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Supreme Court of India

Shaukat Hussain Alias Ali Akram & ... vs Smt. Bhuneshwari Devi (Dead)) By ... on 25 August, 1972

Order XXI, CPC deals generally with the execution of decrees and orders. That order is divided into several topics, each topic containing a number of rules. The first four topics cover rules 1 to 25 and the fifth topic, namely, stay of execution comprises 4 rules, namely, rules 26 to 29. A perusal of these rules will show that the first three rules i.e. rules 26 to 28 deal with the powers and duties of a court to which decree has been sent for execution. Under rule 26, that court can stay the execution of the decree transferred to it for execution for a reasonable time to enable the judgment-debtor to apply to the court by which the decree was passed or to any court having appellate jurisdiction over the former for an order to stay execution or for any other order relating to the decree or execution which might have been made by the court of first instance or the appellate court. It will be seen, therefore, that under rule 26 the transferee court has a limited power to stay execution before it. Moreover, under sub-rule (2) if any property is seized by it in the course of execution, it may even order the restitution of the property pending the result of the application made by the judgment-debtor to the court of the first instance or to the appellate court. Rule 27 says that any such restitution made under sub-rule (2) of rule 26 will not prevent the property of the judgment-debtor from being retaken in execution of the decree sent for execution. Rule 28 provides that any order of the court by which the decree was passed, in relation to the execution of such decree, shall be binding upon the court to which the decree was sent for execution. And then we have rule 29 which deals with a different situation. The rule is as follows :

" Where a suit is pending in any court against the holder of a decree of such court, on the part of the person against whom the decree was passed, the court may, on such terms as to security or otherwise, as it thinks fit, stay execution of the decree until the pending suit has been decided."

It is obvious from a mere perusal of the rule that there should be simultaneously two proceedings in one court. One is the proceeding in execution at the instance of the decree-holder against the judgment-debtor and the other a suit at the, instance of the judgment-debtor against the decree-holder. That is a condition under which the court in which the suit is pending may stay the execution before it. If that was the only condition, Mr. Chagla would be right in his contention, because admittedly there was a proceeding in execution by the decree-holder against the judgment-debtor in the court of Munsif 1st Gaya and there was also a suit at the instance of the judgment-debtor against the decreeholder in that court. But there is a snag in that rule. It is not enough that there is a suit pending by the judgment-debtor, it is further necessary that the suit must be against the holder of a decree of such court.The words "such court" are important. "Such court" means inthe context of that rule the court in which the suit is pending.In other words, the suit must be one not only pending in thatcourt but also one against the holder of a decree of that court.That appears to be the plain meaning of the rule. It is true that in appropriate cases a court may grant an injunction against a party not to prosecute a proceeding in some other court. But ordinarily courts, unless they exercise appellate or revisional jurisdiction, do not have the power to stop proceedings in other courts by an order directed to such courts. For this specific provisions of law are necessary. Rule 29 clearly shows that the power of the court to stay execution before it flows directly from the fact that the execution is at the instance of the decree- holder whose decree had been passed by that court only. If the decree in execution was not passed by it, it had no jurisdiction to stay the execution. In fact this is emphasised by rule 26 already referred to. In the case before us the decree sought to be executed was not the decree of Munsif 1st Court Gaya but the decree of the Subordinate Judge, Gaya passed by him in exercise of his Small Cause Court jurisdiction. It is, therefore, obvious that the Order staying execution passed by the Munsif, Gaya would be incompetent and without jurisdiction.

Supreme Court of India

Shyam Singh vs Collector, District Hamirpur, ... on 25 September, 1992

It has been said the difficulties of a litigant''begin when he has obtained a decree". It is a matter of common knowledge that far too many obstacles are placed in the way of a decree-holder who seeks to execute his decree against the property of the judgment-debtor. Perhaps because of that there is no statutory provision against a number of execution: proceedings continuing concurrently. Section 51 of the Code gives an option to the creditor, of enforcing the decree either against the person or the property of the debtor; and nowhere it has been laid down that execution against the person of the debtor shall not be allowed unless and until the decree-holder has exhausted his remedy against the property. Order 21, Rule 30 of the Code provides that "every decree for payment of money, including a decree for the payment of money as the alternative to some other relief, may be executed by the detention in the civil prison of the Judgment-debtor, or by the attachment and sale of his property, or by both."

in the case of A.K. Subramania Cheniar v.A Ponnuswami Chettiar , saying:

the Court has a discretion under Order XXI, Rule 21 C.P.C., to refuse simultaneous execution and to allow the decree-holder to avail himself of only one mode of execution at a time.

16. In the case of Uma Kama Banerjee v . Renwick and Co. Ltd. AIR 1953 Calcutta 717, also it was said:

power of the decree-holder is, however, subject to the exercise by the Court of a judicial discretion vested in it under Order 21, Rule 21 of the Code.

17. It is true that the proverbial laws delay is more frequently and strikingly exemplified in execution proceedings that even in the initial dispute, and as such, courts have to aid the creditor in realising the dues from the debtor. But at the same time in the special facts and circumstances of a particular case, the Court can direct the decree-holder or the creditor not to put any property on sale if by the mode already opted by the decree-holder or the creditor, the amount due has been realised or likely to be realised without any further delay.

Allahabad High Court

Shamsuddin vs Abbas Ali on 19 January, 1970

It appears to me that the possession referred to in Sub-rules (1) and (3) of Order 21, Rule 35 is Khas or actual possession, while that referred to in Sub-rule (2) and Rule 36 is formal or symbolical possession. Formal or symbolical possession is delivered by fixing a copy of the warrant in some conspicuous place of the property and proclaiming by the beat of drum or other customary mode at some convenient place the substance of the decree. Rules 35 and 36 refer to cases where a suit is brought for possession of immoveable property and a decree is passed in the suit for the delivery of the property to the decree-holder. If the immoveable property of which possession is directed by the decree to be delivered to the decree-holder is in the possession of the judgment-debtor, actual possession must be delivered to the decree-holder under Sub-rule (1) of Rule 35. Where it is in the possession of a tenant or other person entitled to occupy the same only symbolical possession can be delivered, and that is to be done under Rule 36. Symbolical possession can in such cases operate as actual possession against the judgment-debtor.

Thus, though the law has made a distinction between actual and symbolical possession under Rules 35 and 36, no such distinction has been made under Rule 100. Where, as in the instant case, symoblical possession was delivered to the auction purchaser and symbolical possession is alleged to have been superimposed on that there would, to my mind be clear dispossession. Plain meaning must be assigned to the word 'dispossession' as occurring in Rule 100. In any case, Shamsuddin did not apply for possession under Order 21, Rule 36. The prayer was for possession under Order 21, Rule 35 even though the disputed shops were in the possession of tenants. The warrant says the Shamsuddin must be put in possession and the officer executing the warrant was authorised to remove any person bound by the decree who refused to vacate the shop.

Supreme Court of India

Lakshmichand & Balchand vs State Of Andhra Pradesh on 5 November, 1986

Learned counsel for the Appellant contends before us that the State Government is not entitled to a set off at all because, he says, a set off can be claimed only under Order 21 Rule 18 of the Code of Civil Procedure and that provision does not apply in terms to the present case. Learned counsel for the respondent urges, on the other hand, that the power of the Court extends to granting an equitable set off in appropriate cases, and the High Court was therefore justified in making the order which it did. We have no doubt that in certain cases the Court has the power to allow a set off even in cases which do not strictly fall within the terms of Order 21 Rule 18 of the Code.

Andhra High Court

Bhoganadham Seshaian vs Budhi Veerabhadrayya (Died) And ... on 15 March, 1971

17. Now, Order 21, Rule 18, Civil P. C. provides that cross decrees for the payment of money shall be set off against each other. However, in order to attract the said Rule, following conditions must be satisfied:

(a) the decrees must be for the payment of definite sums of money;

(b) they must have been passed in separate suits;

(c) the decree-holder in one must be the judgment-debtor in the other;

(d) the parties must fill the same character in both the suits:

(e) both decrees must be capable of execution and must be so at the same time and by the same Court; and

(f) application should have been made to the Court for execution of both decrees.

18. If the above conditions are satisfied, the set off would be worked out in accordance with the said Rule. If the amounts under the two decrees are not equal, full satisfaction will have to be entered upon the decree for the smaller amount. and part satisfaction upon the decree for the larger amount; and execution would be allowed only under the latter decree and for so much only as remains due after the set off. It is, however, necessary that the Court passes an order of set off. There would be no adjustment merely because two applications for execution of the cross-decrees are filed. it must, however, be remembered that the set off of decrees under Rule 18 to 20 of Order XXI, Civil P. C. is not a discretionary matter depending upon equitable considerations. Whatever they arise from, circuitry of proceedings thereunder can be avoided and should be avoided. This is the underlying principle of the said rules.

19. While conditions (a) to (d) both inclusive are undisputable satisfied in the present case, conditions (e) and (f) have raised controversy between the parties. It is not , in our view, necessary to consider and decide anything relating to condition (e). It is enough to state that since the two applications by the two decree-holders have to been made to the Court for execution because the judgment-debtor had not filed any execution petition to execute his modified decree, in our judgment condition (f) is not satisfied, and consequently Rule 18 of Order 21, Civil P. C. cannot be said to apply to the present case.

20. The question then is whether apart from the provisions of Rule 18, the Court has general or inherent power to allow a set off in executions proceedings. The matter seems to us beyond any pale of doubt that the Court does possess a general or inherent power to allow a set off of cross-decrees even in cases where Rule 18 or 19 Order 21, Civil P. C. is not applicable.

21. On general principles and in exercise of its inherent power an executing court can entertain and give effect to a claim of set off even in cases which do not fall strictly within the provisions of Rule 18 or 19 of Order 21, Civil P. C. It must be remembered that while Rule 18 is applicable to cases passed in two different suits, Rule 19 relates to cases where there is a decree under which two parties are to recover sums of money from each other. These provisions are not however exhaustive. De hors these Rules, there is general and inherent power in the executing court to grant what is called equitable set off.

22. The principle of set of may be defined as the extinction of debts of which two persons are reciprocal debtors to one another, by the credits of which they are reciprocally creditors to one another.

23. While Order VIII, Rule 6, Order XXI, Rules 18 and 19, Civil P. C. are instances of legal set off, the equitable set off is mainly based on the principle of equity, justice and good con-science. The provisions for legal set off do not take away from the parties any right to set off which they had independently of the Code. For example in cases of natural debits the credits, that is in mutual open and current account cases and in cases where cross decrees arise out of the same transaction or cases where cross demands arise from different sets of transactions but are so connected in their nature and circumstances as to make it inequitable that the plaintiff or the decree-holder should recover form the defendant and the judgment-debtor driven to a cross suit or execution petition. This set off is known as equitable set off, if one may like to call then so and such a right is well recognised in India apart from the provisions of the Civil P. C.

24. The distinction between the two has, however, to be borne in mind. The difference between the legal set off and an equitable set off is that while in the former case the Court is bound to entertain and adjudicate upon the plea when raised, the defence of equitable set of cannot be claimed as a matter of right, but the Court has a discretion to adjudicate upon it in the same suit or execution proceedings or to order it to be dealt with in a separate suit or execution proceedings.

25. From what is discussed above, it would be plain that equitable set off can be claimed in a case where cross-demands, arise out of the same transaction as well as in cases where the cross-demands may not arise out of the same transaction but they are so connected in the nature or circumstances that it would be inequitable to allow one party to execute his decree driving the other party to separate proceedings of execution. No hard and fast rules can be laid down, nor it is desirable to do so as to in what circumstances in such cases equitable set off can be permitted. The granting of equitable set off rests in the discretion of the Court. This discretion is a judicial discretion and we conceive that the dominant feature of judicial discretion is that it has to be exercised accordingly to settled rules rather than individual fluctuating and unsettled opinion. Thus where a Court thinks that investigation into the claim of equitable set off will cause great delay it may refuse to allow it or may order the enquiry to proceed on such terms as it thinks fit.

26. The equitable set of, however, cannot be treated as a strait-jacket formula. It cannot be bound down to the procedural limitations. Since the matter is in the discretion of the Court, it may grant equitable set off in a proper case in spite of the fact that no execution petition is independently filed for that purposes. It can grant such a set off if an execution petition is pending albeit seeking a different mode of executing the decree such as arrest of the judgment-debtor.

27. It is also not relevant that execution petition of a decree which is sought to be set off is or is not filed by the other decree-holder. And even in a case where an independent execution petition if necessary and if filed for the purpose of claiming set off is time barred, that would not deter the Court from granting an equitable set off like legal set off would not be permitted if the claim separately enforced would be time barred. But the jurisdiction of the Court exists to grant equitable set off if special circumstances permit even in a case where claim for set off is time barred.

28. That the Court has general and inherent power to grant equitable set off de hors the provisions of Order XXI, Rule 18 or 19, Civil P. c. is well supported by the following decisions. We are first referring to the decisions in which the cross demands had arisen out of a single transaction or were so connected with each other as to attract equitable considerations. See Mt. Nonibai v. Jethanand, AIR 1938 Sind 31; Badri Nath v. Moti Ram, AIR 1939 Lal 85, Adwaita Chandra Saha v. Chittagong Co., AIR 1925 Cal 102: Rama Rao v. Venkatramanachar, AIR 1951 Mys 20; Cinnammal v. Chidambara, AIR 1936 Mad 626; Bank of Dacca Ltd, v. Gour Gopa Saha, AIR 1936 Cal 409 and Ramu Sahu v. Thakur Rai, AIR 1917 Pat 259.

29. Counter claims arising out of two separate transactions are not treated to fall outside the jurisdiction of the Court in granting equitable relief de hors the said provisions of the Civil Procedure Code. Whatever may be the position in legal set off under Order VIII, Rule 6, Civil P. c. the provision of Order XXI, Rule 18, Civil P. C. recognises the legal set off of two cross decrees arising out of separate transactions. Whatever may be the considerations for the allowing distinctly separate transactions to be the basis of the set off under Order VIII, Rule 6. in executing proceedings the two cross decrees not only can be legally set off by observing Rule 18, but they can also be equitably set off obviously because after the decrees are passed, there is precious little-unlike a claim of set off based on separate transaction in a suit under Order VIII, Rule 6 to be enquired into. Thus on the execution side the two cross decrees although arising out of two separate and unconnected transactions when legally can be set off under Rule 18 of Order XXI, Civil P. C., one fails to see why in such cases equitable set off cannot be permitted. If power exists to grant equitable set off apart from Rule 18, as we comprehend it does exist, then equitable set off in proper cases can be permitted although the decrees may have been the result of unconnected and independent transactions. The said position of law gathers support from the following decisions: Bangar Raj v. Kalidindi Suraiahmma, AIR 1957 Andh Pra 403 and Narayanan v. Krishnaru, AIR 1951 Trav-Co. 78.

30. The proposition that cross-decrees can be set off only when they are attempted to be executed is not applicable to a case of equitable set off. Even without filling any execution petition, the claim under cross decrees could be set off and adjusted either (a) by agreement of parties or (b) under orders of Court. This view is supported by the following decisions. Narayanan v. Krishanaru, AIR 1951 Trav-Co 78 and Hira Lal Singh v. Ramjiram, AIR 1919 Pat 312 (1). In cases of agreement see Shiv Prasad Singh v. Lalit Kishore Mitra, Air 1943 Pat 152 and Nathulal v. Kacharalal, ILR (1953) 3 Raj 278 = AIR 1955 NUC (Raj) 273. In cases of orders of Court directing set off, see AIR 1919 Pat 312 (1).

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