TMI Blog1987 (3) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... e house which is the subject matter of this appeal. This application was allowed as early as 26.3.43. It was long thereafter, on 4.5.58, that he entered into an agreement to sell the house to the appellant herein. Subsequently he made an application to include this house also in the properties to be sold in the proceedings under the Act. The appellant on being informed of this, objected to the request. The Collector rejected this request by his order dated 23rd June, 1961. From this order it is seen that there was an earlier order dated 14.6.45, by which permis- sion to sell the house was rejected by the Deputy Commis- sioner. There was a mortgage on the property, but before the agreement a decree on the strength of the mortgage had been passed. Under these circumstances, it comes with little grace from the respondents to contend that the agreement to sell, even granting that it would come within the mischief of Section 7, cannot be accepted. Since the mortgage had been extinguished by its merger into a decree, the charge under it was disappeared and in the proceeding, under the Act only a simple decree can be passed. What is more, an order produced before us, dated 7.5.76 shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e debtor-respondent again wanted this house to be included in the property for sale in the proceedings under the Act to which the present appellant objected and this objection was disposed of by the Collector by his order dated 23rd June 1961 reiterating the position that by order dated 26.3.43 this house has been exempted from the proceedings under this Act and therefore that order can not be re-opened. This order dated June 23, 1961 also refers to an order dated 14.6.45 wherein permission to sell this house which was sought by the respondent under Sec.7 of the Act was rejected by the Deputy Commissioner. It appears that the mortgage which was executed by predecessors of the respondents in favour of Aditya Prasad Singh was also considered as a claim under Sec. 1 of the Act and ultimately a decree was passed in favour of Aditya Prasad Singh by the Special Judge under the Act. As this decree was passed under clause 7 of Sec. 14 in view of Sec. 18 of the Act it only remained a money decree and the rights of mortgagee came to an end. The present appellant therefore pressed the respondent for execution of the sale deed in pursuance of the contract and ultimately filed a suit for specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing of a decree under Specific Relief Act for specific performance will not be available. Learned counsel placed reliance on an order dated 7.5.76 which was filed in this Court which clearly stated that on this date i.e. 7.5.76 no proceedings are pending and they are over under Sec.44 of the Act and on this basis it was contended that to a decree for specific performance objection under Sec.7 will not be available to the respondents. Learned counsel for the respondents on the other hand contended that this document which is an order from the court of Collector, Allahabad dated 7.5.76 on which reliance has been placed by the learned counsel for the appellant has been filed in this Court for the first time and this order itself shows that this was after the judgment of the High Court as the High Court judgment is dated 13.4.76 whereas this order has been obtained which is dated 7.5.76 and on this basis it was contended that it could not be said that no proceedings are pending under the Act and the last order passed was dated 7.7.75. It was also contended that although under Sec.24 it is possible for a debtor to obtain an order from the Collector exempting one house from the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for specific performance can not be passed. Learned counsel alternatively contended that even if it is in dispute as to whether the proceedings under the Act are still pending when the provisions contained in Sec.7 are attracted the decree for specific performance could be passed subject to a permission under Sec.7. Learned counsel for the appellant placed reliance on the decision of this Court in Mrs. Chandnee Widya Wati Madden v. Dr. C.L. Katial and Others., [1964] 2 SCR 495. Learned counsel for the respondents however placed reliance on the decisions of this Court in Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 SCR 613; Bhasheshar Nath v. The Commissioner of Income Tax, Delhi Rajasthan Another, [1959] Supp. 1 SCR 528; Murlidhar Aggarwal and Another v. State of Uttar Pra- desh and Another, [1974] 2 SCC 472, Lochoo Mal v. Radhey Shyam, [1971] 3 SCR 693 and also on Ral Nation Jain v. Firm Sukha Nand Ram Norgin and others., [1980] AIR Allahabad 78. Facts are not in dispute. It is also not disputed that U.P. Encumbered Estates Act 1934 was brought in to give relief to a class of debtors particularly landholders and the Act provide for a scheme for settlement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 shall be executed against any of his property, other than pro- prietary rights in land, which has been men- tioned in the notice under Section 11 and the landlord shall not be competent without the sanction of the Collector to make an exchange, or gift or, or to sell, mortgage or lease, any of that property. (3) After the passing of the order under Section 6 and until the Collector has declared in accordance with Section 44 that the land- lord has ceased to be subject to the disa- bilities of this sub-section or until the passing of the order by the Special Judge, referred to in sub-section (2) of Section 44, no decree obtained on the basis of any private debt incurred after the passing of the order under Section 6 shall be executed against any of the landlord's proprietary rights in the land mentioned in the notice published under Section 11 and the landlord shall not be competent, without the sanction of the Collec- tor, to make any exchange or gift or, or to sell, mortgage or lease those proprietary fights, or any portion of them. (4) Any transfer made in contravention of the provisions of this section shall be void. Much of the controversy in the present ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des: The Collector shall then realise the value of such of the debtor's property, other than proprietary fights in land, but including proprietary rights in land in the areas which on the 7th day of July, 1949, were included in a Municipality or a Notified Area under the provisions of the U.P. Municipalities Act, 1916, or a cantonment under the provisions of the Cantonment Act, 1924, or a Town Area under the provisions of the U.P. Town Area Act, 1914, as shall have been reported by the Special Judge under the provisions of sub- section (2) of Section 19 to be liable to at- tachment or sale: Provided that the Collector before passing orders under this section of the sale of any property shall hear any objection which the debtor may have to make to the sale of that property. Provided also notwithstanding anything in any other section of this Act, the Collector may, if he considers fit, sell, along with any building disposed of under this Section, the proprietary rights of the applicant in any land occupied by such building or appurtenant there- to: Provided further that the Collector shall leave the debtor at least one residential house and necessary furniture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. 14 having been passed. So far as Sec.24 is concerned and the effect of the order under this Section is concerned it is clear that once an order exempting the property under this provision is passed by Collector the house and furniture about which such an order is made is free from any mortgage or charge and therefore it leaves no doubt that after the order under Sec.24 having been passed in the present case i.e. on 26.3.43 the mortgage which was in existence before the proceedings under this Act commenced ceased to be effective and this property was free from any . mortgage or charge. Sec. 14 clause 7 provides for determination of debts: It reads as under: (7) If the Special Judge finds that-- (a) no amount is due, he may pass a decree for cost in favour of the landlord; (b) an amount is due to the claimant he shall-- (i) pass a simple money decree, having regard also to the provisions of Section 3 of the U.P. Zamindars' Debt Reduction Act, 1952, for such amount together with any costs which he may allow in respect of the proceedings in his court and of proceedings in any court stayed under the provisions of the Act together with pendente lite and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed is determined by the Special Judge under Sec. 14 sub-clause 7 and a money decree is passed the 'rights of the creditors even if it was under mortgage come to an end although the scheme of the Act indicates that such debts which are secured may get priority over the debts which were not secured and on the basis of these provisions and the provisions contained in Sec.44 an attempt was made by learned counsel for the respondents to contend that although the rights of the mortgagee may be extinguished but so long as the proceedings are pendings they are not completely extinguished as in the event of quashing of the proceedings the scheme of the Act indicates a revival of such rights. But it could not be doubted that so long as they are not revived they come to an end and we have no hesitation in view of Sec.24, sub-clause 7 of Sec. 14 read with Sec. 18 that this house in dispute at the time when the suit was filed for specific performance of the contract was free from all encumbrances and there was no mortgage or charge against this property. It is therefore clear that what learned counsel for the respondents contended on the basis of provisions contained in Sections 43 and 44 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sec.7 as quoted above is clear enough that this is effective only during the pendency of the proceedings under this Act and the order dated 7.5.76 filed by the appellant in this Court clearly goes to show that no proceedings are pending and the case has been consigned to the record. There is nothing to indicate that any proceed- ings are pending nor anything to indicate that any claim of any creditor still remains to be satisfied. In the absence of any proceedings pending the effect of clause 4 of Sec.7 will be of no avail. In our opinion therefore a decree for specific performance could be passed. The High Court there- fore was in error in allowing the appeal and setting aside the judgment and decree passed by the learned courts below. It is no doubt open to the respondent to approach the executing court to retain the sale proceeds if they are in a position to satisfy the court that any part of the claim still remain to be satisfied. The appeal is therefore allowed, the judgment and decree. passed by the High Court is set aside. Instead the decree passed by the trial court and maintained by the Appellate court is restored. In the circumstances of the case, parties are directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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