1. These are three appeals, Ex. P.A. Nos. 336, 451 and 456 of 1943, against the judgment of the learned Civil Judge of Benares by which he disposed of the cases of the Benares Bank, through the Official Liquidators, of the Allahabad Bank and of Maharaj Kishore Khanna. The facts are briefly these : A suit No. 117 of 1929, on a mortgage, was brought by the Benares Bank Ltd. against Maharaj Kishore Khanna, the mortgagor, and with him were cited as defendants, the Allahabad Bank, as a prior mortgagee, and certain other persons who have been described by the learned Civil Judge as the Kalia family as subsequent mortgagees. On 6th January 1932, Mr. Krishna Behari Lai was appointed receiver by the learned Civil Judge. The preliminary decree was passed on 25th May 1933. In 1936 Maharaj Kishore Khanna made an application under Section 4, U.P. Encumbered Estates Act, which was in due course, transmitted to the Special Judge of Benares. On 2lst March 1940, the Special Judge passed a decree under Section 14 in favour of inter alia the Allahabad Bank and the Kalias and sent the same to the Collector under Section 19 of the Act. He mentioned the nature and extent of the property mentioned in the notice under Section 11 which was held liable for attachment, sale or mortgage. The Civil Judge felt that it was not necessary for the receiver to function any more and passed an order on 28th March 1940, which was, in effect, an order removing him from his office. This order was challenged in appeal to this Court and a learned Judge, on the application of the Allahabad Bank directed the receiver to continue till the final disposal of the application. An application was thereafter presented to the Collector by the Allahabad Bank for the appointment of a receiver, but he declined the prayer on the ground that he could not, in face of the order of the High Court, make such an appointment. On 20th November 1940, the application came up for final hearing before Mulla J. who left the question entirely to the discretion of the Collector. On 17th March 1941 the Col-lector dismissed the application for the appointment of a receiver on the ground that it was premature and directed the receiver appointed by the civil Court, to continue. Into the details of some other incidents which intervened it is not necessary to enter, till we come to 8th June 1944 when the Collector himself appointed a receiver. There is another chapter of events which must also be set forth.
2. Maharaj Kishore Khanna had, in 1919, purchased some shares of the Benares Bank, of the face value of Rs. 50 each, but he had paid only Rs. 6-4-0 per share at the time of the allotment of shares. On 1st March 1940, the bank was, under the orders of this Court, compulsorily wound up. On 27th March 1942 Messrs. Indu Bhushan Banerji and Abu Ali were appointed Official Liquidators, who made a call upon the aforesaid Maharaj Kishore Khanna for the balance of the share money. We now come to the real matter in controversy. The receiver has in his hands a sum of RS. 25,000 and there is a regular scramble for the amount by the Official Liquidators of the Benares Bank, the Allahabad Bank and Maharaj Kishore Khanna. The Collector, presumably under Section 24, Encumbered Estates Act, directed the receiver to deposit with him the sum for the purpose of distribution amongst the creditors, in whose favour the decree under Section 14 had been passed. The Official Liquidators, as holders of the decree of this Court under Section 187, Companies Act, prayed, on the other hand, for its attachment for the satisfaction of their decree. Maharaj Kishore Khanna denies the claim both of the liquidators and of the creditors and claims the money as his. The learned Civil Judge has rejected the claim of the liquidators and the objections of Maharaj Kishore Khanna and ordered the money to be sent to the Collector for distribution amongst the creditors. The liquidators, representing the Benares Bank, and Maharaj Kishore Khanna have come in appeal. The appeal of the former is Ex. P.A. No. 336 of 1943 and those of the latter are the other two, namely, Ex. F.A. Nos. 451 and 456 of 1943.
3. Sir Wazir Hasan, the learned Counsel for the liquidators, contends that the Collector had no right to claim any portion of the sum of Rs. 25,000 which has accrued after the transmission of the decree by the Special Judge to the Collector under Section 19. The schedule of property appended to the decree under Section 14, and sent by the Special Judge to the Collector must be, he argues, treated as part of the decree and as it made no reference to the profits realised subsequently, they cannot share the fate of the corpus or the profits already accrued. This line of argument does not commend itself to us. What was mentioned in the decree transmitted by the Special Judge, was the property covered by the mortgage, although after the decree the mortgage ceased to subsist and eventuated in a simple money, decree. It will not be correct to divorce the property from its usufruct, and there is no warrant, in law, to stamp the two with different legal incidents. The usufruct must, save in certain classes of cases of which the present is not one, partake of the character of the corpus. He is, however, on surer grounds, when he tries to achieve the result by a different line of reasoning, although it is not, while on this point, necessary to follow the learned Civil Judge in his somewhat novel reasoning, couched in picturesque language, when he gays that the sum in the hands of the Receiver was not 'static', but the 'dynamic entity capable of accumulation by continuous realisations by the Receiver.'
4. The Collector had no doubt a right to appoint a receiver under Section 24(4), Encumbered Estates Act, but that he did only on 8th June 1944. It was open to him after the transmission of the decree to him on 21st March 1940, to appoint a receiver. This he never did. Indeed he rejected the application of the Allahabad Bank as premature. It is true that on 17th March 1941 he directed the receiver appointed by the learned Subordinate Judge to continue, but this does not amount to an appointment by himself. It may be that - we express no opinion on this point - a receiver appointed by the Special Judge may be accepted and directed to continue by the Collector, but this is not the case here. No receiver was appointed even by the Special Judge. We are, therefore, of opinion that while the Collector has a right to call upon the receiver to place in his hands the t. amount of profits which accrued due between 6th January 1932 and 21st March 1940, he has no right with respect to the amount realised between 21st March 1940, the date of the transmission of the decree to him, and 8th June 1944, the date when he himself appointed a receiver. The amount of profits during this period ought to be available to the liquidators of the Benares Bank. This disposes of the appeal of the liquidators. We now come to the appeals of Maharaj Kishore Khanna. He opposed the attachment of the amount in question on different grounds. He, in the first place, contended that the shares in respect of which the decree had been passed, having been purchased in 1919, the decree should be deemed as having been passed in respect of a debt incurred before the passing of an order under Section 6, Encumbered Estates Act, within the meaning of Section 7(1)(b) of the Act, and under Section 7(1)(a) of the Act the execution should be stayed and the order of attachment so far passed should be held null and void. This contention is obviously erroneous, inasmuch as the decree under execution was not in point of fact passed in respect of a debt incurred before the passing of the order under Section 6, Encumbered Estates Act. Maharaj Kishore Khanna admitted that the unpaid balance of share money was payable only on a call and that; it was about two years ago that the Official Liquidators made such a call. The debt, therefore, represented by the decree was incurred only in 1940 or 1941, that is, long after the passing of the order under Section 6, Encumbered Estates Act.
5. It is also contended that the Benares Bank not having laid any claim to the said unpaid balance of the share money under Section 9, Encumbered Estates Act, the claim should be deemed to have been discharged under Section 13. The answer to this contention is also the same. The claim came into being only when a call was made and not before that. It was lastly contended that the decree under execution is a nullity as it was passed in the teeth of the provisions of Section 7(1)(b), Encumbered Estates Act, and Section 17, Presidency Towns Insolvency Act (3 [III] of 1909). It appears that he was adjudged an insolvent in 1929 by the High Court at Calcutta, but it was admitted by him that the order of adjudication was discharged on 10th August 1931. This argument has, therefore, no force. We, therefore, allow the appeal of the liquidators of the Benares Bank, modify the decree of the learned Civil Judge and send the case back to him with a direction to restore it to its original number and decide the case in the light of the observations made above. While the Collector will be entitled to receive from the receiver all sums realised by him from 6th January 1932 to 21st March 1940 and any sum which has accrued due since 8th June 1944, the liquidators will be entitled to the sum which accrued due between 21st March 1940 and 8th June 1944. The parties will receive and pay costs in proportion to success and failure.