ORDER
Iqbal Ahmad and Bajpai JJ.
1. This is a plaintiff’s appeal arising out of a suit for the recovery of a sum of Rs. 22,645 odd on the basis of a sarkhat dated 17th June 1934, executed by three brothers named Pandit Sri Sadaitan Pande, Srish Chandra Pande and Sri Kar Pande in favour of the plaintiff firm Thakuri Sao and Purshottam Das. The plaintiffs firm carried on business in Sarguja in the Central Provinces and the three brothers named above carried on the business of commission agents in the district of Mirzapur. It is common ground that there were dealings between the parties and it is alleged by the plaintiff that on the settlement of accounts on 17th June 1934, a sum of Rs. 67,936 was found due to the plaintiff firm from the three brothers and that with respect to this amount a sarkhat was executed in favour of the plaintiff firm. The suit giving rise to the present appeal was directed only against Sri Sadaitan Pande and was for the recovery of one-third of the amount alleged to be due on the basis of the sarkhat. The other two brothers, viz. Srish Chandra Pande and Sri Kar Pande, were impleaded as pro forma defendants in the suit. The Court below holding that the suit was barred by Section 7(1)(b) of the Encumbered Estates Act (4 of 1935) dismissed the suit.
2. There is no controversy about the facts which are briefly as follows: On or before 23rd July 1936 separation was effected between the three brothers named above by means of an award. Thereafter on 30th September 1936, Srish Chandra Pande and Sri Kar Pande filed an application under Section 4, Encumbered Estates Act, and the Collector, in pursuance of the provisions of Section 6 of the Act, transmitted the application to the Special Judge. In their application the applicants admitted their liability to the plaintiff firm to the extent of two-thirds of the amount due to the plaintiff firm. The plaintiff firm then filed a written statement on 15th April 1937 before the Special Judge in accordance with the provisions of Section 10 of the Act and prayed that Sri Sadaitan Pande be made a party in the case. It however appears that prior to the date on which the written statement was filed by the plaintiff Sri Sadaitan Pande had already been made a party to the case. During the pendency of the case under the Encumbered Estates Act the suit giving rise to the present appeal was filed on 17th May 1937. Sri Sadaitan Pande contended that the suit was barred by Section 7(b) of the Act, and this contention was accepted by the learned Civil Judge.
3. In appeal before us it is contended that the decision of the Court below is erroneous and that Section 7(b) of the Act has no application to the case and in support of this contention reliance has been placed on the decision of a learned Judge of this Court in Swadeshi Bima Co. Ltd. v. Shiv Narain (1939) 26 AIR All 75. This decision finds support from certain observations contained in the judgment of this Court in Civil Revision No. 470 of 1936 decided on 24th November 1937, by Harries and Rachhpal Singh JJ. On behalf of the respondent reliance has been placed on the decision of Thom and Rachhpal Singh JJ., in Inamullah v. Babu Ram (1937) 24 AIR All 360 and the decision of Sulaiman C.J. and Harries J., in Babu Ram v. Manohar Lal (1938) 25 AIR All 6 and on the decision of Bennet and Verma JJ., in Souti Raghubar Dayal v. Amba Prasad (1938) 25 AIR All 390. The cases relied upon by the parties are not easily reconcilable and the question that arises for decision in the present appeal is one of general importance. Accordingly we consider that it is desirable that there should be an authoritative pronouncement on the question. We, therefore, direct that the case be laid before the Hon’ble the Chief Justice with the request for the constitution of a Full Bench.
JUDGMENT
Thom, C.J.
4. This is a plaintiff’s appeal arising out of a suit in which the plaintiff claims a decree against the defendant for the sum of Rs. 22,645-9-6. The defendant along with his two brothers executed a sarkhat on 17th June 1934. The amount sued for represents one-third of what is due under the sarkhat. The three brothers who executed the sarkhat separated on 23rd July 1936. Thereafter the defendant’s two brothers filed an application under Section 4, Encumbered Estates Act. An order was passed thereon by the Collector under Section 6 of the Act. The application was transmitted to the Special Judge for disposal. In the application which they filed under the Act the defendant’s brothers admitted liability to the extent of two-thirds of the amount due under the sarkhat. In the proceedings under the Encumbered Estates Act, the plaintiff in the present suit filed a written statement on 15th April 1937. He pleaded that the defendant in the present suit be made a party to these proceedings. It appears however that the defendant had already been made a party. The suit has been dismissed by the learned Civil Judge. The learned Judge held that the suit did not lie, an application having been made by two out of the three joint debtors under the provisions of the Encumbered Estates Act.
5. It was contended in appeal that the provisions of the Act did not bar the suit. It was urged that the plaintiff was entitled to recover what was admittedly due from the joint debtor who had not applied under the Act. It was argued for the respondents on the other hand that Sub-section (b) of Section 7 of the Act clearly barred the suit. Sub-section (b) enjoins that
no fresh suit or other proceedings other than an appeal or revision against a decree or order, or a process for ejectment for arrears of rent shall, except as hereinafter provided, be instituted in any Civil or Revenue Court in the United Provinces in respect of any debts incurred before the passing of the said order.
6. This provision is undoubtedly very wide in its terms and it would appear from Section 9, Sub-section (5)(b) that the remedy of the creditor against the non-applying debtor was by way of execution of a decree passed by the Special Judge. Section 9, Sub-section (5)(b) is as follows:
If all the joint debtors have not applied under Section 4 the creditor shall have a right to recover from the debtors who have not applied only such amount on account of the joint debt as may be decreed by the Special Judge to be due by them.
7. The question as to whether under the Act before amendment the creditor was entitled by a separate suit to recover what was due by a joint debtor who had not preferred an application under the act is one which is not free from difficulty. We are however absolved from deciding the question in view of the amendment to the Act, and in view of the procedure which we think it is appropriate to follow in disposing of this appeal. The Encumbered Estates Act of 1935 has been amended by Act 11 of 1939. In particular Section 9, Sub-section (5)(b) has been amended and for the word “decreed” in that sub-section the word “determined” has been substituted. Section 11 of the 1939 Act enjoins
(c) where no suit has been instituted or where no application for execution of a joint decree has been made in any other Court in respect of such joint debt or joint decree the creditor may on application to any Court having jurisdiction to entertain such suit, or execute such decree, obtain a decree, or get the decree executed against non-applicant joint-debtors, for the amount so determined, subject to the payment of the court-fee payable on such execution application, or on a plaint in a suit for the amount determined by the Special Judge.
8. Under the amended Act, therefore, the creditor must wait until the amount due by the joint debtor who had not made an application under the Encumbered Estates Act has been determined by the Special Judge. Thereafter he may apply to the Civil Court for a decree for that amount against the debtor. When the suit out of which this appeal arises was filed the law as to the procedure to be adopted by the creditor to recover the proportion of the debt due to him by the debtor who had not applied under the provisions of the Encumbered Estates Act was somewhat in doubt. The procedure to be followed is now made plain by the amendment above referred to. In these circumstances we are of the opinion that the appropriate course would be for this Court to allow the appeal and direct the record to be sent to the Court below. That Court will then treat the suit as an application under Section 11 of Act 11 of 1939 and dispose of it according to law after the amount due by the defendant has been determined by the Special Judge. In the result, the appeal is allowed and the order of the learned Civil Judge is set aside. The record will be returned to the Court of the learned Civil Judge with the direction that the plaint be treated as an application under Section 11 of Act 11 of 1939. This application will be disposed of according to law after the amount due by the defendant has been determined by the Civil Judge in the proceedings under the Encumbered Estates Act. In all the circumstances we direct the parties to bear their own costs in this appeal. Costs in the Court below will abide the result.
