Case: Krishna Prasad And Others Vs. Gauri Kumari Devi

1. This appeal has been brought to this Court with a certificate issued by the Patna High Court and it raises a short question about the scope and effect of the provisions of S. 4(d) of the Bihar Land Reforms Act, 1950 (30 of 1950) (hereinafter called the Act) The respondent Smt. Gouri Kumari Devi along with her husband, Babu Shyamakant Lal, executed a registered anomalous mortgage in favour of the appellants Babu Krishna Prasad and his three sons on July 10, 1937, for a sum of Rs. 35,000. The document evidenced a combination of Sudharna as well as simple mortgage and the period specified in it was five years. The respondent was the principal mortgagor and by the mortgage deed she mortgaged 10 annas and 8 pies Hakiat Milkiat of village Sonchari Mouza No. 11912 in the district of Patna which was the Zamindari property and 16.41 acres of khudkasht land appertaining to Khata No. 3 of the said Mouza2. The appellants sued on this mortgage to recover Rs. 69,816-5-17 in the court of the Sub-Judge at Patna. The said suit ended in a decree in favour of the appellants on the 26th August, 1946. The trial Judge ordered that for the satisfaction of the decretal amount, "the mortgaged properties would be charged preliminary and if the decretal amount is not fully satisfied from them, then alone the respondent would be personally liable for the satisfaction of the balance, if any." That is how a composite decree came to be passed in the suit. By the final decree which followed on September 30, 1947, the respondents liability to pay Rs. 52,950-3-0 was determined3. The appellants then filed an Execution Case No. 6 of 1952 and claimed that the decretal amount should be realised by sale of the mortgaged Zamindari properties. The respondent raised an objection against the appellants claim on the ground that the mortgaged properties had in the meanwhile vested in the State of Bihar under the provisions of the Act and so, they were not liable to sale in execution proceedings as the respondent had ceased to have any interest in them. Ultimately, the Execution Case filed by the appellants was dismissed on January 9, 19544. When the respondent contested the Execution Case on the ground that the mortgaged properties had vested in the State of Bihar, the appellants applied for transfer of their decree for execution to the Gaya Court. They intimated to the Court that they wanted to execute the decree against the respondent by proceeding against her properties other than those which were the subject-matter of the mortgage and they alleged that they were entitled so to do by reason of the personal decree which had been passed against her. The application made by the appellants for the transfer of the decree was granted and the decree was transferred on January 22, 1954 with a certificate of non-satisfaction5. The appellants then filed Execution Case No. 19 of 1954 in the Court of the Subordinate Judge at Gaya and sought to recover the decretal amount by attachment and sale of other properties belonging to the respondent. In these proceedings, the respondent filed an objection under S. 47 of the Code and it was numbered as Misc. Case No. 96 of 1954. She urged that the appellants had not obtained a personal decree against her and so, the claim made by them in their Execution Case was not maintainable. She also contended that the appellants could not proceed against her other properties because their remedy was to follow the compensation money which would be given by the State of Bihar to her in lieu of her properties which had vested in the said State6. It appears that on December 23, 1954, the Misc. Case No. 96 of 1954 filed by the respondent was allowed ex parte by the Sub-Judge at Gaya and, in consequence, the Execution Case No. 19 of 1954 filed by the appellants was dismissed. The appellants then applied for review of the said order and prayed that their Execution Case should be restored to file and should be dealt with in accordance with law. On April 20, 1955, the Executing Court allowed the appellants application for review and held that the appellants had obtained a personal decree against the respondent and that they had a right to sell the other properties of the respondent in execution of the said personal decree. That is how the Executing Court directed that execution should proceed as prayed for by the appellants7. The respondent challenged this order by preferring a Civil Revision Application before the Patna High Court and it was numbered as 590 of 1955 (see (S) AIR 1957 Pat 575  ). The High Court held that a personal decree had been passed in favour of the appellants, though that part of the direction given in the judgment had not been formally incorporated in the decree. The High Court, therefore, rejected the respondents contention that no personal decree had been passed since an application had not been made by the appellants under O. 34 R. 6 of the C. P. C. The High Court also rejected the respondents argument that a Review Application did not lie against the first order passed by the Executing Court, though it thought that there was some substance in the contention raised by the respondent that, on the merits, the review need not have been granted. Even so, the High Court did not choose to base its decision on this contention. It has allowed the Revision Application on the merits because it has held that the appellants have no right to execute the personal decree by proceeding to sell the other properties of the respondent, for S. 4(d). of the Act constitutes a bar against such proceedings. On this view the High Court allowed the Revision Application, set aside the order passed by the Executing Court in favour of the appellants and has ordered that the Execution Application filed by the appellants should be dismissed. The appellants then applied for and obtained a certificate from the High Court and it is with the said certificate that they have come to this Court; and so, the point which falls to be decided is in regard to the scope and effect of S. 4(d) of the Act. We ought to add that the respondents objection against the competence of the appellants application for review has not been pressed before us8. Before dealing with the said point, it would be convenient to state some material facts. The first material fact is that all the properties mortgaged by the respondent in favour of the appellants constitute an estate under S. 2(i) of the Act so that we are dealing with a case where the entire mortgaged property belonging to the mortgagor proprietor has vested in the State of Bihar. It is not a case where part of the properties mortgaged has vested in the State while some of them continue to be vested in the mortgagor9. The second point which has to be borne in mind in dealing with the present controversy is that the appellants seek to execute the personal decree against the respondent. There is no doubt that under O 34 R. 6 of the Code, a personal decree can be passed on an application made by the mortgagee decree-holder only where the net proceeds of any sale held under O. 34 R. 5 are found to be insufficient to pay the amount due to the decree-holder, that is to say, it is only after the mortgagee decree-holder has exhausted his remedy against the mortgaged property that he is entitled to apply to recover the balance from the mortgagor judgment-debtor personally otherwise than out of the properties mortgaged. It may be that in the case of a composite decree, an application as contemplated by O. 34 R. 6, may not be necessary; but in that connection, it may be relevant to bear in mind that under the normal procedure prescribed by O. 34 R. 6, recovery of the balance due under a mortgage decree is ordered on an application by the mortgage decree-holder where it is shown that the net proceeds of any sale held under the mortgage decree are insufficient to pay the amount due under the decree. Besides, the order passed by the trial Court in its judgment which has been treated in substance to constitute a personal decree in the present proceedings, makes the position quite clear. The learned judge directed that for the satisfaction of the decretal amount the mortgaged properties would be charged preliminary and he added that if the decretal amount is not fully, satisfied from them, then the appellants would be entitled to proceed against the respondent personally. In other words, the decree clearly and unambiguously provides that the appellants would be justified in executing the personal decree against the respondent only if and after they have exhausted their remedy against the mortgaged properties and have not been able to recover the whole of the decretal amount by that process. That is the second material fact which has to be borne in mind10. Then the third fact to which reference must be made is that after the prescribed notification was issued and the mortgaged properties belonging to the respondent had vested in the State of Bihar, the appellants applied under S. 14 of the Act notifying their claim under the mortgage decree to the Claims Officer, and, in fact, on November 24; 1956, the Claims Officer has determined that a sum of Rs. 58,100 plus future interest at 4% per annum over the principal amount only but limited to the total interest not exceeding the amount of the principal, would be payable to the appellants out of the compensation amount payable to the respondent in respect of the properties mortgaged. This fact was not known to the respondent at the time when her Revision Application was argued before the High Court, because it appears that the respondent did not appear in the proceedings before the Claims Officer. The said fact has, however, been stated before us by the respondent on an affidavit and its correctness is not disputed by the appellants. It is in the light of these facts that we have to decide whether the High Court was right in holding that the appellants application for execution at the present stage is incompetent in view of the provisions of S. 4(d) of the Act.

Court's reasoning:
In our opinion, this argument proceeds on an imperfect view of the aim and object of the Act. It is true that one of the objects of the Act was to provide for the transference to the State of the estates as specified. But as we have already seen, the provisions contained in Section 16 in regard to the scaling down of the debts due by the proprietors and tenure-holders clearly indicate that another object which the Act wanted to achieve was to give some redress to the debtors whose estates have been taken away from them by the notifications issued under Section 3. Therefore, in construing S. 4(d), it would not be right to assume that the interests of the debtors affected by the provisions of the Act do not fall within the protection of the Act. Mr. Jha fairly conceded that if the words used in S. 4(d) are literally construed and they are given their natural grammatical meaning, it would not be easy to limit the operation of S. 4(d) to execution proceedings where relief is claimed against the properties which have vested in the State. The relevant clause in S. 4(d) provides that all suits and proceeding for the recovery of any such money which may be pending on the date of the vesting shall be dropped; and these words are wide enough to include within their sweep execution proceedings, even though the recovery of the amount due may have been claimed by the decree-holder from properties other than those which have vested in the State. The only limitation imposed by the clause is that the execution proceedings should be for the recovery of any such money---meaning any money due from the proprietor on the strength of a mortgage executed by him in respect of an estate. We have already emphasised that in the present case, the whole of the mortgaged property is an estate and, therefore, it is unnecessary for us to consider what would be the effect of the provisions of S. 4(d) in cases where part of the mortgaged property is an estate and part is not. It is also unnecessary to consider whether Section 4(d) would create a bar even in cases where the compensation amount payable to the mortgagor is insufficient to satisfy the mortgagee decree-holders claim even to the extent of the amounts scaled down under S. 16We do not see how this principle can assist Mr. Jha in the present case. The scheme of the relevant provisions of the Act to which we have already referred unambiguously suggests that where the whole of the mortgaged property is an estate, certain consequences follow. The decree-holder has to make a claim; the claim has to be enquired into by the Claims Officer; the amount due to the decree-holder has to be determined by the Claims Officer and the amount so determined has to be paid to the decree-holder from out of the compensation money payable to the judgment-debtor. Having regard to the said scheme, it is difficult to confine the application of S. 4(d) only to execution proceedings in which the decree-holder seeks to proceed against the estate of the debtor. In fact, an execution proceeding to recover the decretal amount from the estate which has already vested in the State, would be incompetent because the said estate no longer belongs to the judgment-debtor. That being so, we are satisfied that on the facts of this case, the High Court was right in holding that the application made by the appellants to execute the decree against the respondent by proceeding against her non-mortgaged properties is incompetent at the present stage. The amount due to the appellants under the decree in question has been already determined by the Claims Officer and the appellants must first seek to recover that amount as provided by the relevant provisions of the Act before they proceed to execute the personal decree17. This conclusion follows even on the terms of the decree itself. We have already seen that the direction issued by the trial Court is explicit and clear. The said direction which is consistent with the provisions of O. 34 R. 6 would enable the appellants to proceed personally against the respondent only if it is shown, that the decretal amount is not fully satisfied from the proceeds of the mortgaged property. In the present case, the mortgaged property cannot be sold because it as vested in the State free of incumbrances; but in lieu of the mortgaged property, the respondent has become entitled to certain compensation amount and the appellants are given the statutory right to receive the amount due to them from the said compensation amount under S. 24(5). This provision is somewhat similar to the provisions of S. 73(2) of the Transfer of Property Act which provides, inter alia, that where the mortgaged property is acquired under the Land Acquisition Act, or any other enactment for the time being in force providing for the compulsory acquisition of immovable property, the mortgagee shall be entitled to claim payment of the mortgage-money, in whole or in part, out of the amount due to the mortgagor as compensation. In a sense, the compensation amount payable to the respondent may prima facie be treated to be like a security substituted in the place of the original mortgaged property under S. 73(2) of the Transfer of Property Act. However that may be, the terms of the decree require that the appellants must first seek their remedy from the said compensation amount before they can proceed against the non-mortgaged property of the respondent. The relevant directions in the decree do not justify the appellants contention that because the mortgaged property has vested in the State, they are entitled to execute the personal decree without taking recourse to the remedy available to them under S. 24(5) of the Act18. It now remains to refer to some decisions of the Patna High Court to which our attention was drawn during the hearing of this appeal. In Raghubir v. Basudevanand, ILR 32 Pat 581, the High Court has held that S. 4(d) of the Act is not applicable to a case where money is secured by a mortgage or charge on estates, some of which are notified under Section 3 of the Act and the others are not notified. In such a case, according to the High Court, S. 4(d) will be a bar to the suit or execution proceedings so far as the vested estates are concerned, but the creditor will be entitled to prosecute the suit or execution proceedings as regards the estates or portions of estates which are not vested in the State. Since we are dealing with a case where the whole of the mortgaged property is an estate, it is unnecessary for us to consider whether the view taken by the Patna High Court in this case is correct or notIn any case both the decisions on which Mr. Jha has relied afford no assistance to us in dealing with the point with which we are concerned in the present appeal.