Chandu Kunhan Panikker vs Ukkappan and Others

The first defendant is the appellant. This appeal arises out of a suit instituted by the 1st respondent for a declaration that the decree in O.S. No.

45 of 1935 and the sale in E.P. No. 296 of 1940 on the file of the Subordinate Judge, South Malabar, are void and do not bind the plaintiff. The

1st defendant obtained the decree in O.S. No. 45 of 1935 on foot of a mortgage. The final decree was passed on 28th January, 1938. The

present 1st respondent was the judgment-debtor and he on 12th August, 1940, filed an application u/s 4 of the Madras Debt Conciliation Act of

1936 for conciliation of his debts. The decree-holder filed execution petition No. 792 of 1940 and the judgment-debtor filed in the executing Court

an application u/s 25 of the Debt Conciliation Act, on 15th August, 1940. The application after due notice to the decree-holder was heard by the

learned Subordinate Judge and disposed of by him on 4th September, 1940. The application was dismissed by the learned Subordinate Judge on

two grounds : firstly that the decree-holder was a creditor to whom more than 50 per cent, of the total amount of the debts was owing and without

him there could be no amicable settlement through the intervention of the Board. Secondly, that the decree-holder was also a secured creditor and

if he did not agree to the settlement there was no prospect of any settlement and that the filing of the execution petition was evidence of an intention

not to agree.

After the dismissal of this petition the property was sold in execution of the decree on 2nd December, 1940 and the decree-holder, the

appellant, became the purchaser. Against the order of the learned Subordinate Judge u/s 25 there was an appeal, C.M.A. No. 97 of 1941, to this

Court. The appeal was dismissed on 7th April, 1941, on the ground that there was nothing to be stayed and that the appeal was not pressed.

Ultimately on 2nd July, 1941, the petition u/s 4 of the Debt Conciliation Act was also dismissed. The judgment-debtor having failed in his attempts

to thwart the execution of the decree filed the suit out of which this present appeal arises contending that the sale in pursuance of the decree was a

nullity since after the filing of an application u/s 4 of the Debt Conciliation Act, the Court had no jurisdiction to proceed with the execution of the

decree. The 1st defendant, i.e., the decree-holder-purchaser raised various objections by way of defence to the suit two of which alone arc

material for the purpose of this appeal. He contended that the suit was incompetent as it was barred u/s 47 of the CPC and that in any event as the

sale was not vitiated by any irregularity or fraud and as the application u/s 25 of the Debt Conciliation Act was dismissed the sale was valid but not

void. These two contentions of the decree-holder were upheld by the learned Subordinate Judge and the suit was dismissed.

The plaintiff preferred an appeal to the District Court. In the Court of the learned District Judge it was practically conceded that the suit was not

maintainable and that Section 47, Civil Procedure Code, was a bar. The learned District Judge, however, in exercise of his discretion converted

the plaint into an application u/s 47. Following the decisions of this Court, he, however, held that in view of the language of Section 25 of the Debt

Conciliation Act, the sale was a nullity and set aside the order of the learned Subordinate Judge after allowing the appeal. The first defendant was

made liable for costs in both the Courts even though the plaintiff persisted till the last moment in his contention that the suit was the only proper

remedy and not an application u/s 47, Civil Procedure Code.

This civil miscellaneous second appeal is against the judgment of the learned District Judge. The learned District Judge, in my opinion, was

correct in his view that Section 47, Civil Procedure Code, was a bar to the suit and he was also right in permitting the plaintiff to convert the suit

into an application. The learned Judge, however, was wrong in allowing the plaint to be converted into an application unconditionally without

making the plaintiff pay all the costs as he persisted in his contention that the suit was the only proper remedy notwithstanding the fact that the 1st

defendant raised this objection and pointed out the defect even in the written statement. Even after the decision of the learned Subordinate Judge

that the suit was not maintainable the plaintiff did not express his intention and ask the leave of the Court to convert the suit into an application u/s

47, Civil Procedure Code. He filed an appeal against the decree and it was only at the time of arguments that the advocate who appeared for him

conceded that the application was the only proper remedy.

In my opinion, the learned District Judge was wrong in holding that the sale was a nullity. Section 25 of the Debt Conciliation Act reads as

follows:

When an application has been made to a board u/s 4, any suit or other proceedings then pending before a Civil Court in respect of any debt for the

settlement of which application has been made shall not be proceeded with until the board has dismissed the application.

This was construed by a Bench of this Court as prohibiting the sale of the property after the executing Court was appraised of the fact of filing an

application u/s 4 of the Debt Conciliation Act. It is unnecessary to refer to all the decisions on the point as the question had been finally decided by

a Bench in Rathnasabapathi Ayyar Vs. Subramania Pillai and Others, . The earlier decisions of this Court were all considered and the conclusion

reached was that the act of presenting a petition u/s 4 takes away the jurisdiction of the Civil Court to execute the decree and sell the property until

the application is dismissed. But for the fact that the case before me stands on a different footing in one important respect I would have thought that

that decision really concluded this case. The distinguishing feature is that in the present case the judgment-debtor himself moved the executing

Court u/s 25 for stay. The Court after notice to the decree-holder passed an order refusing stay and claiming in effect to exercise its jurisdiction to

sell the property. There was an appeal against that order and that appeal was dismissed ultimately as not having been pressed. There was,

therefore, a binding adjudication between the parties by which the executing Court decided at an earlier stage that it had jurisdiction to proceed

with the execution. The question, therefore, is, is it open to the judgment-debtor now to repaginate that very question of jurisdiction of the

executing Court to sell the property in an application u/s 47, in that very Court ? This is not a case where the Court had no inherent jurisdiction to

deal with the matter or to sell the property. The executing Court, it cannot be doubted, had the right to sell but for the prohibition u/s 25 of the

Debt Conciliation Act. It had also the right and jurisdiction to consider the question whether it was a case for stay u/s 25. Its decision on the

question may be right or wrong but when once that decision had become final and binding between the parties, in my view, it is not open to impugn

its validity and binding nature in a subsequent stage. Of course, if the Court lacked inherent jurisdiction as in the cases under the Madras Estates

Land Act where the revenue Court alone possesses exclusive jurisdiction to adjudicate upon questions relating to rent and other matters in respect

of ryoti lands or where there is a conflict between an Agency Court and an ordinary civil Court as in (1904) L.R. 32 I.A. 45 (Privy Council) the

matter may be different. In a case where the Court did not lack inherent jurisdiction but there was a statutory prohibition from proceeding; with

execution and the Court considers the question at the outset and decides that it had jurisdiction to sell, that decision is binding on the parties,

however, erroneous that decision may be. This distinction between the lack of inherent jurisdiction and statutory restriction on the exercise of

jurisdiction was considered in Yeruva Chinnapareddi Vs. Rai Bahadur P.V. Srinivasa Rao Garu, Official Receiver, where the question was

whether the executing Court could deal with the properties which were vested u/s 37 of the Provincial Insolvency Act in the Official Receiver. The

executing Court at an earlier stage decided that very question against the Official Receiver and in favour of its own jurisdiction. The question was

whether in any subsequent proceeding the prior order would operate as res judicata. It was pointed that the word jurisdiction is used in more than

one sense and that a distinction should be drawn between inherent want of jurisdiction and a want of jurisdiction which can be discovered only

after the decision of an issue by the very Court whose jurisdiction is attacked by the defendant. If the case falls under the former category the

decision being a nullity would not operate as res judicata; if on the other hand it comes under the latter category it would operate as res judicata. In

that case also it was held that notwithstanding the provision u/s 37 of the Provincial Insolvency Act which vested the property of the insolvent in the

Official Receiver there was no inherent lack of jurisdiction in the executing Court to entertain and deal with the matter. The decision may be wrong

but all the same as it was a decision of a competent Court it became final between the parties and was binding on them. Section 25 of the Debt

Conciliation Act, in my view, does not prohibit the Court from considering the question whether the proceeding should be stayed or not. The

prohibition is from proceeding with the matter until the Board dismisses the application u/s 4. It cannot be said that in deciding the question of the

applicability of the bar the Court was proceeding with the matter. The decisions in Makhan Lal v. Bhagwan Singh ILR (1938) Pat. 201

Prakashchandra Chakrabarti v. Barada-kishore Chakrabarti ILR (1933) Cal. 234 and in K.L. Gauba v. Punjab Cotton Press Co. Ltd. ILR 1941

Lah. 524 are also to the same effect.

The Privy Council also seem to indicate that even a decision that a Court had no jurisdiction would operate as res judicata in a subsequent

proceeding where the same question was raised, vide AIR 1940 222 (Privy Council) . In Bikan Mahuri and Others Vs. Bibi Walian and Others,

one of the decisions relied on, on behalf of the respondent there was an earlier suit in which a certain sum was claimed as representing rent and

also tax. There was a decree in that suit in 1872. The landlord claimed later an amount which was in substance and in effect a tax within the

meaning of Bengal Regulation (XXVII of 1793). One of the contentions urged was that the prior decision of 1872 operated as res judicata. It was

held that that decision did not operate as res judicata as there was no adjudication regarding title but there was only a decision upon that particular

liability. There, it was also contended that to claim the amount in the subsequent action was contrary to the provisions of the Regulation and that

therefore (as the plea of res judicata was only a form of estoppel) there could be no estoppel against statute. The answer to that is given by the

learned Judge in column 2 at page 636 in these words:

If the Regulation prohibits the recovery of this sum, the previous judgment entitling the plaintiff'' to recover the sum cannot stand in the way of

defence of the defendants in this case with one exception which has been pointed out by Mr. Hussain in the course of his argument. If the previous

case of 1872 had decided not only the liability of the defendants, but that the nature of the imposition was not such as to bring it within the mischief

of the Regulation, the matter would have been concluded. But there was no such decision and, in order to rely upon the plea of res judicata Mr.

Hussain falls back on what is ordinarily known as constructive res judicata.

If, therefore, the very question was considered and decided on the previous occasion: by the Court in favour or against the jurisdiction of the Court

that decision would certainly be res judicata in a subsequent proceeding and there could be no question: of estoppel against a statute. I think,

therefore, the decision in Bikan Mahuri and Others Vs. Bibi Walian and Others, does not help the contention urged on behalf of the respondent.

The other cases relied on, viz., (1904) L.R. 32 I.A. 45 (Privy Council) Subramanya Ayyar Vs. Swaminatha Chettiar and Another, and Lakhmi

Chand v. Madho Rao ILR (1930) All. 868 are all cases where the prior adjudication was by a Court which was not competent to deal with the

matter and so the earlier decision in those cases could not operate as res judicata in subsequent proceedings. For these reasons I am of opinion

that the sale in the present case is not a nullity and that by reason of the prior adjudication the plaintiff is precluded from reagitating the question u/s

47, Civil Procedure Code.

There is also a minor point raised in the course of the argument by the respondent, namely, that as there was an appeal against the order of the

learned Subordinate Judge to the High Court the order of the Subordinate Judge could no longer be treated as final as the appeal was not pressed.

I am unable to agree with this contention. Whether the appeal was dismissed on the merits after hearing arguments or whether it was dismissed

because it was not pressed the result in both the cases is the same. The order of the Court below was confirmed and therefore became final. The

decisions relied on in support of the contention do not at all help the respondent. In Abdullah Ashgar Ali Khan v. Ganesh Dass (1917) 34 M.L.J.

12 : 1917 L.R. 44 IndAp 213 : 1917 ILR 45 Cal. 442 (P.C.) the suit was ultimately dismissed on the ground that it was not maintainable and

therefore, there was no final adjudication on the material issue in the case.

In Munshi Muhammad Abdul Aziz v. Gulam Julani AIR 1937 Mad. 709 the Subordinate Judge expressly stated in his judgment that he did not

decide a particular issue. In the face of that statement it is impossible to contend that that issue was heard and finally disposed of.

For these reasons the appeal is allowed, the order of the learned District Judge is set aside the application of the plaintiff is dismissed with costs

throughout. (Leave refused.)