{"id":139348,"date":"1987-03-05T00:00:00","date_gmt":"1987-03-04T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/gaya-prasad-vs-surendra-bahadur-singh-dead-by-on-5-march-1987"},"modified":"2019-01-20T17:28:03","modified_gmt":"2019-01-20T11:58:03","slug":"gaya-prasad-vs-surendra-bahadur-singh-dead-by-on-5-march-1987","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/gaya-prasad-vs-surendra-bahadur-singh-dead-by-on-5-march-1987","title":{"rendered":"Gaya Prasad vs Surendra Bahadur Singh, (Dead) By … on 5 March, 1987"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Gaya Prasad vs Surendra Bahadur Singh, (Dead) By … on 5 March, 1987<\/div>\n
Equivalent citations: 1987 AIR 925, \t\t 1987 SCR (2) 542<\/div>\n
Author: V Khalid<\/div>\n
Bench: Khalid, V. (J)<\/div>\n
           PETITIONER:\nGAYA PRASAD\n\n\tVs.\n\nRESPONDENT:\nSURENDRA BAHADUR SINGH, (DEAD) BY L.RS. & ORS.\n\nDATE OF JUDGMENT05\/03\/1987\n\nBENCH:\nKHALID, V. (J)\nBENCH:\nKHALID, V. (J)\nOZA, G.L. (J)\n\nCITATION:\n 1987 AIR  925\t\t  1987 SCR  (2) 542\n 1987 SCC  (2) 383\t  JT 1987 (1)\t652\n 1987 SCALE  (1)514\n\n\nACT:\n    U.P.  Encumbered Estates Act, 1934-- Sections 7,  14(7),\n18,  20,  24, 43 and 44-- Restrictions imposed\tby  the\t Act\nAgreement  of  sale Whether such  restriction--Agreement  to\nsell   Not a transfer of right in immovable  property--Mort-\ngage  of  the property--Rights of  mortgage  whether  extin-\nguished\t by  its merger into a decree--Rights  of  mortgagee\nwhen revived.\n\n\n\nHEADNOTE:\n    The\t respondent  entered into an agreement to  sell\t the\nhouse in dispute to the appellant on May 5, 1958. Earlier he\nhad made an application to the Collector under Section 4  of\nthe U.P. Encumbered Estates Act (U.P. Act No. XXB of  1934),\nwhich  had been transmitted to the Special Judge under\tSec-\ntion  6\t of the Act and pursuant to  his  application  under\nSection 24 of the Act, the house in dispute had been exempt-\ned  from sale in the proceedings under the Act on March\t 26,\n1943.  Subsequent to the agreement, he made  an\t application\nfor  including\tthis house also in the property to  be\tsold\nunder the proceedings of the Act. The appellant objected  to\nit.  By his order dated 23rd June, 1961, the  Collector\t re-\njected\tthis request on the ground that since the  house  in\ndispute\t had already been exempted by the order dated  March\n26, 1943, that order could not be re-opened.\n    There  was a mortgage of this property by the  predeces-\nsors of the respondent, which was also considered as a claim\nunder  Section 14 of the Act and a decree in favour  of\t the\nmortgagee  was passed by the Special Judge under clause\t (7)\nof  Section 14 of the Act. In view of Section 18 the  decree\nremained only as a money decree and the rights of the  mort-\ngagee came to an end.\n    The\t appellant filed a suit against the  respondent\t for\nspecific performance of the contract of sale of the house in\ndispute. The trial court decreed the suit and on appeal, the\nfirst  appellate  court also maintained the  decree  but  on\nsecond\tappeal,\t the High Court held that as  permission  to\nsell was refused under Section 7, the contract of sale would\nbe  hit by Section 23 of the Contract Act and set aside\t the\ndecree passed in favour of the appellant.\n543\n    In\tthe appeals, it was submitted by the appellant\tthat\nalthough  permission for sale of the house under  Section  7\nwas rejected on June 14, 1945, the prohibition under Section\n7  will\t not  apply to an agreement for sale,  that  as\t the\nproceedings  before  Special Judge had come to an  end,\t the\nobjection  pertaining to Section 7 for passing of  a  decree\nunder Specific Relief Act for specific performance will\t not\nbe  available,\tthat if the debts remained to  be  satisfied\nstill  the sale proceeds could be kept in deposit for  being\ndistributed  to the creditors, and, therefore, it could\t not\nbe said that a decree for specific performance could not  be\npassed, that the agreement to sell is not covered by  anyone\nof the restrictions specified in sub-clauses (2) and (3)  of\nSection\t 7 and, therefore, the agreement which\twas  entered\ninto in 1958 could not be said to be bad in law.\n    On behalf of the respondent it was contended that as the\norder  dated  May  7, 1976 of the Collector  was  after\t the\njudgment  of  the High Court, it could not be said  that  no\nproceedings  were pending under the Act, as the\t last  order\npassed was on July, 7, 1975, that the language of Section  7\nsub-clause (4) was wide enough and even an agreement to sell\nwould  be  affected by the provisions of Section  7,  and  a\ntransfer  under decree could also be void if it was in\tcon-\ntravention  of this Section, that the rights of a  mortgagee\nsurvived  inspire  of an order passed under  Section  24  or\ninspire\t of an order under clause (7) of Section  14  having\nbeen passed, and that though the rights of the mortgagee may\nbe extinguished but so long as the proceedings were  pending\nthey were not completely extinguished.\nAllowing the appeals, this Court,\nHELD: [PER OZA, J]\n    1.\tU.P. Encumbered Estates Act, 1934 was brought in  to\ngive relief to a class of debtors , particularly land  hold-\ners  and  the Act provides for settlement of  debts  without\nfiling of an insolvency petition. Once an application  under\nSection\t 4  is made, the proceedings are said to  have\tcom-\nmenced under the provisions of the Act. [550E]\n    In\tthe instant case, on the day when the agreement\t was\nentered into, an application under Section 4 had been  made,\nthe order under Section 6 had been passed and the provisions\nof  Section 7 were attracted and the limitations put on\t the\npower of the landlord under Section 7\n544\nbecame applicable to the respondent-landlord. [552C-D]\n    A  plain  reading of the provisions\t contained  in\tsub-\nclauses (2) and (3) clearly shows that an agreement to\tsell\nhas  not been included in the restrictions which  have\tbeen\nimposed on the right of debtor. The terms used clearly\tshow\nthat the prohibition pertains to the transfer (where  rights\nin immovable property are transferred.) An agreement to sell\nis  not a transfer of any rights is immovable property\tand,\ntherefore, it could not be held to be bad in law. [552F-H]\n    2.1 Once an order exempting property under Section 24 is\npassed by the Collector, the house and furniture about which\nsuch  an order is made is free from any mortgage  or  charge\nand the mortgage which was in existence before the  proceed-\nings under the Act commenced ceased to be effective.  [554F-\nG]\n    2.2\t Once the claim of a creditor even if he is  secured\nis  determined\tby the Special Judge under Section  14\tsub-\nclause\t(7)  and a money decree passed, the  rights  of\t the\ncreditors,  even if it was under mortgage, come to  an\tend.\n[556D]\n    2.3\t So  long  as the rights of the\t mortgagee  are\t not\nrevived,  they\tcame to an end and in view  of\tSection\t 24,\nsub-clause (7) of Section 14 read with Section 18, the house\nin dispute, at the time when the suit was filed for specific\nperformance of the contract, was free from the\tencumbrances\nand  there was no mortgage or charge against  the  property.\n[556E-F]\n    3. The language of Section 7 is clear enough that it  is\neffective only during the pendency of the proceedings  under\nthe Act. The Order dated 7.5.1976 filed in this Court clear-\nly  goes  to show that no proceedings were pending  and\t the\ncase  had been consigned to the record. There is nothing  to\nindicate  that any proceedings are pending nor any claim  of\nany creditor still remains to be settled. In the absence  of\nany proceedings pending the effect of clause (4) of  Section\n7 will be of no avail, and therefore, a decree for  specific\nperformance could be passed. [557F-H]\n[PER KHALID, J.]\n    It\tcomes with little grace from the respondent to\tcon-\ntend that the agreement to sell, even granting that it would\ncome  within the mischief of Section 7, cannot be  accepted.\nSince the mortgage had been extinguished by its merger\tinto\na decree, the charge under it has disappeared\n545\nand in the proceeding under the Act only a simple decree can\nbe  passed.  A perusal of the order produced in\t this  Court\nshows  that  no\t proceedings are pending under\tthe  Act  at\npresent.  In view of the finality of the matter, it  is\t not\nnecessary  to go into the question of law  regarding  public\npolicy Section 7 contemplates and the authorities bearing on\nit. [546B-D]\n    The respondent has to be compensated in some measure  by\nway of equity. The appellant is, therefore, directed to\t pay\na sum of Rs.20,000 to the respondent. [546E]\n    Mrs.  Chandnee Widya Wati Madden v. Dr. C.L. Katial\t and\nOthers,<\/a>\t [1964] 2 SCR 495; Behram Khurshed Pesikaka  v.\t The\nState  of  Bombay,<\/a> [1955] 1 SCR 613; Basheshar Nath  v.\t The\nCommissioner  of  Income Tax, Delhi & Rajasthan\t &  Another,<\/a>\n[1959]\tSupp. 1 SCR 528; Murlidhar Aggarwal and\t Another  v.\nState of Uttar Pradesh and Another,<\/a> [1974] 2 SCR 472; Lachoo\nMal v. Radhey Shyam,<\/a> [1971] 3 SCR 693 and Raj Narian Jain v.\nFinn Sukha Nand Ram Narain and others, [1980] AIR  Allahabad\n78, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
    CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1331\t And
\n1382 of 1976.\n<\/p>\n
    From   the\tJudgment  and  Order  dated  13.4.1976\t and
\n29.4.1976 of the Allahabad High Court in Civil Second Appeal
\nNo. 49 of 1971 and 362 of 1969.\n<\/p>\n
S.N. Kacker, and C.P. Lal, for the Appellant.
\nT.S. Krishnamurthy Iyer, and R. Bana, for the Respondents.
\nThe Judgment were delivered by,
\n    KHALID,  J.\t I agree with my learned  brother  that\t the
\nappeal has to be allowed. The Act involved in this appeal is
\nan  anachronism today because it was enacted to benefit\t the
\nland-holders and zamindars. On a consideration of the  facts
\nand  circumstances, I feel that equity is in favour  of\t the
\nappellant more than the respondents. The respondents made an
\napplication  to\t the Collector, under Section 4 of  the\t Act
\nwhich was transmitted to the Special Judge, under Section  6
\nof  the\t Act. He exercised his option under Section  24\t and
\nprayed\tfor  exemption\tof the house which  is\tthe  subject
\nmatter of this appeal. This application was allowed as early
\nas  26.3.43.  It  was long thereafter, on  4.5.58,  that  he
\nentered into an agreement to sell the house to the appellant
\nherein.\n<\/p>\n
546<\/span><\/p>\n
Subsequently  he made an application to include\t this  house
\nalso  in the properties to be sold in the proceedings  under
\nthe  Act. The appellant on being informed of this,  objected
\nto  the request. The Collector rejected this request by\t his
\norder dated 23rd June, 1961. From this order it is seen that
\nthere  was an earlier order dated 14.6.45, by which  permis-
\nsion  to sell the house was rejected by the  Deputy  Commis-
\nsioner. There was a mortgage on the property, but before the
\nagreement a decree on the strength of the mortgage had\tbeen
\npassed.\t Under\tthese circumstances, it\t comes\twith  little
\ngrace from the respondents to contend that the agreement  to
\nsell,  even granting that it would come within the  mischief
\nof  Section  7, cannot be accepted. Since the  mortgage\t had
\nbeen  extinguished by its merger into a decree,\t the  charge
\nunder  it was disappeared and in the proceeding,  under\t the
\nAct  only  a simple decree can be passed. What is  more,  an
\norder  produced before us, dated 7.5.76 shows that  no\tpro-
\nceedings  are pending under the Act at present. In  view  of
\nthe finality of the matter, we do not propose to go into the
\nquestions of law regarding public policy, Section 7  contem-
\nplates and the authorities bearing on it.\n<\/p>\n
    Under  these  circumstances, the Judgment  of  the\tHigh
\nCourt,\tin my opinion, is more in accord with fair play\t and
\njustice.  The  appeal has to be allowed as indicated  by  my
\nlearned brother.\n<\/p>\n
    However, I am of the view that the respondent has to  be
\ncompensated  in some measure by way of equity. I direct\t the
\nappellant  to  pay  a sum of Rs.20,000\tto  the\t respondent,
\ntaking\tinto account the fact that the property\t would\thave
\nescalated in price many times by now.\n<\/p>\n
    Since  we  are allowing the main appeal, no\t orders\t ate
\nnecessary in the other appeal.\n<\/p>\n
    OZA,  J. These appeals have been filed  after  obtaining
\nleave of this Court against the judgment passed by the\tHigh
\nCourt of Allahabad, Lucknow Bench in Civil Second Appeal No.
\n49 of 1971 decided on 13th April, 1976.\n<\/p>\n
    The facts necessary for the disposal of this appeal\t are
\nthat the appellant filed a suit for specific performance  of
\nthe  contract  of sale of the house in dispute\tsituated  in
\nPratapgarh  (Uttar Pradesh). The agreement was made  by\t the
\nrespondent  in favour of the appellant on 4th May, 1958\t for
\nsale  of  the  house in dispute\t for  the  consideration  of
\nRs.6,000  within 5 years. Rs. 1500 were paid as the  earnest
\nmoney  by  the appellant to the respondent on  the  date  of
\nagreement. Further a
\n547<\/span>
\nsum  of Rs.2510 was paid on 7.7.58 and on 6.12.59 a  further
\nsum  of\t Rs.  10 was paid. It appears that  this  house\t was
\nearlier mortgaged in favour of Thakur Aditya Prasad Singh by
\nthe predecessors of the respondent. The respondent  Surendra
\nBahadur\t Singh filed an application under Sec.4 of the\tU.P.
\nEncumbered Estates Act (U.P. Act No. XXV of 1934) (‘Act’ for
\nshort)\tto the Collector and Collector had  transmitted\t the
\nsame  to  the Special Judge under Sec.6 of the\tAct.  Subse-
\nquently\t the respondent-debtor had submitted an\t application
\nto the Collector that the disputed house may not be sold  in
\nthe proceedings under the Act and may be exempted as provid-
\ned  in Sec.24 of the Act. On 26.3.43 the Collector in  exer-
\ncise of powers under Sec.24 exempted this house from sale in
\nthe proceedings under the Act and it is thereafter that\t the
\nagreement was entered into. It appears that subsequently the
\ndebtor-respondent again wanted this house to be included  in
\nthe  property for sale in the proceedings under the  Act  to
\nwhich the present appellant objected and this objection\t was
\ndisposed  of by the Collector by his order dated  23rd\tJune
\n1961  reiterating the position that by order  dated  26.3.43
\nthis house has been exempted from the proceedings under this
\nAct  and  therefore that order can not\tbe  re-opened.\tThis
\norder  dated  June 23, 1961 also refers to  an\torder  dated
\n14.6.45\t wherein  permission to sell this  house  which\t was
\nsought by the respondent under Sec.7 of the Act was rejected
\nby  the\t Deputy Commissioner. It appears that  the  mortgage
\nwhich  was  executed by predecessors of the  respondents  in
\nfavour of Aditya Prasad Singh was also considered as a claim
\nunder  Sec. 1 of the Act and ultimately a decree was  passed
\nin favour of Aditya Prasad Singh by the Special Judge  under
\nthe Act. As this decree was passed under clause 7 of Sec. 14
\nin  view  of  Sec. 18 of the Act it only  remained  a  money
\ndecree\tand  the  rights of mortgagee came to  an  end.\t The
\npresent\t appellant  therefore  pressed\tthe  respondent\t for
\nexecution of the sale deed in pursuance of the contract\t and
\nultimately  filed  a suit for specific\tperformance  of\t the
\ncontract  for sale dated 2nd May 1958. Trial  Court  decreed
\nthe suit and on appeal the first Appellate court also  main-
\ntained the decree but on second appeal the High Court on the
\nbasis  of  the provisions contained in the Act came  to\t the
\nconclusion  that  as permission to sell\t was  refused  under
\nSec.7 and in view of the prohibition under Sec.7 of the\t Act
\nthe contract of sale would be hit by Sec.23 of the  Contract
\nAct and in this view of the matter the High Court interfered
\nis  second appeal and set aside the decree passed in  favour
\nof  the appellant. Aggrieved by this the present appeal\t has
\nbeen filed.\n<\/p>\n
    Learned  counsel  for the appellant contended  that\t the
\nscheme\tof the Act indicates that in order to  protect\tland
\nholders of their in-\n<\/p>\n
548<\/span><\/p>\n
debtedness  and consequent insolvency this Act\twas  enacted
\nand  it was provided that whenever the land holder  made  an
\napplication  under  Sec.4 the Collector will pass  an  order
\nunder Sec.6 and send the matter to the Special Judge.  Under
\nthe  scheme of the Act the Special Judge will consider\tvar-
\nious  claims and determine the liability of the debtor.\t But
\nif  these liabilities are determined they all will be  money
\ndecree\tand the earlier fights of creditors will come to  an
\nend.  It  appears thereafter the properties will be  put  to
\nsale and the debtors may be paid on the basis of  priorities
\ni.e. public debts first, then those which were secured debts
\nand  thereafter\t other debts. It was contended that  in\t the
\nscheme\tof this Act Sec.24 provided that the landholder\t may
\nkeep  one  residential house with furniture  and  belongings
\nfree  from all encumbrances which will not be sold in  order
\nto discharge the debts and it was competent for the  Collec-
\ntor when an application has been made under Sec.4, to exempt
\nsuch a house under Sec.24 of the Act.\n<\/p>\n
    It\twas contended that such an application was  made  by
\nthe respondents under Sec.24 on the basis of which by orders
\ndated  26.3.43 the Collector exempted the house\t in  dispute
\nfrom  sale  during the proceedings under this Act  and\tthis
\norder was reiterated on 23.6.61.\n<\/p>\n
    It\twas further contended that although  permission\t was
\nrejected for sale of the house under Sec.7 on 14.6.45 but it
\nwas  contended\tthat the prohibition under  Sec.7  will\t not
\napply  to an agreement for sale. It was also contended\tthat
\nas the proceedings before the Special Judge have come to  an
\nend  the  objection  pertaining to Sec.7 for  passing  of  a
\ndecree\tunder Specific Relief Act for  specific\t performance
\nwill not be available. Learned counsel placed reliance on an
\norder  dated  7.5.76  which was filed in  this\tCourt  which
\nclearly stated that on this date i.e. 7.5.76 no\t proceedings
\nare pending and they are over under Sec.44 of the Act and on
\nthis  basis it was contended that to a decree  for  specific
\nperformance  objection under Sec.7 will not be available  to
\nthe respondents.\n<\/p>\n
    Learned  counsel for the respondents on the\t other\thand
\ncontended  that\t this document which is an  order  from\t the
\ncourt of Collector, Allahabad dated 7.5.76 on which reliance
\nhas been placed by the learned counsel for the appellant has
\nbeen  filed in this Court for the first time and this  order
\nitself\tshows that this was after the judgment of  the\tHigh
\nCourt  as the High Court judgment is dated  13.4.76  whereas
\nthis  order has been obtained which is dated 7.5.76  and  on
\nthis  basis it was contended that it could not be said\tthat
\nno proceedings are
\n549<\/span>
\npending\t under the Act and the last order passed  was  dated
\n7.7.75.\n<\/p>\n
    It\twas also contended that although under Sec.24 it  is
\npossible for a debtor to obtain an order from the  Collector
\nexempting  one house from the proceedings under the Act\t but
\nit was contended that this exemption was nothing but  exemp-
\ntion  from attachment and sale which otherwise would  follow
\nunder the scheme of the Act after the claims are  determined
\nunder Sec. 14. Learned counsel after examining the scheme of
\nthe  Act contended that in fact what is\t contemplated  under
\nSec.24\tis to allow a debtor landholder to have a house\t and
\nfurniture for his residence and use so that he may live in a
\nrespectable  manner. This, as is not disputed. was  in\tfact
\nthe  purpose  of  the Act as indicated by  the\tObjects\t and
\nReasons and it is with that view that Sec.24 was enacted. It
\nwas  contended that if a house was exempted under Sec.24  it
\nwould not be consistent with the scheme of the Act to permit
\nthe debtor landholder to seek an exemption under Sec.24\t and
\nthen sell away the house and pocket the money to defeat\t the
\ncreditors.  It\twas therefore contended that  is  why  Sec.7
\nprovides that no property could be sold except with  permis-
\nsion  under  Sec.7. It was contended that  the\tlanguage  of
\nSec.7 sub-clause (4) is wide enough and even an agreement to
\nsell  which  creates rights in immovable  property  will  be
\naffected by the provisions of Sec.7.\n<\/p>\n
    Learned  counsel by reference to the various  provisions
\nand  especially to the provisions contained in\tSections  43
\nand  44 contended that even when the proceedings under\tthis
\nAct are quashed or an application is dismissed the rights of
\nthe creditors are revived. According to the learned counsel,
\nit  could not be said that the proceedings have come  to  an
\nend and in this view of the matter it was contended that the
\nHigh  Court  was right in allowing the\tappeal\tand  setting
\naside the decree passed.\n<\/p>\n
    Learned  counsel  appearing for  the  appellant  further
\ncontended  that\t although the order from the  Collector\t has
\nbeen  filed in this Court but is was filed long ago  and  if
\nthe  respondents wanted to challenge they could\t have  filed
\nany other order from the Collector. As regards the  argument
\nthat  under  Sec.24 a house can be exempted for use  of\t the
\ndebtor\tlandholder  and\t it could not be just  a  device  to
\nobtain exemption, sell the property and pocket the amount to
\nthe  detriment\tof the creditors but it was  contended\tthat
\nunder  these circumstances if the debts remain to be  satis-
\nfied  still  the sale proceeds can be kept  in\tdeposit\t for
\nbeing  distributed to the creditors. On this basis it  could
\nnot  be said that a decree for specific performance can\t not
\nbe passed.\n<\/p>\n
550<\/span><\/p>\n
Learned\t counsel alternatively contended that even if it  is
\nin  dispute as to whether the proceedings under the Act\t are
\nstill  pending\twhen the provisions contained in  Sec.7\t are
\nattracted  the\tdecree\tfor specific  performance  could  be
\npassed subject to a permission under Sec.7. Learned  counsel
\nfor  the appellant placed reliance on the decision  of\tthis
\nCourt in Mrs. Chandnee Widya Wati Madden v. Dr. C.L.  Katial
\nand  Others.,<\/a>  [1964]  2 SCR 495. Learned  counsel  for\t the
\nrespondents however placed reliance on the decisions of this
\nCourt  in Behram Khurshed Pesikaka v. The State\t of  Bombay,<\/a>
\n[1955]\t1  SCR 613; Bhasheshar Nath v. The  Commissioner  of
\nIncome Tax, Delhi & Rajasthan & Another, [1959] Supp. 1\t SCR
\n528;  Murlidhar Aggarwal and Another v. State of Uttar\tPra-
\ndesh  and  Another, [1974] 2 SCC 472, Lochoo Mal  v.  Radhey
\nShyam,<\/a> [1971] 3 SCR 693 and also on Ral Nation Jain v.\tFirm
\nSukha Nand Ram Norgin and others., [1980] AIR Allahabad\t 78.
\nFacts are not in dispute. It is also not disputed that\tU.P.
\nEncumbered Estates Act 1934 was brought in to give relief to
\na  class  of debtors particularly landholders  and  the\t Act
\nprovide for a scheme for settlement of debts without  filing
\nof  an insolvency petition. The authorities referred  to  by
\nlearned\t counsel  do not throw any light  on  the  questions
\ninvolved.\n<\/p>\n
    Sec.4 of this Act provides for making of an\t application
\nto  attract the provisions of this Act and once an  applica-
\ntion under this Section is made, the proceedings are said to
\nhave  commenced\t under\tthe provisions of  this\t Act.  Sec.6
\nprovides  for  passing of an order and transmission  of\t the
\napplication  to\t the Special Judge who\thas  been  conferred
\njurisdiction under this Act to proceed with the proceedings.
\nSec.7 of this Act provides:\n<\/p>\n
\t      “When the Collector has passed an order  under
\n\t      Section  6  the  following  consequence  shall
\n\t      ensue:\n<\/p><\/blockquote>\n
\t      (a) all proceedings pending at the date of the
\n\t      said  order in any civil or revenue  court  in
\n\t      Uttar  Pradesh  in respect of  any  public  or
\n\t      private debt to which the landlord is subject,
\n\t      or with which his immovable property is encum-
\n\t      bered,  except an appeal, review\tor  revision
\n\t      against  a decree or order, shall\t be  stayed,
\n\t      all attachments and other execution  processes
\n\t      issued by any such court and then in force  in
\n\t      respect of any such debt shall become null and
\n\t      void, and no fresh process in execution shall,
\n\t      except as hereinafter provided, be issued;\n<\/p><\/blockquote>\n
\t      551<\/span><\/p>\n
\t      (b)  no fresh suit or other proceedings  other
\n\t      than  an appeal, review or revision against  a
\n\t      decree  of order, or a process  for  ejectment
\n\t      for arrears of rent shall, except as hereinaf-
\n\t      ter  provided, be instituted in any  civil  or
\n\t      revenue  court in Uttar Pradesh in respect  of
\n\t      any  debts incurred before the passing of\t the
\n\t      said  order but if for any  reason  whatsoever
\n\t      such a suit or proceeding has been instituted,
\n\t      it shall be deemed to be a proceeding  pending
\n\t      at  the  date  of the said  order\t within\t the
\n\t      meaning of clause (a).\n<\/p><\/blockquote>\n
\t\t  Provided that when a landlord has executed
\n\t      a\t usufructuary mortgage in respect of any  of
\n\t      his land and is in possession of that land  as
\n\t      a thekadar of the mortgagee, no fresh  process
\n\t      shall  issue for his ejectment from that\tland
\n\t      for arrears of the theka rent.\n<\/p><\/blockquote>\n
\t\t  (2)  After the passing of the\t said  order
\n\t      and until the application is dismissed by\t the
\n\t      Special Judge under subsection (3) of  Section
\n\t      8 proceedings under this Act are quashed under
\n\t      Section  20 or until the Collector has  liqui-
\n\t      dated  the  debt under Chapter  V,  no  decree
\n\t      obtained\ton  the basis of  any  private\tdebt
\n\t      incurred by the landlord after the passing  of
\n\t      the  order under Section 6 shall\tbe  executed
\n\t      against  any of his property, other than\tpro-
\n\t      prietary\trights in land, which has been\tmen-
\n\t      tioned in the notice under Section 11 and\t the
\n\t      landlord\tshall not be competent\twithout\t the
\n\t      sanction of the Collector to make an exchange,
\n\t      or gift or, or to sell, mortgage or lease, any
\n\t      of that property.\n<\/p><\/blockquote>\n
\t\t  (3)  After the passing of the order  under
\n\t      Section 6 and until the Collector has declared
\n\t      in  accordance with Section 44 that the  land-
\n\t      lord  has\t ceased to be subject to  the  disa-
\n\t      bilities\tof  this sub-section  or  until\t the
\n\t      passing  of  the order by the  Special  Judge,
\n\t      referred to in sub-section (2) of Section\t 44,
\n\t      no decree obtained on the basis of any private
\n\t      debt  incurred after the passing of the  order
\n\t      under Section 6 shall be executed against\t any
\n\t      of  the landlord’s proprietary rights  in\t the
\n\t      land  mentioned in the notice published  under
\n\t      Section  11  and\tthe landlord  shall  not  be
\n\t      competent, without the sanction of the Collec-
\n\t      tor,  to make any exchange or gift or,  or  to
\n\t      sell,  mortgage  or  lease  those\t proprietary
\n\t      fights, or any portion of them.<\/p><\/blockquote>\n
552<\/span><\/p>\n
\t  (4)  Any  transfer made in  contravention  of\t the
\nprovisions of this section shall be void.”
\nMuch  of the controversy in the present matter\tpertains  to
\nthe  effect of Sec.7. Sub-clause (1) of this  Section  indi-
\ncates the consequences that will follow when an order  under
\nSec.6  has  been  passed by the\t Collector.  sub-clause\t (2)
\nspeaks of restrictions on the landlord about exchange, gift,
\nsale, mortgage or lease of any of the properties without the
\nsanction  of the Collector. It is not in dispute that  after
\nan  application\t under Sec.4 was filed\tby  the\t respondent-
\ndebtor when an application under Sec.24 was filed for exemp-
\ntion  in respect of the house in dispute and the  order\t was
\npassed\ton 26.3.1943. It is therefore plain that on the\t day
\ni.e. 4.5.58 when the agreement was entered into an  applica-
\ntion  under Sec.4 had been made and the order had been\tmade
\nunder Sec.6 and it is not disputed that on the day on  which
\nthe agreement was made the provisions of Sec.7 were attract-
\ned  and\t the limitations put on the power  of  the  landlord
\nunder  Sec.7 were applicable to the  respondent-landlord  in
\nthis  case.  Sub-clauses 2 and 3 of the Sec.7  provided\t for
\nrestrictions  put on the power of the landlord and  the\t re-
\nstriction is in respect of exchange, gift, sale, mortgage or
\nlease.\tIt  is clear that the restrictions  pertain  to\t ex-
\nchange, gift, sale, mortgage and lease and it was  contended
\nby learned counsel for the appellant that agreement to\tsell
\nis  not covered by any one of these restrictions and  there-
\nfore the agreement which was entered into in 1958 could\t not
\nbe  said to be bad in law as the High Court appears to\thave
\nheld whereas an attempt was made by learned counsel for\t the
\nrespondents to contend that as the agreement to sell creates
\nsome rights in immovable property it will be covered  within
\nthe language of sub-clauses (2) and (3).\n<\/p>\n
    It is not disputed that at the time when this  agreement
\nwas entered into the proceedings under this Act were pending
\nand  the provisions of Sec.7 are attracted. A plain  reading
\nof  the provisions contained in sub-clauses 2 and 3  clearly
\ngo  to show that agreement to sell has not been included  in
\nthe  restrictions  which have been imposed on the  right  of
\ndebtor. The terms used clearly go to show that the  prohibi-
\ntion is pertaining to the transfer (where fights in  immova-
\nble  property are transferred). Admittedly an  agreement  to
\nsell  is not a transfer of any rights in immovable  property
\nand  therefore the agreement could not be held to be bad  in
\nlaw.\n<\/p>\n
.lm13
\n\t    Sec.24 of this Act provides:\n<\/p>\n
\t    “The  Collector shall then realise the value  of
\n\t    such of the
\n\t    553<\/span>
\n\t    debtor’s property, other than proprietary fights
\n\t    in\tland,  but including proprietary  rights  in
\n\t    land in the areas which on the 7th day of  July,
\n\t    1949,  were\t included  in a\t Municipality  or  a
\n\t    Notified  Area under the provisions of the\tU.P.
\n\t    Municipalities Act, 1916, or a cantonment  under
\n\t    the provisions of the Cantonment Act, 1924, or a
\n\t    Town Area under the provisions of the U.P.\tTown
\n\t    Area  Act, 1914, as shall have been reported  by
\n\t    the\t Special Judge under the provisions of\tsub-
\n\t    section  (2) of Section 19 to be liable  to\t at-
\n\t    tachment or sale:\n<\/p>\n
\t\tProvided  that the Collector before  passing
\n\t    orders  under  this section of the sale  of\t any
\n\t    property  shall  hear any  objection  which\t the
\n\t    debtor  may\t have to make to the  sale  of\tthat
\n\t    property.\n<\/p>\n
\t\tProvided  also notwithstanding\tanything  in
\n\t    any\t other\tsection of this Act,  the  Collector
\n\t    may,  if he considers fit, sell, along with\t any
\n\t    building  disposed\tof under this  Section,\t the
\n\t    proprietary rights of the applicant in any\tland
\n\t    occupied by such building or appurtenant  there-
\n\t    to:\n<\/p>\n
\t\tProvided  further that the  Collector  shall
\n\t    leave the debtor at least one residential  house
\n\t    and necessary furniture thereof if–\n<\/p>\n
\t    (a) the debtor owns such house and furniture and
\n\t    desires to retain it, and\n<\/p>\n
\t    (b)\t such house and furniture is free  from\t any
\n\t    mortgage or charge.\n<\/p>\n
\t    (2) The amount so realized shall be expended  by
\n\t    the Collector in discharging the debts in  order
\n\t    of priority.\n<\/p>\n
\t    (3) For the purpose of execution against proper-
\n\t    ty\toutside\t the  (Uttar  Pradesh)\tthe  decrees
\n\t    passed  by the Special Judge shall be deemed  to
\n\t    be decrees in favour of the Collector.\n<\/p>\n
\t    (4)\t For  realising the value  of  the  debtor’s
\n\t    property under
\n\t    this section the Collector may excercise all the
\n\t    powers of a
\n\t    civil court for the execution of a decree.”\n<\/p>\n
554<\/span><\/p>\n
The  proviso  to this Section with sub-clauses (a)  and\t (b)
\nclearly indicates that Collector has the authority to exempt
\none residential house and necessary furniture and the exemp-
\ntion  for  such a house and furniture once granted  will  be
\nfree from any mortgage or charge.\n<\/p>\n
    Much emphasis was laid on the terms of the order  passed
\nby  the Collector on June 23, 1961 wherein it  was  observed
\nthat “house in question should remain exempted from  attach-
\nment  and sale” and it was contended by the learned  counsel
\nfor the respondents that this exemption only pertains to its
\nexemption from attachment and sale. The original order dated
\n26th March 1943 only talks of the house and personal effects
\nto  be excluded. We have no hesitation in saying that it  is
\nnot  the  language of the order which is  material  but\t the
\nlanguage of the provision under which the order was made  as
\nit is not disputed that an order under Sec.24 exempting\t the
\nhouse  in  dispute was passed on 26th March 1943  which\t was
\nonly  reiterated  in the order dated 23rd June 1961.  It  is
\ntherefore clear that once this order is passed the house  in
\nquestion was free from any mortgage or charge.
\n    It was contended by the learned counsel for the respond-
\nents  that the scheme of the Act dearly show that  what\t was
\nprovided  in  sec.24 was only with a purpose  to  allow\t the
\ndebtor to have a residential house with necessary  furniture
\nto  permit him to have a respectable living but it  did\t not
\nmean  that  the\t debtor was at liberty\tto  sell  away\tthis
\nproperty and pocket the money to defeat the creditors and on
\nthis  basis an attempt was made to contend that\t during\t the
\npendency  of the proceedings the fights of a mortgagee\tsur-
\nvived in spite of an order passed under Sec.24 or inspite of
\nan order under clause 7 of Sec. 14 having been passed.
\n    So\tfar  as Sec.24 is concerned and the  effect  of\t the
\norder under this Section is concerned it is clear that\tonce
\nan  order  exempting the property under\t this  provision  is
\npassed by Collector the house and furniture about which such
\nan  order  is made is free from any mortgage or\t charge\t and
\ntherefore  it  leaves no doubt that after  the\torder  under
\nSec.24\thaving\tbeen  passed in the  present  case  i.e.  on
\n26.3.43\t the  mortgage\twhich was in  existence\t before\t the
\nproceedings under this Act commenced ceased to be  effective
\nand this property was free from any . mortgage or charge.
\n    Sec. 14 clause 7 provides for determination of debts: It
\nreads as under:\n<\/p>\n
555<\/span><\/p>\n
\t      “(7) If the Special Judge finds that–\n<\/p><\/blockquote>\n
\t      (a) no amount is due, he may pass a decree for
\n\t      cost in favour of the landlord;\n<\/p><\/blockquote>\n
\t      (b)  an  amount  is due  to  the\tclaimant  he
\n\t      shall–\n<\/p><\/blockquote>\n
\t      (i) pass a simple money decree, having  regard
\n\t      also  to\tthe provisions of Section 3  of\t the
\n\t      U.P. Zamindars’ Debt Reduction Act, 1952,\t for
\n\t      such  amount together with any costs which  he
\n\t      may allow in respect of the proceedings in his
\n\t      court  and of proceedings in any court  stayed
\n\t      under the provisions of the Act together\twith
\n\t      pendente\tlite and further interest at a\trate
\n\t      not higher than 4-1\/4 per cent per annum; and\n<\/p><\/blockquote>\n
\t      (ii) also certify the amount, if any, of\tsuch
\n\t      decree  which, in accordance with\t the  provi-
\n\t      sions of Section 8 of the U.P. Zamindars’ Debt
\n\t      Reduction Act, 1952, is not legally  recovera-
\n\t      ble otherwise than out of the compensation and
\n\t      rehabilitation grant payable to the landlord:
\n\t\t\t  Provided  that  no  pendente\tlite
\n\t      interest\tshall be allowed in the case of\t any
\n\t      debt  where the creditor was in possession  of
\n\t      any  portion of the debtor’s property in\tlieu
\n\t      of  interest  payable  on such  debt  for\t the
\n\t      period he was so in possession.”\n<\/p><\/blockquote>\n
Sub-clause  (b) of this clause 7 clearly provides  that\t the
\namount\twhich  is found to be due to the claimant,  a  money
\ndecree\tshall be passed and what will be the effect of\tthis
\nmoney  decree having been passed under sub-clause 7 of\tSec.
\n14 has been provided in Sec. 18. Sec. 18 reads:\n<\/p>\n
\t      “Subject\tto the fight of appeal\tor  revision
\n\t      conferred\t in  Chapter  VI, the  effect  of  a
\n\t      decree of the Special Judge under\t sub-section
\n\t      (7)  of Section 14 shall be to extinguish\t the
\n\t      previously  existing  fights, if any,  of\t the
\n\t      claimant, together with all rights, if any, of
\n\t      mortgage or lien by which the same are secured
\n\t      and, where any decree is given by the  Special
\n\t      Judge  to substitute for those fights a  fight
\n\t      to  recover  the amount of the decree  in\t the
\n\t      manner  and  to the  extent  hereinafter\tpre-
\n\t      scribed:\n<\/p><\/blockquote>\n
\t      556<\/span><\/p>\n
\t\t\tProvided that secured debts,  which,
\n\t      in accordance with the provisions of Section 8
\n\t      of  the U.P. Zamindars’ Debts  Reduction\tAct,
\n\t      1952,  are not legally  recoverable  otherwise
\n\t      than  out of the compensation and\t rehabilita-
\n\t      tion  grant payable to the landlord  shall  be
\n\t      recoverable from the compensation and rehabil-
\n\t      itation grant aforesaid as though the security
\n\t      had not been extinguished.”<\/p><\/blockquote>\n
    Sub-clause\t7 of Sec. 14 uses the phrase “pass a  simple
\nmoney  decree” and in our opinion this\tterminology  “simple
\nmoney  decree” has been used with some significance  and  if
\nany  doubt is left it has further been cleared by  providing
\nSec. 18. This provision clearly indicates that once a decree
\nhas  been  passed by the Special Judge under sub-Sec.  7  of
\nSec. 14 the effect of it will be to extinguish the previous-
\nly existing fights in any of the claims or mortgage and\t the
\ndecree passed by the Special Judge will substitute all those
\nfights.\t It  is\t therefore clear that once the\tclaim  of  a
\ncreditor even if he is secured is determined by the  Special
\nJudge  under  Sec.  14 sub-clause 7 and a  money  decree  is
\npassed\tthe  ‘rights of the creditors even if it  was  under
\nmortgage  come\tto  an end although the scheme\tof  the\t Act
\nindicates that such debts which are secured may get priority
\nover  the debts which were not secured and on the  basis  of
\nthese  provisions and the provisions contained in Sec.44  an
\nattempt\t was made by learned counsel for the respondents  to
\ncontend\t that  although the rights of the mortgagee  may  be
\nextinguished  but  so long as the proceedings  are  pendings
\nthey  are  not completely extinguished as in  the  event  of
\nquashing of the proceedings the scheme of the Act  indicates
\na  revival of such rights. But it could not be doubted\tthat
\nso  long as they are not revived they come to an end and  we
\nhave  no hesitation in view of Sec.24, sub-clause 7 of\tSec.
\n14 read with Sec. 18 that this house in dispute at the\ttime
\nwhen  the  suit was filed for specific\tperformance  of\t the
\ncontract  was  free from all encumbrances and there  was  no
\nmortgage or charge against this property.
\n    It is therefore clear that what learned counsel for\t the
\nrespondents  contended on the basis of provisions  contained
\nin  Sections 43 and 44 only is that in cases where  proceed-
\nings are quashed under Sec.20 the rights of the creditors if
\nthey  were of a mortgagee may revive and the time  spent  in
\nthese  proceedings may be exempted but it is  nobody’s\tcase
\nthat  the  proceedings have been quashed  under\t Sec.20\t and
\nadmittedly  the\t respondent during these proceedings  at  no
\ntime  has not raised a plea that the proceedings  have\tbeen
\nquashed\t under\tSec.20. On the contrary the order  that\t has
\nbeen put on record by the learned counsel for the  appellant
\nclearly goes to show that the pro-\n<\/p>\n
557<\/span><\/p>\n
ceedings  have\tbeen  concluded and  therefore\tquestion  of
\nrevival does not arise.\n<\/p>\n
    Learned counsel for the respondents vehemently contended
\nthat the scheme of the Act does not mean that when the house
\nwhich  has been exempted only for the purposes of living  of
\nthe  debtor, could not be sold away and money  pocketed\t de-
\nfeating\t the claims of the creditors. Even if this  argument
\nis accepted it does not carry the matter further except that
\nif  any\t claim\tis still remaining to be  settled  the\tsale
\nproceeds  which\t the respondent-debtor will get out  of\t the
\ndecree\tfor  specific performance could be  kept  apart\t for
\ndistribution to the creditors.\n<\/p>\n
    It was also contended that sub-clause 4 of Sec.7  quoted
\nabove clearly provides that any transfer in contravention of
\nprovisions of this Section will be void and therefore even a
\ntransfer under a decree would be void if it is in contraven-
\ntion of the provisions of Sec.7 whereas learned counsel\t for
\nthe  appellant frankly conceded that although as  the  order
\ndated  7.5.76 discloses that the proceedings are over  under
\nthis  Act and therefore effect of Sec.7 has come to  an\t end
\nand  a\tdecree for specific performance for  sale  could  be
\npassed\twithout\t any objection under Sec.7 but even  if\t the
\nproceedings  are pending, the decree could be subject  to  a
\npermission  from the Collector under Sec.7. Although it\t was
\nvehemently contend by the counsel for the appellant that  if
\nthe  respondent wanted to challenge the order  dated  7.5.76
\nwhich  was  filed  by the appellant in\tthis  Court  clearly
\nindicating that the proceedings are over under Sec.44 of the
\nAct and it was open to them to file any further order  indi-
\ncating that the proceedings are still pending and as no such
\norder has been filed it has to be accepted that the proceed-
\nings  are over and the limitation put on transfer  by  Sec.7
\nhas ceased to be effective.\n<\/p>\n
    The\t language of Sec.7 as quoted above is  clear  enough
\nthat  this  is\teffective only during the  pendency  of\t the
\nproceedings under this Act and the order dated 7.5.76  filed
\nby the appellant in this Court clearly goes to show that  no
\nproceedings  are pending and the case has been consigned  to
\nthe  record. There is nothing to indicate that any  proceed-
\nings are pending nor anything to indicate that any claim  of
\nany  creditor still remains to be satisfied. In the  absence
\nof  any proceedings pending the effect of clause 4 of  Sec.7
\nwill  be of no avail. In our opinion therefore a decree\t for
\nspecific performance could be passed. The High Court  there-
\nfore  was in error in allowing the appeal and setting  aside
\nthe judgment and decree passed by the learned courts  below.
\nIt is no
\n558<\/span>
\ndoubt open to the respondent to approach the executing court
\nto  retain  the sale proceeds if they are in a\tposition  to
\nsatisfy the court that any part of the claim still remain to
\nbe satisfied. The appeal is therefore allowed, the  judgment
\nand  decree. passed by the High Court is set aside.  Instead
\nthe  decree passed by the trial court and maintained by\t the
\nAppellate  court  is restored. In the circumstances  of\t the
\ncase, parties are directed to bear their own costs.\n<\/p>\n
N.P.V.\t\t\t\t\t\t      Appeal\nallowed.\n559<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Gaya Prasad vs Surendra Bahadur Singh, (Dead) By … on 5 March, 1987 Equivalent citations: 1987 AIR 925, 1987 SCR (2) 542 Author: V Khalid Bench: Khalid, V. (J) PETITIONER: GAYA PRASAD Vs. RESPONDENT: SURENDRA BAHADUR SINGH, (DEAD) BY L.RS. & ORS. DATE OF JUDGMENT05\/03\/1987 BENCH: KHALID, V. (J) BENCH: KHALID, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-139348","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nGaya Prasad vs Surendra Bahadur Singh, (Dead) By ... on 5 March, 1987 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/gaya-prasad-vs-surendra-bahadur-singh-dead-by-on-5-march-1987\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Gaya Prasad vs Surendra Bahadur Singh, (Dead) By ... on 5 March, 1987 - 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