultory
proceedings resulting in undesirable congestion in the files
of  the Executing Court by  keeping alive so many  execution
proceedings.  On the other hand, while the dismissal  of  an
application  in the circumstances mentioned in the rule  had
the merit of preventing a congestion of the file by  finally
disposing of the application by a final order, it was calcu-
lated to discourage decreeholders from giving even  reasona-
ble  accommodation to the judgment-debtor on account of  the
destruction of the attachment which left the judgment-debtor
free  to  deal  with the property to the  detriment  of  the
decreeholder after the attachment ceased.  It was  evidently
with a view to preserve the advantage of a dismissal and  at
the same time to avoid the disadvantage of the rigid rule of
cesser of the attachment that the Calcutta High Court amend-
ed rule 57 by adding the words "unless the Court shall  make
an order to the contrary" at the end of the last sentence of
that rule.  The rule thus amended leaves three courses  open
to  the  Executing Court in case it finds  it  difficult  to
proceed with the execution case by reason of the default  of
the  decree-holder.  It may (1) adjourn the proceedings  for
good  reason  which will automatically keep  the  attachment
alive  or  (2)  simply dismiss the  application  which  will
automatically   destroy  the attachment or (3)  dismiss  the
application but specifically keep alive the attachment by an
express order. The rule, as amended, therefore, contemplates
three distinct forms of order, any one of which may be  made
by the Court in the
585
circumstances mentioned in the rule.  The question before us
is as to the category in which the order made on January 30,
1937, in Execution Case No. 118 of 1936 falls.
    It will be recalled that the order of January 30,  1937,
was  made  on a petition (Exhibit 2) filed on  that  day  in
Execution  Case No. 118 of 1936.  Great stress was  laid  by
the learned advocate for the appellants on the words "struck
off for the present" occurring in the body of that petition.
It  will  be  noticed that those words formed  part  of  the
request of the judgmentdebtor which was being recited in the
petition. In the actual prayer portion the decree-holder did
not use the words "for the present" but only asked the Court
"to strike off the execution case keeping the attachment  in
force."   Further, apart from what the parties  wanted,  the
Court  made  its intention clear in the very order  that  it
passed  and which is entered in column 20 of Exhibit F.  The
Court  regarded the willingness of the the decree-holder  to
enter into a long and protracted negotiation with the  judg-
ment-debtor as evidence of unwillingness on the part of  the
decree-holder  to  diligently   prosecute   the    execution
proceedings  and accordingly  dismissed the  execution  case
for non-prosecution but thought fit to expressly keep  alive
the attachment.  It is quite obvious that the Court made  an
order of the third kind mentioned above.  The three forms of
order permissible under rule 57 as amended by the High Court
are  quite distinct and independent of each other and  there
is no room for their overlapping.  If the mere  continuation
of attachment will automatically convert an express order of
dismissal  of  the execution application which  is  a  final
order  into  an order of adjournment which is  not  a  final
order  then there was no point in the High Court taking  the
trouble  of  amending  rule 57 at all. The  Court  could  by
simply  adjourning the proceedings  automatically   continue
the   attachment   without  any express  direction  in  that
behalf.   The fact that the Court gave an express  direction
that  the attachment should continue clearly indicates  that
the
586
Court  intended to make a final order of  dismissal.  Again,
the heading of column 20 in Exhibit F clearly indicates that
only  a  final order is to be entered in that  column.   The
fact that the order was entered in that column affords  some
justification for the conclusion that the Court made a final
order  of dismissal. That the claim case  was  automatically
dropped  is yet another indication that the  execution  case
was  at an end.  The fact that the judgment-debtor had  paid
the full costs of the execution case is also a feature which
goes  to show, to a certain extent at any rate if not  deci-
sively,  that the execution proceeding was finally  disposed
of  by the order. The following endorsement appears  on  the
petition Ex. 2 (a), dated June 2, 1939:
    "Heard  learned pleaders for the parties.  They  jointly
ask me to cancel the attachment (existing by special  order)
in Money Ex. 118 of 1936 though that case was dismissed."
    This  endorsement  also  clearly shows  that  the  Court
itself understood that the order that it made on January 30;
1937, was a final order of dismissal and that the attachment
had been continued by a special order. On a consideration of
all these matters I have not the least doubt in my mind that
the order of January 30, 1937, was in form and in  substance
a final order of dismissal of the Execution Case No. 118  of
1936  and  that the attachment was continued  by  a  special
order  such as is contemplated and authorised by the  amend-
ment  made  by the Calcutta High Court in rule  57.  Learned
advocate for the appellants contended that if the  execution
case came to an end the attachment could not be left hanging
in  the air. There is no substance in this  argument.  Ordi-
narily, an attachment is supported by an execution case  and
if  the  execution case is simply dismissed  the  attachment
must fail with it. But rule 57, as amended, expressly empow-
ers the Court to dismiss an execution application but at the
same  time to keep alive the attachment by a special  order.
That is what was done in this case. Here the attachment does
not,  to use the expression of the learned advocate for  the
appellants,
587
hang  in  the air. It rests upon the solid foundation  of  a
special order which rule 57, as amended, in terms authorises
the Court to make. The continuance of the attachment, in the
circumstances, needs no execution proceeding to support  it.
Take the case of an attachment before judgment. Under  Order
XXXVIII, rule 11, where after an order of attachment  before
judgment  a decree is passed in favour of the plaintiff,  it
is not necessary upon an application for execution of such a
decree to apply for re-attachment of the property.  It means
that the attachment continues and the judgmentdebtor  cannot
deal  with the property to the disadvantage of  the  decree-
holder. After the decree is passed, the attachment continues
but nobody will say that although there has been no applica-
tion  for  the execution of the decree at any  time  by  the
decree-holder there is, nevertheless, an execution  proceed-
ing  pending merely because the attachment continues.   Here
also  the attachment subsists and rests only upon the  terms
of Order, XXXVIII rule 11, and without any proceeding.  Such
attachment  cannot be called a proceeding in execution,  for
none was ever initiated after the decree was passed.  In  my
judgment,  the order of January 30, 1937, was a final  order
which brought the Execution Case No. 118 of 1936, to an  and
and the attachment continued, not because there was a  pend-
ing  execution  proceeding but because a special  order  was
made  under Order XXI,      rule 57, as amended by the  High
Court.
As to (ii)--Learned advocate for the        appellants  then
contended  that  the petition (Ex. 2a) dated June  2,  1939,
amounted to a proceeding in execution and as that was insti-
tuted and was pending after January 1, 1939 the  proceedings
came  within the definition in section 2 (22)of "a  suit  to
which  this Act applies".  I do not think this  argument  is
sound. The petition (Ex.2a) was not really an application at
all. See Raja Shri Prakash Singh v. The Allahabad Bank  Ltd.
(1). In substance, it was nothing but a certification by the
decree-holder  of the satisfaction of the decree.  The  mere
fact
(1) 33 C.W.N. 267; A.I.R. 1929 P.C. 19,
588
that  the document was in the form of a petition  could  not
convert what was really the usual certifying procedure  into
a  proceeding  in execution for recovery of a  loan  or  for
enforcement  of any agreement. It was purely  an  intimation
given  to the Court by the decreeholder that the decree  had
been satisfied out of Court and the prayer for withdrawal of
the attachment was merely consequential and would follow  as
a matter of course on full satisfaction of the decree  being
recorded.  The order made on that petition also  shows  that
the  decree was recorded as adjusted and the attachment  was
cancelled. In my judgment, that petition (Ex. 2a) was not an
application such as would initiate a proceeding in execution
for  any of the purposes mentioned in clauses (a) or (b)  or
(c) of section 2 (22) of the Act.
    For  reasons  stated  above, the decrees  sought  to  be
reopened were not decrees made in "a suit to which this  Act