Order XXI Rule 16 CPC - Transferee Of Rights In Subject Matter Of Suit Can Apply For Execution Without Separate Assignment Of Decree : Supreme Court

The Supreme Court observed that the Explanation to Order XXI Rule 16 of the Code of Civil Procedure, removed the distinction between an assignment pre-the decree and an assignment post the decree.

Thus, the court observed that there is no bar under Order XXI Rule 16 against assignee who acquired rights prior to decree from making an application to execute the decree.

The bench comprising Justices Sanjay Kishan Kaul and BR Gavai observed that the objective of the said amendment is to avoid multifarious proceedings to determine the issue of assignment and to determine the issue of assignment in the execution proceedings itself.

The bench was hearing an appeal arising out of a claim based of an assignee of the decree holder in terms of Order XXI Rule 16 CPC ( application for execution by transferee of decree). During the pendency of the execution proceedings, the decree holder died. The appellants (now before SC) filed application before the executing court under Section 47 read with Order 22 Rules 1&2 of the CPC. This claim was based on the basis of an assignment made by the deceased decree holder (prior to decree). This application was dismissed by the Trial Court, and later by the High Court.

In appeal, the appellants referred to the Supreme Court judgment in Jugalkishore Saraf v. M/s. Raw Cotton Co. Ltd. It was held therein that Order XXI Rule 16 contemplates the actual transfer of the decree by an assignment in writing executed "after the decree is passed". According to that decision, while a transfer of or an agreement to transfer a decree that may be passed in the future may, in equity, entitle the intending transferee to claim the beneficial interest in the decree after it is passed, such equitable transfer does not relate back to the prior agreement and does not render the transferee a transferee of the decree by an assignment in writing within the meaning of Order XXI Rule 16 of the CPC.

According to the appellants, the amendments made to the CPC vide the Code of Civil Procedure (Amendment) Act, 1976 changes this position and the above judgment was delivered before this amendment (and thus do not apply to this case). The respondents, on the other hand, contended that, the decree not being in existence, they were fully covered by the judgment in Jugalkishore Saraf and that the amendments to Order XXI Rule 16 would not change the position of law as laid down therein.

The 1976 amendment added the following Explanation to Order XXI Rule 16: Nothing in this rule shall affect the provisions of section 146, and a transferee of rights in the property, which is the subject matter of the suit, may apply for execution of the decree without a separate assignment of the decree as required by this rule.

The court, referred to the Law Commission report and the amendment of 1976 and noted as follows:

24. It is an admitted position that the explanation was added to Order XXI Rule 16 which did not exist earlier, pursuant to the recommendations made by the Law Commission of India in its 54th Report on the Code of Civil Procedure, 1908. The Explanation was so added due to conflicting High Courts' decisions on the question, i.e., whether a person who does not have a written assignment of the decree, but who has succeeded to a decree holders' right, is entitled to such decree under Section 146 of the CPC.

Thus, the Law Commission recommended amending Order XXI Rule 16 to clarify that it does not affect the provisions of Section 146 and that a transferee of rights in the subject matter of the suit can obtain execution of a decree without separate assignment of the decree. The objective appears to be to not have multifarious proceedings to determine the issue of assignment, but to determine the issue of assignment in the execution proceedings itself.

We are of the view that the objective of amending Order XXI Rule 16 of the CPC by adding the Explanation was to deal with the scenario as exists in the present case, to avoid separate suit proceedings being filed therefrom and to that extent removing the distinction between an assignment pre the decree and an assignment post the decree. Thus, what has been discussed even in the judgment in Jugalkishore Saraf as a view based on the equitable principle was sought to be incorporated in Order XXI Rule 16 of the CPC by adding the Explanation, something which had not been done earlier. Once the legislative intent is clear, and the law is amended, then theearlier position of law cannot be said to prevail post the amendment and it is not in doubt that the present case is one post the amendment

Observing thus, the bench allowed the appeal. It clarified that the validity of the document, i.e., the Assignment Deed or the cheque as that would be a matter to be decided by the executing court.  "The question was as to whether at the threshold, the appellants' objection could be rejected on the ground that they were assignees who had acquired the rights prior to the passing of the decree. The rest of the job would be of the executing court, despite the considerable prolongation which has taken place.", the court observed.

Click here to Read/Download Judgment