Deo Chand vs Shiv Ram

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Miscellaneous Petition No. 1223 of 1964

Decision Date: 24 August 1964

Coram: Raghubar Dayal, J.R. Mudholkar, S.M. Sikri

In the matter titled Deo Chand versus Shiv Ram, the Supreme Court of India rendered its judgment on 24 August 1964. The decision was authored by Justice Raghubar Dayal, who sat on a bench together with Justices J. R. Mudholkar and S. M. Sikri. The petitioner in the case was Deo Chand, and the respondent was Shiv Ram. The judgment is recorded under the citation 1965 AIR 615 and also appears in the Supreme Court Reporter as 1965 SCR (1) 109. The procedural issue before the Court arose under the Supreme Court Rules of 1950, specifically Order XLV, rule 5, which deals with the Court’s inherent powers to condition the conduct of a respondent on terms and whether such exercise is justified in the interest of justice.

The headnote of the judgment notes that, while the appeal was pending before the Supreme Court, the respondents had obtained possession of the suit property in their favor. The appellants, having failed to invoke Order XLV, rule 13(2) of the Code of Civil Procedure at the appropriate time, subsequently sought the intervention of the Supreme Court by invoking its inherent powers under the Rules. The respondents, who were decree holders, had executed the decree in their favor and were involved in further proceedings seeking a stay or other directions under the Civil Procedure Act of 1908. The Court ultimately held that it could not exercise any inherent power to impose conditions on the respondents, such as requiring security for returning possession of the disputed lands, for payment of mesne profits, or for restraining the respondents from transferring the land. The Court explained that while the Supreme Court Rules state that the Rules do not limit the Court’s inherent powers to make orders necessary for the ends of justice or to prevent abuse of process, any order that would restrain a party already in possession of property delivered by a lower court would not serve the interests of justice. The Court observed that the appellant was already entitled to recover mesne profits as permitted by law, and any transfer of the suit property would be governed by the doctrine of lis pendens; therefore, imposing such restraints would be unwarranted. In the final order, the Court noted that the application, which was presented as an application under Order XLV, rules 2 and 5 of the Supreme Court Rules, sought four specific prayers: (i) a directive for the respondents to furnish security for delivering possession of the disputed lands and for payment of mesne profits and costs that might be awarded in the appeal; (ii) an injunction restraining the respondents from transferring the disputed lands or creating any charge on them pending the decision of the appeal; (iii) a request for the case record to be sent and printed under the supervision of the Court; and (iv) an order for an early hearing of the case. The Court observed that prayers (i) and (ii) were made on the basis of rule 5, which states that nothing in the Rules shall be deemed to limit or otherwise affect the Court’s inherent powers to make such orders.

In this matter, the Court explained that it may issue any order that is required for the ends of justice or to prevent misuse of the Court’s process. The respondents, who held the decree, had already taken possession of the land that was the subject of the suit because a decree in their favour had been executed. The petitioners had not invoked rule 13 (2) of Order XLV of the Code of Civil Procedure at the time the respondents applied for execution. The Court observed that, had the petitioners applied to the High Court for a stay of execution, the High Court would have had two possible courses: it could have permitted the execution to proceed while requiring the respondents to give security for the proper performance of any order that might be made by this Court on the appeal; or it could have stayed the execution by requiring the petitioners‑appellants to furnish security for the performance of the decree that was appealed against or for any decree or order that this Court might later make on the appeal.

The Court then posed the question whether, after a decree had been executed and the decree‑holders had been placed in possession by the Court, this Court could now command the respondents‑decree holders to provide security for restoring possession of the disputed land and for paying mesne profits if the appeal succeeds, and whether this Court could restrain the respondents‑decree holders from transferring the disputed lands pending the final decision of the appeal. A notice of the petition had been served on the respondents‑decree holders, but they failed to appear before the Court. Counsel for the petitioners referred the Court to several authorities and to the provisions of the Code of Civil Procedure that were relevant. The primary reliance was placed on the decision in Mst. Jariutool‑Butool v. Mst. Hoseinee Begum (1), which had been followed by the Madras High Court in Narayanan Chetti v. Arunachallam Chetti (2) and by the Bombay High Court in Khushaldas Gokuldas v. Chimanlal Kalidas (8), a case that arose after the Code of 1908 was enacted.

The Court noted that in the Privy Council case the Privy Council had held that the Sadar Dewani Adalat possessed the authority to require the decree‑holder to furnish security or otherwise to secure the property that was in dispute while the appeal was pending, even though execution had taken place before the appeal was admitted. The Privy Council judges did not elaborate on the reasons for their view; they merely expressed that they faced some difficulty in dealing with the matter but, after reviewing the relevant regulations and considering the nature of the case, they believed that an order could be made upon application. The regulations examined by the Privy Council were identified as Bengal Regulation XVI of 1797, Bengal Regulation XIII of 1808 (section II, clause (3)), and Bengal Regulation V of 1798 (sections V and VI). Section 11 of Bengal Regulation XVI of 1797 was cited as providing for certain persons.

In this matter the Court examined the provisions of the Bengal regulations that governed appeals from the Sadar Dewani Adalat to the King‑in‑Council. The regulations allowed a party who wished to appeal a judgment of the Sadar Dewani Adalat to the King‑in‑Council to present a petition of appeal before the Sadar Dewani Adalat, which was then empowered to admit the appeal and to proceed with it in accordance with the sections of the regulation that prescribed several restrictions. Section IV of the regulation stated that, in cases of appeal to His Majesty‑in‑Council, the court of Sudder Dewanny Adalat could either order that the judgment be executed, provided that sufficient security was taken from the party in whose favour the judgment was passed for the due performance of any order or decree that the King‑in‑Council might later make on the appeal, or suspend the execution of the judgment during the pendency of the appeal, taking comparable security from the party who retained possession of the property adjudged against him. The Court found that nothing in these provisions gave the Sadar Dewani Adalat authority to demand security from the decree‑holders or to restrain them from transferring any property over which they had obtained possession in execution of their decree before an appeal was taken to the Privy Council. Section TV, however, directed the Sadar Dewani Adalat to allow execution of the decree after taking sufficient security from the decree‑holder. In the case before the Privy Council no such security had been taken, and therefore the Court concluded that the Sadar Dewani Adalat was held to be competent to remedy its default by ordering the decree‑holders to furnish security even after the decree had been executed. Bengal Regulation XIII of 1808 dealt only with the procedure in cases that were appealable to the Sadar Dewani Adalat and could not speak to appeals to the Privy Council from the orders of that court. Section V of Bengal Regulation V of 1798 provided that the principles contained in sections III and IV applied to cases where a decree ordered the transfer of possession of property and an appeal might be pending in a superior court, including the King‑in‑Council. Section III of that regulation empowered appellate courts to require additional security during an appeal if the security already taken from the appellant for a stay of execution was found to be insufficient, and, in case the appellant failed to furnish further security, to permit execution of the decree after taking requisite security from the respondent. Section IV declared that any transfers made by the appellant while an appeal was pending were to be considered null and void. The Court therefore could not see how sections III, IV and V of Regulation V of 1798 could guide the matter before the Privy Council. Section VI of the same regulation dealt with the attachment of property when neither party could furnish security, but that provision likewise could not assist in determining whether the High Court could require decree‑holders to furnish security after execution of the decree had already occurred.

Section VI of the Regulation provides for the attachment of property when neither party is able to furnish security. The Court observed that this provision could not assist in deciding whether the High Court may require decree‑holders to furnish security after the decree has already been executed. The Court then turned to Order XLV of the Code of Civil Procedure, which governs matters relating to appeals to this Court. Rule 13 of that Order addresses the powers of the Court whose decree is under appeal while the appeal is pending. Rule 13 reads as follows: “13. (1) Notwithstanding the grant of a certificate for the admission of any appeal, the decree appealed from shall be unconditionally executed, unless the Court otherwise directs. (2) The Court may, if it thinks fit, on special cause shown by any party interested in the suit, or otherwise appearing to the Court, (a) impound any movable property in dispute or any part thereof; (b) allow the decree appealed from to be executed, taking such security from the respondent as the Court thinks fit for the due performance of any order which the Supreme Court may make on the appeal; (c) stay the execution of the decree appealed from, taking such security from the appellant as the Court thinks fit for the due performance of the decree appealed from, or of any decree or order which the Supreme Court may make on the appeal; or (d) place any party seeking the assistance of the Court under such conditions or give such other direction respecting the subject‑matter of the appeal, as it thinks fit, by the appointment of a receiver or otherwise.” The Court noted that sub‑rule (1) makes clear that, unless the Court issues a specific direction, the decree must be executed without condition. Such a direction must be issued before the execution takes place; otherwise the execution proceeds unconditionally. An unconditional execution permits the decree‑holder to carry out the decree and thereafter manage the property obtained in accordance with the law. Sub‑rule (2) enumerates the situations in which the Court may issue directions affecting the suit, including the execution of the decree. Paragraphs (b) and (c) respectively allow the Court to require security from the respondent to facilitate execution, or to stay execution by demanding security from the appellant to ensure performance of any decree or order that this Court may later make on appeal. The Court explained that a direction for security to guarantee the performance of a future order is to be made at the stage when the Court is deciding whether to allow or to stay execution of the decree. The sub‑rule does not empower the Court to issue such a direction after the decree has already been executed. Even when the Court considers giving such directions, it must do so while dealing with

In this case, the Court explained that an application for execution may be granted only when the Court is satisfied that a special cause exists justifying the issuance of such directions. Rule 13 of the Supreme Court Rules was cited to show that, as a general principle, the holder of a decree possesses the full right to enforce the decree, unless the party seeking execution fails to demonstrate a special cause and the Court, under clause (b) of sub‑rule (2), orders the decree‑holder to provide security. Rule 14 was then discussed as the provision allowing the Court to order an increase in the security that has been furnished by either party when the security is deemed inadequate. The Court stated that if the appellant, who is the judgment debtor, does not deposit the additional security ordered, the decree may be executed. Conversely, if the decree‑holder who is the respondent fails to provide the additional security, the Court may stay any further execution of the decree and may restore the parties to the positions they occupied at the time the inadequate security was originally furnished, or may issue directions concerning the subject‑matter of the appeal as it deems appropriate. The Court clarified that the operation of Rule 14 is limited to situations where security was initially furnished either by the decree‑holder respondent or by the judgment debtor appellant; it does not apply to cases where the Court has allowed execution without imposing any security condition. The Court observed that the legislature could have inserted a provision, either in this rule or in another rule, permitting the Court to demand fresh security if new circumstances arose during the pendency of the appeal that would justify requiring security from a decree‑holder respondent who had already executed the decree. No such provision exists. The Court further noted that the discussion thus far had concerned the powers of the High Court and of courts whose orders were under appeal before this Court. No precedent was cited in which this Court ordered a decree‑holder to furnish security for the performance of a decree already executed, nor was any statutory provision identified that addressed the issue. Order XX, rule 1, of the Supreme Court Rules was quoted, which provides that the filing of an appeal does not bar execution of the decree or order appealed against, but the Court may, after imposing terms and conditions it deems fit, stay execution or stay the proceedings in any appeal before it. Finally, the Court observed that there is no rule authorising this Court to issue directions related to the execution of a decree. Because the decree‑holder is at liberty to execute the decree, and because the powers of the court whose decree is under appeal with respect to execution applications are set out in Order XLV of the Code, the inherent powers of this Court, as defined in Order XLV, rule 5 of the Supreme Court Rules, are limited to making orders necessary to achieve justice or to prevent abuse of the process.

The Court observed that the inherent powers of the Court are not affected by the procedural rules. The counsel for the petitioner did not contend that the reliefs sought, namely the demand for security from the respondents and an order restraining them from transferring the property, were to be granted on the basis of the Court’s inherent powers. The Court held that the very existence of such an inherent power was highly doubtful because the statutory Code already provides a complete scheme for the decree‑holder’s right to enforce the decree and for the High Court to issue directions relating to that enforcement. Moreover, the Court noted that no situation arose which would justify the exercise of an inherent power, since the High Court itself had not issued any such direction and the appellant‑judgment debtor had not asked the High Court to stay the execution of the decree. The Court further reasoned that invoking an inherent power in these circumstances would not serve to prevent an abuse of process; rather, it could encourage abuse, because a judgment‑debtor who had previously failed to act in a timely manner might be prompted to seek such relief only after the decree had been executed and while the appeal was pending. The law, the Court explained, permits a party to transfer its interest in a property while litigation is ongoing, but it does not forbid such transfers; they remain subject to the final outcome of the litigation. Consequently, ordering a restraint on a party who is already in possession of the property, as directed by the Court, could not be said to be in the interests of justice. In view of these considerations, the Court concluded that the reliefs sought in clauses (i) and (ii) of paragraph 11 of the application could not be granted after the decree‑holders had been lawfully put in possession of the property in execution of their decree.

The Court added that the appellants’ failure to obtain the requested reliefs from this Court would not necessarily prejudice them should they succeed on appeal. Any transfer of the suit property made by the respondents‑decree‑holders during the pendency of the appeal would be governed by the principle of lis pendens, and the appellants would be entitled to claim mesne profits for the period of the respondents’ possession, as permitted by law. Accordingly, the application was rejected with respect to the reliefs mentioned in clauses (i) and (ii) of paragraph 11. The Court did not consider any other relief for the protection of the appellants’ interests, as no additional relief had been sought. Regarding the prayer in clause (iii), the Court ordered that the record of the case be sent for printing, with the papers for the Court’s use to be printed under the supervision of the Registrar. Concerning the prayer in clause (iv), the appellants were directed to take appropriate steps after the record had been printed. Finally, the Court rejected prayers 1 and 2 of the petition.