1968 (4) TMI 95 - SC - Indian Laws

Summary

Issues Involved:
1. Whether the power of attorney in question is a power coupled with interest and if it is revocable.
2. Whether the bank can be held to be an assignee of the interest in the decree, and if so, whether that assignment is legal or equitable.
3. Whether the dispute between the appellant and the bank could have been enquired under Section 47 of the Code of Civil Procedure.
4. Whether the bank, as an assignee of the amount due under the decree, can execute the decree despite the appellant's objection, either under Order XXI, Rule 16, or under Section 146 of the Code of Civil Procedure.
5. Whether the bank can continue the execution in its own right after the execution application was filed in the name of the appellant.

Detailed Analysis:

1. Power of Attorney Coupled with Interest:
The court concluded that the power of attorney granted to the bank was indeed a power coupled with interest and hence irrevocable. Section 202 of the Indian Contract Act, 1872, stipulates that an agency cannot be terminated to the detriment of the agent's interest if the agent has an interest in the property forming the subject-matter of the agency. The document explicitly stated that the power given to the bank was irrevocable, and this finding was not contested by the appellant's counsel.

2. Assignment of Interest in the Decree:
The court examined whether the power of attorney constituted a transfer or assignment of the appellant's rights in the decree to the bank. It was determined that the document did not contain any words of transfer and explicitly stated that the bank was to execute the decree on behalf of the appellant. Therefore, the appellant remained the owner of the amount due under the decree, and the bank was merely acting as an agent. Thus, the bank was not considered a legal assignee of the decree.

3. Equitable Assignment:
Despite the absence of a legal assignment, the court found that the power of attorney amounted to an equitable assignment of the decree. The decree's amount was earmarked for discharging the appellant's debts to the bank, creating a special fund for this purpose. The bank was authorized to realize this fund and set off the amount towards the debts. This arrangement constituted an equitable assignment, supported by precedents such as Watson v. Duke of Wellington and Burn v. Carvalho. Indian courts, administering both law and equity, have followed this rule, as seen in decisions like Jagabhai Lallubhai v. Rustamji Nasarwanji and Prahlad Pd. Modi v. Tikaiini Faldani Kumari.

4. Execution of Decree by Equitable Assignee:
The court addressed whether the bank, as an equitable assignee, could execute the decree despite the appellant's objections. The appellant argued that only the decree-holder named in the decree could execute it, and the bank's execution was invalid without a transfer recognized under Order XXI, Rule 16 of the Code of Civil Procedure. However, the court referred to its decision in Jugalkishore Saraf, which held that an equitable assignee could execute the decree under Section 146 of the Code of Civil Procedure. Despite the appellant's counsel contesting this decision, the court adhered to it, allowing the bank to execute the decree in its own right.

5. Continuation of Execution by the Bank:
The court considered the procedural aspect of the execution application, initially filed in the appellant's name with the bank acting as an agent. The dispute between the appellant and the bank arose during the execution proceedings. The court found no useful purpose in closing the current application merely because it was made in the appellant's name. Given the equitable assignment and the bank's right to execute the decree, the court allowed the existing application to proceed.

Conclusion:
The appeal was dismissed with costs, affirming the bank's right to execute the decree based on the irrevocable power of attorney and the equitable assignment of the decree amount to discharge the appellant's debts.