Mathura Prasad Singh and Others vs Jageswar Prasad Singh

Adami, J.—This appeal arises out of a suit for the recovery of Rs. 20,705-7-1 as principal and interest due upon a handnote executed by Defendant No. 1 as karta of the family on behalf of himself and his brother Defendant No. 2. The handnote was executed in favour of the father of the plaintiff on the 18th of October 1902, for a sum of Rs. 6,198. The loan was taken for the purpose of meeting the cost of litigation and saving the joint family property. On the 18th of June 1904, the defendants applied to the Deputy Commissioner for protection under the Chota Nagpur Encumbered Estates Act, and on the 30th of October 1904 an order was passed vesting their estate under a manager under the provisions of the Act. The order was published in the Gazette on the 11th of January 1905. After publication of the order the manager called upon the creditors to submit their claims. The defendants in their application had given a list of their debts and the second item in the schedule is this debt of Rs. 6,198 on the bond of 18th of October 1902. Interest at 1 per cent. per month had risen to Rs. 829-11 and the total debt was Rs. 7,027-11. The application was signed and verified by both the defendants. The manager proceeded to determine the claims u/s 8 of Act VI of 1876 and like defendants admitted the claim. The manager thereafter drew up a scheme for the repayment of this debt of Rs. 6,198 and interest Rs. 914. That scheme is Ex. 4. The scheme was submitted to the Commissioner u/s 11 of the Act and was approved by him. According to Section 11 a scheme "when approved by the Commissioner shall be carried into effect." I am referring to Act VI of 1876 as it stood before the Amending Act, Behar and Orissa Act, VIII of 1922. The manager, however, failed to carry out the scheme so far as it effected this debt, and no money was received from him by the plaintiffs.

On the 21st of June 1921 the estate was released from the operation of the Act by notification under order from the Board of Revenue. The notification was published in the Gazette on the 13th of July 1921. The notification did not state under what section the release was ordered. It merely stated that the provisions of the Act had ceased to apply to the proprietor of the estate. There after the plaintiff, Lalu Jageshwar Prasad Singh, instituted a suit out of which this appeal arises on the 9th of May 1922. The plaintiff claims that the period during which the estate was under protection of the Act should be excluded In computing limitation. The plaint also alleges that the defendants admitted the debt both when they submitted their application for protection and also when the manager was determining the claim.

The defendants pleaded that the suit was barred by limitation and that there was no legal necessity for the loan in 1902. Defendant No. 1 admitted execution of the handnote, but denied that consideration had passed. He alleged that in 1904, when he was intending to apply for protection under the Chota Nagpur Encumbered Estates Act, knowing that he had a daughter to marry and that it would be hard to obtain money from the manager, he executed several handnotes in collusion with and in favour of various relatives, so that those relatives might submit claims to the manager and get the money from him and make the money over to the defendant so that he could spend it on his necessary expenses. Defendant No. 2 denied that he was any party to the loan, or that Defendant No. 1 borrowed the money for family necessity. He alleged that he was separate from Defendant No. 1 and was not bound by the handnote.

The learned Subordinate Judge considered with great care the question whether the period during which the estate was under protection could be excluded when computing the period of limitation. He noticed that the second clause of Section 12 of the Act does not meet the present case, because the estate was released after the Commissioner had given approval, and, therefore, the provisions of the sixth clause to that section could not be applied to the case in their strict interpretation; but he found himself unable to put a strict interpretation upon the section and found that the sixth clause provides in general terms for all cases where the estate is released from management, before the debts have been paid off. He held that Section 12 applied to the case and that the plaintiff was entitled to the benefit of the section. He also found that the provisions of Section 15 of the Limitation Act applied and enabled the plaintiff to exclude the period of protection. He disbelieved the defendant''s story about the absence of consideration and also the story about the taking of the money in order to provide for the defendant''s daughter''s marriage. He held that Defendant No. 1 borrowed the money as karta of the joint family for the purposes of the family and that Defendant No. 2 was liable. He decreed the plaintiff''s suit.

Mr. Ganga Charan Mukherji has argued this appeal with great ability on behalf of the defendants-appellants. The main part of his argument has been devoted to the question of limitation. The three questions which arise under this head are: Whether Section 12 of the Chota Nagpur Encumbered Estates Act, Clause 6, saves the suit from being barred by limitation; secondly, whether if Section 12, Clause 6 does not apply, Section 15 of the Limitation Act applies; and, thirdly, whether there was such acknowledgment by the defendants as would save the suit from being barred by limitation. Mr. Mukherji has taken us through the sections of the Encumbered Estates Act and his argument is that the first clause of Section 3 of the Act is an absolute bar to all proceedings and suits after the publication of an order u/s 2 of the Act. He points out that the sixth clause of Section 12 refers only to release covered by Clause 2 of the section, that is to say.

If the Commissioner at any time before a scheme has been approved by him u/s 11 thinks that the provisions of this Act should not continue to apply to the case of the holder of the said property or his heir.

In the present case the estate was released after approval of the scheme by the Commissioner, and, therefore, the sixth clause cannot apply and there can be no revival of claims. His contention is that the first clause of Section 3, which is the bar to all proceedings still holds good even though the estate has been released because Sub-clause 6 of Section 12 does not apply in the circumstances of this case. There is no doubt, as has been often remarked, that the Chota Nagpur Encumbered Estates Act, 1876, is inartistic in its drafting. That this has been recognized with regard to such circumstances as we find in the present case is shown by the amendments made by the Legislature by the Bihar and Orissa Act, VIII of 1922, whereby in Section 4 the following words have been added to the second clause of Section 12:

Or if after the scheme has been so approved an application is made u/s 11-B, for the relinquishment of the property.

The framers of the Act do not seem to have contemplated that when a scheme has once been approved and has to be carried into effect u/s 11, there could be release under any circumstances other than those mentioned in the first three clauses of Section 12, and as the Act stood before the amendment of 1922 the strict wording of the Act seems to show that no revivor was contemplated in circumstances other than those mentioned in Clause 2 of Section 12. The learned Subordinate Judge has, I think, taken the right view in holding that too strict interpretation cannot be placed on Section 12.

Section 3, it is true, states that on the publication of order u/s 2 all pending proceedings shall be barred and all processes, executions and attachments for or in respect of debts and liabilities shall become null and void, whereas the second and third clauses are limited in theirs operation to the period during which such management continues. It is contended that save in the case mentioned in Section 12, Clause 6 the bar shall be absolute and that no proceeds or execution or attachment can, after the publication of an order u/s 2, be served or made.

But surely when the order itself is cancelled by a subsequent notification, the effect of the first clause of Section 3 disappears. It could never have been in contemplation of the Legislature that the mere approval by the Commissioner of a scheme should for ever deprive all creditors of redress. But I think it is quite clear that, even were it to be held that as the Act is drafted no revivor of proceedings is allowed, the provisions of Section 15 of the Limitation Act must apply. Though the word "bar" is used with regard to pending proceedings in Clause 1 of Section 3, its real meaning is clearly that they should be stayed, for Clause 6 of Section 12 shows that in certain circumstances proceedings may be revived. In the present case we have not to do with proceedings which were pending at the time the notification was published; the question is whether any process can issue or any suit be instituted after the order of release. Clause 1 of Section 3 states that processes, execution and attachments shall become null and void on the publication of an order u/s 2. After that order has been cancelled, there is no bar to any process, execution or attachment; there has really been merely a stay. The order tinder Section 2 bringing the estate under protection was a vesting order staying all proceedings, and u/s 15 of the Limitation Act I am satisfied that there should be a revivor, the period of protection being excluded. I would refer to the case of Raja Jyoti Prasad Singh Deo Vs. Ranjit Singh, . It is true that there Das, J., did not consider the difficulty which we have now before us with regard to the wording of Clause (2) of Section 2; but it may be that in that case the point did not arise. The general principles, however are given as to the right of reviver. I am quite satisfied that the plaintiff is entitled to exclude the time during which he was barred from suing on the debt due to him by reason of the estate being under protection. Mr. Mukherji has argued that after the manager had examined the claim and had judicially determined the debt u/s 8 of the Act, the plaintiff could have sued the manager within three years of the determination of the debt; but I think that this contention cannot in any way be upheld, for under the wording of Clause 1 of Section 3 any such suit would be barred. Secondly it is contended that when the manager heard the claims and determined the debt and thereafter drew up a scheme, he was in fact contracting with the plaintiff to pay the debt in a certain manner and within a certain time; and when in 1916, which was the last date of payment under the scheme, he had failed to pay to the plaintiff, the plaintiff might have sued him on the contract; but it is clear that in a case like this there was no contract between the manager and the plaintiff. The manager determined the scheme without reference to the wishes of the plaintiff. Thirdly, it is argued that even, if a suit in respect of such determined debt was barred during the period of management, what would revive after release from management would be the debt determined by the manager and not the original debt. In the present case the manager determined the original debt to be due but decided that he would pay interest at 6 per cent. and not at 12 per cent, per annum. After the release the whole scheme came to nothing and anything arranged in the scheme would not affect the revival of the original debt at the original rate of interest. Mr. Mukherji would have us hold that the determination of a debt by the manager is a judicial proceeding and his decision as to what the debt is amounts to a decree. But here the original and determined debts are exactly the same and so the point does not arise. I must hold that the plaintiff was entitled to exclude the period of management. It is certainly hard on the defendants that their debts should have been allowed to accumulate for so long a time as 19-1/2 years: but it has to be remembered that through the protection of the Act the defendant''s property has been preserved.

The plaintiff has also suffered in not being able to obtain repayment of the debt during so long a period. The debt would be barred, even if the period of management were excluded, if the defendants had not in 1904 acknowledged their indebtedness. The schedule to their application in 1904 cites and admits the debt. That application is signed and verified by both the defendants. Again when the debt was examined by the manager tinder Section 8 the Defendants both admitted it, and in his written statement Defendant No. 1 acknowledged that he admitted the debt before the manager. These acknowledgment save the claim from the bar of limitation. (His Lordship then discussed the findings regarding passing of consideration and legal necessity and proceeded). I can see no reason to differ from finding arrived at by the learned Subordinate Judge, and I would, therefore, dismiss the appeal with costs.

Kulwant Sahay, J.

I agree.