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Baij Nath Sahai Vs. Seth ParbIn Singh and anr. - Court Judgment

LegalCrystal Citation
SubjectFamily ;Civil
CourtAllahabad
Decided On
Reported inAIR1945All48
AppellantBaij Nath Sahai
RespondentSeth ParbIn Singh and anr.
Excerpt:
.....in section 9 (5) (a) that the special judge shall, for the purpose of this determination make the joint debtors who have not applied parties to the proceedings and shall hear any objection that they make before recording his finding, it would seem that the joint debtors are persons standing in the same position in regard to the proceedings under section 14 as is the applicant under section 4. we think that even in the absence of a specific provision under section 14 (1) it is clearly necessary that notice of the date for inquiring into the claim should be given to the non-applicant joint debtors. chandra bhan agrawala after a vain attempt to suggest that the creditor's appeal was not maintainable went on to argue that in a case where there are joint debtors the creditor is bound to..........(a), encumbered estates act, provides and has always provided as follows:if one or more of several joint debtors, who are not members of the same joint hindu family, apply under section 4 but all the joint debtors do not apply then the special judge shall determine the amount of the joint debt which is due by the debtor or debtors who have applied and the amount due by those who have not applied. for the purpose of this determination the special judge shall make the joint debtors who have not applied parties to the proceedings and shall hear any objection that they make before recording his finding.3. clause (b) of this sub-section originally provided as follows:if all the joint debtors have not applied under section 4 the creditor shall have a right to recover from the debtors who have.....
Judgment:

Yorke, J.

1. This is a first appeal under' the Encumbered Estates Act arising out of the following circumstances. On 31st January 1893 one Johri Mal, grandfather of the debtor applicant Seth Parbin Singh, executed a usufructuary mortgage in respect of 19 biswas 15 biswansis out of a 20-biswa share in village Etawah in favour of Rai Bahadur Nanak Chand of Bijnor. This mortgage deed provided that the Rai Bahadur was being put in possession or occupation of the property but it also implied that the mortgagee was giving a lease to the mortgagor of the mortgaged property. The document provided that the consideration of Rs. 20,000 would be paid off at the rate of Rs. 5000 per annum in four instalments and that the mortgagor would deposit Rs. 1200 as interest or profits with the mortgagee in two half-yearly instalments each year. There were provisions in case of failure with which we shall have to deal later. The executant Seth Johri Mal had two sons, Banwari Das and Partap Singh. Each of these two sons had three sons, Banwari Das's sons being Parbin Singh the landlord applicant, Zalim Singh and Bhara Mal, while Partap Singh's sons were Naunihal Singh, Harbans Singh and Balwant Singh. Thus of the property originally belonging to Seth Johri Mal each of the grandsons would have had a one-sixth share, it being not in dispute that there had been separation.

2. On 29th October 1936 Seth Parbin Singh and his son Mahindrapal Singh a minor filed an application under Section 4, Enpumbered Estates Act, stating inaccurately that Baij Nath Sahai was the mortgagee of their zamindari property, whereas in fact he was mortgagee in respect of only one piece of property. On 4th February 1937 Parbin Singh filed his written statement under Section 8 in which he named Baij Nath Sahai as a creditor but alleged that the mortgage of 1893 had been paid up out of the usufruct of the property. It may be noted here that the usufructuary mortgagee had, after a short time, to sue the mortgagors to recover the interest mentioned in the mortgage deed and had obtained actual possession. On 1st November 1937 Baij Nath Sahai son of the original mortgagee Rai Bahadur Nanak Chand, filed a written statement of his claim seeking a decree for Rs. 20,000 principal plus Rs. 77,342 odd interest. To this claim the landlord applicants put in no reply, their main contention having already been stated in the written statement under Section 8. One of the cousins, Balwant Singh, filed a written statement on 12th September 1939 in which he also alleged that the amount of the mortgage had been paid out of the income from the mortgaged property and in fact a considerable sum of money amounting to about Rs. 10,000 was really due to the mortgagor by the mortgagee on account of excess payment. It was also alleged that the mortgagee had cut trees belonging to the mortgagor. In para. 4 of this written statement Balwant Singh stated as follows:

Dr. Harbans Singh Babu Naunihal Singh and I the opposite party, being own brothers, are the representatives of Seth Pratap Singh, i.e., we are the grandsons of Seth Johri Mal, and are cosharers to the extent of one-half in the property mortgaged; and I the opposite party have a one rule share therein, i.e., I am the cosharer of a one-sixth share in the entire property mortgaged. If it is held by the Court that a certain amount is due to the mortgagee on account of the mortgage money then it should be divided and set apart to the extent of the share of me the opposite party.

That 'was request for an apportionment under Section 9 (5) (a), Encumbered Estates Act. No written statement was filed by either Dr. Harbans Singh or Babu Naunihal Singh and the only other written statement filed was by Damodar Das a claimant to a one-sixth share of Bhara Mal in competition with one Desh Bandhu who was ultimately successful in establishing that he was the prior purchaser of the one-sixth share. The position which thus arose before the learned Special Judge was that the landlords applicants had, on the one hand, asked for an apportionment of the debt as between them and the non-applicant-co-debtors as also had one of those co-debtors, while on the other hand the landlords applicants had further contended that the amount of the mortgage had been satisfied out of the usufruct of the property and one of his cousins had alleged that there had even been an excess payment. Section 9 (5) (a), Encumbered Estates Act, provides and has always provided as follows:

If one or more of several joint debtors, who are not members of the same joint Hindu family, apply under Section 4 but all the joint debtors do not apply then the Special Judge shall determine the amount of the joint debt which is due by the debtor or debtors who have applied and the amount due by those who have not applied. For the purpose of this determination the Special Judge shall make the joint debtors who have not applied parties to the proceedings and shall hear any objection that they make before recording his finding.

3. Clause (b) of this sub-section originally provided as follows:

If all the joint debtors have not applied under Section 4 the creditor shall have a right to recover from the debtors who have not applied only such amount on account of the joint debt as may be decreed by the Special Judge to be due by them.

By the Amendment Act, 11 of 1939, the word 'determined' was substituted for the word 'decreed' in this clause for the obvious reason that the learned Special Judge, as such, had no jurisdiction and could scarcely be given a jurisdiction to make a decree against a non-applicant debtor. There might possibly be room for doubt as to what was the original intention of the Legislature in enacting Clauses (a) and (b) of Sub-section (5) of Section 9, Encumbered Estates Act. The Encumbered Estates Act enables a Judge appointed under the provisions of that Act to interfere, very substantially indeed, with the contract between a creditor and an applicant under the Act. Prima facie, it is difficult to see how a Court exercising this special jurisdiction could be given a power to interfere with the contract as between the creditor and non-applicant joint debtors, but taking the provisions of these two Clauses (a) and (b) as a whole it would seem that the intention was to give the Special Judge a power to fix the amount of the debt not only as against the applicant but also as against the non-applicant joint debtors and establish a rule that a regular Court should not be able to give a decree against the non-applicant debtor for a larger or smaller amount than the amount so ascertained or determined. Be that as it may, the question which must arise is, in what proceedings is the Special Judge to determine the amount of the joint debt due by the applicant debtor and the amount due by the non-applicant debtor or debtors? It appears to us to be clear that this has to be done in the proceedings for the examination of claims and determination of the amount of debts under Section 14 of the Act. The first two sub-sections of Section 14 provide as follows:

(1) The Special Judge shall, by an order in writing fix a date for inquiring into the claims made in pursuance of the notice published in accordance with Section 9 and give notice of such date to all the claimants and the person who made the application under Section 4.

(2) The Special Judge shall examine each claim and after hearing such parties as desire to be heard and considering the evidence, if any, produced by them shall determine the amount, if any, due from the landlord to the claimant on the date of the application under Section 4.

It is true that there is a slight difference in the wording of this Sub-section (2) and that of Clause (a) of Sub-section (5) of Section 9 but the difference of wording does not appear to imply any difference of meaning. In Section 9 (5) (a) the Act speaks of determining the amount of the joint debt due by the debtor applicant and the amount due by the non-applicant whereas Sub-section (2) of Section 14 speaks of determining the amount, if any, due from the landlord to the claimant (creditor) on the date of the application under Section 4.

4. What happened in the present case was that as a result of the notices issued under Section 9 applications for determination of their share of the debt were made by Balwant Singh and Damodar Das but no applications - were made by any of the other joint debtors. Nonetheless the names of the three other joint debtors became known to the Special Judge and the names of the other two must also have become known. It was, therefore, the duty of the Special Judge to make these persons parties to the proceedings, that is, the subsequent proceedings. Prom September 1939 until 1941 it is not apparent what progress was made in the proceedings in this case. At the end of 1940 an application was made by Parbin Singh that the papers be sent to the Commissioner for adjudicating the amount of profits. The Commissioner submitted his report on 26th February 1941 and' the final determination proceedings under Section 14 took the form of the disposal by the Special Judge of objections to the Commissioner's finding. The Commissioner found that the amount of interest due to the creditor Baij Nath Sahai was Rs. 33,164-13-0 as compared with Rs. 77,000 odd claimed by Baijnath Sahai. The Court disposed of the objections and accepted this finding but held that the creditor was entitled only to Rs. 2000 by way of principal and Rs. 20,000 by way of interest under the provisions of Sub-section 4 (a) of Section 14. He held that the liability of Parbin Singh and his son was one-sixth of the joint debt, that is Rs. 6666-10-8 and he gave a simple money decree against the landlord applicants for that amount. In regard to the matter of the determination under Section 9 (5) (a) of the Act he remarked at the beginning of his judgment:

All the other representatives of the mortgagor are parties to these proceedings under Section 9, Encumbered Estates Act.

He did not, however, proceed to make any determination as against the other representatives apparently on the ground that the other joint debtors had not appeared before him. In this connexion he remarked:

The other joint debtors did not appear before me. This decree is being passed against the applicants only in favour of the creditor.

In the light of the mandatory provisions of Section 9 (5), Encumbered Estates Act, and the fact that notice under Section 9 of the Act had been given to these persons, it would seem, subject to what we shall have to say at a later stage, that this was not an adequate reason for not making an order of determination. The judgment of the Court below was pronounced on 28th March 1941, and on 29th March and 5th April applications were made by the creditor asking the Court to comply with the law and make the required determination. Upon the latter of these two applications the Court passed the following order:

The creditor has filed this application after the case had been finally decided. He wants decrees against other joint debtors, but these never appeared before me and no order can be passed now after the decision of the case in this sort of application unless the whole case is re-opened. The application is therefore filed.

The order shows a failure on the part of the learned Special Judge to appreciate the provisions of the Act. He could have amended his order by way of review or even otherwise. Against the decree of the learned Special Judge or rather really against the omission from his order of 28th March 1941, of any determination as against the joint debtors an appeal has been filed by the creditor who found himself in the uncomfortable position that he could not apply to a regular Court under the provisions of the present Clause (c) of Section 9 (5) of the Act because he had got no determination from the Special Judge of the amount due against the non-applicant joint debtors. By this appeal the creditor sought that a determination should be made against the joint debtors under Section 9 (5), which determination ought to be included in the order made under Section 14. The creditor impleaded Seth Par-bin Singh and his son only as pro forma respondents against whom he sought no relief but the landlord applicants have taken advantage of the filing of the appeal and the receipt of notice of it to file a cross-objection seeking to have the decree passed against them under Section 14 set aside or modified.

5. We feel no doubt that the creditor's appeal must be allowed. The provisions of Section 9 (5) (a) appear to us to be mandatory and bearing in mind the provisions of Clauses (b) and (c) it becomes all the more apparent that it is the duty of the Special Judge to make the determination in the course of his proceedings because if he does not do so, the creditor will apparently be left with no redress against the non-applicant joint debtors. On behalf of the creditor, it has been contended that we should merely send the case back with a direction to the Special Judge to make the determination as required by law without giving any further opportunity to the non-applicant joint debtors to lead evidence as to the correct amount of the joint debt. In this connexion considerable stress has been laid on the fact that in Section 14 (1) there is no provision that notice of the proceedings under Section 14 should be given to the non-applicant joint debtors. That section provides that notice of the date fixed is to be given to the claimants and the persons who made the application under Section 4. Bearing in mind the provisions in Section 9 (5) (a) that the Special Judge shall, for the purpose of this determination make the joint debtors who have not applied parties to the proceedings and shall hear any objection that they make before recording his finding, it would seem that the joint debtors are persons standing in the same position in regard to the proceedings under Section 14 as is the applicant under Section 4. We think that even in the absence of a specific provision under Section 14 (1) it is clearly necessary that notice of the date for inquiring into the claim should be given to the non-applicant joint debtors. Their only interest in the proceedings is this matter of the determination of the amount due and they are therefore not persons who are expected to follow every twist and turn of the proceedings in the case. Sub-section (2) of Section 14 which provides that the Special Judge shall hear such parties as desire to be heard upon each claim and that part of Section 9 (5) (a) which provides that the Special Judge shall hear any objection that the non-applicant joint debtors may make before recording his finding lead to the same conclusion. In these circumstances, we are clear that while the creditor's appeal must be allowed and the case sent back to enable the Court to comply with the mandatory provisions of Section 9 (5) (a), the direction must be that he will proceed with this determination after giving notice to the non-applicant joint debtors and hearing any objection they may make before recording his finding, which, implies that he may also permit them, if they so desire, to lead evidence in support of their objection.

6. It remains to consider the cross-objection filed on behalf of Seth Parbin Singh and his son. On their behalf Mr. Chandra Bhan Agrawala after a vain attempt to suggest that the creditor's appeal was not maintainable went on to argue that in a case where there are joint debtors the creditor is bound to prove his claim as against the joint debtors as well as against the debtor applicant and he urges that the creditor had never proved the mortgage. It is clear, however, that so far as the landlord applicants were concerned, the mortgage was admitted, and indeed the mortgage was not disputed by Balwant Singh or by Damodar Das nor was this point raised in the cross-objection. Mr. Chander Bhan Agarwala went on to argue that on any view of the case the decree of the Court of the Special Judge granted against the landlord applicants is wrong because the commissioner calculated compound interest whereas there is no provision in the mortgage deed of 31st January 1893, allowing such interest. We have examined the wording of this mortgage deed with care. The deed provides that in case in any year the instalment of its. 5000 or the amount of profits, stated earlier as being in lieu of interest at eight annas per cent, is not paid in full,

the mortgagee shall have power to realise (even) within the stipulated period aforesaid (that is the original four years) the entire amount in a lump sum from me the mortgagor as well as from the property mortgaged and other moveable and immovable property of me the executant and shall also duly realise the amount of profits, i.e., the amount of interest that may be duo up to the date of realisation, in addition to the amount of interest aforesaid.

It is suggested that this is a provision for compound interest but it appears to us that it is no more than a provision that mortgagee is entitled upon such failure to realise not only the interest for the stipulated period of four years but also the interest which may fall due after that period right up to the date of realisation. The document from beginning to end contains no provision for interest upon interest such as is often found and easily included in mortgage deeds. Mr. Chandra Bhan Agrawala points out the amount due by way of simple interest was found by the commissioner to be only Rs. 14,941-3-0 and, in our judgment, ho is right in contending that the creditor was entitled to a decree for only one-sixth of that amount plus Rs. 20,000 that is one-sixth of Rs. 34,941-3-0, i.e. Rs. 5823-8-6. Mr. Chander Bhan Agrawala further sought to contend that the creditor should be deprived of interest entirely because he had failed to comply with the provisions of Section 76 (g), T.P. Act, to maintain accounts. In this connexion reliance was placed on the decision of their Lordships of the Privy Council in Shadi Lal v. Lal Bahadur in which it was held that

Where the mortgagee in possession placed before the Court a day before the judgment was pronounced, and after the evidence was closed, some accounts which apparently were prepared from Khataunis kept by the revenue authorities, and no actual receipts from the land were shown in the accounts, then the mortgagee did not comply with the provisions of Section 76 (g), T.P. Act, and in the circumstances the High Court rightly disallowed the claim for interest.

7. It is however obvious that the circumstances of that case were rather special and it has not been shown to us that in the present case there was such a complete failure on the part of the creditor to maintain accounts of some sort as to bring him within the mischief of Section 77 and in any case we have to note that this is not a point which was raised either before the commissioner or before the learned special Judge or in terms in the grounds of cross-objection in this Court. All that is said in the grounds of cross-objection is that 'the accounts of receipts and profits and interest have been wrongly calculated.' This is clearly not an allegation that no accounts were maintained and therefore by reason of the provisions of Section 76 (g) the creditor was not entitled to any amount by way of interest. We may also remark that even in the application made on behalf of the landlord applicants on 20th December 1940 it was not suggested that there ' were no accounts but only that the accounts must be properly checked.

8. Mr. Chander Bhan Agarwala has sought to argue that if the cross-objection of Parbin Singh is disallowed and this Court merely modifies the simple money decree of the Court below, the position may arise that in the future determination proceedings upon remand the special Judge may hold that nothing is due against the non-applicant joint debtors and he suggests that there may be some sort of injustice in this. It will be sufficient to say that Seth Parbin Singh has had every opportunity to meet the claim and lead evidence to show that the creditor has already been paid in full. If it should be found that his defence of the claim was badly conducted and in consequence he has suffered a decree whereas his joint debtors may establish that nothing is due from them, he has really no one to blame but himself. Upon this view, we allow the cross-objection to this extent only that for the simple money decree for Rs. 6,660-10-8 passed against Seth Parbin Singh we substitute a simple money decree for Rs. 5,823-8-6. The cross-objectors will pay and receive costs in proportion to their failure and success. We make no order in regard to the coats of the creditor's appeal. The case will be remanded to the Special Judge for disposal in accordance with the provisions of Section 9(5)(a) as explained earlier in this judgment.


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