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Than Singh and ors. Vs. Lakhapat Singh and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad
Decided On
Reported inAIR1948All265
AppellantThan Singh and ors.
RespondentLakhapat Singh and ors.
Excerpt:
- - the section clearly contemplates voluntary salts......except as provided by those sections, shall any right of pre-emption arise in respect of - (a) any sale in execution of the decree of a civil or revenue court, or (b) any sale in default of payment of land revenue or of any sum legally recoverable as an arrear of land revenue, or (c) any sale under the provisions of the bundelkhand encumbered estates act, 1903.10. it is argued on behalf of the appellants that a sale made under the encumbered estates act, 1934, is not mentioned in section 6, agra pre-emption act. this is true; but the reason is obvious. when the agra pre-emption act, 1922, was passed, the u.p. encumbered estates act, 1934, did not exist on the statute book and so it could not be possibly provided for in section 6.11. the question then arises whether a sale made by the.....
Judgment:

Bind Basni Prasad. J.

1. The sole point for determination in this second appeal is whether on a true interpretation of the provisions of the Agra Pre-emption Act, 1922, a right of pre-emption accrues on the basis of a sale deed executed by the Collector in pursuance of the provisions Section 28, U.P. Encumbered Estates Act, 1934.

2. The facts are undisputed. One Mt. Um-mat-uz-zohra Begam was the owner of the disputed property which was mortgaged to the defendants. She made an application to the Collector under Section 4, Encumbered Estates Act. In due course, the Collector forwarded the application to the Special Judge. On 3-6-1939, the 'Special Judge passed a decree under Section 11 of the Act. This was followed by decrees for money in favour of creditors under Section 14 of the Act. The Special Judge then sent the decrees under Section 19 of the Act to the Collector for execution in accordance with the provisions of chapter V of the Act. The Collector proceeded under Chapter V. He made an award which became final on 9-4-1942. Acting under Section 28, Encumbered Estates Act, he ordered that the unprotected property of the debtor should be sold. The sale deed was accordingly executed by him on 81-7-1943, in favour of the defendants. It is this sale on the basis of which the plaintiffs-appellants brought the suit for pre-emption.

3. After the award of the Collector had become final and the instalment value of the debtor's property had been determined, she deposit, ed the total amount of the instalments which she had to pay under the award and the protected property was released. She then executed three sale deeds on 16-6-1943, which were registered on 19-6-1943, in favour of the plaintiffs. It will be noted that these sales were prior to the one in dispute by about six weeks. Under these sale deeds the plaintiffs had become cosharers in the Mahal and there is no dispute that they would have the right of pre-emption if not prohibited by the Agra Pre-emption Act.

4. The suit was resisted on the ground that having regard to the provisions of Sections 6 and 11, Agra Preemption Act, no right of pre-emption arises when a sale is made by the Collector under Section 28, Encumbered Estates Act. The learned Munsif and the Civil Judge have upheld this plea. The plaintiffs come in second appeal to this Court. On the case coming up before a learned single Judge, he referred it to the Full Bench.

5. It is necessary to examine in some detail the relevant provisions of the Agra Pre-emption Act, 1922. Section 3 provides:

No right of pre-emption shall be enforced in respect of any transfer made after the commencement of this Act of an interest in land in any area to which this Act applies, except in accordance with the provisions of this Act.

6. The only exception provided to the above general rule is contained in the proviso which runs as follows:

Provided that where there is no right of pre-emption under Section 5 the provisions of the Muhammadan law of 'pre-emption shall not he affected in case the vendor and the pre-emptor are both Muhammadans.

7. It is clear from the above that a right of preemption can now be enforced only if available under the Act, or under the Muhammadan law where the vendor and the pre-emptor are both Muhammadans.

8. The word 'sale' has been defined in Sub-section (10) of Section 4 as 'a sale as defined in the Transfer of Property Act, 1882.'

9. Then comes Section 6 which is important for the purposes of this case. It provides:

Nothing in this Act shall affect the provisions of Rule 88 of Order 21, Civil P.C., 1908, or Section 182, United Provinces Land Revenue Act, 1901, or Section 24, Bundelkhand Encumbered Estates Act, 1903, nor, except as provided by those sections, shall any right of pre-emption arise in respect of - (a) any sale in execution of the decree of a civil or revenue Court, or (b) any sale in default of payment of land revenue or of any sum legally recoverable as an arrear of land revenue, or (c) any sale under the provisions of the Bundelkhand Encumbered Estates Act, 1903.

10. It is argued On behalf of the appellants that a sale made under the Encumbered Estates Act, 1934, is not mentioned in Section 6, Agra Pre-emption Act. This is true; but the reason is obvious. When the Agra Pre-emption Act, 1922, was passed, the U.P. Encumbered Estates Act, 1934, did not exist on the statute book and so it could not be possibly provided for in Section 6.

11. The question then arises whether a sale made by the Collector under Section 28, Encumbered Estates Act, is a 'sale in execution of the decree of a civil or revenue Court' as contemplated by Clause (a) of Section 6, Agra Preemption Act, 1922. I have no doubt in my mind that it is such a sale.

12. A perusal of Section 19, Encumbered Estates Act, will show that the Special Judge forwards the decrees to the Collector 'for execution in accordance with the provisions of the next chapter.' The next chapter is chapter V. The heading of that chapter is 'EXECUTION OF DECREES AND LIQUIDATION OF DEBTS'. Learned Counsel for the appellants contends on the basis of Sub-section (4) of Section 24 that the Collector ceases to be an executing Court after the sale of the debtor's property other than proprietary rights in land and when he proceeds with the debtor's proprietary rights in land he does not execute, the decrees but only liquidates the debts. I see no force in this contention. From the definition of the word 'debt' as contained in clause (a) of Section 2 it will be seen that it includes any pecuniary liability except a liabitity for unliquidated damages. The Special Judge passes decree only in respect of private debts and not in respect of public debts as defined in Clause (c) of Section 2. The Collector when forwarding the application under Section 4 informs the Special Judge of the public debts standing against the landlord in pursuance of the provisions of Section 6. It will be seen from Section 16 that the Special Judge classifies the public debts ascertained by him in the priority list and then forwards the list to the Collector according to Section 19. On the receipts the list the Collector again determines the public debt, if any, which had not been reported under Section 6. Under chapter v. not only the decrees passed by the Special Judge are to be executed but the undecreed public debts have also to be liquidated. It is for this reason that the heading of the chapter is not I only 'EXECUTION OF DECREES', but also I 'LIQUIDATION OF DEBTS'. From Section 22 onwards, we find the words 'amount due' occurring. These words mean the amounts due under 1 the decrees passed by the Special Judge and on I account of public debts ascertained by the I Special Judge or determined by the Collector.

13. Prior to the passing of the Encumbered I Estates Act, 1934, decrees could be executed only I in the manner provided by Order 21, Civil P.C., I It was felt that the procedure provided therein I placed the landlord-debtors at a disadvantage of Hence the Encumbered Estates Act was enacted. As the preamble of the Act will show, its object : was to provide relief to the landlords. The relief was provided in several ways, for example, by granting a moratorium, by reducing the contractual rate of interest, by providing that the debtor's property shall be sold for reasonable value and by providing that the indebted landlords shall be left with some property for their maintenance and residence and that they shall not be completely deprived of their property. Statutory powers were given to the collector so that in the execution of decrees and liquidation of debts the above objects are given effect to. On the receipt of the decrees from the Special Judge and the determination of the public debts under Section 24, the Collector has first to allow the debtor a period of two months within which he may pay into Court the whole or any part of the amount due from him (Section 22). If the debtor does not pay the amount due, then the Collector proceeds firstly against his property other than proprietary rights in land (Section 24). It will be seen that provision is made in the section to leave to the debtor at least one residential house and necessary furniture thereof. It is in this connection that Sub-section (4) of Section 24 was enacted which provides that for realising the value of the debtor's property the Collector may exercise all the powers of a civil Court for the execution of a decree. It is impossible to hold that the Collector ceases to discharge the function of executing the decrees after the sale ' of the debtor's property other than proprietary rights in land. The object of Sub-section (4) is to provide that when the Collector proceeds against the debtor's property other than proprietary rights in land he may follow the procedure laid down in the Code of Civil Procedure. When the Collector proceeds against land then he has to follow the procedure provided from Section 25 onwards, and not the procedure prescribed by the Code of Civil Procedure. It may be mentioned that the procedure prescribed under Section 25 onwards of the Encumbered Estates Act is really not novel. Even before the enactment of the Encumbered Estates Act when decrees were sought to be executed by sale of land they were transferred to the Collector under Section 68, Civil P.C. Clause 1 of the Third Schedule of the Code of Civil Procedure will show that three alternatives are given to the Collector when he received a decree under Section 68 : (a) to proceed as the Court would proceed when the sale of immovable property is postponed in order to enable the judgment-debtor to raise the amount of the decree; or (b) to raise the amount of the decree by letting in perpetuity, or for a term, on payment of a premium, or by mortgaging, the whole or any part of the property ordered to be sold; or (c) to sell the property ordered to be sold or so much thereof as may be necessary.

14. Clause 7 of the Third Schedule of the Code of Civil Procedure provides for the scheme for liquidation of decrees for payment of money and it will be seen therefrom that it was permissible to the Collector to raise the requisite amount by lease, mortgage or sale of part of the property. In Section 25 onwards, Encumbered Estates Act, this scheme has been worked out in greater detail and in a more developed form. It is thus clear that when the Collector executes a sale deed of unprotected land of the indebted landlord under Section 28 he does so to execute the decree by virtue of the statutory powers vested in him and not as an agent of the indebted landlord as contended on behalf of the appellants. The Collector can be called an agent of the indebted landlord only if he acted under the instructions of the landlord and if it was open to the landlord to stop the Collector from making sale under Section 28. The landlord has no such power. From the mere fact that the Collector does not proceed against the land of the debtors in the manner provided by Order 21, Civil P.C., it does not follow that the sale made by him under Section 28 is not one in execution of a decree. A mode for execution of decrees different from the one laid down in the Code of Civil Procedure may be provided by statute and this is what the Encumbered Estates Act has done so far as the execution may be against proprietary rights in land. The point directly arose in Deepchand v. Mania ('47) 1947 A.L.J. 668 in which it was held by me that a sale made by the Collector under chapter v of the Act is a sale in execution of a decree.

15. The view taken above finds support also from Bandhan v. Kishan Prasad : AIR1939All45 . It was held. in that case that a transfer of land by the Collector in accordance with the provisions of Section 5, U.P. Regulation of Sales Act, 1934, is a sale in execution of a decree and not a voluntary sale of the nature contemplated by Section 11, Agra Pre-emption Act, 1922, arid that no right of pre-emption accrues from such a transfer Under that Act also, the sale did not use to take place according to the Civil P.C. It was pointed out in that case that as in a sale under that Act the judgment-debtor had no voice, so it was a sale in the execution of a decree. The position is analogous in the present case. A similar view was taken in Sheo Bandhan v. Kishan Prasad 27 : AIR1940All323 .

16. The essence of a sale in the execution of a decree is that the will or volition of the judgment-debtor does not enter into it. It is made in the exercise of statutory powers and its object is to satisfy a decree. All these ingredients exist in the present case and I have no hesitation to arrive at the conclusion that the sale made by a Collector under Section 28, Encumbered Estates Act, is a 'sale in execution of a decree.'

17. There is another reason why the right of pre-emption is not available to the plaintiffs-appellants Section 11 provides:

Subject to the foregoing provisions a right of preemption shall accrue to the persons mentioned in 8. 12 whenever a cosharer or petty proprietor sells any proprietary interest in land forming part of any mahal or village in which a right of pre-emption exists, or when any such interest is foreclosed.

The vendor in the present case was the Collector who was neither a cosbarer nor a petty proprietor in the mahal. The section clearly contemplates voluntary salts. The sale in the present case was not by act of parties but by operation of law. Learned Counsel for the appellants relies upon Lanchand v. Ramchander : AIR1929All462 in which it was held that a right of pre-emption accrues where a decree for specific performance of a contract for sale is executed by the Court. There is a difference in a sale under such a decree and one made under Section 28, Encumbered Estates Act. The basis of a decree for specific performance of a contract for sale is the contract of the parties and what the Court does is only to give effect to that contract. A sale under Section 28, Encumbered Estates Act, however, has no basis of any such contract.

18. Reliance is also placed upon Sheo Baran Singh v. Mt. Kulsumunissa . It was held in that case that on the sale of the bankrupt's property by an Official Assignee a right of pre-emption accrues That case is also distinguishable. Their Lordships observed in that case:

In every system of law the term may vary but in all there is an official, be he called an assignee or trustee or by any other name and that official is by force of the statute invested in the bankrupt's property, but the property he takes is the property of the bankrupt exactly as it stood in his person with all advantages and all its burden.

In an insolvency proceeding the Official Assignee or Receiver is vested with all the rights, liabilities and burden of the insolvent and it is in that capacity that he makes the sale. He does not execute any decree. A right of pre-emption therefore, accrues when he makes a sale.

19. Learned Counsel for the appellants has also referred to Benares Bank Ltd v. Bhagwan Das 34 A.I.R. 1947 All. 18. That was a case in which the point under consideration did not arise. The question in that case was whether an appeal under the Encumbered Estates Act to which all the creditors had not been made parties was maintainable and in that connexion it was observed that the proceedings under the Encumbered Estates Act are in the nature of proceedings for the administration of debts under the Companies Act or the Bankruptcy Act. It does not follow from this remark divorced from the context that the same principles should apply to sales made by the Collecltor under the Encumbered Estates Act as applicable to sate made under the Insolvency Act While making, the above observation Braund J. went on to say at pp 405 and 406:

But the Legislature has not thought fit to assimilate the Encumbered Estates Act proceedings in all essential particulars to the proceedings under those Acts. No provision has been made in the Encumbered Estates Act for the representation of the creditors by another person and I am constrained to hold that in the proceedings under the Encumbered Estates Act the creditors are parties not as beneficiaries represented by some trustee but in their individual capacity.

20. The above remarks bring out the distinctions between the provisions of the Encumbered Estates Act and the Insolvency Act.

21. We have been also referred to Pearey Lal v. Pirthi Singh : AIR1945All422 . That case is not at all relevant. The facts were different and the point involved was different.

22. To sum up, the position is that in view of the provisions of Sections Section 6 and 11, Agra Preemption Act no right of pre-emption has accrued to the plaintiffs-appellants. The sale made by; the Collector under Section 28, Encumbered Estates Act, was one in execution of a decree.

23. I would, therefore, dismiss the appeal with costs.

Malik, C.J.

24. I agree and have nothing to add.

Raghubar Dayal, J.

25. I agree.

26. The appeal is dismissed with costs.


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