Additional Collector, Banares vs Maharaj Kishore Khanna

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 298 of 1955

Decision Date: 16 March 1959

Coram: SARKAR, J.

In this case the petitioner was the Additional Collector of Banaras and the respondent was Maharaj Kishore Khanna, who owned landed property in Banaras, Uttar Pradesh, and in Purnea, Bihar. The respondent was deeply indebted and, invoking section 4 of the Uttar Pradesh Encumbered Estates Act of 1934, appealed to the Collector of Banaras for the liquidation of his debts. Acting under section 6 of that Act, the Collector referred the application to the Special Judge appointed under the Act. After conducting the enquiry required by the statute, the Special Judge, on 21 March 1940, issued three money decrees in favour of three of the respondent’s creditors and forwarded those decrees to the Collector for execution. Section 14(7) of the Encumbered Estates Act declared that such decrees were to be regarded as decrees of a civil court of competent jurisdiction, while section 24(3) provided that, for the purpose of executing the decrees against property situated outside Uttar Pradesh, the decrees were to be deemed to be in favour of the Collector. Execution of the decrees was therefore begun by the Additional Collector of Banaras against the respondent’s assets located within Uttar Pradesh. Subsequently the Additional Collector applied to the Additional Civil Judge of Banaras, and on 4 January 1947 secured the transfer of the three decrees to the Subordinate Judge of Purnea. On 17 March 1947 the Additional Collector then applied to the Subordinate Judge for the attachment and sale of the respondent’s properties situated at Purnea. The Subordinate Judge issued an order directing that the execution process be commenced. However, on appeal the Patna High Court set aside that order on the ground that the Subordinate Judge did not possess jurisdiction to entertain the execution application. The Supreme Court held that the Subordinate Judge of Purnea did in fact have jurisdiction to execute the decrees. By virtue of section 14(7) the decree of the Special Judge, although passed in Uttar Pradesh, functioned for all purposes of the Code of Civil Procedure and could lawfully be transferred under section 39 of the Code to a court outside Uttar Pradesh for execution. No question of extra‑territorial operation of the Act arose because the Purnea court was merely applying the Uttar Pradesh Act to decrees that had been passed within Uttar Pradesh. For the purposes of execution and sale, the Additional Collector was to be deemed to be the Collector, since he exercised the powers of the Collector in this context. Consequently, the applications for transfer and for execution of the decrees were properly made by the Additional Collector. The Court also observed that the order of transfer made by the Additional Civil Judge could be treated as having been made by the Special Judge, as it was issued by the same court that had passed the original decrees, and therefore was a valid order under section 39 of the Code. The application for execution before the Subordinate Judge of Purnea was filed while execution proceedings regarding the same decrees were ongoing before the Additional Collector of Banaras, and was therefore a continuation of the same proceeding, precluding any question of limitation.

In the case before the Court, it was observed that the court which had issued the original decree had exercised the authority of the Additional Civil Judge as well as that of the Special Judge. Consequently, the order transferring the decree, which had been made by the Additional Civil Judge, could legally be regarded as having been made by the Special Judge. Because the same court that had rendered the original decrees also made the transfer order, the transfer complied with the requirements of Section 39 of the Code of Civil Procedure and was therefore a valid order. An application for execution was subsequently filed before the Subordinate Judge at Purnea while execution proceedings concerning the same decrees were already pending before the Additional Collector at Banaras. The Court noted that the application before the Subordinate Judge was merely a continuation of the execution proceedings already in progress and that no limitation bar could arise against such an application. The judgment of the appellate court therefore proceeded to consider the appeal, which was styled Civil Appeal No 298 of 1955 and was filed against the judgment and order dated 28 April 1953 of the Patna High Court. That High Court order itself had arisen from Original Order No 90 of 1949, which in turn stemmed from the judgment and order dated 25 January 1949 of the Sub‑Judge at Purnea in Miscellaneous Case No 54 of 1947. The appellant was represented by counsel, while the respondent was defended by the Attorney‑General for India and his counsel. The appeal was heard on 16 March 1959, and the opinion was delivered by Justice Sarkar. The Court clarified that the appeal concerned the execution of a decree issued under the United Provinces Encumbered Estates Act, 1934 (U.P. XXV of 1934), a statute enacted by the United Provinces legislature, now Uttar Pradesh. The principal issues in the appeal depended upon the interpretation of several provisions of that Act. The Act was designed to provide relief to owners of certain landed estates in the United Provinces. Under Section 4, a landowner could submit a written application to the District Collector stating the amount of his debts and requesting the relief of the Act. Upon receipt, the Collector was required by Section 6 to forward the application to a Special Judge appointed under the Act; Section 3 defined a Special Judge as any civil judicial officer appointed for a local area, vested with the powers and duties conferred by the Act. Section 7 stipulated that once the Collector issued an order under Section 6, all pending proceedings in any court of the United Provinces concerning a debt claimed by the applicant would be stayed, any execution processes issued against the applicant would become null and void, and no new execution processes, suits, or other proceedings could be instituted against him, subject to certain exceptions that need not be enumerated here. After receiving the application forwarded by the Collector, the Special Judge, in accordance with Section 8, was required to call upon the applicant to file a verified written statement setting out full particulars of his debts, the names and addresses of his creditors, and the nature and extent of his proprietary rights in land, as well as any properties liable to attachment under Section 60 of the Code of Civil Procedure.

In the procedure before the Special Judge, the applicant was first directed to file a written statement that had to be verified in the same manner as a plaint. That statement was required to set out a complete account of all debts owed by the applicant, to give the names and addresses of each creditor, and to describe in detail the nature and extent of the applicant’s proprietary rights in land. In addition, the statement had to disclose every other property of the applicant that could be subject to attachment under section 60 of the Code of Civil Procedure. After receiving the applicant’s statement, section 9 mandated that the Special Judge publish a notice calling upon any persons who claimed a right against the applicant to present their claims within a time fixed by the notice. Section 10 then required each claimant to provide full particulars of the claim as well as particulars of the applicant’s properties that were relevant to the claim. Under section 11 the Special Judge was further obliged to issue another notice that specified the properties which the applicant had identified as his own. That notice informed any person who wished to assert a claim over any of those properties that such a claim had to be filed within a further prescribed period. Section 11 also conferred on the Special Judge the authority to determine the claims made against the identified properties, and it declared that any decision made by the Special Judge would be deemed to be a decree of a civil court of competent jurisdiction. Section 14 directed the Special Judge to examine the claims that the creditors had submitted against the applicant and to resolve the issues in the same manner as a regular court would, applying the usual principles of law. The Special Judge also possessed the power to reduce the interest due and to grant relief to the applicant under certain specified Acts of the United Provinces. Sub‑section (7) of section 14 provided that, if after inquiry the Special Judge found that any amount was due to a claimant, he was to pass a simple money decree for that amount, together with costs and interest, and that such decree would be treated as a decree of a civil court of competent jurisdiction. However, that decree could not be executed within the United Provinces except in accordance with the provisions of the Act. Section 19 required the Special Judge to forward the decrees that were granted under section 14(7) to the Collector for execution, following the procedures set out in Chapter V of the Act, and to inform the Collector of the nature and extent of the property that the Judge had determined to be liable for satisfying the applicant’s debts. Chapter V then dealt with execution. Its provisions stipulated that the Collector, without needing any application from any party, would proceed to execute the decree against the applicant’s properties located within the United Provinces by the various methods prescribed, and that, for the purpose of realizing the value of those properties, the Collector would enjoy all the powers of a civil court in executing a decree. The Act made no provision for execution against the applicant’s properties situated outside the United Provinces.

For cases involving property situated outside the United Provinces, section 24(3) of the Act stipulated that the decrees issued by the Special Judge would be treated as decrees in favour of the Collector for the purpose of execution. These provisions constituted the entirety of the statutory framework relevant to the matter before the Court. The factual background was as follows. The respondent owned landed properties within the United Provinces and therefore possessed a right to seek relief under the Act. Over time he became heavily indebted. In 1926 and 1927 he executed several substantial mortgages over his properties in favour of the Allahabad Bank, the Banaras Bank and an individual named Kalia. In 1929 the Banaras Bank instituted a suit before the Court of the Additional Sub‑Judge at Banaras, United Provinces, to enforce its mortgage, naming the other creditors as parties to the suit. That suit culminated in a decree that assigned priority among the creditors in a particular sequence. Dissatisfied with the priority order, the Allahabad Bank appealed to the Allahabad High Court, which ultimately granted the bank’s relief. While that appeal was pending, the respondent applied to the Collector of Banaras for relief under the Act. The procedural steps prescribed by the Act were observed, and on 21 March 1940 the Special Judge of Banaras, to whom the Collector had referred the application, rendered three monetary decrees in favour of the three creditors, arranging them in a certain order of priority, the details of which are not material to the present dispute. The aggregate amount of the decrees approximated nine lakh rupees. The Special Judge then forwarded the decrees to the Collector of Banaras for execution, as required by the statute. Execution of the decrees commenced thereafter, carried out by the Additional Collector of Banaras under the Act, against the respondent’s properties located within the United Provinces. The respondent also possessed an estate in the district of Purnea, Bihar, known as the Semapur estate. Under section 24(3), the decrees of the Special Judge were deemed to be decrees in favour of the Collector for the purpose of executing against the Semapur estate. Consequently, the Additional Collector of Banaras petitioned the Additional Civil Judge of Banaras for the transmission of those decrees to the Court of the Subordinate Judge at Purnea for execution. The Additional Civil Judge issued an order on 4 January 1947 directing such transmission. Subsequently, on 17 March 1947, the Additional Collector of Banaras applied to the Subordinate Judge of Purnea, now the receiving court, seeking execution of the decrees by means of attachment and sale of the Semapur estate. The Subordinate Judge then issued an order directing that execution proceed as requested.

The Subordinate Judge of Purnea issued an order directing that execution of the decree be carried out as requested. The respondent challenged this order by filing an appeal in the Patna High Court, and the High Court allowed the appeal, resulting in the failure of execution against the Semapur estate. Consequently, the Additional Collector of Banaras appealed the High Court’s order. The primary issue before the appellate court was whether the Subordinate Judge of Purnea possessed jurisdiction to order execution of the decree that had been transferred to him. The High Court had concluded that the Subordinate Judge lacked such jurisdiction. The reasoning presented explained that the decree in question was not a decree under the Code of Civil Procedure; it was treated as a decree under the Code only because of section fourteen, clause seven, of the United Provinces Act. The United Provinces Act was legislation enacted by the legislature of the United Provinces and, therefore, could not produce legal effects outside the territorial limits of the United Provinces. Accordingly, the operation of section fourteen, clause seven, had to be confined within the borders of the United Provinces. Because the Subordinate Judge sat in Bihar, he could not apply that section to treat the decree as a decree under the Code, and without such classification he could not order its execution. The argument advanced was that permitting the Subordinate Judge to apply the United Provinces Act would amount to an indirect extra‑territorial effect of a United Provinces statute on property situated outside the United Provinces, something the law does not permit. The Court found this argument to be erroneous. It held that no question of extra‑territorial application of the United Provinces Act, either directly or indirectly, arose. By virtue of section fourteen, clause seven, a decree of the Special Judge issued under the United Provinces Act was, for all purposes of the Code, a decree within the United Provinces. Consequently, such a decree could be transferred under section thirty‑nine of the Code of Civil Procedure to a court outside the United Provinces for execution. When a decree is transferred, the receiving court bears the duty to execute it using the methods provided by the Code. However, the receiving court must first be satisfied that the decree qualifies as a decree under the Code before it may order execution under that Code. The Court explained that the receiving court must assess a decree originally passed by another court and determine whether, for its own purposes, the decree is one that would be considered a decree under the Code. To reach that conclusion, the receiving court must apply the United Provinces Act to the decree that originated within the United Provinces. The Court then asked how it could be said that such an application of the United Provinces Act resulted in an extra‑territorial operation.

In this case, the Court explained that applying the United Provinces Act to a decree that originated within the United Provinces does not constitute an extra‑territorial operation. The Court observed that the act of applying a statute of the United Provinces to a matter that occurred within the territorial limits of those provinces is simply the normal exercise of the legislative competence of that Province. Although a court situated outside the United Provinces may be called upon to apply that provincial statute, such application does not transform the statute into one having extra‑territorial effect. The Court further stated that when the statute is applied to one of its legitimate objects, namely the enforcement of a decree, no extra‑territorial operation is created. The Court then turned to the specific question of how the Subordinate Judge of Purnea could apply the United Provinces Act to a decree issued by the Special Judge in Banaras and sent for execution. The Court found it difficult to see how such application could cause the United Provinces Act to affect property located outside the United Provinces. The only practical result of the application, the Court held, is to remove the objection that the decree was not a decree of a court within the United Provinces made under the Code of Civil Procedure. The Act itself does not extend its reach to property beyond the provincial boundaries. The Court clarified that if the decree qualifies as a decree under the Code, it may be executed against property anywhere, including outside the United Provinces, but that authority derives from the Code of Civil Procedure, which is a central enactment applicable in Bihar, and not from the United Provinces Act. Consequently, the Court concluded that the High Court had erred in holding that the Subordinate Judge of Purnea lacked jurisdiction to execute the decree that had been transferred under the Act. The Court also addressed the contention that the order of transfer was invalid because Section 39 of the Code permits transfer only upon an application by the decree‑holder. The argument relied on Section 24(3) of the United Provinces Act, which deems a decree of the Special Judge to be a decree in favour of the Collector for execution against property outside the Province, and therefore claimed that only the Collector, Banaras, could apply for transfer. The Court observed that the order for transfer had in fact been made on an application filed by the Additional Collector, Banaras, and examined whether the Collector and the Additional Collector are distinct persons. Referring to Sections 14 and 14A of the United Provinces Land Revenue Act, 1901, the Court noted that Section 14 empowers the Government to appoint a Collector, while Section 14A(1) authorises the Government to appoint an Additional Collector who may be directed to exercise such powers and perform such duties of a Collector. Hence, the Court recognised that the Additional Collector, when authorised, effectively acts as the Collector for purposes such as execution and sale under the relevant statutes.

The Court observed that the statute authorises the Government to appoint an Additional Collector, and that subsection (3) of section 14A expressly provides that “the Additional Collector shall exercise such powers and perform such duties of a Collector” as may be directed by the Government. Consequently, the Additional Collector is required to exercise those powers and discharge those functions of the Collector that the Government commands him to perform. The record before the Court contained an order whereby the tasks of sale and execution, which under the Encumbered Estates Act were required to be carried out by a Collector, were entrusted to the Additional Collector. From this, the Court concluded that, for the purpose of execution and sale under the Act, the Additional Collector must be treated as the Collector because he is exercising the Collector’s powers in that context. Accordingly, the Additional Collector was fully competent to apply for the transfer of the decree.

The third contention challenging the validity of the order of the learned Subordinate Judge was based on section 39 of the Code of Civil Procedure, which permits a decree to be transferred only by the court that passed it. It was argued that, in the present case, the decree of the Special Judge was deemed a decree only by virtue of section 14 of the Act, and therefore the Special Judge himself must be deemed to have passed it. It was further pointed out that the order effecting the transfer of the decree had actually been made by the Additional Civil Judge, Banaras, and not by the Special Judge, Banaras, and thus the order was purportedly ineffective. The Court was not persuaded by this argument. It noted that the powers of a Special Judge under the Act had been conferred upon the Court of the Additional Subordinate Judge, Banaras, by Government Revenue Department notification No 767‑Rev, published in the United Provinces Gazette on 12 October 1935. The Additional Subordinate Judge was subsequently redesignated as the Additional Civil Judge, meaning the same court exercised both the powers of an Additional Civil Judge and those of a Special Judge under the Act. The Court therefore treated the order of transfer as if it had been issued by the Special Judge. The irregularity that the order was ostensibly made by the Additional Civil Judge did not, in the Court’s view, render it invalid, and no lack of jurisdiction on the part of the Special Judge to order a transfer of the decree was found.

The Act provides that the adjudication of the Special Judge is to be treated as a decree of a civil court of competent jurisdiction, and section 24(3) explicitly contemplates execution of such a decree outside the United Provinces. The Court had previously held that such execution is lawful. Accordingly, to give effect to the provisions of the Act, the Court held that the Special Judge must be deemed to be the court that passed the decree within the meaning of section 39 of the Code of Civil Procedure.

In the Court’s view, the Special Judge must be regarded as a court that passed the decree within the meaning of section 39 of the Code of Civil Procedure, and there is no objection to treating the Special Judge as a civil court. The provisions of the Act, as previously discussed, demonstrate that the Special Judge adjudicates the parties’ rights and functions in the same manner as any other civil court. Apart from the procedural difference that his proceedings do not begin with the filing of a plaint, the Court finds no substantive distinction between the Special Judge and a court ordinarily understood. Consequently, the Court holds that the order transferring the decree is a valid and proper order. The parties also argued that the decree was barred by limitation long before the transfer order was issued, contending that article 182 of the Limitation Act applied and that the application for execution had been filed after the prescribed period. The Court examined whether that article applied. The High Court had held that article 182 did not apply to the present case and that no limitation issue arose because the execution proceeding in Purnea Court was merely a continuation of the execution proceeding pending before the Collector of Banaras. The Court agrees with the High Court’s view. It is clear that when the application for execution under consideration is made within a pending execution proceeding, the question of the application of article 182 does not arise. It has long been recognised by Indian courts that a right to continue a pending proceeding is a day‑to‑day right, and no limitation bar attaches to the enforcement of such a right, as observed in Kedar Nath Dutt v. Harra Chand Dutt and Subba Chariar v. Muthuveeran Pillai. The Court therefore considered whether the application for execution that resulted in the order now under appeal was, in fact, an application to continue a pending execution proceeding. It is undisputed that from the moment the Special Judge sent the decree to the Collector for execution, and before that date the decree could not be executed, the decree has been continuously subject to execution under the Act by the Additional Collector, Banaras, and that such execution proceeding remained pending at the time of the present application for execution. Accordingly, the Court examined whether the execution proceeding that commenced before the Subordinate Judge in Purnea constituted a continuation of the execution proceeding carried out by the Additional Collector, Banaras. The Court is of the opinion that it indeed was a continuation. The Court must also recall that section 14(7) of the Act provides that an adjudication of the Special Judge is deemed to be a decree, yet such a decree cannot be executed within the United Provinces except in accordance with the provisions of the Act. The Court further notes that the Act itself contains additional provisions governing the manner of execution.

In this case the Court explained that, with respect to property situated within the United Provinces, the decree could be executed only by the Collector acting in his own capacity and using the various methods that the statute provides. The Court further pointed out that section 24(4) of the Act expressly states that, for the purpose of such execution, the Collector is to possess all the powers of a civil court for the execution of a decree. Consequently the Court held that the sole mode of executing the decree inside the United Provinces, as contemplated by the Act, is execution by the Collector. The Court clarified that, within the United Provinces, execution of the decree by the Collector is to be deemed an execution carried out under the Civil Procedure Code, and that the Collector’s execution therefore amounts to execution of a decree as defined by that Code.

The Court noted that when the decree is executed outside the United Provinces, the decree can be legally executed as already indicated by the authorities (1) (1882) I.L.R. 8 Cal 420 and (2) (1912) I.L.R. 36 Mad 553, and that the amount realized by the Collector’s execution must be taken into account. When the Subordinate Judge of Purnea is called upon to decide whether an application for execution made to him is a continuation of an already existing execution proceeding, the Court said that the Judge must recognize the proceeding before the Additional Collector, Banaras, as a proceeding in execution under the Code, because the Act treats it as such. In doing so, for the reasons earlier mentioned, the Judge would not be giving any extra‑territorial operation to the Act.

The Court concluded that the execution of the decree by the Collector must be deemed execution of the decree for all purposes. Accordingly, an application made to the Subordinate Judge, Purnea, for execution of the same decree while an execution proceeding was pending before the Collector must be regarded as a continuation of that earlier execution. The Court held that no question of limitation could arise in relation to such an application. On this basis the Court decided that the appeal must succeed, set aside the order of the High Court, and restore the order of the Subordinate Judge, Purnea. The respondent was ordered to pay the costs of the appellant in both this Court and the High Court, and the appeal was allowed.