1

 Registration Act of Iceland 1978

Registration Act

1978  May 10

99th Legislative Assembly 1977–1978

Act no. 39/1978 .

Þinglýsingalög

Entered into force on 1 January 1979. Amended by: L. 63/1988 (entered into force on 1 January 1989). Act 85/1989 (entered into force on 1 July 1992). Act 31/1990 (entered into force on 1 July 1992). Act 20/1991 (entered into force on 1 July 1992). Act 90/1991 (entered into force on 1 July 1992). Act 91/1991 (entered into force on 1 July 1992). Act 6/1992 (entered into force on 1 July 1992). Act 37/1993 (entered into force on 1 January 1994). Act 45/2000 (entered into force on 1 January 2001; implemented in accordance with the instructions in Article 13). Act 69/2008 (entered into force on 1 June 2008, published in the Official Journal, 13 June 2008).Act 83/2008 (entered into force on 1 January 2009, except for Article 22, which entered into force on 20 June 2008). Act 77/2010 (entered into force on 1 July 2010). Act 162/2010 (entered into force on 1 January 2011). Act 126/2011 (entered into force on 30 September 2011). Act 117/2016 (entered into force on 1 January 2018, except for Articles 52, 53, 75, 76 and 79–81, which entered into force on 28 October 2016). Act 151/2018 (entered into force on 1 April 2019, except for Articles 16 and 18, which entered into force on 9 January 2019). Act 161/2019 (entered into force on 4 January 2020). Act 25/2020 (entered into force on 1 April 2020). Act 82/2020 (entered into force on 21 July 2020). Act 85/2020 (entered into force on 21 July 2020). L. 125/2020(entered into force on 4 December 2020). Act 37/2021 (entered into force on 19 May 2021, except for Articles 1 and 7, which applied retroactively from 1 February 2021, and points b and c of Articles 4 and 5, which applied retroactively from 6 Jan. 2021).

Law

 

Registration Act

Chapter I. [Registrars.]1)

1)L. 85/1989, Art.
Article 1
[District magistrates are registrars, each in their own district.] 1)
1)L. 85/1989, Art.

Article 2
[Director of Public Registration] 1)shall not determine whether a document shall be notarised, [if it is disqualified under administrative law]. 2)However, [the Registrar] 1)usually intervene in the actions necessary to prevent legal damage.
[Representative of the district commissioner] 1)can resolve a registration issue, even if [the registrar] 1)behind those incidents is in the 1st paragraph. articles.
1)L. 85/1989, Article 3. 2)L. 37/1993, Article 36.

Article 3
[The decision of the Director of Public Registration on registration pursuant to this Act may be submitted to a district court judge in the jurisdiction of the Director of Public Registration. Anyone with a legally protected interest is authorized to do so due to the decision of the Director of Registration. The decision shall be brought before a court before four weeks have elapsed if the applicant for registration or his / her agent was present with it, or otherwise before four weeks have elapsed from the time when he or his agent became aware of it.

If a party submits the decision of the Director of Registration to a court, a comment shall be recorded in the registration book.

The person who wants to carry out a decision on registration according to Art. Paragraph 1 under judgment, the Registrar of Registration shall be notified in writing. It shall specify the decision of the person brought before the court, a request for changes to it and the reasons for the claim. The Director of Registration shall hand over the certified photocopy of documents and a copy of the registration book as soon as possible. The person who wishes to bring the decision of the Director of Registration before a court shall without delay submit the case to the district judge. The Registrar may send his comments on the matter to the district court judge. The district court judge shall issue a reasoned ruling as soon as possible and no later than three weeks after he has received the case file.

If someone other than the applicant for registration wishes to submit a decision on registration to a court pursuant to Art. Paragraph 1 the Director of Registration shall notify the applicant for registration and, as the case may be, others who may have an interest and give them the opportunity to submit their written demands and comments. The district court judge shall then rule on the case and issue a reasoned ruling within the time limit specified in the third paragraph. If a district court judge considers a case to be particularly extensive, he may decide to hold an oral hearing on the subject matter of the dispute before it is decided.

The decision of the district court judge on the decision of the director of registration is subject to appeal to [National Court] 1)according to the general rules of civil action. A ruling shall be appealed before two weeks have elapsed from his dismissal if the complainant or his agent was present at it, but otherwise before two weeks have elapsed from the time he or his agent became aware of the ruling.

[Rulings of the National Court on matters listed in the first paragraph. Article 167 of the Code of Civil Procedure is subject to appeal to the Supreme Court. It is also possible to request permission from the Supreme Court to appeal to the court against the ruling of the National Court in appeals according to this chapter, which constitutes a final decision on the subject matter of the dispute.] 1)] 2)
1)L. 117/2016, Article 22. 2)L. 6/1992, Art.

II. Chapter. Execution of registrations and cancellations.

Article 4
A document to be registered shall be delivered in the district where the registration is to take place, cf. Articles 20, 41, 43 and 47
[Registration with an electronic record is subject to the provisions of the first paragraph. where applicable.] 1)
1)L. 151/2018, Art.

Article 5
The person requesting registration must hand in [the registrar] 1)document in duplicate, original and transcript or transcript. The copy, which [the Registrar] 1)is intended to be written on sound paper, which [the Ministry] 2)has legalized for this purpose. [It is also permitted to register by electronic entry.] 3)

If a document to be registered is written in a foreign language, [the Registrar] may 1)requires that it be accompanied by an Icelandic translation, written on a certified registration paper and made by a certified document translator, if possible.

Due to changes in the custody of registration documents, a regulation may set other instructions on the preparation of documents and the number of copies, which shall be submitted for registration.

[Electronic registration entry shall be confirmed by a valid electronic means.
The Minister may issue a regulation 4)on the implementation of registrations [and cancellations] 5)by electronic entry, including electronic security, certification, timestamps, identification, seal, payment and other matters relating to implementation and registration requirements [and cancellations] 5)by electronic entry.] 3)
1)L. 85/1989, 5. gr. 2)L. 126/2011, Article 80 3)L. 151/2018, Article 2. 4)Rg. 360/2019 , Coll. 1082/2020 , 278/2021 and 851/2021 .5)L. 161/2019, Art.

Article 6
All documents submitted for registration shall be entered in a diary. [The same applies to documents submitted for cancellation where a calendar is kept on a computer.] 1)A diary shall be prepared in such a way that the submission of a copy of it can, as the case may be, with the necessary comments, fulfill the provisions of this Act on the publication of a weekly register of notarised documents, cf. Article 9 Paragraph 3
[If a document is submitted for registration, it shall be dismissed if any of the following matters apply:

a. a document is delivered in the wrong district,
b. real estate is not registered in the registration book… 2)
c. … 2)
d. document concerns direct or indirect ownership of real estate and is not mentioned [real estate number] 2)her,
e. the demarcation of land or plot is not in accordance with [real estate register], 2)
f. it is not unequivocal with which property a document belongs, which party the document concerns or what its contents are in other respects,
g. the document lacks the signature of the issuer and witnesses or others who can certify the document, cf. Article 22, if this is necessary,
h. a document is only delivered in one copy or a transcript or transcript is not written on certified registration paper.] 1)
[Conditions of points a – f of the second paragraph. apply to a request for registration by electronic entry.
Receipt of a request for electronic registration must be confirmed electronically.] 3)
After entry of a document in a calendar, it shall be signed and a transcript or transcript thereof. The endorsement shall include acknowledgment of receipt of the document and indication of the date and time of receipt. 3)
1)L. 45/2000, Art. 2)L. 83/2008, 24. gr. 3)L. 151/2018, Article 3.

Article 7
After a document has been entered in a journal, the [Director of Registration] shall 1)verify whether there is anything to prevent the document from being notarised.

A document shall be dismissed from registration if its issuer violates the authorization for ownership in the manner specified in the document, cf. however, Articles 24, 25 and 51. Paragraph 3 The same applies if the registration is manifestly unnecessary for the protection of rights, if the reading of a document or other inscriptions is indistinguishable or the writing is such that there is a special risk that it may be misunderstood, as well as if the copies are substantially inconsistent or the document has other significant defect, that it is not considered appropriate to take it for registration and custody.

There are now items in the document, worded or unspoken, that are not in accordance with the contents of the registration book, but the document is still acceptable for registration. A comment shall then be made on the documents, if it must be considered that the inconsistency can have a significant effect on the right of the person to whom the document is intended to be granted. If two or more documents on the same property are submitted simultaneously for registration, cf. Article 15, and the rights they apply for, described together, a written comment shall be made on the documents on that incident. The same applies if a party, who only enjoys a conditional authorization for property, issues a document without analyzing the condition.
If a document is not notarised without a comment, the registration book must state that the document has been notarised with a comment.

[Director of Public Registration] 1)shall be paid as soon as possible and no later than within two weeks of the document being received for registration, whether it will be entered in the registration book. A document will not be delivered to the applicant for registration [or registration with an electronic record confirmed], 2)until this study is completed. If registration is refused, the applicant for registration shall be notified of the refusal immediately and the reasons for it in a letter of guarantee or in another secure manner.
1)L. 85/1989, Article 6. 2)L. 151/2018, Article 4.

Article 8
[Registrars] 1)enter these books:
1. Real Estate Register of documents relating to real estate.
2. Ship register of documents relating to all ships subject to registration.
3. Vehicle register of documents relating to motor vehicles.
4. Liquidity book of all documents relating to liquidity in general, e.g. á m. ships which are not subject to registration, but documents on such ships may also be entered in the ship register in accordance with point 2, if [the Director of Registration] 1)it is considered more suitable.
[Books relating to real estate shall be computerized in [real estate register] 2)following further instructions from the Minister in a regulation. It shall prescribe security measures and the storage of registration documents. Until the registration part [real estate register] has been completed 2)Registration directors may use older registration books, loose-leaf books, cards or older computer systems. Other books shall be loose-leaf books, but may be kept in card form. [Minister] 3)determines their further arrangements, whether computer technology shall be used in the registration of the information they contain and whether this shall be done in some or all of the registration districts.] 4)
The term registration books in this Act refers to these books, unless otherwise stated.
In these books, [what] 4)ship and car subject to registration one or more sheets as required. Furthermore, a person shall be provided with a sheet in the liquidity register that establishes liquidity rights, including a ship that is not subject to registration. When documents are received for registration, they must be mentioned on the person’s sheet… 4)ship, cars and the legal sale of public chattels, and then in such a way that it is usually possible to issue a certificate of ownership and mortgage by handing over a photocopy of the paper.
… 4)
1)L. 85/1989, 7. gr. 2)L. 83/2008, 24. gr. 3)L. 126/2011, Article 80 4)L. 45/2000, Art.

Article 9
[Registration takes place in such a way that the main points of a document are entered in the registration book, as well as the time stamp of a diary entry. When registering, the status of a document is changed from “diary entry” to “registered”.] 1)
When a document has been entered in the registration book, the [registration director] writes 2)certificate of registration on copies of the document [or it is confirmed that registration has been made by electronic entry]. 1)
A register of registered documents shall be made weekly, and it shall be available at the office of the [Director of Registration] 2)full week. This register shall state who is the issuer of the document, its owner, type and other information required for the document to be adequately described. [Minister] 3)may decide to publish such files in an official newspaper.
1)L. 151/2018, Article 5. 2)L. 85/1989, Article 8. 3)L. 162/2010, Article 110.

Article 10
The copies of notarized documents, which [the Registrar] 1)remains, shall be stored in special document boxes, and decides [the Ministry] 2)their type.
When a document is canceled, it must be removed from the document box and placed in the archives of [the Registrar] 1)and later to other archives as required by law. [If a request for cancellation is entered in a diary according to Art. Paragraph 1 Article 6 canceled documents shall not be taken from document cases.] 3)
[With a regulation, it may be decided that the storage of documents in computerized form replaces storage in document envelopes according to Art. Paragraph 1 This may be the case in some or all of the registration districts, as circumstances permit. The custody of documents can be limited in this way to certain types of documents.] 3)
A regulation may also stipulate that special technology shall be used for the custody of documents, such as the production of documents on microfilm. This may be the case in some or all of the registration districts. The custody of documents may be limited in this way to certain types of documents.
1)L. 85/1989, Article 9. 2)L. 162/2010, Article 110. 3)L. 45/2000, Article 4.

Article 11
If in one and the same document more rights are created than those which the document is primarily intended to grant, the attention of the [Director of Registration] 1)specifically drawn on, either by endorsement of the document itself or by underlining in the text of the document, the rights to which the registration should apply.
1)L. 85/1989, 10. gr.

Article 12
If a mortgagee gives up some or all of his mortgage right according to a mortgage bond or security bond (he does not release a mortgage) or he agrees to a new mortgage or transfer of his mortgage right (mortgage license) or he makes some similar statements, due to his mortgage right, [and may do so by electronic entry]. 1)[Mortgage bonds and guarantee bonds must always be signed for the change in mortgage.] 2)[[If about [registration of a document] 2)will be involved] 1)such declarations shall not be notarised unless the mortgage itself or a copy thereof, with an endorsement of the mortgage change, is shown or handed over to the Registrar so that he can make sure that it is sufficiently mentioned in the mortgage itself.] 3)
… 3)
1)L. 151/2018, Article 6. 2)L. 161/2019, Article 2. 3)L. 45/2000, 5. gr.

Article 13
The cancellation of a document takes place in such a way that a line is drawn over the entry of the document in the registration book and it must be stated when such a deletion took place, and reference is made to the document that authorized the cancellation. Deletion should be made in such a way that there are no problems in reading what was previously recorded later. [Cancellation of a document in the registration book takes place in such a way that the status of a document is changed from “registered” to “canceled”. Information on canceled documents and the declaration of the rightholder shall be kept in the CV of the property in question in the registration book.] 1)Once grown, a copy must be returned to its party.
[If a document has been delivered with a signed declaration by the right holder that it can be canceled, a certificate of the cancellation must be written on that copy of the document and state when it took place and where it is mentioned. The Director of Registration saves the signed copy of the cancellation in the registration book.] 1)Then write a certificate of cancellation on the original of the document and state when it took place and where it is mentioned. When grown, a copy shall be returned to his party.] 2)
1)L. 151/2018, Article 7. 2)L. 45/2000, Article 6.

III. Chapter. On the priority effect of registration and indecency.

Article 14
A document is not considered to have been submitted for registration, unless [the Registrar] 1)the information he requests is also provided, and a lawful payment is made for the processing of the document.
[A document submitted for registration will be time stamped at 21 on the day it is deemed delivered. Documents received after office hours are considered delivered the next working day.
An electronic registration entry in a diary is time-stamped when it is received and is considered delivered for registration at that moment.] 2)
1)L. 85/1989, Article 13. 2)L. 151/2018, Article 8.

Article 15
[A document is registered when it has been entered in the registration book…, 1)but the priority effect of registration is counted from [that date] 1)when a document was submitted for registration, cf. however, the second paragraph. Article 14, provided that the document is acceptable for registration.] 2)A document is considered to have been submitted for registration at [the date specified] 1)is in a diary, unless full proof is provided to the contrary. Now two or more incompatible documents are delivered [simultaneously] 1)for registration, and they are then equivalent in registration value. … 1)If documents for two enforcement actions (detention actions) or more are submitted simultaneously, the oldest of them is the most correct. If the owner hands over his property to another person and has also reserved rights over the property, such as a lien or pre-emptive right, the right that rights the younger owner may create for other persons then prevails, if the younger owner’s document contains the reservation of the right of the older owner and the document indicating this is delivered at the latest at the same time as the document called the rights of the younger owner’s counterparty.
… 3)
1)L. 151/2018, Article 9. 2)L. 45/2000, Article 7. 3)L. 31/1990, Article 44.

Article 16
If traditional rights to real estate have not been registered, they shall nevertheless remain unaffected, despite the fact that Articles 15 and 29, cf. Article 32 of this Act should lead to a different conclusion, if the party who has acquired the right to the same real estate has not filed a lawsuit to enforce his right within two years from the time he acquired his rights.
If the traditional period has not expired, when a party received his right, he must follow up his right with a lawsuit, before the above-mentioned deadline expires, provided that the traditional period is completed during the deadline.
Upon completion of the tradition, the rights over the property that would be contrary to the uses permitted by tradition lapse.

Article 17
Now the [registrar] counts 1)themselves can not decide what fee or fees should be charged for a document that has been submitted for registration, without consultation with the relevant ministry. He shall then enter the document temporarily in the registration book and state that the entry is not final. As soon as the Ministry’s reply has been received [Director of Registration], 1)he shall inform the person delivering the document in a secure manner of the Ministry’s decision on fees. If the fees are paid accordingly within two weeks of the notification being sent to the party, the [Director of Registration] shall 1)book in the registration book, that the entry is final, as the priority effect of the registration is then counted from the time a document was submitted for registration. [Alternatively, the Director of Registration draws a line over the entry of a document in a registration book or deletes a document in a computer system, and the effect of the registration is then deleted.] 2)
1)L. 85/1989, Article 14. 2)L. 45/2000, Article 8.

Article 18
If the content of a document is incorrectly entered in a registration book, the document has been entered in the registration book within the time limit specified in Article 7. Paragraph 5, or a document that does not comply with another document that was previously received for registration, is entered in the registration book before that. It is then possible to stipulate in a court of law that the right of the person granting this document shall give way to a right which is later notarised and based on an agreement, provided that the right holder is innocent of these incidents. The conditions of this are:
A. that the younger right holder would be compensated for undeserved damage, if he had to blur, and
B. that the damage would be to the right holder, if he had to be mitigated, much more detrimental than the older one or would lead to significant disruption of later registered rights , if the right of the person who made the mistake prevails.

Article 19
In this Act, carelessness means that the right holder, by agreement or legal act, neither knows nor should know the unregistered rights.

IV. Chapter. Registration regarding real estate.

1. Conditions for a document to be notarised.

Article 20
A document relating to real estate shall be registered in the district in which the property is located.
… 1)
1)L. 83/2008, 24. gr.

Article 21
A waiver will not be registered as a title deed, if it is subject to other conditions for the transfer of ownership than the settlement and payment of the purchase price within a specified time limit. [A waiver will also not be registered as a title deed if it does not contain information on the purchase price of the property, unless it is clearly stated in the document that there is no consideration for the property.] 1)
1)L. 85/2020, Article 3.

Article 22
A waiver or mortgage not issued by the government or other public bodies will not be registered unless the signature is confirmed by a notario publico, [lawyer] 1)or [his representative], 1)a certified real estate agent, or two witnesses. It must be clearly stated that the issuer wrote his name or recognized his signature in the presence of the person or persons confirming the signature, as well as that he was in possession of funds when he wrote his name. [Witnesses must state their ID number, or depending on the date of birth and address.] 2)
Signing for approval according to Article 24. shall be confirmed in a similar manner.
[A valid electronic signature on the application for registration by electronic entry confirms the date and signature. The issuer’s finances shall be verified in a list of deprived persons.] 3)
1)L. 117/2016, Article 23. 2)L. 45/2000, Article 10. 3)L. 151/2018, Article 10.

Article 23
A document to be registered may be subject to probation, but its content must be finally decided. Collateral letters can still be registered, even if only the maximum amount of debt is analyzed, the letter is to be insured.

Article 24
If a document is based on a legal instrument, and it will not be entered in the real estate register if the issuer fails to register a property to dispose of the property specified in the document, or he lacks the written consent of the person enjoying such authorization, cf. however, Article 51 Paragraph 3
Enforcement and detention of property will still be registered, even though the respondent lacks a registered authorization for the property. [A waiver issued due to a forced sale will be entered in the real estate register, even though the basis for the sale] 1)is a lien established by a legal instrument by a person who did not have or has a registered authorization or the same was the case with the person with whom enforcement was carried out. [If the lien on enforcement or detention has not been entered in the registration book, the director of registration shall be authorized to form a temporary property in the [real estate register]. 2)Such temporary registration does not replace the [establishment of real estate in the real estate register according to Art. Article 14 Act no. 6/2001 ]. 2)] 3)
An exchange waiver for a property will not be registered if the person expressing the waiver has owned the property, is not its registered owner… 1)
A judgment on the right to real estate will not be notarised, unless it binds the person who enjoys a notarised right to property, as the law does not state otherwise.
1)L. 90/1991, Article 91. 2)L. 83/2008, 24. gr. 3)L. 45/2000, Article 11.

Article 25
A person who registers a registered title has a registered title at any given time. The same applies to the person who proves that the right of ownership has been transferred to him due to the death of the owner. Similar rules apply to registered authorization for other rights.
Now [heirs have completed a private transfer to the estate of the deceased] 1)and register a deed of exchange or a declaration that real estate has become their property or one of theirs, and this is a sufficient right of ownership for them, cf. however, the third paragraph. Article 24 If the spouse lives in an undivided estate, it is sufficient to register the permission of [the district commissioner] 1)for residence.
If a property is sold [by forced sale, and the sheriff shall then] 2)take steps to ensure that it is mentioned on the property sheet in the real estate register. A similar obligation rests on the [liquidator] 1)at the beginning of bankruptcy proceedings and public liquidation of estates and at the beginning of composition agreements. No registration fee shall be paid for the entry of such notifications.
1)L. 20/1991, Article 136. 2)L. 90/1991, Article 91.

Article 26
A person who has a registered ownership right to a property also enjoys such a right to individual parts of it, e.g. á m. buildings that have been or will be built on the property, unless the real estate register mentions another right holder.
If documents are registered which give ownership of a building to someone other than the landowner, a special sheet shall be included in the real estate register for the construction.
Inheritance rights and other permanent rights of use shall be selected in a separate sheet in the real estate register. A person who enjoys the right to such a right is also considered to have a right to buildings that stand on the land covered by the right to rent, unless otherwise stated.

2. Correction of incorrect entries. Temporary protection of rights.

Article 27
Now [registrar] becomes 1)notices that an entry in the real estate register is incorrect or that an error has occurred in the registration otherwise, and he shall then rectify it. If it can be assumed that certain parties have received incorrect information about property due to the mistakes, the [Director of Registration] shall 1)inform them of the facts of the case, if possible, in a letter of guarantee or in an equally secure manner.
If a person states that an entry in a real estate register is materially incorrect and looks to court proceedings, then he has the opportunity to have his claim for correction registered, if he gives strong reasons for his statement, in the opinion of [the director of registration], 1)or provides a guarantee as provided by [the Registrar] 1)provides for. If he does not provide proof of his statement within the time limit, which [the Registrar] 1)puts it, the comment should be crossed out in the real estate book.
1)L. 85/1989, Article 16.

Article 28
If a case concerning the rights of immovable property is brought before a court, the court may decide by a ruling that the summons or an extract from it may be registered. If the judge refuses this, and that decision can be appealed to [the National Court and the appeal is dealt with in accordance with the Act on Civil Procedure]. 1)… 2)[Decisions of the National Court other than those laid down in the first paragraph. Article 167 of the Code of Civil Procedure will not be appealed to the Supreme Court.] 1)
If the case is initiated, or a judgment is passed in the plaintiff’s favor in favor of claiming or recognizing rights over the property. A comment on a policy in the real estate register shall then be deleted at the request of the defendant or others who have an interest, when a case has been initiated, the appeal period ends without an appeal or the judgment of the Supreme Court has ruled on the case.
1)L. 117/2016, Article 24. 2)L. 91/1991, Article 161.

3. What rights are subject to registration and to what extent.

Article 29
The rights to real estate shall be registered in order for them to remain valid against those who establish their right to contracts for the property, and against the debt collectors of the owner or other right holder of the property.
A contract or legal basis on which debt collectors are based may not invalidate an older unregistered right that is subject to registration, unless this document is registered itself, if registration is required, provided that the right holder by agreement is unjustified about the right to be enforced.

Article 30
Now the mortgage is registered, and you need it… 1)to register the transfer of a mortgage or deed (act), which concerns another type of transfer of rights to it. The same applies to the mortgaging of a mortgage, when it is created by pledging the bond.
1)L. 151/2018, Article 11.

Article 31
The establishment of the right of use and the transfer of the right of use are not subject to registration:
1. If the period of use is a maximum of 12 months or it is possible to terminate the contract with notice, which is not longer than 3 months, based on general travel.
2. If the period of use is not longer than 2 years or a contract may be terminated with notice, which is not longer than 6 months, provided that the contract concerns commercial premises. Utilization agreements, which are subject to the provisions of the legislation on land ownership, are not subject to registration.
Advance payment of rent for a period longer than one year and a reduction in rent from what is stated in a notarised agreement are subject to notarization, provided that these events are not specifically mentioned in the notarised agreement.

Article 32
The legal protection of mortgage rights is not subject to registration, unless otherwise provided by law. Legal protection of expropriation proceedings, on the other hand, is subject to registration. The same is true of rights acquired through tradition.

4. Legal effect of registration.

Article 33
A person who acquires rights through a contract with a registered owner of property does not have to face the objection that the credentials of his predecessor are invalid, if he is unaware of the invalidity event when he acquired the rights.
Counterclaim, which relates to a document according to para. is forged or obtained through the use of such coercion, is in Article 28. Act no. 7/1936 , but will not be lost. The same is true of the objection that a document is invalid due to the issuer’s lack of jurisdiction for youth.
A document is now notarized, which is invalid by law. If the defect disappears later, there is no need for a new registration, but the priority effect of the registration is then counted from the fact that the defect is alleviated.

Article 34
Rents, fees and other payments will be made to those who are authorized by a registration book to provide them with a receipt, so that it is binding, provided that the payer is unaware that the authorization has later disappeared on behalf of another person. A similar situation applies to redundancies and similar actions.
The repayment of a mortgage bond and actions based on it are governed by special rules on commercial bonds.

5. Lapse of registration.

a. Temporary validity of registration.

Article 35
Now there is a registered restriction or obligation on property, and they are not meant to be permanent. The effects specified in Article 15 shall then be deleted when 30 years have elapsed since the restriction was registered, provided that it is not re-registered before this deadline expires, cf. however, Articles 36 and 37.
The registration of an endorsement of a previously notarised document shall not invalidate the time limit referred to in the first paragraph, if the endorsement does not imply special recognition of the existence of the restriction. An increase in the amount of a mortgage constitutes such recognition.

Article 36
If a document covers a specific period for which it is intended to apply, or is limited to the life of the right holder, the provisions of Article 35 shall apply. not applicable.
If the minimum period for the validity of a document is mentioned, the legal effect of the registration will never be removed until three years after the end of that period.
For mortgages, the effect of registration does not disappear until at least five years have elapsed from the date on which the debt was to be paid in full in accordance with the provisions of the letter or the debt could first be finalized before termination by creditors, but the provisions of para. . Article 35

Article 37
The effect of a registration on a mortgage, arising out of foreclosure, foreclosure or similar proceedings, does not lapse until a full five years have elapsed since the proceedings were registered. The effect of a declaration of detention and an injunction is lost two years after the declaration of a judgment or a court ruling on its validity.
The provisions of the first paragraph. is not possible if a notification from the rightholder is registered before the deadline that the restriction has not expired. From that notification or new registration, new deadlines, equal to the first, from the last previous registration begin to count.

Article 38
[Director of Public Registration] 1)monitors, as far as possible, whether the legal effect of a particular registration has been deleted, and it must be removed from the real estate register, if applicable, on its own initiative. The same applies if the court is manifestly over. [Director of Public Registration] 1)shall, however, normally send the right holder a special notification of the impending annulment, so that the right holder has the opportunity to prevent the effect of the registration from being lost.
It is now the prospect that ownership, which has been registered for at least twenty years, has been completed, and then [the Registrar] can 1)at the request of the owner issued a challenge, which shall be published three times in Lögbirtingablaðið, to prospective rightholders to assert their rights within four months from the last publication of the challenge. If possible, a special notice shall be sent in a letter of guarantee to the person named by the real estate register. If no one shows up, the ownership shall be abolished.
If ownership is misappropriated, the rules of Article 18 shall apply. where applicable.
If the ticket is sold, the deadline shall be 35-37. gr. when registering a document, the date of entry in the registration book shall be used.
1)L. 85/1989, Article 17.

b. Cancellations.

Article 39
Ownership shall be canceled when proof of its cancellation is registered or a document is delivered with a declaration by the rightholder that it may be canceled [or cancellation is made by electronic entry]. 1)
A mortgage bond or security bond will not be canceled, however, unless a receipt or consent to cancellation is written on the letter itself [or the confirmation of the registered right holder of the cancellation of a document is registered, provided that the creditors’ registration has been corrected… 1)]. 2)… 2)
When a notarised document has been invalidated by a court, it may, however, be canceled if a copy of the judgment is submitted with a signed request from the judge for cancellation.
[If a property is sold by forced sale, then ownership may be removed from the registration book in accordance with what is laid down in the waiver of the forced sale when it is registered.] 3)In order for such [documents] 3)will be removed from the registration book, they do not have to be handed over, but the [registration director] must be able to 4)its endorsement of the copy of the document which he kept, why it had been erased.
If the evidence presented by the person requesting the cancellation is not considered satisfactory, the cancellation shall be refused.
1)L. 161/2019, Article 3. 2)L. 151/2018, Article 12. 3)L. 90/1991, Article 91. 4)L. 85/1989, Article 18.

Chapter V. [Registration of registered ship, 5 gross tons and larger.]1)

1)L. 69/2008, Art.

Article 40
Establishment and protection of property rights and restrictions on a registered ship, which is 5 [gross ton] 1)or larger, or part of such a vessel, is subject to the rules of real estate, as far as possible.
If the right holders of real estate are granted a special advantage in law in recovering their claims, then such right holders enjoy the property which is the first paragraph. covers, parallel benefits.
1)L. 69/2008, Art.

Article 41
Registration of documents relating to ship 5 [gross ton] 1)or greater, shall take place there in the district in which the ship is registered. [Clause 4 . and Article 5. Maritime Act, no. 34/1985 ], 2)however, retain their value as appropriate.
1)L. 69/2008, Art. 2)L. 151/2018, Article 13.

Article 42
The name change of a registered ship requires the approval of its registered owners. The name change and transfer of a ship shall be [the Director of Registration] 1)notify indirect rights holders in the vessel, if known. Notification of transfer is handled by [registration director] 1)in the registration district of the ship from which the ship is transferred.
[There is now a registered ship covered by this chapter of the Act between districts. The director of registration in the district to which a ship is transferred will then be active after the ship has been re-registered in the main ship register. Registered documents about the ship shall be accessible in computerized form in the ship register of the Director of Registration.] 2)
The legal effect of registration does not interrupt the transfer of a vessel between districts.
1)L. 85/1989, Article 19. 2)L. 69/2008, Article 3.

VI. Chapter. [Registration of registered ships subject to registration of less than 5 gross tons.]1)

1)L. 69/2008, Article 8.

Article 43
[Document relating to a registered ship of less than [5 gross tonnage] subject to registration, 1)shall be registered where the ship is registered.
Ownership permit for a registered ship subject to registration, which is less than [5 gross tons], 1)does not need to be registered, but the ownership authority specified in the ship register shall be considered a sufficient basis for the registration of documents from those whose owners are registered there. If the issuer of a document is not the registered owner, the document shall be dismissed from registration unless there is written consent from the registered owner with his confirmed signature in the manner of Article 22.
Any ownership of a registered ship subject to registration shall be registered in order for it to be valid against those who inadvertently enter into an agreement with their owners and against debt collectors.
Mortgages on these assets shall be submitted for registration at the same time as specified in the first paragraph. Article 48 and the signature and jurisdiction of the issuer, as well as the correct date, shall be confirmed in the manner of Article 22.] 2)
1)L. 69/2008, Article 5. 2)L. 63/1988, Article 3.

Article 44
Mortgages on a registered ship less than [5 gross tonnage] 1)… 2)shall be removed from the registration book, when 15 years have elapsed since the registration of the letter, provided that [the registration director] has 3)no notification will be received for registration within this deadline stating that the letter is still valid. In other respects, the provisions of Articles 36 and 37 shall apply.
1)L. 69/2008, Article 6. 2)L. 63/1988, Art. 3)L. 85/1989, Article 20.

Article 45
[[A ship subject to registration within 5 gross tonnes is now transferred between registration districts. The director of registration in the district to which a ship is transferred will then be active after the ship has been re-registered in the main ship register. Registered documents about the ship shall be accessible in computerized form in the ship register of the Director of Registration.] 1)
The legal effect of registration is not interrupted before the transfer of a ship.
[Director of Public Registration] 2)in the previous registration district sends indirect rights holders, if they are known, a notice of the transfer of a ship between districts.] 3)
1)L. 69/2008, Article 7. 2)L. 85/1989, 21. gr. 3)L. 63/1988, 5. gr.

Article 46
Of the provisions of IV. Chapter I of this Act applies to the assets covered by this Chapter, Articles 21-23. Article 25 and, as appropriate, provisions 27-28. gr. and Article 29. Paragraph 2 and 30. – 39. gr. (cf., however, Article 44).

VII. Chapter. [Registration of liquid assets in general, including ships that are not subject to registration and ships that have not been registered.]1)

1)L. 63/1988, 6. gr.

Article 47
A document concerning liquid assets, e.g. á m. a ship that is not subject to registration, or has not been registered, shall be registered at the home defense assembly of the owner of the property that has been deported, or of the person who must be subject to a restriction of rights. If he does not have a venue in Iceland, the document can be registered in Reykjavík.
If a registered company or association is the owner of a memorandum, a relevant document shall be registered in the registration district in which they are registered. If other associations are owners of memorabilia, a document shall be registered at the venue of the chairman of the association’s board. In the case of a special common property, a document shall be registered at the venue of the person representing the common property, otherwise at the venue of all co-owners.
[If a document relating to a registered car is registered and the title deed does not have to be registered, the title deed identified in the car register shall be considered a sufficient basis for the registration of documents from those who are registered owners. If the issuer of a document is not the registered owner, the document shall be dismissed from registration, unless the written consent of the registered owner with his confirmed signature in the manner of Article 22 is obtained]. 1)
If the owner moves out of a registration district or a change of ownership becomes an asset, registration can be resumed, but it is not necessary.
Of the provisions of IV. Chapter I of this Act shall apply from the 22nd to the 23rd. Article 29 Paragraph 2 and 30. – 39. gr. (cf., however, Article 48) as applicable.
1)L. 63/1988, 7. gr.

Article 48
Mortgages, which provide self-custody mortgages in liquid assets, e.g. á m. a ship that is not required to be registered or registered shall be delivered to [the Registrar] 1)for registration within three weeks of publication… 2). In addition to confirmation of the signature and jurisdiction of the issuer in the manner of Article 22. shall also certify that the date is correct.

Registration is a precondition for mortgages to remain valid against rightholders in accordance with agreements made in vain with the owner of the mortgage on mortgaged movable property, and against debt collectors.
If registration does not take place within the time limit covered by this Article, the mortgage shall not be valid against the parties referred to in the second paragraph.

A mortgage that provides a mortgage on certain movable assets shall be taken from the registration book, when ten years have elapsed since the registration of the bond, if [the registrar] 1)no notification is received within this deadline that the letter is still valid. In other respects, the provisions of Articles 36 and 37 shall apply.
The legal effect of a registration on the mortgaging of a commercial paper vis-à-vis the unsuspecting holders of the bond is subject to the endorsement of the bond itself regarding the mortgaging.
1)L. 85/1989, Article 22. 2)L. 151/2018, Article 14

VIII. Chapter. Compensation provisions.

Article 49
Now one suffers damage, which must be considered probably the result of a mistake [the registrar] 1)or of events specified in items d and e of this article, but the claimant is not to blame for it, and he is then entitled to compensation from the State Treasury, if the damage is due to it:

a. That he has trusted the registration certificate [registration director], 1)sbr. Article 9, or a certificate from the [Director of Registration] 1)on the content of registration books (mortgage certificate), provided that the party is innocent.
b. A document that has been submitted for registration has not been registered, or registered too late.
c. That a document must be blurred for a later notarized document according to Article 18.
d. To the source document, which is specified in the second paragraph. Article 33, is registered and a party has entered into an agreement on real estate or a registered ship, 5 berths or more, in the confidence that the document is valid.
e. That the provisions of Article 38 or 50 have led to his rights being revoked.
1)L. 85/1989, 23. gr.

IX. Chapter. Entry into force, etc.

Article 50
A person now takes ownership of a specific property upon the entry into force of this Act, but his registered right of ownership is somewhat lacking. Is he then entitled to turn to [the Registrar] 1)at the venue of the property with a declaration that he is the owner of the property. The conditions for him to receive unrestricted ownership on the basis of the declaration are the following:

a. that he has in his possession a document of authority, which is deficient and has been registered at least 5 years before this authority is consumed, or
b. has in his possession a source document from a man who has had such a document registered 5 years ago at least.
Now the [registrar], 1)that these conditions are met, and he then issues a challenge to the rightholder to assert his rights within four months from the last publication of the challenge, subject to the loss of rights. This challenge shall be published three times in Lögbirtingablaðið at the expense of the applicant. If no one submits within this deadline, the [Director of Registration] registers 1)a note in the registration book stating that the right of ownership is not lacking.
If a person breaches a notarised right of ownership and at the same time a certificate of his rights, a property lawsuit shall be instituted as the conditions exist]. 2)
1)L. 85/1989, 24. gr. 2)L. 91/1991, Article 161.

Article 51
If the law on the right to real estate, a registered ship or a registered car is fully established before the law enters into force, and the rights would have remained valid against a third party without registration under the previous law, and they are also valid in the same way in the future.
Rules of Articles 22 and 24, cf. Articles 43 and 48 of the Act will not apply to documents issued before their entry into force.
If a building property is without registered plot rights due to the fact that for special reasons the plot owner does not want to enter into a temporary use or lease agreement for the plot, the provisions of the first and third paragraphs shall apply. Article 24 of the Act does not apply to documents relating to such real estate. Article 50 of the Act does not apply to such assets.
Paragraph 1 Article 33 and Article 49 (d). apply only to documents which are registered after the entry into force of this Act and no special exceptions apply.

Article 52
Documents registered before 1 January 1949 may not be removed from the registration book pursuant to Article 35, cf. Article 38, before 1 January 1984.
The documents referred to in Article 37, Article 44. and Article 48. and is registered before the entry into force of the Act, shall not be removed from the registration book before 1 January 1986.

For the next 5 years after the entry into force of the Act, registration judges shall carefully examine registration books to rule on rights that may have lost their validity. Rights that are manifestly revoked are governed by Art. Article 38 Paragraph 1 If there is any doubt as to the validity of individual rights, the judge should seek information from the right parties. It is also possible for him to apply the provisions of the second paragraph. Article 38 where applicable.
The registration books entered when the Act enters into force shall be used until [the Ministry] 1)prescribes new books or the use of new technology. When new registration books are introduced, the rights that have obviously lapsed shall not be transferred. [Ministry] 1)decides when the provisions of Art. frv. 2)implemented in individual districts.
[Ministry] 1)decides when to enter documents in diaries according to Art. shall be included in individual districts. Until such a decision has been made, the receipt of documents and their signatures shall be arranged in the same manner as before the entry into force of this Act.
1)L. 162/2010, Article 110. 2)Seems to be “the law”.

Article 53
[Ministry] 1)sets in a regulation 2)provisions on the implementation of this Act, including on registration paper, appearance of documents and materials, transcripts of documents, on storage of documents, arrangement of registration books and their entry, on registration certificates, and to what extent the public has the opportunity to familiarize themselves with the contents of registration books. Furthermore, further provisions shall be made for the publication of documents which have been entered in the registration books.
[The Minister decides in a regulation 3)what types of documents can be registered by electronic entry, what information is considered the main document and on what types of assets according to Art. IV. – VII. section can be registered by electronic entry.] 4)
1)L. 162/2010, Article 110. 2)Rg. 405/2008 , Coll. 1152/2014 .3)Rg. 360/2019 .4)L. 151/2018, Article 15.
Article 54 …

Article 55
This Act shall enter into force on 1 January 1979.

[Temporary provisions.

I.

[Ministry] 1)oversees the transfer of real estate registration books to [real estate register] 2)in collaboration with [National Registry of Iceland] 3)in order to form a registration section [real estate registers] 2)in accordance with the law on registration and valuation of real estate. On the preparation of registration parts [real estate register] 2)subject to the provisions of this Act.

Before information from the registration book is transferred to [real estate register] 2)the director of registration shall compare the description of the property as it is in [real estate register] 2)and a registration book. In the event of a discrepancy, the Director of Registration shall record comments on this in the [real estate register]. 2)
If a property in the registration book is not identified by a fixed number or country code, the director of registration may use the identification of the property in [real estate register], 2)as there is no doubt that it is the same property.

When demarcating land in [real estate register] 2)shall form the basis of the description of the property boundaries in the registration book if they exist, otherwise the description shall be used in the land register. If information on the demarcation of land is not available, neither in the registration book nor in the land register, the director of registration may use the demarcation as a basis according to the municipality’s registers.
[Minister] 1)otherwise sets further rules on how to deal with discrepancies in registration between registration books and [real estate registers]. 2)] 4)
1)L. 162/2010, Article 110. 2)L. 83/2008, 24. gr. 3)L. 77/2010, Article 5. 4)L. 45/2000, brbákv.

[II.

The registration of creditors shall be corrected according to mortgages other than bearer bonds in the registration book. If the creditor is the Treasury, a public institution, a bank, a savings bank, a pension fund, an insurance company or a mutual fund, the registration of creditors may be corrected without the original or photocopy of the mortgage being presented as proof of transfer. In other cases, a signed original or copy of a mortgage must be presented in accordance with Articles 12 and 39. The aim is for the correction of creditors’ registration to be completed within one year from the entry into force of this Act.] 1)
1)L. 151/2018, Article 16.

[III.

Notwithstanding the provisions of this Act, an annex to mortgages, where the creditor is a public institution or financial undertaking or pension fund with a valid operating license, which only provides for deferral of payments on debts of individuals or companies, including [interest and / or installments, up to 18 months, from 16 March 2020 to 1 May 2021], 1)due to the coronary virus pandemic, the same legal effect as if it had been registered and approved by subsequent mortgagors. Annex according to 1st sentence shall be signed by the borrower, or by someone authorized to bind legal entities, with an autograph signature and certified in accordance with Article 22. or signed with a valid electronic signature.

In the appendix according to Paragraph 1 it should be noted that a change in terms is made due to the coronary virus epidemic. Annex according to Paragraph 1 shall be registered for [31. December] 2)2021.

Mortgage bonds and guarantee bonds shall always be signed for a change in the terms contained in the appendix pursuant to Art. Paragraph 1] 3)

1)L. 125/2020, 1. gr. 2)L. 37/2021, Article 9. 3)L. 25/2020, Article 16.





SRS Advertising & Marketing Pvt. Ltd. & Ors. Vs. Mr. Kamal Garg & Anr-16/02/2022

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

C.A. No. 1302-1303/2022 – D.No. 32172 / 2021 16-Feb-2022

SUPREME COURT OF INDIA

SRS Advertising & Marketing Pvt. Ltd. & Ors. Vs. Mr. Kamal Garg & Anr.

[Civil Appeal Nos. 1302-1303 of 2022]

February 16, 2022

M. R. Shah, J.

1. Feeling aggrieved and dissatisifed with the impugned judgment and order dated 22.11.2021 passed by the High Court of Delhi in Writ Petition (Civil) No.12530 of 2021 and in Review Petition No.197 of 2021, the original Respondent No.2 has preferred the present appeals. 2. That Respondent No.1 herein – original writ petitioner was the auction purchaser, who purchased the properties which were auctioned in pursuance of Recovery Certificate No.6/2016 which was in favour of the Corporation Bank (now merged with the Union Bank of India) for a sum of Rs.85 lakhs.

The reserved price of the properties was fixed at Rs.54 lakhs. Respondent No.1 – original writ petitioner made the highest bid of Rs.85 lakhs. After making the said bid and after making the earnest money deposit to the tune of Rs.21,25,000/( being 25% of the bid price) Respondent no.1 – the original writ petitioner moved an application before the Recovery Officer seeking some clarity in the matter. The same was replied to by the Bank. However, thereafter the Recovery Officer dismissed the application of the petitioner on 28.11.2019 and forfeited 10% of the amount deposited by him.

2.1 Aggrieved by the order of the Recovery Officer, Respondent No.1 herein had preferred an appeal being Appeal No.21 of 2019 before DRTII, Delhi on 19.12.2019. The said appeal came to be dismissed by the DRTII vide order dated 18.03.2020. Thereafter Respondent No.1 herein original writ petitioner preferred an appeal bearing No.91 of 2019 before the DRAT challenging the order of DRT dated 18.03.2020. The DRAT, however did not grant any interim relief to him and consequently Respondent Bank herein sought to put the property to auction on 10.11.2021.

The application to seek interim relief from the DRAT was renotified on 17.11.2021 i.e. after the date of the proposed auction and therefore apprehending that his interim relief application would become infructuous, Respondent No.1 herein preferred the present writ petition before the High Court. Though the appeal before the DRAT was pending and what was challenged before the High Court was with regard to not granting any interim relief against the auction, by the impugned judgment and order the High Court has disposed of the writ petition by granting one further opportunity to the original writ petitioner to deposit the balance amount along with the damages quantified at Rs.5 lakhs.

The High Court has passed the following order:

“13. In the aforesaid circumstances, we grant one opportunity to the petitioner to deposit the balance amount along with damages quantified at Rs.5 Lakhs, within the next two weeks. The deposit shall be made with the respondent bank within the aforesaid period. In case, the deposit is made in these terms, the respondent bank shall proceed to deliver the possession of the properties to the petitioner. The Recovery Officer is directed to release the 25% of the amount deposited by the petitioner with him, along with up to date interest, within the next 10 days to the respondent Bank, and to confirm the sale. The Recovery Officer shall take all steps under the law to perfect the title of the petitioner.”

2.2 Feeling aggrieved and dissatisifed with the impugned judgment and order passed by the High Court, original respondent No.2 – original borrower has preferred the present Civil Appeal Nos. 13021303 of 2022.

2.3 After the judgment and order dated 22.11.2011 passed in Writ Petition (C) No.12530 of 2021, a review petition was filed which has been dismissed by the High Court which is the subject matter of Civil Appeal Nos.13021303 of 2022.

3. We have heard learned counsel for the respective parties and perused the impugned judgment and order.

3.1 Having gone through the impugned judgment and order passed by the High Court, we are of the opinion that the same passed by the High Court is unsustainable.

3.2 The High Court has not properly appreciated the fact that what was challenged before it was regarding nongrant of any interim relief pending the appeal before the DRAT. Main appeal was yet to be considered by the DRAT on merits. From the impugned judgment and order passed by the High Court, it appears that the High Court has decided and disposed of the writ petition as if the High Court was considering the final decision of the DRAT. The order passed by the DRT confirming the order passed by the Recovery Officer forfeiting 10% amount deposited by the auction purchaser was yet to be decided by the DRAT. Therefore, the High Court as such has gone beyond the scope and ambit of the proceedings before it.

3.3 By passing the impugned judgment and order the High Court has as such made the proceedings before the DRAT infructuous, as after the impugned judgment and order nothing further is required to be decided by the DRAT. Therefore, the High Court has exceeded in its jurisdiction by passing the impugned judgment and order.

4. In view of the above and for the reasons stated above, the present appeals succeed.

The impugned judgment and order passed by the High Court is/are hereby quashed and set aside. Now, the DRAT to finally decide and dispose of the Appeal No.91 of 2019 in accordance with law and on its own merits. DRAT is directed to finally decide and dispose of the said appeal at the earliest, preferably within a period of four months from the date of the receipt of the present order. Present appeals are accordingly Allowed to the aforesaid extent. No costs.

J. (M. R. SHAH)

J. (B. V. NAGARATHNA)

New Delhi,

February 16, 2022

C.A. No. 1302-1303/2022 – D.No. 32172 / 2021 16-Feb-2022





Blocking Property and Suspending Entry Into USA of Certain Persons Contributing to Destabilizing Situation in Western Balkans-EO-08/06/21

Executive Order 14033 of June 8, 2021

Blocking Property and Suspending Entry Into the United States of Certain Persons Contributing to the Destabilizing Situation in the Western Balkans

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), section 212(f) of the Immigration and Nationality Act of 1952 (8 U.S.C. 1182(f)), and section 301 of title 3, United States Code,

I, JOSEPH R. BIDEN JR., President of the United States of America, hereby expand the scope of the national emergency declared in Executive Order 13219 of June 26, 2001 (Blocking Property of Persons Who Threaten International Stabilization Efforts in the Western Balkans), as amended by Executive Order 13304 of May 28, 2003 (Termination of Emergencies With Respect to Yugoslavia and Modification of Executive Order 13219 of June 26, 2001), finding that the situation in the territory of the former Socialist Federal Republic of Yugoslavia and the Republic of Albania (the Western Balkans), over the past two decades, including the undermining of post-war agreements and institutions following the breakup of the former Socialist Federal Republic of Yugoslavia, as well as widespread corruption within various governments and institutions in the Western Balkans, stymies progress toward effective and democratic governance and full integration into transatlantic institutions, and thereby constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States.

Accordingly, I hereby order:

Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

(i) to be responsible for or complicit in, or to have directly or indirectly engaged in, actions or policies that threaten the peace, security, stability, or territorial integrity of any area or state in the Western Balkans;

(ii) to be responsible for or complicit in, or to have directly or indirectly engaged in, actions or policies that undermine democratic processes or institutions in the Western Balkans;

(iii) to be responsible for or complicit in, or to have directly or indirectly engaged in, a violation of, or an act that has obstructed or threatened the implementation of, any regional security, peace, cooperation, or mutual recognition agreement or framework or accountability mechanism related to the Western Balkans, including the Prespa Agreement of 2018; the Ohrid Framework Agreement of 2001; United Nations Security Council Resolution 1244; the Dayton Accords; or the Conclusions of the Peace Implementation Conference Council held in London in December 1995, including the decisions or conclusions of the High Representative, the Peace Implementation Council, or its Steering Board; or the International Criminal Tribunal for the former Yugoslavia, or, with respect to the former Yugoslavia, the International Residual Mechanism for Criminal Tribunals;Start Printed Page 31080

(iv) to be responsible for or complicit in, or to have directly or indirectly engaged in, serious human rights abuse in the Western Balkans;

(v) to be responsible for or complicit in, or to have directly or indirectly engaged in, corruption related to the Western Balkans, including corruption by, on behalf of, or otherwise related to a government in the Western Balkans, or a current or former government official at any level of government in the Western Balkans, such as the misappropriation of public assets, expropriation of private assets for personal gain or political purposes, or bribery;

(vi) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to this order; or

(vii) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order.

(b) The prohibitions in subsection (a) of this section apply except to the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted before the date of this order.

Sec. 2. The prohibitions in section 1 of this order include:

(a) the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order; and

(b) the receipt of any contribution or provision of funds, goods, or services from any such person.

Sec. 3. I hereby determine that the making of donations of the types of articles specified in section 203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)) by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to section 1(a) of this order would seriously impair my ability to deal with the national emergency declared in Executive Order 13219, as amended by Executive Order 13304, and as expanded in this order, and I hereby prohibit such donations as provided by section 1 of this order.

Sec. 4. (a) The unrestricted immigrant and nonimmigrant entry into the United States of noncitizens determined to meet one or more of the criteria in section l(a) of this order would be detrimental to the interests of the United States, and the entry of such persons into the United States, as immigrants or nonimmigrants, is hereby suspended, except when the Secretary of State or the Secretary of Homeland Security, as appropriate, determines that the person’s entry would not be contrary to the interests of the United States, including when the Secretary of State or Secretary of Homeland Security, as appropriate, so determines, based on a recommendation of the Attorney General, that the person’s entry would further important United States law enforcement objectives.

(b) The Secretary of State shall implement this order as it applies to visas pursuant to such procedures as the Secretary of State, in consultation with the Secretary of Homeland Security, may establish.

(c) The Secretary of Homeland Security shall implement this order as it applies to the entry of noncitizens pursuant to such procedures as the Secretary of Homeland Security, in consultation with the Secretary of State, may establish.

(d) Such persons shall be treated by this section in the same manner as persons covered by section 1 of Proclamation 8693 of July 24, 2011 (Suspension of Entry of Aliens Subject to United Nations Security Council Travel Bans and International Emergency Economic Powers Act Sanctions).Start Printed Page 31081

Sec. 5. (a) Any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order is prohibited.

(b) Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited.

Sec. 6. For the purposes of this order:

(a) the term “entity” means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization;

(b) the term “noncitizen” means any person who is not a citizen or noncitizen national of the United States;

(c) the term “person” means an individual or entity; and

(d) the term “United States person” means any United States citizen, lawful permanent resident, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.

Sec. 7. For those persons whose property and interests in property are blocked pursuant to this order who might have a constitutional presence in the United States, I find that because of the ability to transfer funds or other assets instantaneously, prior notice to such persons of measures to be taken pursuant to this order would render those measures ineffectual. I therefore determine that for these measures to be effective in addressing the national emergency declared in Executive Order 13219, as amended by Executive Order 13304, and as expanded by this order, there need be no prior notice of a listing or determination made pursuant to this order.

Sec. 8. The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA as may be necessary to carry out the purposes of this order. The Secretary of the Treasury may, consistent with applicable law, redelegate any of these functions within the Department of the Treasury. All executive departments and agencies of the United States shall take all appropriate measures within their authority to implement this order.

Sec. 9. Nothing in this order shall prohibit transactions for the conduct of the official business of the Federal Government by employees, grantees, or contractors thereof.

Sec. 10. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

Start Printed Page 31082
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

J. Biden

  THE WHITE HOUSE,

June 8, 2021. Filed 6-9-21; 11:15 am]

[FR Doc. 2021-12382

Billing code 3295-F1-P





Whether a third party in possession of a property can seek adjudication of his objections U/O 21, Rule 97 of CPC ?

Remedy of third possession in case of Execution of Decree

Whether a third party in possession of a property claiming independent right as a tenant not party to a decree under execution could resist such decree by seeking adjudication of his objections under Order 21, Rule 97 of the Civil Procedure Code ?

A perusal of Order 21, Rule 97 shall facilitate the proper appreciation of the issue. It reads as follows:

97. Resistance or obstruction to possession of immovable property– (1) Where the holder of a decree for the possession of immovable property or the purchaser of any such property sold in execution of a decree is resisted or obstructed by any person obtaining possession of the property, he may make an application to the Court complaining of such resistance or obstruction.

(2) Where any application is made under sub-rule (i), the court shall proceed to adjudicate upon the application in accordance with the provisions herein contained.”

The above noted provision entitles the decree holder to bring it to the notice of the execution court the fact that the execution of the decree is being resisted or obstructed by any person in possession of the property. The executing court would adjudicate upon the application made under sub-rule (1) of Rule 97 in accordance with law.

We may also peruse Rule 99, Order 21, which reads as under :

99. Dispossession by decree-holder or purchaser :– (1) Where any person other than the judgment debtor is dispossessed of immovable property by the holder of a decree for the possession of such property or, where such property has been sold in execution of a decree, by the purchaser thereof, he may make an application to the Court complaining of such dispossession.

(2) Where any such application is made, the Court shall proceed to adjudicate upon the application in accordance with the provisions herein contained.”

The above provision is to be availed of after a person in possession claiming its independent right is dispossessed, in that event such the 3rd person can complain of dispossession to the executing court.

It will also be appropriate to peruse Rule 101 of Order 21, it reads as under :

101. Question to be determined– All questions (including questions relating to title or interest in the property) arising between the parties to a proceeding on an application under rule 97 or rule 99 or their representatives and relevant to the adjudication of the application, shall be determined by the Court dealing with the application, and not by a separate SUIT and for this purpose, the court shall, notwithstanding anything to the contrary contained in any other law for the time being in force, be deemed to have jurisdiction to decide such questions.”

Under sub-clause 1 Order 21, Rule 35, the Executing Court delivers actual physical possession of the disputed property to the decree-holder and, if necessary, by removing any person bound by the decree who refuses to vacate the said property. The significant words are by removing any person bound by the decree. Order 21, Rule 36 conceives of immovable property when in occupancy of a tenant or other person not bound by the decree, the Court delivers possession by fixing a copy of the warrant in some conspicuous place of the said property and proclaiming to the occupant by beat of drum or other customary mode at some convenient place, the substance of the decree in regard to the property. In other words, the decree-holder gets the symbolic possession. Order 21, Rule 99 conceives of resistance or obstruction to the possession of immovable property when made in execution of a decree by “any person”. This may be either by the person bound by the decree, claiming title through judgment debtor or claiming independent right of his own including tenant not party to the suit or even a stranger. A decree holder, in such case, may make an application to the Executing Court complaining such resistance, for delivery of possession of the property. Sub-clause (2) after 1976 substitution empowers the Executing Courts when such claim is made to proceed to adjudicate upon the applicant’s claim in accordance with provisions contained hereinafter. This refers to Order 21, Rule 101 (as amended by 1976 Act) under which all questions relating to right, title or interest in the property arising between the parties under Order 21, Rule 97 or Rule 99 shall be determined by the Court and not by a separate suit. By the amendment, one has not to go for a fresh suit but all matter pertaining to that property even if obstructed by a stranger is adjudicated and finality given even in the executing proceedings. We find the expression “any person” under sub-clause (1) is used deliberately for widening the scope of power so that the Executing Court could adjudicate the claim made in any such application under Order 21, Rule 97. Thus by the use of the words ‘any person’ it includes all persons resisting the delivery of possession, claiming right in the property even those not bound by the decree, includes tenants or other persons claiming right on their own including a stranger.

 So, under Order 21, Rule 101 all disputes between the decree-holder and any such person is to be adjudicated by the Executing Court. A party is not thrown out to relegate itself to the long drawn out arduous procedure of a fresh suit. This is to salvage the possible hardship both to the decree-holder and other person claiming title on their own right to get it adjudicated in the very execution proceedings. We find that Order 21, Rule 35 deals with cases of delivery of possession of an immovable property to the decree-holder by delivery of actual physical possession and by removing any person in possession who is bound by a decree, while under Order 21, Rule 36 only symbolic possession is given where tenant is in actual possession. Order 21, Rule 97, as aforesaid, conceives of cases where delivery of possession to decree-holder or purchaser is resisted by any person. ‘Any person’, as aforesaid, is wide enough to include even a person not bound by a decree or claiming right in the property on his own including that of a tenant including stranger.

Prior to the 1976 Amending Act, provisions under Order 21, Rules 97 to 101 and 103 were different which are quoted hereunder:-

“97. (1) Where the holder of a decree for the possession of immovable property or the purchaser of any such property sold in execution of a decree is resisted or obstructed by any person in obtaining possession of the property he may make an application to the Court complaining of such resistance or obstruction.

(2) The Court shall fix a day for investigating the matter and shall summon the party against whom the application is made to appear and answer the same.

98. Where the Court is satisfied that the resistance or obstruction was occasioned without any just cause by the judgment debtor or by some other person at his instigation, it shall direct that the applicant be put into possession of the property, and where the applicant is still resisted or obstructed in obtaining possession, the Court may also, at the instance of the applicant, order the judgment-debtor, or any person acting at his instigation to be detained in the civil prison for a term which may extend to thirty days.

99. Where the Court is satisfied that the resistance or obstruction was occasioned by any person (other than the judgment-debtor) claiming in good faith to be in possession of the property on his own account or on account of some person other than the judgment-debtor, the Court shall make an order dismissing the application.

100. (1) Where any person other than the judgment-debtor is dispossessed of immovable property by the holder of a decree for the possession of such property or, or where such property has been sold in execution of a decree, by the purchaser thereof, he may make an application to the Court complaining of such dispossession.

(2) The Court shall fix a day for investigating the matter and shall summon the party against whom the application is made and answer the same.

101. Where the Court is satisfied that the applicant was in possession of the property on his own account or on account of some person other than the judgment-debtor, it shall direct that the applicant be put into possession of the property.

103. Any party not being a judgment-debtor against whom an order is made under rule 98, rule 99 and rule 101 may institute a suit to establish the right which he claims to the present possession of the property but, subject to the result of such suit (if any), the order shall be conclusive.”

So far sub-clause (1) of Rule 97 the provision is same but after 1976 amendment all disputes relating to the property made under Rules 97 and 99 is to be adjudicated under Rule 101, while under unamended provision under sub-clause (2) of Rule 97, the Executing Court issues summons to any such person obstructing possession over the decretal property. After investigation under Rule 98 the Court puts back a decree-holder in possession where the Court finds obstruction was occassioned without any just cause, while under Rule 99 where obstruction was by a person claiming in good faith to be in possession of the property on his own right, the Court has to dismiss the decree-holder application. Thus even prior to 1976 right of any person claiming right on his own or as a tenant, not party to the suit such person’s right has to be adjudicated under Rule 99 and he need not fall back to file a separate suit. By this, he is saved from a long litigation. So a tenant or any person claiming a right in the property, on his own, if resists delivery of possession to the decree-holder the dispute and his claim has to be decided after 1976 Amendment under Rule 97 read with Rule 101 and prior to the amendment under Rule 97 read with Rule 99. However, under the old law, in case order is passed against the person resisting possession under Rule 97 read with Rule 99 then by virtue of Rule 103, as it then was, he has to file a suit to establish his right. But now after the amendment one need not file suit even in such cases as all disputes are to be settled by the Executing Court itself finally under Rule 101.

We find both either under the old law or the present law the right of a tenant or any person claiming right on his own of the property in case he resists, his objection under Order 21, Rule 97, has to be decided by the Executing Court itself.

Rule 100 of the old law, as referred in the aforesaid Full Bench decision of the Madhya Pradesh High Court is a situation different from what is covered by Rule 97. Under Rule 100 (old law) and Order 99 (Rule) the new law covers cases where persons other than judgment-debtor is dispossessed of immovable property by the decree-holder, of course, such cases are also covered to be decided by the Executing Court. But this will not defeat the right of such person to get his objection decided under Rule 97 which is a stage prior to his dispossession or a case where he is in possession. In other words, when such person is in possession the adjudication to be under Rule 97 and in case dispossessed adjudication to be under Rule 100 (old law) and Rule 99 under the new law. Thus a person holding possession of an immovable property on his own right can object in the execution proceeding under Order 21, Rule 97. One has not to wait for his dispossession to enable him to participate in the execution proceedings. This shows that such person can object and get adjudication when he is sought to be dispossessed by the decree-holder. For all the aforesaid reasons, we do not find the Full Bench in Smt. Usha Jain (supra) correctly decided the law.

In Noorduddin v. Dr. K. L. Anand, (1995) 1 SCC 242 it is held:-

“Para 8:Thus the scheme of the Code clearly adumbrates that when an application has been made under Order 21, Rule 97, the Court is enjoined to adjudicate upon the right, title and interest claimed in the property arising between the parties to a proceeding or between the decree-holder and the person claiming independent right, title or interest in the immovable property and an order in that behalf be made. The determination shall be conclusive between the parties as if it was a decree subject to right of appeal and not a matter to be agitated by a separate suit. In other words, no other proceedings were allowed to be taken. It has to be remembered that preceding Civil Procedure Code Amendment Act, 1976, right of suit under Order 21, Rule 103 of 1908 Code was available which has been now taken away. By necessary implication, the legislature relegated the parties to an adjudication of right, title or interest in the immovable property under execution and finality has been accorded to it. Thus, the scheme of the Code appears to be to put an end to the protraction of the execution and to shorten the litigation between the parties or persons claiming right, title and interest in the immovable property in execution.”

In Brahmdeo Chaudhary v. Rishikesh Prasad Jaiswal, (1997) 3 SCC 694 , the question raised was whether a stranger occupying the premises on his own right when offered resistance to the execution of the decree obtained by the decree holder can or cannot request the Executing Court to adjudicate his claim without being insisted upon the first he must handover the possession and then move an application under Order 21, Rule 97. It is held in para 9:-

“Para 9:In short the aforesaid statutory provisions of Order 21 lay down a complete code for resolving all disputes pertaining to execution of the decree for possession obtained by a decree-holder and whose attempts at executing the said decree meet with rough weather. Once resistance is offered by a purported stranger to the decree and which comes to be noted by the executing court as well as by the decree-holder the remedy available to the decree-holder against such an obstructionist is only under Order 21, Rule 97, sub-rule (1) and he cannot bypass such obstruction and insist on reissuance of warrant for possession under Order 21, Rule 35 with the help of police force, as that course would amount to bypassing and circumventing the procedure laid down under Order 21, Rule 97 . . . . . . . . . . . . . . . . .”

Rule 103 – Orders to be treated as decrees.– Where any application has been adjudicated upon under Rule 98 or Rule 100, the order made thereon shall have the same force and be subject to the same conditions as to an appeal or otherwise as is if it were a decree.

Rule 104 – Order under Rule 101 or Rule 103 to be subject to the result of pending suit.- Every order made under Rule 101 or Rule 103 shall be subject to the result of any suit that may be pending on the date of commencement of the proceeding in which such order is made, if in such suit the party against whom the order under Rule 101 or Rule 103 is made has sought to establish a right which he claims to the present possession of the property.”

Thus, the scheme of the Code clearly adumbrates that when an application has been made under Order 21, Rule 97, the court is enjoined to adjudicate upon the right, title and interest claimed in the property arising between the parties to a proceeding or between the decree-holder and the person claiming independent right, title or interest in the immovable property and an order in that behalf be made. The determination shall be conclusive between the parties as if it was a decree subject to right of appeal and not a matter to be agitated by a separate suit.

In other words, no other proceedings were allowed to be taken. It has to be remembered that preceding CPC Amendment Act, 1976, right of suit under Order 21, Rule 103 of 1908 Code was available which has been now taken away. By necessary implication, the legislature relegated the parties to an adjudication of right, title or interest in the immovable property under execution and finality has been accorded to it. Thus, the scheme of the Code appears to be to put an end to the protraction of the execution and to shorten the litigation between the parties or persons claiming right, title and interest in the immovable property in execution.

Adjudication before execution is an efficacious remedy to prevent fraud, oppression, abuse of the process of the court or miscarriage of justice. The object of law is to meet out justice. Right to the right, title or interest of a party in the immovable property is a substantive right. But the right to an adjudication of the dispute in that behalf is a procedural right to which no one has a vested right. The faith of the people in the efficacy of law is the saviour and succour for the sustenance of the rule of law. Any weakening like in the judicial process would rip apart the edifice of justice and create a feeling of disillusionment in the minds of the people of the very law and courts. The rules of procedure has been devised as a channel or a means to render substantive or at best substantial justice which is the highest interest of man and almameter for the mankind. It is a foundation for orderly human relations. Equally the judicial process should never become an instrument of oppression or abuse or a means in the process of the court to subvert justice. The court has, therefore, to wisely evolve its process to aid expeditious adjudication and would preserve the possession of the property in the interregnum based on factual situation. Adjudication under Order 21, Rules 98, 100 and 101 and its successive rules is sine qua non to a finality of the adjudication of the right, title or interest in the immovable property under execution.


Ref: AIR 1998 SC 1827 : (1998) 2 SCR 709 : (1998) 4 SCC 543 : JT 1998 (3) SC 244 : (1998) 2 SCALE 725




General Principles of the Civil Law of the People’s Republic of China-1987

(Adopted at the Fourth Session of the Sixth National People’s Congress, promulgated by Order No. 37 of the President of the People’s Republic of China on April 12, 1986, and effective as of January 1, 1987)

National People’s Congress

Chapter I Basic Principles

Article 1

This Law is formulated in accordance with the Constitution and the actual situation in our country, drawing upon our practical experience in civil activities, for the purpose of protecting the lawful civil rights and interests of citizens and legal persons and correctly adjusting civil relations, so as to meet the needs of the developing socialist modernization.

Article 2

The Civil Law of the People’s Republic of China shall adjust property relationships and personal relationships between civil subjects with equal status, that is, between citizens, between legal persons and between citizens and legal persons.

Article 3

Parties to a civil activity shall have equal status.

Article 4

In civil activities, the principles of voluntariness, fairness, making compensation for equal value, honesty and credibility shall be observed.

Article 5

The lawful civil rights and interests of citizens and legal persons shall be protected by law; no organization or individual may infringe upon them.

Article 6

Civil activities must be in compliance with the law; where there are no relevant provisions in the law, they shall be in compliance with state policies.

Article 7

Civil activities shall have respect for social ethics and shall not harm the public interest, undermine state economic plans or disrupt social economic order.

Article 8

The law of the People’s Republic of China shall apply to civil activities within the People’s Republic of China, except as otherwise stipulated by law.

The stipulations of this Law as regards citizens shall apply to foreigners and stateless persons within the People’s Republic of China, except as otherwise stipulated by law.

Chapter II Citizen (Natural Person)

Section 1 Capacity for Civil Rights and Capacity for Civil Conduct.[edit]

Article 9

A citizen shall have the capacity for civil rights from birth to death and shall enjoy civil rights and assume civil obligations in accordance with the law.

Article 10

All citizens are equal as regards their capacity for civil rights.

Article 11

A citizen aged 18 or over shall be an adult. He shall have full capacity for civil conduct, may independently engage in civil activities and shall be called a person with full capacity for civil conduct.

A citizen who has reached the age of 16 but not the age of 18 and whose main source of income is his own labour shall be regarded as a person with full capacity for civil conduct.

Article 12

A minor aged 10 or over shall be a person with limited capacity for civil conduct and may engage in civil activities appropriate to his age and intellect; in other civil activities, he shall be represented by his agent ad litem or participate with the consent of his agent ad litem.

A minor under the age of 10 shall be a person having no capacity for civil conduct and shall be represented in civil activities by his agent ad litem.

Article 13

A mentally ill person who is unable to account for his own conduct shall be a person having no capacity for civil conduct and shall be represented in civil activities by his agent ad litem.

A mentally ill person who is unable to fully account for his own conduct shall be a person with limited capacity for civil conduct and may engage in civil activities appropriate to his mental health; in other civil activities, he shall be represented by his agent ad litem or participate with the consent of his agent ad litem.

Article 14

The guardian of a person without or with limited capacity for civil conduct shall be his agent ad litem.

Article 15

The domicile of a citizen shall be the place where his residence is registered; if his habitual residence is not the same as his domicile, his habitual residence shall be regarded as his domicile.

Section 2 Guardianship

Article 16

The parents of a minor shall be his guardians.

If the parents of a minor are dead or lack the competence to be his guardian, a person from the following categories who has the competence to be a guardian shall act as his guardian:

(1) paternal or maternal grandparent;

(2) elder brother or sister; or

(3) any other closely connected relative or friend willing to bear the responsibility of guardianship and having approval from the units of the minor’s parents or from the neighbourhood or village committee in the place of the minor’s residence. In case of a dispute over guardianship, the units of the minor’s parents or the neighbourhood or village committee in the place of his residence shall appoint a guardian from among the minor’s near relatives. If disagreement over the appointment leads to a lawsuit, the people’s court shall make a ruling.

If none of the persons listed in the first two paragraphs of this article is available to be the guardian, the units of the minor’s parents, the neighbourhood or village committee in the place of the minor’s residence or the civil affairs department shall act as his guardian.

Article 17

A person from the following categories shall act as guardian for a mentally ill person without or with limited capacity for civil conduct:

(1) spouse;

(2) parent;

(3) adult child;

(4) any other near relative;

(5) any other closely connected relative or friend willing to bear the responsibility of guardianship and having approval from the unit to which the mentally ill person belongs or from the neighbourhood or village committee in the place of his residence. In case of a dispute over guardianship, the unit to which the mentally ill person belongs or the neighbourhood or village committee in the place of his residence shall appoint a guardian from among his near relatives. If disagreement over the appointment leads to a lawsuit, the people’s court shall make a ruling.

If none of the persons listed in the first paragraph of this article is available to be the guardian, the unit to which the mentally ill person belongs, the neighbourhood or village committee in the place of his residence or the civil affairs department shall act as his guardian.

Article 18

A guardian shall fulfil his duty of guardianship and protect the person, property and other lawful rights and interests of his ward. A guardian shall not handle the property of his ward unless it is in the ward’s interests.

A guardian’s rights to fulfil his guardianship in accordance with the law shall be protected by law.

If a guardian does not fulfil his duties as guardian or infringes upon the lawful rights and interests of his ward, he shall be held responsible; if a guardian causes any property loss for his ward, he shall compensate for such loss. The people’s court may disqualify a guardian based on the application of a concerned party or unit.

Article 19

A person who shares interests with a mental patient may apply to a people’s court for a declaration that the mental patient is a person without or with limited capacity for civil conduct.

With the recovery of the health of a person who has been declared by a people’s court to be without or with limited capacity for civil conduct, and upon his own application or that of an interested person, the people’s court may declare him to be a person with limited or full capacity for civil conduct.

Section 3 Declarations of Missing Persons and Death

Article 20

If a citizen’s whereabouts have been unknown for two years, an interested person may apply to a people’s court for a declaration of the citizen as missing.

If a person’s whereabouts become unknown during a war, the calculation of the time period in which his whereabouts are unknown shall begin on the final day of the war.

Article 21

A missing person’s property shall be placed in the custody of his spouse, parents, adult children or other closely connected relatives or friends.

In case of a dispute over custody, if the persons stipulated above are unavailable or are incapable of taking such custody, the property shall be placed in the custody of a person appointed by the people’s court. Any taxes, debts and other unpaid expenses owed by a missing person shall defrayed by the custodian out of the missing person’s property.

Article 22

In the event that a person who has been declared missing reappears or his whereabouts are ascertained, the people’s court shall, upon his own application or that of an interested person, revoke the declaration of his missing-person status.

Article 23

Under either of the following circumstances, an interested person may apply to the people’s court for a declaration of a citizen’s death:

(1) if the citizen’s whereabouts have been unknown for four years or

(2) if the citizen’s whereabouts have been unknown for two years after the date of an accident in which he was involved.

If a person’s whereabouts become unknown during a war, the calculation of the time period in which his whereabouts are unknown shall begin on the final day of the war.

Article 24

In the event that a person who has been declared dead reappears or it is ascertained that he is alive, the people’s court shall, upon his own application or that of an interested person, revoke the declaration of his death.

Any civil juristic acts performed by a person with capacity for civil conduct during the period in which he has been declared dead shall be valid.

Article 25

A person shall have the right to request the return of his property, if the declaration of his death has been revoked. Any citizen or organization that has obtained such property in accordance with the Law of Succession shall return the original items or make appropriate compensation if the original items no longer exist.

Section 4 Individual Businesses and Leaseholding Farm Households

Article 26

“Individual businesses” refers to business run by individual citizens who have been lawfully registered and approved to engage in industrial or commercial operation within the sphere permitted by law. An individual business may adopt a shop name.

Article 27

“Leaseholding farm households” refers to members of a rural collective economic organization who engage in commodity production under a contract and within the spheres permitted by law.

Article 28

The legitimate rights and interests of individual businesses and leaseholding farm households shall be protected by law.

Article 29

The debts of an individual business or a leaseholding farm household shall be secured with the individual’s property if the business is operated by an individual and with the family’s property if the business is operated by a family.

Section 5 Individual Partnership

Article 30

“Individual partnership” refers to two or more citizens associated in a business and working together, with each providing funds, material objects, techniques and so on according to an agreement.

Article 31

Partners shall make a written agreement covering the funds each is to provide, the distribution of profits, the responsibility for debts, the entering into and withdrawal from partnership, the ending of partnership and other such matters.

Article 32

The property provided by the partners shall be under their unified management and use. The property accumulated in a partnership operation shall belong to all the partners.

Article 33

An individual partnership may adopt a shop name; it shall be approved and registered in accordance with the law and conduct business operations within the range as approved and registered.

Article 34

The operational activities of an individual partnership shall be decided jointly by the partners, who each shall have the right to carry out and supervise those activities. The partners may elect a responsible person. All partners shall bear civil liability for the operational activities of the responsible person and other personnel.

Article 35

A partnership’s debts shall be secured with the partners’ property in proportion to their respective contributions to the investment or according to the agreement made. Partners shall undertake joint liability for their partnership’s debts, except as otherwise stipulated by law. Any partner who overpays his share of the partnership’s debts shall have the right to claim compensation from the other partners.

Chapter III Legal Persons

Section 1 General Stipulations

Article 36

A legal person shall be an organization that has capacity for civil rights and capacity for civil conduct and independently enjoys civil rights and assumes civil obligations in accordance with the law.

A legal person’s capacity for civil rights and capacity for civil conduct shall begin when the legal person is established and shall end when the legal person terminates.

Article 37

A legal person shall have the following qualifications:

(1) establishment in accordance with the law;

(2) possession of the necessary property or funds;

(3) possession of its own name, organization and premises; and

(4) ability to independently bear civil liability.

Article 38

In accordance with the law or the articles of association of the legal person, the responsible person who acts on behalf of the legal person in exercising its functions and powers shall be its legal representative.

Article 39

A legal person’s domicile shall be the place where its main administrative office is located.

Article 40

When a legal person terminates, it shall go into liquidation in accordance with the law and discontinue all other activities.

Section 2 Enterprise as Legal Person

Article 41

An enterprise owned by the whole people or under collective ownership shall be qualified as a legal person when it has sufficient funds as stipulated by the state; has articles of association, an organization and premises; has the ability to independently bear civil liability; and has been approved and registered by the competent authority. A Chinese-foreign equity joint venture, Chinese-foreign contractual joint venture or foreign-capital enterprise established within the People’s Republic of China shall be qualified as a legal person in China if it has the qualifications of a legal person and has been approved and registered by the administrative agency for industry and commerce in according with the law.

Article 42

An enterprise as legal person shall conduct operations within the range approved and registered.

Article 43

An enterprise as legal person shall bear civil liability for the operational activities of its legal representatives and other personnel.

Article 44

If an enterprise as legal person is divided or merged or undergoes any other important change, it shall register the change with the registration authority and publicly announce it.

When an enterprise as legal person is divided or merged, its rights and obligations shall be enjoyed and assumed by the new legal person that results from the change.

Article 45

An enterprise as legal person shall terminate for any of the following reasons:

(1) if it is dissolved by law;

(2) if it is disbanded;

(3) if it is declared bankrupt in accordance with the law; or

(4) for other reasons.

Article 46

When an enterprise as legal person terminates, it shall cancel its registration with the registration authority and publicly announce the termination.

Article 47

When an enterprise as legal person is disbanded, it shall establish a liquidation organization and go into liquidation. When an enterprise as legal person is dissolved or is declared bankrupt, the competent authority or a people’s court shall organize the organs and personnel concerned to establish a liquidation organization to liquidate the enterprise.

Article 48

An enterprise owned by the whole people, as legal person, shall bear civil liability with the property that the state authorizes it to manage. An enterprise under collective ownership, as legal person, shall bear civil liability with the property it owns. A Chinese-foreign equity joint venture, Chinese-foreign contractual joint venture or foreign-capital enterprise as legal person shall bear civil liability with the property it owns, except as stipulated otherwise by law.

Article 49

Under any of the following circumstances, an enterprise as legal person shall bear liability, its legal representative may additionally be given administrative sanctions and fined and, if the offence constitutes a crime, criminal responsibility shall be investigated in accordance with the law:

(1) conducting illegal operations beyond the range approved and registered by the registration authority;

(2) concealing facts from the registration and tax authorities and practising fraud;

(3) secretly withdrawing funds or hiding property to evade repayment of debts;

(4) disposing of property without authorization after the enterprise is dissolved, disbanded or declared bankrupt;

(5) failing to apply for registration and make a public announcement promptly when the enterprise undergoes a change or terminates, thus causing interested persons to suffer heavy losses;

(6) engaging in other activities prohibited by law, damaging the interests of the state or the public interest.

Section 3 Official Organ, Institution and Social Organization as Legal Person

Article 50

An independently funded official organ shall be qualified as a legal person on the day it is established.

If according to law an institution or social organization having the qualifications of a legal person needs not go through the procedures for registering as a legal person, it shall be qualified as a legal person on the day it is established; if according to law it does need to go through the registration procedures, it shall be qualified as a legal person after being approved and registered.

Section 4 Economic Association

Article 51

If a new economic entity is formed by enterprises or an enterprise and an institution that engage in economic association and it independently bears civil liability and has the qualifications of a legal person, the new entity shall be qualified as a legal person after being approved and registered by the competent authority.

Article 52

If the enterprises or an enterprise and an institution that engage in economic association conduct joint operation but do not have the qualifications of a legal person, each party to the association shall, in proportion to its respective contribution to the investment or according to the agreement made, bear civil liability with the property each party owns or manages. If joint liability is specified by law or by agreement, the parties shall assume joint liability.

Article 53

If the contract for economic association of enterprises or of an enterprise and an institution specifies that each party shall conduct operations independently, it shall stipulate the rights and obligations of each party, and each party shall bear civil liability separately.

Chapter IV Civil Juristic Acts and Agency

Section 1 Civil Juristic Acts

Article 54

A civil juristic act shall be the lawful act of a citizen or legal person to establish, change or terminate civil rights and obligations.

Article 55

A civil juristic act shall meet the following requirements:

(1) the actor has relevant capacity for civil conduct;

(2) the intention expressed is genuine; and

(3) the act does not violate the law or the public interest.

Article 56

A civil juristic act may be in written, oral or other form. If the law stipulates that a particular form be adopted, such stipulation shall be observed.

Article 57

A civil juristic act shall be legally binding once it is instituted. The actor shall not alter or rescind his act except in accordance with the law or with the other party’s consent.

Article 58

Civil acts in the following categories shall be null and void:

(1) those performed by a person without capacity for civil conduct;

(2) those that according to law may not be independently performed by a person with limited capacity for civil conduct;

(3) those performed by a person against his true intentions as a result of cheating, coercion or exploitation of his unfavourable position by the other party;

(4) those that performed through malicious collusion are detrimental to the interest of the state, a collective or a third party;

(5) those that violate the law or the public interest;

(6) economic contracts that violate the state’s mandatory plans; and

(7) those that performed under the guise of legitimate acts conceal illegitimate purposes. Civil acts that are null and void shall not be legally binding from the very beginning.

Article 59

A party shall have the right to request a people’s court or an arbitration agency to alter or rescind the following civil acts:

(1) those performed by an actor who seriously misunderstood the contents of the acts;

(2) those that are obviously unfair.

Rescinded civil acts shall be null and void from the very beginning.

Article 60

If part of a civil act is null and void, it shall not affect the validity of other parts.

Article 61

After a civil act has been determined to be null and void or has been rescinded, the party who acquired property as a result of the act shall return it to the party who suffered a loss. The erring party shall compensate the other party for the losses it suffered as a result of the act; if both sides are in error, they shall each bear their proper share of the responsibility.

If the two sides have conspired maliciously and performed a civil act that is detrimental to the interests of the state, a collective or a third party, the property that they thus obtained shall be recovered and turned over to the state or the collective, or returned to the third party.

Article 62

A civil juristic act may have conditions attached to it. Conditional civil juristic acts shall take effect when the relevant conditions are met.

Section 2 Agency

Article 63

Citizens and legal persons may perform civil juristic acts through agents An agent shall perform civil juristic acts in the principal’s name within the scope of the power of agency. The principal shall bear civil liability for the agent’s acts of agency. Civil juristic acts that should be performed by the principal himself, pursuant to legal provisions or the agreement between the two parties, shall not be entrusted to an agent.

Article 64

Agency shall include entrusted agency, statutory agency and appointed agency. An entrusted agent shall exercise the power of agency as entrusted by the principal; a statutory agent shall exercise the power of agency as prescribed by law; and an appointed agent shall exercise the power of agency as designated by a people’s court or the appointing unit.

Article 65

A civil juristic act may be entrusted to an agent in writing or orally. If legal provisions require the entrustment to be written, it shall be effected in writing. Where the entrustment of agency is in writing, the power of attorney shall clearly state the agent’s name, the entrusted tasks and the scope and duration of the power of agency, and it shall be signed or sealed by the principal.

If the power of attorney is not clear as to the authority conferred, the principal shall bear civil liability towards the third party, and the agent shall be held jointly liable.

Article 66

The principal shall bear civil liability for an act performed by an actor with no power of agency, beyond the scope of his power of agency or after his power of agency has expired, only if he recognizes the act retroactively. If the act is not so recognized, the performer shall bear civil liability for it. If a principal is aware that a civil act is being executed in his name but fails to repudiate it, his consent shall be deemed to have been given.

An agent shall bear civil liability if he fails to perform his duties and thus causes damage to the principal.

If an agent and a third party in collusion harm the principal’s interests, the agent and the third party shall be held jointly liable.

If a third party is aware that an actor has no power of agency, is overstepping his power of agency, or his power of agency has expired and yet joins him in a civil act and thus brings damage to other people, the third party and the actor shall be held jointly liable.

Article 67

If an agent is aware that the matters entrusted are illegal but still carries them out, or if a principal is aware that his agent’s acts are illegal but fails to object to them, the principal and the agent shall be held jointly liable.

Article 68

If in the principal’s interests an entrusted agent needs to transfer the agency to another person, he shall first obtain the principal’s consent.

If the principal’s consent is not obtained in advance, the matter shall be reported to him promptly after the transfer, and if the principal objects, the agent shall bear civil liability for the acts of the transferee; however, an entrusted agency transferred in emergency circumstances in order to safeguard the principal’s interests shall be excepted.

Article 69

An entrusted agency shall end under any of the following circumstances:

(1) when the period of agency expires or when the tasks entrusted are completed;

(2) when the principal rescinds the entrustment or the agent declines the entrustment;

(3) when the agent dies;

(4) when the principal loses his capacity for civil conduct; or

(5) when the principal or the agent ceases to be a legal person.

Article 70

A statutory or appointed agency shall end under any of the following circumstances:

(1) when the principal gains or recovers capacity for civil conduct;

(2) when the principal or the agent dies;

(3) when the agent loses capacity for civil conduct;

(4) when the people’s court or the unit that appointed the agent rescinds the appointment; or

(5) when the guardian relationship between the principal and the agent ends for other reasons.

Chapter V Civil Rights

Section 1 Property Ownership and Related Property Rights

Article 71

“Property ownership” means the owner’s rights to lawfully possess, utilize, profit from and dispose of his property.

Article 72

Property ownership shall not be obtained in violation of the law. Unless the law stipulates otherwise or the parties concerned have agreed on other arrangements, the ownership of property obtained by contract or by other lawful means shall be transferred simultaneously with the property itself.

Article 73

State property shall be owned by the whole people.

State property is sacred and inviolable, and no organization or individual shall be allowed to seize, encroach upon, privately divide, retain or

destroy it.

Article 74

Property of collective organizations of the working masses shall be owned collectively by the working masses. This shall include:

(1) land, forests, mountains, grasslands, unreclaimed land, beaches and other areas that are stipulated by law to be under collective ownership;

(2) property of collective economic organizations;

(3) collectively owned buildings, reservoirs, farm irrigation facilities and educational, scientific, cultural, health, sports and other facilities; and

(4) other property that is collectively owned.

Collectively owned land shall be owned collectively by the village peasants in accordance with the law and shall be worked and managed by village agricultural production cooperatives, other collective agricultural economic organizations or villages’ committees. Land already under the ownership of the township (town) peasants’ collective economic organizations may be collectively owned by the peasants of the township(town). Collectively owned property shall be protected by law, and no organization or individual may seize, encroach upon, privately divide, destroy or illegally seal up, distrain, freeze or confiscate it.

Article 75

A citizen’s personal property shall include his lawfully earned income, housing, savings, articles for daily use, objects d’art, books, reference materials, trees, livestock, as well as means of production the law permits a citizen to possess and other lawful property. A citizen’s lawful property shall be protected by law, and no organization or individual may appropriate, encroach upon, destroy or illegally seal up, distrain, freeze or confiscate it.

Article 76

Citizens shall have the right of inheritance under the law.

Article 77

The lawful property of social organizations, including religious organizations, shall be protected by law.

Article 78

Property may be owned jointly by two or more citizens or legal persons.

There shall be two kinds of joint ownership, namely co-ownership by shares and common ownership. Each of the co-owners by shares shall enjoy the rights and assume the obligations respecting the joint property in proportion to his share. Each of the common owners shall enjoy the rights and assume the obligations respecting the joint property. Each co-owner by shares shall have the right to withdraw his own share of the joint property or transfer its ownership. However, when he offers to sell his share, the other co-owners shall have a right of pre-emption if all other conditions are equal.

Article 79

If the owner of a buried or concealed object is unknown, the object shall belong to the state. The unit that receives the object shall commend or give a material reward to the unit or individual that turns in the object.

Lost-and-found objects, flotsam and stray animals shall be returned to their rightful owners, and any costs thus incurred shall be reimbursed by the owners.

Article 80

State-owned land may be used according to law by units under ownership by the whole people; it may also be lawfully assigned for use by units under collective ownership. The state shall protect the usufruct of the land, and the usufructuary shall be obligated to manage, protect and properly use the land.

The right of citizens and collectives to contract for management of land under collective ownership or of state-owned land under collective use shall be protected by law. The rights and obligations of the two contracting parties shall be stipulated in the contract signed in accordance with the law.

Land may not be sold, leased, mortgaged or illegally transferred by any other means.

Article 81

State-owned forests, mountains, grasslands, unreclaimed land, beaches, water surfaces and other natural resources may be used according to law by units under ownership by the whole people; or they may also be lawfully assigned for use by units under collective ownership. The state shall protect the usufruct of those resources, and the usufructuary shall be obliged to manage, protect and properly use them.

State-owned mineral resources may be mined according to law by units under ownership by the whole people and units under collective ownership; citizens may also lawfully mine such resources. The state shall protect lawful mining rights.

The right of citizens and collectives to lawfully contract for the management of forests, mountains, grasslands, unreclaimed land, beaches and water surfaces that are owned by collectives or owned by the state but used by collectives shall be protected by law. The rights and obligations of the two contracting parties shall be stipulated in the contract in accordance with the law.

State-owned mineral resources and waters as well as forest land, mountains, grasslands, unreclaimed land and beaches owned by the state and those that are lawfully owned by collectives may not be sold, leased, mortgaged or illegally transferred by any other means.

Article 82

Enterprises under ownership by the whole people shall lawfully enjoy the rights of management over property that the state has authorized them to manage and operate, and the rights shall be protected by law.

Article 83

In the spirit of helping production, making things convenient for people’s lives, enhancing unity and mutual assistance, and being fair and reasonable, neighbouring users of real estate shall maintain proper neighbourly relations over such matters as water supply, drainage, passageway, ventilation and lighting. Anyone who causes obstruction or damage to his neighbour, shall stop the infringement, eliminate the obstruction and compensate for the damage.

Section 2 Creditors’ Rights

Article 84

A debt represents a special relationship of rights and obligations established between the parties concerned, either according to the agreed terms of a contract or legal provisions. The party entitled to the rights shall be the creditor, and the party assuming the obligations shall be the debtor.

The creditor shall have the right to demand that the debtor fulfil his obligations as specified by the contract or according to legal provisions.

Article 85

A contract shall be an agreement whereby the parties establish, change or terminate their civil relationship. Lawfully established contracts shall be protected by law.

Article 86

When there are two or more creditors to a deal, each creditor shall be entitled to rights in proportion to his proper share of the credit. When there are two or more debtors to a deal, each debtor shall assume obligations in proportion to his share of the debt.

Article 87

When there are two or more creditors or debtors to a deal, each of the joint creditors shall be entitled to demand that the debtor fulfil his obligations, in accordance with legal provisions or the agreement between the parties; each of the joint debtors shall be obliged to perform the entire debt, and the debtor who performs the entire debt shall be entitled to ask the other joint debtors to reimburse him for their shares of the debt.

Article 88

The parties to a contract shall fully fulfil their obligations pursuant to the terms of the contract.

If a contract contains ambiguous terms regarding quality, time limit for performance, place of performance, or price, and the intended meaning cannot be determined from the context of relevant terms in the contract, and if the parties cannot reach an agreement through consultation, the provisions below shall apply:

(1) If quality requirements are unclear, state quality standards shall apply; if there are no state quality standards, generally held standards shall apply.

(2) If the time limit for performance is unclear, the debtor may at his convenience fulfill his obligations towards the creditor; the creditor may also demand at any time that the debtor perform his obligations, but sufficient notice shall be given to the debtor.

(3) If the place of performance is unclear, and the payment is money, the performance shall be effected at the seat or place of residence of the party receiving the payment; if the payment is other than money, the performance shall be effected at the seat or place of residence of the party fulfilling the obligations.

(4) If the price agreed by the parties is unclear, the state-fixed price shall apply. If there is no state-fixed price, the price shall be based on market price or the price of a similar article or remuneration for a similar service.

If the contract does not contain an agreed term regarding rights to patent application, any party who has completed an invention-creation shall have the right to apply for a patent.

If the contract does not contain an agreed term regarding rights to patent application, and technological research achievements, the parties shall all have the right to use such achievements.

Article 89

In accordance with legal provisions the agreement between the parties on the performance of a debt may be guaranteed using the methods below:

(1) A guarantor may guarantee to the creditor that the debtor shall perform his debt. If the debtor defaults, the guarantor shall perform the debt or bear joint liability according to agreement. After performing the debt, the guarantor shall have the right to claim repayment from the debtor.

(2) The debtor or a third party may offer a specific property as a pledge. If the debtor defaults, the creditors shall be entitled to keep the pledge to offset the debt or have priority in satisfying his claim out of the proceeds from the sale of the pledge pursuant to relevant legal provisions.

(3) Within the limits of relevant legal provisions, a party may leave a deposit with the other party. After the debtor has discharged his debt, the deposit shall either be retained as partial payment of the debt or be returned. If the party who leaves the deposit defaults, he shall not be entitled to demand the return of the deposit; if the party who accepts the deposit defaults, he shall repay the deposit in double.

(4) If a party has possession of the other party’s property according to contract and the other party violates the contract by failing to pay a required sum of money within the specified time limit, the possessor shall have a lien on the property and may keep the retained property to offset the debt or have priority in satisfying his claim out of the proceeds from the sale of the property pursuant to relevant legal provisions.

Article 90

Legitimate loan relationships shall be protected by law.

Article 91

If a party to a contract transfers all or part of his contractual rights or obligations to a third party, he shall obtain the other party’s consent and may not seek profits therefrom. Contracts which according to legal provisions are subject to state approval, such as transfers, must be approved by the authority that originally approved the contract, unless the law or the original contract stipulates otherwise.

Article 92

If profits are acquired improperly and without a lawful basis, resulting in another person’s loss, the illegal profits shall be returned to the person who suffered the loss.

Article 93

If a person acts as manager or provides services in order to protect another person’s interests when he is not legally or contractually obligated to do so, he shall be entitled to claim from the beneficiary the expenses necessary for such assistance.

Section 3 Intellectual Property Rights

Article 94

Citizens and legal persons shall enjoy rights of authorship (copyrights) and shall be entitled to sign their names as authors, issue and publish their works and obtain remuneration in accordance with the law.

Article 95

The patent rights lawfully obtained by citizens and legal persons shall be protected by law.

Article 96

The rights to exclusive use of trademarks obtained by legal persons, individual businesses and individual partnerships shall be protected by law.

Article 97

Citizens who make discoveries shall be entitled to the rights of discovery. A discoverer shall have the right to apply for and receive certificates of discovery, bonuses or other awards.

Citizens who make inventions or other achievements in scientific and technological research shall have the right to apply for and receive certificates of honour, bonuses or other awards.

Section 4 Personal Rights

Article 98

Citizens shall enjoy the rights of life and health.

Article 99

Citizens shall enjoy the right of personal name and shall be entitled to determine, use or change their personal names in accordance with relevant provisions. Interference with, usurpation of and false representation of personal names shall be prohibited. Legal persons, individual businesses and individual partnerships shall enjoy the right of name. Enterprises as legal persons, individual businesses and individual partnerships shall have the right to use and lawfully assign their own names.

Article 100

Citizens shall enjoy the right of portrait.

The use of a citizen’s portrait for profit without his consent shall be prohibited.

Article 101

Citizens and legal persons shall enjoy the right of reputation. The personality of citizens shall be protected by law, and the use of insults, libel or other means to damage the reputation of citizens or legal persons shall be prohibited.

Article 102

Citizens and legal persons shall enjoy the right of honour. It shall be prohibited to unlawfully divest citizens and legal persons of their honorary titles.

Article 103

Citizens shall enjoy the right of marriage by choice. Mercenary marriages, marriages upon arbitrary decision by any third party and any other acts of interference in the freedom of marriage shall be prohibited.

Article 104

Marriage, the family, old people, mothers and children shall be protected by law. The lawful rights and interests of the handicapped shall be protected by law.

Article 105

Women shall enjoy equal civil rights with men.

Chapter VI Civil Liability

Section 1 General Stipulations

Article 106

Citizens and legal persons who breach a contract or fail to fulfil other obligations shall bear civil liability.

Citizens and legal persons who through their fault encroach upon state or collective property or the property or person of other people shall bear civil liability. Civil liability shall still be borne even in the absence of fault, if the law so stipulates.

Article 107

Civil liability shall not be borne for failure to perform a contract or damage to a third party if it is caused by force majeure, except as otherwise provided by law.

Article 108

Debts shall be cleared. If a debtor is unable to repay his debt immediately, he may repay by instalments with the consent of the creditor or a ruling by a people’s court. If a debtor is capable of repaying his debt but refuses to do so, repayment shall be compelled by the decision of a people’s court.

Article 109

If a person suffers damages from preventing or stopping encroachment on state or collective property, or the property or person of a third party, the infringer shall bear responsibility for compensation, and the beneficiary may also give appropriate compensation.

Article 110

Citizens or legal persons who bear civil liability shall also be held for administrative responsibility if necessary. If the acts committed by citizens and legal persons constitute crimes, criminal responsibility of their legal representatives shall be investigated in accordance with the law.

Section 2 Civil Liability for Breach of Contract

Article 111

If a party fails to fulfil its contractual obligations or violates the term of a contract while fulfilling the obligations, the other party shall have the right to demand fulfillment or the taking of remedial measures and claim compensation for its losses.

Article 112

The party that breaches a contract shall be liable for compensation equal to the losses consequently suffered by the other party.

The parties may specify in a contract that if one party breaches the contract it shall pay the other party a certain amount of breach of contract damages; they may also specify in the contract the method of assessing the compensation for any losses resulting from a breach of contract.

Article 113

If both parties breach the contract, each party shall bear its respective civil liability.

Article 114

If one party is suffering losses owing to the other party’s breach of contract, it shall take prompt measures to prevent the losses from increasing; if it does not promptly do so, it shall not have the right to claim compensation for the additional losses.

Article 115

A party’s right to claim compensation for losses shall not be affected by the alteration or termination of a contract.

Article 116

If a party fails to fulfil its contractual obligations on account of a higher authority, it shall first compensate for the losses of the other party or take other remedial measures as contractually agreed and then the higher authority shall be responsible for settling the losses it sustained.

Section 3 Civil Liability for Infringement of Rights

Article 117

Anyone who encroaches on the property of the state, a collective or another person shall return the property; failing that, he shall reimburse its estimated price. Anyone who damages the property of the state, a collective or another person shall restore the property to its original condition or reimburse its estimated price. If the victim suffers other great losses therefrom, the infringer shall compensate for those losses as well.

Article 118

If the rights of authorship (copyrights), patent rights, rights to exclusive use of trademarks, rights of discovery, rights of invention or rights for scientific and technological research achievements of citizens or legal persons are infringed upon by such means as plagiarism, alteration or imitation, they shall have the right to demand that the infringement be stopped, its ill effects be eliminated and the damages be compensated for.

Article 119

Anyone who infringes upon a citizen’s person and causes him physical injury shall pay his medical expenses and his loss in income due to missed working time and shall pay him living subsidies if he is disabled; if the victim dies, the infringe shall also pay the funeral expenses, the necessary living expenses of the deceased’s dependents and other such expenses.

Article 120

If a citizen’s right of personal name, portrait, reputation or honour is infringed upon, he shall have the right to demand that the infringement be stopped, his reputation be rehabilitated, the ill effects be eliminated and an apology be made; he may also demand compensation for losses.

The above paragraph shall also apply to infringements upon a legal person’s right of name, reputation or honour.

Article 121

If a state organ or its personnel, while executing its duties, encroaches upon the lawful rights and interests of a citizen or legal person and causes damage, it shall bear civil liability.

Article 122

If a substandard product causes property damage or physical injury to others, the manufacturer or seller shall bear civil liability according to law. If the transporter or storekeeper is responsible for the matter, the manufacturer or seller shall have the right to demand compensation for its losses.

Article 123

If any person causes damage to other people by engaging in operations that are greatly hazardous to the surroundings, such as operations conducted high aboveground, or those involving high pressure, high voltage, combustibles, explosives, highly toxic or radioactive substances or high-speed means of transport, he shall bear civil liability; however, if it can be proven that the damage was deliberately caused by the victim, he shall not bear civil liability.

Article 124

Any person who pollutes the environment and causes damage to others in violation of state provisions for environmental protection and the prevention of pollution shall bear civil liability in accordance with the law.

Article 125

Any constructor who engages in excavation, repairs or installation of underground facilities in a public place, on a roadside or in a passageway without setting up clear signs and adopting safety measures and thereby causes damage to others shall bear civil liability.

Article 126

If a building or any other installation or an object placed or hung on a structure collapses, detaches or drops down and causes damage to others, its owner or manager shall bear civil liability, unless he can prove himself not at fault.

Article 127

If a domesticated animal causes harm to any person, its keeper or manager shall bear civil liability. If the harm occurs through the fault of the victim, the keeper or manager shall not bear civil liability; if the harm occurs through the fault of a third party, the third party shall bear civil liability.

Article 128

A person who causes harm in exercising justifiable defence shall not bear civil liability. If justifiable defence exceeds the limits of necessity and undue harm is caused, an appropriate amount of civil liability shall be borne.

Article 129

If harm occurs through emergency actions taken to avoid danger, the person who gave rise to the danger shall bear civil liability. If the danger arose from natural causes, the person who took the emergency actions may either be exempt from civil liability or bear civil liability to an appropriate extent. If the emergency measures taken are improper or exceed the limits of necessity and undue harm is caused, the person who took the emergency action shall bear civil liability to an appropriate extent.

Article 130

If two or more persons jointly infringe upon another person’s rights and cause him damage, they shall bear joint liability.

Article 131

If a victim is also at fault for causing the damage, the civil liability of the infringe may be reduced.

Article 132

If none of the parties is at fault in causing damage, they may share civil liability according to the actual circumstances.

Article 133

If a person without or with limited capacity for civil conduct causes damage to others, his guardian shall bear civil liability. If the guardian has done his duty of guardianship, his civil liability may be appropriately reduced.

If a person who has property but is without or with limited capacity for civil conduct causes damage to others, the expenses of compensation shall be paid from his property. Shortfalls in such expenses shall be appropriately compensated for by the guardian unless the guardian is a unit.

Section 4 Methods of Bearing Civil Liability

Article 134

The main methods of bearing civil liability shall be:

(1) cessation of infringements;

(2) removal of obstacles;

(3) elimination of dangers;

(4) return of property;

(5) restoration of original condition;

(6) repair, reworking or replacement;

(7) compensation for losses;

(8) payment of breach of contract damages;

(9) elimination of ill effects and rehabilitation of reputation; and

(10) extension of apology.

The above methods of bearing civil liability may be applied exclusively or concurrently. When hearing civil cases, a people’s court, in addition to applying the above stipulations, may serve admonitions, order the offender to sign a pledge of repentance, and confiscate the property used in carrying out illegal activities and the illegal income obtained therefrom.

It may also impose fines or detentions as stipulated by law.

Chapter VII Limitation of Action

Article 135

Except as otherwise stipulated by law, the limitation of action regarding applications to a people’s court for protection of civil rights shall be two years.

Article 136

The limitation of action shall be one year in cases concerning the following:

(1) claims for compensation for bodily injuries;

(2) sales of substandard goods without proper notice to that effect;

(3) delays in paying rent or refusal to pay rent; or

(4) loss of or damage to property left in the care of another person.

Article 137

A limitation of action shall begin when the entitled person knows or should know that his rights have been infringed upon. However, the people’s court shall not protect his rights if 20 years have passed since the infringement. Under special circumstances, the people’s court may extend the limitation of action.

Article 138

If a party chooses to fulfil obligations voluntarily after the limitation of action has expired, he shall not be subject to the limitation.

Article 139

A limitation of action shall be suspended during the last six months of the limitation if the plaintiff cannot exercise his right of claim because of force majeure or other obstacles. The limitation shall resume on the day when the grounds for the suspension are eliminated.

Article 140

A limitation of action shall be discontinued if suit is brought or if one party makes a claim for or agrees to fulfillment of obligations. A new limitation shall be counted from the time of the discontinuance.

Article 141

If the law has other stipulations concerning limitation of action, those stipulations shall apply.

Chapter VIII Application of Law in Civil Relations with Foreigners

Article 142

The application of law in civil relations with foreigners shall be determined by the provisions in this chapter.

If any international treaty concluded or acceded to by the People’s Republic of China contains provisions differing from those in the civil laws of the People’s Republic of China, the provisions of the international treaty shall apply, unless the provisions are ones on which the People’s Republic of China has announced reservations. International practice may be applied to matters for which neither the law of the People’s Republic of China nor any international treaty concluded or acceded to by the People’s Republic of China has any provisions.

Article 143

If a citizen of the People’s Republic of China settles in a foreign country, the law of that country may be applicable as regards his capacity for civil conduct.

Article 144

The ownership of immovable property shall be bound by the law of the place where it is situated.

Article 145

The parties to a contract involving foreign interests may choose the law applicable to settlement of their contractual disputes, except as otherwise stipulated by law. If the parties to a contract involving foreign interests have not made a choice, the law of the country to which the contract is most closely connected shall be applied.

Article 146

The law of the place where an infringing act is committed shall apply in handling compensation claims for any damage caused by the act. If both parties are citizens of the same country or have established domicile in another country, the law of their own country or the country of domicile may be applied.

An act committed outside the People’s Republic of China shall not be treated as an infringing act if under the law of the People’s Republic of China it is not considered an infringing act.

Article 147

The marriage of a citizen of the People’s Republic of China to a foreigner shall be bound by the law of the place where they get married, while a divorce shall be bound by the law of the place where a court accepts the case.

Article 148

Maintenance of a spouse after divorce shall be bound by the law of the country to which the spouse is most closely connected.

Article 149

In the statutory succession of an estate, movable property shall be bound by the law of the decedent’s last place of residence, and immovable property shall be bound by the law of the place where the property is situated.

Article 150

The application of foreign laws or international practice in accordance with the provisions of this chapter shall not violate the public interest of the People’s Republic of China.

Chapter IX Supplementary provisions

Article 151

The people’s congresses of the national autonomous areas may formulate separate adaptive or supplementary regulations or provisions in accordance with the principles of this Law and in light of the characteristics of the local nationalities. Those formulated by the people’s congresses of autonomous regions shall be submitted in accordance with the law to the Standing Committee of the National People’s Congress for approval or for the record. Those formulated by the people’s congresses of autonomous prefectures or autonomous counties shall be submitted to the standing committee of the people’s congress in the relevant province or autonomous region for approval.

Article 152

If an enterprise owned by the whole people has been established with the approval of the competent authority of a province, autonomous region or centrally administered municipality or at a higher level and it has already been registered with the administrative agency for industry and commerce, before this Law comes into force, it shall automatically qualify as a legal person without having to re-register as such.

Article 153

For the purpose of this Law, “force majeure” means unforeseeable, unavoidable and insurmountable objective conditions.

Article 154

Time periods referred to in the Civil Law shall be calculated by the Gregorian calendar in years, months, days and hours.

When a time period is prescribed in hours, calculation of the period shall begin on the prescribed hour. When a time period is prescribed in days, months and years, the day on which the period begins shall not be counted as within the period; calculation shall begin on the next day.

If the last day of a time period falls on a Sunday or an official holiday, the day after the holiday shall be taken as the last day.

The last day shall end at 24:00 hours. If business hours are applicable, the last day shall end at closing time.

Article 155

In this Law, the terms “not less than,” “not more than,” “within” and “expires” shall include the given figure; the terms “under” and “beyond” shall not include the given figure.

Article 156

This Law shall come into force on January 1, 1987.

 





Union of India Vs. Ibrahim Uddin & ANR-17/07/2012

Rule 15 Order XI provides for inspection of documents referred to in pleadings or affidavits. Rule 18 thereof, empowers the court to issue order for inspection. Rule 21 thereof provides for very stringent consequences for non-compliance with the order of discovery, as in view of the said provisions in case the party fails to comply with any order to answer interrogatories or for discovery or inspection of documents, he shall, if he is a plaintiff, be liable to have his suit dismissed for want of prosecution and if he is a defendant, to have his defence, if any, struck out and to be placed in the same position as if he had not defended, and the party interrogating or seeking discovery or inspection may apply to the court for an order to that effect. Thus, in view of the above, the suit may be dismissed for non-compliance of the aforesaid orders by the plaintiff and the plaintiff shall also be precluded from bringing a fresh suit on the same cause of action. Similarly, defence of the defendant may be struck off for non-compliance of such orders.

(2012) 8 SCC 148 (Union of India vs. Ibrahim Uddin and another)

SUPREME COURT OF INDIA

Union of India Vs. Ibrahim Uddin & ANR.

[Civil Appeal No. 1374 of 2008]

ACTS: Order XLI Rule 27 of the Code of Civil Procedure 1908

DATE-17/07/2012

CITATION: (2012) 8 SCC 148

JUDGMENT

Dr. B. S. CHAUHAN, J.

1. This appeal has been preferred against the impugned judgment and decree dated 19.4.2007 passed by the High Court of Judicature at Allahabad in Second Appeal No.289 of 2000 by which it has upheld the judgment and decree of the first appellate Court dated 15.10.1999 passed in Civil Appeal No.81 of 1998 by which the first appellate Court had reversed the judgment and decree of the Civil Court dated 20.1.1998 passed in Original Suit No.442 of 1995 wherein the plaintiff/respondent no.1 had sought declaration of title of the ownership in respect of the suit property.

2. Facts and circumstances giving rise to this appeal are:

A. Plaintiff/respondent no.1-Ibrahim Uddin filed Original Suit No.442 of 1995 in the Court of Civil Judge, Agra on 25.7.1995 seeking a decree for declaration that he was the owner of the suit property (Agriculture land measuring 25 bighas), making averments that the suit land originally had been with the Maratha Government (Scindia-Gwalior). The ancestors of the plaintiff having close association with the Maratha Government, were made a grant in respect of the suit land in the year 1800. Subsequently, the land was partitioned between the ancestors of the plaintiff in the year 1819. The plaintiff/respondent no.1 being the only heir (descendant) of Smt. Hasin Begum and Zafaruddin became the absolute owner of the land after the death of his mother Smt. Hasin Begum. The said land was never sold, alienated, transferred or gifted to any person either by the plaintiff or his ancestors at any point of time. The suit land was given on rent to the State authorities in Agra by executing a rent note for a sum of Rs.22/- per month. The Union of India claimed title over the suit land illegally and in an unauthorised manner on 22.2.1993 and afterwards, thus the cause of action arose to approach the court.

B. The defendant no.1/appellant filed the written statement denying the averments and ownership of the plaintiff/respondent no.1 and averred that the land belonged to the Ministry of Defence, i.e., Union of India, a part of which has been leased out to several persons for agriculture work and their lease has been renewed from time to time. As they became unauthorised occupants, proceedings had been initiated in accordance with law and eviction order had been passed against the occupants/tenants.

C. In view of the pleadings, 8 issues were framed by the Trial Court and after appreciating the evidence on record, the trial Court came to the conclusion that Pedigree produced by the plaintiff alongwith the plaint was not successfully proved; the plaintiff could not prove any kind of grant by the Maratha Government to his ancestors/great-grandfathers in the year 1800. Plaintiff failed to prove the partition between his ancestors in 1819. The lease deed alleged to have been executed in favour of the Military Estate Officer under the Union of India, appellant/defendant No.1, was not successfully proved. In view of the above, the suit was dismissed vide judgment and decree dated 20.1.1998.

D. Aggrieved, the plaintiff/respondent no.1 preferred the first appeal before the District Judge, Agra. During the pendency of the said appeal, he preferred an application under Order XLI Rule 27 of the Code of Civil Procedure 1908 (hereinafter called “CPC”) on 6.4.1998 for adducing additional evidence, i.e., Will executed by his maternal grandfather dated 1.3.1929 in his favour bequeathing the suit property. The said application was allowed by the first appellate Court vide order dated 28.4.1999. The First Appeal itself stood allowed by the first appellate Court vide judgment and decree dated 15.10.1999 wherein the first appellate Court came to the conclusion that Maratha Government had made the gift of land in favour of plaintiff’s fore- fathers which was subsequently partitioned. The registered partition deed stood duly proved and it was the proof of the title of the plaintiff/respondent no.1. The plaintiff/respondent no.1 made an application for inspection of the record before the officers of the appellant/defendant no.1 but perusal of the record was not permitted. The appellant/defendant no.1 did not produce any document to show its title and failed to produce the original record, thus, adverse inference was drawn against it in view of the provisions of Section 114 clause(g) of the Indian Evidence Act, 1872 (hereinafter called the Evidence Act). The Will, taken on record as an additional evidence at appellate stage stood proved and thus, contents thereof automatically stood proved.

E. Aggrieved, the appellant preferred Second Appeal before the High Court which has been dismissed vide impugned judgment and decree. Hence, this appeal.

3. Shri R.P. Bhatt, learned Senior counsel duly assisted by Ms. Madhurima Tatia, Advocate has submitted that there was no documentary evidence or trustworthy oral evidence that the suit property had been given to the fore-fathers of the plaintiff/respondent no.1 by the Maratha Government in the year 1800. Same remained the factual aspect in respect of alleged partition among his fore-fathers in the year 1819. The first appellate Court had no occasion to decide the application under Order XLI Rule 27 CPC prior to the hearing of the appeal itself. More so, as there has been no reference to the Will in the plaint or First Appeal, thus, it could not be taken on record for want of pleadings in this respect.

Further, taking the Will on record did not mean that either the Will or its contents stood proved. None had proved the said Will and thus, could not be relied upon. If the Will is ignored, there is no evidence on record to prove the case of the plaintiff/respondent no.1. The High Court had framed 4 substantial questions of law at the time of admission of the appeal and 2 additional substantial questions at a later stage but did not answer either of them nor recorded any finding that none of them was, in fact, a substantial question of law, rather the appeal has been decided placing reliance on the Will, which was liable to be ignored altogether and making reference to the record of the Cantonment Board. In case, the Union of India did not produce the revenue record before the trial Court, the first appellate Court has wrongly drawn adverse inference under Section 114(g) of the Evidence Act. Thus, the appeal deserves to be allowed.

4. Per contra, Shri Asok Ganguly and Shri C.L. Pandey, learned Senior counsel with Shri Vibhor Garg, Advocate vehemently opposed the appeal contending that concurrent findings recorded by the first and second appellate Court are not liable to be interfered with in discretionary jurisdiction under Article 136 of the Constitution of India, 1950. The registered partition deed of 1819 is the proof of title of the plaintiff/respondent no. 1. In view of the fact that the Second Appeal could be decided on limited issues, the High Court was not bound to answer the substantial questions of law, framed by it. The appeal lacks merit and is liable to be dismissed.

5. We have considered the rival submissions made by learned counsel for the parties and perused the record. Presumption under Section 114(g) of the Evidence Act :

6. Generally, it is the duty of the party to lead the best evidence in his possession, which could throw light on the issue in controversy and in case such material evidence is withheld, the Court may draw adverse inference under Section 114(g) of the Evidence Act notwithstanding, that the onus of proof did not lie on such party and it was not called upon to produce the said evidence. (Vide: Murugesam Pillai v. Gnana Sambandha Pandara Sannadhi, AIR 1917 PC 6; Hiralal & Ors. v. Badkulal & Ors., AIR 1953 SC 225; A. Raghavamma & Anr. v. A. Chenchamma & Anr., AIR 1964 SC 136; The Union of India v. Mahadeolal Prabhu Dayal, AIR 1965 SC 1755; Gopal Krishnaji Ketkar v. Mohamed Haji Latif & Ors., AIR 1968 SC 1413; M/s. Bharat Heavy Electrical Ltd. v. State of U.P. & Ors., AIR 2003 SC 3024; Musauddin Ahmed v. State of Assam, AIR 2010 SC 3813; and Khatri Hotels Pvt. Ltd. & Anr. v. Union of India & Anr., (2011) 9 SCC 126).

7. However, in Mt. Bilas Kunwar v. Desraj Ranjit Singh, AIR 1915 PC 96, a view has been expressed that it is open to a litigant to refrain from producing any document that he considers irrelevant; if the other litigant is dissatisfied, it is for him to apply for interrogatories/inspections and production of documents. If he fails to do so, neither he nor the Court at his suggestion, is entitled to draw any inference as to the contents of any such documents.

8. In Kamma Otukunta Ram Naidu v. Chereddy Pedda Subba Reddy & Ors., AIR 2003 SC 3342, this Court held that all the pros and cons must be examined before drawing an adverse inference against a party. In that case the issue had been, as to whether two persons had been travelling together in the vehicle and presumption had been drawn only on the basis that the bus tickets of both the persons were not produced. This Court held that presumption could not have been drawn if other larger evidence was shown to the contrary. (See also: Mohinder Kaur v. Kusam Anand, (2000) 4 SCC 214; and Takhaji Hiraji v. Thakore Kubersing Chamansing & Ors., AIR 2001 SC 2328).

9. In Municipal Corporation, Faridabad v. Siri Niwas, AIR 2004 SC 4681, this Court has taken the view that the law laid down by this Court in Gopal Krishnaji Ketkar (supra) did not lay down any law, that in all situations the presumption in terms of clause (g) of Section 114 of the Evidence Act must be drawn.

10. In Mahant Shri Srinivas Ramanuj Das v. Surjanarayan Das & Anr., AIR 1967 SC 256, this Court held that mere withholding of documentary evidence by a party is not enough to draw adverse inference against him. The other party must ask the party in possession of such evidence to produce the same, and in case the party in possession does not produce it, adverse inference may be drawn: “It is true that the defendant-respondent also did not call upon the plaintiff-appellant to produce the documents whose existence was admitted by one or the other witness of the plaintiff and that therefore, strictly speaking, no inference adverse to the plaintiff can be drawn from his non-producing the list of documents. The Court may not be in a position to conclude from such omission that those documents would have directly established the case for the respondent. But it can take into consideration in weighing the evidence or any direct inferences from established facts that the documents might have favoured the respondent case.”

11. In Ramrati Kuer v. Dwarika Prasad Singh & Ors., AIR 1967 SC 1134, this Court held: “It is true that Dwarika Prasad Singh said that his father used to keep accounts. But no attempt was made on behalf of the appellant to ask the court to order Dwarika Prasad Singh to produce the accounts. An adverse inference could only have been drawn against the plaintiffs-respondents if the appellant had asked the court to order them to produce accounts and they had failed to produce them after admitting that Basekhi Singh used to keep accounts. But no such prayer was made to the court, and in the circumstances no adverse inference could be drawn from the non-production of accounts.” (See also: Ravi Yashwant Bhoir v. District Collector, Raigad & Ors., AIR 2012 SC 1339).

12. In Smt. Indira Kaur & Ors. v. Shri Sheo Lal Kapoor, AIR 1988 SC 1074, the lower courts drew an adverse inference against the appellant- plaintiff on the ground that the plaintiff was not ready and willing to perform his part of the contract. The question arose as to whether the party had the means to pay. The court further held that before the adverse inference is drawn against a particular party, the conduct and diligence of the other party is also to be examined. Where a person deposed that as he had deposited the money in the Bank and the other party did not even ask as on what date and in which Bank the amount had been deposited and did not remain diligent enough, the question of drawing adverse inference against such a person for not producing the Pass Book etc. cannot be drawn.

13. In Mahendra L. Jain & Ors. v. Indore Development Authority & Ors., (2005) 1 SCC 639, this Court held that mere non-production of documents would not result in adverse inference. If a document was called for in the absence of any pleadings, the same was not relevant. An adverse inference need not necessarily be drawn only because it would be lawful to do so.

14. In Manager, R.B.I., Bangalore v. S. Mani & Ors., AIR 2005 SC 2179, this Court dealt with the issue wherein the Industrial Tribunal directed the employer to produce the attendance register in respect of the first party workmen. The explanation of the appellant was that the attendance registers being very old, could not be produced. The Tribunal, however, in its award noticed the same and drew an adverse inference against the appellants for non-production of the attendance register alone. This Court reversed the finding observing: “As noticed hereinbefore, in this case also the respondents did not adduce any evidence whatsoever. Thus, in the facts and circumstances of the case, the Tribunal erred in drawing an adverse inference. The initial burden of proof was on the workmen to show that they had completed 240 days of service. The Tribunal did not consider the question from that angle. It held that the burden of proof was upon the appellant on the premise that they have failed to prove their plea of abandonment of service” (See also: A. Jayachandra v. Aneel Kaur, AIR 2005 SC 534; R.M. Yellatti v. Assistant Executive Engineer AIR 2006 SC 355; and Pratap Singh & Anr. v. State of M.P., AIR 2006 SC 514).

15. Order XI CPC contains certain provisions with the object to save expense by obtaining information as to material facts and to obtain admission of any fact which he has to prove on any issue. Therefore, a party has a right to submit interrogatories relating to the same matter in issue.

The expression “matter” means a question or issue in dispute in the action and not the thing about which such dispute arises. The object of introducing such provision is to secure all material documents and to put an end to protracted enquiry with respect to document/material in possession of the other party. In such a fact-situation, no adverse inference can be drawn against a party for non-production of a document unless notice is served and procedure is followed. Under Rule 14 of Order XI, the court is competent to direct any party to produce the document asked by the other party which is in his possession or power and relating to any material in question in such suit.

Rule 15 Order XI provides for inspection of documents referred to in pleadings or affidavits. Rule 18 thereof, empowers the court to issue order for inspection. Rule 21 thereof provides for very stringent consequences for non-compliance with the order of discovery, as in view of the said provisions in case the party fails to comply with any order to answer interrogatories or for discovery or inspection of documents, he shall, if he is a plaintiff, be liable to have his suit dismissed for want of prosecution and if he is a defendant, to have his defence, if any, struck out and to be placed in the same position as if he had not defended, and the party interrogating or seeking discovery or inspection may apply to the court for an order to that effect. Thus, in view of the above, the suit may be dismissed for non-compliance of the aforesaid orders by the plaintiff and the plaintiff shall also be precluded from bringing a fresh suit on the same cause of action. Similarly, defence of the defendant may be struck off for non-compliance of such orders.

16. Thus, in view of the above, the law on the issue can be summarised to the effect that, issue of drawing adverse inference is required to be decided by the court taking into consideration the pleadings of the parties and by deciding whether any document/evidence, withheld, has any relevance at all or omission of its production would directly establish the case of the other side. The court cannot loose sight of the fact that burden of proof is on the party which makes a factual averment. The court has to consider further as to whether the other side could file interrogatories or apply for inspection and production of the documents etc. as is required under Order XI CPC.

Conduct and diligence of the other party is also of paramount importance. Presumption or adverse inference for non-production of evidence is always optional and a relevant factor to be considered in the background of facts involved in the case. Existence of some other circumstances may justify non-production of such documents on some reasonable grounds. In case one party has asked the court to direct the other side to produce the document and other side failed to comply with the court’s order, the court may be justified in drawing the adverse inference. All the pros and cons must be examined before the adverse inference is drawn. Such presumption is permissible, if other larger evidence is shown to the contrary.

17. In the instant case, admittedly, the plaintiff/respondent no.1 during the pendency of his suit had made an application before the authorities under the control of the appellant/defendant no.1 to make the inspection. However, he was not permitted to have any inspection. The plaintiff/respondent no.1 did not submit any interrogatory statement or an application for making inspection or for production of the document as provided under Order XI CPC. In such a fact-situation, in view of the law referred to hereinabove, it is not permissible for the first appellate Court or the High Court to draw any adverse inference against the appellant/defendant no.1. Admissions:

18. The first appellate court while dealing with the issue of admission and proof of documents held as under:? “The plaintiff has produced will dated l.3.1929 of his maternal grandfather, Syed Nazim Ali which the court had taken on record on 28.4.99 and the defendant No.1 was given one week time for producing the rebuttal, but the defendant No.1 did not produce any paper against the Will. Therefore, it has been given in section 58 of the Evidence that if the defendant does not produce any paper in rebuttal, then it means that he admitted the paper produced by the plaintiff. There is no need of proving the same.” (Emphasis added)

19. The question does arise as to whether not filing a document in rebuttal of a document amounts to an admission and whether the provisions of Section 58 of the Evidence Act are attracted. Order XII CPC deals with admission of the case, admission of the documents and judgment on admissions. Rule 1 thereof provides that a party to a suit may give notice by his pleading or otherwise in writing that he admits the truth of the whole or any party of the case of any other party. Rule 2 deals with notice to admit documents – it provides that each party may call upon the other party to admit within 7 days from the date of service of the notice of any document saving all such exceptions. Rule 2A provides that a document could be deemed to have been admitted if not denied after service of notice to admit documents.

20. Admission is the best piece of substantive evidence that an opposite party can rely upon, though not conclusive, is decisive of the matter, unless successfully withdrawn or proved erroneous. Admission may in certain circumstances, operate as an estoppel. The question which is needed to be considered is what weight is to be attached to an admission and for that purpose it is necessary to find out as to whether it is clear, unambiguous and a relevant piece of evidence, and further it is proved in accordance with the provisions of the Evidence Act.

It would be appropriate that an opportunity is given to the person under cross-examination to tender his explanation and clear the point on the question of admission. (Vide: Narayan Bhagwantrao Gosavi Balajiwale v. Gopal Vinayak Gosavi & Ors., AIR 1960 SC 100; Basant Singh v. Janki Singh & Ors., AIR 1967 SC 341; Sita Ram Bhau Patil v. Ramchandra Nago Patil, AIR 1977 SC 1712; Sushil Kumar v. Rakesh Kumar, AIR 2004 SC 230; United Indian Insurance Co Ltd. v. Samir Chandra Choudhary., (2005) 5 SCC 784; Charanjit lal Mehra & Ors v. Kamal Saroj Mahajan & Anr., AIR 2005 SC 2765; and Udham Singh v. Ram Singh & Anr., (2007) 15 SCC 529.)

21. In Nagubai Ammal & Ors. v. B.Shama Rao & Ors., AIR 1956 SC 593, this Court held that admission made by a party is admissible and best evidence, unless it is proved that it had been made under a mistaken belief. While deciding the said case reliance has been placed upon the judgment in Slatterie v. Pooley, (1840) 6 M & W 664, wherein it had been observed “What a party himself admits to be true, may reasonably be presumed to be so.”

22. In L.I.C of India & Anr v. Ram Pal Singh Bisen, (2010) 4 SCC 491, this Court held that “failure to prove the defence does not amount to an admission, nor does it reverse or discharge the burden of proof of the plaintiff.”

23. In view of the above, the law on the admissions can be summarised to the effect that admission made by a party though not conclusive, is a decisive factor in a case unless the other party successfully withdraws the same or proves it to be erroneous. Even if the admission is not conclusive it may operate as an estoppel. Law requires that an opportunity be given to the person who has made admission under cross-examination to tender his explanation and clarify the point on the question of admission. Failure of a party to prove its defence does not amount to admission, nor it can reverse or discharge the burden of proof of the plaintiff.

24. In the instant case, the Court held that not filing any document in rebuttal of the Will dated 1.3.1929 amounts to admission of the said Will as well as it contents. Without following the procedure as required under Order XII CPC or admission having not been made during the course of hearing before the Court, the question of application of Section 58 of the Evidence Act could not arise. Section 58 provides that a fact may not need to be proved in any proceeding which the parties thereto agreed to admit at the hearing or which, before the hearing, they agree to admit by any writing under their hands or which they admitted by their pleading, even in that case court may, in its discretion, even if such a admission has been made by the party, require the fact admitted to be proved otherwise than by such admission. In fact, admission by a party may be oral or in writing.

‘Admissions’ are governed under Sections 17 to 31 of the Evidence Act and such admission can be tendered and accepted as substantive evidence. While admission for purposes of trial may dispense with proof of a particular fact. Section 58 deals with admissions during trial i.e. at or before the hearing, which are known as judicial admissions or stipulations dispense it with proof. Admissions are not conclusive proof but may operate as estoppel against its maker. Documents are necessarily either proved by witness or marked on admission. In view of above, it is evident that the first appellate court has misdirected itself so far as the issue of admission is concerned. The finding recorded by it that appellant/defendant No.1 failed to produce any document in rebuttal of the Will is not only wrong but preposterous. Order XLI Rule 27 C.P.C.

25. The general principle is that the Appellate Court should not travel outside the record of the lower court and cannot take any evidence in appeal. However, as an exception, Order XLI Rule 27 CPC enables the Appellate Court to take additional evidence in exceptional circumstances. The Appellate Court may permit additional evidence only and only if the conditions laid down in this rule are found to exist. The parties are not entitled, as of right, to the admission of such evidence. Thus, provision does not apply, when on the basis of evidence on record, the Appellate Court can pronounce a satisfactory judgment. The matter is entirely within the discretion of the court and is to be used sparingly. Such a discretion is only a judicial discretion circumscribed by the limitation specified in the rule itself. (Vide: K. Venkataramiah v. A. Seetharama Reddy & Ors., AIR 1963 SC 1526; The Municipal Corporation of Greater Bombay v. Lala Pancham & Ors., AIR 1965 SC 1008; Soonda Ram & Anr. v. Rameshwaralal & Anr., AIR 1975 SC 479; and Syed Abdul Khader v. Rami Reddy & Ors., AIR 1979 SC 553).

26. The Appellate Court should not, ordinarily allow new evidence to be adduced in order to enable a party to raise a new point in appeal. Similarly, where a party on whom the onus of proving a certain point lies fails to discharge the onus, he is not entitled to a fresh opportunity to produce evidence, as the Court can, in such a case, pronounce judgment against him and does not require any additional evidence to enable it to pronounce judgment. (Vide: Haji Mohammed Ishaq Wd. S. K. Mohammed & Ors. v. Mohamed Iqbal and Mohamed Ali and Co., AIR 1978 SC 798).

27. Under Order XLI , Rule 27 CPC, the appellate Court has the power to allow a document to be produced and a witness to be examined. But the requirement of the said Court must be limited to those cases where it found it necessary to obtain such evidence for enabling it to pronounce judgment. This provision does not entitle the appellate Court to let in fresh evidence at the appellate stage where even without such evidence it can pronounce judgment in a case. It does not entitle the appellate Court to let in fresh evidence only for the purpose of pronouncing judgment in a particular way. In other words, it is only for removing a lacuna in the evidence that the appellate Court is empowered to admit additional evidence. [Vide: Lala Pancham & Ors. (supra) ].

28. It is not the business of the Appellate Court to supplement the evidence adduced by one party or the other in the lower Court. Hence, in the absence of satisfactory reasons for the non- production of the evidence in the trial court, additional evidence should not be admitted in appeal as a party guilty of remissness in the lower court is not entitled to the indulgence of being allowed to give further evidence under this rule. So a party who had ample opportunity to produce certain evidence in the lower court but failed to do so or elected not to do so, cannot have it admitted in appeal. (Vide: State of U.P. v. Manbodhan Lal Srivastava, AIR 1957 SC 912; and S. Rajagopal v. C.M. Armugam & Ors., AIR 1969 SC 101).

29. The inadvertence of the party or his inability to understand the legal issues involved or the wrong advice of a pleader or the negligence of a pleader or that the party did not realise the importance of a document does not constitute a “substantial cause” within the meaning of this rule. The mere fact that certain evidence is important, is not in itself a sufficient ground for admitting that evidence in appeal.

30. The words “for any other substantial cause” must be read with the word “requires” in the beginning of sentence, so that it is only where, for any other substantial cause, the Appellate Court requires additional evidence, that this rule will apply, e.g., when evidence has been taken by the lower Court so imperfectly that the Appellate Court cannot pass a satisfactory judgment.

31. Whenever the appellate Court admits additional evidence it should record its reasons for doing so. (Sub-rule 2). It is a salutary provision which operates as a check against a too easy reception of evidence at a late stage of litigation and the statement of reasons may inspire confidence and disarm objection. Another reason of this requirement is that, where a further appeal lies from the decision, the record of reasons will be useful and necessary for the Court of further appeal to see, if the discretion under this rule has been properly exercised by the Court below. The omission to record the reasons must, therefore, be treated as a serious defect. But this provision is only directory and not mandatory, if the reception of such evidence can be justified under the rule.

32. The reasons need not be recorded in a separate order provided they are embodied in the judgment of the appellate Court. A mere reference to the peculiar circumstances of the case, or mere statement that the evidence is necessary to pronounce judgment, or that the additional evidence is required to be admitted in the interests of justice, or that there is no reason to reject the prayer for the admission of the additional evidence, is not enough comp1iance with the requirement as to recording of reasons.

33. It is a settled legal proposition that not only administrative order, but also judicial order must be supported by reasons, recorded in it. Thus, while deciding an issue, the Court is bound to give reasons for its conclusion. It is the duty and obligation on the part of the Court to record reasons while disposing of the case. The hallmark of order and exercise of judicial power by a judicial forum is for the forum to disclose its reasons by itself and giving of reasons has always been insisted upon as one of the fundamentals of sound administration of the justice – delivery system, to make it known that there had been proper and due application of mind to the issue before the Court and also as an essential requisite of the principles of natural justice. The reason is the heartbeat of every conclusion.

It introduces clarity in an order and without the same, the order becomes lifeless. Reasons substitute subjectivity with objectivity. The absence of reasons renders an order indefensible/unsustainable particularly when the order is subject to further challenge before a higher forum. Recording of reasons is principle of natural justice and every judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person who is adversely affected must know why his application has been rejected. (Vide: State of Orissa v. Dhaniram Luhar, AIR 2004 SC 1794; State of Uttaranchal & Anr. v. Sunil Kumar Singh Negi, AIR 2008 SC 2026; The Secretary & Curator, Victoria Memorial Hall v. Howrah Ganatantrik Nagrik Samity & Ors., AIR 2010 SC 1285; and Sant Lal Gupta & Ors. v. Modern Cooperative Group Housing Society Limited & Ors., (2010) 13 SCC 336).

34. In The Land Acquisition Officer, City Improvement Trust Board, Bangalore v. H. Narayanaiah etc. etc., AIR 1976 SC 2403, while dealing with the issue, a three judge Bench of this Court held as under: “We are of the opinion that the High Court should have recorded its reasons to show why it found the admission of such evidence to be necessary for some substantial reason. And if it found it necessary to admit it an opportunity should have been given to the appellant to rebut any inference arising from its insistence by leading other evidence.” (Emphasis added) A similar view has been reiterated by this Court in Basayya I. Mathad v. Rudrayya S. Mathad and Ors., AIR 2008 SC 1108.

35. A Constitution Bench of this Court in K. Venkataramiah (Supra), while dealing with the same issue held: “It is very much to be desired that the courts of appeal should not overlook the provisions of cl. (2) of the Rule and should record their reasons for admitting additional evidence. The omission to record reason must, therefore, be treated as a serious defect. Even so, we are unable to persuade ourselves that this provision is mandatory.” (Emphasis added) In the said case, the court after examining the record of the case came to the conclusion that the appeal was heard for a long time and the application for taking additional evidence on record was filed during the final hearing of the appeal. In such a fact-situation, the order allowing such application did not vitiate for want of reasons.

36. Where the additional evidence sought to be adduced removes the cloud of doubt over the case and the evidence has a direct and important bearing on the main issue in the suit and interest of justice clearly renders it imperative that it may be allowed to be permitted on record such application may be allowed.

37. To sum up on the issue, it may be held that application for taking additional evidence on record at a belated stage cannot be filed as a matter of right. The court can consider such an application with circumspection, provided it is covered under either of the prerequisite condition incorporated in the statutory provisions itself. The discretion is to be exercised by the court judicially taking into consideration the relevance of the document in respect of the issues involved in the case and the circumstances under which such an evidence could not be led in the court below and as to whether the applicant had prosecuted his case before the court below diligently and as to whether such evidence is required to pronounce the judgment by the appellate court. In case the court comes to the conclusion that the application filed comes within the four corners of the statutory provisions itself, the evidence may be taken on record, however, the court must record reasons as on what basis such an application has been allowed. However, the application should not be moved at a belated stage. Stage of Consideration :

38. An application under Order XLI Rule 27 CPC is to be considered at the time of hearing of appeal on merits so as to find whether the documents and/or the evidence sought to be adduced have any relevance/bearing on the issues involved. The admissibility of additional evidence does not depend upon the relevancy to the issue on hand, or on the fact, whether the applicant had an opportunity for adducing such evidence at an earlier stage or not, but it depends upon whether or not the Appellate Court requires the evidence sought to be adduced to enable it to pronounce judgment or for any other substantial cause. The true test, therefore is, whether the Appellate Court is able to pronounce judgment on the materials before it without taking into consideration the additional evidence sought to be adduced. Such occasion would arise only if on examining the evidence as it stands the court comes to the conclusion that some inherent lacuna or defect becomes apparent to the Court. (Vide: Arjan Singh v. Kartar Singh & Ors., AIR 1951 SC 193; and Natha Singh & Ors. v. The Financial Commissioner, Taxation, Punjab & Ors., AIR 1976 SC 1053).

39. In Parsotim Thakur & Ors. v. Lal Mohar Thakur & Ors., AIR 1931 PC 143, it was held: ?”The provisions of S.107 as elucidated by O.41, R.27 are clearly not intended to allow a litigant who has been unsuccessful in the lower Court to patch up the weak parts of his case and fill up omissions in the Court of appeal. Under R.27, Cl.(1) (b) it is only where the appellate Court “requires” it (i.e. finds it needful). The legitimate occasion for the exercise of this discretion is not whenever before the appeal is heard a party applies to adduce fresh evidence, but “when on examining the evidence as it stands, some inherent lacuna or defect becomes apparent”, it may well be that the defect may be pointed out by a party, or that a party may move the Court to apply the defect, but the requirement must be the requirement of the court upon its appreciation of evidence as it stands.

Wherever the Court adopts this procedure it is bound by R. 27(2) to record its reasons for so doing, and under R.29 must specify the points to which the evidence is to be confined and record on its proceedings the points so specified. The power so conferred upon the Court by the Code ought to be very sparingly exercised and one requirement at least of any new evidence to be adduced should be that it should have a direct and important bearing on a main issue in the case ” (Emphasis added) (See also: Indirajit Pratab Sahi v. Amar Singh, AIR 1928 P.C. 128)

40. In Arjan Singh v. Kartar Singh & Ors. (supra), this Court held: ” If the additional evidence was allowed to be adduced contrary to the principles governing the reception of such evidence, it would be a case of improper exercise of discretion, and the additional evidence so brought on the record will have to be ignored and the case decided as if it was non-existent . The order allowing the appellant to call the additional evidence is dated 17.8.1942. The appeal was heard on 24.4.1942. There was thus no examination of the evidence on the record and a decision reached that the evidence as it stood disclosed a lacuna which the court required to be filled up for pronouncing the judgment” (Emphasis added)

41. Thus, from the above, it is crystal clear that application for taking additional evidence on record at an appellate stage, even if filed during the pendency of the appeal, is to be heard at the time of final hearing of the appeal at a stage when after appreciating the evidence on record, the court reaches the conclusion that additional evidence was required to be taken on record in order to pronounce the judgment or for any other substantial cause. In case, application for taking additional evidence on record has been considered and allowed prior to the hearing of the appeal, the order being a product of total and complete non-application of mind, as to whether such evidence is required to be taken on record to pronounce the judgment or not, remains inconsequential/in executable and is liable to be ignored. In the instant case, the application under Order XLI Rule 27 CPC was filed on 6.4.1998 and it was allowed on 28.4.1999 though the first appeal was heard and disposed of on 15.10.1999. In view of law referred to hereinabove, the order dated 28.4.1999 is just to be ignored.

42. The High Court while admitting the appeal had framed the following substantial questions of law: 1. Whether the judgment and decree passed by the lower appellate court is vitiated in law inasmuch as the land in dispute which was recorded in Column B-4 under Rule 6 of the Cantonment Land Administration Rule 1937 was wrongly and illegally discarded on the ground of secondary evidence in the presence of the original register maintained by the Military Estate Officer. 2. Whether the certified copy of the relevant registers maintained under the Cantonment Act are admissible in evidence and appellate court erred in law in discarding the same illegally against the relevant provisions of the Evidence Act and decreed the suit of the plaintiff on the false pretext that there is no document was filed on behalf of the defendant? 3. Whether the appellate court did not consider this aspect at all that the suit for declaration without possession is not maintainable is barred by the provision of Specific Relief Act. 4. Whether the lower appellate court has committed illegality while accepting the Will dated 1.3.1992 filed on 28.4.1999 without its proof by plaintiff? The High Court admittedly did not answer any of them, though had the question Nos. 2, 3 and 4 been decided, the result would have been otherwise. Section 34 of the Specific Relief Act, 1963 :

43. The Section provides that courts have discretion as to declaration of status or right, however, it carves out an exception that a court shall not make any such declaration of status or right where the complainant, being able to seek further relief than a mere declaration of title, omits to do so.

44. In Ram Saran & Anr. v. Smt. Ganga Devi, AIR 1972 SC 2685, this Court had categorically held that the suit seeking for declaration of title of ownership but where possession is not sought, is hit by the proviso of Section 34 of Specific Relief Act, 1963 (hereinafter called ‘Specific Relief Act’) and, thus, not maintainable.

45. In Vinay Krishna v. Keshav Chandra & Anr., AIR 1993 SC 957, this Court dealt with a similar issue where the plaintiff was not in exclusive possession of property and had filed a suit seeking declaration of title of ownership. Similar view has been reiterated observing that the suit was not maintainable, if barred by the proviso to Section 34 of the Specific Relief Act. (See also: Gian Kaur v. Raghubir Singh, (2011) 4 SCC 567).

46. In view of above, the law becomes crystal clear that it is not permissible to claim the relief of declaration without seeking consequential relief. In the instant case, suit for declaration of title of ownership had been filed though, the plaintiff/respondent no. 1 was admittedly not in possession of the suit property. Thus, the suit was barred by the provision of Section 34 of the Specific Relief Act and, therefore, ought to have been dismissed solely on this ground. The High Court though framed a substantial question on this point but for unknown reasons did not consider it proper to decide the same. Section 100 CPC :

47. Section 100 CPC provides for a second appeal only on the substantial question of law. Generally, a Second Appeal does not lie on question of facts or of law.

48. In State Bank of India & Ors. v. S.N. Goyal, AIR 2008 SC 2594, this Court explained the terms “substantial question of law” and observed as under : “The word ‘substantial’ prefixed to ‘question of law’ does not refer to the stakes involved in the case, nor intended to refer only to questions of law of general importance, but refers to impact or effect of the question of law on the decision in the lis between the parties. ‘Substantial questions of law’ means not only substantial questions of law of general importance, but also substantial question of law arising in a case as between the parties. any question of law which affects the final decision in a case is a substantial question of law as between the parties.

A question of law which arises incidentally or collaterally, having no bearing on the final outcome, will not be a substantial question of law. There cannot, therefore, be a straitjacket definition as to when a substantial question of law arises in a case.” (Emphasis added) Similarly, in Sir Chunilal V. Mehta & Sons Ltd. v. Century Spinning and Manufacturing Co. Ltd., AIR 1962 SC 1314, this Court for the purpose of determining the issue held:- “The proper test for determining whether a question of law raises in the case is substantial, would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties” (Emphasis added)

49. In Vijay Kumar Talwar v. Commissioner of Income Tax, New Delhi, (2011) 1 SCC 673, this Court held that, a point of law which admits of no two opinions may be a proposition of law but cannot be a substantial question of law. To be ‘substantial’ a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law ‘involving in the case’ there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. It will, therefore, depend on the facts and circumstance of each case, whether a question of law is a substantial one or not; the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis.” (See also: Rajeshwari v. Puran Indoria, (2005) 7 SCC 60).

50. The Court, for the reasons to be recorded, may also entertain a second appeal even on any other substantial question of law, not formulated by it, if the Court is satisfied that the case involves such a question. Therefore, the existence of a substantial question of law is a sine-qua-non for the exercise of jurisdiction under the provisions of Section 100 CPC. The second appeal does not lie on the ground of erroneous findings of facts based on appreciation of the relevant evidence.

There may be a question, which may be a “question of fact”, “question of law”, “mixed question of fact and law” and “substantial question of law.” Question means anything inquired; an issue to be decided. The “question of fact” is whether a particular factual situation exists or not. A question of fact, in the Realm of Jurisprudence, has been explained as under:- “A question of fact is one capable of being answered by way of demonstration. A question of opinion is one that cannot be so answered. An answer to it is a matter of speculation which cannot be proved by any available evidence to be right or wrong.” (Vide: Salmond, on Jurisprudence, 12th Edn. page 69, cited in Gadakh Yashwantrao Kankarrao v. E.V. alias Balasaheb Vikhe Patil & ors., AIR 1994 SC 678).

51. In Smt. Bibhabati Devi v. Ramendra Narayan Roy & Ors., AIR 1947 PC 19, the Privy Council has provided the guidelines as in what cases the second appeal can be entertained, explaining the provisions existing prior to the amendment of 1976, observing as under:- “that miscarriage of justice means such a departure from the rules which permeate all judicial procedure as to make that which happen not in the proper sense of the word ‘judicial procedure’ at all. That the violation of some principles of law or procedure must be such erroneous proposition of law that if that proposition to be corrected, the finding cannot stand, or it may be the neglect of some principle of law or procedure, whose application will have the same effect. The question whether there is evidence on which the Courts could arrive at their finding, is such a question of law. ‘That the question of admissibility of evidence is a proposition of law but it must be such as to affect materially the finding. The question of the value of evidence is not sufficient reason for departure from the practice.”

52. In Suwalal Chhogalal v. Commissioner of Income Tax, (1949) 17 ITR 269, this Court held as under:- “A fact is a fact irrespective of evidence, by which it is proved. The only time a question of law can arise in such a case is when it is alleged that there is no material on which the conclusion can be based or no sufficient evidence.”

53. In Oriental Investment Company Ltd. v. Commissioner of Income Tax, Bombay, AIR 1957 SC 852, this Court considered a large number of its earlier judgments, including Sree Meenakshi Mills Ltd., Madurai v. Commissioner of Income Tax, Madras, AIR 1957 SC 49, and held that where the question of decision is whether certain profit is made and shown in the name of certain intermediaries, were, in fact, profit actually earned by the assessee or the intermediaries, is a mixed question of fact and law. The Court further held that inference from facts would be a question of fact or of law according as the point for determination is one of pure fact or a “mixed question of law and fact” and that a finding of fact without evidence to support it or if based on relevant or irrelevant matters, is not unassailable.

54. There is no prohibition to entertain a second appeal even on question of fact provided the Court is satisfied that the findings of the courts below were vitiated by non-consideration of relevant evidence or by showing erroneous approach to the matter and findings recorded in the court below are perverse. (Vide: Jagdish Singh v. Nathu Singh, AIR 1992 SC 1604; Smt. Prativa Devi (Smt.) v. T.V. Krishnan, (1996) 5 SCC 353; Satya Gupta (Smt.) @ Madhu Gupta v. Brijesh Kumar, (1998) 6 SCC 423; Ragavendra Kumar v. Firm Prem Machinary & Co., AIR 2000 SC 534; Molar Mal (dead) through Lrs. v. M/s. Kay Iron Works Pvt. Ltd., AIR 2000 SC 1261; Bharatha Matha & Anr. v. R. Vijaya Renganathan & Ors., AIR 2010 SC 2685; and Dinesh Kumar v. Yusuf Ali, (2010) 12 SCC 740).

55. In Jai Singh v. Shakuntala, AIR 2002 SC 1428, this Court held that it is permissible to interfere even on question of fact but it may be only in “very exceptional cases and on extreme perversity that the authority to examine the same in extenso stands permissible it is a rarity rather than a regularity and thus in fine it can thus be safely concluded that while there is no prohibition as such, but the power to scrutiny can only be had in very exceptional circumstances and upon proper circumspection.” Similar view has been taken in the case of Kashmir Singh v. Harnam Singh & Anr., AIR 2008 SC 1749.

56. Declaration of relief is always discretionary. If the discretion is not exercised by the lower court “in the spirit of the statute or fairly or honestly or according to the rules of reason and justice”, the order passed by the lower court can be reversed by the superior court. (See: Mysore State Road Transport Corporation v. Mirja Khasim Ali Beg & Anr., AIR 1977 SC 747).

57. There may be exceptional circumstances where the High Court is compelled to interfere, notwithstanding the limitation imposed by the wording of Section 100 CPC. It may be necessary to do so for the reason that after all the purpose of the establishment of courts of justice is to render justice between the parties, though the High Court is bound to act with circumspection while exercising such jurisdiction. In second appeal the court frames the substantial question of law at the time of admission of the appeal and the Court is required to answer all the said questions unless the appeal is finally decided on one or two of those questions or the court comes to the conclusion that the question(s) framed could not be the substantial question(s) of law. There is no prohibition in law to frame the additional substantial question of law if the need so arises at the time of the final hearing of the appeal.

58. In the instant case, none of the substantial questions framed by the Court had been answered. Much reliance has been placed on the Will which was liable just to be ignored. Even otherwise, the Will in the instant case cannot be relied upon for want of pleadings.

59. The pleading taken in the plaint dated 25.7.1995 clearly revealed that the land in dispute belonged to Hafiz Ahmad Bux and Hafiz Kareem Bux who were the ancestors of the plaintiff and they were the owners of the same in the year 1800. The property was partitioned between ancestors of the plaintiff in the year 1819. There had been succession of the property by various documents of Hafiz Kareem Bux and Hafiz Ahmad Bux. The plaintiff claims to be heir and successor of one Smt. Hasin Begum wife of Zafaruddin and daughter of Sri Hazim Ali. He had inherited the suit property being a lone heir of Shri Hafiz Ahmed Bux after the death of his mother Smt. Hasin Begum.

In case, the plaint does not make any reference that the property had been given to the plaintiff/respondent no.1 by way of Will, and pleadings had not been amended at the stage of first appeal, the question does arise as to whether, the Will could be taken into consideration, while deciding the case. The trial court had considered as many as seven issues and does not make any reference that the property had been gifted to the ancestors of the plaintiff by the Maratha rulers. Further finding has been recorded that in respect of documents, the plaintiff/respondent no. 1 had given paper to defendant no. 1 for inspection of the record but he did not make any inspection.

However, a passing reference had been made by the trial court that no record had been produced by the plaintiff to show that the Maratha Government had given the land to the forefathers of the plaintiff. So far as the First Appellate Court is concerned, it placed a very heavy reliance on the Will and further recorded a finding that in spite of the fact that the plaintiff filed an application for inspection before the appellant/defendant no.1, he was not permitted to have the inspection. Nor the said revenue record was presented by the present appellant and, therefore, an adverse inference was drawn against it. So far as the Will is concerned, it is evident that it was taken on the record as an additional evidence without any pleading anywhere. There is nothing on record that the plaintiff/defendant no. 1 made any attempt to make an amendment in the plaint even at the appellate stage by moving an application under Order VI Rule 17 CPC.

60. Relevant part of the application under Order XLI Rule 27 CPC, reads as under: ?”2. That the property in suit belongs to the ancestors of the plaintiff. The grand father of the plaintiff/appellant had made the Will in favour of the plaintiff regarding the property in suit inter alia other properties in year 1929. 3. That at the time of trial of the suit the said will was not in possession of the plaintiff and the same was misplaced in the other lot of old papers of the plaintiff kept in store. 4. That even after best effort, and due diligence the aforesaid Will could not be available at the time of trial of the suit and now after due diligence and best effort it has been available and traced our. 5. That the papers were not available earlier so it could not be filed in the lower court. 6. That the said paper is very much relevant to establish the right, title or interest in the disputed property of the plaintiff so the same is very necessary to be taken on record. 7. That if the said paper is not taken on record the plaintiff will be deprived from getting justice.”

61. The first Appellate Court allowed the application filed by the plaintiff under Order XLI Rule 27 CPC vide order dated 28.4.1999 which reads as under: “The Will in question is necessary for the disposal of the appeal because the applicant/appellant obtains right in the disputed property from this Will. The respondent/defendants have neither opposed it that as to why it was not produced in the subordinate court, there is no any relevancy of it. The applicant has given reason of not producing the Will in the subordinate court that this will was lost. In my opinion, the will appears to be necessary for the disposal of the appeal for the property which was obtained to the appellant earlier by this Will. Proper reason has been given for not producing this Will in the subordinate court.”

62. This Court while dealing with an issue in Kalyan Singh Chouhan v. C.P. Joshi, AIR 2011 SC 1127, after placing reliance on a very large number of its earlier judgments including Messrs. Trojan & Co. v. RM.N.N. Nagappa Chettiar, AIR 1953 SC 235; Om Prakash Gupta v. Ranbir B. Goyal, AIR 2002 SC 665; Ishwar Dutt v. Land Acquisition Collector & Anr., AIR 2005 SC 3165; and State of Maharashtra v. M/s. Hindustan Construction Company Ltd., AIR 2010 SC 1299, held that relief not founded on the pleadings cannot be granted. A decision of a case cannot be based on grounds outside the pleadings of the parties. No evidence is permissible to be taken on record in absence of the pleadings in that respect. No party can he permitted to travel beyond its pleading and that all necessary and material facts should be pleaded by the party in support of the case set up by it. It was further held that where the evidence was not in the line of the pleadings, the said evidence cannot be looked into or relied upon.

63. In Bachhaj Nahar v. Nilima Mandal & Ors., AIR 2009 SC 1103, this court held that a case not specifically pleaded can be considered by the court unless the pleadings in substance contain the necessary averments to make out a particular case and issue has been framed on the point. In absence of pleadings, the court cannot make out a case not pleaded, suo motu. Therefore, in view of the above, there is nothing on record to show that Maratha Government had made a gift to the ancestors of the plaintiff. The claim of the plaintiff to get a title by virtue of the Will cannot be taken note of being not based on pleadings.

Even this Will is dated 1.3.1929, affidavits filed by the plaintiff/respondent no.1 before this Court reveal that on 26.3.2012 he was 80 years of age. The date of Will is 1.3.1929. So, it appears that the Will had been executed prior to the birth of the plaintiff/respondent no.1. In such a fact-situation, it could not have been taken into consideration without proper scrutiny of facts and, that too, without any pleading. In the plaint, the plaintiff for the reasons, best known to him, did not even make reference to the Will. In absence of any factual foundation of the case, based on Will, the first appellate Court committed a grave error taking into consideration the said Will. More so, the Will had not been proved as required under Section 68 of the Evidence Act.

64. The High Court had placed a very heavy reliance on the rent note allegedly executed by the fore-fathers of the plaintiff/ respondent no.1. The same reads as under: “Applicant caretaker masque noori darwaza which was constructed by Hafiz Ahmed is of our ancestor and who received cash payment which has been deposited register board no.38 treasury collectorate agra situated namner cantt., Agra, questioner is entitled to which is following mentioned money which has been stated after enquiry it be given to me, and if govt. has any objection to pay to me the information about the same given to us that condition govt. will be liable for the expenses of court I hafiz ahmed is receiver of rent of this land which has been situated at namner the rent which is rupees 22.”

The said rent note does not provide any description of the property nor does it bear any date, so it cannot be determined as on what date it was executed; what was the duration of the lease; in whose favour the lease had been executed; and what was the lease rent because it simply mentions that the rent to be Rs.22/-. It is not evident whether it was a rent for a month, or a year or for a total indefinite period. The rent note does not provide any period at all. In fact, such a vague document could not be linked in the circumstances proving the title.

65. Appellant/defendant No.1 produced the certified copies of the Extract from General Land Register prepared on 15.3.1948 in support of its case and denying title of the plaintiff/respondent No.1. The relevant part thereof reads as under:

Sl.No.

Survey No.5

Existing Entry

1.

 

 

2.

 

 

3.

 

 

4.

Area in acres

9.447 acres

5.

Description

Agricultural land

6.

Class

B-4

7.

By whom managed

Military Estate Officer

8.

Landlord

Govt. of India

9.

 

 

Similarly, another land had also been shown in Survey No.6 in the same manner and showing the similar entries. The High Court has considered the said entries and rejected the same on the ground that the partition among the ancestors of the plaintiff/respondent No.1 had taken place prior to enactment of the Cantonment Land Administration Rules, 1925, though there is nothing on record to prove the said partition. More so, the partition made among the ancestors of plaintiff/respondent No.1 in 1819 would not be a conclusive factor to determine the title of ownership in favour of the plaintiff/respondent No.1.

The High Court dealt with the issue in an unwarranted manner as it observed as under: “Clause B-1, B-2, B-3, B-4 and B-5 Classification of land was first time introduced by enactment of Cantonment Land Administration Rule 1925. The General Land Register was prepared near about in the year 1928, whereas the partition is in the year 1819. The appellant also failed to file the notification in the official gazette regarding survey Nos. 5 and 6 which are situated outside the notified area and to establish that such area was declared under Section 43A of the Cantonment Act, 1924. In the circumstances, I do not find that it is a case where this court in exercise of jurisdiction under Section 100 CPC can set aside the findings of fact arrived at by the court below.”

66. The General Land Register and other documents maintained by the Cantonment Board under the Cantonment Act, 1924 and the Rules made thereunder are public documents and the certified copies of the same are admissible in evidence in view of the provisions of Section 65 read with Section 74 of the Evidence Act. It is settled legal position that the entries made in General Land Register maintained under Cantonment Land Administration Rules is conclusive evidence of title. (Vide: Chief Executive Officer v. Surendra Kumar Vakil, AIR 1999 SC 2294; and Union of India & Ors. v. Kamla Verma, (2010) 13 SCC 511).

67. In view of the above, we are of the considered opinion that the appellate courts dealt with the case in an unwarranted manner giving a complete go-by to the procedure prescribed by law.

68. The appellate courts examined the title of government instead of the plaintiff/respondent no.1. Such a course was not warranted. The title of government cannot be disputed. In any event possession of government for decades is not disputed. The plaintiff shifted the case from time to time but failed to prove his title.

69. 69. To sum up: In view of the above discussion, we reach the following conclusion:

i. The first appellate court as well as the High Court committed grave error in shifting the burden of proof on the Union of India, appellant/defendant No.1, though it could have been exclusively on the plaintiff/respondent No.1 to prove his case.

ii. There is nothing on record to prove the grant/gift by the Maratha Government in favour of ancestors of plaintiff/respondent No.1 in the year 1800.

iii. Plaintiff/Respondent No. 1 miserably failed to prove the pedigree produced by him.

iv. The alleged partition in the year 1819 among the ancestors of plaintiff/respondent No.1 even if had taken place, cannot be a proof of title of the plaintiff/respondent No.1 over the suit property as the pedigree has not been proved. Presumption under Section 90 of the Evidence Act in respect of 30 years’ old document coming from proper custody relates to the signature, execution and attestation of a document i.e. to its genuineness but it does not give rise to presumption of correctness of every statement contained in it. The contents of the document are true or it had been acted upon have to be proved like any other fact. More so, in case the Will is ignored, there is nothing on record to show as how the plaintiff/respondent no. 1 could claim the title.

v. The rent note produced by the appellant/defendant No.1 before the court below does not prove anything in favour of the plaintiff/respondent. The same being a vague document is incapable of furnishing any information and, thus, is liable to be rejected. The said document does not make it clear as who has executed it and in whose favour the same stood executed. It does not bear any date as it cannot be ascertained when it was executed. The lease deed cannot be executed without the signature/thumb impression of the lessee. The said lease does not contain any signature/thumb impression of any lessee and also the tenure of the lease has not been mentioned therein. The rent has been mentioned as Rs.22/- without giving any detail as to whether it was per day, fortnightly, monthly, quarterly or yearly or for ever. More so, there is no reference to the said rent note in the pleadings contained in the plaint, therefore, it is just to be ignored.

vi. Had there been any Will in existence and not available with the plaintiff/respondent No.1 for any reason whatsoever at the time of institution of the suit, the plaintiff/respondent No.1 could have definitely mentioned that Will had been executed in his favour by his maternal grand-father which could not be traced. Therefore, the application under Order XLI Rule 27 CPC was liable to be rejected. Even otherwise, the Will in absence of any pleading either in the plaint or first appeal could not be taken on record. More so, the Will was not proved in accordance with law i.e. Section 68 of the Evidence Act.

vii. The court cannot travel beyond the pleadings as no party can lead the evidence on an issue/point not raised in the pleadings and in case, such evidence has been adduced or a finding of fact has been recorded by the Court, it is just to be ignored. Though it may be a different case where in spite of specific pleadings, a particular issue is not framed and parties having full knowledge of the issue in controversy lead the evidence and the court records a finding on it.

viii. The first appellate court committed a grave error in deciding the application under Order XLI Rule 27 CPC much prior to the hearing of the appeal. Thus, the order allowing the said application is liable to be ignored as the same had been passed in gross violation of the statutory requirement.

ix. The documents produced by the Union of India have not been properly appreciated by the first appellate court and the High Court.

x. The courts below further committed an error holding that in case the document is taken on record, the document as well as the content thereof would be deemed to have been proved. (xi) The appellate courts have also wrongly rejected the certified copies of the documents prepared by the Cantonment Board which were admissible in evidence.

xi. The High Court committed a grave error in not addressing itself to the substantial questions of law framed at the time of admission of the appeal and it ought to have decided the same or after discussing the same a finding could have been recorded that none of them was substantial question of law.

xii. The suit was barred by the proviso to Section 34 of the Specific Relief Act, for the reason that plaintiff/respondent No.1, admittedly, had not been in possession and he did not ask for restoration of possession or any other consequential relief.

xiii. The first appellate court as well as the High Court recorded a finding that the Union of India failed to prove its title over the suit land. The said courts did not realise that this was not the issue to be determined, rather the issue had been as to whether the plaintiff/respondent No.1 was the owner of the suit land.

xiv. The first appellate court has not decided the issue of admission of documents in correct perspective and recorded a perverse finding. (xvi) Question of filing a document in rebuttal of a Will could not arise. The other party has to admit or deny the document as required under Order XII CPC. There could be no Will in favour of the Union of India by the predecessors of the plaintiff, on the basis of which it could also claim title.

xv. (xvii) The courts below had wrongly drawn adverse inference against the appellant/defendant No.1 for not producing the documents as there was no direction of the court to produce the same. Neither the plaintiff/respondent No.1 had ever made any application in this respect nor he filed any application under Order XI CPC submitting any interrogation or for inspection or production of document.

xvi. (xviii) The appellate courts have decided the appeals in unwarranted manner in complete derogation of the statutory requirements. Provisions of CPC and Evidence Act have been flagrantly violated.

70. In view of above, appeal succeeds and is allowed, judgments and decrees of the first and second appellate courts are set aside and the judgment and decree dated 20.1.1998 passed by Civil Court in Original Suit No.442 of 1995 is restored. No costs.

J. (Dr. B.S. CHAUHAN)

J. (DIPAK MISRA)

New Delhi,

July 17, 2012





Freehold and leasehold ownership in UK

Freehold and leasehold ownership

What does “ownership” mean? When an estate agent markets a house or flat as being “for sale”, what is the asset on offer? In England and Wales, property is almost always owned on either a freehold or a leasehold basis.

  • (1) Freehold is ownership that lasts forever, and generally gives fairly extensive control of the property.
  • (2) Leasehold provides time-limited ownership (for example, a 99-year lease), and control of the property is shared with, and limited by, the freehold owner (that is, the landlord).

So we refer to “buying” or “owning” a house or a flat. But when we buy on a leasehold basis, we are in fact buying a lease of a house or flat for a certain number of years (after which the assumption is that the property reverts to the landlord). A leasehold interest is therefore often referred to as a wasting asset: while it may increase in value in line with property prices, its value also tends to fall over time as its length (the “unexpired term”) reduces. There comes a point when the remaining length of the lease makes it difficult to sell, because purchasers cannot obtain a mortgage since lenders will not provide a mortgage for the purchase of a short lease.

In addition, leasehold owners often do not have the same control over their home as a freehold owner. For example, they may not be able to make alterations to their home, or choose which type of flooring to have, without obtaining the permission of their landlord. The balance of power between leasehold owners and their landlord is governed by the terms of the lease and by legislation. Recently, concerns have been raised that the lack of control historically associated with leasehold ownership has – in some cases – become a feature of freehold ownership. We return to that issue below.

As well as a division of control, landlords may have different interests from leaseholders. For instance, the landlord may see a leasehold property solely as an investment opportunity or a way of generating income, while for leaseholders the property may be their home as well as a capital investment.Different types of ownershipFreeholdLeaseholdDuration of ownershipLasts foreverTime-limitedControlGenerally extensiveShared with landlord

In summary, therefore, leasehold does not provide outright ownership. The experience of leasehold owners has been described as being that of “owners yet tenants”. On the one hand, they are homeowners, with some of the benefits that ownership brings, such as a financial stake in the home. On the other hand, they have a landlord who maintains some control over their use of their home, who has a financial interest in their home, and who will ultimately take back the home on the expiry of the lease.

The inherent features of leasehold “provided the impetus for the development of commonhold, and remain at the heart of many criticisms of leasehold. They do not simply suggest the need for tighter regulation of developers and landlords in the interests of their leaseholders. Instead, they call into question the ability of the landlord-tenant relationship to deliver home-ownership, and provide an imperative for a radical increase in the control held by individuals over their homes. This change, which is reflected in the Law Commission’s three residential leasehold and commonhold projects, arguably marks a renewed focus on the home as a vital element in people’s financial and personal autonomy”.11

Leasehold as a valuable asset for landlords

As we go on to explain below, these inherent features of leasehold ownership are the root cause of many criticisms that have been levelled at it as a mechanism to deliver home ownership. Conversely, these features of leasehold ownership are the very reason that it is an attractive investment opportunity, and a valuable asset, for landlords.

(1) Since a lease is a time-limited interest, there will come a point when the leaseholder needs to extend the lease or buy the freehold in order to retain the property. The leaseholder has to pay the landlord in order to do so. In addition, throughout the term of the lease, the leaseholder will usually have to pay ground rent to the landlord, which provides a source of income for landlords.

(2) The landlord’s control over the property provides a further source of income. For example:

  • (a) landlords can charge leaseholders a fee for certain actions, such as giving consent to alterations to a flat, or for registering a change of ownership when a leaseholder sells his or her flat; and
  • (b) landlords can receive income indirectly through the service charge that leaseholders are required to pay for the costs of maintaining their block or estate. For example, the premium for insuring a block will be paid by the leaseholders, but when arranging the insurance policy the landlord might receive a commission from the insurance company. Similarly, the landlord might arrange for the services at a block (such as for management, for cleaning, or for repair work) to be undertaken by an associated company.

Why are homes owned on a leasehold basis?

Flats

Flats are almost universally owned on a leasehold, as opposed to freehold, basis. There is a good legal reason for that: certain obligations to pay money or perform an action in relation to a property (such as to repair a wall or a roof) cannot legally be passed to future owners of freehold property. These obligations are especially important for the effective management of blocks of flats. For instance, it is necessary that all flat owners can be required to pay towards the costs of maintaining the block, which is important since flats are structurally interdependent. There are therefore good reasons, under the current law, why flats are sold on a leasehold basis.

Houses

  • But leasehold ownership is not limited to flats. Sometimes houses are sold on a leasehold basis. That has been the case for some years.More recently there has been an increase in new-build houses being sold on a leasehold basis. That allows developers to sell the property subject to an ongoing obligation to pay a ground rent.
  • The legal reasons for selling houses on a leasehold basis are less apparent than those for leasehold flats. One reason might be the need to impose positive obligations on house owners in relation to the upkeep (management) of an estate, but that does not apply in all cases.

A source of income

We have explained that there can be good legal reasons why homes are sold on a leasehold basis. The reasons why, for legal purposes, houses and flats may be sold on a long lease do not, however, require the lease to provide income streams to the landlord , beyond those needed to maintain the property, the block, or the estate.

Leasehold and feudalism

Leasehold is often referred to as “feudal”. In fact, leasehold developed outside of the main feudal tenures and later in time. Leases began as contracts, not interests in land. But while “feudal” is a misdescription of the landlord-tenant relationship, it is not necessarily a mischaracterisation. The language of “feudalism” reflects the power imbalance experienced by leaseholders, and concerns that the tenure has too readily facilitated the extraction of excessive monetary payments from those leaseholders.

What is wrong with leasehold home ownership?

Residential leasehold has, for some time, been hitting the headlines and is the subject of an increasingly prominent policy debate. There is a growing political consensus that leasehold tenure is not a satisfactory way of owning residential property.

“too often leaseholders, particularly in new-build properties, have been treated by developers, freeholders and managing agents, not as homeowners or customers, but as a source of steady profit. The balance of power in existing leases, legislation and public policy is too heavily weighted against leaseholders, and this must change”. Housing, Communities and Local Government Select Committee

Criticisms based on leasehold ownership being inherently unfair

  • Many people have a fundamental objection to leasehold being used as a mechanism for delivering home ownership. They argue that the fact that external investors have a financial stake in a person’s home  which arises from the time-limited nature of the leaseholder’s interest and the control enjoyed by the landlord – creates an inappropriate, unbalanced and inherently unfair starting point for home ownership. Leasehold, it is argued, is fundamentally flawed as a mechanism to deliver the type of home ownership that people want and expect. The solution is said to be for home ownership – of both houses and flats – to be delivered through freehold (including commonhold) ownership.
  • Arguments about inherent unfairness are compounded by the inequality of arms that exists, broadly speaking, between leaseholders and landlords in the current leasehold regime. It is a systemic inequality between leaseholders (as a whole) and landlords (as a whole), as opposed to an individual inequality as between particular people within those groups. We discussed the inequality of arms, the opposing views on whether leasehold ownership is inherently unfair, and competing arguments about reform in our earlier report on valuation in enfranchisement.

Criticisms of ways in which the leasehold market operates

While there is a strong voice that leasehold is inherently unfair and should be replaced with freehold (including commonhold), there are also criticisms of specific aspects of how the leasehold market operates.To those who have a fundamental objection to leasehold, they are all symptoms of what they consider to be an inherently unfair system. But these criticisms are not made solely by those who have a fundamental objection to leasehold; many who do not object to the use of leasehold nevertheless have concerns about aspects of the way that it operates. For example, concerns have been raised about:

(1) legal, practical and financial obstacles for leaseholders seeking to exercise their statutory rights, including:

  • (a) their right to extend their lease or buy their freehold (that is, their enfranchisement rights);
  • (b) their right to take over management of their block (that is, the RTM);
  • (c) their right to challenge the reasonableness of service charges that have been levied by landlords;
  • (d) the “right of first refusal”, which is intended to allow leaseholders whose landlord proposes to sell the freehold of their block of flats to step in to the purchaser’s shoes and themselves purchase the freehold instead;
  • (e) the right to apply to the Tribunal for a manager to be appointed to manage the block instead of the landlord;
  • (f) the right to form a recognised tenants’ association, and acquire the contact details of the leaseholders in a block in order to do so;
  • (2) high and escalating onerous ground rents, with a particular concern about the imposition of ground rents which double at periodic intervals (generally ten years) during the term of a lease; such obligations can make properties unmortgageable and unsaleable, trapping the owners in their homes;
  • (3) houses being sold on a leasehold, as opposed to freehold, basis, for no apparent reason other than for developers to extract a profit from owning the freehold;
  • (4) the absence of any compulsory regulation of managing agents, either in terms of their qualifications or the quality of their work;
  • (5) excessive service charges levied by landlords;
  • (6) the ability of landlords to require leaseholders to pay all or some of the landlord’s legal costs when there has been a dispute between the parties, including in cases where the leaseholder has “won” a legal challenge against their landlord;
  • (7) the legal entitlement of landlords to “forfeit” (that is, terminate) a lease if the leaseholder breaches a term of the lease;
  • (8) the charging by landlords of unreasonable permission fees for leaseholders to carry out alterations to their property; and
  • (9) close relationships between property developers and particular conveyancers which may threaten the latter’s independence in advising clients seeking to buy leasehold properties from the referring developers.
  • The concerns set out above lie against a background, generally speaking, of leasehold purchasers not understanding what leasehold ownership involves.

“For most consumers, buying a house or flat will be their largest purchase and investment. Because it is a relatively infrequent purchase consumers are unlikely to accumulate significant knowledge of the process or of the salient characteristics of different forms of property ownership. Further, while the value of the purchase may make the consumer cautious, the sheer magnitude of the purchase price will typically make other amounts of money involved seem insignificant by comparison”.

  • Further, even when purchasers do understand what leasehold ownership involves, there is often no choice over the form of ownership. As we explained above, flats are almost invariably owned on a leasehold basis.
  • Some criticisms outlined above can fairly be described as abusive practices by landlords or developers. The Competition and Markets Authority (“CMA”) launched an investigation into leasehold home ownership in 2019 and published an interim report in 2020. The CMA expressed concerns about ground rents in leases, about misselling of leasehold houses, about service charges and permission fees, and about a failure of “checks and balances” in the leasehold system. The CMA stated that it intended to take enforcement action in relation to the mis-selling of leasehold property, and in relation to leases containing high and escalating ground rents.
  • While there have been abusive practices in leasehold, we would emphasise that there are other landlords who operate fairly and transparently. But however fairly the system is operated, inherent limitations of leasehold remain.
  • All of the criticisms summarised above derive, at least to some extent, from those inherent limitations – namely that the asset is time-limited, and that control is shared with the landlord. Those limitations are compounded by the fact that the landlord and leaseholder have opposing financial interests – generally speaking, any financial gain for the landlord will be at the expense of the leaseholder, and vice versa. Accordingly, the leasehold system has been reformed over the years in an attempt to create an appropriate balance between those competing interests. Given their opposing interests, it is very unlikely that leaseholders and landlords will agree that the balance that has been struck between their respective interests is fair. Their interests are diametrically opposed, and consensus will be impossible to achieve.

“For landlords, property is fundamentally about money: both the capital value in the freehold and the income that is generated from ground rent payments, commissions, enfranchisement premiums and other fees. That is not to say that the profit generated cannot be used for good ends, and landlords come in many guises. … But the fact remains that the primary value of property to many landlords is financial. And whether a particular landlord has observed better or worse practices does not alter the fact that, systematically, leaseholders still lack autonomy and control over their homes.

For homeowners, the home is also about money, but in a very different sense. It is about having a financial stake in the property in which we live; a stake we are increasingly being asked to draw upon to support us financially into retirement, as well as to support the next generation. But the more a person’s home is used as a financial asset to benefit their landlord, the less it is an investment for the individual. The more a leaseholder’s money is providing an investment for their landlord, the less their money is providing an investment for their own future, their family and their next generation.

For homeowners, however, the home is about more than money. Britain has famously been described as a nation of homeowners. Fulfilling the dream of home-ownership has long been many people’s ambition. Much of this ambition can be attributed to the non-financial, “x-factor” values that home-ownership encompasses, and which have become embedded in an ideology of home ownership. Our home is the focal point of our private and family lives; it is integral to our identity, reflecting who we are and the community we belong to. Bad law and bad practice that affect people’s experience in their home therefore have a particular impact on them. The current programme of law reform marks an opportunity to reform the law so that it can better deliver both the financial and non-financial benefits of home ownership”.

Freehold ownership of flats: commonhold

In many countries, leasehold ownership does not exist. Instead, forms of “strata” or “condominium” title are used so that flats can be owned on a freehold basis.

In England and Wales, commonhold was introduced as an alternative to leasehold in 2002, to enable the freehold ownership of flats. Commonhold allows the residents of a building to own the freehold of their individual flat (called a “unit”) and to manage (or appoint someone to manage) the shared areas through a company. For many blocks, the homeowners would not themselves carry out the day-to-day management but would instead appoint agents to manage the block. Crucially, however, the homeowners (rather than an external landlord) would control the appointment of those agents.

For homeowners, commonhold offers a number of advantages over leasehold ownership. In particular:

  • (1) it allows a person to own a flat forever, with a freehold title – unlike a leasehold interest, which will expire at some point in the future;
  • (2) no ground rent is payable;
  • (3) it gives the homeowner greater control of their property than leasehold; and
  • (4) it is designed to regulate the relationship between a group of people whose interests are broadly aligned. That is in stark contrast to the leasehold regime, which has to attempt to balance and regulate the competing interests of landlord and leaseholder.
  • Despite these apparent advantages, however, commonhold has not taken off – fewer than 20 commonholds have been created since the commonhold legislation came into force.

Why has commonhold failed?

  • Various suggestions have been made as to why commonhold has not taken off.
  • (1) Some have suggested that shortcomings in the law governing commonhold can make it unworkable in practice and have led to a lack of confidence in commonhold as a form of ownership.
  • (2) Some ascribe commonhold’s low uptake to an unwillingness of mortgage lenders to lend on commonhold units.
  • (3) Some think that there may be a lack of consumer and sector-wide awareness of what is a relatively unfamiliar form of ownership.
  • (4) Others point out that commonhold remains less attractive to developers than leasehold because of the opportunities that leasehold offers to secure ongoing income-streams on top of the initial purchase price paid by the leaseholders.
  • (5) Others point out that Government provided no incentives for developers to use commonhold – and no disincentives to them continuing to use leasehold (for example, by removing the financial advantages for developers of selling leasehold flats).
  • (6) Others suggest that the low uptake is more the result of inertia among professionals and developers. Moreover, we have been told that there is insufficient incentive (financial or otherwise) for developers of homes and commercial property to change their practices and adopt a whole new system while the existing one (from their perspective at least) does the job.

Stewardship and culture change

A common thread that runs through all three of our projects is moving management and control from a third-party landlord to homeowners. But it is in relation to commonhold that the management of land has come under the greatest scrutiny, because of the removal of the relationship of landlord and tenant. This shift from leasehold to freehold tenure has raised questions as to the stewardship of land and the utility of the landlord-tenant relationship in the residential context. Stewardship is not always defined, but in this context, we use the term to mean the management of land over time and for the next generation of owners. It has been suggested that landlords are necessary to provide stewardship over residential property. Institutional landlords are said to act as custodians who take a long-term view of the investments needed in a building or estate. Such landlords are also said to have superior expertise in overseeing insurance, maintenance, health and safety, fire risks, planning obligations, building regulations and anti-social behaviour.

But this argument must address the following challenge: if owners of houses are trusted to be the stewards of their house, why can owners of flats not be similarly trusted? While leaseholders have a shorter-term interest than their landlords, it is the term of the lease granted by the landlord that so constrains them. There is no reason to assume that leaseholders would not have the same incentives as landlords presently do if they had the same enduring financial stake. The management of a block is undoubtedly more complex than that of an individual house. It is not suggested that commonhold unit owners themselves will personally take charge. In all but small blocks, where self-management is a realistic choice, the expectation is that professional managers will be appointed.

This insistence on the necessity of landlord freeholders to provide inter-generational stewardship of a building or estate is symptomatic of a broader issue. The reform of leasehold, and particularly the reinvigoration of commonhold, bring about a need for cultural change, and for all participants in the housing market to re-think fundamental assumptions on which the market currently operates.

It has been suggested, for example, that developers will not build unless there is a professional landlord in place to manage the development. This ignores the fact that commonhold structures are used around the world and that large, mixed-use developments are built in those jurisdictions. It is also argued that commonhold owners will not take an active interest in the management of their block. Such arguments operate on the assumption that flat owners are ultimately apathetic about how their buildings or estates are run.While commonhold is about empowering and giving responsibility to owners of flats, it is also about owners of flats being ready to accept responsibility and therefore being ready to take on that cultural change. Law reform must be matched by changes in people’s expectations of what homeownership will involve. It should not be assumed that apathy generated in a leasehold system – where the long-term financial investment and control of a building lie with an external third party – will carry over into a system in which, from the outset, investment and control lie with the unit owners.

In summary, therefore, commonhold should not be looked at through the lens of leasehold. Commonhold involves a culture change. It moves away from an “us and them” mindset, towards “us and ourselves”.


Refer: Reinvigorating commonhold: the alternative to leasehold ownership [2020] EWLC 394 (July 2020)




Anamika Dutta (Das) Vs. Sri Sandip Das-19/11/2018

Custody of Minor Child -Section 9 of the Guardians and Wards Act, 1890, it is the place where the minor child “ordinarily resides” is the paramount consideration for deciding the jurisdiction of the Court.

CALCUTTA HIGH COURT

Anamika Dutta (Das) Vs. Sri Sandip Das

C.O. 2189 of 2018

DATE: 19/11/2018

ACTS: Sec 24 of the Code of Civil Procedure read with Secs 9  of the Guardians and Wards Act, 1890

Advocate Petitioner :  Syed Arif Ahamed and Mr. Sajal Kumar Ghosh

Affidavit of service filed in Court today be taken on record. Despite service no one appears for the opposite party although affidavit of service discloses that the registered article was delivered on 12th September, 2018.

This is an application under section 24 of the Code of Civil Procedure seeking transfer of Misc. Case no. 3 of 2018, pending in the Court of the learned Distort Judge at Suri, Birbhum.

From the petition, it appears that the husband of the petitioner has filed the said miscellaneous case in the Court of the learned District Judge at Suri, Birbhum seeking custody of the minor child of the petitioner. From the petition under section 24 of the Code of Civil Procedure, it appears that the marriage between the petitioner and the opposite party was solemnized in the year 2010 and for the purpose of showing cause of action for the miscellaneous case the opposite party stated that the wife came to her in law’s house at Suri and has started to live as husband and wife, although in the cause title of the said petition the petitioner has shown Raniganj to be the residence of the wife.

It is the case of the petitioner that the minor child is residing ordinarily with the petitioner all-through-out and the minor child is presently residing with mother/ petitioner at Raniganj. From the petition in Miscellaneous case no of 2018 it also does not appear that the minor child after her birth on 28th June, 2012 has ever resided with the 0.P. If that be so, it can be presumed that the minor child, Rachana, is residing with her mother at her place i.e. at Raniganj, which is admitted in the cause title of the miscellaneous case. According to Section 9 of the Guardians and Wards Act, 1890, it is the place where the minor child “ordinarily resides” is the paramount consideration for deciding the jurisdiction of the Court which win hear the application for Guardianship in the said miscellaneous case no of 2018. Section 9 of the Guardianship and Wards Act, 1890 is set out below:

“Section 9 Court having jurisdiction to entertain application-

(1) If the application is with respect to the guardianship of the person of the minor, it shall be made to the District Court having jurisdiction in the place where the minor ordinarily resides.
(2) If the application is with respect to the guardianship of the property of the minor, it maybe made either to the District Court having jurisdiction in the place where the minor ordinarily resides or to a District Court having jurisdiction in a place where he has property.
(3) If an application with respect to the guardianship of the property of a minor is made to a District Court other than that having jurisdiction in the place where the minor ordinarily resides, the Court may return the application if in its opinion the application would e disposed of more justly or conveniently by any other District Court having jurisdiction.

Therefore, this Court is prim facie, satisfied that Suri Court does not have the jurisdiction to entertain the application under section 9 of the Guardians and Wards Act, 1890 as bees been sought to be filed by the opposite party in the Court at Suri, Birbhum.

Accordingly, this Court directs stay of all further proceedings in Miscellaneous Case no of 2018, pending in the Court of the learned District Judge, Suri at Birbhum for a period of 8 weeks from date and the petitioner is directed to serve a copy of this application upon the opposite party within a week by registered cover with acknowledgement due and to file affidavit of service on the next date of hearing.

Let this matter be returnable two weeks hence.

Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance of the requisite formalities.

SAHIDULLAH MUNSHI, J

November 19, 2018-R.C.





Code of Civil Procedure-1908

Ed-2021

[21st March, 1908]

1. Short title, commencement and extent
2. Definitions
3. Subordination of Courts
4. Savings
5. Application of the Code to Revenue Courts
6. Pecuniary jurisdiction
7. Provincial Small Cause Courts
8. Presidency Small Cause Courts
9. Courts to try all civil suits unless barred
10. Stay of suit
11. Res judicata
12. Bar to further suit
13. When foreign judgment not conclusive
14. Presumption as to foreign judgments
15. Court in which suits to be instituted
16. Suits to be instituted where subject-matter situate
17. Suits for immovable property situate within jurisdiction of different Courts
18. Place of institution of suit where local limits of jurisdiction of Courts are uncertain
19. Suits for compensation for wrongs to person or movables
20. Other suits to be instituted where defendants reside or cause of, action arises
21. Objections to jurisdiction
21-A. Bar on suit to set aside decree on objection as to place of suing
22. Power to transfer suits which may be instituted in more than one Court
23. To what Court application lies
24. General power of transfer and withdrawal
25. Power of Supreme Court to transfer suits, etc
26. Institution of suits
27. Summons to defendants
28. Service of summons where defendant resides in another State
29. Service of foreign summonses
30. Power to order discovery and the like
31. Summons to witness
32. Penalty for default
33. Judgment and decree
34. Interest
35. Costs
35-A. Compensatory costs in respect of false or vexatious claims or defences
35-B. Costs for causing delay
36. Application to orders
37. Definition of Court which passed a decree
38. Court by which decree may be executed
39. Transfer of decree
40. Transfer of decree to Court in another State
41. Result of execution proceedings to be certified
42. Powers of Court in executing transferred decree
43. Execution of decrees passed by Civil Courts in places to which this Code does not extend
44. Execution of decrees passed by Revenue Courts in places to which this Code does not extend
44-A. Execution of decrees passed by Courts in reciprocating territory
45. Execution of decrees outside India
46. Precepts
47. Questions to be determined by the Court executing decree
48. Execution barred in certain cases
49. Transferee
50. Legal representative
51. Powers of Court to enforce execution
52. Enforcement of decree against legal representative
53. Liability of ancestral property
54. Partition of estate or separation of share
55. Arrest and detention
56. Prohibition of arrest or detention of women in execution of decree for money
57. Subsistence allowance
58. Detention and release
59. Release on ground of illness
60. Property liable to attachment and sale in execution of decree
61. Partial exemption of agricultural produce
62. Seizure of property in dwelling-house
63. Property attached in execution of decrees of several Courts
64. Private alienation of property after attachment to be void
65. Purchaser’s title
66. Suit against purchaser not maintainable on ground of purchase being on behalf of plaintiff
67. Power for State Government to make rules as to sales of land in execution of decrees for payment of money
68 to 72……
73. Proceeds of execution-sale to be rateably distributed among decree-holders
74. Resistance to execution
75. Power of Court to issue commissions
76. Commission to another Court
77. Letter of request
78. Commissions issued by foreign Courts
79. Suits by or against Government
80. Notice
81. Exemption from arrest and personal appearance
82. Execution of decree
83. When aliens may sue
84. When foreign States may sue
85. Persons specially appointed by Government to prosecute or defend on behalf of foreign Rulers
86. Suits against foreign Rulers, Ambassadors and Envoys
87. Style of foreign Rulers as parties to suits
87-A. Definitions of “foreign State” and “Ruler”
87-B. Application of sections 85 and 86 to Rulers of former Indian States
88. Where interpleader suit may be instituted
89. Settlement of disputes outside the Court
90. Power to state case for opinion of Court
91. Public nuisances
92. Public charities
93. Exercise of powers of Advocate-General outside Presidency-towns
94. Supplemental proceedings
95. Compensation for obtaining arrest, attachment or injunction on insufficient grounds
96. Appeal from original decree
98. Decision where appeal heard by two or more Judges
99. No decree to be reversed or modified for error or irregularity not affecting merits or jurisdiction
99-A. No order under section 47 to be reversed or modified unless decision of the case is prejudicially affected
100. Second appeal
100-A. No further appeal in certain cases
101. Second appeal on no other grounds
102. No second appeal in certain cases
103. Power of High Court to determine issue of fact
104. Orders from which appeal lies
105. Other orders
106. What Courts to hear appeals
107. Powers of appellate Court
108. Procedure in appeals from appellate decrees and orders
109. When appeals lie to the Supreme Court
110. Value of subject-matter
111. Bar of certain appeals
111-A. Appeals to Federal Court
112. Savings
113. Reference to High Court
114. Review
115. Revision
116. Part to apply only to certain High Courts
117. Application of Code to High Courts
118. Execution of decree before ascertainment of costs
119. Unauthorised persons not to address Court
120. Provisions not applicable to High Court in original civil jurisdiction
121. Effect of rules in First Schedule
122. Power of certain High Courts to make rules
123. Constitution of Rule Committees in certain States
124. Committee to report to High Court
125. Power of other High Courts to make rules
126. Rules to be subject to approval
127. Publication of rules
128. Matters for which rules may provide
129. Power of High Courts to make rules as to their original civil procedure
130. Power of other High Courts to make rules as to matters other than procedure
131. Publication of rules
132. Exemption of certain women from personal appearance
133. Exemption of other persons
134. Arrest other than in execution of decree
135. Exemption from arrest under civil process
135-A. Exemption of members of legislative bodies from arrest and detention under civil process
136. Procedure where person to be arrested or property to be attached is outside district
137. Language of subordinate Courts
138. Power of High Court to require evidence to be recorded in English
139. Oath on affidavit by whom to be administered
140. Assessors in causes of salvage, etc
141. Miscellaneous proceedings
142. Orders and notices to be in writing
143. Postage
144. Application for restitution
145. Enforcement of liability of surety
146. Proceedings by or against representatives
147. Consent or agreement by persons under disability
148. Enlargement of time
148-A. Right to lodge a caveat
149. Power to make up deficiency of Court-fees
150. Transfer of business
151. Saving of inherent powers of Court
152. Amendment of judgments, decrees or orders
153. General power to amend
153-A. Power to amend decree or order where appeal is summarily dismissed
153-B. Place of trial to be deemed to be open Court
154. Saving of present right of appeal
155. Amendment of certain Acts
156. Repeals
157. Continuance of orders under repealed enactments
158. Reference to Code of Civil Procedure and other repealed enactments
Order 1 Parties Of Suits
Order 2 Frame Of Suit
Order 3 Recognized Agents And Pleaders
Order 4 Institution Of Suits
Order 4A Consolidation of Cases
Order 5 Issue And Service Of Summons
Order 6 Pleadings Generally
Order 7 Plaint
Order 8 Written Statement, Set-Of And Counter- Claim
Order 9 Appearance Of Parties And Consequence Of Non-Appearance
Order 10 Examination Of Parties By The Court
Order 11 Discovery And Inspection
Order 12 Admission
Order 13 Production, Impounding And Return Of Documents
Order 14 Settlement Of Issues And Determination Of Suit On Issues Of Law Or On Issues Agreed Upon
Order 15 Disposal Of The Suit At The First Hearing
Order 16 Summoning And Attendance Of Witnesses
Order 16A Attendance Of Witnesses Confined Or Detained In Prisons
Order 17 Adjournments
Order 18 Hearing Of The Suit And Examination Of Witnesses
Order 19 Affidavits
Order 20 Judgment And Decree
Order 20A Costs
Order 21 Execution Of Decrees And Orders
Order 22 Death, Marriage And Insolvency Or Parties
Order 23 Withdrawal And Adjustment Of Suits
Order 24 Payment Into Court
Order 25 Security For Costs
Order 26 Commissions
Order 27 Suits By Or Against The Government Or Public Officersrin Their Official Capacity
Order 27A Suits Involving A Substantial Question Of Law As To Their Interpretation Of The Constitution Or As To Their Validity Of Any Statutory Instrument
Order 28 Suits By Or Against Military Or Naval Men Or Airmen
Order 29 Suits By Or Against Corporations
Order 30 Suits By Or Against Firms And Persons Carrying On Business In Names Other Than Their Own
Order 31 Suits By Or Against Trustees, Executors And Administrators
Order 32 Suits By Or Against Minors And Persons Of Unsound Mind
Order 32A Suits Relating To Matters Concerning The Family
Order 33 Suits By Indigent Persons
Order 34 Suits Relating To Mortgages Of Immovable Property
Order 35 Interpleader
Order 36 Special Case
Order 37 Summary Procedure
Order 38 Arrest And Attachment Before Judgment
Order 39 Temporary Injunctions And Interlocutory Orders
Order 40 Appointment Of Receivers
Order 41 Appeals From Original Decrees
Order 42 Appeals From Appellate Decrees
Order 43 Appeals From Orders
Order 44 Appeals By Indigent Persons
Order 45 Appeals To The Supreme Court
Order 46 Reference
Order 47 Review
Order 48 Miscellaneous
Order 49 Chartered High Courts
Order 50 Provincial Small Cause Courts
Order 51 Presidency Small Cause Courts



[nextpage title=”Preliminary”]

The Code of Civil Procedure, 1908

(5 of 1908)

Preliminary

1. Short title, commencement and extent .-(1) This Act may be cited as The Code of Civil Procedure, 1908.
(2) It shall come into force on the first day of January, 1909.
[(3) It extends to the whole of India except-
(a) the [***];

(b) the State of Nagaland and the tribal areas:

Provided that the State Government concerned may, by notification in the Official Gazette, extend the provisions of this Code or any of them to the whole or part of the State of Nagaland or such tribal areas, as the case may be, with such supplemental, incidental or consequential modifications as may be specified in the notification.
Explanation .-In this clause, “tribal areas” means the territories which, immediately before the 21st day of January, 1972, were included in the tribal areas of Assam as referred to in paragraph 20 of the Sixth Schedule to the Constitution.
(4) In relation to the Amindivi Islands, and the East Godavari, West Godavari and Visakhapatnam Agencies in the State of Andhra Pradesh and the Union territory of Lakshadweep, the application of this Code shall be without prejudice to the application of any rule or regulation for the time being in force in such Islands, Agencies or such Union territory, as the case may be, relating to the application of this Code.]

2. Definitions .-In this Act, unless there is anything repugnant in the subject or context,-
(1) “Code” includes rules;
(2) “decree” means the formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final. It shall be deemed to include the rejection of a plaint and the determination of any question within [* * *] section 144, but shall not include-
(a) any adjudication from which an appeal lies as an appeal from an order, or

(b) any order of dismissal for default.

Explanation .-A decree is preliminary when further proceedings have to be taken before the suit can be completely disposed of. It is final when such adjudication completely disposes of the suit. It may be partly preliminary and partly final;
(3) “decree-holder” means any person in whose favour a decree has been passed or an order capable of execution has been made;
(4) “district” means the local limits of the jurisdiction of a principal Civil Court of original jurisdiction (hereinafter called a “District Court”), and includes the local limits of the ordinary original civil jurisdiction of a High Court;
[(5) “foreign Court” means a Court situate outside India and not established or continued by the authority of the Central Government;]
(6) “foreign judgment” means the judgment of a foreign Court;
(7) “Government Pleader” includes any officer appointed by the State Government to perform all or any of the functions expressly imposed by this Code on the Government Pleader and also any pleader acting under the directions of the Government Pleader;
[(7-A) “High Court”, in relation to the Andaman and Nicobar Islands, means the High Court in Calcutta;
(7-B) “India”, except in sections 1, 29, 43, 44, [44-A], 78, 79, 82, 83 and 87-A, means the territory of India excluding the State of Jammu and Kashmir;]
(8) “Judge” means the presiding officer of a Civil Court;
(9) “Judgment” means the statement given by the Judge on the grounds of a decree or order;
(10) “judgment-debtor” means any person against whom a decree has been passed or an order capable of execution has been made;
(11) “legal representative” means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued;
(12) ” mesne profits ” of property means those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received therefrom, together with interest on such profits, but shall not include profits due to improvements made by the person in wrongful possession;
(13) “movable property” includes growing crops;
(14) “order” means the formal expression of any decision of a Civil Court which is not a decree;
(15) “pleader” means any person entitled to appear and plead for another in Court, and includes an advocate, a vakil and an attorney of a High Court;
(16) “prescribed” means prescribed by rules;
(17) “public officer” means a person falling under any of the following descriptions, namely:-
(a) every Judge;

(b) every member of [an All-India Service];

(c) every commissioned or gazetted officer in the military, [naval or air] forces of [the Union] [* * *]

(d) every officer of a Court of Justice whose duty it is, as such officer, to investigate or report on any matter of law or fact, or to make, authenticate or keep any document, or to take charge or dispose of any property, or to execute any judicial process, or to administer any oath, or to interpret, or to preserve order, in the Court, and every person especially authorized by a Court of Justice to perform any of such duties;

(e) every person who holds any office by virtue of which he is empowered to place or keep any person in confinement;

(f) every officer of the Government whose duty it is, as such officer, to prevent offences, to give information of offences, to bring offenders to justice, or to protect the public health, safety or convenience;

(g) every officer whose duty it is, as such officer, to take, receive, keep or expend any property on behalf of the Government, or to make any survey, assessment or contract on behalf of the Government, or to execute any revenue process, or to investigate, or to report on, any matter affecting the pecuniary interests of the Government, or to make, authenticate or keep any document relating to the pecuniary interests of the Government, or to prevent the infraction of any law for the protection of the pecuniary interests of the Government; and

(h) every officer in the service or pay of the Government, or remunerated by fees or commission for the performance of any public duty;

(18) “rules” means rules and forms contained in the First Schedule or made under section 122 or section 125;
(19) “share in a corporation” shall be deemed to include stock, debenture-stock, debentures or bonds; and
(20) “signed”, save in the case of a judgment or decree, includes stamped.

3. Subordination of Courts .-For the purposes of this Code, the District Court is subordinate to the High Court, and every Civil Court of a grade, inferior to that of a District Court and every Court of Small Causes is subordinate to the High Court and District Court.

4. Savings .-(1) In the absence of any specific provision to the contrary, nothing in this Code shall be deemed to limit or otherwise affect any special or local law now in force or any special jurisdiction or power conferred, or any special form of procedure prescribed, by or under any other law for the time being in force.
(2) In particular and without prejudice to the generality of the proposition contained in sub-section (1), nothing in this Code shall be deemed to limit or otherwise affect any remedy which a landholder or landlord may have under any law for the time being in force for the recovery of rent of agricultural land from the produce of such land.

5. Application of the Code to Revenue Courts .-(1) Where any Revenue Courts are governed by the provisions of this Code in those matters of procedure upon which any special enactment applicable to them is silent, the State Government [* * *] may, by notification in the Official Gazette, declare that any portions of those provisions which are not expressly made applicable by this Code shall not apply to those Courts, or shall only apply to them with such modifications as the State Government [* * *] may prescribe.
(2) “Revenue Court” in sub-section (1) means a Court having jurisdiction under any local law to entertain suits or other proceedings relating to the rent, revenue or profits of land used for agricultural purposes, but does not include a Civil Court having original jurisdiction under this Code to try such suits or proceedings as being suits or proceedings of a civil nature.

6. Pecuniary jurisdiction .-Save in so far as is otherwise expressly provided, nothing herein contained shall operate to give any Court jurisdiction over suits the amount or value of the subject-matter of which exceeds the pecuniary limits (if any) of its ordinary jurisdiction.

7. Provincial Small Cause Courts .-The following provisions shall not extend to Courts constituted under the Provincial Small Cause Courts Act, 1887 (9 of 1887), [or under the Berar Small Cause Courts Law, 1905], or to Courts exercising the jurisdiction of a Court of Small Causes [under the said Act or Law], [or to Courts in [any part of India to which the said Act does not extend] exercising a corresponding jurisdiction], that is to say,-
(a) so much of the body of the Code as relates to-

(i) suits excepted from the cognizance of a Court of Small Causes;

(ii) the execution of decrees in such suits;

(iii) the execution of decrees against immovable property; and

(b) the following sections, that is to say,-

section 9, sections 91 and 92, sections 94 and 95 [so far as they authorize or relate to-
(i) orders for the attachment of immovable property;

(ii) injunctions;

(iii) the appointment of a receiver of immovable property; or

(iv) the interlocutory orders referred to in clause (e) of section 94], and sections 96 to 112 and 115.

8. Presidency Small Cause Courts .-Save as provided in sections 24, 38 to 41, 75, clauses (a), (b) and (c), 76, [77, 157 and 158], and by the Presidency Small Cause Courts Act, 1882 (15 of 1882), the provisions in the body of this Code shall not extend to any suit or proceeding in any Court of Small Causes established in the towns of Calcutta, Madras and Bombay:
[Provided that-
(1) the High Courts of Judicature at Fort William, Madras and Bombay, as the case may be, may from time to time, by notification in the Official Gazette, [direct] that any such provisions not inconsistent with the express provisions of the Presidency Small Cause Courts Act, 1882 (15 of 1882), and with such modifications and adaptations as may be specified in the notification, shall extend to suits or proceedings or any class of suits or proceedings in such Court;
(2) all rules hereto fore made by any of the said High Courts under section 9 of the Presidency Small Cause Courts Act, 1882 (15 of 1882), shall be deemed to have been validly made.]


[nextpage title=”SUITS IN GENERAL”]

PART I

SUITS IN GENERAL

Jurisdiction of the Courts and res judicata

9. Courts to try all civil suits unless barred .-The Courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred.
Explanation [I ].-A suit in which the right to property or to an office is contested is a suit of a civil nature, notwithstanding that such right may depend entirely on the decision of questions as to religious rites or ceremonies.
[ Explanation II .-For the purposes of this section, it is immaterial whether or not any fees are attached to the office referred to in Explanation I or whether or not such office is attached to a particular place.]

10. Stay of suit .-No Court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties, or between parties under whom they or any of them claim litigating under the same title where such suit is pending in the same or any other Court in [India] having jurisdiction to grant the relief claimed, or in any Court beyond the limits of [India] established or continued by [the Central Government] [* * *] and having like jurisdiction, or before [the Supreme Court].
Explanation .-The pendency of a suit in a foreign Court does not preclude the Courts in [India] from trying a suit founded on the same cause of action.

11. Res judicata .-No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.
Explanation I .-The expression “former suit” shall denote a suit which has been decided prior to the suit in question whether or not it was instituted prior thereto.
Explanation II .-For the purposes of this section, the competence of a Court shall be determined irrespective of any provisions as to a right of appeal from the decision of such Court.
Explanation III .-The matter above referred to must in the former suit have been alleged by one party and either denied or admitted, expressly or impliedly, by the other.
Explanation IV.-Any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.
Explanation V.-Any relief claimed in the plaint, which is not expressly granted by the decree, shall, for the purposes of this section, be deemed to have been refused.
Explanation VI .-Where persons litigate bona fide in respect of a public right or of a private right claimed in common for themselves and others, all persons interested in such right shall, for the purposes of this section, be deemed to claim under the persons so litigating.

[ Explanation VII .-The provisions of this section shall apply to a proceeding for the execution of a decree and references in this section to any suit, issue or former suit shall be construed as references, respectively, to a proceeding for the execution of the decree, question arising in such proceeding and a former proceeding for the execution of that decree.
Explanation VIII .-An issue heard and finally decided by a Court of limited jurisdiction, competent to decide such issue, shall operate as res judicata in a subsequent suit, notwithstanding that such Court of limited jurisdiction was not competent to try such subsequent suit or the suit in which such issue has been subsequently raised.]

12. Bar to further suit .-Where a plaintiff is precluded by rules from instituting a further suit in respect of any particular cause of action, he shall not be entitled to institute a suit in respect of such cause of action in any Court to which this Code applies.

13. When foreign judgment not conclusive .-A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except-
(a) where it has not been pronounced by a Court of competent jurisdiction;

(b) where it has not been given on the merits of the case;

(c) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of [India] in cases in which such law is applicable;

(d) where the proceedings in which the judgment was obtained are opposed to natural justice;

(e) where it has been obtained by fraud;

(f) where it sustains a claim founded on a breach of any law in force in India.

14. Presumption as to foreign judgments .-The Court shall presume, upon the production of any document purporting to be a certified copy of, a foreign judgment, that such judgment was pronounced by a Court of, competent jurisdiction, unless the contrary appears on the record; but such presumption may be displaced by proving want of jurisdiction.

Place of suing

15. Court in which suits to be instituted .-Every suit shall be instituted in the Court of the lowest grade competent to try it.

16. Suits to be instituted where subject-matter situate .-Subject to the pecuniary or other limitations prescribed by any law, suits-
(a) for the recovery of immovable property with or without rent or profits,

(b) for the partition of immovable property,

(c) for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property,

(d) for the determination of any other right to or interest in immovable property,

(e) for compensation for wrong to immovable property,

(f) for the recovery of movable property actually under distraint or attachment, shall be instituted in the Court within the local limits of whose jurisdiction the property is situate:

Provided that a suit to obtain relief respecting, or compensation for wrong to, immovable property held by or on behalf of the defendant may, where the relief sought can be entirely obtained through his personal obedience, be instituted either in the Court within the local limits of whose jurisdiction the property is situate, or in the Court within the local limits of whose jurisdiction the defendant actually and voluntarily resides, or carries on business, or personally works for gain.
Explanation .-In this section “property” means property situate in [India].

17. Suits for immovable property situate within jurisdiction of different Courts .-Where a suit is to obtain relief respecting, or compensation for wrong to, immovable property situate within the jurisdiction of different Courts, the suit may be instituted in any Court within the local limits of whose jurisdiction any portion of the property is situate:
Provided that, in respect of the value of the subject-matter of the suit, the entire claim is cognizable by such Court.

18. Place of institution of suit where local limits of jurisdiction of Courts are uncertain .-(1) Where it is alleged to be uncertain within the local limits of the jurisdiction of which of two or more Courts any immovable property is situate, any one of those Courts may, if satisfied that there is ground for the alleged uncertainty, record a statement to that effect and thereupon proceed to entertain and dispose of any suit relating to that property, and its decree in the suit shall have the same effect as if the property were situate within the local limits of its jurisdiction:
Provided that the suit is one with respect to which the Court is competent as regards the nature and value of the suit to exercise jurisdiction.
(2) Where a statement has not been recorded under sub-section (1), and an objection is taken before an Appellate or Revisional Court that a decree or order in a suit relating to such property was made by a Court not having jurisdiction where the property is situate, the Appellate or Revisional Court shall not allow the objection unless in its opinion there was, at the time of the institution of the suit, no reasonable ground for uncertainty as to the Court having jurisdiction with respect thereto and there has been a consequent failure of justice.

19. Suits for compensation for wrongs to person or movables .-Where a suit is for compensation for wrong done to the person or to movable property, if the wrong was done within the local limits of the jurisdiction of one Court and the defendant resides, or carries on business, or personally works for gain, within the local limits of the jurisdiction of another Court, the suit may be instituted at the option of the plaintiff in either of the said Courts.

20. Other suits to be instituted where defendants reside or cause of, action arises .-Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction-
(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

(c) the cause of action, wholly or in part, arises.

[* * * *]
[ Explanation ].-A corporation shall be deemed to carry on business at its sole or principal office in [India] or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.

21. Objections to jurisdiction .- [(1)] No objection as to the place of suing shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues are settled, at or before such settlement, and unless there has been a consequent failure of justice.
[(2) No objection as to the competence of a Court with reference to the pecuniary limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity, and, in all cases where issues are settled, at or before such settlement, and unless there has been a consequent failure of justice.
(3) No objection as to the competence of the executing Court with reference to the local limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the executing Court at the earliest possible opportunity, and unless there has been a consequent failure of justice.]

21-A. Bar on suit to set aside decree on objection as to place of suing .-No suit shall lie challenging the validity of a decree passed in a former suit between the same parties, or between the parties under whom they or any of them claim, litigating under the same title, on any ground based on an objection as to the place of suing.
Explanation .-The expression “former suit” means a suit which has been decided prior to the decision in the suit in which the validity of the decree is questioned, whether or not the previously decided suit was instituted prior to the suit in which the validity of such decree is questioned.]

22. Power to transfer suits which may be instituted in more than one Court .-Where a suit may be instituted in any one of two or more Courts and is instituted in one of such Courts, any defendant, after notice to the other parties, may, at the earliest possible opportunity and in all cases where issues are settled at or before such settlement, apply to have the suit transferred to another Court, and the Court to which such application is made, after considering the objections of the other parties (if any), shall determine in which of the several Courts having jurisdiction the suit shall proceed.
23. To what Court application lies .-(1) Where the several Courts having jurisdiction are subordinate to the same Appellate Court, an application under section 22 shall be made to the Appellate Court.
(2) Where such Courts are subordinate to different Appellate Courts but to the same High Court, the application shall be made to the said High Court.
(3) Where such Courts are subordinate to different High Courts, the application shall be made to the High Court within the local limits of whose jurisdiction the Court in which the suit is brought is situate.
24. General power of transfer and withdrawal .-(1) On the application of any of the parties and after notice to the parties and after hearing such of them as desired to be heard, or of its own motion, without such notice, the High Court or the District Court may, at any stage-
(a) transfer any suit, appeal or other proceeding pending before it for trial or disposal to any Court subordinate to it and competent to try or dispose of the same; or

(b) withdraw any suit, appeal or other proceeding pending in any Court subordinate to it; and

(i) try or dispose of the same; or

(ii) transfer the same for trial or disposal to any Court subordinate to it and competent to try or dispose of the same; or

(iii) re-transfer the same for trial or disposal to the Court from which it was withdrawn.

(2) Where any suit or proceeding has been transferred or withdrawn under sub-section (1), the Court which [is thereafter to try or dispose of such suit or proceeding] may, subject to any special directions in the case of an order of transfer, either retry it or proceed from the point at which it was transferred or withdrawn.
[(3) For the purposes of this section,-
(a) Courts of Additional and Assistant Judges shall be deemed to be subordinate to the District Court;

(b) “proceeding” includes a proceeding for the execution of a decree or order.]

(4) The Court trying any suit transferred or withdrawn under this section from a Court of Small Causes shall, for the purposes of such suit, be deemed to be a Court of Small Causes.
[(5) A suit or proceeding may be transferred under this section from a Court which has no jurisdiction to try it.]

25. Power of Supreme Court to transfer suits, etc .-(1) On the application of a party, and after notice to the parties, and after hearing such of them as desire to be heard, the Supreme Court may, at any stage, if satisfied that an order under this section is expedient for the ends of justice, direct that any suit, appeal or other proceeding be transferred from a High Court or other Civil Court in one State to a High Court or other Civil Court in any other State.
(2) Every application under this section shall be made by a motion which shall be supported by an affidavit.
(3) The Court to which such suit, appeal or other proceeding is transferred shall, subject to any special directions in the order of transfer, either re-try it or proceed from the stage at which it was transferred to it.
(4) In dismissing any application under this section, the Supreme Court may, if it is of opinion that the application was frivolous or vexatious, order the applicant to pay by way of compensation to any person who has opposed the application such sum, not exceeding two thousand rupees, as it considers appropriate in the circumstances of the case.
(5) The law applicable to any suit, appeal or other proceeding transferred under this section shall be the law which the Court in which the suit, appeal or other proceeding was originally instituted ought to have applied to such suit, appeal or proceeding.]


[nextpage title=”Institution of suits”]

Institution of suits

26. Institution of suits .- [(1)] Every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed.
[(2) In every plaint, facts shall be proved by affidavit.]

Summons and discovery

27. Summons to defendants .-Where a suit has been duly instituted, a summons may be issued to the defendant to appear and answer the claim and may be served in manner prescribed [on such day not beyond thirty days from date of the institution of the suit.]

28. Service of summons where defendant resides in another State .- (1) A summons may be sent for service in another State to such Court and in such manner as may be prescribed by rules in force in that State.
(2) The Court to which such summons is sent shall, upon receipt thereof, proceed as if it had been issued by such Court and shall then return the summons to the Court of issue together with the record (if any) of its proceedings with regard thereto.
[(3) Where the language of the summons sent for service in another State is different from the language of the record referred to in sub-section (2), a translation of the record,
(a) in Hindi, where the language of the Court issuing the summons is Hindi, or

(b) in Hindi or English where the language of such record is other than Hindi or English, shall also be sent together with the record sent under that sub-section.]

[29. Service of foreign summonses .-Summonses and other processes issued by-
(a) any Civil or Revenue Court established in any part of India to which the provisions of this Code do not extend, or

(b) any Civil or Revenue Court established or continued by the authority of the Central Government outside India, or

(c) any other Civil or Revenue Court outside India to which the Central Government has, by notification in the Official Gazette, declared the provisions of this section to apply, may be sent to the Courts in the territories to which this Code extends, and served as if they were summonses issued by such Courts.]

30. Power to order discovery and the like .-Subject to such conditions and limitations as may be prescribed, the Court may, at any time, either of its own motion or on the application of any party,-
(a) make such orders as may be necessary or reasonable in all matters relating to the delivery and answering of interrogatories, the admission of documents and facts, and the discovery, inspection, production, impounding and return of documents or other material objects producible as evidence;

(b) issue summonses to persons whose attendance is required either to give evidence or to produce documents or such other objects as aforesaid;

(c) order any fact to be proved by affidavit.

31. Summons to witness .-The provisions in sections 27, 28 and 29 shall apply to summonses to give evidence or to produce documents or other material objects.

32. Penalty for default .-The Court may compel the attendance of any person to whom a summons has been issued under section 30 and for that purpose may-
(a) issue a warrant for his arrest;

(b) attach and sell his property;

(c) impose a fine upon him [not exceeding five thousand rupees];

(d) order him to furnish security for his appearance and in default commit him to the civil prison.

Judgment and decree

33. Judgment and decree .-The Court, after the case has been heard, shall pronounce judgment, and on such judgment a decree shall follow.
Interest

34. Interest .-(1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, [with further interest at such rate not exceeding six per cent. per annum, as the Court deems reasonable on such principal sum], from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit:
[Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent. per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions.
Explanation.-In this sub-section, “nationalised bank” means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970).
Explanation II.-For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.]
(2) Where such a decree is silent with respect to the payment of further interest [on such principal sum] from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefor shall not lie.

Costs

35. Costs .-(1) Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incident to all suits shall be in the discretion of the Court, and the Court shall have full power to determine by whom or out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid. The fact that the Court has no jurisdiction to try the suit shall be no bar to the exercise of such powers.
(2) Where the Court directs that any costs shall not follow the event, the Court shall state its reasons in writing.
[* * *]

35-A. Compensatory costs in respect of false or vexatious claims or defences .-(1) If in any suit or other proceeding, [including an execution proceeding but [excluding an appeal or a revision],] any party objects to the claim or defence on the ground that the claim or defence or any part of it is, as against the objector, false or vexatious to the knowledge of the party by whom it has been put forward, and if thereafter, as against the objector, such claim or defence is disallowed, abandoned or withdrawn in whole or in part, the Court, [if it so thinks fit], may, after recording its reasons for holding such claim or defence to be false or vexatious, make an order for the payment to the objector by the party by whom such claim or defence has been put forward, of costs by way of compensation.
(2) No Court shall make any such order for the payment of an amount exceeding [three thousand rupees] or exceeding the limits of its pecuniary jurisdiction, whichever amount is less:
Provided that where the pecuniary limits of the jurisdiction of any Court exercising the jurisdiction of a Court of Small Causes under the Provincial Small Cause Courts Act, 1887 (9 of 1887), [or under a corresponding law in force in [any part of India to which the said Act does not extend] and not being a Court constituted [under such Act or law], are less than two hundred and fifty rupees, the High Court may empower such Court to award as costs under this section any amount not exceeding two hundred and fifty rupees and not exceeding those limits by more than one hundred rupees:
Provided, further, that the High Court may limit the amount which any Court or class of Courts is empowered to award as costs under this section.
(3) No person against whom an order has been made under this section shall, by reason thereof, be exempted from any criminal liability in respect of any claim or defence made by him.
(4) The amount of any compensation awarded under this section in respect of a false or vexatious claim or defence shall be taken into account in any subsequent suit for damages or compensation in respect of such claim or defence.]

35-B. Costs for causing delay .-(1) If, on any date fixed for the hearing of a suit or for taking any step therein, a party to the suit-
(a) fails to take the step which he was required by or under this Code to take on that date, or

(b) obtains an adjournment for taking such step or for producing evidence or on any other ground, the Court may, for reasons to be recorded, make an order requiring such party to pay to the other party such costs as would, in the opinion of the Court, be reasonably sufficient to reimburse the other party in respect of the expenses incurred by him in attending the Court on that date, and payment of such costs, on the date next following the date of such order, shall be a condition precedent to the further prosecution of-

(a) the suit by the plaintiff, where the plaintiff was ordered to pay such costs,

(b) the defence by the defendant, where the defendant was ordered to pay such costs.

Explanation .-Where separate defences have been raised by the defendants or groups of defendants, payment of such costs shall be a condition precedent to the further prosecution of the defence by such defendants or groups of defendants as have been ordered by the Court to pay such costs.
(2) The costs, ordered to be paid under sub-section (1), shall not, if paid, be included in the costs awarded in the decree passed in the suit; but, if such costs are not paid, a separate order shall be drawn up indicating the amount of such costs and the names and addresses of the persons by whom such costs are payable and the order so drawn up shall be executable against such persons.]


[nextpage title=”Execution of Decree”]

PART II

Execution

General

36. Application to orders .-The provisions of this Code relating to the execution of decrees (including provisions relating to payment under a decree) shall, so far as they are applicable, be deemed to apply to the execution of orders (including payment under an order).]

37. Definition of Court which passed a decree .-The expression “Court which passed a decree”, or words to that effect, shall, in relation to the execution of decrees, unless there is anything repugnant in the subject or context, be deemed to include,-
(a) where the decree to be executed has been passed in the exercise of appellate jurisdiction, the Court of first instance, and

(b) where the Court of first instance has ceased to exist or to have jurisdiction to execute it, the Court which, if the suit wherein the decree was passed was instituted at the time of making the application for the execution of the decree, would have jurisdiction to try such suit.

[ Explanation .-The Court of first instance does not cease to have jurisdiction to execute a decree merely on the ground that after the institution of the suit wherein the decree was passed or after the passing of the decree, any area has been transferred from the jurisdiction of that Court to the jurisdiction of any other Court; but, in every such case, such other Court shall also have jurisdiction to execute the decree, if at the time of making the application for execution of the decree it would have jurisdiction to try the said suit.]
Courts by which decrees may be executed

38. Court by which decree may be executed .-A decree may be executed either by the Court which passed it, or by the Court to which it is sent for execution.

39. Transfer of decree .-(1) The Court which passed a decree may, on the application of the decree-holder, send it for execution to another Court [of competent jurisdiction],-
(a) if the person against whom the decree is passed actually and voluntarily resides or carries on business, or personally works for gain, within the local limits of the jurisdiction of such other Court, or

(b) if such person has not property within the local limits of the jurisdiction of the Court which passed the decree sufficient to satisfy such decree and has property within the local limits of the jurisdiction of such other Court, or

(c) if the decree directs the sale or delivery of immovable property situate outside the local limits of the jurisdiction of the Court which passed it, or

(d) if the Court which passed the decree considers for any other reason, which it shall record in writing, that the decree should be executed by such other Court.

(2) The Court which passed a decree may of its own motion send it for execution to any subordinate Court of competent jurisdiction.
[(3) For the purposes of this section, a Court shall be deemed to be a Court of competent jurisdiction if, at the time of making the application for the transfer of decree to it, such Court would have jurisdiction to try the suit in which such decree was passed.]
[(4) Nothing in this section shall be deemed to authorise the Court which passed a decree to execute such decree against any person or property outside the local limits of its jurisdiction.]

40. Transfer of decree to Court in another State .-Where a decree is sent for execution in another State, it shall be sent to such Court and executed in such manner as may be prescribed by rules in force in that State.

41. Result of execution proceedings to be certified .-The Court to which a decree is sent for execution shall certify to the Court which passed it the fact of such execution, or where the former Court fails to execute the same the circumstances attending such failure.

42. Powers of Court in executing transferred decree .- [(1)] The Court executing a decree sent to it shall have the same powers in executing such decree as if it had been passed by itself. All persons disobeying or obstructing the execution of the decree shall be punishable by such Court in the same manner as if it had passed the decree. And its order in executing such decree shall be subject to the same rules in respect of appeal as if the decree had been passed by itself.
[(2) Without prejudice to the generality of the provisions of sub-section (1), the powers of the Court under that sub-section shall include the following powers of the Court which passed the decree, namely:-
(a) power to send the decree for execution to another Court under section 39;

(b) power to execute the decree against the legal representative of the deceased judgment-debtor under section 50;

(c) power to order attachment of a decree.

(3) A Court passing an order in exercise of the powers specified in sub-section (2) shall send a copy thereof to the Court which passed the decree.
(4) Nothing in this section shall be deemed to confer on the Court to which a decree is sent for execution any of the following powers, namely:-
(a) power to order execution at the instance of the transferee of the decree;

(b) in the case of a decree passed against a firm, power to grant leave to execute such decree against any person, other than such a person as is referred to in clause (b), or clause (c), of sub-rule (1) of rule 50 of Order XXI.]

[43. Execution of decrees passed by Civil Courts in places to which this Code does not extend .-Any decree passed by any Civil Court established in any part of India to which the provisions of this Code do not extend, or by any Court established or continued by the authority of the Central Government outside India, may, if it cannot be executed within the jurisdiction of the Court by which it was passed, be executed in the manner herein provided within the jurisdiction of any Court in the territories to which this Code extends.]

44. Execution of decrees passed by Revenue Courts in places to which this Code does not extend .-The State Government may, by notification in the Official Gazette, declare that the decrees of any Revenue Court in any part of India to which the provisions of this Code do not extend, or any class of such decrees, may be executed in the State as if they had been passed by Courts in that State.]
[44-A. Execution of decrees passed by Courts in reciprocating territory .-(1) Where a certified copy of a decree of any of the superior Courts of [* * *] any reciprocating territory has been filed in a District Court, the decree may be executed in [India ]as if it had been passed by the District Court.
(2) Together with the certified copy of the decree shall be filed a certificate from such superior Court stating the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for the purposes of proceedings under this section, be conclusive proof of the extent of such satisfaction or adjustment.
(3) The provisions of section 47 shall as from the filing of the certified copy of the decree apply to the proceedings of a District Court executing a decree under this section, and the District Court shall refuse execution of any such decree, if it is shown to the satisfaction of the Court that the decree falls within any of the exceptions specified in clauses (a) to (f) of section 13.
[ Explanation I .-“Reciprocating territory” means any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare to be a reciprocating territory for the purposes of this section; and “superior Courts”, with reference to any such territory, means such Courts as may be specified in the said notification.
Explanation II .-“Decree” with reference to a superior Court means any decree or judgment of such Court under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty, but shall in no case include an arbitration award, even if such an award is enforceable as a decree or judgment.]
[45. Execution of decrees outside India .-So much of the foregoing sections of this Part as empowers a Court to send a decree for execution to another Court shall be construed as empowering a Court in any State to send a decree for execution to any Court established [* * *] by the authority of the Central Government [outside India] to which the State Government has by notification in the Official Gazette declared this section to apply.]
46. Precepts .-(1) Upon the application of the decree-holder the Court which passed the decree may, whenever it thinks fit, issue a precept to any other Court which would be competent to execute such decree to attach any property belonging to the judgment-debtor and specified in the precept.
(2) The Court to which a precept is sent shall proceed to attach the property in the manner prescribed in regard to the attachment of property in execution of a decree:
Provided that no attachment under a precept shall continue for more than two months unless the period of attachment is extended by an order of the Court which passed the decree or unless before the determination of such attachment the decree has been transferred to the Court by which the attachment has been made and the decree-holder has applied for an order for the sale of such property.
Questions to be determined by Court executing decree
47. Questions to be determined by the Court executing decree .-(1) All questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit.
[* * *]
(3) Where a question arises as to whether any person is or is not the representative of a party, such question shall, for the purposes of this section, be determined by the Court.
[ Explanation I .-For the purposes of this section, a plaintiff whose suit has been dismissed and a defendant against whom a suit has been dismissed are parties to the suit.
Explanation II .-
(a) For the purposes of this section, a purchaser of property at a sale in execution of a decree shall be deemed to be a party to the suit in which the decree is passed; and

(b) all questions relating to the delivery of possession of such property to such purchaser or his representative shall be deemed to be questions relating to the execution, discharge or satisfaction of the decree within the meaning of this section. ]

Limit of time for execution

48. Execution barred in certain cases .-[ Repealed by the Limitation Act, 1963 (36 of 1963), section 28 (w.e.f. 1-1-1964).]
Transferees and legal representatives

49. Transferee .-Every transferee of a decree shall hold the same subject to the equities (if any) which the judgment-debtor might have enforced against the original decree-holder.

50. Legal representative .-(1) Where a judgment-debtor dies before the decree has been fully satisfied, the holder of the decree may apply to the Court which passed it to execute the same against the legal representative of the deceased.
(2) Where the decree is executed against such legal representative, he shall be liable only to the extent of the property of the deceased which has come to his hands and has not been duly disposed of; and, for the purpose of ascertaining such liability, the Court executing the decree may, of its own motion or on the application of the decree-holder, compel such legal representative to produce such accounts as it thinks fit.
Procedure in execution

51. Powers of Court to enforce execution .-Subject to such conditions and limitations as may be prescribed, the Court may, on the application of the decree-holder, order execution of the decree-
(a) by delivery of any property specifically decreed;

(b) by attachment and sale or by sale without attachment of any property;

(c) by arrest and detention in prison [for such period not exceeding the period specified in section 58, where arrest and detention is permissible under that section;]

(d) by appointing a receiver; or

(e) in such other manner as the nature of the relief granted may require:

[Provided that, where the decree is for the payment of money, execution by detention in prison shall not be ordered unless, after giving the judgment-debtor an opportunity of showing cause why he should not be committed to prison, the Court, for reasons recorded in writing, is satisfied-
(a) that the judgment-debtor, with the object or effect of obstructing or delaying the execution of the decree,-

(i) is likely to abscond or leave the local limits of the jurisdiction of the Court, or

(ii) has, after the institution of the suit in which the decree was passed, dishonestly transferred, concealed, or removed any part of his property, or committed any other act of bad faith in relation to his property, or

(b) that the judgment-debtor has, or has had since the date of the decree, the means to pay the amount of the decree or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same, or

(c) that the decree is for a sum for which the judgment-debtor was bound in a fiduciary capacity to account.

Explanation .-In the calculation of the means of the judgment-debtor for the purposes of clause (b), there shall be left out of account any property which, by or under any law or custom having the force of law for the time being in force, is exempt from attachment in execution of the decree.]

52. Enforcement of decree against legal representative .-(1) Where a decree is passed against a party as the legal representative of a deceased person, and the decree is for the payment of money out of the property of the deceased, it may be executed by the attachment and sale of any such property.
(2) Where no such property remains in the possession of the judgment-debtor and he fails to satisfy the Court that he has duly applied such property of the deceased as is proved to have come into his possession, the decree may be executed against the judgment-debtor to the extent of the property in respect of which he has failed so to satisfy the Court in the same manner as if the decree had been against him personally.

53. Liability of ancestral property .-For the purposes of section 50 and section 52, property in the hands of a son or other descendant which is liable under Hindu law for the payment of the debt of a deceased ancestor, in respect of which a decree has been passed, shall be deemed to be property of the deceased which has come to the hands of the son or other descendant as his legal representative.

54. Partition of estate or separation of share .-Where the decree is for the partition of an undivided estate assessed to the payment of revenue to the Government, or for the separate possession of a share of such an estate, the partition of the estate or the separation of the share shall be made by the Collector or any gazetted subordinate of the Collector deputed by him in this behalf, in accordance with the law (if any) for the time being in force relating to the partition, or the separate possession of shares, of such estates.

Arrest and detention

55. Arrest and detention .-(1) A judgment-debtor may be arrested in execution of a decree at any hour and on any day, and shall, as soon as practicable, be brought before the Court, and his detention may be in the civil prison of the district in which the Court ordering the detention is situate, or, where such civil prison does not afford suitable accommodation, in any other place which the State Government may appoint for the detention of persons ordered by the Courts of such district to be detained:
Provided, firstly, that, for the purpose of making an arrest under this section, no dwelling-house shall be entered after sunset and before sunrise:
Provided, secondly, that, no outer door of a dwelling-house shall be broken open unless such dwelling-house is in the occupancy of the judgment-debtor and he refuses or in any way prevents access thereto, but when the officer authorised to make the arrest has duly gained access to any dwelling-house, he may break open the door of any room in which he has reason to believe the judgment-debtor is to be found:
Provided, thirdly, that, if the room is in the actual occupancy of a woman who is not the judgment-debtor and who according to the customs of the country does not appear in public, the officer authorised to make the arrest shall give notice to her that she is at liberty to withdraw, and, after allowing a reasonable time for her to withdraw and giving her reasonable facility for withdrawing, may enter the room for the purpose of making the arrest:
Provided, fourthly, that, where the decree in execution of which a judgment-debtor is arrested, is a decree for the payment of money and the judgment-debtor pays the amount of the decree and the costs of the arrest to the officer arresting him, such officer shall at once release him.
(2) The State Government may, by notification in the Official Gazette, declare that any person or class of persons whose arrest might be attended with danger or inconvenience to the public shall not be liable to arrest in execution of a decree otherwise than in accordance with such procedure as may be prescribed by the State Government in this behalf.
(3) Where a judgment-debtor is arrested in execution of a decree for the payment of money and brought before the Court, the Court shall inform him that he may apply to be declared an insolvent, and that he [may be discharged] if he has not committed any act of bad faith regarding the subject of the application and if he complies with the provisions of the law of insolvency for the time being in force.
(4) Where a judgment-debtor expresses his intention to apply to be declared an insolvent and furnishes security, to the satisfaction of the Court, that he will within one month so apply, and that he will appear, when called upon, in any proceeding upon the application or upon the decree in execution of which he was arrested, the Court [may release] him from arrest, and, if he fails so to apply and to appear, the Court may either direct the security to be realised or commit him to the civil prison in execution of the decree.

56. Prohibition of arrest or detention of women in execution of decree for money .-Notwithstanding anything in this Part, the Court shall not order the arrest or detention in the civil prison of a woman in execution of a decree for the payment of money.

57. Subsistence allowance .-The State Government may fix scales, graduated according to rank, race and nationality, of monthly allowances payable for the subsistence of judgment-debtors.
58. Detention and release .-(1) Every person detained in the civil prison in execution of a decree shall be so detained,-
(a) where the decree is for the payment of a sum of money exceeding [** [five thousand rupees], for a period not exceeding three months, and,]

[(b) where the decree is for the payment of a sum of money exceeding two thousand rupees, but not exceeding five thousand rupees, for a period not exceeding six weeks:]

Provided that he shall be released from such detention before the ex-piration of the [said period of detention]-
(i) on the amount mentioned in the warrant for his detention being paid to the officer in charge of the civil prison, or

(ii) on the decree against him being otherwise fully satisfied, or

(iii) on the request of the person on whose application he has been so detained, or

(iv) on the omission by the person, on whose application he has been so detained, to pay subsistence allowance:

Provided, also, that he shall not be released from such detention under clause (ii) or clause (iii), without the order of the Court.
[(1-A) For the removal of doubts, it is hereby declared that no order for detention of the judgment-debtor in civil prison in execution of a decree for the payment of money shall be made, where the total amount of the decree does not exceed two thousand rupees” (1-A) For the removal of doubts, it is hereby declared that no order for detention of the judgment-debtor in civil prison in execution of a decree for the payment of money shall be made, where the total amount of the decree does not exceed [two thousand rupees].]
(2) A judgment-debtor released from detention under this section shall not merely by reason of his release be discharged from his debt, but he shall not be liable to be re-arrested under the decree in execution of which he was detained in the civil prison.
59. Release on ground of illness .-(1) At any time after a warrant for the arrest of a judgment-debtor has been issued the Court may cancel it on the ground of his serious illness.
(2) Where a judgment-debtor has been arrested, the Court may release him if, in its opinion, he is not in a fit state of health to be detained in the civil prison.
(3) Where a judgment-debtor has been committed to the civil prison, he may be released therefrom-
(a) by the State Government, on the ground of the existence of any infectious or contagious disease, or

(b) by the committing Court, or any Court to which that Court is subordinate, on the ground of his suffering from any serious illness.

(4) A judgment-debtor released under this section may be re-arrested, but the period of his detention in the civil prison shall not in the aggregate exceed that prescribed by section 58.

Attachment

60. Property liable to attachment and sale in execution of decree .- (1) The following property is liable to attachment and sale in execution of a decree, namely, lands, houses or other buildings, goods, money, bank-notes, cheques, bills of exchange, hundis, promissory notes, Government securities, bonds or other securities for money, debts, shares in a corporation and, save as hereinafter mentioned, all other saleable property, movable or immovable, belonging to the judgment-debtor, or over which, or the profits of which, he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor or by another person in trust for him or on his behalf:
Provided that the following particulars shall not be liable to such attachment or sale, namely:-
(a) the necessary wearing-apparel, cooking vessels, beds and bedding of the judgment-debtor, his wife and children, and such personal ornaments as, in accordance with religious usage, cannot be parted with by any woman;

(b) tools of artisans, and, where the judgment-debtor is an agriculturist, his implements of husbandry and such cattle and seed-grain as may, in the opinion of the Court, be necessary to enable him to earn his livelihood as such, and such portion of agricultural produce or of any class of agricultural produce as may have been declared to be free from liability under the provisions of the next following section;

(c) houses and other buildings (with the materials and the sites thereof and the land immediately appurtenant thereto and necessary for their enjoyment) belonging to [an agriculturist or a labourer or a domestic servant]and occupied by him;

(d) books of account;

(e) a mere right to sue for damages;

(f) any right of personal service;

(g) stipends and gratuities allowed to pensioners of the Government or of a local authority [or of any other employer], or payable out of any service family pension fund [notified] in the Official Gazette by [the Central Government or the State Government] in this behalf, and political pensions;

[(h) the wages of labourers and domestic servants, whether payable in money or in kind;] [* * *]

[(i) salary to the extent of [the first [ [one thousand rupees] and two-thirds of the remainder][in execution of any decree other than a decree for maintenance:]

[Provided that where any part of such portion of the salary as is liable to attachment has been under attachment, whether continuously or inter-mittently, for a total period of twenty-four months, such portion shall be exempt from attachment until the expiry of a further period of twelve months, and, where such attachment has been made in execution of one and the same decree, shall, after the attachment has continued for a total period of twenty-four months, be finally exempt from attachment in execution of that decree;]
[(ia) one-third of the salary in execution of any decree for maintenance;]

[(j) the pay and allowances of persons to whom the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957), applies;]

(k) all compulsory deposits and other sums in or derived from any fund to which the Provident Funds Act, [1925] (19 of 1925), for the time being applies, in so far as they are declared by the said Act not to be liable to attachment;

[(ka) all deposits and other sums in or derived from any fund to which the Public Provident Fund Act, 1968 (23 of 1968), for the time being applies, in so far as they are declared by the said Act as not to be liable to attachment;

(kb) all moneys payable under a policy of insurance on the life of the judgment-debtor;

(kc) the interest of a lessee of a residential building to which the provisions of law for the time being in force relating to control of rents and accommodation apply;]

[(l) any allowance forming part of the emoluments of any [servant of the Government] or of any servant of a railway company or local authority which the [appropriate Government] may, by notification in the Official Gazette, declare to be exempt from attachment, and any subsistence grant or allowance made to [any such servant] while under suspension;]

(m) an expectancy of succession by survivorship or other merely contingent or possible right or interest;

(n) a right to future maintenance;

(o) any allowance declared by [any Indian law] to be exempt from liability to attachment or sale in execution of a decree; and

(p) where the judgment-debtor is a person liable for the payment of land-revenue, any movable property which, under any law for the time being applicable to him, is exempt from sale for the recovery of an arrear of such revenue.

[ Explanation I .-The moneys payable in relation to the matters mentioned in clauses (g), (h), (i), (ia), (j), (l) and (o) are exempt from attachment or sale, whether before or after they are actually payable, and, in the case of salary, the attachable portion thereof is liable to attachment, whether before or after it is actually payable.]
[[ Explanation II .-In clauses (i) and (ia)], [“salary” means the total monthly emoluments, excluding any allowance declared exempt from attachment under the provisions of clause (l), derived by a person from his employment whether on duty or on leave.]]
[ Explanation [III] .-In clause (l) “appropriate Government” means-
(i) as respects any [person] in the service of the Central Government, or any servant of [a Railway Administration] or of a cantonment authority or of the port authority of a major port, the Central Government;

[* * *]

(iii) as respects any other servant of the Government or a servant of any other [* * *] local authority, the State Government.]

[Explanation IV .-For the purposes of this proviso, “wages” includes bonus, and “labourer” includes a skilled, unskilled or semi-skilled labourer.
Explanation V .-For the purposes of this proviso, the expression “agriculturist” means a person who cultivates land personally and who depends for his livelihood mainly on the income from agricultural land, whether as owner, tenant, partner or agricultural labourer.
Explanation VI .-For the purposes of Explanation V , an agriculturist shall be deemed to cultivate land personally, if he cultivates land-
(a) by his own labour, or

(b) by the labour of any member of his family, or

(c) by servants or labourers on wages payable in cash or in kind (not being as a share of the produce), or both.]

[(1-A) Notwithstanding anything contained in any other law for the time being in force, an agreement by which a person agrees to waive the benefit of any exemption under this section shall be void.]
(2) Nothing in this section shall be deemed [* * *] to exempt houses and other buildings (with the materials and the sites thereof and the lands immediately appurtenant thereto and necessary for their enjoyment) from attachment or sale in execution of decrees for rent of any such house, building, site or land [* * *].
[* * *]

61. Partial exemption of agricultural produce .-The State Government [* * *] may, by general or special order published in the Official Gazette, declare that such portion of agricultural produce, or of any class of agricultural produce, as may appear to the State Government to be necessary for the purpose of providing until the next harvest for the due cultivation of the land and for the support of the judgment-debtor and his family, shall, in the case of all agriculturists or of any class of agriculturists, be exempted from liability to attachment or sale in execution of a decree.

62. Seizure of property in dwelling-house .-(1) No person executing any process under this Code directing or authorizing seizure of movable property shall enter any dwelling-house after sunset and before sunrise.
(2) No outer door of a dwelling-house shall be broken open unless such dwelling-house is in the occupancy of the judgment-debtor and he refuses or in any way prevents access thereto, but when the person executing any such process has duly gained access to any dwelling-house, he may break open the door of any room in which he has reason to believe any such property to be.
(3) Where a room in a dwelling-house is in the actual occupancy of a woman who, according to the customs of the country, does not appear in public, the person executing the process shall give notice to such woman that she is at liberty to withdraw; and, after allowing reasonable time for her to withdraw and giving her reasonable facility for withdrawing, he may enter such room for the purpose of seizing the property, using at the same time every precaution, consistent with these provisions, to prevent its clandestine removal.
63. Property attached in execution of decrees of several Courts .-(1) Where property not in the custody of any Court is under attachment in execution of decrees of more Courts than one, the Court which shall receive or realise such property and shall determine any claim thereto and any objection to the attachment thereof shall be the Court of highest grade, or, where there is no difference in grade between such Courts, the Court under whose decree the property was first attached.
(2) Nothing in this section shall be deemed to invalidate any proceeding taken by a Court executing one of such decrees.
[ Explanation .-For the purposes of sub-section (2), “proceeding taken by a Court” does not include an order allowing, to a decree-holder who has purchased property at a sale held in execution of a decree, set off to the extent of the purchase price payable by him.]
64. Private alienation of property after attachment to be void .- [(1)] Where an attachment has been made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment-debtor of any debt, dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment.
[(2) Nothing in this section shall apply to any private transfer or delivery of the property attached or of any interest therein, made in pursuance of any contract for such transfer or delivery entered into and registered before the attachment.]
Explanation .-For the purposes of this section, claims enforceable under an attachment include claims for the rateable distribution of assets.

Sale

65. Purchaser’s title .-Where immovable property is sold in execution of a decree and such sale has become absolute, the property shall be deemed to have vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute.
66. Suit against purchaser not maintainable on ground of purchase being on behalf of plaintiff .-[ Repealed by the Benami Transactions (Prohibition) Act , 1988, section 7 (w.e.f.19-5-1988).]
67. Power for State Government to make rules as to sales of land in execution of decrees for payment of money .- [(1)] The State Government [* * *] may, by notification in the Official Gazette, make rules for any local area imposing conditions in respect of the sale of any class of interests in land in execution of decrees for the payment of money, where such interests are so uncertain or undetermined as, in the opinion of the State Government, to make it impossible to fix their value.
[(2) When on the date on which this Code came into operation in any local area, any special rules as to sale of land in execution of decrees were in force therein, the State Government may, by notification in the Official Gazette, declare such rules to be in force, or may ][* * *] [by a like notification, modify the same.
Every notification issued in the exercise of the powers conferred by this sub-section shall set out the rules so continued or modified.]
[(3) Every rule made under this section shall be laid, as soon as may be after it is made, before the State Legislature.]
Delegation to Collector of power to execute decrees against immovable property

68 to 72.-[ Repealed by the Code of Civil Procedure (Amendment) Act, 1956 (66 of 1956), section 7 (w.e.f.1-1-1957).]
Distribution of assets

73. Proceeds of execution-sale to be rateably distributed among decree-holders .-(1) Where assets are held by a Court and more persons than one have, before the receipt of such assets, made application to the Court for the execution of decrees for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof, the assets, after deducting the costs of realization, shall be rateably distributed among all such persons:
Provided as follows:-
(a) where any property is sold subject to a mortgage or charge, the mortgagee or incumbrancer shall not be entitled to share in any surplus arising from such sale;

(b) where any property liable to be sold in execution of a decree is subject to a mortgage or charge, the Court may, with the consent of the mort-gagee or incumbrancer, order that the property be sold free from the mortgage or charge, giving to the mortgagee or incumbrancer the same interest in the proceeds of the sale as he had in the property sold;

(c) where any immovable property is sold in execution of a decree ordering its sale for the discharge of an incumbrance thereon, the proceeds of sale shall be applied-

first, in defraying the expenses of the sale;
secondly, in discharging the amount due under the decree;
thirdly, in discharging the interest and principal moneys due on subsequent incumbrances (if any); and
fourthly, rateably among the holders of decrees for the payment of money against the judgment-debtor, who have, prior to the sale of the property, applied to the Court which passed the decree ordering such sale for execution of such decrees, and have not obtained satisfaction thereof.
(2) Where all or any of the assets liable to be rateably distributed under this section are paid to a person not entitled to receive the same, any person so entitled may sue such person to compel him to refund the assets.
(3) Nothing in this section affects any right of the Government.
Resistance to execution
74. Resistance to execution .-Where the Court is satisfied that the holder of a decree for the possession of immovable property or that the purchaser of immovable property sold in execution of a decree has been resisted or obstructed in obtaining possession of the property by the judgment-debtor or some person on his behalf and that such resistance or obstruction was without any just cause, the Court may, at the instance of the decree-holder or purchaser, order the judgment-debtor or such other person to be detained in the civil prison for a term which may extend to thirty days and may further direct that the decree-holder or purchaser be put into possession of the property.


[nextpage title=”Incidental Proceedings”]

PART III

Incidental Proceedings

Commissions

75. Power of Court to issue commissions .-Subject to such conditions and limitations as may be prescribed, the Court may issue a commission-
(a) to examine any person;

(b) to make a local investigation;

(c) to examine or adjust accounts; or

(d) to make a partition;

[(e) to hold a scientific, technical, or expert investigation;

(f) to conduct sale of property which is subject to speedy and natural decay and which is in the custody of the Court pending the determination of the suit;

(g) to perform any ministerial act.]

76. Commission to another Court .-(1) A commission for the examination of any person may be issued to any Court (not being a High Court) situate in a State other than the State in which the Court of issue is situate and having jurisdiction in the place in which the person to be examined resides.
(2) Every Court receiving a commission for the examination of any person under sub-section (1) shall examine him or cause him to be examined pursuant thereto, and the commission, when it has been duly executed, shall be returned together with the evidence taken under it to the Court from which it was issued, unless the order for issuing the commission has otherwise directed, in which case the commission shall be returned in terms of such order.
77. Letter of request .-In lieu of issuing a commission the Court may issue a letter of request to examine a witness residing at any place not within [India.]
[78. Commissions issued by foreign Courts .-Subject to such conditions and limitations as may be prescribed, the provisions as to the execution and return of commissions for the examination of witnesses shall apply to commissions issued by or at the instance of-
(a) Courts situate in any part of India to which the provisions of this Code do not extend; or

(b) Courts established or continued by the authority of the Central Government outside India; or

(c) Courts of any State or country outside India.]

PART IV

Suits In Particular Cases

Suits by or against the Government or Public Officers in their official capacity

[79. Suits by or against Government .-In a suit by or against the Government, the authority to be named as plaintiff or defendant, as the case may be, shall be-
(a) in the case of a suit by or against the Central Government, [the Union of India], and

(b) in the case of a suit by or against a State Government, the State.]

80. Notice .- [(1)] [Save as otherwise provided in sub-section (2), no suit shall be instituted ][against the Government (including the Government of the State of Jammu and Kashmir)] or against a public officer in respect of any act purporting to be done by such public officer in his official capacity, until the expiration of two months next after notice in writing has been [delivered to, or left at the office] of-
(a) in the case of a suit against the Central Government, [except where it relates to a railway], a Secretary to that Government;

[[(b)] [in the case of a suit against the Central Government where it relates to a railway, the General Manager of that railway;]

[* * *]

[(bb) in the case of a suit against the Government of the State of Jammu and Kashmir, the Chief Secretary to that Government or any other officer authorised by that Government in this behalf;]

(c) in the case of a suit against [any other State Government], a Secretary to that Government or the Collector of the district; [* * *]

[* * *]

and, in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered or left.
[(2) A suit to obtain an urgent or immediate relief against the Government (including the Government of the State of Jammu and Kashmir) or any public officer in respect of any act purporting to be done by such public officer in his official capacity, may be instituted, with the leave of the Court, without serving any notice as required by sub-section (1); but the Court shall not grant relief in the suit, whether interim or otherwise, except after giving to the Government or public officer, as the case may be, a reasonable opportunity of showing cause in respect of the relief prayed for in the suit:
Provided that the Court shall, if it is satisfied, after hearing the parties, that no urgent or immediate relief need be granted in the suit, return the plaint for presentation to it after complying with the requirements of sub-section (1).
(3) No suit instituted against the Government or against a public officer in respect of any act purporting to be done by such public officer in his official capacity shall be dismissed merely by reason of any error or defect in the notice referred to in sub-section (1), if in such notice-
(a) the name, description and the residence of the plaintiff had been so given as to enable the appropriate authority or the public officer to identify the person serving the notice and such notice had been delivered or left at the office of the appropriate authority specified in sub-section (1), and

(b) the cause of action and the relief claimed by the plaintiff had been substantially indicated.]

81. Exemption from arrest and personal appearance .-In a suit instituted against a public officer in respect of any act purporting to be done by him in his official capacity-
(a) the defendant shall not be liable to arrest nor his property to attachment otherwise than in execution of a decree, and

(b) where the Court is satisfied that the defendant cannot absent himself from his duty without detriment to the public service, it shall exempt him from appearing in person.

82. Execution of decree .- [(1) Where, in a suit by or against the Government or by or against a public officer in respect of any act purporting to be done by him in his official capacity, a decree is passed against the Union of India or a State or, as the case may be, the public officer, such decree shall not be executed except in accordance with the provisions of sub-section (2).]
(2) Execution shall not be issued on any such decree unless it remains unsatisfied for the period of three months computed from the date of [such decree].
[(3) The provisions of sub-sections (1) and (2) shall apply in relation to an order or award as they apply in relation to a decree, if the order or award-
(a) is passed or made against [the Union of India][or a State or a public officer in respect of any such act as aforesaid, whether by a Court or by any other authority; and

(b) is capable of being executed under the provisions of this Code or of any other law for the time being in force as if it were a decree.]]

[Suits by Aliens and by or against Foreign Rulers, Ambassadors and Envoys]
83. When aliens may sue .-Alien enemies residing in India with the permission of the Central Government, and alien friends, may sue in any Court otherwise competent to try the suit, as if they were citizens of India, but alien enemies residing in India without such permission, or residing in a foreign country, shall not sue in any such Court.
Explanation .-Every person residing in a foreign country, the Government of which is at war with India and carrying on business in that country without a licence in that behalf granted by the Central Government, shall, for the purpose of this section, be deemed to be an alien enemy residing in a foreign country.
84. When foreign States may sue .-A foreign State may sue in any competent Court:
Provided that the object of the suit is to enforce a private right vested in the Ruler of such State or in any officer of such State in his public capacity.
85. Persons specially appointed by Government to prosecute or defend on behalf of foreign Rulers .-(1) The Central Government may, at the request of the Ruler of a foreign State or at the request of any person competent in the opinion of the Central Government to act on behalf of such Ruler, by order, appoint any persons to prosecute or defend any suit on behalf of such Ruler, and any persons so appointed shall be deemed to be the recognised agents by whom appearances, acts and applications under this Code may be made or done on behalf of such Ruler.
(2) An appointment under this section may be made for the purpose of a specified suit or of several specified suits, or for the purpose of all such suits as it may from time to time be necessary to prosecute or defend on behalf of such Ruler.
(3) A person appointed under this section may authorise or appoint any other persons to make appearances and applications and do acts in any such suit or suits as if he were himself a party thereto.
86. Suits against foreign Rulers, Ambassadors and Envoys .-(1) No [* * *] foreign State may be sued in any Court otherwise competent to try the suit except with the consent of the Central Government certified in writing by a Secretary to that Government:
Provided that a person may, as a tenant of immovable property, sue without such consent as aforesaid [a foreign State] from whom he holds or claims to hold the property.
(2) Such consent may be given with respect to a specified suit or to several specified suits or with respect to all suits of any specified class or classes, and may specify, in the case of any suit or class of suits, the Court in which the foreign State may be sued, but it shall not be given, unless it appears to the Central Government that [the foreign State]-
(a) has instituted a suit in the Court against the person desiring to sue [it], or

(b) by [itself] or another, trades within the local limits of the jurisdiction of the Court, or

(c) is in possession of immovable property situate within those limits and is to be sued with reference to such property or for money charged thereon, or

(d) has expressly or impliedly waived the privilege accorded to [it] by this section.

[(3) Except with the consent of the Central Government, certified in writing by a Secretary to that Government, no decree shall be executed against the property of any foreign State.]
(4) The preceding provisions of this section shall apply in relation to-
[(a) any Ruler of a foreign State;]

[(aa)] any Ambassador or Envoy of a foreign State;

(b) any High Commissioner of a Commonwealth country; and

(c) any such member of the staff [of the foreign State or the staff or retinue of the Ambassador] or Envoy of a foreign State or of the High Commissioner of a Commonwealth country as the Central Government may, by general or special order, specify in this behalf,

[as they apply in relation to a foreign State.]
[(5) The following persons shall not be arrested under this Code, namely:-
(a) any Ruler of a foreign State;

(b) any Ambassador or Envoy of a foreign State;

(c) any High Commissioner of a Commonwealth country;

(d) any such member of the staff of the foreign State or the staff or retinue of the Ruler, Ambassador or Envoy of a foreign State or of the High Commissioner of a Commonwealth country, as the Central Government may, by general or special order, specify in this behalf.

(6) Where a request is made to the Central Government for the grant of any consent referred to in sub-section (1), the Central Government shall, before refusing to accede to the request in whole or in part, give to the person making the request a reasonable opportunity of being heard.]
87. Style of foreign Rulers as parties to suits .-The Ruler of a foreign State may sue, and shall be sued, in the name of his State:
Provided that in giving the consent referred to in section 86, the Central Government may direct that the Ruler may be sued in the name of an agent or in any other name.
87-A. Definitions of “foreign State” and “Ruler”.-(1) In this Part,-
(a) “foreign State” means any State outside India which has been recognised by the Central Government; and

(b) “Ruler”, in relation to a foreign State, means the person who is for the time being recognised by the Central Government to be the head of that State.

(2) Every Court shall take judicial notice of the fact-
(a) that a State has or has not been recognised by the Central Government;

(b) that a person has or has not been recognised by the Central Government to be the head of a State.

Suits against Rulers of former Indian States

87-B. Application of sections 85 and 86 to Rulers of former Indian States .- [(1) In the case of any suit by or against the Ruler of any former Indian State which is based wholly or in part upon a cause of action which arose before the commencement of the Constitution or any proceeding arising out of such suit, the provisions of section 85 and sub-sections (1) and (3) of section 86 shall apply in relation to such Ruler as they apply in relation to the Ruler of a foreign State.]
(2) In this section-
(a) “former Indian State” means any such Indian State as the Central Government may, by notification in the Official Gazette, specify for the purposes of this section; [* * *]

[(b) “commencement of the Constitution” means the 26th day of January, 1950; and

(c) “Ruler”, in relation to a former Indian State, has the same meaning as in article 363 of the Constitution.]

Interpleader

88. Where interpleader suit may be instituted .-Where two or more persons claim adversely to one another the same debt, sum of money or other property, movable or immovable, from another person, who claims no interest therein other than for charges or costs and who is ready to pay or deliver it to the rightful claimant, such other person may institute a suit of interpleader against all the claimants for the purpose of obtaining a decision as to the person to whom the payment or delivery shall be made and of obtaining indemnity for himself:
Provided that where any suit is pending in which the rights of all parties can properly be decided, no such suit of interpleader shall be instituted.


[nextpage title=”Special proceedings”]

PART V

Special Proceedings

Arbitration

[89. Settlement of disputes outside the Court .-(1) Where it appears to the Court that there exist elements of a settlement which may be acceptable to the parties, the Court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the Court may reformulate the terms of a possible settlement and refer the same for-
(a) arbitration;

(b) conciliation;

(c) judicial settlement including settlement through Lok Adalat; or

(d) mediation.

(2) Where a dispute has been referred-

(a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply as if the proceedings for arbitration or conciliation were referred for settlement under the provisions of that Act;

(b) to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with the provisions of sub-section (1) of section 20 of the Legal Services Authority Act, 1987 (39 of 1987) and all other provisions of that Act shall apply in respect of the dispute so referred to the Lok Adalat;

(c) for judicial settlement, the Court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok Adalat and all the provisions of the Legal Services Authority Act, 1987 (39 of 1987) shall apply as if the dispute were referred to a Lok Adalat under the provisions of that Act;

(d) for mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.]

Special case

90. Power to state case for opinion of Court .-Where any persons agree in writing to state a case for the opinion of the Court, then the Court shall try and determine the same in the manner prescribed.
[Public nuisances and other wrongful acts affecting the public]

91. Public nuisances .- [(1) In the case of a public nuisance or other wrongful act affecting, or likely to affect, the public, a suit for a declaration and injunction or for such other relief as may be appropriate in the circumstances of the case, may be instituted,-
(a) by the Advocate-General, or

(b) with the leave of the Court, by two or more persons, even though no special damage has been caused to such persons by reason of such public nuisance or other wrongful act.]

(2) Nothing in this section shall be deemed to limit or otherwise affect any right of suit which may exist independently of its provisions.
92. Public charities .-(1) In the case of any alleged breach of any express or constructive trust created for public purposes of a charitable or religious nature, or where the direction of the Court is deemed necessary for the administration of any such trust, the Advocate-General, or two or more persons having an interest in the trust and having obtained the [leave of the Court,] may institute a suit, whether contentious or not, in the principal Civil Court of original jurisdiction or in any other Court empowered in that behalf by the State Government within the local limits of whose jurisdiction the whole or any part of the subject-matter of the trust is situate to obtain a decree-
(a) removing any trustee;

(b) appointing a new trustee;

(c) vesting any property in a trustee;

[(cc) directing a trustee who has been removed or a person who has ceased to be a trustee, to deliver possession of any trust property in his possession to the person entitled to the possession of such property;]

(d) directing accounts and inquiries;

(e) declaring what proportion of the trust property or of the interest therein shall be allocated to any particular object of the trust;

(f) authorizing the whole or any part of the trust property to be let, sold, mortgaged or exchanged;

(g) settling a scheme; or

(h) granting such further or other relief as the nature of the case may require.

(2) Save as provided by the Religious Endowments Act, 1863 (20 of 1863), [or by any corresponding law in force in [the territories which, immediately before the 1st November, 1956, were comprised in Part B States], no suit claiming any of the reliefs specified in sub-section (1) shall be instituted in respect of any such trust as is therein referred to except in conformity with the provisions of that sub-section.
[(3) The Court may alter the original purposes of an express or constructive trust created for public purposes of a charitable or religious nature and allow the property or income of such trust or any portion thereof to be applied cy pres in one or more of the following circumstances, namely:-
(a) where the original purposes of the trust, in whole or in part,-

(i) have been, as far as may be, fulfilled; or

(ii) cannot be carried out at all, or cannot be carried out according to the directions given in the instrument creating the trust or, where there is no such instrument, according to the spirit of the trust; or

(b) where the original purposes of the trust provide a use for a part only of the property available by virtue of the trust; or

(c) where the property available by virtue of the trust and other property applicable for similar purposes can be more effectively used in conjunction with, and to that end can suitably be made applicable to any other purpose, regard being had to the spirit of the trust and its applicability to common purposes; or

(d) where the original purposes, in whole or in part, were laid down by reference to an area which then was, but has since ceased to be, a unit for such purposes; or

(e) where the original purposes, in whole or in part, have, since they were laid down,-

(i) been adequately provided for by other means, or

(ii) ceased, as being useless or harmful to the community, or

(iii) ceased to be, in law, charitable, or

(iv) ceased in any other way to provide a suitable and effective method of using the property available by virtue of the trust, regard being had to the spirit of the trust.]

[93. Exercise of powers of Advocate-General outside Presidency-towns .-The powers conferred by sections 91 and 92 on the Advocate-General may, outside the Presidency-towns, be, with the previous sanction of the State Government, exercised also by the Collector or by such officer as the State Government may appoint in this behalf.]

PART VI

Supplemental Proceedings

94. Supplemental proceedings .-In order to prevent the ends of justice from being defeated the Court may, if it is so prescribed,-
(a) issue a warrant to arrest the defendant and bring him before the Court to show cause why he should not give security for his appearance, and if he fails to comply with any order for security commit him to the civil prison;

(b) direct the defendant to furnish security to produce any property belonging to him and to place the same at the disposal of the Court or order the attachment of any property;

(c) grant a temporary injunction and in case of disobedience commit the person guilty thereof to the civil prison and order that his property be attached and sold;

(d) appoint a receiver of any property and enforce the performance of his duties by attaching and selling his property;

(e) make such other interlocutory orders as may appear to the Court to be just and convenient.

95. Compensation for obtaining arrest, attachment or injunction on insufficient grounds .-(1) Where, in any suit in which an arrest or attachment has been effected or a temporary injunction granted under the last preceding section,-
(a) it appears to the Court that such arrest, attachment or injunction was applied for on insufficient grounds, or

(b) the suit of the plaintiff fails and it appears to the Court that there was no reasonable or probable ground for instituting the same, the defendant may apply to the Court, and the Court may, upon such application, award against the plaintiff by its order such amount, [not exceeding fifty thousand rupees], as it deems a reasonable compensation to the defendant for the [expense or injury (including injury to reputation) caused to him]:

Provided that a Court shall not award, under this section, an amount exceeding the limits of its pecuniary jurisdiction.
(2) An order determining any such application shall bar any suit for compensation in respect of such arrest, attachment or injunction.

PART VII

Appeals

Appeals from original decrees

96. Appeal from original decree .-(1) Save where otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie from every decree passed by any Court exercising original jurisdiction to the Court authorized to hear appeals from the decisions of such Court.
(2) An appeal may lie from an original decree passed ex parte .
(3) No appeal shall lie from a decree passed by the Court with the consent of parties.
[(4) No appeal shall lie, except on a question of law, from a decree in any suit of the nature cognizable by Courts of Small Causes, when the amount or value of the subject-matter of the original suit does not exceed [ten thousand rupees.]
97. Appeal from final decree where no appeal from preliminary, decree .-Where any party aggrieved by a preliminary decree passed after the commencement of this Code does not appeal from such decree, he shall be precluded from disputing its correctness in any appeal which may be preferred from the final decree.
98. Decision where appeal heard by two or more Judges .-(1) Where an appeal is heard by a Bench of two or more Judges, the appeal shall be decided in accordance with the opinion of such Judges or of the majority (if any) of such Judges.
(2) Where there is no such majority which concurs in a judgment varying or reversing the decree appealed from, such decree shall be confirmed:
Provided that where the Bench hearing the appeal is [composed of two or other even number of Judges belonging to a Court consisting of more Judges than those constituting the Bench], and the Judges composing the Bench differ in opinion on a point of law, they may state the point of law upon which they differ and the appeal shall then be heard upon that point only by one or more of the other Judges, and such point shall be decided according to the opinion of the majority (if any) of the Judges who have heard the appeal, including those who first heard it.
[(3) Nothing in this section shall be deemed to alter or otherwise affect any provision of the Letters Patent of any High Court.]
99. No decree to be reversed or modified for error or irregularity not affecting merits or jurisdiction .-No decree shall be reversed or substantially varied, nor shall any case be remanded, in appeal on account of any misjoinder [or non-joinder] of parties or causes of action or any error, defect or irregularity in any proceedings in the suit, not affecting the merits of the case or the jurisdiction of the Court:
Provided that nothing in this section shall apply to non-joinder of a necessary party.]
[99-A. No order under section 47 to be reversed or modified unless decision of the case is prejudicially affected .-Without prejudice to the generality of the provisions of section 99, no order under section 47 shall be reversed or substantially varied, on account of any error, defect or irregularity in any proceeding relating to such order, unless such error, defect or irregularity has prejudicially affected the decision of the case.]
Appeals from appellate decrees

[100. Second appeal .-(1) Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, if the High Court is satisfied that the case involves a substantial question of law.
(2) An appeal may lie under this section from an appellate decree passed ex parte .
(3) In an appeal under this section, the memorandum of appeal shall precisely state the substantial question of law involved in the appeal.
(4) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.
(5) The appeal shall be heard on the question so formulated and the respondent shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question:
Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law, not formulated by it, if it is satisfied that the case involves such question.]
[100-A. No further appeal in certain cases .-Notwithstanding anything contained in any Letters Patent for any High Court or in any instrument having the force of law or in any other law for the time being in force, where any appeal from an original or appellate decree or order is heard and decided by a Single Judge of a High Court, no further appeal shall lie from the judgment and decree of such Single Judge.]
101. Second appeal on no other grounds .-No second appeal shall lie except on the grounds mentioned in section 100.
[102. No second appeal in certain cases .-No second appeal shall lie from any decree, when the subject matter of the original suit is for recovery of money not exceeding twenty-five thousand rupees.]

[103. Power of High Court to determine issue of fact .-In any second appeal, the High Court may, if the evidence on the record is sufficient, determine any issue necessary for the disposal of the appeal,-
(a) which has not been determined by the lower appellate Court or both by the Court of first instance and the lower appellate Court, or

(b) which has been wrongly determined by such Court or Courts by reason of a decision on such question of law as is referred to in section 100.]

Appeals from orders

104. Orders from which appeal lies .-(1) An appeal shall lie from the following orders, and save as otherwise expressly provided in the body of this Code or by any law for the time being in force, from no other orders:-
[* * * * *]

[(ff) an order under section 35-A;]

[(ffa) an order under section 91 or section 92 refusing leave to institute a suit of the nature referred to in section 91 or section 92, as the case may be;]

(g) an order under section 95;

(h) an order under any of the provisions of this Code imposing a fine or directing the arrest or detention in the civil prison of any person except where such arrest or detention is in execution of a decree;

(i) any order made under rules from which an appeal is expressly allowed by rules:

[Provided that no appeal shall lie against any order specified in clause (ff) save on the ground that no order, or an order for the payment of a less amount, ought to have been made. ]
(2) No appeal shall lie from any order passed in appeal under this section.
105. Other orders .-(1) Save as otherwise expressly provided, no appeal shall lie from any order made by a Court in the exercise of its original or appellate jurisdiction; but, where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal.
(2) Notwithstanding anything contained in sub-section (1), where any party aggrieved by an order of remand [* * *] from which an appeal lies does not appeal therefrom, he shall thereafter be precluded from disputing its correctness.
106. What Courts to hear appeals .-Where an appeal from any order is allowed, it shall lie to the Court to which an appeal would lie from the decree in the suit in which such order was made, or where such order is made by a Court (not being a High Court) in the exercise of appellate jurisdiction, then to the High Court.
General provisions relating to appeals

107. Powers of appellate Court .-(1) Subject to such conditions and limitations as may be prescribed, an appellate Court shall have power-
(a) to determine a case finally;

(b) to remand a case;

(c) to frame issues and refer them for trial;

(d) to take additional evidence or to require such evidence to be taken.

(2) Subject as aforesaid, the appellate Court shall have the same powers and shall perform as nearly as may be the same duties as are conferred and imposed by this Code on Courts of original jurisdiction in respect of suits instituted therein.
108. Procedure in appeals from appellate decrees and orders .-The provisions of this Part relating to appeals from original decrees shall, so far as may be, apply to appeals-
(a) from appellate decrees, and

(b) from orders made under this Code or under any special or local law in which a different procedure is not provided.

Appeals to the Supreme Court

[109. When appeals lie to the Supreme Court .-Subject to the provisions in Chapter IV of Part V of the Constitution and such rules as may, from time to time, be made by the Supreme Court regarding appeals from the Courts of India, and to the provisions hereinafter contained, an appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a High Court, if the High Court certifies-
(i) that the case involves a substantial question of law of general importance; and

(ii) that in the opinion of the High Court the said question needs to be decided by the Supreme Court.]

110. Value of subject-matter .-[ Omitted by the Code of Civil Procedure (Amendment) Act , 1973 (49 of 1973), section 3 (w.e.f.29-11-1973).]
111. Bar of certain appeals .-[ Repealed by A.O. 1950.]
[111-A. Appeals to Federal Court .-[ Repealed by the Federal Court Act, 1941 (21 of 1941), section 2 (w.e.f.1-9-1942).]]
112. Savings .- [(1) Nothing contained in this Code shall be deemed-
(a) to affect the powers of the Supreme Court under Article 136 or any other provision of the Constitution, or

(b) to interfere with any rules made by the Supreme Court, and for the time being in force, for the presentation of appeals to that Court, or their conduct before that Court.]

(2) Nothing herein contained applies to any matter of criminal or admiralty or vice-admiralty jurisdiction, or to appeals from orders and decrees of Prize Courts.

PART VIII

Reference, Review And Revision

113. Reference to High Court .-Subject to such conditions and limitations as may be prescribed, any Court may state a case and refer the same for the opinion of the High Court, and the High Court may make such order thereon as it thinks fit:
[Provided that where the Court is satisfied that a case pending before it involves a question as to the validity of any Act, Ordinance or Regulation or of any provision contained in an Act, Ordinance or Regulation, the determination of which is necessary for the disposal of the case, and is of opinion that such Act, Ordinance, Regulation or provision is invalid or inoperative, but has not been so declared by the High Court to which that Court is subordinate or by the Supreme Court, the Court shall state a case setting out its opinion and the reasons therefor, and refer the same for the opinion of the High Court.
Explanation.-In this section, “Regulation” means any Regulation of the Bengal, Bombay or Madras Code or Regulation as defined in the General Clauses Act, 1897 (10 of 1897), or in the General Clauses Act of a State.]
114. Review .-Subject as aforesaid, any person considering himself aggrieved-
(a) by a decree or order from which an appeal is allowed by this Code, but from which no appeal has been preferred,

(b) by a decree or order from which no appeal is allowed by this Code, or

(c) by a decision on a reference from a Court of Small Causes, may apply for a review of judgment to the Court which passed the decree or made the order, and the Court may make such order thereon as it thinks fit.

115. Revision .- [(1)] The High Court may call for the record of any case which has been decided by any Court subordinate to such High Court and in which no appeal lies thereto, and if such subordinate Court appears-
(a) to have exercised a jurisdiction not vested in it by law, or

(b) to have failed to exercise a jurisdiction so vested, or

(c) to have acted in the exercise of its jurisdiction illegally or with material irregularity, the High Court may make such order in the case as it thinks fit:

[Provided that the High Court shall not, under this section, vary or reverse any order made, or any order deciding an issue, in the course of a suit or other proceeding, except where the order, if it had been made in favour of the party applying for revision, would have finally disposed of the suit or other proceedings.]
[(2) The High Court shall not, under this section, vary or reverse any decree or order against which an appeal lies either to the High Court or to any Court subordinate thereto.
[(3) A revision shall not operate as a stay of suit or other proceeding before the Court except where such suit or other proceeding is stayed by the High Court.]
Explanation .-In this section, the expression, “any case which has been decided” includes any order made, or any order deciding an issue, in the course of a suit or other proceeding.]

PART IX

Special Provisions Relating To The High Courts Not Being The Court Of A Judicial Commissioner

116. Part to apply only to certain High Courts .-This Part applies only to High Courts [not being the Court of a Judicial Commissioner].
117. Application of Code to High Courts -Save as provided in this Part or in Part X or in rules, the provisions of this Code shall apply to such High Courts.
118. Execution of decree before ascertainment of costs .-Where any such High Court considers it necessary that a decree passed in the exercise of its original civil jurisdiction should be executed before the amount of the costs incurred in the suit can be ascertained by taxation, the Court may order that the decree shall be executed forthwith, except as to so much thereof as relates to the costs;
and, as to so much thereof as relates to the costs, that the decree may be executed as soon as the amount of the costs shall be ascertained by taxation.
119. Unauthorised persons not to address Court .-Nothing in this Code shall be deemed to authorise any person on behalf of another to address the Court in the exercise of its original civil jurisdiction, or to examine witnesses, except where the Court shall have in the exercise of the power conferred by its charter authorised him so to do, or to interfere with the power of the High Court to make rules concerning advocates, vakils and attorneys.
120. Provisions not applicable to High Court in original civil jurisdiction .-(1) The following provisions shall not apply to the High Court in the exercise of its original civil jurisdiction, namely, sections 16, 17 and 20.

PART X

Rules

121. Effect of rules in First Schedule .-The rules in the First Schedule shall have effect as if enacted in the body of this Code until annulled or altered in accordance with the provisions of this Part.
122. Power of certain High Courts to make rules .- [High Courts [not being the Court of a Judicial Commissioner]] [* * *] may, from time to time after previous publication, make rules regulating their own procedure and the procedure of the Civil Courts subject to their superintendence, and may by such rules annul, alter or add to all or any of the rules in the First Schedule.
123. Constitution of Rule Committees in certain States .-(1) A Committee, to be called the Rule Committee shall be constituted at [the town which is the usual place of sitting of each of the High Courts [* * *] referred to in section 122.]
(2) Each such Committee shall consist of the following persons, namely:-
(a) three Judges of the High Court established at the town at which such Committee is constituted, one of whom at least has served as a District Judge or [* * *] a Divisional Judge for three years-

[(b) two legal practitioners enrolled in that Court,]

[(c) a Judge of a Civil Court subordinate to the High Court,] [* * * ]

[* * *]

(3) The members of each such Committee shall be appointed by the [High Court], who shall also nominate one of their member to be President:
[* * *]
(4) Each member of any such Committee shall hold office for such period as may be prescribed by the [High Court] in this behalf; and whenever any member retires, resigns, dies or ceases to reside in the State in which the Committee was constituted, or becomes incapable of acting as a member of the Committee, the said [High Court] may appoint another person to be a member in his stead.
(5) There shall be a Secretary to each such Committee, who shall be appointed by the [High Court] and shall receive such remuneration as may be provided in this behalf [by the State Government.]

124. Committee to report to High Court .-Every Rule Committee shall make a report to the High Court established at the town at which it is constituted on any proposal to annul, alter or add to the rules in the First Schedule or to make new rules, and before making any rules under section 122 the High Court shall take such report into consideration.

125. Power of other High Courts to make rules .-High Courts, other than the Courts specified in section 122, may exercise the powers conferred by that section in such manner and subject to such conditions [as [the State Government] may determine]:
Provided that any such High Court may, after previous publication, make a rule extending within the local limits of its jurisdiction any rules which have been made by any other High Court.
[126. Rules to be subject to approval .-Rules made under the foregoing provisions shall be subject to the previous approval of the Government of the State in which the Court whose procedure the rules regulate is situate or, if that Court is not situate in any State, to the previous approval of the [Central Government].]
127. Publication of rules .-Rules so made and [approved] shall be published in the [Official Gazette], and shall from the date of publication or from such other date as may be specified have the same force and effect, within the local limits of the jurisdiction of the High Court which made them, as if they had been contained in the First Schedule.
128. Matters for which rules may provide .-(1) Such rules shall be not inconsistent with the provisions in the body of this Code, but, subject thereto, may provide for any matters relating to the procedure of Civil Courts.
(2) In particular, and without prejudice to the generality of the powers conferred by sub-section (1), such rules may provide for all or any of the following matters, namely:-
(a) the service of summonses, notices and other processes by post or in any other manner either generally or in any specified areas, and the proof of such service;

(b) the maintenance and custody, while under the attachment, of live-stock and other movable property, the fees payable for such maintenance and custody, the sale of such live-stock and property, and the proceeds of such sale;

(c) procedure in suits by way of counterclaim, and the valuation of such suits for the purposes of jurisdiction;

(d) procedure in garnishee and charging orders either in addition to, or in substitution for, the attachment and sale of debts;

(e) procedure where the defendant claims to be entitled to contribution or indemnity over against any person whether a party to the suit or not;

(f) summary procedure-

(i) in suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising-

on a contract express or implied; or

on an enactment where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or

on a guarantee, where the claim against the principal is in respect of a debt or a liquidated demand only ; or

on a trust; or

(ii) in suits for the recovery of immovable property, with or without a claim for rent or mesne profits , by a landlord against a tenant whose term has expired or has been duly determined by notice to quit, or has become liable to forfeiture for non-payment of rent, or against persons claiming under such tenant;

(g) procedure by way of originating summons;

(h) consolidation of suits, appeals and other proceedings;

(i) delegation to any Registrar, Prothonotary or Master or other official of the Court of any judicial, quasi-judicial and non-judicial duties; and

(j) all forms, registers, books, entries and accounts which may be necessary or desirable for the transaction of the business of Civil Courts.

129. Power of High Courts to make rules as to their original civil procedure .-Notwithstanding anything in this Code, any High Court [not being the Court of a Judicial Commissioner] may make such rules not inconsistent with the Letters Patent [or order] [or other law] establishing it, to regulate its own procedure in the exercise of its original civil jurisdiction as it shall think fit, and nothing herein contained shall affect the validity of any such rules in force at the commencement of this Code.

130. Power of other High Courts to make rules as to matters other than procedure .-A High Court [not being a High Court to which section 129 applies] may, with the previous approval of the State Government, make with respect to any matter other than procedure any rule which a High Court [for a [* * *] State] might under [article 227 of the Constitution] make with respect to any such matter for any part of the territories under its jurisdiction which is not included within the limits of a Presidency-town.

131. Publication of rules .-Rules made in accordance with section 129 or section 130 shall be published in the [Official Gazette] and shall from the date of publication or from such other date as may be specified have the force of law.

PART XI

Miscellaneous

132. Exemption of certain women from personal appearance .-(1) Women who, according to the customs and manners of the country, ought not to be compelled to appear in public shall be exempt from personal appearance in Court.
(2) Nothing herein contained shall be deemed to exempt such women from arrest in execution of civil process in any case in which the arrest of women is not prohibited by this Code.
133. Exemption of other persons .- [(1) The following persons shall be entitled to exemption from personal appearance in Court, namely:-
(i) the President of India;

(ii) the Vice-President of India;

(iii) the Speaker of the House of the People;

(iv) the Ministers of the Union;

(v) the Judges of the Supreme Court;

(vi) the Governors of States and the Administrators of Union territories;

(vii) the Speakers of the State Legislative Assemblies;

(viii) the Chairmen of the State Legislative Councils;

(ix) the Ministers of States;

(x) the Judges of the High Courts ; and

(xi) the persons to whom section 87-B applies.]

[* * *]
(3) Where any person [* * *] claims the privilege of such exemption, and it is consequently necessary to examine him by commission, he shall pay the costs of that commission, unless the party requiring his evidence pays such costs.
134. Arrest other than in execution of decree .-The provisions of sections 55, 57 and 59 shall apply, so far as may be, to all persons arrested under this Code.

135. Exemption from arrest under civil process .-(1) No Judge, Magistrate or other judicial officer shall be liable to arrest under civil process while going to, presiding in, or returning from, his Court.
(2) Where any matter is pending before a tribunal having jurisdiction therein, or believing in good faith that it has such jurisdiction, the parties thereto, their pleaders, mukhtars, revenue-agents and recognised agents, and their witnesses acting in obedience to a summons, shall be exempt from arrest under civil process other than process issued by such tribunal for contempt of Court while going to or attending such tribunal for the purpose of such matter, and while returning from such tribunal.
(3) Nothing in sub-section (2) shall enable a judgment-debtor to claim exemption from arrest under an order for immediate execution or where such judgment-debtor attends to show cause why he should not be committed to prison in execution of a decree.

135-A. Exemption of members of legislative bodies from arrest and detention under civil process .- [(1) No person shall be liable to arrest or detention in prison under civil process-
(a) if he is a member of-

(i) either House of Parliament, or

(ii) the Legislative Assembly or Legislative Council of a State, or

(iii) a Legislative Assembly of a Union territory, during the continuance of any meeting of such House of Parliament or, as the case may be, of the Legislative Assembly or the Legislative Council;

(b) if he is a member of any committee of-

(i) either House of Parliament, or

(ii) the Legislative Assembly of a State or Union territory, or

(iii) the Legislative Council of a State, during the continuance of any meeting of such committee;

(c) if he is a member of-

(i) either House of Parliament, or

(ii) a Legislative Assembly or Legislative Council of a State having both such Houses, during the continuance of a joint sitting, meeting, conference or joint committee of the Houses of Parliament or Houses of the State Legislature, as the case may be;

and during the forty days before and after such meeting, sitting or conference. ]
(2) A person released from detention under sub-section (1) shall, subject to the provisions of the said sub-section, be liable to re-arrest and to the further detention to which he would have been liable if he had not been released under the provisions of sub-section (1).]
136. Procedure where person to be arrested or property to be attached is outside district .-(1) Where an application is made that any person shall be arrested or that any property shall be attached under any provision of this Code not relating to the execution of decrees, and such person resides or such property is situate outside the local limits of the jurisdiction of the Court to which the application is made, the Court may, in its discretion, issue a warrant of arrest or make an order of attachment, and send to the District Court within the local limits of whose jurisdiction such person or property resides or is situate a copy of the warrant or order, together with the probable amount of the costs of the arrest or attachment.
(2) The District Court shall, on receipt of such copy and amount, cause the arrest or attachment to be made by its own officers, or by a Court subordinate to itself, and shall inform the Court which issued or made such warrant or order of the arrest or attachment.
(3) The Court making an arrest under this section shall send the person arrested to the Court by which the warrant of arrest was issued, unless he shows cause to the satisfaction of the former Court why he should not be sent to the latter Court, or unless he furnishes sufficient security for his appearance before the latter Court, or for satisfying any decree that may be passed against him by that Court, in either of which cases the Court making the arrest shall release him.
(4) Where a person to be arrested or movable property to be attached under this section is within the local limits of the ordinary original civil jurisdiction of the High Court of Judicature at Fort William in Bengal or at Madras or at Bombay, [* * *] the copy of the warrant of arrest or of the order of attachment, and the probable amount of the costs of the arrest or attachment, shall be sent to the Court of Small Causes of Calcutta, Madras [or Bombay], as the case may be, and that Court, on receipt of the copy and amount, shall proceed as if it were the District Court.
137. Language of subordinate Courts .-(1) The language which, on the commencement of this Code, is the language of any Court subordinate to a High Court shall continue to be the language of such subordinate Court until the State Government otherwise directs.
(2) The State Government may declare what shall be the language of any such Court and in what character applications to and proceedings in such Courts shall be written.
(3) Where this Code requires or allows anything other than the recording of evidence to be done in writing in any such Court, such writing may be in English; but if any party or his pleader is unacquainted with English, a translation into the language of the Court shall, at his request, be supplied to him; and the Court shall make such order as it thinks fit in respect of the payment of the costs of such translation.

138. Power of High Court to require evidence to be recorded in English .-(1) The [High Court] may, by notification in the Official Gazette, direct with respect to any Judge specified in the notification, or falling under a description set forth therein, that evidence in cases in which an appeal is allowed shall be taken down by him in the English language and in the manner prescribed.
(2) Where a Judge is prevented by any sufficient reason from complying with a direction under sub-section (1), he shall record the reason and cause the evidence to be taken down in writing from his dictation in open Court.
139. Oath on affidavit by whom to be administered .-In the case of any affidavit under this Code-
(a) any Court or Magistrate, or

[(aa) any notary appointed under the Notaries Act, 1952 (53 of 1952), or]

(b) any officer or other person whom a High Court may appoint in this behalf, or

(c) any officer appointed by any other Court which the State Government has generally or specially empowered in this behalf, may administer the oath to the deponent.

140. Assessors in causes of salvage, etc.-(1) In any admiralty or vice-admiralty cause of salvage, towage or collision, the Court, whether it be exercising its original or its appellate jurisdiction, may, if it thinks fit, and shall upon request of either party to such cause, summon to its assistance, in such manner as it may direct or as may be prescribed, two competent assessors, and such assessors shall attend and assist accordingly.
(2) Every such assessor shall receive such fees for his attendance, to be paid by such of the parties as the Court may direct or as may be prescribed.

141. Miscellaneous proceedings .-The procedure provided in this Code in regard to suits shall be followed, as far as it can be made applicable, in all proceedings in any Court of civil jurisdiction.
[ Explanation .-In this section, the expression “proceedings” includes proceedings under Order IX, but does not include any proceeding under article 226 of the Constitution.]

142. Orders and notices to be in writing .-All orders and notices served on or given to any person under the provisions of this Code shall be in writing.

143. Postage .-Postage, where chargeable on a notice, summons or letter issued under this Code and forwarded by post, and the fee for registering the same, shall be paid within a time to be fixed before the communication is made:
Provided that the State Government [* * *] may remit such postage, or fee, or both, or may prescribe a scale of court-fees to be levied in lieu thereof.

144. Application for restitution .-(1) Where and in so far as a decree [or an order] is [varied or reversed in any appeal, revision or other proceeding or is set aside or modified in any suit instituted for the purpose, the Court which passed the decree or order] shall, on the application of any party entitled to any benefit by way of restitution or otherwise, cause such restitution to be made as will, so far as may be, place the parties in the position which they would have occupied but for such decree [or order] or [such part thereof as has been varied, reversed, set aside or modified] and, for this purpose, the Court may make any orders, including orders for the refund of costs and for the payment of interest, damages, compensation and mesne profits , which are properly [consequential on such variation, reversal, setting aside or modification of the decree or order].
[ Explanation .-For the purposes of sub-section (1), the expression “Court which passed the decree or order” shall be deemed to include,-
(a) where the decree or order has been varied or reversed in exercise of appellate or revisional jurisdiction, the Court of first instance;

(b) where the decree or order has been set aside by a separate suit, the Court of first instance which passed such decree or order;

(c) where the Court of first instance has ceased to exist or has ceased to have jurisdiction to execute it, the Court which, if the suit wherein the decree or order was passed were instituted at the time of making the application for restitution under this section, would have jurisdiction to try such suit.]

(2) No suit shall be instituted for the purpose of obtaining any restitution or other relief which could be obtained by application under sub-section (1).
145. Enforcement of liability of surety .-Where any person [has furnished security or given a guarantee]-
(a) for the performance of any decree or any part thereof, or

(b) for the restitution of any property taken in execution of a decree, or

(c) for the payment of any money, or for the fulfilment of any condition imposed on any person, under an order of the Court in any suit or in any proceeding consequent thereon,

the decree or order may be executed in the manner herein provided for the execution of decrees, namely:-
(i) if he has rendered himself personally liable, against him to that extent;

(ii) if he has furnished any property as security, by sale of such property to the extent of the security;

(iii) if the case falls both under clauses (i) and (ii), then to the extent specified in those clauses, and such person shall be deemed to be a party within the meaning of section 47]:

Provided that such notice as the Court in each case thinks sufficient has been given to the surety.

146. Proceedings by or against representatives .-Save as otherwise provided by this Code or by any law for the time being in force, where any proceeding may be taken or application made by or against any person, then the proceeding may be taken or the application may be made by or against any person claiming under him.

147. Consent or agreement by persons under disability .-In all suits to which any person under disability is a party, any consent or agreement, as to any proceeding shall, if given or made with the express leave of the Court by the next friend or guardian for the suit, have the same force and effect as if such person were under no disability and had given such consent or made such agreement.
148. Enlargement of time .-Where any period is fixed or granted by the Court for the doing of any act prescribed or allowed by this Code, the Court may, in its discretion, from time to time, enlarge such period, [not exceeding thirty days in total,] even though the period originally fixed or granted may have expired.

Caveat

148A. Right to lodge a caveat .-(1) Where an application is expected to be made, or has been made, in a suit or proceeding instituted, or about to be instituted, in a Court, any person claiming a right to appear before the Court on the hearing of such application may lodge a caveat in respect thereof.
(2) Where a caveat has been lodged under sub-section (1), the person by whom the caveat has been lodged (hereinafter referred to as the caveator) shall serve a notice of the caveat by registered post, acknowledgment due, on the person by whom the application has been, or is expected to be, made under sub-section (1).
(3) Where, after a caveat has been lodged under sub-section (1), any application is filed in any suit or proceeding, the Court shall serve a notice of the application on the caveator.
(4) Where a notice of any caveat has been served on the applicant, he shall forthwith furnish the caveator, at the caveator’s expense, with a copy of the application made by him and also with copies of any paper or document which has been, or may be, filed by him in support of the application.
(5) Where a caveat has been lodged under sub-section (1), such caveat shall not remain in force after the expiry of ninety days from the date on which it was lodged unless the application referred to in sub-section (1) has been made before the expiry of the said period.

149. Power to make up deficiency of Court-fees .-Where the whole or any part of any fee prescribed for any document by the law for the time being in force relating to Court-fees has not been paid, the Court may, in its discretion, at any stage, allow the person, by whom such fee is payable, to pay the whole or part, as the case may be, of such Court-fee; and upon such payment the document, in respect of which such fee is payable, shall have the same force and effect as if such fee had been paid in the first instance.

150. Transfer of business .-Save as otherwise provided, where the business of any Court is transferred to any other Court, the Court to which the business is so transferred shall have the same powers and shall perform the same duties as those respectively conferred and imposed by or under this Code upon the Court from which the business was so transferred.

151. Saving of inherent powers of Court .-Nothing in this Code shall be deemed to limit or otherwise affect the inherent power of the Court to make such orders as may be necessary for the ends of justice, or to prevent abuse of the process of the Court.

Amendment of judgments

152. Amendment of judgments, decrees or orders .-Clerical or arithmetical mistakes in judgments, decrees or orders or errors arising therein from any accidental slip or omission may at any time be corrected by the Court either of its own motion or on the application of any of the parties.

153. General power to amend .-The Court may, at any time, and on such terms as to costs or otherwise as it may think fit, amend any defect or error in any proceeding in a suit; and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on such proceeding.

[153A. Power to amend decree or order where appeal is summarily dismissed .-Where an Appellate Court dismisses an appeal under rule 11 of Order XLI, the power of the Court to amend, under section 152, the decree or order appealed against may be exercised by the Court which had passed the decree or order in the first instance, notwithstanding that the dismissal of the appeal has the effect of confirming the decree or order, as the case may be, passed by the Court of first instance.

153B. Place of trial to be deemed to be open Court .-The place in which any Civil Court is held for the purpose of trying any suit shall be deemed to be an open Court, to which the public generally may have access so far as the same can conveniently contain them:
Provided that the presiding Judge may, if he thinks fit, order at any stage of any inquiry into or trial of any particular case, that the public generally, or any particular person, shall not have access to, or be or remain in, the room or building used by the Court.]

154. Saving of present right of appeal .-[ Repealed by the Repealing and Amending Act, 1952 (48 of 1952), section 2 and Schedule I.]

155. Amendment of certain Acts .-[ Repealed by the Repealing and Amending Act, 1952 (48 of 1952), section 2 and Schedule I.]

156. Repeals .-[ Repealed by the Second Repealing and Amending Act, 1914 (17 of 1914), section 3 and Schedule II.]

157. Continuance of orders under repealed enactments .-Notifications published, declarations and rules made, places appointed, agreements filed, scales prescribed, forms framed, appointments made and powers conferred under Act 8 of 1859 or under any Code of Civil Procedure or any Act amending the same or under any other enactment hereby repealed shall, so far as they are consistent with this Code, have the same force and effect as if they had been respectively published, made, appointed, filed, prescribed, framed and conferred under this Code and by the authority empowered thereby in such behalf.

158. Reference to Code of Civil Procedure and other repealed enactments .-In every enactment or notification passed or issued before the commencement of this Code in which reference is made to or to any Chapter or section of Act 8 of 1859 or any Code of Civil Procedure or any Act amending the same or any other enactment hereby repealed, such reference shall, so far as may be practicable, be taken to be made to this Code or to its corresponding Part, Order, section or rule.





Malik

The word ‘Malik’ is of very common use in many parts of India and it cannot certainly be regarded as a technical term at conveyancing. In the language at the P. C., the term ‘Malik’ when used in a will or other document

“as descriptive of the position which a devisee or donee is intended to hold, has been held apt to describe an owner possessed of full property rights, including a full right of alienation, unless there is something in the context or in the surrounding circumstances to indicate that suchfull proprietary rights were not intended to be conferred:vide Sasiman Chowdhurain v. Shib Narain,49 I. A. 25.”

“The word “Malik” is too common an expression in this part of the country and its meaning and implications were fairly well settled by judicial pronouncements long before the document was executed. If really the grantee was intended to have only a life interest in the properties, there was no lack of appropriate words, prefectly well known in the locality, to express such intention”.

Though the word ‘malik’ s not a term of art, it has been held in quite a large number of cases, decided mostly by the Judicial Committee of the P. C. that the word, as employed in Indian documents, means absolute owner and that unless the context indicated a different meaning, its use would be sufficient to convey a full title even without the addition of the word ‘heirs’, or ‘son’, ‘grand son’ and ‘great grandson’. Of course, if there are other clauses in the document which control the import of the word and restrict the estate to a limited one, we must give the narrower meaning, otherwise the word must receive its full significance. Especially is this so, when the rule of interpretation laid down in Mohammed Shamsul v. Sewak Ram, 2 I. A. 7, (14 Beng. L. R. 226 P. C.) has come to be regarded as unsound.


Refer: AIR 1951 SC 139




Termination of agency, where agent has interest in subject matter- SEC-202 of Indian Contract Act

In the case of Shikha Properties Pvt Ltd versus S Bhagwant Singh & Others reported in 74 (1998) DLT 113 and Harbans Singh versus Smt. Shanti Devi reported in 1997 RLR 487, it has been held by the Hon’ble High Court of Delhi that Section 202 of the contract Act would make a power of attorney executed for consideration irrevocable. It cannot be cancelled. In the case of Ramesh Chand (supra), the Hon’ble High Court was pleased to reiterate that by virtue of the provisions of Section 202 of the Contract Act, a power of attorney executed for consideration would remain valid even after the death of the executants because the same had elements of a commercial transaction which cannot be allowed to be frustrated on account of death of the executants. Section 202 of the Contract Act provides that such an agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.

Sh. Bidhan Chand Biswas vs Sh. Prakash Chand Bansal & Ors.[ Delhi High Court-RSA No.131/2014- DT 20 May, 2014]

Indian Contract Act-1872

202. Termination of agency, where agent has an interest in subject-matter 

Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.

Illustrations

(a) A gives authority to B to sell As land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.

(b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out of the price, the amount of his own advances. A cannot revoke this authority, nor is it terminated by his insanity or death.

_________________________

Irrevocable Agency

An agency in the absence of an express contract to the contrary cannot be terminated by the Principal if the agent has himself an interest in the property which is the subject-matter of agency. ‘Agent’ has been defined in Section 182 of the Indian Contract Act, 1872, to mean a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the ‘principal’. Section 185 of the Contract Act suggests that no consideration is necessary to create an agency. Besides the Indian Contract Act, the Power of Attorney Act, 1882 deals with the subject. Section 1-A of the Power of Attorney Act defines power of attorney to include any instruments empowering a specified person to act for and in the name of the person executing it. Section 2 of the said Act provides that the donee of a power-of-attorney may, if he thinks fit, execute or do any instrument or thing in and with his own name and signature and his own seal, where sealing is required, by the authority of the donor of the power and every instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof. This section applies to powers-of-attorney created by instruments executed either before or after this Act comes into force. Thus, the donor of a power of attorney has every right to revoke the same at any time after the execution of such power except in a case where Section 202 of the Contract Act is attracted. [Smt. Shamali Das vs Swadesh Ghosh & Ors DATED-10 July, 2009]

A Brief Survey of The Registration Act.

Amar Nath Vs. Gian Chand and Anr. [ Supreme Court of India] –

[Civil Appeal No. 5797 of 2009]

12. We must make a survey of the relevant provisions of the Registration Act. Section 17 deals with the documents which are compulsorily to be registered. The consequences of a compulsorily registrable document not being registered are spelt out in Section 49 of the Act.

Section 18 deals with documents, which are optionally registrable. In other words, they are documents, which do not attract the wrath of Section 49 of the Act. In the state of Himachal Pradesh from where this case arises, Section 18A has been inserted (vide Vide Himachal Pradesh Act 2 of 1969, s. 3). It reads as follows:

“18-A. Documents for registration to be accompanied by a true copy.-

Notwithstanding anything contained in this Act, the registering officer shall refuse to register any document presented to him for registration unless such document is accompanied by a true copy thereof.”

13. The argument of the first defendant, based on Section 18A, is as follows:

Section 18A contemplates the production of the certified copy of the power of attorney and therefore the production of the certified copy of the power of attorney along with the original of the sale deed was fully justified.

The High Court, in the impugned judgment, has referred to Section 18 (apparently Section 18A) and held that it is evident from the said provision that it was necessary for the Registering Authority to see the true copy of the special power of attorney.

Impact of Section 18A

14. What Section 18A contemplates is the production of a true copy of a document, which is sought to be got registered. The document, which is sought to be registered in this case was the sale deed executed by the second defendant in favour of the first defendant. We are not called upon to decide the case that the true copy of the sale deed was not produced.

15. In fact, our view finds support from the Statement of Objects and Reasons to be found in the Indian Registration (Punjab Amendment Bill), 1961.Section 18A was first introduced in Punjab and it, is thereafter, that it was also made applicable in respect of the State of Himachal Pradesh. The Statement of Objects and Reasons to the Punjab Bill reads as follows:

“According to section 52(1)(c) of the Indian Registration Act, 1908, all documents registerable under the Act, are copied in the relevant Bahis before they are returned to the executant. It takes a considerable time to copy out these documents in the relevant Bahis and the delay causes considerable loss to the litigant people.

Similarly, there is no check on the writing of deeds and to give relief to the public on these two accounts. Applications under this Act, and also on the fees charged by deed-writers. Often, people with little. experience and knowledge of the laws on Stamp Registration are. writing out these documents at very high rates. This Bill seeks to give relief to the public on these two accounts.”

16. It is, therefore, clear that the true copy of the document presented for registration is to be produced under Section 18A.It is only to avoid the delay resulting from having to copy the document, that Section 18A was inserted.

The Other Provisions

17. The argument of the plaintiff would appear to be that it is imperative, having regard to Sections 32 and 33 of the Act, that the original power of attorney should be produced. In view of this, we consider it necessary to advert to Sections 32 and 33 of the Act, which read as follows:

“32. Persons to present documents for registration `Except in the cases mentioned in sections 31, 88 and 89 every document to be registered under this Act, whether such registration be compulsory or optional, shall be presented at the proper registration office-

(a) by some person executing or claiming under the same, or, in the case of a copy of a decree or order, claiming under the decree or order, or

(b) by the representative or assignee of such a person, or

(c) by the agent of such a person, representative or assign, duly authorised by power-of-attorney executed and authenticated in manner hereinafter mentioned.”

33. Power-of-attorney recognisable for purposes of section 32

(1) For the purposes of section 32, the following powers-of-attorney shall alone be recognised, namely:-

(a) if the principal at the time of executing the power-of-attorney resides in any part of India in which this Act is for the time being in force, a power-of-attorney executed before and authenticated by the Registrar or Sub-Registrar within whose district or sub-district the principal resides;

(b) if the principal at the time aforesaid resides in any part of India in which this Act is not in force, a power-of-attorney executed before and authenticated by any Magistrate;

(c) if the principal at the time aforesaid does not reside in India, a power-of-attorney executed before and authenticated by Notary Public, or any court, Judge, Magistrate, Indian Consul or vice-consul, or representative of the Central Government:

PROVIDED that the following persons shall not be required to attend at any registration-office or court for the purpose of executing any such power-of-attorney as is mentioned in clauses (a) and (b) of this section, namely-

(i) persons who by reason of bodily infirmity are unable without risk or serious inconvenience so to attend;

(ii) persons who are in jail under civil or criminal process; and

(iii) persons exempt by law from personal appearance in court.

Explanation: In this sub-section “India” means India, as defined in clause (28) of section 3 of the General Clauses Act, 1897.] Section 33 (2) In the case of every such person the Registrar or Sub-Registrar or Magistrate, as the case may be, if satisfied that the power-of-attorney has been voluntarily executed by the person purporting to be the principal, may attest the same without requiring his personal attendance at the office or court aforesaid.

Section 33 (3) To obtain evidence as to the voluntary nature of the execution, the Registrar or Sub-Registrar or Magistrate may either himself go to the house of the person purporting to be the principal, or to the jail in which he is confined, and examine him, or issue a commission for his examination.

Section 33 (4) Any power-of-attorney mentioned in this section may be proved by the production of it without further proof when it purports on the face of it to have been executed before and authenticated by the person or court hereinbefore mentioned in that behalf.”

18. We also consider it necessary to refer to Section 34 of the Act. It reads as follows:

“34. Enquiry before registration by registering officer.-

(l) Subject to the provisions contained in this Part and in sections 41, 43, 45, 69, 75, 77, 88 and 89, no document shall be registered under this Act, unless the persons executing such document, or their representatives, assigns or agents authorized as aforesaid, appear before the registering officer within the time allowed for presentation under sections 23, 24, 25 and 26:

Provided that, if owing to urgent necessity or unavoidable accident all such persons do not so appear, the Registrar, in cases where the delay in appearing does not exceed four months, may direct that on payment of a fine not exceeding ten times the amount of the proper registration fee, in addition to the fine, if any, payable under section 25, the document may be registered.

(2) Appearances under sub-section (1) may be simultaneous or at different times.

(3) The registering officer shall thereupon-

(a) enquire whether or not such document was executed by the persons by whom it purports to have been executed;

(b) satisfy himself as to the identity of the persons appearing before him and alleging that they have executed the document; and

(c) in the case of any person appearing as a representative, assign or agent, satisfy himself of the right of such person so to appear.

(4) Any application for a direction under the proviso to sub-section (1) may be lodged with a Sub-Registrar, who shall forthwith forward it to the Registrar to whom he is subordinate.

(5) Nothing in this section applies to copies of decrees or orders.

19. The argument of the plaintiff that for a proper and legal presentation of a document, the first defendant was obliged to produce the original power of attorney, does not appear to be sound. In fact, the matter itself is not res integra. This Court in Rajni Tandon v. Dulal Ranjan Ghosh Dastidar and another (supra), held, inter alia, as follows:

“19. In view of the aforesaid situation, the issue that falls for our consideration is whether a person who executes a document under the terms of the power of attorney, is, insofar as the registration office is concerned, the actual executant of the document and is entitled under Section 32(a) to present it for registration and get it registered.

21. Section 32 deals with persons who are eligible to present documents for registration before the proper registration office. Section 32 specifies three categories of persons who can present documents for registration.

The use of the word “or” between the clauses of Section 32 demonstrates that the legislature intended the said clauses to be read disjunctively and not conjunctively. It is settled law that the use of the word “or” is used to signify the disjunctive nature of a provision. In this regard reference may be made to the decision of this Court in State of Orissa v. State of A.P. [(2006) 9 SCC 591]

22. Clause (a) of Section 32 specifies that a document can be presented for registration by:

(i) by the person executing the document;

(ii) any person claiming under the document presented for registration; and

(iii) in the case the said document is a copy of a decree or order, any person claiming under the decree or order.

Clauses (b) and (c) deal with cases where the document is presented not by any person mentioned in (i), (ii) and (iii) above but by their agent, representative or assign. This is so because the use of the words “such person” in clauses (b) and (c) can be understood to mean only persons as referred to in (i), (ii) and (iii) above.

23. It may also be mentioned herein that the scope of clauses (b) and (c) in Section 32 may to an extent overlap one another. However, we do not propose to deal with the same as it is not relevant for determination of the issue before us.

It is suffice to say that insofar as clause (c) of Section 32 is concerned the agents, representatives or assigns of the persons referred to in (i), (ii) and (iii) above can present the said document for registration only if they are duly authorised by the power of attorney executed and authenticated in the manner hereinafter mentioned.

24. The words “executed and authenticated in manner hereinafter mentioned” in Section 32(c) would mean the procedure specified in Section 33. This is clear from the opening words of Section 33 which reads “for the purposes of Section 32, the following power of attorney shall alone be recognised”.

Section 32 refers to documents presented for registration by a holder of “power of attorney” in clause (c) and it therefore follows that the procedure specified under Section 33 would be attracted where a document is presented by a person holding “powers of attorney” of the persons mentioned in clause (a) of Section 32.

25. The aforesaid position makes it explicitly clear that Section 32 of the Act requires the documents sought to be registered, to be presented, inter alia by the person executing it. In other words, the said expression requires presence of the actual person executing the document. The basic principle underlying this provision of the Act is to get before the Sub-Registrar the actual executant who, in fact, executes the document in question.

In fact, the ratio of the decision in Ram Gopal [AIR 1960 Punj 226] has laid down a similar proposition on the conjoint reading of Section 32 and Section 33 of the Act and after referring to all the judgments noted hereinbefore. Same view has been expressed earlier by the Bombay High Court in Ratilal Nathubhai v. Rasiklal Maganlal [AIR 1950 Bom 326].

26. It is important to bear in mind that one of the categories of persons who are eligible to present documents before the registration office in terms of Section 32 of the Act is the “person executing” the document.

The expression “person executing” used in Section 32 of the Act, can only refer to the person who actually signs or marks the document in token of execution, whether for himself or on behalf of some other person. Thus, “person executing” as used in Section 32(a) of the Act signifies the person actually executing the document and includes a principal who executes by means of an agent.

Where a person holds a power of attorney which authorises him to execute a document as agent for someone else, and he executes a document under the terms of the power of attorney, he is, so far as the registration office is concerned, the actual executant of the document and is entitled under Section 32(a) to present it for registration and get it registered.

28. In the facts of the present case, it is quite clear that Indra Kumar Halani, was given the full authority by Nandlal Tantia under the power of attorney to transfer the suit property and to execute the necessary document. It is an accepted position that the said document had been executed by Indra Kumar Halani in the name and on behalf of Nandlal Tantia thereof.

Therefore, for the purposes of registration office under Section 32(a) of the Act Indra Kumar Halani is clearly the “person executing” the document. Therefore, it follows that the said sale deed which was executed and authenticated by Indra Kumar Halani could be presented for registration by him. We are of the considered view that Indra Kumar Halani acted in the aforesaid manner mandated under Section 32(a) of the Act.

29. The object of registration is designed to guard against fraud by obtaining a contemporaneous publication and an unimpeachable record of each document. The instant case is one where no allegation of fraud has been raised.

In view thereof the duty cast on the registering officer under Section 32 of the Act was only to satisfy himself that the document was executed by the person by whom it purports to have been signed. The Registrar upon being so satisfied and upon being presented with a document to be registered had to proceed with the registration of the same.”

20. In other words, when a person empowers another to execute a document and the power of attorney, acting on the power, executes the document, the power of attorney holder can present the document for registration under Section 32(a). Section 32(a) of the Registration Act deals with the person executing a document and also the person claiming under the same.

It also provides for persons claiming under a decree or an order being entitled to present a document. Section 32(b) speaks about the representative or assignee of ‘such a person’. The word such a person in Section 32(b) is intended to refer to the persons covered by Section 32(a).

Finally, Section 32(c) provides for the agent of ‘such a person’ which necessarily means the persons who are encompassed by Section 32(a). Besides agent of the person covered by Section 32(a), Section 32(c) also takes in the agent of the representative or assignee.

Now the words representative or assignee are to be found in Section 32(b). Thus, Section 32(c) deals with agents of the persons covered by Section 32(a) and agents of the representative or assignee falling under Section 32(b).

It is in respect of such an agent that there must be due authorisation by a power of attorney, which in turn, is to be executed and authenticated in the manner provided for in Section 33.

However, the person, who has actually signed the document or executed the document for the purpose of Section 32(a) does not require a power of attorney to present the document. It may be open to the principal, who has entered obligations under the document, to present the document. Section 32(c) must alone be read with Section 33 of the Act.

Thus, when Section 32(c) of the Registration Act declares that a document, whether it is compulsorily or optionally registrable, is to be presented, inter alia, by the agent of such a person, representative or assignee, duly authorised by power of attorney, it must be executed and authenticated in the manner and hereinafter mentioned immediately in the next following section.

Section 33 by its very heading provides for power of attorney recognisable for the purpose of Section 32. Section 32(a) cannot be read with Section 33 of the Act. In other words, in a situation, if a document is executed by a person, it will be open to such a person to present the document for registration through his agent.

The agency can be limited to authorising the agent for presenting the document for it is such a power of attorney, which is referred to in Section 32(c). It is in regard to a power of attorney holder, who is authorised to present the document for registration to whom Section 33 would apply.

In the facts of this case, the second defendant was armed with the power of attorney dated 28.01.1987 and if it was not cancelled and he had executed the sale deed on 28.04.1987, he would be well within his rights to present the document for registration under Section 32(a) of the Act.

21. It is no doubt true that presentation is not a matter of form. Without a valid presentation of the document, the registration would be illegal. In this regard, the observations of the Privy Council in judgment reported in Jambu Prasad v. Muhammad Aftab Ali Khan and others8 may be noticed.

“Para 8. It was decided, and as their Lordships considered correctly, by Sir John Stanley, C.J. and Sir George Knox, J. in 1966 in Ishri Prasad v. Baijnath 28A. 707 : 3 A.L.J. 743 : A.W.N. (1906) 195 that the terms of Sections 32 and 33 of Act III of 1877 are imperative, and that a presentation of a document for registration by an agent, in that case the agent of a vendee of Immovable property, who has not been duly authorised in accordance with those sections, does not give to the Registering Officer the indispensable foundation of his authority to register the document. As those learned Judges said:

His (the Sub-Registrar’s) jurisdiction only comes into force if and when a document is presented to him in accordance with law.

Para 11. One object of Sections 32, 33, 34 and 35 of Act III of 1877 was to make it difficult for persons to commit frauds by means of registration under the Act.”

However, in the facts, the IInd defendant having presented the sale deed as executant, the presentation and registration cannot be questioned.

22. Section 34 provides for the inquiry to be done by the Registering Office before he orders registration. It declares that no document shall be registered under the Act unless the persons executing such document or their representatives, assigns or agents authorised as aforesaid, appear before the Registering Authority before the time, allowed for presentation under Sections 23, 24, 25 and 26.

This is, however, subject to Sections 41, 43, 45, 69, 75, 77, 83 and 89. Appearances under Section 34(1) may be simultaneous or at different times. Section 34(3)(a) enjoins upon the Registering Officer to enquire whether or not such document was executed by the persons by whom it purports to have been executed.

Section 34(3)(b) further makes it his duty to satisfy himself as to the identity of a person’s appearing before him and alleging that they have executed the document. It must be understood and read along with Section 32(a). Section 32(a) mandates presentation of the document for registration by some person executing or claiming under the same, inter alia.

In respect of a person who presents the document, who claims to have executed the document, not only is he entitled to present the document for registration, in the inquiry under Section 34(3)(a) and 3(b), the duty of the Registering Officer extends only to enquire and find that such person is the person who has executed the document he has presented and further be satisfied about the identity of the person.

When it comes to Section 34(3)(c), the Registering Officer is duty-bound in respect of any person appearing as a representative, assign or agent to satisfy himself of a right of such a person to so appear. Section 34(3)(c) is relatable to persons covered by Section 32(b) and 32(c) of the Act.

We have already found that the word ‘agent’ is to be understood as a person who is authorised to present the document for registration. Such an agent would fall under Section 32(c). Thus, in regard to persons falling in Section 34(3)(c), it would, indeed, be incumbent on the agent, inter alia, to produce the power of attorney as such.

23. Section 33(4) of the Act must be read with Section 4 of the Power of Attorney Act, 1882. Section 33(4) reads as follows:

“33(4) Any power-of-attorney mentioned in this section may be proved by the production of it without further proof when it purports on the face of it to have been executed before and authenticated by the person or Court hereinbefore mentioned in that behalf.”

24. Sections 4(a) and (b) of the Power of Attorney Act, 1882 reads as follows:

“4. Deposit of original instruments creating powers-of-attorney. –

(a) An instrument creating a power-of-attorney, its execution being verified by affidavit, statutory declaration or other sufficient evidence, may, with the affidavit or declaration, if any, be deposited in the High Court 9 [or District Court] within the local limits of whose jurisdiction the instrument may be.

(b) A separate file of instruments so deposited shall be kept; and any person May search that file, and inspect every instrument so deposited; and a certified copy thereof shall be delivered out to him on request.”

25. For reasons, which we have indicated, Section 32(c) read with Section 33 and Section 34(2)(c) are inter-related and they would have no application in regard to the document presented for registration by a power of attorney holder who is also the executant of the document.

In other words, there is really no need for the production of the original power of attorney, when the document is presented for registration by the person standing in the shoes of the second defendant in this case as he would be covered by the provisions of Section 32(a) as he has executed the document though on the strength of the power of attorney.

To make it even further clear, the inquiry contemplated under the Registration Act, cannot extend to question as to whether the person who executed the document in his capacity of the power of attorney holder of the principal, was indeed having a valid power of attorney or not to execute the document or not.

26. Section 35 of the Registration Act provides for the procedure on admission or denial of execution. The person, who has executed the document is to be asked whether he accepts the execution of the document. Section 35(2) reads as follows:

“35(2) The registering officer may, in order to satisfy himself that the persons appearing before him are the persons they represent themselves to be, or for any other purpose contemplated by this Act, examine any one present in his office.”

27. This provision gives authority to the Registering Authority to satisfy himself that the persons appearing before him are the persons they represent to be or for any other purpose contemplated under the Act. Towards this end, Registering Officer can examine anyone present in his Office. Section 35(3) reads as follows:

“(3) (a) If any person by whom the document purports to be executed denies its execution, or

(b) if any such person appears to the registering officer to be a minor, an idiot or a lunatic, or

(c) if any person by whom the document purports to be executed is dead, and his representative or assign denies its execution, the registering officer shall refuse to register the document as to the person so denying, appearing or dead: Provided that, where such officer is a Registrar, he shall follow the procedure prescribed in Part XII: 50

[Provided further that the 51 [State Government] may, by notification in the 52 [Official Gazette], declare that any Sub-Registrar named in the notification shall, in respect of documents the execution of which is denied, be deemed to be a Registrar for the purposes of this sub-section and of Part XII.]”

28. Thus, the aforesaid provision deals with situations in which the Registering Authority refuses the registration. If the registering Authority is satisfied about the identity of the person and that he admits the execution of the document, it may not be a part of the Registrar’s duty to enquire further. The registration by itself will not bring the curtains down on questions relating to title to the property.

The very purport of the Law of Registration is to usher in and maintain a transparent system of maintaining documents relating to property rights. It puts the world on notice about certain transactions which are compulsorily registrable Section 17 interalia. The law also makes available facility of registering documents at the option of the person (Section 18).

29. Section 57 of the Act provides for keeping Books No. 1 and 2 and the Index relating to Book No.1 open for inspection to any person applying to inspect the same. Book No.1, it must be noticed, as provided in Section 51, is a register of non-testamentary documents relating to immovable property. Book No.2 is a record of reasons for refusal to register.

30. Section 58 of the Act deals with the procedure on admitting a document to registration.

“58. Particulars to be endorsed on documents admitted to registration. –

(l) On every document admitted to registration, other than a copy of a decree or order, or a copy sent to a registering officer under section 89, there shall be endorsed from time to time the following particulars, namely: –

(a) the signature and addition of every person admitting the execution of the document, and, if such execution has been admitted by the representative, assign or agent of any person, the signature and addition of such representative, assign or agent;

(b) the signature and addition of every person examined in reference to such document under any of the provisions of this Act; and

(c) any payment of money or delivery of goods made in the presence of the registering officer in reference to the execution of the document, and any admission of receipt of consideration, in whole or in part, made in his presence in reference to such execution.

(2) If any person admitting the execution of a document refuses to endorse the same, the registering officer shall nevertheless register it, but shall at the same time endorse a note of such refusal. State Amendments Tamil Nadu:

In section 58, – (i) in sub-section (1), after item (a), the following item shall be inserted, namely:-

“(aa) in the case of a document for sale of property, the signature and addition of every person admitting the claim under such document, and, if such claim has been admitted by the representative, assign or agent of any person, the signature and addition of such representative, assign or agent;”;

(ii) in sub-section (2), after the expression “execution of a document”, the expression “and in the case of a document for sale of property, any person admitting the execution of such document, or any person admitting the claim under that document” shall be inserted. [Vide Tamil Nadu Act 28 of 2000].”

31. Section 71 provides for reasons for refusal to register to be recorded. Section 72 provides for an appeal to the Registrar against an Order of the Sub-Registrar refusing to register. Section 77 contemplates a Suit against refusal by the Registrar within 30 days of his Order.

Precedent from Supreme court of India

Law

Suraj Lamp and Industries Pvt. Ltd. vs. State of Haryana and Another (2012) 1 SCC 656,

The scope of power of attorney has been explained in the following words:

“20. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorises the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see Section 1-A and Section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee.

21. In State of Rajasthan v. Basant Nahata, (2005) 12 SCC 77. this Court held: (SCC pp. 90 & 101, paras 13 & 52) “13. A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent  is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience.
* * *
52. Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers of Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee.”
An attorney-holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor.”

Loonkaran Sethiya Vs. State Bank of Jaipur & Ors [1968] INSC 124 (25 April 1968)-1969 AIR 73 1969 SCR (1) 122

The appellant was indebted to the respondent Bank. He executed a power of attorney in favour of the bank giving it authority to execute a decree which he had obtained in his favour. The bank filed an application for the execution of the decree in the appellant’s name, the application being signed by the manager of the Bank as holding power of attorney. The appellant object to the execution. His objections were over-ruled.

(i) The power given by the appellant in favour of the Bank was a power coupled with interest and in view of s. 202 of the Indian Contract Act it was irrevocable. [126 D] (ii) The interest of the appellant under the decree could not be said to have been transferred to the Bank either in writing or by operation of law. But the power of attorney was an engagement to pay out of the particular fund the debt due to the Bank and hence the same constituted an equitable assignment of the amount due under the decree or so much of that amount as was necessary for discharging the debts due to it. [127 A C] Watson v. The Duke of Wellington, [1830] 39 E.R. 231 and Burn N. Carvalho, [1839] 41 E.R. 265, applied.

There is hardly any doubt that the power given by the appellant in favour of the Bank is a power coupled with interest.

That is clear both from the tenor of the document as well as from its terms. Section 202 of the Contract Act provides that where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence, of an express contract, be terminated to the prejudice of such interest. It is settled law that where the agency is created for -valuable consideration and authority is given to effectuate a security -or to secure interest of the agent, the authority cannot be revoked. The document itself says that the power given to the Bank is irrevocable.

Shanti Budhiya Vesta Patel & Ors. Vs. Nirmala Jayprakash Tiwari & Ors. [2010] INSC 297 (21 April 2010)

The appellants contended that they had revoked the Powers of Attorney executed in favour of respondent no. 1 by executing a fresh Power of Attorney in favour of said Narendra M. Patel. A registered document has a lot of sanctity attached to it and this sanctity cannot be allowed to be lost without following the proper procedure. The Power of Attorney executed by the appellants in favour of said Narender M. Patel, by revoking the registered Powers of Attorney executed in favour of respondent no. 9 to be baseless.

Budhiya Vesta Patel had himself entered into a Development Agreement dated 12.01.1994 with respondent no. 9 whereby the former transferred his rights, title and interest in the suit property to the latter for a consideration of Rs. 2,00,000/- which was fully paid by respondent no. 9 to the Budhiya Vesta Patel and accepted by him prior to the execution of the said agreement. It 9 was further submitted that the irrevocable Powers of Attorney which were executed in favour of respondent no. 9 by Budhiya Vesta Patel and, upon his death, by the appellants made the acts, which were carried out by respondent no. 9 in the best interest of the appellants, binding on the appellants and that there existed no valid ground for setting aside the compromise arrived at between the parties and the consent decree passed by the High Court.

By executing the said Powers of Attorney in favour of the respondent no. 9, the appellants had consciously and willingly appointed, nominated, constituted and authorized respondent no. 9 as their lawful Power of Attorney to do certain deeds, things and matters. The relevant clauses are being extracted herein below: – “6. To sign Petition or present Petitions or Petition, to file suit and to sign and verify claims, written statements, pleadings, applications, returns, and to appear, act in any Court- Civil, Criminal, Court Receiver and /or Revenue, original or appellate or Revisional or before any competent authority, Officer, or Officer for in respect of or in connection with the aforesaid and with buildings etc. thereon and/or any other proceedings, suit or appeal in connection with the management and superintendence of my said lands for any purpose whatsoever necessary.

The appellants also alleged that they had revoked the Powers of Attorney executed by them in favour of the respondent no. 9 by filing complaints with the police. We are of the considered opinion that this contention of the appellants is devoid of merit. Although there is no denying the fact that three police complaints had been filed on three different dates with the police against the alleged harassment and threats by 21 respondent nos. 8 and 9, it is difficult to understand how the Powers of Attorney executed by the appellants or their predecessor-in-interest stood revoked. The record of the case reveals that each of the complaints was filed by a separate person – the first complaint was filed by the appellants themselves, the second by an Advocate and the third by one Narendra M. Patel, who is himself a builder. It is significant to note that all these complaints came to be filed when said Narender M. Patel came into the picture. Further, it is important to take note of the fact that all the Powers of Attorney executed in favour of respondent no. 9 as also all the deeds and documents entered into between the predecessor-in-interest of the appellants and respondent no. 9 were duly registered with the office of the Sub-Registrar. Neither any document nor any of the Powers of Attorney was ever got cancelled by the appellants.

.

Precedent from High Courts

Ashok Kumar Jaiswal vs Ashim Kumar Kar (Calcutta High Court)

CO No. 1358 of 2010 – (13 February 2014)

If we look to Section 202 of the Indian Contract Act 1872, we would find, when the agent had interest in the property under the agency agreement in absence of an express provision the contract could not be terminated to the prejudice of such interest. Section 203 would permit the principal to revoke the authority of his agent subject however; when the agent partly exercised his authority such revocation would not be permissible under Section 204. If we read these three provisions together and try to answer the second query made to us by His Lordship we would find, the Power of Attorney so revoked by the owner should not be looked at in an isolated manner. The Power of Attorney generally issued to the developer, was in continuation of the original agreement for the development of the property meaning thereby, the developer who was entrusted to develop the property would be given authority to do further act as per the contract including dealing with the property to the extent permissible under the contract. Hence, the Power of Attorney was nothing but an agency agreement executed in furtherance of the original contract. If the original contract creates an interest in favour of the developer even if the Power of Attorney is revoked such interest would not evaporate. Hence, the analogy under the Contract Act would also lead to the conclusion;

Development Agreement

The first difficulty that arises in dealing with the questions referred is that neither a “developer” nor a “development agreement” is defined in the 1963 Act. Such expressions may not have been defined in any other statute and, in any event, even if they were defined in any other statute, such definitions may have been of little use in assessing the legal issues that arise herein. In the absence of a “developer” or a “development agreement” being defined, it is imperative that the nature of an agreement which is the subject-matter of a suit has to be assessed to ascertain whether such agreement is merely “a contract for the construction of any building or the execution of any other work on land” within the meaning of the expression in Section 14(3)(c) of the 1963 Act. It must first be appreciated that the questions that have been referred to this Bench arise in course of interlocutory proceedings in a suit and not at the trial of the suit. This is of immense significance as the considerations at the interlocutory stage and at the trial are qualitatively distinct and, arguably, may not overlap. Thus, the discretion of the court that may be exercised under Chapter II of the 1963 Act would be irrelevant at the interlocutory stage though a separate kind of discretion as recognised, for instance, in Order XXXIX of the Code would come into play. Again, jurisprudentially, the nature of the discretion that the court exercises under Chapter II of the 1963 Act is different from the nature of the discretion ordinarily exercised in interlocutory proceedings in a suit.

This leads to the unavoidable discussion as to what may be regarded as a development agreement as referred to in the questions framed for the reference and the judgments of this court cited by the parties. Without intending the discussion to be an exhaustive treatise on development agreements of all hues, it may be recognised there can be several agreements which can be loosely described as development agreements in the sense that such expression has been used in the judgments cited in course of the present proceedings. An owner without any funds or the independent resources to construct a new building on such owner’s land may engage another for such purpose with the consideration for the construction being paid by allocation of a part of the constructed area. There could be several variants of the same basic structure of a development agreement with the agreement either providing for the owner being entitled to a sum of money in addition to a specified share in the constructed area or with a developer being required to rid the land of its encumbrances, whether monetary or otherwise, prior to the construction being taken up. There may be other similar agreements under which the developer is required to temporarily relocate an existing tenant or occupant and ultimately provide the tenant or occupant a part of the constructed area. In the context in which certain agreements pertaining to the construction of new buildings contemplate the construction to be undertaken or orchestrated by a person other than the owner of the land, whether upon the demolition of the existing structure or otherwise, with such person other than the owner having a share in the constructed area, such agreements have now come to be regarded as development agreements. Whether or not such agreements are in the nature of collaboration or joint venture, they are loosely referred to as development agreements in several judgments. Such agreements are not merely for the construction of any building or for the mere execution of any other work on the land. The developer is not merely a contractor engaged to undertake the construction; the developer is, under the agreement with the owner, promised a part of the constructed premises as owner thereof together with the proportionate area of the land. In the context in which certain agreements are referred to as development agreements and the non-owner party to such an agreement is regarded as the developer qua the nature of the work envisaged under the agreement, the developer always has a share in the building or the area proposed to be constructed – which implies a proportionate share of the piece of earth – and such agreement envisages the developer to have a share of, and interest in, the final product which is the outcome of the agreement.

In such sense, a development agreement which envisages the party thereto other than the owner being responsible for ensuring the construction of a building on the subject land and having a share therein, there is an inescapable contract to transfer immovable property. In form, a development agreement which envisages the developer to have a share in the building proposed to be constructed in terms of the agreement, the agreement may appear to be somewhat not resembling an agreement for transfer of an immovable property; and, indeed, it is not an agreement simpliciter for sale of an immovable property. In law, however, a development agreement of the kind described herein entails the transfer of immovable property in the sense that the developer or an assignee of the developer, at the instance of the developer, would be entitled not only to a part of the constructed area but the proportionate share of the land on which the construction is made.

Understood in the sense that a development agreement has been in such context, the agency created by a power of attorney executed by the owner in favour of the developer may be seen to recognise an interest of the developer in the property which forms the subject-matter of the agency. But to stop here in answering the second question in the reference would be an abject failure to recognise the implication of the question. If the limited answer thus far given in response to the second question implies that such agency can never be annulled; it would make a mockery of the legal position on such aspect.

To begin with, Section 202 of the Contract Act, in the context of a power of attorney executed by an owner in favour of a developer pursuant to a development agreement, has to be reconciled with Section 54 of the Transfer of Property Act; particularly, as at least two of the judgments cited speak of a power of attorney executed in pursuance of a development agreement creating an agency coupled with an interest in favour of the developer-agent. Indian law does not recognise the equitable title to land of a person who has entered into an agreement to purchase the same. Thus, the final paragraph of Section 54 clarifies that an agreement for sale of an immovable property does not, of itself, create any interest in or charge on such land. Section 202 of the Contract Act, on the other hand, recognises an interest in the property which forms the subject-matter of the agency. The word “property” in Section 202 of the Contract Act would not mean the same “property” in the final paragraph of Section 54 of the Transfer of Property Act. In an agreement for sale of a land, the property is the land itself. In a power of attorney executed in pursuance of a development agreement of the kind that is referred to herein, the property which forms the subject-matter of the agency is not necessarily the part of the land that is envisaged to be transferred to the developer; it is the project itself.

In the context of the interest of the agent that is protected under Section 202 of the Contract Act, the authority of the principal has to be regarded as a kind of security for the agent. It must also be appreciated that the mere use of the word “irrevocable” in a power of attorney would not make it irrevocable unless it creates the kind of interest that is envisaged in Section 202 of the Contract Act. It is also the nature of the interest that has to be discerned; for instance, the prospect of remuneration to the agent arising from the agency may not constitute such an interest as would prevent the termination of the agency. The authority must be seen to have been given with the object of protecting or securing the interest of the agent; and it may not be sufficient if it does so incidentally. (Pollock & Mulla on Indian Contract and Specific Relief Acts; 12th Ed.) Section 201 of the Contract Act provides, inter alia, for the termination of an agency by the principal by revoking of the authority of the agent. The pre- conditions to the exercise of the power to revoke the authority of the agent and the effect of such termination are recognised in some of the subsequent provisions of the Contract Act. The general rule is that the principal may revoke the authority of the agent; the exceptions to the rule are provided in the statute. But when an agent has not exercised the authority to bind the principal and the revocation of the agency is contested on the basis of Section 202 or 204 of the Contract Act, it must be appreciated that such provisions are to protect the agent and if the prejudice suffered or likely to be suffered is offset by any act or deed, the revocation cannot be resisted. The point is best made with the help of the illustrations in Section 202 and Section 204 of the Contract Act. According to Illustration (a) under Section 202 of the Contract Act, if A gives authority to B to sell his land, and to pay himself out of the proceeds, the debts due to him from A, then A cannot revoke the authority. But it cannot be said that if A makes over the debts due to B prior to or simultaneously with the revocation of the authority, the revocation would still be bad. The same analogy can be carried to Illustration

(a) under Section 204 of the Contract Act. Such illustration provides that if A authorises B to buy cotton on account of A and to pay for it out of A’s money with B and B buys cotton in his own name and on his liability, then A cannot revoke B’s authority for payment for the cotton. Again, if A pays for the cotton purchased by B, or makes over such money to B, prior to revoking B’s authority or simultaneously therewith, there is no prejudice to B, and, consequently, the revocation may not be regarded as impermissible.

Manubhai Chhotabhai Patel vs Manubhai Motibhai [Gujarat High Court]

C/SA/202/2015 [dated-15/06/2022]

Death of the Principal

In Bowstead and Reynolds on “Agency”, 16th Edition, at page Nos. 660-661, it has been mentioned that the authority expressed to be irrevocable is not determined by death etc. In Chitty on “Contract”, 27th Edition, Vol. 2, page 94-95, the learned Author while dealing with the “Termination of Authority” has commented that, if there is an interest coupled with the authority, that is, if the agreement is entered into by Deed or on sufficient consideration, whereby an authority is given for the purpose of providing a security, such an authority is irrevocable even by death, etc.

I am in agreement with the contention of the learned counsel Mr. Mihir Thakor for the respondent that the agency would not be terminated Under Section 202 of the Contract Act even after death of the person who has, authorized, where there is no express contract. for termination, relied upon the decision of Division Bench of this Court in the case of Her Highness Shantadevi Pratapsinh Rao Gaekwad v. Sayjibhai H. Patel reported in 1998 (2) GLR 1521, wherein it is held as under : “No doubt, in the case of Garapati Venkanna (sic) (supra), the Madras High Court had held that, where a power of attorney has been executed by several principals in favour of a person and one of the principals having distinguished interest in subject-matter of power of attorney dies, the death terminates the power of attorney. This view was taken by the Madras High Court because, the Court found that there was no authority coupled with an interest and, therefor, the argument raised on the basis of Section 202 of the Contract Act could not prevail. Here is a case in which we have already held as above that it was a case of an agency coupled with interest. In our opinion, the position of law with reference to Sec. 202 of the Contract Act is, therefore, very clear that the cases in which the agency is coupled with interest and there is no express contract for termination, there cannot be any termination even by death and, therefore, the factum of death of the principal during the pendency of the suit cannot lead to the termination of the agency. The necessary ingredients required under Section 202 of the Contract Act so as to hold that the agency could not be terminated in the facts of the present case are, therefore, clearly established and we also find that even the factum of death of the principal cannot bring about the termination of the agency.”

Interpretation process

It is well settled principles of the interpretation that process of interpretation is process of providing meaning of words and their effectiveness as medium to communicate a particular thoughts. It is by the process of interpretation that the Court interpret any statute or any given documents. It is well settled that in a process of interpretation the entire documents needs to be read as a whole. There cannot be any piece-meal interpretation of averment made in the documents or statute. The intention of the maker of the documents is to be gathered by reading the documents as a whole. If there is conflicting clauses in document or statute, then it has to be read harmoniously to avoid the situation whereby any of the provision becomes otios. The various rules of interpretation are guidelines for interpretation of statute and that of documents. Those rules do not override language of document, where the language is clear. They are only lights to enable the judges to understand what the statute is. It is compendious Rules of interpretation can only be regarded as mere to interpretation guides and ought to be applied as if there was statutory process enacted with all decisions on proviso of the legislation. The Court should invoke whichever of the rules produce a result that satisfy it sense of justice to approach before it.

 





SHANTI PRASAD DEVI AND ANOTHER  Vs. SHANKAR MAHTO AND OTHERS-11/07/2005

Mere acceptance of rent for the subsequent months in which the lessee continued to occupy the lease premises cannot be said to be a conduct signifying ‘assent’ to the continuance of the lessee even after expiry of lease period

SHANTI PRASAD DEVI AND ANOTHER  Vs. SHANKAR MAHTO AND OTHERS

SUPREME COURT OF INDIA

DIVISION BENCH

( Before : D. M. Dharmadhikari, J; B. N. Srikrishna, J )

SHANTI PRASAD DEVI AND ANOTHER — Appellant

Vs.

SHANKAR MAHTO AND OTHERS — Respondent

Civil Appeal No’s. 2718-2719 of 2000

Decided on : 11-07-2005

Transfer of Property Act, 1882 – Section 106, Section 116
Transfer of Property Act, 1882 – Section 116 – Lease of suit premises for running a Petrol Pump – Effect of holding over – Clauses (7) and (9) of agreement required fulfillment of two conditions, (i) exercise of option of renewal by lessee before expiry of original period of lease, and (ii) fixation of terms, and conditions by mutual consent and in the absence thereof through initiation of local Mukhia or Panchas of the village – Lessor neither expressly or impliedly agreed for renewal of lease – On the face of specific clauses for renewal, there could be no implied renewal at ‘holding over’ on mere acceptance of rent offered by lessee.

Specific Relief Act, 1963 – Section 12 – Suit for specific performance of agreement of lease – Option for renewal exercised after expiry of lease period contrary to clause (9) of terms of lease agreement – Failure to send any reply to legal notice for renewal of lease there was no mutual consent for renewal – Suit dismissed – Cross suit filed by lessor for eviction decreed – Appellant granted two months time to vacate premises and to pay all arrears of rent and mesne profits at the agreed rate.

Cases Referred

  1. Bhawanji Lakhamshi and Others Vs. Himatlal Jamnadas Dani and Others, AIR 1972 SC 819 : (1972) 1 SCC 388 : (1972) 2 SCR 890
    Counsel for Appearing Parties
  2. S.B. Sanyal and Akhilesh Kumar Pandey, for the Appellant; Prabhash Kr. Yadav and Krishan Singh Chauhan, for the Respondent

JUDGMENT

D.M. Dharmadhikari, J.—The appellant obtained possession on lease of the suit premises for running a Petrol Pump under a registered lease deed dated 17.7.1962 for a period of fifteen years. It was an annual lease but the rent at agreed rate was payable in monthly instalments. The period of lease expired on 17.7.1977.

2. The registered sale deed contained Clauses Nos.(7) & (9) giving option of renewal for a further period which could be exercised before expiry of the initial period. After the period of lease expired on 19.7.1977 the lessee continued to remit the rent till August 19, 1977. On 23.8.1977 the lessee sent a lawyer’s notice exercising his option under Clause (7) and seeking renewal of the lease. The lessee thereafter remitted monthly rent of Rs.345/- each for three months from March to May 1978. The rent was accepted by the lessor.

3. Clause (7) of the lease providing option of renewal to the lessee contained two conditions firstly that the option has to be exercised before expiry of the lease and secondly the terms and conditions of renewal for further period shall be decided either by mutual consent of parties or in case of failure of mutual consent, through the intervention of local Mukhia or Panchas of the village.

4. To the legal notice given by the lessee seeking renewal of the lease, the lessor gave no positive response and instead filed Title Suit No.59/78 on 16.6.1978 seeking ejectment of the lessee from the suit premises on the ground that the term of lease had expired.

5. The lessee filed a counter suit No.13/80 seeking specific performance of the alleged agreement of renewal of lease on his alleged right of option of renewal.

6. The two cross suits were tried jointly and decided by common judgment.

7. The trial court by common judgment dated 16.3.1987 dismissed the suit for ejectment filed by the lessor by holding that after expiry of the initial period of fifteen years of lease, acceptance of rent by the lessor had resulted in renewal of lease and the lessee would be held to be ‘holding over’ within the meaning of Section 116 of the Transfer of Property Act. Based on the above finding that the lessee was ‘holding over’ as a result of the acceptance of rent by the lessor for the period subsequent to the expiry of lease, the trial court came to the conclusion that the suit for ejectment could not have been filed without terminating the lease by statutory notice u/s 106 of the Transfer of Property Act.

8. The trial court by the common judgment dismissed the counter suit seeking specific performance of renewal of lease by the lessee. It was held that in accordance with Clause (9) of the lease deed, the option of renewal was not exercised before expiry of original period. The specific performance of agreement of renewal claimed was also rejected on the ground that the terms and conditions of renewal were vague and incapable of enforcement. Thus, the trial court dismissed both the suits.

9. The dismissal of two suits by the trial court gave rise to two cross appeals one at the instance of lessor and the other at the instance of lessee. The first appellate court allowed the appeal of the lessor and decreed the suit of ejectment. It held that mere acceptance of rent by the lessor sent by the lessee after expiry of lease, in view of specific terms prescribing mode of renewal, did not result in deemed renewal of lease and the doctrine of ‘holding over’ u/s 116 of the Transfer of Property Act was not attracated. According to the first appellate court, the period of lease having expired there was no legal requirement of terminating the alleged renewed lease by issuing a statutory notice u/s 106 of the Transfer of Property Act.

10. The cross appeals filed by the lessee were dismissed and the dismissal of suit for specific performance of the alleged agreement of renewal was maintained.

11. The lessee filed two Second Appeals in the High Court. By the impugned common judgment the High Court upheld the common judgment of the first appellate court. The High Court agreed with the reasoning of the first appellate court that mere acceptance of rent by the lessor on expiry of original period of lease, for use and occupation of the leased premises by the lessee, did not signify ‘assent’ of the lessor to the continuance in possession of the lessee so as to infer deemed renewal of the lease u/s 116 of the Transfer of Property Act.

12. The High Court agreed with the concurrent findings of the trial court and the first appellate court that the option of renewal given to the lessee in the lease deed was not exercised before expiry of the original period of lease. The High Court also agreed that conditions stipulated for the renewed period of lease were vague and incapable of specific enforcement. Thus the dismissal of suit of the lessee for specific performance of contract of renewal of lease was also upheld.

13. Having thus lost her case in the courts below, the lessee has approached this Court in these two appeals.

14. Learned Senior Counsel Shri S. B. Sanyal reiterated the legal stand taken by the lessee in the courts below. It is contended that on expiry of original period of lease, acceptance of rent for the month of August and from March 1978 to May 1978 clearly showed an ‘assent’ on the part of the lessor to continue the lease. There was deemed renewal of the lease on the same terms and conditions of original lease as an effect of ‘holding over’ by the lessee u/s 116 of the Transfer of Property Act. It is argued that the courts below erred in holding that the lease, which stood renewed as an effect of ‘holding over’ u/s 116 of the Transfer of Property Act, was not required to be terminated by statutory notice u/s 106 of the Transfer of Property Act as a pre-condition for filing a suit for ejectment.

15. In respect of the cross suits of the lessee seeking specific performance of the contract of renewal of the lease, it is submitted that the relevant contract Clauses (7) & (9) of the lease deed should have been construed reading them with other clauses therein to hold that option for renewal could have been exercised within a reasonable period which in the present case was 35 days from the date of the expiry of the original lease. It is also argued that the suit for specific performance of the agreement of renewal could not have been rejected on the ground that clause of renewal was vague and incapable of specific performance. Reliance is placed on Bhawanji Lakhamshi and Others Vs. Himatlal Jamnadas Dani and Others, and AIR 1949 124 (Federal Court) .

16. In reply, we have heard learned counsel Shri Prabhash Kumar Yadav assisted by Dr. Krishan Singh Chauhan, advocate who supported the view taken by the High Court and the courts below in decreeing the suit for ejectment.

17. Section 116 of the Transfer of Property Act reads thus:-

“Effect of holding over. – If a lessee or under-lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor of his legal representative accepts rent from the lessee or under lessee, or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in Section 106.”

[Emphasis supplied]

18. We fully agree with the High Court and the first appellate court below that on expiry of period of lease, mere acceptance of rent for the subsequent months in which the lessee continued to occupy the lease premises cannot be said to be a conduct signifying ‘assent’ to the continuance of the lessee even after expiry of lease period. To the legal notice seeking renewal of lease, the lessor gave no reply. The agreement of renewal contained in Clause (7) read with Clause (9) required fulfillment of two conditions; first the exercise of option of renewal by the lessee before the expiry of original period of lease and second, fixation of terms and conditions for the renewed period of lease by mutual consent and in absence thereof through the mediation of local Mukhia or Panchas of the village. The aforesaid renewal Clauses (7) & (9) in the agreement of lease clearly fell within the expression ‘agreement to the contrary’ used in Section 116 of the Transfer of Property Act Under the aforesaid clauses option to seek renewal was to be exercised before expiry of the lease and on specified conditions.

19. The lessor in the present case had neither expressly nor impliedly agreed for renewal. The renewal as provided in the original contract was required to be obtained by following a specified procedure i.e. on mutually agreed terms or in the alternative through the mediation of Mukhias and Panchas. In the instant case, there is a renewal clause in the contract prescribing a particular period and mode of renewal which was ‘an agreement to the contrary’ within the meaning of Section 116 of the Transfer of Property Act. In the face of specific Clauses (7) & (9) for seeking renewal there could be no implied renewal by ‘holding over’ on mere acceptance of the rent offered by the lessee. In the instant case, option of renewal was exercised not in accordance with the terms of renewal clause that is before the expiry of lease. It was exercised after expiry of lease and the lessee continued to remain in use and occupation of the leased premises. The rent offered was accepted by the lessor for the period the lessee overstayed on the leased premises. The lessee, in the above circumstances, could not claim that he was ‘holding over’ as a lessee within the meaning of Section 116 of the Transfer of Property Act.

20. So far as the cross suit for specific performance of agreement of renewal of lease filed by the lessee is concerned, there are concurrent findings of all the courts that the option for renewal was exercised after the expiry of the lease period. The option for renewal exercised was, therefore, contrary to terms of Clause (9) of the lease agreement. The clauses of renewal requiring fixation of terms and conditions for renewed period of lease mutually or in the alternative through village Mukhia and Panchas are uncertain and incapable of specific performance. After legal notice of renewal, the lessor did not send any positive reply and instead filed a suit for ejectment, therefore, there was no mutual consent for renewal. The forum agreed to for deciding dispute was through local Mukhia and Panchas of the village. The renewal clauses of the agreement were vague and incapable of specific performance. The Mukhia and Panchas were not named in the agreement and the method of choosing either of the two forums was not specified.

21. The cross suit filed by the lessor for specific performance of the agreement of renewal was rightly dismissed throughout.

22. The original period of lease expired on 19.7.1977 and the suit for ejectment on the ground of expiry of the lease was filed on 16.6.1978 which was well within the period of limitation and rightly decreed.

23. For the additional reasons discussed by us above, the appeals have no force. As the leased premises were in use for running a petrol pump, we grant the appellant a reasonable period of two months from the date of this order to deliver possession of the leased premises after removing her installations and other movables.

24. The above grace period to vacate is granted to the appellant only on her filing an undertaking on affidavit to this Court, within a period of two months that she would pay all arrears of rent and mesne profits at the originally agreed rate for the total period of occupation of the property. The lessee shall also undertake to deliver vacant possession of the property in the same condition in which it was initially taken.

25. For the aforesaid reasons, we find no merits in these appeals preferred by the lessee, they are accordingly dismissed with costs.

Final Result : Dismissed


CITATION: (2005) 32 AIC 22 : (2005) AIR(SCW) 3359 : (2005) AIRJharR 2084 : (2005) AIR(SC) 2905 : (2005) 2 AllCJ 1572 : (2005) 5 ALLMR 848 : (2005) 3 AllWC 2537 : (2005) 60 ALR 744 : (2005) 4 AndhLD 116 : (2005) 3 APLJ 51 : (2005) 3 ARC 120 : (2005) 2 BLJR 1608 : (2005) 4 CalHCN 119 : (2005) 3 CivCC 389 : (2005) 3 CTC 550 : (2005) DNJ 509 : (2005) 3 ICC 806 : (2005) ILR(Karnataka) 3587 : (2005) 6 JT 6 : (2005) 2 LAR 159 : (2005) 2 LAR 427 : (2005) 3 LW 716 : (2005) 3 MLW 716 : (2005) 2 OriLawRev 431 : (2005) 2 OriLR 431 : (2005) 3 PLJR 199 : (2005) RajdhaniLR 325 : (2005) 3 RCR(Civil) 402 : (2005) 2 RCR(Rent) 112 : (2005) 5 SCALE 337 : (2005) 5 SCC 543 : (2005) Sup1 SCR 418 : (2005) 2 UJ(SC) 902 : (2005) 2 WLC 190




State Bank of India & Ors v Mallya-[2020]EWHC 96(Ch)

Neutral Citation Number: [2020] EWHC 96 (Ch)Case No: BR-2018-001805

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (Chd)
The Rolls Building 7 Fetter Lane London EC4A 1NL

Date: 09/04/2020

Before:

CHIEF INSOLVENCY AND COMPANIES COURT JUDGE BRIGGS

– – – – – – – – – – – – – – – – – – – – –

Between:

(1) STATE BANK OF INDIA

(2) BANK OF BARODA

(3) CORPORATION BANK

(4) THE FEDERAL BANK LIMITED

(5) IDBI BANK LIMITED

(6) INDIAN OVERSEAS BANK

(7) JAMMU & KASHMIR BANK LIMITED

(8) PUNJAB & SIND BANK

(9) PUNJAB NATIONAL BANK

(10) STATE BANK OF MYSORE

(11) UCO BANK

(12) UNITED BANK OF INDIA

(13) JM FINANCIAL ASSET

RECONSTRUCTION CO.PVT.LTD

Petitioners

– and –

DR VIJAY MALLYA

Respondent

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

MARCIA SHEKERDEMIAN QC (instructed by TLT LLP) for the PETITIONERS

PHILIP MARSHALL QC AND JAMES MATHER (instructed by DWF LAW LLP ) for the

RESPONDENT

Hearing dates: 10 December 2019

 

CHIEF INSOLVENCY AND COMPANIES COURT JUDGE BRIGGS

Chief Insolvency and Companies Court Judge Briggs:

Introduction

1.  Dr Mallya is a well-known Indian businessman and former member of the Parliament of India, now living in the UK pursuant to an indefinite leave to remain certificate. He has possessed the certificate since 1992. The petitioners seek to make Dr Mallya bankrupt. This is the first hearing of a bankruptcy petition.

2. The petition is based on a foreign judgment debt, registered in England under the Foreign Judgments (Reciprocal Enforcement) Act 1933. The registration of the judgment is not subject to an appeal. The judgment debt is £720,740,180.57. Due to interest accruing at a rate of 11.5% with yearly rests, the debt has increased to approximately £1.05 billion. This figure takes account of recoveries already made.

3. The first twelve petitioners are state-owned Indian banks. The thirteenth is an asset restructuring company that purchased debt owed to other Indian banks. I shall describe them collectively as the “Banks”.

4. The judgment debt and subsequent order were made by the Debt Recovery Tribunal, Karnataka, Bangalore, India. The Debt Recovery Tribunal has been referred to through-out the hearing as the “DRT” as the judgment the “DRT judgment”.

5. Dr Mallya resists the making of a bankruptcy order. Two principal grounds for resistance are advanced: (i) the petitioners are secured creditors and there is a failure to state the security on the face of the petition (ii) there is a reasonable prospect that the DRT judgment will be compromised within a reasonable period of time.

The background in brief

6. I deal with the background in brief as it has been dealt with in part in another judgment ([2018] EWHC 1084) where Dr Mallya and several companies he controls asked the court to (i) set aside the registration of the DRT judgment (see below) and (ii) set aside a freezing order. The overall context is that the petition debt is based on an unsatisfied demand made pursuant to a personal guarantee (the “PG”) provided by Dr Mallya in respect of certain company loans. The companies were or are associated with Dr Mallya and detailed in a Master Debt Recast Agreement (“MDRA”) dated 21 December 2010. The MDRA consolidated existing liabilities of Kingfisher Airlines

Limited (“Kingfisher”) which had suffered financially due to the 2008 credit crunch. In addition to the PG provided by Dr Mallya, the Banks held a guarantee from another company owned and controlled by Dr Mallya namely, United Breweries (Holdings) Limited (“UBHL”).

7. In his first witness statement Dr Mallya explains that in March 2013 he challenged the validity of the PG. Less than a month later, on 2 April 2013, the Banks accelerated their loan facilities. They subsequently, on 19 January 2017, obtained judgment for the sums lent and not repaid by Kingfisher and UBHL. In addition judgment was entered against Dr Mallya on the PG. After the loans were accelerated and demands made, the Banks released a press report stating that: “[t]here was no fraud involved in the non-payment of loans and that it was simply a case of business failure”. His view is that “the Government of India is under pressure to take action in respect of loans owed to state owned banks. On 6 May 2016, India’s Ministry of Finance (IMF) sent a letter to the Petitioners directing them to meet with the head of the Central Bureau of Investigation (the “CBI”) and the head of the Enforcement Directorate in Mumbai (the “ED”). The ED is a law enforcement agency that forms part of the Department of Revenue of IMF. Whilst the CBIs role is to investigate independently from political influence, I consider that there is a lack of independence of the CBI from government ministries and departments.”

8. That Dr Mallya perceives political interference is clear, but that is not a matter for this court. His perception is partly based on what he claims to be inconsistent dealings he has experienced with the authorities. His position is that the CBI pressurised the Banks to make a complaint about him, Kingfisher and UBHL. The complaint made by the Banks appears to have been that Dr Mallya had “caus[ed] loss of Rs 6,027 crore to [the Banks] by not keeping repayment commitments of his loan taken during 2005-10”. The complaint is seemingly with a letter from the First Petitioner to the Reserve Bank of India dated 31 January 2012 in which it was stated that Kingfisher had “been making every effort to achieve satisfactory performance of its operations through infusion of substantial funds and keep the airline as a going concern, despite facing severe constraints…” (sic).

9. On 26 June 2013 the Banks began proceedings in the DRT to enforce the covenants in the MDRA. A jurisdictional challenge was mounted and dismissed. An appeal was made against the dismissal but later withdrawn due to a change in the law. On 19 January 2017 the DRT gave judgment for the Banks which was followed by attachment orders in respect of shares in UBHL, said to be worth £385.9 million. There have been a number of appeals made by Dr Mallya, UBHL or Kingfisher but they have generally been thwarted by a failure to comply with procedure, namely appeals being made out of time or failing to comply with a condition. There have been appeals to the DRT appeal court and Karnataka High Court which have all been dismissed. A hearing in the Bombay High Court is pending which will determine a question of jurisdiction. There are other proceedings that are yet to be determined such as a challenge to the rate of interest, a settlement sanction petition in respect of UBHL and a special leave petition filed with the Supreme Court.

10. On 24 November 2017 the DRT judgment was registered in England and Wales.

The attachment orders

11. In 2016 and 2017 the ED obtained attachment orders over assets of UBHL and personal assets of Dr Mallya. I turn to the DRT judgment. The presiding officer of the DRT was Shri. K. Srinvasan. Unless it is clearly stated or the context suggests otherwise, the passages I quote below are from his judgment. It should be noted that the judgment contains some linguistic imperfections.

12. The claim made by the Banks was that Kingfisher approached them for working capital and a term loan facility in 2005. A demand for repayment followed default that led to restructuring negotiations, the MDRA, the PG and a guarantee provided by UBHL “for repayment of the outstanding loans by [Kingfisher] to applicant banks…pursuant to the terms of the MDRA…a security Trustee Agreement dated 21.12.2010 was also entered into among the Applicants and Defendants No 1 and 5, by which Defendant 5 was appointed as security trustee for the benefit of the Applicant-Banks and, inter alia, to hold the security documents created by Defendant no 1 in favour of Defendant No 5 for the benefit of the applicant-banks.” Defendant No.1 is Kingfisher and Defendant No 5 is SBICAP Trustee Company Ltd. Kingfisher and UBHL also provided a pledge “pledging thereby certain shares owned by the Pledgors…” It is common ground that the pledged shares have been realised for the benefit of the Banks. The sixth defendant in the DRT was the Commissioner of Service Tax. Having dismissed many challenges made by the defendant to the DRT action Shri. K. Srinvasan considered an issue of security: “whether the sixth defendant has got first charge over the movable and immovable properties of defendants 1 to 3?” The answer is set out at page 92 of the judgment:

“The said claim of the sixth defendant cannot be accepted in view of section 31(b) of the RDDB & FI Act according to which the rights of secured creditors to realise secured debts due and payable to them by sale of assets over which security interest is created shall have priority and shall be paid in priority over all debts and government dues including revenues, taxes, cesses and rates due by them to the Central and State Government of any local authority. Further, even according to the 6th defendant, u/s 88 of Finance Act 1994, the claim of the sixth defendant will be subject to the banks claim. Hence, the claim of the sixth defendant for first charge over the charged assets of the defendants 1 to 3 is rejected and it is held that claim of the sixth defendant will be considered for distribution only as a second charge subject to the first charge of applicant banks being fully satisfied…”

13. The PG provided by Dr Mallya obliges him to produce a statement of personal assets and liabilities on an annual basis and restricts dealings with his personal assets so that

“transactions contemplated by, the Personal Guarantee do not and will not conflict: (i) with any Applicable Law; (ii) with the constitutional documents of the Personal Guarantor; or (iii) with any document which is binding upon the Personal Guarantor or on any of his assets; and (iv) will not result in the existence of, nor oblige to create, any encumbrance over all or any of his present or future revenues or assets.” The PG contains a clause stating that it will not result in the existence of an encumbrance over Dr Mallya’s “present or future revenues or assets” but also precludes him from dealing with his property. It obliges him not to “convey, sell, lease, let or otherwise dispose (or agree to do any of the foregoing at any future time) all or any part of his property or assets without the prior written approval of the Lenders’ Agent and the Lenders.” The orders made by the DRT are set out at the end of the judgment. These include the following:

“In the event of failure of defendants to pay the said OA amount, the applicant bank is at liberty to sell the hypothecated/mortgaged movables/immovables properties described in schedules to the main petition according to law…the Applicant Banks are also at liberty to proceed against the person and properties of the defendants 1 to 4 in execution proceedings.”

14. Chapter VI, section 31B of the Recovery of Debts Due and Financial Institutions Act 1993 cited as authority for the proposition that the Banks have a first charge over the assets of Dr Mallya in the DRT judgment provides:

“Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realise secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes…due to the Central Government, State Government or local authority”.

15. A secured creditor shall have the meaning assigned to it in section 2(1)(zf) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002. By section 2(1b) a security interest means “a mortgage, charge, assignment or any other right, title or interest of any kind whatsoever upon property, created in favour of any bank or financial institution”. The definition states that secured creditor means “any bank or financial institution or any consortium or group of banks or financial institutions holding any right, title or interest upon any tangible asset or intangible asset as specified…in whose favour security interest is created by any borrower for due repayment of any financial assistance”. The term ‘pledge’ is also defined as a security interest. It is not a far reach to conclude that having cited section 31B of “the RDDB & FI Act” Shri. K. Srinvasan would have (i) known the meaning of security (ii) known how security operates and (iii) applied section 31B to the facts of the case. There has been no appeal against this part of the decision by the Banks. In my judgment it is highly likely that Shri. K. Srinvasan was finding not only that the debt was due but that the Banks were secured and as a first charge have priority over other charges.

16. As a result of the Banks reporting a potential fraud provisional attachment orders were made pursuant to the Prevention of Money Laundering Act 2002 on an application of the Deputy Director of ED. The attachment orders are said to be “in respect of movable properties and immovable properties as detailed below”. The ‘detail below’ is contained in a schedule and provides a list of moveable and immovable properties which includes the pledge on shares and other assets of Dr Mallya, Kingfisher and UBHL. The initial adjudication was on 1 December 2016 and confirmation of the attachment orders was made on 22 February 2017. The Banks subsequently challenged the attachment orders and filed three applications for condonation of delay. I am informed by counsel for Dr Mallya that the challenge application made by the Banks stated at paragraph 17 that they have “an interest in all the assets of Dr Vijay Mallya” by reason of the PG and the DRT judgment; and at paragraph 19 “the Applicants have an interest in the assets of Dr. Vijay Mallya by virtue of the Personal Guarantee dated 21.12.2010, on which basis recoveries had already been made against certain of his assets”. This is strong evidence that the Banks knew or should have known that they held security.

17. On 10 October 2018 Justice Manmohan Singh as chairman of the Prevention of Money Laundering Appellate Tribunal, Delhi (“PMLA”), gave judgment in relation to the challenge application.

18. In his judgment Justice Singh set out the argument of the Banks that they have prior rights over the moveable and immovable properties in respect of Dr Mallya, UBHL and Kingfisher pursuant to the contractual provisions in the PG, a corporate guarantee and by a final order dated 19 January 2017 (the DRT judgment). The first respondent to the applications was the Deputy Director of the ED, the second to fifth respondents were Kingfisher, Dr Mallya, UBHL and Kingfisher Finvest India Ltd. The application for condonation of delay related to a delay of 562 days and the judgment of Justice Singh sets out the relevant part of the application:

“4. It is further submitted the Impugned Order was passed by the Adjudicating Authority inter alia confirming the Provisional Attachment Order dated 03.09.2016 passed by the Respondent No.1 in the criminal case bearing ECIR No. ECIR/07/MBZO/2016 inter alia attaching movable and immovable properties of the Respondent Nos. 2 to 5 are bad in law as the Appellants have prior right over the moveable and immovable properties of the Respondent Nos. 2 to 5 pursuant to the Personal Guarantee dated 21.12.2010, the Corporate Guarantee dated 21.12.2010 and the Final Order passed by the DRT on 19.01.2017 in O.A. No 766/2013 inter alia holding that the Respondent Nos 2 to 5 are jointly and severally liable to pay the OA amount and consequently by the Recovery Certificate in favour of the Appellants.”

19. At paragraph 10 of the Judgment:

“I have gone through the application filed by the appellants for condonation of delay. This Tribunal is of the considered opinion that as a matter of fact, ED has failed to perform his duty not to implead the appellants (lenders) banks despite having full knowledge that the loan amounts have to be returned by Vijay Mallya and his associate company to the banks who are the mortgagees of the attached properties. One is failed to understand why have not done so when they were full aware. Thus, the prayer made in the application for condonation of delay is liable to be allowed as the sufficient cause has been shown…” (emphasis supplied)

20. Having dealt with the condonation application Justice Singh explained (paragraphs 20 and 21):

“Earlier, the State Bank of India and other banks have appreciated the investigation of the ED and were also satisfied with the Provisional Attachment Order passed by the ED and the confirmation order. Once the State Bank of India and other banks have come to the notice that the ED may not agree to dispose of the properties by the banks (in view of the decree passed) till the completion of trial under Section 5(5) of the Act, the banks have decided to challenge the impugned order before this

Tribunal…Therefore, it appears that in the present appeal, the banks are seeking the interim order. Admittedly, the trial may take a number of years in view of the nature of the case and bulky records. The banks are the secured creditors against the unpaid loans by the Vijay Mallya and his associate companies.” (emphasis supplied).

21. This is further evidence to support the view that the Banks knew or should have known of the security.

22. Justice Singh recited section 31B of the Recovery Debts Due to Banks and Financial Institutions Act 1993 noting that it came into effect on 1 September 2016, and commented (paragraph 24) that the Banks “are admittedly secured creditors who have obtained decree against the borrowers who have provided security” and explained the effect of the section (paragraph 25) in the following way:

“The amendment prima facie gives the Secured Creditor, a priority over the rights of Central or State Government or any other Local Authority. It is evident that the amendment has been introduced to facilitate the rights of the Secured Creditors which are being hampered by way of attachments of properties belonging to the Financial Institutions/Secured Creditors, done by/in favour of the Government institutions.”

23. The Tribunal cited The Assistant Commissioner (CT), Anna Salai- III Assessment Circle vs. The Indian Overseas Bank and Ors MANU/TN/3743/2016 for the proposition that section 31B of the Recovery of Debts Due and Financial Institutions Act 1993 had the effect of giving priority to the Banks’ security over Government dues and “the law having now come into force, naturally it would govern the rights of the parties in respect of even a lis pending.”

24. The Tribunal found that “in view of settled law on the subject, I am of the opinion the appellant Bank is the rightful claimant who have already obtained decree against the borrower from DRT” and (at paragraph 34):

“The Respondent No 1 is not having any lien over the said properties as the Appellant banks are now the Legal Transferee of said properties”.

25. The Justice explained that the ED did not have title over the identified property, that the Banks are entitled to dispose of the properties if they chose and “have priority rights on assets of the secured creditors to recover the loan amount/debts by sale of assets over which security interest in created.” And at paragraph 38 of the judgment the Justice said:

“In view of facts and nature of the present case, I am of the opinion that once the banks are secured creditors and have obtained the final decree from the court which has attained finality, the banks are bound to receive the default loan amount from Vijay Mallya and his companies. He was/is active person of the companies. The loans amount has to be paid by the borrowers. It is a banks money. It must come to the banks…”

26. The result of the challenge application in the High Court of Karnataka is that the Banks succeeded in demonstrating that the contractual nature of the PG made them secured creditors over certain assets of Dr Mallya, and the security had priority over any security obtained by the ED by reason of the attachment orders and interim orders were made. The terminology used suggests that the Justice was making interim findings but there can be little doubt that the Banks were asserting rights over property as secured creditors.

27. Two issues arise. First, can an English court take account of the Indian security said to exist over the Indian assets of Dr Mallya? This leads to the issue of security for the purpose of section 269 of the Insolvency Act 1986 (“IA 1986”). Secondly, if there is security for the purpose of section 269 IA 1986, should discretion be exercised to permit an amendment or dismiss the petition?

Security for the purpose of section 269 Insolvency Act 1986

28. A creditor may hold security but for the purpose of a creditor’s petition, the petition must contain a statement that the creditor is willing in the event of a bankruptcy order to give up the security or that the petition is not made in respect of any secured part of the debt.

29. In correspondence solicitors acting for Dr Mallya wrote seeking agreement that expert evidence be adduced in respect of the Indian Court System, the matters adjudicated upon in the Indian Courts and settlement offers made. Solicitors acting for the Banks responded that these matters were not suitable for expert evidence. Accordingly, no expert evidence was adduced in respect of the judgments provided by the Indian Courts and in particular whether the decision that the Banks held security in the DRT is security for the purpose of section 269 of the Insolvency Act 1986. The present state of affairs is that this court has the benefit of the DRT judgment registered in

England and Wales, under the Foreign Judgments (Reciprocal Enforcement) Act 1933 (the “1933 Act”).

30. It is not contested that section 2 of the 1933 Act provides that “a registered judgment shall, for the purposes of execution, be of the same force and effect…as if the judgment had been a judgment originally given in the registering court and entered on the date of registration”.

31. I agree with Mr Marshall that, the DRT judgment is of a competent court that found the PG gave rise to the “consequences prescribed by Indian statute under section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act 1993 (as inserted by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions Act 2016) (“Section 31B”), namely that the rights of secured creditors to ‘realise secured debts due and payable to them by sale of assets over which security interest is created’ take priority over all other debts and government dues and that this is ‘notwithstanding anything contained in any other law’.” The fact of security is reinforced by the findings in the PMLA. Ms Shekerdemian argues that as the DRT judgment is against other parties as well as Dr Mallya “this is not security”. She argues that the judgment merely gives rise to a right to enforce.

32. In my judgment the analysis given by the DRT and Justice Singh goes further than that contended by Ms Shekerdemian. This is not just a question of enforcement. The Banks are entitled to enforce the order made by the DRT over Dr Mallya’s property rights.

33. In my judgment the term “security” is used by the Indian Courts in a particular manner. It gives rise to a specific form of encumbrance over the property rights of Dr Mallya. It is specific as it gives the Banks priority in the business of collecting-in proceeds from the sale (enforcement) of specified property owned by Dr Mallya. The ability to make a claim on the proceeds enables the Banks to receive payment ahead of Dr Mallya and all other creditors. Another way of putting it is that the security interest found to exist, provides the creditor Banks with a right to secure payment of the sums said to be due. The rights also secure Dr Mallya’s contractual obligations under the PG. The security interest does not purport to transfer outright any interest in Dr Mallya’s property (which is not necessary for security) but restricts his right to dispose of specific assets free from the security interest. The security provisions are defined by Indian statute and the term “security” in English law is “no wider than the ordinary meaning of the word”: Bristol Airport Plc v Powdrill [1990] 1 Ch 744, 760. In that case Sir Nicolas Browne-Wilkinson V-C accepted a submission from Mr Crystal (at page 760) that security is created where in addition to a personal promise from the debtor a creditor obtains “rights exercisable against some property in which the debtor has an interest in order to enforce the discharge of the debtor’s obligation to the creditor.” The submission of Mr Crystal accepted by Sir Nicolas BrowneWilkinson, is not challenged in this court. It follows that it matters not that the Banks have security rights over property belonging to other parties. The issue is whether the Banks hold security over (some or all of the) property rights of Dr Mallya.

34. The conclusiveness of a foreign judgment is dealt with in Rule 48 of Dicey, Morris & Collins on the Conflict of Laws (15th Ed) at 14R-118 which provides:

“A foreign judgment which is final and conclusive on the merits and not impeachable under any of Rules 49 to 52 is conclusive as to any matter thereby adjudicated upon, and cannot be impeached for any error either of fact or law.”

35. The authors of Dicey state that Rule 48 has never been questioned and that the Rule is consistent with the maxims interest reipublicae ut sit finis litium and nemo debet bis vexari pro eadem causa. They explain that Rule 48 “holds good whether the judgment is relied upon by the claimant or defendant” whether in rem or in personam. Of consequence Rule 48 “precludes a party from denying any matter of fact or law necessarily decided in the earlier judgment”. In my judgment the DRT judgment (i) is a final judgment on the merits (it is not argued otherwise) (ii) is a judgment of a foreign court of competent jurisdiction (it is not argued otherwise) (iii) where the parties are clearly identified and (iv) is a judgment that concerns the subject matter or issues (namely security) that are argued before the court at this bankruptcy hearing. Accordingly Rule 48 applies: Carl Zeiss Stiftung v Rayner & Keeler Ltd (No. 2) [1967] 1 A.C. 853; The Sennar (No 2) [1985] 1 WLR 490.

36. It follows, in my judgment, that the Banks are in breach of section 269 of the Insolvency Act 1986 (the “IA 1986”) and Rule 10.9 of the Insolvency Rules 1986 (the “Rules”) as they have failed to disclose their security over the assets of Dr Mallya.

37. It is argued that the failure should lead to dismissal. Cited in support of the argument is Barclays Bank Plc v Mogg [2004] BPIR 259 where David Richard J (as he was) considered the consequences of a failure by a secured creditor to comply with the requirements of section 269 of the Insolvency Act 1986. He found [17]:

“The importance of compliance with s269 of the 1986 Act does not, however, lead to the automatic conclusion that a bankruptcy petition which fails to comply must be dismissed and cannot be cured by amendment. Neither the language of the section nor the underlying principles compel that result.”

38. The judge considered the equivalent provision in the Bankruptcy Act 1914 and agreed with the approach suggested by the authors of Muir Hunter on Personal Insolvency (Sweet & Maxwell), para 3-337. In appropriate cases the court should allow an amendment rather than dismiss the petition. The editors of Insolvency Legislation Annotations and Commentary (LexisNexis), (8th Ed) comment:

“[I]n Wave Lending Ltd v Parmar [2017] EWHC 681, [2019] BPIR 451, where Mr Martin Griffiths (sitting as a deputy High Court judge) allowed appeals from bankruptcy orders where the petitions had failed to comply with either of the limbs in s 269(1). It is submitted that the difference in outcome may be accounted for by the fact that the petitioner in Mogg appears to have included the correct gross figure for the debt but omitted to mention the security, whereas in Parmar the petition included only an estimated net balance, accompanied by a statement that no security was held, without reference either to the gross figure or the security, or any acknowledgment that the figure was a net figure.”

39. In fact the deputy High Court Judge in Parmar did not dismiss the petition but concluded with the observation that the parties had agreed “the existing bankruptcy orders should be discharged and the petitions should be remitted to the County Court so that any applications to amend may be determined”. In my judgment neither Mogg nor Parmar is authority for the proposition that a petition should be dismissed if it fails to comply with the provisions of the IA 1986. It may be otherwise if the petition cannot be cured by amendment.

40. In my judgment where there is a breach of section 269 of the IA the court should take account of at least the following factors when exercising its discretion: (i) the consequence of the breach (ii) the conduct of the parties and (iii) all the circumstances of the case. It may be argued that the identified breach is deliberate, and the petition should be dismissed. In this case the Banks know they have security over the specified assets of Dr Mallya.

41. The submissions of Ms Shekedemian lead me to conclude that although the Banks knew or should have known of their status as secured creditors due to (i) their participation in the Indian proceedings (ii) specifically by reason of the arguments they advanced in those proceedings, their legal advisers had doubt that the security said to exist by the foreign court is security for the purpose of section 269 of the IA 1986. Taking account of the contentious background to this matter and the Indian proceedings, a cautious approach would have been to make a statement in accordance with section 269(1)(a) or section 269(1)(b) of the IA 1986.

42. In my judgment a bankruptcy order should not ordinarily be made where the petition is defective as a result of such a breach.

43. It is accepted that the security obtained by the Banks over the assets of Dr Mallya, does not secure the entire judgment debt. It may be argued that the security provided is over the entirety of his assets, but recent evidence undermines the argument as Dr Mallya has assets in the UK that are not subject to security held by the Banks.

44. In my judgment the following factors weigh in favour of adjourning the petition rather than dismissal. First, the assets secured are not, or at the very least based on recent evidence, are unlikely to represent the entirety of Dr Mallya’s assets. Secondly the security over the assets of Dr Mallya have a value which is significantly less or at least less than the judgment debt. Thirdly although there is good evidence to support an inference of abuse (deliberately failing to disclose the security) there is also good reason to reach the opposite conclusion. The petition could have proceeded due to the size of the judgment debt measured against the value of security held. Fourthly, the petition is capable of cure. Lastly any prejudice suffered as a result of a failure to state the security in accordance with section 269 IA 1986 is limited. There are no opposing creditors. The judgment creditors are not claiming to have suffered prejudice as a result of the breach. Any prejudice suffered by Dr Mallya may be compensated by an appropriate cost order and an adjournment.

Settlement offers

45. Dr Mallya has petitioned the Supreme Court of India seeking a court sanctioned settlement with creditors of UBHL. If the Supreme Court were to accede to the petition two consequences flow. First, he would be under no personal liability as the DRT judgment debt would be compromised. Secondly, the settlement would be supervised by the Indian courts as a collective procedure.

46. In respect of the first petition there has been a delay due to a procedural failure. The second petition is the subject of expert evidence given by Justice Verma in a report dated 4 December 2019. Justice Verma is a retired Judge of the Indian Supreme Court. In his opinion the Supreme Court should determine the petition within four months. He explains the procedure and the effect of a court sanctioned settlement. In particular there is no requirement for the creditors of UBHL or Dr Mallya to consent to the settlement terms. If the Supreme Court sanctions the settlement agreement it will bind the creditors regardless of consent. Although the process will be more straightforward and quicker if the Banks were to agree.

47. In his evidence Dr Mallya states that some of the debts from supporting creditors are disputed. He claims, although I have not seen the evidence to support the claim, that there are sufficient assets to meet the DRT judgment. The Banks say otherwise.

48. Justice Verma can “see no legal infirmity with Dr Mallya’s offer”. The fact of the attachment orders does not undermine the settlement proposals. He explains that the powers of the Supreme Court are wide as the Constitution of India provides it with a power “to pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or order so made shall be enforceable throughout the territory of India…”. As regards the liability under the PG, Justice Verma concludes that there “is a reasonable prospect of the Supreme Court of India passing an appropriate order in respect of the release sought”.

49. The evidence of Justice Verma leads me to conclude that the prospect of a court sanctioned compromise is more than just fanciful. It would be highly unusual in this jurisdiction for a company in liquidation to be able to conduct negotiations to settle its debts. It has not been argued that it is equally unusual in India. Yet Karnataka High Court has made an order, in April 2017, staying the winding up of UBHL for the purpose of allowing settlement negotiations and proceedings to continue and be conducted by its management officers. Dr Mallya explains in his written evidence that the settlement offer provides that the assets of UBHL be sold and proceeds deposited with the High Court. His evidence is that in addition to assets of UBHL other companies owned and controlled by family members will also be sold and made available to the Banks.

50. I agree with the submission of Dr Mallya, that when the settlement proposals are analysed, as long as they have substance, it is difficult to see what reasonable basis the Banks may have for rejecting the offers. In the teeth of this evidence the Banks argue that (i) some of the assets are secured or pledged to third parties, and (ii) there can be no certainty that they will have their debts settled within a reasonable period of time. The pledge of assets to third parties was not advanced with any vigour at this hearing. Dr Mallya has explained that the purported pledge is challenged. In my judgment a reasonable period of time is dependent upon the context. I turn to the applicable principles.

Adjournment- applicable principles

51. There is agreement that the court has a discretion to exercise at the hearing of a bankruptcy petition. The discretion is provided by section 266(3) of the Insolvency Act 1986 which provides:

“The Court has a general power, if it appears to it appropriate to do so on the grounds that there has been a contravention of the rules or for any other reason, to dismiss a bankruptcy petition or to stay proceedings on such a petition; and where it stays proceedings on a petition, it may do so on such terms and conditions as it thinks fit.”

52. The discretion has long been available. The first statute that formalised the discretion was the Bankruptcy Act 1914. Section 5(3) of the 1914 Act gave discretion to dismiss a petition where the Court was not satisfied that there had been an act of bankruptcy or not satisfied as to proper service. Judicial consideration of the discretion introduced by section 5(3) of the 1914 Act shows that there were few limits other than it had to be exercised judicially. In Re A Debtor [1920] KB 432 McCardie J (sitting as part of a two-man Court) said that a judge appears to “possess the widest discretion in respect of granting adjournments” and that the limits imposed on the judge are that he “should exercise a judicial discretion”. Mr. Justice Peter Smith said that the discretion remained “quite unfettered”: Re Micklethwait [2003] BPIR 101, 102. There is some doubt whether it is completely unfettered but Mr. Justice Peter Smith was merely explaining that the discretion was wide. In Re A Debtor [1920] KB 432 the Court identified at least three circumstances where an adjournment may be sought. First to remedy technicalities; secondly “to enable the evidence on either side to be fully heard and thirdly to enable the debtor in the event of his being able to do so, to satisfy [the Court] of his power to pay his or her debts in full.”

53. The Court’s discretion provided by section 266(3) of the Insolvency Act 1986 is supplemented by the Insolvency Rules 2016. Rule 10.24 provides that the Court “may make a bankruptcy order if satisfied that the statements in the petition are true and that the debt on which it is founded has not been paid, or secured or compounded for”. Whether or not the petition debt could be paid within a reasonable time was the subject of an appeal to Henderson J (as he was) in Ross & Holmes v HMRC [2010] BPIR 652:

“[72] I come finally to the question of discretion, and whether the Chief Registrar should have granted a further adjournment. There is no doubt that the Court retains a discretion not to make a bankruptcy order, even where the petition debt has been clearly established and any grounds of opposition have been dismissed. However, the authorities establish that in such circumstances the discretion to adjourn should only be exercised if there is a reasonable prospect of the petition debt being paid in full within a reasonable period: see Harrison v Seggar [2005] EWHC 411 (Ch), [2005] BPIR 583, at para [7] per Blackburne J, and Re Gilmartin (A Bankrupt) [1989] 1 WLR 513, at 516F–G, per Harman J. Furthermore, as Blackburne J said, “[t]here must be credible evidence to support such a prospect if the Court is to grant an adjournment for payment”.

[73] Accordingly, the first question is whether there was credible evidence before the Chief Registrar on 20 July to establish a reasonable prospect that the petition debts would be paid in full within a reasonable time. In my judgment there was not. In the context of the long-drawn out history of the petitions, and the adjournments which had already been granted, it seems to me that a reasonable time for payment in full of the petition debts could have been no more than a further 2 or 3 months at the most. There was no credible prospect of payment being received within such a timescale, because the offer of security contemplated that nothing would probably happen for at least 6 months, and the terminal loss claims were still inchoate and unsupported by any draft accounts. In view of the past history of delay and broken promises, it was in my judgment appropriate to take a fairly hard line and to accord priority to HMRC’s undoubted prima facie right to obtain bankruptcy orders over protestations that a further adjournment might finally yield the payment in full which had so signally failed to materialise in the past. Furthermore, the Court would in my opinion have been justified in harbouring a suspicion that the predominant purpose of the adjournment, from the debtors’ point of view, was to enable them to realise their assets at a time of their choosing in a difficult property market.”

54. It is notable that the Judge was not taken to Re A Debtor (supra), but the judgment can be easily distinguished from the present situation. There was a “long-drawn out history of the petitions, and the adjournments” but even so a further 2 to 3 months would have been appropriate but for the fact that “There was no credible prospect of payment being received within such a timescale.”

Application of principle

55. This bankruptcy petition is by any measure extraordinary. The Banks are pressing for a bankruptcy order at a time when there is extant proceedings in India such as a challenge to the PG, a challenge to the high rate of interest accruing on the debts, and the Karnataka High Court is seized of compromise proposals presented by UBHL. In addition, a petition has been presented to the Supreme Court to sanction a binding compromise. There is no obvious advantage to the Banks to pursue this class action at this point in time. First, a bankruptcy order may put at risk a compromise that may see the Banks paid in full from the assets of UBHL and assets made available from outside the liquidation estate (I accept that is disputed). Secondly assets with a current market value of approximately 14,875 crores (£1.6 billion) “have been attached [secured] and/or seized under the orders of various courts, tribunals or authorities, including the Petitioners and the ED…”

56. In my judgment the following factors weigh heavily in favour of an adjournment for a period of time sufficient to permit the petitions to the Supreme Court, and the settlement proposal before the Karnataka High Court to be determined. First, apart from the high rate of interest, Dr Mallya is not contesting that UBHL owes substantial money to the Banks. He does contest the validity of the PG. The PG contest is yet to be finally determined. Secondly, although the petition to the Supreme Court and proposal before the Karnataka High Court are not guaranteed to succeed, they are genuine. The evidence supports the view that the petitions stand a reasonable prospect of success. Thirdly, if Dr Mallay is right in his contention that the proposal before the Karnataka High Court, if sanctioned, is likely to see the UBHL debt paid in full, there will be no liability under the PG. Fourthly, if the Supreme Court were to accede to the compromise petition, the Bank will be bound. Lastly, if the Banks decide to continue with the petition they are required to amend.

57. Finally, I record that although an argument of abuse, in the sense that the bankruptcy proceedings are prosecuted for a collateral purpose, was raised in written submissions, Dr Mallya preferred to preserve the argument for another occasion. I make no decision on the issue.

Conclusions

58. In my judgment the Banks are secured, at least in part. The petition fails to comply with section 269 of the IA 1986. A bankruptcy order should not ordinarily be made where the petition is defective as a result of such a breach. The breach is capable of cure by amendment. The hearing of the petition should be adjourned for the purpose of amendment and for time to pay the debts in full.

59. Having regard to the factual background, a reasonable period of time is at least six months.

60. I will hear counsel on the precise period for an adjournment when this judgment is handed down. Postscript

61. This judgment was produced in December 2019 and circulated in January 2020. Handing-down was adjourned for further argument, at the request of the parties. The parties agreed to a hearing after 1 June 2020. The outbreak of Covid-19 has made fixing a date uncertain. In my judgment it is in the interests of the administration of justice and in the public interest that this judgment be handed down now. In any event the agreed adjournment is not inconsistent with the judgment. Two matters arise. First, I shall order that the decision hearing for the purpose of CPR 52.3(2) is to be adjourned to a date to be fixed, and I shall extend time for filing an appellant’s notice to 21 days after the decision hearing, subject to permission. Secondly, no decision has been made in respect of the further argument referred to above, namely that as a matter of fact the whole of the debt owed by the Respondent to the Petitioners is secured. Consequently, it is argued, the court should not adjourn the hearing of the petition but exercise its discretion to dismiss the petition. Further evidence may be served in respect of this argument at the adjourned hearing.





Mortgage by deposit of title deeds

A mortgage by deposit of title deeds is a form of mortgage recognised by S. 58 (f), T. P. Act,which provides that it may be effected in certain towns (including Calcutta) by a person “delivering to his creditor or his agent documents of title to immovable property with intent to create a security thereon.”

That is to say, when the debtor deposits with the creditor the title deeds of his property with intent to create a security, the law implies a contrAct between the parties to create a mortgage, and no registered instrument is required under S. 59 as in other forms of mortgage. But if the parties choose to reduce the contract to writing, the implication is excluded by their express bargain, and the document will be the sole Evidence of its terms. In such a case the deposit and the document both form integral parts of the transAction and are essential ingredients in the creation of the mortgage. As the deposit alone is not intended to create the charge and the document, which constitutes the bargain regarding the security, is also necessary and operates to create the charge in conjunction with the deposit, it requires registration under S. 17, Registration Act, 1903, as a non-testamentary instrument creating an interest in immovable property, where the value of such Property is one hundred rupees and upwards.

The time factor is not decisive. The document may be handed over to the creditor along with the title deeds and yet may not be registrable, as in Obla Sundarachariar vs. Narayan Ayyar, 58 I. A. 68. Or, it may be delivered at a later date and nevertheless be registrable, as in Hari Sankar Paul vs. Kedar Nath Saha, 66 1. A. l84;. The crucial question is: Did the parties intend to reduce their bargain regarding the deposit of the title deeds to the form of a document ? If so, the document requires registration. If, on the other hand, its proper construction and the surrounding circumstances lead to the conclusion that the parties did not intend to do so, then, there being no express bargain, the contract to create the mortgage arises by implication of the law from the deposit itself with the requisite intention, and the document, being merely evidential does not require registration.

In Obla Sundarachariar vs. Narayan Ayyar, 58 I. A. 68 a signed memorandum was delivered to the mortgages along with the title deeds of certain properties deposited as security. The memorandum stated ‘‘As agreed upon in person, I have delivered to you the under-mentioned documents as security,” and listed the title deeds deposited. It was held that the memorandum was no more than a mere record of the particulars of the deeds and did not require registration. The criterion applied was:

“No such memorandum can be within the section (S. 17, Registration Act) unless on its face it embodies such terms and is signed and delivered at such time and place and in such circumstances as to lead legitimately to the conclusion that, so far as the deposit is concerned, it constitutes the agreement between the parties.”

In Hari Sankar vs. Kedar Nath, 66 I. A. 184 the title deeds were deposited accompanied by a memorandum when part of the advance arranged for was made. Some days later when the balance was advanced, another memorandum was delivered superseding the earlier one, and this was a formal document stating the essential terms of the transAction “hereby agreed” and referred to the moneys “hereby secured.” It also conferred an express power of sale on the mortgagee. Lord Macmillan, after reviewing the earlier decisions of the Board, held that the document required registration, observing

“where, as here, the parties professing to create a mortgage by a deposit of title deeds contemporaneously enter into a contrActual agreement in writing, which is made an integral part the transAction, and is itself an operative instrument and not merely evidential, such a document must, under the statute, be registered.”

It is clear,  that if the parties did not intend thereby to create the charge. The document purports only to record a transAction which had been concluded and under which the rights and liabilities had been orally agreed upon. No doubt it was taken by the respondents to show that the title deeds of the appellant’s properties were deposited with them as security for the moneys advanced by them, and to obviate a possible plea that the deeds were left with them for other purposes, as indeed was contended by the appellant in his written statement, taking advantage of the non-registration of the memorandum in question. But that is far from intending to reduce the bargain to writing and make the document the basis of the rights and liabilities of the parties. In agreement with the High Court, we are of opinion, that the memorandum delivered by the appellant along with the title deeds deposited with the respondents did not require registration and was properly admitted in Evidence to prove the creation of the charge.[Rachpal Mahraj AIR 1950 SC 272 : (1950) SCR 548 : (1950) SCJ 361]




Blocking Property With Respect to the Situation in Burma-Executive Order 12/02/2021

A Presidential Document by the Executive Office of the President on 02/12/2021

Executive Order 14014

February 10, 2021

Blocking Property With Respect to the Situation in Burma

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), section 212(f) of the Immigration and Nationality Act of 1952 (8 U.S.C. 1182(f)), and section 301 of title 3, United States Code,

I, JOSEPH R. BIDEN JR., President of the United States of America, find that the situation in and in relation to Burma, and in particular the February 1, 2021, coup, in which the military overthrew the democratically elected civilian government of Burma and unjustly arrested and detained government leaders, politicians, human rights defenders, journalists, and religious leaders, thereby rejecting the will of the people of Burma as expressed in elections held in November 2020 and undermining the country’s democratic transition and rule of law, constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States. I hereby declare a national emergency to deal with that threat.

Accordingly, I hereby order:

Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any foreign person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

(i) to operate in the defense sector of the Burmese economy or any other sector of the Burmese economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State;

(ii) to be responsible for or complicit in, or to have directly or indirectly engaged or attempted to engage in, any of the following:

(A) actions or policies that undermine democratic processes or institutions in Burma;

(B) actions or policies that threaten the peace, security, or stability of Burma;

(C) actions or policies that prohibit, limit, or penalize the exercise of freedom of expression or assembly by people in Burma, or that limit access to print, online, or broadcast media in Burma; or

(D) the arbitrary detention or torture of any person in Burma or other serious human rights abuse in Burma;

(iii) to be or have been a leader or official of:

(A) the military or security forces of Burma, or any successor entity to any of the foregoing;

(B) the Government of Burma on or after February 2, 2021;

(C) an entity that has, or whose members have, engaged in any activity described in subsection (a)(ii) of this section relating to the leader’s or official’s tenure; or

(D) an entity whose property and interests in property are blocked pursuant to this order as a result of activities related to the leader’s or official’s tenure;

(iv) to be a political subdivision, agency, or instrumentality of the Government of Burma;

(v) to be a spouse or adult child of any person whose property and interests in property are blocked pursuant to this order;

(vi) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of any person whose property and interests in property are blocked pursuant to this order; or

(vii) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, the military or security forces of Burma or any person whose property and interests in property are blocked pursuant to this order.

(b) The prohibitions in subsection (a) of this section apply except to the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted before the date of this order.

Sec. 2. The prohibitions in section 1 of this order include:

(a) the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order; and

(b) the receipt of any contribution or provision of funds, goods, or services from any such person.

Sec. 3. (a) The unrestricted immigrant and nonimmigrant entry into the United States of noncitizens determined to meet one or more of the criteria in section 1(a) of this order would be detrimental to the interests of the United States, and the entry of such persons into the United States, as immigrants or nonimmigrants, is hereby suspended, except where the Secretary of State or the Secretary of Homeland Security, as appropriate, determines that the person’s entry would not be contrary to the interests of the United States, including when the Secretary of State or the Secretary of Homeland Security, as appropriate, so determines, based on a recommendation of the Attorney General, that the person’s entry would further important United States law enforcement objectives.

(b) The Secretary of State shall implement this authority as it applies to visas pursuant to such procedures as the Secretary of State, in consultation with the Secretary of Homeland Security, may establish.

(c) The Secretary of Homeland Security shall implement this order as it applies to the entry of noncitizens pursuant to such procedures as the Secretary of Homeland Security, in consultation with the Secretary of State, may establish.

(d) Such persons shall be treated by this section in the same manner as persons covered by section 1 of Proclamation 8693 of July 24, 2011 (Suspension of Entry of Aliens Subject to United Nations Security Council Travel Bans and International Emergency Economic Powers Act Sanctions).

Sec. 4. (a) Any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order is prohibited.

(b) Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited.

Sec. 5. I hereby determine that the making of donations of the types of articles specified in section 203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)) by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to section 1 of this order would seriously impair my ability to deal with the national emergency declared in this order, and I hereby prohibit such donations as provided by section 1 of this order.

Sec. 6. For the purposes of this order:

(a) the term “entity” means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization;

(b) the term “Government of Burma” means the Government of Burma, any political subdivision, agency, or instrumentality thereof, including the Central Bank of Myanmar, and any person owned or controlled by, or acting for or on behalf of, the Government of Burma;

(c) the term “noncitizen” means any person who is not a citizen or noncitizen national of the United States;

(d) the term “person” means an individual or entity; and

(e) the term “United States person” means any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.

Sec. 7. For those persons whose property and interests in property are blocked pursuant to this order who might have a constitutional presence in the United States, I find that because of the ability to transfer funds or other assets instantaneously, prior notice to such persons of measures to be taken pursuant to this order would render those measures ineffectual. I therefore determine that for these measures to be effective in addressing the national emergency declared in this order, there need be no prior notice of a listing or determination made pursuant to section 1 of this order.

Sec. 8. The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA as may be necessary to carry out the purposes of this order. The Secretary of the Treasury may, consistent with applicable law, redelegate any of these functions within the Department of the Treasury. All departments and agencies of the United States shall take all appropriate measures within their authority to carry out the provisions of this order.

Sec. 9. Nothing in this order is intended to affect the continued effectiveness of any action taken pursuant to Executive Order 13742 of October 7, 2016 (Termination of Emergency With Respect to the Actions and Policies of the Government of Burma).

Sec. 10. The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to submit recurring and final reports to the Congress on the national emergency declared in this order, consistent with section 401(c) of the NEA (50 U.S.C. 1641(c)) and section 204(c) of IEEPA (50 U.S.C. 1703(c)).

Sec. 11. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

J Biden

THE WHITE HOUSE, February 10, 2021. Filed 2-11-21; 11:15 am]
[FR Doc. 2021-03139

Billing code 3295-F1-P