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Attorney(S)
  • Dr. N.P Asthana and Mr. R.N Gurtu, for the appellant.
  • Mr. S.N Verma, for the respondent.
Judges
  • Collister
  • Bajpai, JJ.
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Attorney(S)
  • Dr. N.P Asthana and Mr. R.N Gurtu, for the appellant.
  • Mr. S.N Verma, for the respondent.
Judges
  • Collister
  • Bajpai, JJ.
Acts
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Smart Summary

Opinion Summary — Collister, J. (with concurring opinion of Bajpai, J.)

Factual and Procedural Background

These are two appeals brought under section 45 of the U.P. Encumbered Estates Act arising from stay orders made by the Special Judge of Saharanpur. The respondent is the Jagadhari estate (formerly under the court of wards and thereafter released), the estate proprietors trading as Narain Das Gulab Singh. Two decree-holders — the Patiala Darbar and the Punjab National Bank — obtained money decrees at Ambala and proceeded to execute those decrees against immovable property of the respondent in the Punjab.

While execution was pending in the Punjab, the respondent applied to the Collector of Saharanpur under section 4 of the U.P. Encumbered Estates Act; the Collector referred the application to the Special Judge under section 6. The respondent then applied for stays of the Ambala proceedings, and the Special Judge issued stay orders dated 15 November 1935 and 19 March 1936. The judge who passed the 19 March 1936 order purported to act under section 151 of the Civil Procedure Code. The decree-holders (appellants) appealed the stay orders, leading to the present proceedings.

Legal Issues Presented

  1. Whether a Special Judge or a court in the United Provinces (U.P.) may, under the U.P. Encumbered Estates Act or otherwise, issue a stay or injunction to restrain the execution of a decree by a court in another province (here, the Punjab).
  2. Whether the U.P. Encumbered Estates Act was intended to protect or affect property of a U.P. landlord situated outside the United Provinces, and if so whether that intention empowers the Special Judge to restrain extra-provincial execution.
  3. Whether a U.P. court can, under section 151 of the Civil Procedure Code or under the court's inherent powers, grant injunctions affecting proceedings or parties located outside its province.

Arguments of the Parties

Appellants' Arguments

  • The object of the U.P. Encumbered Estates Act is solely to protect encumbered estates in the United Provinces and not to protect debtors generally.
  • The Act was not intended to affect and cannot affect property situated in another province; it does not provide for injunctions or stays of proceedings in courts outside the United Provinces.
  • A court in the United Provinces is not competent under section 151 of the Civil Procedure Code to issue a stay order to a court in another province.

Respondent's Arguments

  • Taking the Act as a whole, a Special Judge in the United Provinces is competent to issue an injunction to a creditor in another province who seeks to execute a decree against the indebted landlord's property in that province.
  • The statutory scheme supports this competence: under section 4 the landlord must disclose all debts wherever located; section 8 requires particulars of debts and property liable to attachment; section 9 calls for notice to all creditors and registered post to named creditors; section 10 requires claimants to disclose proprietary rights and other property; section 11 publishes disclosed property; section 12 annuls certain transfers (which would include transfers to residents of another province); and section 13 deems claims not made within time to have been discharged.
  • Section 14 provides for the Special Judge to pass simple money decrees which are sent to the Collector for execution under section 19, and section 24(3) provides that for execution against property outside the United Provinces the Special Judge's decrees are to be deemed decrees in favour of the Collector — suggesting awareness of extra-provincial property and the need for its treatment under the Act.
  • On that scheme, it would be inconsistent with the Act's purpose to protect U.P. property while leaving the landlord's extra-provincial property exposed to execution.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Lalmohan Trivedi v. Ram Chandra Awasthcy (Chief Court of Oudh) Held that the U.P. Encumbered Estates Act provides for stay of proceedings in civil and revenue courts only in the United Provinces on an order made by the Collector under section 6; a U.P. court cannot stay execution proceedings in a court situated in another province nor issue an injunction to a party outside its jurisdiction. The court relied on the reasoning in that case to support its conclusion that the Special Judge in the United Provinces was not competent to issue an injunction restraining execution in the Punjab.

Court's Reasoning and Analysis

The court's analysis proceeded from statutory interpretation and considerations of legislative competence and territorial scope:

  1. Constitutional/legislative context: The court cited sub-section (1) of section 80A of the Government of India Act (as amended by the Act of 1919) to affirm that a local legislature has power to make laws for the peace and good government of that province. The U.P. Act received required sanction, but its preamble expressly states its object is to provide relief for "encumbered estates in the United Provinces."
  2. Statutory definitions and language: Section 2(d) of the U.P. Encumbered Estates Act defines "land" as a share of or interest in a mahal in the United Provinces. Section 7(1)(a) provides that when the Collector has passed an order under section 6 all proceedings pending in any civil or revenue court in the United Provinces in respect of a debt to which the landlord is subject shall be automatically stayed — language that confines the statutory stay to courts within the United Provinces.
  3. Scope of the Act: Given the definitions and operative provisions, the court concluded that the Act is focused on protection of land in the United Provinces and contains no express provision authorising the issuance of injunctions to restrain execution by courts of another province. The court observed that Order XXXIX, rule 1 of the Civil Procedure Code does not apply in terms because the property in question (in another province) cannot be said to be "wrongfully sold" within the rule's intended scope, and that rule is designed for temporary injunctions.
  4. Limits of implied powers and section 151 CPC: Although counsel for the respondent argued for implied powers and inherent jurisdiction to do what is necessary for execution of the Act, the court expressed reluctance to read into the Act a power for a U.P. court to issue an indefinite injunction restraining a creditor in another province absent specific statutory language granting such a power. The judge stated a court in the United Provinces is not competent under section 151 CPC to issue a stay order to a court in another province.
  5. Interpretation of section 13 and territorial effect: The court acknowledged section 13's broad language that claims not presented would be deemed discharged, but doubted that section 13 could be read as enabling a U.P. court to declare decrees obtained in the Punjab to be discharged and thereby unexecutable in that province. The court inclined to view the operation of section 13 as limited to courts having jurisdiction in the United Provinces, consistent with other confinement of remedies (e.g., section 7).
  6. Practical consequences and unresolved questions: The court noted practical concerns raised by the respondent about unfair advantage to extra-provincial creditors but observed that questions such as whether a creditor could execute two different decrees arising from the same cause of action were not before the court and therefore not decided.
  7. Reliance on precedent: The court cited the Chief Court of Oudh decision in Lalmohan Trivedi v. Ram Chandra Awasthcy which reached a similar conclusion — that the U.P. Act provides for stays only in the U.P. and a U.P. court cannot stay execution proceedings in a court outside the province.
  8. Conclusion of analysis: On the combined basis of textual interpretation of the Act, limits on provincial legislative reach, the confined language of stay and execution provisions, and supporting authority, the court concluded that the Special Judge was not competent under the Act (nor under section 151 CPC in this context) to issue an injunction restraining the appellants from executing decrees against the respondent's property in the Punjab.

The concurring judge, Bajpai, J., agreed with Collister, J. and expressly declined to decide whether an out-of-province creditor should file a claim before the Special Judge or on the precise effect of failure to so file; he noted that the particular appellants had not filed claims (one not at all; the other only under protest).

Holding and Implications

Holding: APPEAL ALLOWED — The orders of the court below (the stay orders issued by the Special Judge restraining execution in the Punjab) are set aside.

Direct consequences and implications:

  • The Special Judge in the United Provinces was held not to be legally competent, under the U.P. Encumbered Estates Act or under section 151 of the Civil Procedure Code, to issue an injunction restraining the appellants from executing their decrees against the respondent's property in the Punjab.
  • Accordingly, the stay orders previously granted by the Special Judge were set aside and the appellants were entitled to the costs of the appeal.
  • The court did not purport to lay down a broader rule on every collateral question raised by the parties (for example, whether an out-of-province creditor must file a claim before the Special Judge or whether failure to file would operate to discharge a decree in another province) and expressly declined to decide those points; those issues remain open for later adjudication if properly presented.
  • No broader novel principle extending the Act's territorial operation was announced: the decision confines the Act's protective remedies, as interpreted by the court, to measures operative within the United Provinces and refuses to extend the Special Judge's injunctive power to restrain execution in another province absent explicit statutory authority.

This summary is limited to the facts, arguments, reasoning and disposition contained in the provided opinion and does not include material beyond that text.

Show full summary ...

    Patiala Darbar v. Narain Das Gulab Singh

    Collister, J.:— These are two appeals under section 45 of the U.P Encumbered, Estates Act. Each arises out of a stay order which has been passed by the Special Judge of Saharanpur.

    The Jagadhari estate, i.e, the respondent to these appeals, was under the court of wards, but it has now been released. The owners of the estate traded in the name of Narain Das Gulab Singh. The Patiala Darbar obtained a money decree against the respondent at Ambala, and a similar decree was obtained there by the Punjab National Bank. The Jagadhari estate has property in the United Provinces as well as in the Punjab. Each of the two aforesaid decree-holders put his decree into execution against immovable property belonging to the respondent in the Punjab. While these decrees were under execution, the respondent presented an application before the Collector of Saharanpur under section 4 of the U.P Encumbered Estates Act, and in due course that application was sent, under section 6 of the Act, to the Special Judge. Thereafter the respondent applied for stay of proceedings at Ambala, and the Special Judge has issued a stay order in each case. One order is dated the 15th of November, 1935, and the other is dated the 19th of March, 1936. The Judge who passed the latter order was the successor in office of the Judge who passed the order dated the 15th of November, 1935.

    The learned Judge who passed the order of the 19th of March, 1936, purported to act under section 151 of the Civil Procedure Code. I may say at once that in my opinion a court in the United Provinces is not competent: under section 151 to issue a stay order to a court in another province; and there was no real controversy before us on this point. Whether such court can issue an injunction to a creditor in another province, either under the specific provisions of the Civil Procedure Code or in exercise of its inherent power, is a matter which will have to be considered in its proper place.

    Learned counsel for the appellants pleads that the object of the U.P Encumbered Estates Act is solely to protect encumbered estates in the United Provinces, not to protect debtors. He argues that the Act was not intended to affect and cannot affect property in another province. Per contra learned counsel for the respondent contends that, having regard to the scheme of the Act, a Special Judge in the United Provinces is competent to issue an injunction to a creditor in another province who is seeking to execute his decree against property of the indebted landlord in that province. He points out that under section 4 of the Act the landlord applying for relief has to disclose in his application to the Collector under that section all his debts, wherever they may exist. Then under section 8 the Special Judge will call upon him to submit full particulars in respect to his debts, the nature and extent of his proprietary rights in land, the nature and extent of such property as may be liable to attachment and sale under section 60 of the Civil Procedure Code and the names and addresses of his creditors. Neither his debts nor such property as is liable to attachment and sale under section 60 are restricted to the United Provinces. Land is defined in section 2(d) as “a share of or interest in a mahal in the United Provinces”; but land in another province would presumably be included in “property which is liable to attachment and sale under section 60”. Under section 9(1) a notice is then published calling upon all persons having claims, whether decreed or undecreed, against the person or property of the landlord to present a written statement of their claims, and a copy of such notice is sent under sub-section (2) by registered post to each of the creditors whose names and addresses have been given by the applicant. Under section 10 every claimant referred to in section 8 is required in the written statement of his claim to give full particulars thereof and to state, so far as they are known to or can be ascertained by him, the nature and extent of the landlord's proprietary rights in land and the nature and extent, if any, of the landlord's property other than proprietary rights in land. He is also required to deliver to the Special Judge all documents upon which he relies Notice is then published under section 11 specifying the property which has been disclosed by the applicant and also the property which has been mentioned by the various claimants. Section 12 provides for the annulment of certain transfers, and it is argued—and no doubt rightly—that this would include a transfer to a resident of another province. Section 13 provides that “Every claim decreed or undecreed against the landlord in respect of a private debt … shall, unless made within the time and in the manner required by this Act, be deemed for all purposes and on all occasions to have been duly discharged.”

    The Special Judge then proceeds under section 14 to hear evidence and examine each claim on a date fixed by him and to determine the amount, if any, due from the landlord to each claimant, and thereafter he has to pass a simple money decree in respect of each amount so found. Such decrees are sent to the Collector for execution under section 19. The next chapter, i.e, chapter V, provides for the execution of decrees and the liquidation of the landlord's debts by the Collector. Section 24(3) provides that “for the purpose of execution against property outside the United Provinces the decrees passed by the Special Judge shall be deemed to be decrees in favour of the Collector.”

    As I understand learned counsel for the respondent his argument, based on the general scope and object of the Act, is that it was the primary intention of the legislature that relief be granted to indepted landlords of the United Provinces, that all claims—whether against the person or property of the landlord and whether provincial or extra-provincial—should be settled by the Special Judge, that the whole body of creditors should come before that court, that for the purposes of the Act all property of the landlord should be taken into account and that it would be a violation of the spirit of the Act and the intention of the legislature if, while the landlord's land in the United Provinces is protected (I use the word “protected” in its ordinary sense, and not in the special sense in which it is defined in section 2(e) of the Act), land belonging to him in another province should have no protection.

    Whatever may have been in the mind of the legislature, I do not think that the intention which is contended for by learned counsel for the respondent can be read into the Act as framed. I am of opinion that the view which has been advanced before us by learned counsel for the appellants must prevail. I will proceed to give my reasons.

    Sub-section (1) of section 80A of the Government of India Act, as amended by the Act of 1919, provides that “The local legislature of any province has power, subject to the provisions of this Act, to make laws for the peace and good government of the territories for the time being constituting that province.” In certain cases the previous sanction of the Governor-General was necessary; and such sanction was obtained for the Act with which we are now dealing, presumably for the reason that it regulates a central subject, i.e, the Code of Civil Procedure, within the meaning of section 80A(3)(e) of the Government of India Act. The preamble of the U.P Encumbered Estates Act states that “Whereas it is expedient to provide for the relief of encumbered estates in the United Provinces …” As I have already shown, section 2(d) of the U.P Encumbered Estates Act defines “land” as a share of or interest in a mahal in the United Provinces. Section 7(1)(a) provides that when the Collector has passed an order under section 6.all proceedings pending in any civil or revenue court in the United Provinces in respect of any debt to which the landlord is subject or with which his immovable property is encumbered shall be automatically stayed.

    It would therefore seem that the Act is concerned exclusively with the protection of land in the United Provinces; and there is no provision in it for issuing an injunction to creditors of another province who have taken out execution against property of the landlord in that province. Order XXXIX, rule 1 of the Civil Procedure Code does not apply in terms, because it cannot be said that such property is being “wrongfully sold”. Also that rule is concerned with injunctions of a purely temporary nature. It is argued by learned counsel for the respondent that the Civil Procedure Code is not exhaustive and that the court in the United Provinces is competent ex debito justitiae to issue such an injunction. He pleads that where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts or employing such means as are necessary to its execution. Even assuming that the United Provinces can legislate so as to protect property of a landlord in another province by diminishing its burden, I would hesitate, in the absence of any specific indication of such intention in the Act itself, to hold that the Special Judge is competent to issue an injunction indefinitely restraining a creditor in the Punjab from executing his decree against property of the debtor landlord in that province.

    Apart from the provisions of section 13 there is nothing in the Act to indicate that a creditor who has obtained a decree in the Punjab or in any other province is precluded from executing his decree by the ordinary process of law against property in that province. Section 13 provides that a claim, if not made before the Special Judge within the time allowed, “shall be deemed for all purposes and on all occasions to have been duly discharged.” These words are certainly very wide, but doubt very much whether under the Act a court in the United Provinces has power to declare that a decree obtained in the Punjab by a creditor who has not had recourse to the Special Judge is discharged so as to be unexecutable in that province. I am inclined to think that the operation of section 13 is limited to courts having jurisdiction in the United Provinces. As I have already shown, the stay of proceedings and avoidance of attachment et cetera provided by section 7 are confined to courts in the United Provinces; and this may afford some clue as to the intention of the legislature.

    It is argued that if the injunction prayed for is not issued, undesirable consequences will ensue, inasmuch as the creditors in the Punjab will have an unfair advantage; it is said that they will be able to have the property in the Punjab sold up without any reduction in the amount of the debt and can also apply to the Special Judge and obtain a decree which can be executed by the Collector against the property in the United Provinces. This argument presupposes that a creditor will be at liberty to execute two different decrees arising out of one and the same cause of action. That question is not before us and so it is not necessary to discuss what the legal position would be. On the other hand, if a creditor of the United Provinces is vigilant he may be able to have his simple money decree executed against the property in the United Provinces and also have it executed by the Collector under section 24(3) of the Act against property in the other province.

    A similar point arose in the Chief Court of Oudh in the case of Lalmohan Trivedi v. Ram Chandra Awasthcy(1), where it was held that the U.P Encumbered Estates Act ‘provides for stay of proceedings in civil and revenue courts in the United Provinces only on an order made by the Collector under section 6, and the preamble of the Act also shows that the Act was passed to provide for the relief of encumbered estates in the United Provinces.” It was held that a court in the United Provinces is not justified in staying execution proceedings in a court not situated in this province or in issuing an injunction to a party residing outside the jurisdiction of the court.

    The landlord's property in another province has to be disclosed in order to facilitate execution under section 24(3), but in my opinion the Special Judge is not competent under the Act to exercise control over such property by issuing an injunction to a creditor who has obtained a decree in that province restraining him from executing it against such property. If the legislature had contemplated the issuing of such an injunction, a provision to that effect would presumably have been inserted in the Act. It may be argued that it would be more in consonance with the spirit and intention of the Act that there should be such a provision. Be this as it may, the fact remains that the Act is completely silent in respect to any measures for the protection of the property in another province against a creditor whose suit has been decreed in that province, and in the circum stances I do not think that the Special Judge can invoke any inherent powers for the purpose of achieving that object.

    The matter is not without difficulty, but having regard to the provisions of the Act as they stand I am of opinion that an injunction cannot legally be issued by the Special Judge to restrain the appellants from executing their decrees against the property of the respondent in the Punjab.

    Bajpai, J.:— I agree. For the reasons given by my learned brother I am of the opinion that a court in these provinces is not justified in issuing an order of stay or in issuing a temporary injunction either under section 151 of the Civil Procedure Code or under the provisions of Order XXXIX, rule 1 of the Civil Procedure Code to a creditor who has obtained a decree against the landlord in another province. The question whether such a creditor should file a claim before the Special Judge in these provinces and whether his claim, if not made within the time and in the manner required by the U.P Encumbered Estates Act, will be deemed for all purposes and on all occasions to have been duly discharged is not before us, and I express no opinion on the point. It will be for such a creditor to consider his best interests in the matter and to take such steps as he may be advised to do. We are told that the Punjab National Bank Ltd., Ambala, has not filed any claim before the Special Judge and the Darbar Patiala has filed a claim only under protest. I take it, therefore, that the two appellants before us have not filed any claim before the Special Judge, and under those circumstances I am of the opinion that the order passed by the court below was not justified.

    By the Court:— We allow this appeal and set aside the order of the court below. The appellant is entitled to his costs of the appeal.

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    Comments

    Patiala Darbar v. Narain Das Gulab Singh
    (Mar 22, 1938)