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Punjab National Bank Ltd. Vs. Vishwa Nath Khanna and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1941All363
AppellantPunjab National Bank Ltd.
RespondentVishwa Nath Khanna and ors.
Excerpt:
.....the debt under section 9(5)(a) of the statute applies to a case where the decree or debt imposes joint liability or whether it also applies to a case where the decree or debt imposes a joint liability as well as a several liability upon the debtors. the first is that a joint debt does not cease to be a joint debt when it is also a several debt and if a joint and several debt does not cease to be a joint debt, the condition of the statute is satisfied in attracting the provisions of clause (5)(a) of section 9 to such a debt. his order of dismissal, so far as defendant shiv narain katiar is concerned, was perfectly right, but i find no justification in law for the dismissal of the suit as against kanhai singh. having heard learned counsel on both sides we have come to the conclusion that..........arise in the case and mulla j. expressed no opinion upon it whether in a case of joint and several debt liability can or cannot be apportioned under section 9, clause (5)(a). indeed, it appears from his judgment that his view was that the liability could be apportioned, as would appear from the following observation which he made:his order of dismissal, so far as defendant shiv narain katiar is concerned, was perfectly right, but i find no justification in law for the dismissal of the suit as against kanhai singh. there is nothing in the encumbered estates act to affect or control the plaintiff's right to institute a suit against kanhai singh. it is true that upon the application made by shiv narain katiar a notice would be issued in the ordinary course to the plaintiff to put in a.....
Judgment:

Dar, J.

1. This is an appeal against a judgment and decree, dated 26th September 1938, of the Special Judge, First Grade of Cawnpore, by which the landlords' liability under a joint debt has been determined and apportioned under Section 9, U.P. Encumbered Estates Act (25 of 1934). Kailash Nath Khanna, resident of Cawnpore, and Moti Lal Daya Ram, resident of Calcutta, had borrowed a large sum of money from the Punjab National Bank Ltd. For the recovery of the debt due to the Punjab National Bank Ltd., the bank brought a suit (No. 380 of 1925) in the Court of the Subordinate Judge of Cawnpore against Kailash Nath Khanna and Moti Lal Daya Ram. On 5th November 1925, a decree was passed in favour of the bank against Khanna and Moti Lal Daya Ram for a sum of Rupees 44,397-10-9. The decree against Khanna was based upon a compromise and against Moti Lal Daya Ram it was ex parte. In an execution case (No. 443 of 1927) which later on arose between Khanna and the Punjab National Bank Ltd., this Court by a judgment dated 19th February 1929, has interpreted the said decree of 1925 as imposing a joint and several liability upon Khanna and Moti Lal Daya Ram and for the purpose of the present case this interpretation has been accepted as correct and it is common ground that under the said decree both Khanna and Moti Lal Daya Ram were jointly and severally responsible to pay the amount of the decree.

2. Before the decree was satisfied, Kailash Nath Khanna died, leaving two sons Vishwanath Khanna and Bishambhar Nath Khanna. On 28th March 1936, Vishwanath Khanna and Bishambhar Nath Khanna presented an application under Section 4, U.P. Encumbered Estates Act (25 of 1934) and in due course this application was transmitted to the Special Judge First Grade of Cawnpore.

3. In the Court of the Special Judge proceedings were taken under Sections 8, 9, 10 and 11, U.P. Encumbered Estates Act (25 of 1934), and in the course of these proceedings an application was made by the landlords to determine the liability of the landlords under the joint decree of 5th November 1925, and to apportion the amount of liability under that decree separately against the landlords and Moti Lal Daya Ram. On behalf of the bank and Moti Lal Daya Ram this application was opposed and an issue was raised and tried out by the Special Judge who, by his judgment dated 2Gth February 1938, found that the landlords were entitled to have the amount due under the said decree apportioned separately against their own share and against the share of Moti Lal Daya Ram. Accordingly the Special Judge found that the landlords

are liable to pay a sum of Rs. 40,762-10-6 to the bank on the foot of the decree and no more. The rest of the decretal amount, i.e., half of the actual amount due on the decree...shall be paid by Moti Lal Daya Ram.

4. Against this judgment the bank has made this appeal which originally came before a Bench of this Court for hearing and has now been referred to this Bench. The main question for consideration in the case is whether in a case of a debt or a decree which imposes a joint and several liability upon the debtors the landlord is entitled under the provisions of the U.P. Encumbered Estates Act (25 of 1934) to have the joint liability apportioned separately against his own share and as against the shares of other debtors. Section 9, Clause (5), U.P. Encumbered Estates Act (25 of 1934), reads as follows:

(5). (a) If one or more of several joint debtorswho are not members of theDetermination of same joint Hindu familyliability of joint apply under Section 4 but all thedebtors who are not joint debtors do not applymembers of a joint then the special Judge shall Hindu family. determine the amount of the joint debt which is due by the debtor or debtors who have applied and the amount due bythose who have not applied. For the purpose of this determinationthe Special Judge shall make the joint debtors who have not applied parties to the proceedings and shall hear any objection that theymay make before recording his finding.(b) If all the joint debtors have not applied under Section 4 the creditors shall have a right to recover from the debtors who have not applied only such amount on account of the joint debts as may be determined by the Special Judge to be due by them.

(c) Where no suit has been instituted' or where no application for execution of a joint decree has been made in any other Court in respect of such joint debt or joint decree the creditor may on application to any Court having jurisdiction to entertain such suit or execute such decree, obtain a decree, or get the decree executed against non-applicant joint-debtors for the amount so determined, subject to the payment of the court-fee payable on such, execution application, or on a plaint in a suit for the amount determined by the Special Judge:

Provided that notwithstanding anything contained in the Limitation Act or any other law for the time being in force, in computing the period of limitation for such suit or such execution application the period from the date of the order of the Collector under Section 6 to the date of determination of such debt by the Special Judge under Clause (b) shall be excluded in either case.

(d) Where a suit in respect of the joint debt had; been instituted or an application for the execution of the joint decree made, and proceedings therein were stayed under Sub-section (1) of Section 7, the Court in which such suit had been instituted or such execution application was made shall, on the application of the creditor, proceed with such suit or execute such application in accordance with Sub-section (c) as against those joint debtors who had not applied under Section 4, in respect of the amount of the joint debt determined by the Special Judge to be due from such joint debtors.

5. In a case where the debt or the decree imposes a joint liability against several persons one or more of whom apply for proceedings under Section 4, U.P. Encumbered Estates Act (25 of 1934) and others do not, Section 9(5)(a), U.P. Encumbered Estates Act (25 of 1934), enjoins that the liability of those debtors who had applied under Section 4 shall be determined and the liability of the joint debt will be apportioned separately against the debtors who had applied and against those who had not applied under Section 4 of the Act. So far there is no dispute. The controversy in the case is whether the power] given to the Court to determine and apportion the debt under Section 9(5)(a) of the statute applies to a case where the decree or debt imposes joint liability or whether it also applies to a case where the decree or debt imposes a joint liability as well as a several liability upon the debtors. As the statute stands today, it is quite clear that the words 'joint debt' in Clause (5)(a) of Section 9 include debts which are both joint and several because Clauses 5(b), (c) and (d) of Section 9 enjoin that a creditor will not be able to follow his remedy against non-applicant debtors till the amount has been determined and apportioned by a Special Judge under Clause (5)(a) and, therefore, the right of a creditor to pursue his remedy separately in a case of joint and several debt has been taken away by the statute and the jurisdiction to determine and apportion the liability in a case of joint debt against debtors who have applied and against debtors who have not applied now solely vests in the Special Judge dealing with the proceedings under the U.P. Encumbered Estates Act (25 of 1938).

6. It is, therefore, not disputed that in the statute as it stands today in Clause (5)(a) of Section 9 the words 'joint debt' are used in a sense so as to include both joint and several debt, but it is contended that in the year 1938 when the amount due under the decree of 1925 was determined and apportioned by the Special Judge Section 9 was worded in a different way and although in the statute as it existed in 1938, Clause (5)(a) was in the same words as Clause 5 (a) is in the present statute, there were no corresponding provisions to Clause (c) and (d) and the question, therefore, which arises for consideration is : What is the meaning to be given to the words 'joint debt' in Clause (5)(a) if we cannot call in aid in construing the words 'joint debt' in Clause (5)(a), Clauses (c) and (d) of the statute as it exists today? This raises the question whether the words 'joint debt' in the statute which was in operation in 1938 under Section 9, Clause (5) were confined to a case where the liability of the debtors under the decree or under the debt was joint or it also included a case where the liability was joint and several. We are of opinion that the words 'joint debt' in Section 9, Clause (5)(a), U.P. Encumbered Estates Act (25 of 1934), which was in force in the year 1938 should also be interpreted to mean and include debts which are joint as also those which are joint and several. There are two main reasons for this view. The first is that a joint debt does not cease to be a joint debt when it is also a several debt and if a joint and several debt does not cease to be a joint debt, the condition of the statute is satisfied in attracting the provisions of Clause (5)(a) of Section 9 to such a debt.

7. The other reason is that the entire scheme of the U.P. Encumbered Estates Act (25 of 1934) as it existed in 1938 prior to the amendments which have since been made in the statute shows that even a joint and several debt the Special Judge should, and must determine and apportion the liability of a debt against the debtors who applied and as also against the debtors who had not applied. If in a case of a joint and several debt the Special Judge were not to determine and apportion the amount and if it were held that Section 9, Clause (5)(a) did not apply to a case of a joint and several debt and gave the Special Judge no power to determine and apportion the liability, then in many cases it will result in passing of two decrees on the same debt and will lead to other confusion. In a case of a joint and several debt, if the amount cannot be determined or apportioned, the Special Judge will be compelled to pass a decree against the landlord for the full amount and it will be open to the creditor to bring a suit and obtain a decree for the entire amount of the debt against the other debtor who had not applied under the U.P. Encumbered Estates Act (25 of 1934) and there will be thus two decrees, one given by the Special Judge and the other given by the ordinary Courts, running side by side on joint and several debts. It will be further noticed that under the U.P. Encumbered Estates Act (25 of 1934) the decrees have to go to a Collector for realization and there a special procedure is followed and it is doubtful whether the Collector under U.P. Encumbered Estates Act (25 of 1934) can take into account payments and adjustments which might be made towards the decree which the creditor obtained against those debtors who had not applied under the U.P. Encumbered Estates Act (25 of 1934).

8. It is contended that the law allows a creditor in a joint and several debt to pursue his remedy against any debtor at his option and it is also contended that it is permissible to a creditor in a joint and several debt to bring successive actions and it is submitted that by interpreting the words 'joint debt' in the manner in which we are doing we are destroying the contract between the parties. The U.P. Encumbered Estates Act (25 of 1934) has taken great liberties with the contract between the parties. Most of its provisions destroy and nullify the covenants which parties make for themselves in the case of a landlord and his creditors and we do not think that we are doing any violence either to the language of the statute or to the spirit of the enactment in interpreting the words 'joint debt' in a wider sense and not in a narrower sense. But it is contended that there are three cases of this Court in which a different interpretation has been put upon the words 'joint debt' as used in Section 9, Clause (5)(a), U.P. Encumbered Estates Act (25 of 1934) as it existed prior to the amendments made by Act 11 of 1939. It becomes therefore necessary to examine these cases.

9. In Swadeshi Bima Co. Ltd. Agra v. Shiv Narain ('39) 26 A.I.R. 1939 All. 75 a promissory note was executed by two persons Shiv Narain Katiar and Kanhai Singh, in favour of the Swadeshi Bima Co. Ltd., which imposed a joint and several liability upon Katiar and Kanhai Singh. Katiar alone applied under the Encumbered Estates Act. Later on a suit was brought by the Swadeshi Bima Co. Ltd., in the Small Cause Court on the pro-note against Katiar and Kanhai Singh and the Small Cause Court Judge dismissed the suit both against Katiar and Kanhai Singh. It was conceded that the dismissal against Katiar was proper but on behalf of the Swadeshi Bima Co. Ltd., the creditor, it was contended that the suit should not have been dismissed against Kanhai Singh and the only point which arose in the case was whether the dismissal of the suit against Kanhai Singh should or should not be maintained. Mulla J. held that the dismissal was improper. The point did not arise in the case and Mulla J. expressed no opinion upon it whether in a case of joint and several debt liability can or cannot be apportioned under Section 9, Clause (5)(a). Indeed, it appears from his judgment that his view was that the liability could be apportioned, as would appear from the following observation which he made:

His order of dismissal, so far as defendant Shiv Narain Katiar is concerned, was perfectly right, but I find no justification in law for the dismissal of the suit as against Kanhai Singh. There is nothing in the Encumbered Estates Act to affect or control the plaintiff's right to institute a suit against Kanhai Singh. It is true that upon the application made by Shiv Narain Katiar a notice would be issued in the ordinary course to the plaintiff to put in a written statement of his claim and it would be open to the Special Judge under Section 9, Clause (5) of the Act to make Kanhai Singh a party to the proceeding and to apportion the liability under the pro-note between him and Shiv Narain Katiar who is an applicant under Section 4 of the Act. When the Special Judge has made such apportionment, Section 9, Clause (5)(b) shall come into operation and the plaintiff shall have a right to recover from Kanhai Singh only such amount as may have been determined by the Special Judge.

10. So far from this case being any authority for the proposition that the liability cannot be determined under Section 9, Clause (5)(a), U.P. Encumbered Estates Act, the case, if anything, suggests and supports the proposition that joint liability in a case of joint and several debt may be determined and apportioned under the provisions of Section 9(5)(a). In Narain Das Bal Kishan Das v. Munir Uddin : AIR1940All203 a promissory note was executed by Nasir Uddin, Munir Uddin and Khabar Uddin in favour of the creditor imposing a joint and several liability. Nasir Uddin and Khabar Uddin alone applied under Section 4, U.P. Encumbered Estates Act (25 of 1934) and the creditor did not file his written statement in time and by reason of the provisions of Section 13, U.P. Encumbered Estates Act (25 of 1934) his claim was extinguished. A suit was then instituted by the creditor against Nasir Uddin, Khabar Uddin and Munir Uddin. During the pendency of this suit Nasir Uddin and Khabar Uddin were exempted from the claim and the suit was fought between the creditor and Munir Uddin and was dismissed by the Small Cause Court Judge. Bennet and Verma JJ. held that this dismissal was wrong. In order to make out that the dismissal was wrong, the creditor also advanced an argument to the effect that Section 9(5) of the Act; did not apply to a case where the liability was joint and several and in the course of the judgment Bennet and Verma JJ. made the following observation:

Having heard learned Counsel on both sides we have come to the conclusion that the contentions of the plaintiffs-appellants are well-founded. It seems to us that Section 9(5) of the Act contemplates only those cases in which the liability of the debtors is joint and not those cases in which it is joint as well as several.

11. It will be noticed that the only question which arose in the case was whether dismissal of the suit against Munir Uddin was proper, having regard to the fact that in proceedings under the U.P. Encumbered. Estates Act (25 of 1934) the creditor had not filed his written statement against Nasir Uddin and Khabar Uddin and the debt, therefore, could not be apportioned in proceedings under the U.P. Encumbered Estates Act (25 of 1934) and in order to consider the propriety of the dismissal of the suit incidentally the question of the joint, and several liability of the debt was considered. The point did not arise in that case and it was certainly not decided that in proceedings under Section 9, U.P. Encumbered, Estates Act (25 of 1934) on an application of a landlord in a case of joint and several debt the liability cannot be determined and apportioned. We, therefore, are of opinion that the observation of Bennet and Verma JJ. referred to above should be taken as not deciding the point and should be confined to the facts of that case. But if they are intended and are susceptible of a. wider meaning and if they in any way support the proposition that in a proceeding under Section 9(5)(a), Encumbered Estates Act (25 of 1934), in a case of a joint and several debt liability of landlord debtor cannot be determined and apportioned, then with all respect we cannot agree. In Murari Lal v. Mt. Bibi : AIR1940All395 which was a case of a decree which imposed a joint and several liability and in which the decree-holder wanted to execute his decree against other judgment, debtors who had not applied, Rachhpal Singh J. observed:

Section 9, Sub-section (5)(a) refers only to the case where a debt is due from several persons and the liability of the various debtors can be apportioned. It can have, in my opinion, no reference to a case where the liability of the various debtors is joint and several.

12. It is sufficient to say that this decision is in conflict with an earlier decision of this Court in Babu Ram v. Manohar Lal : AIR1938All6 , decided by Sir Shah Mohammad Sulaiman C.J. and Harris J., and here again with all respect, we cannot agree with the interpretation which has been put upon Section 9, Sub-section (5)(a) by Rachhpal Singh J. Mohammad Ihtisham Ali v. Lachhaman Prasad was a case in which Ahtasham Ali and Azhar Ali had executed a joint and several pronote. Azhar Ali alone applied under the Encumbered Estates Act and then a suit was brought by the creditor against Ahtasham and Azhar. No relief was asked against Ahtasham but Azhar contended that the suit should be stayed till the joint liability of Ahtasham and Azhar was determined by the Special Judge and apportioned. The stay of suit was refused by the lower Court and Yorke and Radha Kishan JJ. held that the suit should have been stayed. In the course of the judgment at p. 648 they expressed the view on the interpretation of the words 'joint debts,' and 'joint decrees,' used in Section 9 as follows:

We ourselves are clearly of opinion that the words used in this section where mention is made of joint debtors and joint debts or joint decrees are not used in the very strict sense of debt and decrees for which the debtors cannot be made liable or proceeded against individually. There is nothing in the wording of these sections which requires that they be interpreted in that very strict sense. We are, therefore, of the opinion that the more general sense should be given to them and we understand, as evidently do the learned Judges of the Allahabad High Court, that whatever injury may thereby be done to the rights of creditors under the general law, the intention of this Act is to limit the right of creditors even in the case of debtors who are not entitled to the protection of the Act, by giving to the Special Judge deciding claims under that Act, an exclusive jurisdiction to apportion the liability under joint debts as between those debtors who applied under the Act and those who had not.

13. It will thus be seen that in two cases referred to above it was decided that in a case where a debt was joint and several an action would lie against the debtor who had not applied under the D.P. Encumbered Estates Act (25 of 1934) and in one case it was decided that execution might proceed against the judgment, debtor who had not applied; in one case it was decided that a suit might lie but the suit shall be stayed till the Special Judge has apportioned the liability at the instance of debtor who had applied and in one case it was implied that the Special Judge would have jurisdiction to apportion the liability and his decision would govern the suit, but in no case was it decided that under Section 9(5), U.P. Encumbered Estates Act, (25 of 1934) the Special Judge had no power to apportion liability in cases where the joint debts and decrees are both joint and several. We are, therefore, of opinion that there is no clear or binding authority in favour of the contention that Section 9(5) does not apply to a joint and several debt or to a joint and several decree. We therefore think that the judgment under appeal is correct and should be affirmed and this appeal should be and is hereby dismissed with costs.


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