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Raghunath Das Vs. Babu Daya Sarup and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Case NumberSecond Appeal No. 11 of 1946 and F.A.F.O. No. 57 of 1947
Judge
Reported inAIR1950All324
ActsDebt Law; Uttar Pradesh Encumbered Estates Act, 1934 - Sections 11, 14, 20 and 43
AppellantRaghunath Das
RespondentBabu Daya Sarup and ors.
Appellant AdvocateLachmi Narayan Gupta, ;B. Dayal and ;Krishna Shankar, Advs.
Respondent AdvocateShabd Saran, Adv.
Excerpt:
.....present case had been heard by a larger bench, yet in view of the fact that this bench is not bound by the aforesaid decision and ours would be a decision of a full bench of three judges after having taken into consideration the decision of the avadh chief court mentioned above and it would bind the other division benches of this court, we have decided not to refer this case to a larger bench but to proceed with the consideration of the point raised. if a landlord applicant did not like a decision under section 11 and thought that it would adversely affect his interest, he was given a sort of locus penitentiae of having the proceedings which he had himself started with drawn and allowing the ordinary law of the land to have its course, the creditors in that case being restored to their..........under section 11 on 12th august 1938. thereafter, on 26th april 1940, he decided the claims and passed decrees under section 14 of the act. it was not till the year 1944, that a fresh objection was preferred by mt. tarawati, daughter of the landlord-applicant under section 11, claiming that certain items of property mentioned in the notice belonged to her which had been gifted to her by her father before he had filed the application under section 4. this objection was dismissed by the learned special judge on 11th november 1944. within one month of this dismissal the landlord applicant filed an application under section 20, u. p. encumbered estates act, for quashing the proceedings. this application was rejected by the learned special judge on 28th april 1945. the learned judge relied.....
Judgment:

Malik, C.J.

1. The fasts of the case have been set out in the referring order. The landlord-applicant Daya Swamp filed an application Under Section 4, U. P. Encumbered Estates Act, in the year 1985, which was, in due course, sent by the Collector to the Special Judge, 2nd Grade, Bijnor. Tue learned Special Judge decided an objection which had been filed Under Section 11 on 12th August 1938. Thereafter, on 26th April 1940, he decided the claims and passed decrees Under Section 14 of the Act. It was not till the year 1944, that a fresh objection was preferred by Mt. Tarawati, daughter of the landlord-applicant Under Section 11, claiming that certain items of property mentioned in the notice belonged to her which had been gifted to her by her father before he had filed the application Under Section 4. This objection was dismissed by the learned Special Judge on 11th November 1944. Within one month of this dismissal the landlord applicant filed an application Under Section 20, U. P. Encumbered Estates Act, for quashing the proceedings. This application was rejected by the learned Special Judge on 28th April 1945. The learned Judge relied on a decision of the Avadh Chief Court in Tn.Sheo Mangal Singh v. James Own, A. I. R. (31) 1944 Avadh 277 : (1944 O. W. N. 297). There was an appeal against that order before the learned District Judge of Moradabad, who, on 24th January 1946, allowed the appeal, granted the application and directed that all proceedings be quashed. It is against this order passed by the District Judge that this second appeal from order was filed in this Court.

2. At the time when the cage came up before the Division Bench, reference was made to the two decisions of this Court, one of them being a reported case in Ganga Sahai v. Mt. Nafis Bano : AIR1946All508 . In that case the Court had held that Section 20 gave an option to the landlord applicant to have the proceedings quashed even after decrees had been passed by the Special Judge Under Section 14 of the Act, so long as he filed his application within 30 days of an order Under Section 11 determining an objection either in favour or against the landlord applicant. This view was followed by another Division Bench. That decision has not yet been reported. It is, how ever, Dr. Brij Bhukhan Saran v. B. Ram Krishna, (S. A. F. O. No. 33 of 1945, dated 13th December 1948). Learned counsel had cited certain cases of the Avadh Chief Court and had specially relied upon the Full Bench decision of that Court in Gur Charan Lal v. Shiva Narain, 23 Luck. 40 : (A. I. R. (35) 1948 Oudh 162 ). The Bench referring this case thought that it was desirable in view of the difference of opinion between the Avadh Chief Court and the Allahabad High Court that the question was decided by a larger Bench.

3. The case has thus come up before us, and we have very carefully considered the decision of the Full Bench of the Avadh Chief Court just quoted. The decision of the Avadh Chief Court is by a Bench of three Judges, and though it would have been better if the present case had been heard by a larger Bench, yet in view of the fact that this Bench is not bound by the aforesaid decision and ours would be a decision of a Full Bench of three Judges after having taken into consideration the decision of the Avadh Chief Court mentioned above and it would bind the other Division Benches of this Court, we have decided not to refer this case to a larger Bench but to proceed with the consideration of the point raised.

4. The relevant portion of Section 20, U. P. Encumbered Estates Act, is as follows :

'The applicant may at any time within a period of one month from the day on which the Special Judge decides any claim Under Section 11 apply that the proceedings under this Act be quashed and the Special Judge shall quash such proceedings ...'

From the language of this section, apart from any other consideration, it would be clear that the landlord-applicant has been given an also lute right at any time within a period of one month from the day on which the Special Judge has decided any claim Under Section 11 to apply for the quashing of the entire proceedings. Learned counsel for the appellant has urged that the word 'any' here does not mean what it ordinarily conveys but that it means 'the first claim'. His argument is that as soon as an objection has been decided by the Special Judge, the landlord-applicant has a right to file an application to withdraw, that it is not a recurring right and that he cannot wait till the other objections have also been disposed of. In this argument he has gone even beyond the view of the Avadh Chief Court which explains the reason why the landlord-applicant is allowed to withdraw his application, that in actual effect, the objections having been disposed of Under Section 11, the landlord-applicant knows what is the total extent of his property, and, all the claims having been filed Under Sections 9 and 10 by the creditors, he also knows the total extent of his liabilities, and he may, after knowing his real financial position, withdraw the application and allow his creditors to pursue their usual remedies in the ordinary Courts. I doubt whether the legislature had in mind what the learned Judges of the Avadh Chief Court have given as the reason for providing a right of withdrawal Under Section 20 of the Act. It appears to me that this Act was enacted for the relief of landlord-debtors and gave them a special right to have their debts liquidated in the manner provided in the Act. If a landlord applicant did not like a decision Under Section 11 and thought that it would adversely affect his interest, he was given a sort of locus penitentiae of having the proceedings which he had himself started with drawn and allowing the ordinary law of the land to have its course, the creditors in that case being restored to their ordinary remedies. By reason of this right, the legislature had to provide a section to protect the rights of others, and Section 43, therefore, prescribes that, where an order has been passed Under Section 20, quashing further proceedings under the Act, certain consequences shall ensue. Firstly, under Clause (a), the entire proceedings under the Encumbered Estates Act are automatically set aside and become null and void; secondly, under Clause (b), certain rights which had either come to an end or their enforcement had been suspended are revived, and thirdly, under Clauses (c) and (d) an extension of the period of limitation is provided for.

5. Confining myself to Sections 20 and 43, there is nothing in those two sections which would in any way restrict the right of the landlord-applicant to make an application for withdrawal only to a period before decrees Under Section 14 have been passed by the learned Special Judge. If anything, the indication is, in fact, to the contrary in Section 43. As I have already said, Clause (a) provides that the entire proceedings are set aside, and they become null and void, Clause (b) provides for the revival of certain rights and in that connection it is useful to mention that the rights which had been extinguished Under Section 18 are expressly revived under the provisions of Clause (b). Section 18 is to the effect that:

'Subject to the right of appeal or revision conferred in Chapter VI, the effect of a decree of the Special Judge under Sub-section (7) of Section 14 shall be to extinguish the previously existing rights, if any, or the claimant, together with all rights, if any, of mortgage or lien by which the same are secured and, where any decree is given by the Special Judge to substitute for those rights a right to recover the amount of the decree in the manner and to the extent hereinafter prescribed.'

Under Clause (a) of Section 43, therefore, decrees, if any, that were passed Under Section 14, would be deemed to have been automatically set aside, and the mortgage or mortgages would, under Clause (b), be deemed to have been revived. Relying on the language of Sections 20 and 43, this Court had held in 1946 that the landlord-applicant has got a right to withdraw the proceedings under the Encumbered Estates Act at any stage, but it must be within 30 days of the determination of an objection Under Section 11. The Avadh Chief Court, on the other hand, was of a contrary view, on the ground that there was no reason why decrees Under Section 14 should be set aside Decrees are passed not only Under Section 14, but also Under Section 11 and, if a landlord-applicant has withdrawn the proceedings Under Section 20 after all the decrees had been passed Under Section 11, as it was possible for him to do even according to the decision of the Avadh Chief Court, all the decrees Under Section 11 would be automatically set aside. I see no reason why a decree Under Section 14 should be given greater sanctity than a decree Under Section 11, which is deemed to be a decree of a civil Court of competent jurisdiction and which determines the right of a third party as against the landlord-applicant with respect to the items of property to which he had laid a claim and in respect of which he had filed an objection. In the decision of the Avadh Chief Court, it is also mentioned, with reference to the unamended Section 11, that when the Encumbered Estates Act was enacted, it could not have been contemplated that proceedings would be withdrawn tinder Section 20 after decrees had been passed Under Section 14. The reason for this is that in the year 1934, when the Act was passed, the proviso to Sub-section (2) of that section did not exist. The original section read as follows :

'Any person having any claim to the property mentioned in such notice shall, within a period of three months from the date of the publication of the notice in the official Gazette, make an application to the Special Judge stating his claim and the Special Judge shall determine whether the property specified in the claim, or any part thereof, is liable to attachment, sale or mortgage in satisfaction of the debts of the applicant.'

It was assumed that the period of three months provided in Sub-section (2) of Section 11 could not be extended by the Special Judge and any objection not filed within three months could not, therefore, be entertained, whatever the reasons for not filing the same might be. No reported decision has been cited, but as I have already said it was assumed that all objections had to be put in within three months or not at all, and after those objections had been disposed of, the Special Judge had to wait for a period of one month before he could proceed to determine the amount due to the creditors and pass decrees Under Section 14. Section 20 also gave the landlord-applicant one month's time after determination of an objection Under Section 11 to file an application of withdrawal. In normal course of things, therefore, the application for withdrawal would be filed before the Special Judge had started to decide the claims put in by the creditors Under Section 9, Encumbered Estates Act, and pass decrees Under Section 14, but because that was the normal course of things, it does not necessarily follow that the legislature had intended that the landlord-applicant mush make up his mind before a decree Under Section 14 was passed and his right to withdraw would cease after any decree had been passed under that section. If that was so, the legislature could easily have said so in Section 20, and it was not necessary to refer to Section 18 in Section 43 (b). Reference to a. 18 in Section 43 (b) gives a contrary indication and tends to show that an order of quashing the proceedings can be passed even after decrees have been passed Under Section 14 of the Act.

6. I may further mention in this connection that, just as there is no provision Under Section 11 for extending time, there was no provision Under Section 9 of the Act for extending the time for putting in a claim beyond five months in all from the date of the publication of the notice in the Gazette. Even before the amendment of 1939, this Court had held that the period could be extended, as a deliberate failure by the landlord-applicant to include the name of a creditor amounted to fraud and benefit of Section 18, Limitation Act, could be given to that creditor. It might be that the legislature had thought at the time when the Act was passed in 1934, that Section 5, Limitation Act, would be applicable, and later, when they discovered their mistake the proviso was added. The fact that the proviso was added later to Sub-section (2) of Section 11 does not compel the Court to interpret Sections 20 and 43 as if the proviso did not exist. The legislature having introduced the proviso giving the Special Judge a right to receive an objection Under Section 11 at any time before the property has been transferred Under Sections 24, 25, 28 or 30, or before a bond is issued by the Collector to the creditor Under Sections 30 and 31, if the Special Judge decided that there was sufficient cause for the condonation of the delay and the delay was condoned, the objection must be deemed to have been filed within time, and the determination of the question by the Special Judge Under Section 11 must be deemed to be a decision within the meaning of the words 'decision of any claim' in Section 20. There is no section in the Encumbered Estates Act which could even remotely suggest that the claim of the landlord-applicant had to be filed before a decree had been passed Under Section 14.

7. I may mention that there is no reason why the landlord-applicant's rights should be so curtailed. Section 20 is enacted for his benefit and the mere fact that some third party has not preferred his claim in time and has not made his objection Under Section 11 within three months of the date of the publication of the property specified as required Under Sections 8 and 10, should not adversely affect the landlord-applicant's right to withdraw his application after the determination of the objection Under Section 11. Learned Judges of the Avadh Chief Court have pointed out that the amendment of Section 11 was not made for the benefit of the landlord-applicant. It is true that the amendment was not so made, but because a special benefit has been given to a third party, there was no suggestion that it was intended that the landlord-applicant's right should be adversely affected. The legislature, if they so intended, could have amended Section 20 or Section 43 along with the amendment of Section 11.

8. Some importance may also be attached to the fact that Section 20 follows and does not precede Section 14. If the legislature had intended that an application Under Section 20 could be filed before decrees bad been passed Under Section 14, in normal course of things I would expect that Section 20 would be placed somewhere between Sections 11 and 14.

9. There is one matter further that may be pointed out that, though the legislature has amended Sub-section (3) of Section 11, by providing for objection Under Section 11 to be filed before the property was transferred or before bonds were issued, as provided for under the said Act, the result is now to make it possible for deciding the claims Under Section 11 after decrees have been passed Under Section 14. It would, therefore, be obvious that if the legislature intended to make a change in Section 20, and it wanted to restrict the right of the landlord-applicant, it should have made some corresponding amendment in Section 20. Sections 20 and 43 not having been amended, I am clearly of opinion that the decisions given in the unreported case of this Court and the case of Ganga Sahai v. Mt. Nafis Bano : AIR1946All508 lay down the correct law.

10. The answer may be sent to the Bench concerned.

Raghubar Dayal J.

11. I agree.

M. Ahmad J.

12. I agree.


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