JUDGMENT P.L. Bhargava, J.
1. On 27-10-1936, Ran Bijai Bahadur Singh and others, who have preferred this appeal, had filed an application, under Section 4, U. P. Encumbered Estates Act. The application was, in due course, transferred to the Special Judge, II grade, Allahabad; and the notices prescribed under the Act were duly published. The respondents, Ram Adhin and Sridhar, filed claims in respect of debts, which the landlords-applicants owed to them. There was no claim to the property mentioned in the notice under Section 11 of the Act. The claim put forward by the respondents were investigated and decrees under Section 14 of the Act were passed in their favour on 13-1-1939.
2. The landlords-applicants preferred an appeal to the District Judge of Allahabad, against the decree passed in favour of Ram Adhin. During the pendency of the appeal the landlords-applicants made an application, under Section 20 of the Act, to the District Judge praying that the proceedings under the Act be quashed. On 8-3-1943, the learned District Judge dismissed the appeal, and also rejected the application for quashing of proceedings on the ground that it was not maintainable at that stage. The landlords-applicants came up to this Court in second appeal, and their appeal was dismissed, on 15-8-1945.
3. After the dismissal of the appeal by this Court, on 1-9-1945, one Basant Singh preferred a claim under Section 11 of the Act; but it was dismissed for want of prosecution on 1-6-1946. Thereafter, the Courts closed for the long vacation.
4. Then, on 3-7-1946, when the Courts reopened after the vacation the landlords-applicants made another application, under Section 20 of the Act, praying for quashing of proceedings. The proceedings relating to liquidation of debts were pending at the time. The application was rejected by the special Judge and, on appeal, the learned District Judge affirmed his decision. This appeal is directed against the order of the District Judge.
5. The learned District Judge found that the claim preferred by Basant Singh was not a bona fide claim and it had been filed in collusion with the landlords-applicants; that the claim was not decided on merits; and that the decrees had been passed under Section 14 of the Act; consequently the landlords-applicants had no right to get the proceedings quashed.
6. The appellants' learned counsel has contended that the question whether the claim was collusive or belated was wholly beyond the scope of the inquiry and that a claim under Section 11, Encumbered Estates Act, having been preferred and disposed of by the special Judge, a fresh right accrued in favour of the landlords-applicants to get the proceedings quashed within one month from the date of its disposal, irrespective of the fact whether the claim was bona fide or mala fide.
7. Section 20, Encumbered Estates Act, is in these terms :
"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 and pass such order as to the costs of the proceedings before him as he thinks proper, provided that the order of quashing proceedings shall not take effect unless the: landlord within one month of such order pays into Court the amount of any costs ordered by the Special Judge under this section."
We have, therefore, to see whether the Special Judge had decided "any claim under Section 11".
8. The learned counsel for the appellants has argued that in Section 20 the words "any claim" have been used and, having regard to their plain meaning, they must be taken to include every claim, whether bona fide or otherwise. No doubt, while interpreting the provisions contained in an enactment we have to give effect to the plain meaning of the language used; but this must be done with reference to context, and in doing so we must take into consideration the enactment as a whole and also the policy and the intention of the Legislature, as the law has to be administered in accordance therewith. Obviously, the intention of the Legislature" in enacting Section 20 was that if the landlord-applicant does not wish to prosecute his application, he must apply for the quashing of proceedings at a particular stage. As proceedings go on, certain rights are created in favour of third parties. It could never have been the intention of the Legislature that a landlord-applicant should have a claim, under Section 11 of the Act, filed by any person whenever he wishes to make an application for quashing of proceedings and to set at naught the rights vested in third parties or that any collusive or mala fide claim should enlarge the time fixed for the filing of such applications.
9. The law never recognises or upholds a collusive or mala fide claim. If a person who prefers a claim has no interest in the property and puts in a mala fide claim in collusion with the landlord-applicant without any intention to prosecute it, such a claim cannot be considered to be a claim of the nature mentioned in Section 20. I have, therefore, no doubt that the claim contemplated by Section 20, Encumbered Estates Act, is a bona fide claim.
10. It may be noted here, that Basant Singh's claim was filed more than three months after the date of the publication of the notice in the Official Gazette. Such a claim could be entertained only after the claimant was able to satisfy the Special Judge that there was sufficient cause for not making it within the prescribed period. It is not clear whether Basant Singh had shown any such cause and his claim was admitted before it was dismissed for default in prosecution. In my opinion, therefore, in law there was no claim under Section 11, Encumbered Estates Act.
11. Assuming for the sake of argument that a claim under Section 11, Encumbered Estates Act, had been preferred, I find that the Special Judge had not decided the claim. A claim under Section, 11 of the Act is a claim by a person that the property mentioned by the landlord-applicant under Section 8 or by any claimant under Section 10 of the Act is not liable to attachment, sale or mortgage in satisfaction of the debts of the applicant. When any such claim is preferred the Special Judge has to determine whether the property is so liable or not. The determination may take place either in the presence of the parties or either of them if both the parties are present, after hearing and recording their evidence, and if the claimant or opposite party is present, after hearing and recording his evidence ex parte. If none of them is present there will be no determination, and the claim will be rejected for want of prosecution.
12. The appellant's learned counsel has urged that in Section 20 the word "decides" has been used in a loose sense to mean "end" or "finish" of the case. I do not think so. The word "decides" has to be construed with reference to the prescribed manner in which a claim under Section 11 of the Act is to be decided. Section 11 (2) of the Act lays down :
" . . . . 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."
Consequently, without any such determination if a claim under Section 11 is rejected for want of prosecution it cannot be said to have been decided.
13. In Sheo Mangal Singh v. James Own, A. I. R. (31) 1944 Oudh 277 : (1944 A. W. R. C. C. 210), after the claims under Section 11 had been investigated and after the decrees under Section 14 had been passed and sent to the Collector for liquidation proceedings, the daughter of the landlord-applicant wanted to file a claim under Section 11 without assigning any sufficient cause for not filing it within the prescribed period and the claim was not entertained. Thereafter, the landlord filed an application under Section 20 of the Act for quashing of proceedings and the question arose whether any claim under Section 11 had been decided. Thomas C. J. and Ghulam Hasan J., observed at p. 278 :
"The word 'decides' used in the section in our opinion unmistakably shows that the decision must be on the merits and must be arrived at subsequent to the stage when the claim has been entertained. Where, however, the claim has not been entertained by reason of the fact that it was not preferred within the period allowed by law, the question of deciding the claim as contemplated in Section 20 does not arise."
If I may say so with respect, I entirely agree With these observations.
14. There is another case of the Avadh Chief Court in Huzur Ara Begam v. Roshan Jahan Begam, A. I. R. (34) 1947 Oudh 66 : (21 Luck. 522), where the preferment of a claim under Section 11, which the Special Judge refused to entertain, was not considered sufficient to entitle the landlord-applicant to file an application under Section 20 of the Act.
15. Both these cases were cited with approval in a Full Bench case of the Avadh Chief Court in Gur Charan Lal v. Shiva Narain, A. I. R. (35) 1948 Oudh 162 : (23 Luck. 40 F. B.).
16. The learned counsel for the appellants has invited our attention to two cases of this Court, one reported in Ganga Sahai v. Mt. Nafiz Bano, I. L. R. (1946) ALL. 588 : (A. I. R. (83) 1946 ALL. 508), and the other not yet reported in Brij Bhukhan Saran v. Ram Krishna, S. A. No. 33 of 1945, D/- 13-12-1948 (I. L. R. (1949) ALL. 920). These cases are, however, distinguishable because in both of them the claim had been entertained and decided.
17. Accordingly, I hold that in law no claim under Section 11, Encumbered Estates Act, was preferred or decided by the Special Judge. Consequently, the appellants were not entitled to apply for the quashing of proceedings and the view taken by the learned District Judge is correct.
18. The learned counsel for the appellants, relying upon the two cases cited above, has further contended that the view taken by the learned District Judge, namely, that after the passing of the decrees under Section 14, Encumbered Estates Act, the landlords-applicants were not entitled to apply for quashing of proceedings under the Act was erroneous. In view of my decision on the first point raised in this appeal it is unnecessary for me to decide this question, and I refrain from expressing my views because I find that this question arose before a Division Bench of this Court in second appeal from Order No. 11 of 1946 and it has been referred to a Pull Bench in view of the conflict between the views of this Court and those of a Full Bench of the Avadh Chief Court.
19. The appellants' learned counsel has also urged that every plaintiff or applicant has got an inherent right to withdraw his suit or application at any stage in view of the provisions contained in 0rder 23, Civil P. C., and the provisions of Section 20, Encumbered Estates Act, which, should be liberally interpreted. The right of a landlord-applicant to apply for quashing of proceedings under the Act is, however, restricted within the four corners of Section 20 of the Act. The appellants cannot, therefore, rely upon the provisions of Order 23 of the Code ; and we have already seen that the provisions of Section 20 of the Act are inapplicable to the facts of the present case.
20. I am, therefore, of opinion that the decision of the learned District Judge is correct. I would, accordingly, dismiss the appeal with costs.
Sapru J.
21. This appeal has been presented on behalf of Ran Bejai Bahadur Singh and others and arises in the following manner.
22. It would appear that on 27-10-1936 there was an application presented by Ran Bejai Bahadur Singh and others under Section 4, U. P. Encumbered Estates Act. This application ultimately came to be heard by the Special Judge, II Grade, Allahabad, who had the notices prescribed under the Act duly published. On the publication of these notices claims were preferred in respect of certain debts, which the landlord-applicants owed to them, by Ram Adhin and Sridhar. It would appear that no claim under Section 11 of the Act was filed. The Special Judge passed decrees in favour of the respondent-creditors under Section 14 on 13-1-1939. This was done after an investigation of their cases.
23. From the above decree under Section 14 the landlord-applicants filed an appeal to the District Judge of Allahabad on 21-3-1939. There was also an application filed by them in the appellate Court on 25-1-1943 praying that the proceedings be quashed under Section 20 of the Act. This application for the quashing of the proceedings was dismissed by the District Judge on 8-3-1943. This order of the District Judge was upheld in appeal by this Court on 15-9-1945. After the order of the High Court dismissing the landlords' application had been passed, one Basant Singh came forward with an application under Section 11, Encumbered Estates Act. His allegation was that he had an interest in the property which the landlord-applicants were claiming to be theirs. On the date fixed for the hearing of his application he was not present in Court. Accordingly his application was dismissed for want of prosecution by the Court on 1-6-1946. Thereafter the application out of which this appeal has arisen was filed on 3-7-1946. Between 1-6-1946 and 3-7-1946 holidays intervened and the application was thus filed, it is urged, one month after the filing of the application by Basant Singh under Section 11, Encumbered Estates Act. At the time this application was filed the liquidation proceedings were not over. The application was, however, rejected by the Special Judge. His order was upheld by the learned District Judge and it is against this order of the learned District Judge affirming the decision of the Special Judge that the appeal before us is directed.
24. The view that the learned District Judge has taken of the claim filed by Basant Singh is that it was not a bona fide claim. His view is that he had no interest in the property and that, in point of fact, the claim preferred by him is of a collusive nature. For this reason the learned District. Judge holds that the principle of the authority, namely, Ganga Sahai v. Mt. Nafiz Bano, 1946 A. W. R. 614 : (A. I. R. (33) 1946 ALL 508), has no application to the facts of this case. The argument that has been put forward on behalf of the landlord-applicants is that it is open to any creditor to make a claim under Section 11 even after the disposal of Section 14 claims, provided that the liquidation proceedings have not been completed under Section 25. It is argued that if such an application, however flimsy and collusive it may be, is made and a decision is given thereon, it gives a fresh right to the landlord-applicants to get the proceedings quashed within one month from the date of its disposal. It has been argued that the question whether the claim preferred is a bona fide one or not is quite immaterial. It has been further urged that "claim" means "any claim" whether bona fide or not. If this argument is accepted, the inevitable result will be to encourage false, vexatious or frivolous claims. To hold that this could have been the intention of the Legislature would be to attribute to it a design to encourage claims which would be in the nature of gross abuse of the process of the Court. The law expects every litigant to come to Courts with clean hands. It is pointed out by Mr. Kerr at p. 2 in his well-known work on Fraud and Mistake, 6th Edn. on the basis of Green v. Nixon, (1857) 23 Beav p. 530 : 113 R. R. 253 that :
"Fraud in all cases implies a wilful act on the part of any one, whereby another is sought to be deprived, by illegal or inequitable means, of what he is entitled to."
Again Mr. Kerr in his work on Fraud and Mistake at p. 4 opines that :
"Fraud vitiates everything, even judgments and orders of the Court."
He further observes at p. 4 of the same work that:
"It would be idle, therefore, to attempt to enumerate all the cases in which it is a ground of relief."
25. I may quote De Grey, C. J., who observes in the Duchess of Kingston's case, reported in, 2 Smith L. C., 13th Edn. 644 at 651, that "Fraud is an intrinsic, collateral act, which vitiates the most solemn proceedings of Courts of Justice." Lord Coke is quoted in that case as saying :
"It avoids all judicial acts ecclesiastical and temporal (Rex v. Duchess of Kingston, 2 Smith L. C. 651)."
26. It may further be pointed out that according to Mr. Kerr the cases lay down that "The Court has jurisdiction to set aside a judgment obtained by fraud in a subsequent action brought for that purpose." (See Kerr on Fraud and Mistake, p. 499.) Mr. Kerr adds, however, on p. 500 that "To set aside a judgment on the ground of fraud, actual positive fraud must be shown."
Reference may also be made to the case of Nistarani Dassi v. Nundo Lall Bose, 26 Cal. 891 : (3 C. W. N. 670), where Stanley J. quoted with approval the remarks of Willes J. in Queen v. Saddlers Co., (1863) 10 H. L. C. 404 : (32 L. J. Q. B. 337) that "A judgment or decree obtained by fraud upon 8 Court binds not such Court nor any other, and its nullity upon this ground, though it has not been set aside or reversed, may be alleged in a collateral proceeding."
Stanley J. added that :
"In applying this rule it matters not whether the impeached judgment has been pronounced by an inferior tribunal or by the highest Court of Judicature in the realm : in all cases alike it is competent for every Court, whether superior or inferior, to treat as B nullity any judgment which can be clearly shown to have been obtained by manifest fraud."
27. It is quite clear that a judgment or decree obtained by fraud upon a Court binds no such Court or any other, and its nullity upon this ground, though it has not been set aside or reversed, may be alleged in a collateral proceeding. It is further clear that a judgment obtained by fraud or collusion cannot operate as res judicata. I would go to the extent of holding that a fraudulent claim is in the eye of law no claim at all. For a person to prefer a claim, it is essential that he must have a bona fide belief that he has an interest in the property he is claiming to be his. "Claim", therefore, clearly means a genuine or bona fide claim, I may by way of analogy point out that a family arrangement, in order to be operative, must be without fraud. Courts will not support it, if they find that it was brought about by mutual mistake or either party has been misled by the concealment of some material facts. Similarly, an essential condition for upholding family arrangements or references to arbitration entered into in good faith by the manager of a joint Hindu family or by a father is that they must not have been brought about by fraud. For these propositions see Dwarka Das v. Krishan Kishore, 2 Lah. 114 : (A. I. R. (8) 1921 Lah. 34) and Kusum Kumari Dasi v. Dasa-rathi Sinha, 34 C. L. J. 323 : (A. I. R. (8) 1921 Cal. 487). In interpreting a Statute, we must attribute to the Legislature an intention to discourage and not further dishonesty on the part of litigants. For it has to be remembered that the principle of law is that he who seeks equity must do equity. Law exists to do justice, and it would be clearly unjust to encourage-mala fide or collusive claims. It could never have been the intention of the Legislature to give any recognition to mala fide or collusive claims. Courts of law would not be justified in attributing such an intention to the Legislature.
28. It is, therefore, unnecessary to labour this point any further as the proposition put forward by learned counsel for the landlord-applicants has, in my opinion, only to be stated to be rejected.
29. The manner in which the entire proceedings in this case were conducted on behalf of Basant Singh leaves no room for doubt in my mind that the conclusion of the learned District Judge that the claim preferred by him was false to his knowledge is correct. The claim by Basant Singh was preferred more than three months after the publication of the notice in the official Gazette. It was in these circumstances incumbent on Basant Singh to satisfy the special Judge that he had sufficient cause for not coming forward with it within the prescribed time. His conduct in not prosecuting it after he had presented it can but only lead to the inference that it was false to his knowledge. That being so, the irresistible conclusion at which I have arrived is that there was no claim within the meaning of Section 11, Encumbered Estates Act.
30. On the question whether there was any decision of the claim or not, I would merely say that the notion the word "decision" conveys is that of judgment on merits. The actual word used in Section 20 is "decides". Looseness of language is not to be attributed to the Legislature and it strikes me that where a claim has been rejected because of want of prosecution, it cannot be said that there has been any decision on it. It is unnecessary to review at length the cases which were cited before us. Their bearing on this case has been examined by my brother, Bhargava J., and I am in agreement with his observations regarding those cases. I am also in agreement with my brother, Bhargava J., in regard to the view that he has taken as regards the applicability of the provisions of Order 23, Civil P. C., to this case.
31. I would, therefore, hold that the decision of the learned District Judge is a sound one and I would uphold it.
32. The appeal is dismissed with costs.