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Narain Singh vs Radhey Shyam Seth And Ors.

High Court Of Judicature at Allahabad|16 October, 1940


JUDGMENT Iqbal Ahmad, J.
1. The question that arises for decision in the present appeal is whether a special Judge exercising jurisdiction under the U.P. Encumbered Estates Act (Act 25 of 1934) has power to pass suitable orders for the preservation of the property of a landlord applicant. This question did not in terms form the subject of consideration by this Court in Rajendra Singh v. Uma Prasad ('38) 25 A.I.R. 1938 All. 80. In that case it was held that a special Judge exercising jurisdiction under the Act has no power to appoint a receiver at the instance of the holder of a simple money decree or a mortgage decree. It was further held in that case that Section 54 of the Act does not contemplate that the Local Government is to make rules which should include a rule making Order 40, Civil P.C. applicable to the proceedings taken before the special Judge. In the course of their judgment the learned Judges, after pointing out that the duty of the special Judge under the Act was merely to ascertain the assets and the liabilities of the landlord, observed that:
It is not the province of the special Judge to augment the assets of the landlord debtor by depriving him of all the profits accruing during the pendency of the proceedings under the Act.
2. It would be noted that the case cited is an authority only for the proposition that the special Judge has not the jurisdiction to deprive the landlord applicant of the profits of his property pending the proceedings under the Act. The question that arises before us is essentially different. It is, as already stated, whether, while ascertaining the liabilities and the assets of the judgment-debtor, the special Judge has or has not the power to ensure the preservation of the property for the benefit of the creditors pending the proceedings under the Act. By Section 54 of the Act, the Local Government is authorized inter alia to make rules consistent with the provisions of the Act for regulating the procedure of the special Judge "and generally for carrying out the purposes of the Act." In exercise of this power the Local Government framed certain rules and Rule 6 of those rules runs as follows:
Proceedings under this Act shall be governed by the provisions of the Code of Civil Procedure, 1908, for the time being in force so far as they are applicable and not inconsistent with the provisions of the Act and of these rules.
3. In view of this rule it is clear that such provisions contained in the Code as can apply to the proceeding under the Act and are not inconsistent with the provisions of that Act or of the rules framed by the Local Government are applicable to proceedings under the Act. Now, there is nothing in the Act or in the rules depriving the special Judge of the authority to pass orders that are calculated to preclude the landlord debtor from wasting the properties shown by him in the written statement filed under Section 8 of the Act. The object of the enactment is to provide for the satisfaction of the claims of creditors out of the assets of the landlord debtor in the manner prescribed by the Act. The preservation of the assets from which the claims of the creditors are to be eventually satisfied is therefore a purpose consistent, and not inconsistent with the objects of the Act. If the power to ensure the preservation of the assets is denied to the special Judge, the provisions of the Act will in some cases be reduced to an absolute farce. On the one hand, the special Judge may go on ascertaining the assets of the landlord debtor and, on the other, pending the final decision by the special Judge, the landlord may go on alienating or otherwise wasting the assets. It is needless to observe that a situation like the one just mentioned would nullify the object of the enactment. By Order 39, Rule 1, Civil P.C. the Court is authorised to grant a temporary injunction or order to prevent the property in dispute being wasted, damaged or alienated by any party to the suit. The power to issue temporary injunctions is vested in the Courts simply with a view to ensure that the successful litigant may not ultimately be deprived of the fruits of his decree. In proceedings under the Encumbered Estates Act the special Judge ultimately passes a decree in favour of the creditors under the provisions of Section 14(7) of the Act. The decree so passed is realizable from the assets of the landlord-debtor. The preservation of those assets is therefore essential to ensure the realisation of the decree passed in favour of the creditors by the special Judge. An order for preservation is therefore consistent with the objects of the Act. It follows that a special Judge has the power to grand temporary injunctions and to take other steps with a view to prevent the landlord debtor from wasting his assets.
4. In the case before us, one item among the properties shown by the landlord applicant in the written statement filed by him under Section 8 was certain zamindari property which evidently he had recently purchased. Pending the proceedings before the special Judge, a decree for pre-emption with respect to that property was passed in favour of a third person and the pre-emptor deposited Rs. 3200 as the price of the property in Court. The property thus passed out of the possession of the landlord and he became entitled to receive the sum of Rs. 3200. He desired to withdraw the amount from Court. The creditors then objected and the Court ordered that the landlord will be allowed to take the money on one of the following conditions: (1) on furnishing security of a third person that the money would be paid when demanded by the Collector, to whom the decrees in this case will be sent for execution; (2) the money may be deposited by the applicants in a bank in fixed deposit account and the bank may be directed to pay only interest to the applicants and not to pay the principal until further orders. This order, though not in terms was, in effect, tantamount to the granting of an injunction restraining the landlord from receiving the money except upon the terms imposed by the Court. At any rate, the order was with a view to preserve the assets till the ultimate execution of the decrees. The Special Judge, in our judgment, had ample jurisdiction to pass such an order. Our attention was drawn by the learned Counsel for the appellant to an unreported decision of a learned Single Judge of this Court in Lachchi v. Mrs. Marry Alice Elezabeth John Civil Revn. No. 456 of 1937. It was observed by the learned Judge in that case that "if Order 40, Civil P.C. cannot apply to the Encumbered Estates Act proceedings much less can Order 39 relating to injunction."
5. For the reasons that we have already given we respectfully dissent from that decision. In our judgment the order appealed against is perfectly correct and accordingly we dismiss this appeal with costs.
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Narain Singh vs Radhey Shyam Seth And Ors.


High Court Of Judicature at Allahabad

16 October, 1940