JAGDISH SAHAI,J. - (1.) JUDGEMENT Mohammad Ismail husband of : respondent No. 2 Smt. Marium and the respondent No. 3 Mehar Afroz Beum and the father of respondent No. 4 Salwa used to carry on business of a contractor. He had several contracts with Government Departments and in order to finance the same entered into an agreement with the Bank by executing power of attorney (Ex. 1). The relevant portions of that power of attorney read : "Whereas I am working as contractor to the Government in its various departments and have entered into certain contracts and will in future enter into other contracts and whereas arrangement has been made between me and the Hindustan Commercial Bank Ltd., in pursuance of which the attorneys have agreed to advance contracts and to advance me sums of money against supply hills of payments to be received by me under the contracts issued by the Government in various departments on the condition inter alia that the attorneys shall have first charge over the cheque in payment of bills and shall also be entitled to legalise the amount of the bills direct from the Government and their remittances of such bills will be made direct by the Government to and in name of the attorneys and the attorneys shall repay themselves from such receipts all monies due from me and in consideration of such advances by the attorneys all monies payable to me under the contracts and bills shall be considered under arrangement as assigned unto the attorneys and we have undertaken not to create any interest charge encumbrance or assignment in favour of anyone else over any monies payable or that may become payable to us under the contracts ............ 1 the appointee hereby promise to allow, ratify "and confirm all whatsoever the said attorneys shall lawfully do or cause to be done in the premises and I hereby declare that these presents and all powers hereby granted are and shall be irrevocable as long as any claims of the attorneys against me whether for principle interest, costs, charges or otherwise remain outstanding and unpaid" ....... Sd Mohd. Ismail." (underlined (Quotation-marks -Editor.) by us) This document was executed on 4-5-1944. Soon after the execution of the document, above mentioned, Ismail sent a copy of the power of attorney (Ex. 1) to the Controller of : Military Accounts, C, C, who by means of Ex. 2, the letter dated 22-3-1944, returned the original copy of the power of attorney sent by Mohammed Ismail to the letter after retaining a true copy of the same in the office of the Controller of Military Accounts, C. C. Arrangement envisaged by the power of attorney (Ex. 1) was put in operation and continued in practice. Mohammad Ismail availed himself of the over-draft facilities provided by the bank and started taking large amounts from the same. Sometime in 1948 the Bank filed suit No. 203 of 1949 against Mohammad Ismail for the recovery of a sum of one lakh and odds on the allegation that that represented the over draft amount taken by Mohammad Ismail. The suit was decreed and the Bank took out Execution No. 39 of 1950. At that time a large amount of money was due to Mohammad Ismail from the Military authorities and the Bank sought the attachment of this amount in execution of its decree in the meantime the income-tax Officer, Kanpur, sent a requisition to the Collector of the District for realizing the income-tax dues against Mohammad Ismail amounting to Rs. 2,33,412/15/- under S. 48 of the Income-tax Act of 1922. The Collector, Kanpur, asked the military authorities to withhold payment to Mohammad Ismail as also the Bank. the military authorities wrote to the executing court that in as-much as the Collector had attached all the amounts belonging to Mohammad Ismail in the hands of the military authorities for the realization of the income-tax dues of the latter no amount could be spared for being paid to the decree-holder. Before the executing court the submission made on behalf of Mohammad Ismail was that the amounts in the hands of the military authorities were subject to a charge in favour of the Bank and consequently the claims of the Bank had to be satisfied, before the Income tax Department could lay its hand over the amounts of money belonging the Mohammad Ismail withheld by the military authorities. The execution court recorded the finding that there was no charge in favour of the Bank and that Government dues had a priority over the Banks dues and that after the satisfaction of the Government dues there shall be no money belonging to Mohammad Ismail in the hands of military authorities. It, therefore, dismissed the execution application.
(2.) WE have heard Sri Jagdish Swamp for the appellant and Sri Shanti Bhushan, the learned Senior Standing Counsel for the respondent, the Union of India. No one has appeared before us on behalf of other respondents. The following two questions require determination in this case : (1) Whether by virtue of power of attorney dated 4-5-1944 (Ex. 1) a charge had been created in favour of the Bank over the amounts due Co Mohammad Ismail and withheld by the military authorities ? (2) Whether things being equal the Government dues have a priority over private dues with the result that the income tax dues in this case would have precedence over the dues of the Bank ? No other question has been raised before us. We will consider the questions seriatim. Section 100, Transfer of Property Act defines a charge. It leads : Where immoveable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a morgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained which apply to a simple mortgage shall, so tar as may be, apply to such charge. Nothing in this section applies to the charge of a trustee on the trust-property for expenses properly incurred in the execution of his trust, and save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any properly in the hands of a person to whom such property have been transferred for consideration and without notice of the charge." There cannot be any manner of doubt that the transaction evidenced by the power of attorney (Ex. 11 does not amount to a mortgage. In fact, it has not been contended by either the two par has before us that it is a case of mortgage. Mr. Jagdish Swarup, however, contends that the document (Ex. 1) creates a charge. In the present case it is not immoveable property of Mohammad Ismail made security for the payment of money to the Bank. Whit has been done is that all sums of money payable either in cash or by cheque or through any other mode have been assigned to the Bank for payment of its dues. The case, therefore, would not he covered by Section 100 of the Transfer of Property Act. But that would not, in our judgment, make any difference because the sum and substance of the transaction evidenced by the power of attorney (Ex-I) is to assign all amounts payable to Mohammad Ismail to the Bank. The learned Civil Judge was of opinion that the military authorities were not bound by the arrangement arrived at between Mohammad Ismail and the Bank. There are in the document exhibit 1; clear and unambiguous words of hypothecation and it is difficult to construe that document in any other manner save that as creating a charge. We read into the document a clear intention to make an assignment in favour of the Bank of the moneys which were to fall due in favour of Mohammad Ismail. For the reasons mentioned above, we are clearly of the opinion that exhibit 1 did create a charge. The learned Senior Standing Counsel contended that section 130 of the Transfer of Property Act deals with transfers of actionable claims and in the present case sums which were to become due in future could not be treated to be a debt so as to fall within the definition of actionable claims as given in Section 3 of the Transfer of Property Act. Section 3 defines actionable claim as : "Actionable claim" means a claim to any debt, other than a debt secured by mortgage of immoveable property or by hypothecation or pledge of moveable property, or to any beneficial interest in imoveable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing conditional or contingent."
(3.) ON the basis of In the matter of Aviet Stephens -AIR 1938 Rang 1 the learned Senior Standing Counsel contends that before there can be an assignment there must be an existing debt. Learned counsel has pointed out to the following words in the power of attorney (exhibit 1) : "......Whereas I am working as contractor to the Government in its various department...and will in future enter into other contracts ... " Learned counsel submits that inasmuch as the power of attorney (exhibit 1) mentions of contracts which Mohammad Ismail may in future enter there was no debt in respect of these likely contracts even if entered into later on, with the result that there can be no assignment. The single fudge decision of the Rangoon High Court AIR !9S8 Rang 1 (supra) was reversed by a Division Bench of the same High Court in Balthazar and Son, Ltd v. Official Assignee AIR 1938 Rang 426 and in that decision it was held, on the basis of the facts operating in that litigation, that case of assignment had been made out. The submission that a charge cannot be created upon property which has to come into existence in future was overruled by the Calcutta High Court in Probodh Chandra v. Road Oils (India) Ltd. ILR 57 Cal 1101 : (AIR 1930 Cal 782), Tripura Modern Bank Ltd. v. Nabadwip Chandra Das, 49 Cal WN 494 and Ranjit Ray v. D.A. David, AIR 1935 Cal 218. This Court had an occasion to consider such a submission in Ram Govind v. Brij Ratan Das, AIR 1937 All 424. in that case a sum of Rs. 1,000/- was awarded by the Joint Magistrate of Benaras to the complainant out of a fine paid by the accused person in a defamation case. The fine having been paid, the complainant became entitled to recover the sum of Rs. 1,000/- in terms of the order of the Joint Magistrate but before he could withdraw that amount, one of his creditors, hereinafter referred to as a creditor, instituted a suit in the Court of City Munsif, Benaras, claiming another sum of Rs. 451/- and took out attachment before judgment under Courts order dated 11th November, 1929 and had the aforesaid sum of Rs. 1000/- attached. The complainant later on made statement through counsel that Rs. 451/- out of Rs. 1000/- awarded to him (complainant) by the criminal Court be given to the plaintiff. The Court passed an order on the basis of this statement to the effect that a sum of Rs. 451/- be requisitioned from the Court of the Joint-Magistrate and paid to the plaintiff. Before the money could be paid another suit was filed for the recovery of Rs. 1010/- against the plaintiff and an attachment before judgment obtained in respect of a sum of Rs. 1000/- standing to the credit of the plaintiff in the Court of the Joint Magistrate, Benaras. The question that this Court hid to decide was whether Rs. 451/-- had been assigned to the plaintiff by the complainant and whether the statement made by the complainant before the learned Munsif amounted to an assignment in law. Niamat Ullah, J., observed as follows : That the declaration made by defendant 2 amounted to assignment in law, can, in my opinion, admit of no doubt. I have already shown that the assignor had a right to the fund and that he did everything which he could to convey his right to the assignee. The right of defendant 2 to the sum of Rs. 1000/- held by the joint Magistrate amounted to "chose in action" as distinguished from "chose in possession" (Halsburys Laws of England, Vol. 4, S, 777). A distinction exists in English Law between legal assignment and equitable assignment There is statutory provision in England contained in the Law of Property Act, 1925, in respect of legal assignment. Even where a transaction does not amount to legal assignment for want of due formalities, English Law recognises equitable assignment under which a right is created in favour of the assignee." The learned Judge then referred to Halsburys Laws of England, Vol. 4, Ss. 805 to 807 as follows : 805. From the earliest times Courts of equity have always permitted and given effect to assignments of all Kinds of choses in action when made for valuable consideration and not contrary to public policy. 806. No form of words is required for an equitable assignment; the only thing that is necessary is to make the meaning plain. The assignment may be by word of mouth, unless in the particular case writing is required and no particular form of words is necessary so long as they clearly show an intention that the assignee is to have the benefit of chose in action. It may be addressed either to the debtor or to the assignee. An agreement amounting to an equitable charge may even be made out from a course of dealing between the parties. An engagement or direction to pay a sum of money out of a specified debt or fund constitutes an equitable assignment, though not of the whole debt or fund. But it is necessary to specify the debt or fund. So also a mere charge on a debt or fund operates as a partial equitable assignment. It is immaterial that the amount of the debt assigned is not ascertained at the date of the assignment. 807. In the case of future choses in action an assignment in terms present and immediate is sufficient, and will bind the subject matter when it comes-into existence, it is of such a nature and so described as to be capable of being ascertained and there is consideration for the assignment." Niamat Ullah, J. after quoting the passages from-Halsburys Laws of England observed : "The above rules are based on decided cases which are quoted in the work. Applying them to the facts of the present case, I find that every requirement of the rule is present. There was valuable consideration for the assignment. Rs. 451/- were due to defendant from defendant 2 who made the assignment. It was in satisfaction of that sum that the assignment was made. There is nothing in Indian-law which requires an assignment to be expressed in any particular words nor is a particular form prescribed for effecting it. The intention of defendant 2 to pay Rs. 451, out of the sum of Rs. 1000/- recoverable by him, to defendant 1, is clear. The words constituting the assignment were addressed to the assignee and also to the Court which had dominion over the fund. The fund was clearly specified." ;