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Shiva Prasad Gupta v. Gokul Chand And Others
Structured Summary of the Provided Opinion
Factual and Procedural Background
This matter is an execution first appeal by the decree-holder, B. Shiva Prasad Gupta (the fourth party in an arbitration award), against an order of the Civil Judge, Allahabad, which stayed execution of a partition decree on the ground that the judgment-debtors had applied under the United Provinces Encumbered Estates Act (Act 25 of 1934) in Benares and consequently execution could not proceed.
Procedural chronology, as set out in the opinion:
- 25 May 1922: Agreement to refer partition of a wealthy joint Hindu family's property to arbitration.
- 30 Nov 1925: Arbitration award made (later published in printed book).
- 25 Feb 1926: Award made a decree by the Civil Judge, Allahabad.
- 3 Feb 1934: Decree-holder (appellant) applied for execution to recover Rs. 9,75,567-0-9 (amount due on that date).
- 10 & 22 Aug 1935: Allahabad Court issued transfer certificates for execution to Courts in Benares, Jaunpur, Gonda and Calcutta; certificates dated 11 Nov 1935.
- 5 Oct 1936: Respondents (first party in arbitration) applied to the Collector of Benares under the Encumbered Estates Act; application transferred to the Special Judge.
- 9–10 Oct 1936: Respondents applied for stay of execution to Civil Judge, Allahabad; on 10 Oct 1936 Civil Judge passed the stay order (now under appeal) and later issued letters withdrawing the certificate of transfer to Calcutta and Gonda (21 Oct 1936).
- Subsequent proceedings in the lower Court and this Court followed; this appeal was originally filed as a civil revision, then recommended for Full Bench reference.
Legal Issues Presented
- Does the U.P. Encumbered Estates Act apply to partition decrees relating to joint family property?
- Having regard to the words used in Section 7, U.P. Encumbered Estates Act, could the proceedings in Calcutta relating to execution against property in Calcutta be stayed?
- Whether the U.P. Legislature had power to legislate with regard to property situated outside the United Provinces (i.e., territorial competence of provincial legislation)?
Arguments of the Parties
Appellant's Arguments
- The appellant's learned counsel formulated and pressed three principal points for Full Bench decision (those listed above), the primary being that the Encumbered Estates Act should not apply to partition decrees concerning joint family property because the money decreed represents an allotted portion of family property (not a debt).
- The appellant also objected to the recall/withdrawal of the certificate for execution sent to the Calcutta Court and argued that Section 7 of the Encumbered Estates Act can only apply to property within the United Provinces (i.e., it cannot validly affect property in Calcutta outside provincial legislative competence).
Respondents' Arguments
The opinion does not contain a detailed account of the respondents' legal arguments. It records only that the respondents applied under the Encumbered Estates Act and sought a stay of execution as a consequence.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kent County Council v. Lord Gerard (1897) A.C. 633 at p. 639 | Principle that courts should not strain statutory language to make it apply to cases to which it does not legitimately apply on its terms (warning against forcing legislative intention to override natural meaning of words). | The Court cited this passage to support the view that the Encumbered Estates Act should not be stretched to include partition decrees simply because that might serve a perceived legislative purpose; the natural meaning and context must control. |
| Jang Bahadur v. Bank of Upper India Ltd., Lucknow (1928) 15 A.I.R. P.C. 162 | On transfer of a decree for execution outside the jurisdiction, the Court which passed the decree does not altogether lose seisin of the decree; an outstanding execution certificate indicates a pending execution proceeding in the original Court. | The Court relied on this to conclude that where an execution certificate is outstanding the original Court continues to have a pending execution proceeding and therefore, if execution is to be stayed under Section 7, the original Court may properly recall certificates issued to other Courts. |
| Darbar Patiala v. Narain Das-Gulab Singh (1938) 25 A.I.R. All. 434 | Held that a Court in the United Provinces is not competent under Section 151, Civil P.C., to issue a stay order to a Court in another Province; and that the Encumbered Estates Act's object is to protect encumbered estates in the United Provinces rather than to protect debtors outside its territorial field. | The Court distinguished that authority: in Darbar Patiala the decree had been passed outside the United Provinces and the question was injunction against an external Court; in the present case the decree was passed in Allahabad and only execution certificates had been sent elsewhere, so the cases were materially different. |
| Wahid-ud-din v. Makhan Lal (1938) 25 A.I.R. All. 564 | Interpreted Section 80-A(3) of the Government of India Act, 1920, as precluding a local legislature from making laws that validly affect rights and properties outside the province. | The Court referred to this ruling but stated the point of territorial legislative competence did not arise for decision in the present case; it noted the precedent but did not base its decision on it. |
Court's Reasoning and Analysis
The Court's analysis proceeded in the following steps, confined to the reasoning explicitly set out in the opinion:
- Examination of the arbitration award and decree: The award, made part of the decree, allocated shares of the joint family estate among parties and directed that the first party pay specified sums to other parties (including the appellant). The award divided immovable and movable assets (zamindari lands, house property, jewellery, shares, promissory notes, postal certificates, war loans, business concerns), and reduced the amount payable by the first party to the others. The figure declared due to the fourth party (appellant) represented his share/allotment from the totality of family property.
- Characterisation of the decree-sum: The Court emphasized that the sum payable by the first party to the fourth party was not a loan or a transaction that originated as a debt; rather it constituted a portion of joint family property allotted to the appellant as part of partition adjustments. The Court concluded the monetary obligation arose from division/allotment, not from borrowing.
- Statutory language and purpose of the Encumbered Estates Act: The Court reviewed the Act's Preamble (to provide relief for encumbered estates) and key provisions including Section 2(a) (definition of 'debt' as including pecuniary liability except for unliquidated damages), Sections 8–10 and 14 (procedure of Special Judge to collect and adjudicate claims), and Section 16 (ranking of debts). It emphasized the Act's intention to preserve estates by liquidating debts that encumber property.
- Application of the statutory saving clause: Section 2(a) contains the phrase "unless there is anything repugnant in the subject or context." The Court considered whether the subject-matter of a partition decree is repugnant to treating the award-amount as a "debt" within the Act. The Court found it repugnant: applying the Act to a partition award would transfer value between family members (one gains, one loses) and would not preserve estates as a whole, contrary to the Act's object.
- Use of interpretive principle: Relying on the cited passage from Kent County Council v. Lord Gerard, the Court declined to strain the words of the Act to cover a case it does not naturally encompass. The Court held that the ordinary meaning and context exclude partition-based allotments from the Act's definition of "debt."
- Conclusion on point 1: Given that the award-sum represented a share allotment and that applying the Act would be repugnant to the statutory definition and object, the Court concluded the Encumbered Estates Act does not apply to the decree-sum in question; therefore the stay issued under Section 7 was erroneous.
- Consideration of point 2 (recall of certificates): Although not necessary to decide points 2 and 3 finally, the Court examined whether the Allahabad Court was correct in recalling its execution certificate sent to Calcutta. The Court noted procedural law under the Code of Civil Procedure (Sections 38–46; Order 21 Rules 5–10) and the principle from Jang Bahadur that the original Court retains seisin when a certificate is issued. The Court reasoned that if execution is legally stayed in the original Court, it is appropriate for that Court to recall any outstanding execution certificates it had issued to other Courts. The Court upheld the correctness of recalling the certificate—but only on the supposition that the Encumbered Estates Act did apply (which the Court had found it did not).
- Other procedural/constitutional points: The Court considered (but did not decide) the appellant's submissions concerning the territorial reach of Section 7 and the competence of the U.P. Legislature to affect property outside the province. It distinguished Darbar Patiala (where a U.P. Court could not issue a stay to a Court in another Province under Section 151) on facts, and noted prior authority on provincial legislative competence (Wahid-ud-din) but held those questions not necessary for the present disposition.
Holding and Implications
Core Ruling: The Full Bench ALLOWED THE APPEAL, set aside the order of 10th October 1936 (the stay of execution), and directed that execution should proceed in whatever Court the decree-holder desires.
Consequences and immediate effects:
- The Court held that the U.P. Encumbered Estates Act does not apply to the particular partition decree-sum in this case because that sum represented an allotted share of joint family property, not a debt within the meaning of the Act in its subject or context. Accordingly, the stay of execution under Section 7 was improper and was set aside.
- The Court observed that, had the Act applied, it would have been appropriate for the original Court to recall any outstanding execution certificates issued to other Courts; but that observation was made on a hypothetical basis (since the Act was held inapplicable).
- Direct practical result for the parties: the decree-holder (appellant) is entitled to proceed with execution in the forum of his choice; the respondents' application under the Encumbered Estates Act cannot block execution of this partition decree on the grounds advanced in that application.
The opinion does not state that it is laying down any broader rule beyond the facts and reasoning applied here; the Court limited itself to the decision on point 1 and allowed the appeal with costs. No extended pronouncement on legislative competence or on the full territorial operation of Section 7 was made as part of this disposition.
1. This is an execution first appeal by the decree-holder against an order of the learned Civil Judge of Allahabad to the following effect:
As the judgment-debtor has applied under the Encumbered Estates Act in Benares (vide order of Collector) execution cannot proceed and is shelved. Certificate sent shall be withdrawn.
2. This first appeal which was originally filed as a civil revision came before a Bench which recommended a reference to a Pull Bench which has now been made. The ground of the reference was that there was a decree passed in a partition suit in regard to properties belonging to a joint Hindu family and the decree directed the payment of a certain amount by one of the coparceners to another coparcener, and the question which arose was whether the amount which was to be paid constituted a debt within the meaning of the United Provinces Encumbered Estates Act, Act 25 of 1934. On 25th May 1922, there was an agreement between the members of a very wealthy joint Hindu family to refer to arbitration the partition of the joint family property. An award was given on 30th November 1925. That award is in a printed book. On 25th February 1926, the award was made a decree of Court in the Court of the Civil Judge of Allahabad. The applicant before us, B. Shiva Prasad Gupta, is the fourth party in the award and on 3rd February 1934 he made an application for execution of his decree to recover the amount of Rs. 9,75,567-0-9 due on the date of the application. The Allahabad Court was asked to attach a small house in Mohalla Daraganj and also to send transfer certificates for execution of the decree to Courts in Benares, Jaunpur, Gonda and Calcutta. Such transfer orders were passed on 10th August 1935 and 22nd August 1935. Certificates were issued bearing the date of 11th November 1935. The respondents in this first appeal who constitute the first party in the arbitration award, B. Gokul Chand and others, made an application to the Collector of Benares on 5th October 1936 under the Encumbered Estates Act. On that date, the Collector transferred the application to the Special Judge. On 9th October 1936, the respondents made an application for stay of execution to the Civil Judge of Allahabad and on 10th October 1936, the Civil Judge passed the order which is now under appeal. The Civil Judge also issued letters to the Calcutta and Gonda Courts on 21st October 1936 withdrawing the certificate of transfer of the decree. Some further proceedings took place in the Court below and in this Court but as no decision was given on this matter there is no question of any res judicata. Now learned Counsel for the appellant has formulated three points for the decision of this Full Bench : (1) Does the U.P. Encumbered Estates Act apply to partition decrees relating to joint family property? (2) Having regard to the words used in Section 7, U.P. Encumbered Estates Act, could the proceedings in Calcutta relating to execution against property in Calcutta be stayed and (3) The U.P. Legislature had no power to legislate with regard to property situated outside the United Provinces.
3. We shall first consider point 1. We refer to the printed books of the arbitration award which had been made a part of the decree of the Court. The decree merely states that the decree is in terms of the award. The printed book states on page 3 that the first party, who are the respondents before us, should have an estate of one-third in the family property. The second and third parties, with whom we are not concerned, have a share of one-sixth each, and the fourth party, who is the appellant before us, has a share of one-third. The award divides the zamindari into four lots and the house property into four lots, also the jewellery and shares in companies and out-standings duo to the Benares money-lending firm. Certain Government Promissory Notes and Postal Certificates and War Loans are divided upon p. 28 and also the business concerns of the family on pp. 28, 29 and 30 which comprise among other things a cotton mill. On p. 33 it is stated that taking into consideration the totality of all the circumstances we have decided to reduce the amount payable by the first party to the second, third and fourth parties to the extent indicated below:
...To the fourth party - Babu Shiva Prasad Gupta...Rs. 13,68,358-7-6.
We declare that the first party - Raja Moti Chand and others - is liable to pay the above sum. and we do hereby order that party to pay to the second, third and the fourth parties respectively the amount mentioned opposite their names.
4. These sums are due as stated in the middle of page 33 on account of the adjustments of the claims of the various parties as indicated above. On page 35, there were certain provisions made as to how the amount was to be paid. From this recital, it is obvious that the amount in question was to be paid by the first party to the fourth party in order to make an equal distribution of the joint family property. The joint family property consisted not only of the zamindari and the house property but of various valuable moveable properties which were either money or could be easily converted into money. It is to be noted there-fore that the amount to be paid was in no-sense a loan nor did it take its origin in any kind of loan. It was in fact a portion of the joint family property which was allotted to the appellant before us.
5. We now come to the question of the wording of the Encumbered Estates Act. This Act in its Preamble sets out that, "Whereas it is expedient to provide for the relief of encumbered estates in the United Provinces." That is, the intention of the Act is to give assistance and relief to estates which are encumbered, or in other words estates of which the owners have to pay debt or where debt is a liability on the property. In Section 2(a) it is stated:
In this Act unless there is anything repugnant in the subject or context:
(a) 'debt' includes any pecuniary liability except a liability for unliquidated damages.
6. In Section 8 it is stated that the Special Judge shall call upon the applicant to submit to him a statement containing so far as may be practicable:
(a) full particulars respecting the public and private debts to which the landlord is subject, or with which his immovable property or any part thereof is encumbered.
7. Under Section 9, a notice is published by the Special Judge calling upon the claimants having claims in respect of private debts, both decreed and undecreed, against the person or property of the landlord to make their claims. Under Section 10, the claimant gives some details. Under Section 14(2), the Special. Judge examines each claim and after hearing the parties and considering the evidence he determines the amount, if any, duo from the landlord to the claimant on the date of the application under section 4, and provision is made for the Special Judge to reduce the amount of the claim by applying the Usurious Loans Act or the Agriculturists Relief Act, etc., and under Sub-section (7) ho passes a decree for the amount that ho finds due. Under Section 16 the Special Judge ranks all debts for priority in the following order:
Class (1). - Debts recoverable under the Agra Tenancy Act 8 of 1926, the Oudh Rent Act 22 of 1886 and the Land Revenue Act 3 of 1901.
Class (2). - Public debts duo to the Government and public debts duo to a local authority creating a charge on immovable property.
Class (3). - Debts secured upon property against which the Collector may take action under the provisions of section 24 up to the value of the security.
Class (4). - Other secured debts.
Class (5). - Debts due on account of goods supplied or services rendered; and Class (6). - Unsecured debts due to a local authority, debts falling into Class (3), in excess of the value of security and other unsecured debts.
8. It is admitted that if the particular amount decreed is to come under the Encumbered Estates Act in the present case it will fall under the words in Clause (6) and other unsecured debts." The result of this would be that if the property were not Sufficient to discharge all the other classes of debt thon nothing would be awarded to the decree-holder. This appears to us to be a very anomalous result considering that the appellant before us is a person who was a member of the joint family and the decree which ho has obtained is a decree for part of his share of the joint Hindu family property the Encumbered Estates Act is to preserve the estates of the owners and in the present case if this result is to follow the Act would be used to deprive the appellant of part of his share of the joint family property. We do not think that that can ever have been the intention of the Legislature in passing this Act. In Kent County Council v. Lord Gerad (1897) A.C. 633 at p. 639 there is a passage in which Lord Herschell says:
My Lords, it would not be legitimate, in my opinion, to strain the language used in order to make it apply to a case to which it does not legitimately, in its terms, apply on account of the supposed intention of the Legislature and the theory that that supposed intention can only be effectively carried out by giving to the words a meaning which they do not naturally bear.
9. Now in the present Section 2(a) which we have to interpret in this appeal there occur the words "unless there is anything repugnant in the subject or context". We have to consider whether the subject of a partition suit is in any way repugnant to the use of the word "debt" in the Encumbered Estates Act. Now a partition suit is a division of a joint family property between the members of a Hindu joint family. Each member who is entitled to a share of the joint family property should in equity receive the full amount of his share. We do not see why the Encumbered Estates Act should be introduced in order to give one member of the family more than his share and to give another member of the family less than his share. Such a principle is in no way the intention of the framers of the Encumbered Estates Act. No doubt the respondents will benefit by the reduction to a small amount or the total abolition of the amount which they were required to pay and the appellant would have a corresponding loss but we fail to see why the Encumbered Estates Act should be used in this manner. It does not in any sense preserve the estate's of the members of the family taken as a whole. It is merely causing loss to one for a gain to the other. The object of the Act was to preserve the estates in the United Provinces and to liquidate the debts which had accumulated on those estates. We do not think that the Act was intended at all to apply to the subject of partition among the members of a joint family, and accordingly in our opinion the subject is one which is repugnant to the definition of the word "debt" in Section 2(a) of the Act. We note that comments have been made in one of the text books on the fact that certain amendments should be made of this subsection and the proposed amendment was the addition of the words:
Maintenance decree for torts, trust money, trade debts unconnected with zamindari, and arrears of rants for houses and shops.
10. There are no doubt many other amendments which might be made, and in our opinion the present case is one which should not, come under this sub-section. Instead of specifying all the matters which should be excepted from the operation of his definition the Legislature has made provision for Uio discretion of Courts in these words "unless there is anything repugnant in the (subject or context." "We consider that the present expression mentioned is quite sufficient for the purpose and that under that expression we can hold that the present Act does not apply the word debt" to the present case. On this view of the matter, it is clear that the Court below was incorrect in passing a stay order. Such a stay order was passed under Section 7 of the Act which provides as follows:
(a) All proceedings pending at the date of the said order in any Civil or Revenue Court in the United Provinces in respect of any public or private debt to which the landlord is subject, or with which his immovable property is encumbered, except an appeal or revision against a decree or order, shall be stayed, all attachments and other ox caution processes issued by any such Court and then in force in respect of any such debt shall become null and void, and no fresh process in execution shall, except as hereinafter provided, be issued.
11. In our view, the proceedings under the Encumbered Estates Act will not apply to this particular debt and therefore the Court below which has before it the execution of the decree for this particular debt should not have stayed the execution of the decree sis it is not a debt to which the Act will apply.
12. It is not necessary for us to decide the remaining two points which have been argued but we consider that it will be useful to come to a decision on point 2. What the Court below has done is to recall its certificate for execution of the decree in the Court in Calcutta and this is objected to by learned Counsel for the appellant. The objection which has been taken is that Section 7, Encumbered Estates Act, can only apply to property in the United Provinces and that the property which might have been taken in execution in Calcutta is property outside the purview of the Legislature in these Provinces. On the other hand it occurs to us that we have to see whether the Court in Allahabad has taken any action which is correct for it to take under the provisions of Section 7(4)(a) on the supposition that there was a debt which did come under the Encumbered Estates Act and that the order of the Court was correctly passed for stay of execution. Now in this connexion we may refer to the procedure laid down by the Civil Procedure Code in regard to transfer of decrees for execution. In the Code itself Sections 38 to 46 deal with this matter of transfer of decrees for execution. There is provision in these Sections for the Court which passed a decree sending a certificate to another Court, and under Section 40 the Court might be in another province. When such a decree has been sent for execution certain rules apply, namely Order 21, Rules 5 to 10. Now the Code does not provide under what circumstances the Court which passed a decree is to recall its certificate. The procedure is that where a Court to which a decree is transferred for execution completes execution in its jurisdiction it returns the certificate with a report as to what has happened in the execution. The Court which has passed the decree has meanwhile kept the execution file pending and the execution file is not transferred to the record room as long as a certificate for execution issued to another Court is outstanding. In this connexion we may refer to a ruling of their Lordships of the Privy Council in Jang Bahadur v. Bank of Upper India Ltd. Lucknow (1928) 15 A.I.R. P.C. 162 where their Lordships state on pages 683 and 684 as follows:
Under Clause (e) of Section 89 of the Code of 1908 a decree directing the sale of immovable property situate outside the local limits of the jurisdiction of the Court which passed it, may be transferred for purposes of execution to the Court within whose jurisdiction the property is situated. On such transfer the former Court does not altogether lose seisin of the decree.
13. It may therefore be said that as long as an execution certificate is outstanding there is a pending proceeding for execution going on in the Court which passed the decree. Section 7(1)(a) states that all proceedings for execution pending at the date of the order shall be stayed. Is it a fair interpretation of this direction to say that the Allahabad Court when it is directed to stay execution of this decree should recall the certificate which has been issued to Calcutta or should the Allahabad Court allow proceedings in execution of this decree to go on in Calcutta although the execution is stayed in the Court in Allahabad? We are of opinion that the Allahabad Court was correct in adopting the former course, on the supposition that the matter came under the Encumbered Estates Act. It appears to us that whore an execution Court which has passed a decree is legally directed to stay proceedings in execution that Court should recall any certificate for execution of the decree which it has issued to another Court.
14. In this connexion, reference was made by learned Counsel for the appellant to Darbar Patiala v. Narain Das-Gulab Singh (1938) 25 A.I.R. All. 434 in which a Bench of this Court has held that a Court in the United Provinces is not competent under Section 151, Civil P.C. to issue a stay order to a Court in another Province and that the object of the Encumbered Estates Act is solely to protect encumbered estates in the United Provinces, not to protect debtors. Now, in that case, the Court in the United Provinces was asked to issue an injunction for the stay of proceedings of a decree passed by a Court outside the United Provinces. That is not the case here because it is not the Calcutta Court which passed the decree the cases therefore are different. Learned Counsel further argued on the third ground that the United Provinces Legislature had no power to legislate in regard to property situated outside the United Provinces, and in this connexion he referred to a decision of a Bench of this Court of which two of us were members in Wahid-ud-din v. Makhan Lal (1938) 25 A.I.R. all. 564. This ruling laid down that under Section 80-A(3), Government of India Act of 1920, the Local Legislature of a Province cannot validly make laws to affect the rights and properties outside the boundaries of the Province. We think that this point does not arise in the present case. Learned Counsel desired that mention should be made in this connexion of Section 205(1), Government of India Act of 1935, which provided for appeals to the Federal Court where the case involved a substantial question of law as to the interpretation of that Act or any Order in Council made thereunder, lie referred to the Order in Council styled:
The Government of India (Adaptation of Indian Laws) Order, 1937, which provided in para. 7 as follow:
Subject to the foregoing provisions of this Order, any reference by whatever form of words in any Indian law in force immediately before the commencement of this Order to an authority competent at the data of the passing of that law to-exercise any powers or authorities, or discharge any functions, in any part of British India shall where a corresponding new authority has been constituted by or under any part of the Government of India Act 1935, for the time being in force, have effect until duly repealed or amended as if it were a reference to that new authority.
15. The argument of learned Counsel was that under this paragraph for the purpose of the Government of India Act of 1935 the Encumbered Estates Act although, passed before that Act should be considered as having been passed after that Act and that therefore any question which would arise on the interpretation of that Act would give rise to an appeal under Section 205 to the Federal Court. We do not desire to express any opinion on the merits of this argument. In the present case, we consider, our decision on the point No. 1 is sufficient for the purpose of this case. Accordingly we allow this first appeal with costs and set aside the order of 10th August 1936 of the learned Civil Judge and direct that the execution should proceed in whatever Court the decree-holder desires.
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