Case: Raj Kishore Prasad Narain Singh Vs. Ram Partap Pandey &amp; Ors

referred, in the earlier part of this judgment, to the principles laid down by those decisions to the effect that whether the whole of the property mortgaged is an estate, there can be no. doubt that the procedure prescribed by Chapter IV has to be followed in order that the amount due to a creditor is determined by the Claims Officer. No. provision in the Act, has been brought to our notice by learned counsel for the respondent, giving jurisdiction to the authorities, functioning under the Act, to adjudicate upon the claims of a mortgagee with reference to properties which do not vest in the State. Nor has any provision of the statute been brought to our notice prohibiting or placing a bar on the right of a creditor to pursue the remedy available to him under the ordinary law, as against properties which have not vested in the State. Therefore, under those circumstances, we are not inclined to agree with the observations of the Patna High Court in the decisions referred to above that in cases where a mortgaged property consists of both vested and non-vested items, it is open to the creditor to make an election as to the choice of his remedies and that election is to be made by a creditor giving up his right of filing a claim under Section 14 with respect to the vested estate or prosecuting a suit or execution proceeding in a Civil Court in respect of items which have not so vested in the State. The Act, so far as we can see, gives jurisdiction to the authorities concerned only in respect of properties, which have vested in the State, and the claims that are filed and adjudications made by the authorities concerned, under the Act, can only be with reference to estates that have vested in the State. In our opinion, the prohibition contained in Sections 4 (d) and 35 of the Act must also relate only to matters which can form properly the subject of a claim or an adjudication under the Act.40. We are further of opinion that while in respect of the estate, which have vested in the State under the Act, the mortgagee will be bound to have recourse to the procedure laid down in the Act, so far as his mortgage takes in other properties his right to enforce his claim under the ordinary law, has not been, in any manner, infringed or taken away by the Act. If that is so, it follows that in this case the appellant, notwithstanding the fact that he had filed a claim under Section 14 of the Act with reference to properties which have vested in the State, is entitled to avail himself. of any other remedy open to him in law, to enforce his claim as against the non-vested properties comprised in the mortgage. The main reason given by the learned Judge, for rejecting the application filed by the appellant for withdrawing his claim, is that the appellant, when he filed an application under Section 14, must be considered to have elected his remedy under the Act, and therefore, he should not be permitted to withdraw the claim.41. Here, again when once we have held that there is no. scope for the application of the doctrine of election, the reason given by the lower Court for declining to grant permission to withdraw the claim, also falls to the ground. Then the question is whether the appellant should be given leave to withdraw the claim filed by him before the Claims Officer under Section 14 of the Act.42. No. doubt, technically, the provisions of Order XXIII, C. P. C. may not apply; but we do not see any bar to a tribunal permitting the withdrawal of any proceeding, if it is satisfied that the said request can be granted otherwise. No. doubt, before permission is granted to withdraw a proceeding, the tribunal can consider as to whether the withdrawal if granted, will prejudice the opposite party. In this case, as we have already pointed out, the learned Judge has not found any positive prejudice, that will result to the respondents, by the appellant being permitted to withdraw his claim application. If the doctrine of election applies, as held by the Patna High Court, which decision has been followed by the learned Judge in this case, quite naturally, permitting the appellant to withdraw his claim, may result in prejudice to the respondents, in whose favour certain findings have also been recorded by the Claims Officer. But we have already pointed out that there is no. question of the appellant being put to election in circumstances like this and, if that is so, there cannot also be any question of prejudice being caused to the respondent by the appellants request for withdrawing the claim being granted, more especially, in view of the limited request made by him, to which we will advert presently.43. As we have already indicated, the appellants request was for permitting him to withdraw his claim application on the ground that he proposed to seek the remedy that might be available to him in law, as against the mortgaged properties, which have not vested in the State. If the appellants request for withdrawing his claim petition had been made with liberty to enable him again to seek his remedies, as against the properties which have vested in the State, the position may be different, because, in those circumstances, the respondents can forcibly urge that they have obtained a decision on certain aspects in their favour at the hands of the Claims Officer and that, if permission to withdraw is granted to the appellant it would be prejudicial to them. When the appellant was making a very simple request for withdrawing hits claim petition, only to enable him to seek any remedy available to him in law, as against the non-vested properties, we do not see any reason as to why that request should not be granted.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]28. The findings recorded on facts, by the learned Judge, are also challenged on behalf of the appellant; and those findings no. doubt are sought to be supported on behalf of the respondents. But, in the view that we take, that the appellants request for withdrawal of the claim petition should have been allowed, we do not propose to consider and express any opinion on the second ground of attack that is made in thesewe are of opinion that such a right has not been taken away by the Act, it will follow that the view of the learned Judge that it is not open to the appellant to proceed simultaneously to enforce his right under the ordinary, law, as also under the Act, is not correct. It will also follow that the further view that a party, situated like the appellant in this case, is bound to elect the remedy which he wants to pursue, cannot also be correct.From the principles laid down by this Court in the above two decisions, it follows that where the whole of the property mortgaged is an estate, there can be no. doubt that the procedure prescribed by Chapter IV has to be followed, in order that the amount due to the creditor should be determined by the Claims Officer and the decision of the Claims Officer or the Board has been made final by thethat decision, the Patna High Court has held that if there are other properties comprised in the mortgage which have not vested in the State, the Act does not say that those properties will not be available for the recovery of the mortgagemoney. So far as this observation is concerned, in our view, that seems to be correct, having due regard to the provisions of the Act. But later on, the Full Bench has also held that a mortgagee has to elect between the two remedies and cannot have recourse to both of them simultaneously and that a Court can compel the mortgagee to elect between the remedy under S. 14 and the ordinary remedy available to him under the general law.No. doubt, the observations extracted above, prima facie, support the contentions of the learned counsel for thehave also referred, in the earlier part of this judgment, to the principles laid down by those decisions to the effect that whether the whole of the property mortgaged is an estate, there can be no. doubt that the procedure prescribed by Chapter IV has to be followed in order that the amount due to a creditor is determined by the Claims Officer. No. provision in the Act, has been brought to our notice by learned counsel for the respondent, giving jurisdiction to the authorities, functioning under the Act, to adjudicate upon the claims of a mortgagee with reference to properties which do not vest in the State. Nor has any provision of the statute been brought to our notice prohibiting or placing a bar on the right of a creditor to pursue the remedy available to him under the ordinary law, as against properties which have not vested in the State. Therefore, under those circumstances, we are not inclined to agree with the observations of the Patna High Court in the decisions referred to above that in cases where a mortgaged property consists of both vested anditems, it is open to the creditor to make an election as to the choice of his remedies and that election is to be made by a creditor giving up his right of filing a claim under Section 14 with respect to the vested estate or prosecuting a suit or execution proceeding in a Civil Court in respect of items which have not so vested in the State. The Act, so far as we can see, gives jurisdiction to the authorities concerned only in respect of properties, which have vested in the State, and the claims that are filed and adjudications made by the authorities concerned, under the Act, can only be with reference to estates that have vested in the State. In our opinion, the prohibition contained in Sections 4 (d) and 35 of the Act must also relate only to matters which can form properly the subject of a claim or an adjudication under the Act.40. We are further of opinion that while in respect of the estate, which have vested in the State under the Act, the mortgagee will be bound to have recourse to the procedure laid down in the Act, so far as his mortgage takes in other properties his right to enforce his claim under the ordinary law, has not been, in any manner, infringed or taken away by the Act. If that is so, it follows that in this case the appellant, notwithstanding the fact that he had filed a claim under Section 14 of the Act with reference to properties which have vested in the State, is entitled to avail himself. of any other remedy open to him in law, to enforce his claim as against theproperties comprised in the mortgage. The main reason given by the learned Judge, for rejecting the application filed by the appellant for withdrawing his claim, is that the appellant, when he filed an application under Section 14, must be considered to have elected his remedy under the Act, and therefore, he should not be permitted to withdraw the claim.41. Here, again when once we have held that there is no. scope for the application of the doctrine of election, the reason given by the lower Court for declining to grant permission to withdraw the claim, also falls to the ground.No. doubt, technically, the provisions of Order XXIII, C. P. C. may not apply; but we do not see any bar to a tribunal permitting the withdrawal of any proceeding, if it is satisfied that the said request can be granted otherwise. No. doubt, before permission is granted to withdraw a proceeding, the tribunal can consider as to whether the withdrawal if granted, will prejudice the opposite party. In this case, as we have already pointed out, the learned Judge has not found any positive prejudice, that will result to the respondents, by the appellant being permitted to withdraw his claim application. If the doctrine of election applies, as held by the Patna High Court, which decision has been followed by the learned Judge in this case, quite naturally, permitting the appellant to withdraw his claim, may result in prejudice to the respondents, in whose favour certain findings have also been recorded by the Claims Officer. But we have already pointed out that there is no. question of the appellant being put to election in circumstances like this and, if that is so, there cannot also be any question of prejudice being caused to the respondent by the appellants request for withdrawing the claim being granted, more especially, in view of the limited request made by him, to which we will advert presently.43. As we have already indicated, the appellants request was for permitting him to withdraw his claim application on the ground that he proposed to seek the remedy that might be available to him in law, as against the mortgaged properties, which have not vested in the State. If the appellants request for withdrawing his claim petition had been made with liberty to enable him again to seek his remedies, as against the properties which have vested in the State, the position may be different, because, in those circumstances, the respondents can forcibly urge that they have obtained a decision on certain aspects in their favour at the hands of the Claims Officer and that, if permission to withdraw is granted to the appellant it would be prejudicial to them. When the appellant was making a very simple request for withdrawing hits claim petition, only to enable him to seek any remedy available to him in law, as against theproperties, we do not see any reason as to why that request should not be granted.