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L. Chunni Lal Vs. Chandan Gopal and ors. - Court Judgment

LegalCrystal Citation
Subject Limitation
CourtAllahabad
Decided On
Reported inAIR1939All542
AppellantL. Chunni Lal
RespondentChandan Gopal and ors.
Excerpt:
- - ..the time limit for instituting a suit or making an application- (a) against the person guilty of the fraud or accessory thereto, or (b) against any person claiming through him otherwise than in good faith and for valuable consideration, shall be computed from the time when the fraud first became known to the person injuriously affected thereby. sohan lal air1939all303 .taking all the facts into consideration i am satisfied that under the special circumstances of the case the special judge was entitled to extend the time for presenting the written statement, and i hold that the written statement presented by the applicant is within time......on behalf of the creditor against an order of the learned district judge reversing an order of the special judge, 2nd grade, hamirpur. it appears that two brothers named sri gopal and chandan gopal, jointly owed some money to the applicant chunni lal. the creditor obtained a decree for the money due to him against the two brothers. it appears that in a private partition between the two brothers it was declared that the debt due to chunni lal would be paid by sri gopal alone. it is obvious that chunni lal was in no way bound by this arrangement arrived at between the brothers. chunni lal executed his decree against the two brothers. in the meantime one of the brothers, chandan gopal, made an application under section 4, encumbered estates act, and the application having been found in.....
Judgment:
ORDER

Mohammad Ismail, J.

1. This is an application in revision on behalf of the creditor against an order of the learned District Judge reversing an order of the Special Judge, 2nd Grade, Hamirpur. It appears that two brothers named Sri Gopal and Chandan Gopal, jointly owed some money to the applicant Chunni Lal. The creditor obtained a decree for the money due to him against the two brothers. It appears that in a private partition between the two brothers it was declared that the debt due to Chunni Lal would be paid by Sri Gopal alone. It is obvious that Chunni Lal was in no way bound by this arrangement arrived at between the brothers. Chunni Lal executed his decree against the two brothers. In the meantime one of the brothers, Chandan Gopal, made an application under Section 4, Encumbered Estates Act, and the application having been found in order was referred to the Special Judge for further proceedings.

2. On 16th September 1935 Chandan Gopal made an application under Section 7 of the Act praying for the stay of the proceedings. This application was allowed. Chunni Lal received no notice to file a written statement and to prove his claim from the Court of the Special Judge. He however made an application to the Special Judge on 5th February 1937 stating the amount due to him and praying for extension of time for admitting his claim on the ground that the debtor had fraudulently omitted to mention his name in the list of creditors. The learned Special Judge allowed the application, but on appeal the learned District Judge reversed the order holding the application to be time-barred. The result is that under the provisions of Section 13 of the Act the claim of the applicant Chunni Lal must be deemed for all purposes and on all occasions to have been duly discharged. Learned Counsel for the applicant contends that Section 13 has no application to the present case, because the mandatory directions contained in Section 9 were not complied with on account of the fraudulent conduct of the debtor. Section 9 of the Act enjoins upon the Special Judge to publish in the Gazette a notice calling upon all persons having claims in respect of private debts, both decreed and undecreed, against the person or the property of the landlord by or on whose behalf an application has been made, within three months from the date of the publication of the notice, a written statement of their claim. This procedure admittedly was followed by the Special Judge. Sub-section (2) of the Section directs that copies of such notice should be published in papers. It is not suggested that this procedure was not followed. The same sub-section directs that a copy of the notice published in the Gazette should be sent by registered post to each of the creditors whose names and addresses are mentioned in the written statement. This procedure was admittedly not followed for the obvious reason that the name of the applicant Chunni Lal was never mentioned in the list of creditors supplied by the debtor.

3. Learned Counsel for the applicant contends that he was prevented from filing a written statement in time in consequence of the fraudulent action of the debtor and therefore limitation did not begin to run against him from the date of the publication of notice in the Gazette. Under Sub-section 3 the Special Judge is empowered to extend the period of three months allowed by Sub-section (1) by a further period of two months. There is no other Section in the Act authorizing the Special Judge to grant further extensions. In the opinion of the learned District Judge the applicant himself was to blame, because he was aware that a proceeding under Section 4 of the Act was pending. There is no doubt that, when an order under Section 7, Encumbered Estates Act, was passed staying the execution of the decree of the applicant, the applicant must have known that an application under Section 4 had been made by Chandan Gopal. There is nothing however to show that the applicant had any knowledge of the date within which the written statement had to be filed by him. The proceedings under the Encumbered Estates Act are proverbially slow. In the present case notice under Section 9(1) was not published till 26th February 1936. There appears no reason for the applicant to have deliberately abstained from filing a written statement, if he were aware that the time was ripe for filing a written statement. In my opinion the only ground for not filing the written statement must have been as contended by learned Counsel for the applicant, that his client was waiting to receive notice from the Court asking him to make a claim as required by law. The question however remains whether the learned Special Judge had any authority to extend time even though there has been sufficient cause for the delay in making the written statement. Section 18, Limitation Act, provides:

Where any person having a right to institute a suit or make an application has, by means of fraud, been kept from the knowledge of such right or of the title on which it is founded...the time limit for instituting a suit or making an application-

(a) against the person guilty of the fraud or accessory thereto, or

(b) against any person claiming through him otherwise than in good faith and for valuable consideration, shall be computed from the time when the fraud first became known to the person injuriously affected thereby....

4. Learned Counsel for the applicant contends that by virtue of the aforesaid Section the applicant was entitled to make his claim even after the expiry of nine months from the date of the notice in the Gazette. There is no doubt that Section 18, Limitation Act, is applicable to proceedings under the incumbered Estates Act: see Section 29, Sub-section (2), Limitation Act. The question for determination therefore is whether the conduct of the opposite party was in fact fraudulent. It is urged on behalf of Chandan Gopal that there was no occasion for him to mention the name of Chunni Lal in the list of creditors because by partition between the two brothers the liability for this debt was on Sri Gopal alone. It is not suggested that Chunni Lal was privy to this arrangement or even consented to realize money from Sri Gopal only. Under the law the liability for the payment of the decretal amount was on both the judgment-debtors, and it was the duty of the debtor to comply with the directions contained in Section 8 of the Act. Under Sub-section (d) of the said Section, the landlord applicant is directed to state in his written statement the names and addresses of his creditors so far as they are known to, or can be ascertained by the applicant. This statement has to be verified in the manner prescribed by law for the verification of plaints. It is admitted that no mention of Chunni Lal's name was made in the written statement by Chandan Gopal. It was open to him to state that there was a decree of Chunni Lal against him and his brother, but under a private arrangement his brother Sri Gopal alone was responsible for the debt. The omission of the name of Chunni Lal could not have been honest. It was in consequence of this omission that no registered notice was sent to Chunni Lal and the latter was not apprised of the date within which the written statement had to be filed. More knowledge of the tendency of the proceedings under the Encumbered Estates Act would not be sufficient.

5. It has been argued by learned Counsel for the opposite party that, even if a registered notice were sent, it would be merely a copy of the notice published in the Gazette and no specific date would have been mentioned in the written statement on which the written statement had to be filed. It appears that the law does not contemplate that any particular date must be fixed for the filing of the written statement, but the notice would have shown to the applicant that the claim was required to be made within three months from the date of the publication of notice in the Government Gazette. The applicant in that case could very easily find out the time within which his written statement would be entertainable. It may be mentioned that Section 13 of the Act provides a very drastic penalty. It deprives the creditors of their money honestly lent to a landlord. It is therefore the duty of a Court to see that the provisions of Section 9 are strictly and literally followed. If there is any defect in the notice, which defect can be attributed to any deliberate action of the landlord, the landlord should not be given advantage of his own omission. In the present case it is manifest that Chandan Gopal claims to take advantage of his own fraudulent omission. In Balbir Singh v. Sohan Lal : AIR1939All303 a Bench of this Court held:

The Special Judge has jurisdiction to extend the period for presenting the written statement by a creditor not mentioned in the application under Section 4, Encumbered Estates Act, beyond five months, where Section 18, Limitation Act, applies and fraud is established.

6. I am aware of an earlier decision in Ashraf v. Saith Mal : AIR1938All47 , where it was held that the period of five months provided by Section 9 of the Act can in no case be extended. In that case however, the provision of Section 18, Limitation Act, was never considered. I therefore prefer to follow the later decision in Balbir Singh v. Sohan Lal : AIR1939All303 . Taking all the facts into consideration I am satisfied that under the special circumstances of the case the Special Judge was entitled to extend the time for presenting the written statement, and I hold that the written statement presented by the applicant is within time. In the result the application is allowed, the order of the Court below is set aside and that of the trial Court is restored. The parties to bear their own costs.


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