Full Judgment Text
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PETITIONER:
RAJ KISHORE PRASAD NARAIN SINGH
Vs.
RESPONDENT:
RAM PARTAP PANDEY & ORS.
DATE OF JUDGMENT:
07/11/1966
BENCH:
VAIDYIALINGAM, C.A.
BENCH:
VAIDYIALINGAM, C.A.
WANCHOO, K.N.
MITTER, G.K.
CITATION:
1967 AIR 801 1967 SCR (2) 56
CITATOR INFO :
F 1969 SC 971 (11,16)
ACT:
Bihar Land Reforms Act, 1950 (Bihar Act 30 of 1950), s. 14-
Mortgaged land vesting in State-Claim in respect of
mortgaged property including land filed before claims
officer-Claim sought to be withdrawn at appellate stage-
Mortgagee whether free to pursue remedies under ordinary law
in respect of non-vested properties-Application under s. 14
whether amounts to a final election of remedies under the
Act only.
HEADNOTE:
The appellant had obtained a usufructuary mortgage from the
respondents in 1925 in respect of three sets of properties
in Bihar : (a) five items of milkiat properties; (b) a three
storey house in the town of Gaya; and (c) certain bakasht
lands. By virtue of a notification issued under s 3 of the
Bihar Land Reforms Act, 1950, the milkiat properties vested
in the State of Bihar in January 25, 1955,, and in respect
of the bakasht lands, the respondents became statutory
tenants under s. 6. On April 24, 1955, the appellant filed
an application under s. 14 of the Act before the Claims
Officer alleging that no amounts had been paid by the
mortgagors towards their liability. The respondents filed
objections disputing the amounts claimed by the appellant.
The Claims Officer partly allowed the claim of the
appellant. The respondent thereupon filed an appeal before
the Board consisting of a single Judge of the High Court
constituted under s. 18( 1) of the Act. On November 9,1959
the appellant filed an application for permission to
withdraw the claim case preferred by him before the claims
-officer and further requested that the proceedings in the
claim appeal filed by the respondent be dropped. This
application was rejected by the Board on the ground that
having once elected the procedure under the Act the
appellant was not entitled to enforce his right under the
ordinary law even in respect of properties not affected by
the Act. On the merits, the respondents’ appeal was
allowed. The appellant came to this Court by special leave.
The question that fell for consideration was whether in a
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case where a mortgage related to two sets of properties-
those which vested in the State and those which had not-the
right of the mortgagee to pursue remedies under the ordinary
law in respect of non-vested properties had in any way been
curtailed by the Act.
HELD : (i) The Act gives jurisdiction to the authorities
concerned only inrespect of properties which have vested
in the State; and the claims that are filed and
adjudication made by the authorities concerned, under the
Act, can only be with reference to estates that have vested
in the State. The prohibition contained in ss. 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. [67 E-F]
Therefore while in respect of the estates 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, in 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. [67 G]
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(ii)The High Court was wrong in holding that the appellant
when he filed an application under s. 14 must be considered
to have elected his remedy under the Act and therefore he
should not be permitted to withdraw the claim. There is no
bar to a tribunal permitting the withdrawal of any
proceeding if it is satisfied that the said request can be
granted otherwise, even though, technically, the provisions
of O.XXIII C.P.C. may not apply. There could be no possible
prejudices to the respondents by the appellant being allowed
to withdraw his-claim petition to enable him to seek his
remedy under the ordinary law in respect of the non-vested
properties. But, as and when the appellant sought his
remedy to enforce his mortgage as against the properties
which had not vested in the State the Tribunal or Court may
have to apply the principle of Marshalling. [68 A-F; 69 B]
Case law considered. Observations contra in Sukhdeo Das v.
Kashi Prasad A.I.R. 1958 Pat. 630 and Sidheshwar Prasad v.
Ram Saroop A.I.R.. 1963 Pat. 412, disapproved.
Raja Sailendra Narayan Bhanj Deo v. Kumar Jagat Kishore
Prasad Narayan Singh [1962] Supp. 2 S.C.R. 119, and Krishna
Prasad v. Gauri Kumari Devi [1962] Supp 3 S.C.R. 564,
referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 759 of 1964.
Appeal by special leave from the judgment and order dated
May 13, 1960 of the Patna High Court (before the Board
constituted under S. 18(1) of the Bihar Land Reforms Act,
1950 in Claim Appeal No. 22 of 1956.
N. C. Chatterjee and D. Goburdhun, for the appellant.
B. P. Jha, for the respondents.
The Judgment of the Court was delivered by
Vaidialingam, J. In this appeal, by special leave, the judg-
ment and order of a single Judge of the Patna High Court,
constituted as the Board, under s. 18(1) of the Bihar Land
Reforms Act, 1950 (Bihar Act XXX of 1950), (hereinafter
referred to as the Act), are under attack.
The appellant had taken three mortgages from the respondents
on July 20, 1915 for Rs. 15,000/- on April 24, 1917 for Rs.
33,000/, and on November 12, 1917 for Rs. 42,500/-. He had
filed a suit. for recovery of the mortgage amounts and also
obtained a decree.
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On November 18, 1925, the appellant had obtained a usufruc-
tuary mortgage for a total sum of Rs. 84,000/-, comprising
three different sets of properties : (a) five items of
milkiat properties ; (b) a three-storey house in the town of
Gaya and (c) certain bakasht lands. The deed of mortgage is
marked as Exhibit I. By this mortgage, the earlier decree
was repaid.
By virtue of a notification issued under S. 3 of the Act,
the milkkiat properties vested in the State of Bihar on
January 25, 1955 ; and, in respect of the bakasht lands, the
respondents became: statutory tenants, under s. 6.
9SupCI/66-5
58
The appellant filed an application, dated April 24, 1955,
under s. 14 of the Act before the Claims Officer. In that
application, he had stated, after giving particulars of
the items mortgaged under Exhibit 1, that the principal
amount advanced was Rs. 84,000/and that no amounts had been
paid by the mortgagors towards their liability. The
appellant requested the Claims Officer to allow his claim,
as per the provisions of the Act.
The respondents filed objections to the claim made by the
appellant. In short, their plea was that the appellant had
not given credit for a sum of Rs. 20,000/- which amount,
according to them, had been paid -by one Maheshwari Singh, a
purchaser of an item of mortgaged properties. They also
alleged that the appellant had not given credit, similarly
to another sum of Rs. 3,250/- paid by one Baldeo Singh, a
purchaser of another item of the mortgaged properties. The
last contention raised by them was that the appellant had
realised, as income from the properties, a sum of Rs.
9,00,000/- and therefore the entire mortgage liability stood
discharged. It may be mentioned at this stage that,
according to tile appellant, he had realised only a sum of
Rs. 23,250/- as income from the properties, which were in
his possession.
The Claims Officer, by his order dated April 18, 1956, ulti-
mately held that the appellant was entitled to recover a sum
of Rs. 40,514/10/- out of the compensation money in respect
of his mortgage claim. The Claims Officer was not prepared
to accept the plea of the respondents regarding the payment
of Rs. 20,000/by Maheshwari Singh.
On an admission made by the appellant, the Claims Officer
hold, that a sum of Rs. 2,309/8/- had been received by the
appellant, from a purchaser of one item of the mortgaged
properties and that the respondents were entitled to be
given credit for that amount. The Claims Officer accepted
the plea of the respondents that, in respect of the house in
Gaya, a ratable reduction of Rs. 2,500/- might be made, out
of the principal amount. The Claims Officer was not
prepared to accept the plea of the respondents that the
appellant had received, by way of income from the mortgaged
properties in his possession, a sum of Rs. 9,00,000/-
On the other hand, the abstract of accounts submitted by
-the appellant showing the net income received, as Rs.
22,340/3/2, has been accepted by the Claims Officer. The
Claims Officer had also held that the principal amount
advanced by the appellant should be fixed in the sum of Rs.
45,324/-.
on these findings, the Claims Officer came to the conclusion
that no, portion of the principal amount had been satisfied
out of the unsufruct of the property given on mortgage,
except the sum
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of Rs. 2,309/8/- received by the mortgagee, from the
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purchaser of an item of the mortgaged properties. A further
reduction of Rs. 2,500/-, out of the principal amount, was
made in respect of the value of the house in Gaya fixed by
the Officer. In the result, the Claims Officer allowed the
claim of the appellant in the sum of Rs. 40,514/10/-
The respondents challenged this decision of the Claims
Officer, in Claim Appeal No. 22 of 1956, before the Board,
constituted under s. 18(1) of the Act. Inasmuch as the
claim appeal involved a claim exceeding Rs. 10,000/-, the
Board, as per s. 18(1)(a) of the Act, consisted of a Judge
of the Patna High Court, namely Misra, J.
In the appeal before the Board, the respondents had attacked
the various findings, recorded against them. by the Claims
Officer.
Before we refer to the findings recorded by the Board, it is
necessary to advert to an application filed by the appellant
before the Board. The appellant filed an application, dated
November 9, 1959, before the Board, for permission to
withdraw the claim case preferred by him before the Claims
Officer and also requesting that further proceedings in the
claim appeal, filed by the respondents, be dropped. In-
that application, the appellant had stated that the claim
appeal arose, out of an order, passed by the Claims Officer,
on an application filed by the appellant under s. 14 of the
Act. It was further stated that the respondents Were the
proprietors and that they had mortgaged certain properties
by way of a usufructuary mortgage to the appellant for a
total sum of Rs. 84,000/The appellant referred to the fact
that the Claims Officer had found that the principal amount
still remained unsatisfied, and that the decision of the
Claims Officer was being challenged by the respondents. The
appellant then stated that he had been advised, and that he
also believed it to be in his interest, not to proceed with
his claim case and that he would follow such other remedy,
as the law permitted.
That application was opposed by the respondents. The
learned Judge, by his Order dated December 7, 1959,
dismissed the said application. In the order dismissing the
application, after referring to the circumstances, under
which the claim application was made by the appellant, and
the findings recorded by the Claims Officer, the learned
Judge referred to the fact that the appellant’s request was
for withdrawal of the claim, without any reservation
whatsoever. The learned Judge adverted to certain
decisions, quoted before him, and was of the view that the
principles laid down in those decisions were to the effect
that if the result of allowing the prayer for withdrawal
would be to prejudice the interest of the opposite party,
the application for withdrawal should not be
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granted. But the learned Judge did not actually record in
this order, what exactly would be the prejudice caused to
the respondents by allowing the appellant to withdraw his
claim application. Nevertheless, the learned Judge was not
inclined to allow the request of the appellant to withdraw
his claim application.
When the claim appeal was being heard by the learned Judge,
the appellant again appears to have reiterated his request
to withdraw the claim application, as originally asked for,
in his application dated November 9, 1959. The learned
Judge, again, was not inclined to accept that request. In
this connection, he referred to a decision of the Patna High
Court in Sukhdeo Das v. Kashi Prasad(1) to the effect that
though it was open to a mortgagee either to proceed against
the compensation money, as part of the mortgage security, or
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enforce his right against the mortgagor personally or
against the mortgage security that had not vested in the
State,. nevertheless, it was not open to the mortgagee to
proceed simultaneously, to enforce his right under the
ordinary law, as also under the Act. The learned Judge also
referred to the principle laid down in the said decision
that, under those circumstances, the mortgagee would have to
elect ; and that, once he had elected his remedy by having
recourse to the procedure under the Act, he was bound down
to it and he could not resile from that position.. The
learned Judge was also of the view that in this case the ap-
pellant, having filed his claim under s. 14 of the Act, and
a decision having been given by the Claims Officer, it was
the duty of the Board, sitting in appeal, only to decide the
correctness or other_ wise of the order passed by the Claims
Officer, In consequence, he was of the view that when once
the prayer of the appellant for withdrawal had been
rejected, he had to proceed to decide the case on merits, as
per the provisions of the Act.
After having expressed his view in the manner indicated
above on the request of the appellant for withdrawing the
claim application, the learned Judge then considered the
appeal filed by the respondents, on merits. He was not
prepared to accept the finding of the Claims Officer that
the sum of Rs. 20,000/- had not been established to have
been paid to the appellant by Maheswari Singh, the purchaser
of one item of mortgaged properties. In this connection, he
referred to the evidence adduced by the parties and, ulti-
mately, held that the sum of Rs. 20,000/- must have been
paid by Maheshwari Singh to the mortgagee-appellant and the
mortgagors should be given credit for that amount.
There was no controversy regarding the receipt by the appel-
lant of Rs. 2,309/8/- in respect of the purchase, of an item
of the mortgaged property by Baldeo Singh; and that amount
also was given credit to in favour of the respondents.
Regarding the claim
(1) A.I.R. 1958 Pat. 630.
61
made by the respondents that the appellant, when he was in
possession of the mortgaged properties, had realised nearly
nine lakhs of rupees, by way of income from the properties,
the learned Judge was of the view that there had only been a
general finding recorded by the Claims Officer in favour of
the appellant. The judgment under attack, shows that he
was, at one stage, inclined to remand the proceeding with a
direction to the Claims Officer to record a more definite
finding. But he ultimately came to the conclusion that it
was not necessary to remand the proceeding, inasmuch as the
claim of the respondent could be adjudicated upon on the
basis of the evidence adduced by the parties and other
circumstances.
In this connection, the learned Judge adverted to the plea
of the appellant that he had realised, by way of rents and
profits, only a sum of Rs. 22,000/-. He was, ultimately, of
the view that the appellant should have derived at least
income, at the rate of 3 %, and on that basis he should have
received a sum of Rs. 75,600/by way of interest on the sum
of Rs. 84,000/- claimed to have been advanced as principal.
The learned Judge, after giving credit to the additional sum
of Rs. 23,009/- mentioned above, ultimately held that the
total amount received by the appellant would be Rs. 97,909/-
; and, after referring to the provisions of s. 16 of the
Act, was of the view that the appellant would be entitled to
a total sum of Rs. 85,000/which is double the amount of
principal of Rs. 42,500/-. But, in view of the finding
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recorded that the appellant had already received a sum of
Rs. 97,909/-, he held that the appellant-creditor had
realised more than double the amount of principal, and
therefore, further held that the mortgage claim of the
appellant should be considered to have been fully discharged
and that no further amounts were due to him. In the result,
the claim appeal, No. 22 of 1956, filed by the respondents,
was allowed and the claim application filed by the appellant
was dismissed.
Mr. N. C. Chatterjee, learned counsel for the appellant,
challenges the decision, substantially, on two grounds : (i)
that the view of the learned Judge that the appellant,
having filed a claim petition under s. 14 of the Act, must
be considered to have elected to adopt the remedy available
to him under the Act and, as such, is not entitled to
proceed under the general law, as against the properties,
which have not vested in the State under the Act, to enforce
his mortgage claim, is not correct ; (ii) the findings re-
corded by the learned Judge, on facts, differing from the
conclusions arrived at by the Claims Officer, are not
correct.
In this appeal, the appellant has also attacked the reasons
given by the learned Judge for declining to grant permission
to him to withdraw the claim application.
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Mr. Chatterjee has urged that, inasmuch as the mortgage
comprises properties which have vested in the State under
the Act and properties which have not so vested, there is no
question of the appellant being bound to seek relief before
the Claims Officer, under the Act, in respect of properties
which have not vested in the State. According to counsel,
the various provisions of the Act will clearly show that the
scheme of the Act is only to confer jurisdiction on the
Claims Officer to entertain claims, in respect of the
mortgages, which take in either the entire properties or
part of the properties which have vested in the State. The
Act does not, in any manner, take away the right of such a
mortgagee to realise his dues, by having recourse to the
remedies available to him from the properties, which have
not vested in the State.
It is argued that the request made by the appellant before
the learned Judge was to permit him to withdraw his claim
petition ; and the appellant had made it clear that his
object was to seek remedy, in law, as against the mortgaged
properties which have not vested in the State. According to
the appellant, the learned Judge has also not found, as to
what exactly is the prejudice which will be caused to the
respondents by the appellant being allowed to withdraw the
claim petition. The only reason given by the learned Judge,
according to the appellant, for not permitting the
withdrawal of the claim petition, is that the appellant has
filed a claim petition under the Act and that he must be
considered to have elected to adopt the remedy available
under the Act. The question of election, does not arise,
inasmuch as the appellant has got a right to seek relief
under the general law to enforce his mortgage claim in
respect of the properties which have not vested in the
State. If the appellant is not, in any way, prohibited from
seeking such relief, according to Mr. Chatterjee, the
application for withdrawal made by his client should have
been allowed.
Mr. Jha, learned counsel for the respondent, has urged that
the appellant voluntarily filed a claim petition before the
Claims Officer, under S. 14 of the Act, in which he has
specifically prayed for adjudicating upon the claim made by
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him. According to Mr. Jha, the Act, in question, is a self-
contained Code and it gives jurisdiction to the Claims
Officer to adjudicate upon all matters pertaining to the
mortgage claim made by the appellant.
Having filed the claim in question and, after obtaining a
decision at the hands of the Claims Officer, the counsel
urges, it is no longer open to the appellant to seek
withdrawal of the same. According to Mr. Jha, the Act gives
jurisdiction to the Claims Officer, even if the mortgage
consists of properties which have vested in the State as
also properties which have not so vested.
In this connection, Mr. Jha referred us to the provisions
contained in ss. 4(d) and 35 of the Act as a bar to any
claim being made by the appellant before any other Court.
63
Mr. Jha points out that the application for withdrawal, made
by the appellant, purported to be under Order XXIII, r. 1,
C.P.C., which has no application at all to proceedings under
the Act, which does not contain any provision relating to
withdrawal of claims. It is also pointed out that the
request for withdrawal was made in the appeal filed by his
clients challenging the decision of the Claims, Officer to
the extent it was against the respondents. Mr. Jha further
points out that the respondents, in such an appeal, cannot,.
as of right, ask for withdrawal of his claim and, in any
event, in this case the learned Judge has declined to
exercise his discretion in favour of the appellant.
Therefore, Mr. Jha points out, no circumstances have been
made out by the appellant, justifying an interference with
the discretion so exercised.
The findings recorded on facts, by the learned
Judge, are also,challenged on behalf of the appellant ;
and those findings no doubtare sought to be supported on
behalf of the respondents. But, inthe view that we take,
that the appellant’s request for withdrawalof 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 these proceedings.
From what is stated above, it will be seen that
the question that arises for consideration is, as to
whether, in a case where a mortgage takes in two sets of
properties, viz., properties which have vested in the
State, under the Act, and properties which have not so
vested, the right of the mortgagee to pursue the remedy
available to him under the ordinary law, as against the
properties which have not vested in the State for enforcing
his mortgage claims, is in any manner taken away by the Act.
If we 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.
The scheme of the Act has been considered by this
Court in two decisions : Raja Sailendra Narayan Bhanj Deo
v. Kumar Jagat Kishore Prasad Narayan Singh(1) and Krishna
Prasad v. Gauri Kumari Devi.(2)
In Sailendra Narayan’s case(1), the question
related to the effect of a decree for redemption obtained by
the mortgagor, after the coming into force of the Act, and
the entire property, whichwas the subject of mortgage
and the decree, vesting in the State. After referring to
the material provisions contained in the
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(2) [1962] Supp. 3 S.C.R. 564.
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Act, including ss. 4(d) and 35 of the Act, this Court held
that the decree for redemption, which had been passed prior
to the Act, became infructuous.
In Krishna Prasad’s case,(1) this Court had to consider the
question as to whether a mortgagee, who had obtained a
decree, -can execute his personal decree against the
mortgagor by attachment and sale ofproperties which
were not the subject of mortgage, without having recourse
to the provisions of the Act. In that case, the wholeof
the property mortgagee had vested in the State under the
Act. the mortgagee had filed a suit on the mortgage and
obtained a decree providing that the mortrgagee decree
holders We be entitled to have a personal decree against
the mortgagor judgment debtor,after exhausting his remidies
asagainst the mortgaged property.Before the decree-holder
could realise the decree amount by sale of the mortgaged
properties, the Act had come into force ; and, under the
provisions of the Act, the entire mortgaged properties had
vested in the State of Bihar. Under those circumstances,
the decree-holders attempted to recover the ,decree amount,
by attachment and sale of certain other properties,
belonging to the judgment-debtor. Objection was taken by
the judgment-debtor on the ground that the decree-holders
were bound to seek their remedies, from the compensation
amount payable to the mortgagors under the Act and that the
decree-holders could not proceed against the non-mortgaged
properties. This Court, again, after referring to the
various provisions of the Act, held that the scheme of the
Act postulates that where the provisions of the Act apply,
claims of creditors have to be submitted before the Claims
Officer and that the claimants have to follow the procedure
prescribed under the Act. This Court has also held that the
creditors cannot avail of any remedy outside the Act by
instituting a suit or any other proceeding in the court of
ordinary civil jurisdiction. Ultimately, this Court held
that without having recourse to the remedy provided under
the Act, a creditor had no right to execute a personal
decree as against the non-mortgaged properties. This Court
also held that inasmuch as the whole of the mortgaged
properties in that case was an estate, it was unnecessary 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. In that decision, this Court also
observed that it was unnecessary to consider whether s. 4(d)
would create a bar, even in cases where the compensation
amount payable to the mortgagor is insufficient to satisfy
the mortgagee-decree holder’s claim even to the extent of
the amounts sealed down under s. 16.
From the principles laid down by this Court in the above two
decisions, it follows that where the whole of the property
mort-
(1) [1962] Supp. 3 S.C.R. 564.
65
gaged 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 the Act.
What then is the position, when a mortgage comprises, not
only properties which have vested in the State under the Act
but also takes in other items of properties which are
outside the purview of the Act ? Under those circumstances,
is the mortgagee still bound to apply to the Claims Officer
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and follow the procedure indicated by the Act ? This raises
the question left undecided in Krishna Prasad’s case.(1)
According to Mr. Chatterjee, learned counsel for the
appellant, there is absolutely no indication in the Act that
any such obligation has been imposed on the mortgagee to
invoke the provisions ,of the Act. The counsel points out
that whatever may be the position, so far as the properties
which have vested in the State are concerned, the mortgagee
is entitled to enforce his claims, under the ordinary law,
as against the properties which have not vested in the
state. Learned counsel points out that the prohibition
enunciated in ss. 4(d) and 35, have no application at all to
any action that may be taken by the appellant in the
ordinary civil courts, as against the properties which have
not vested in the State. The mere fact that his client,
counsel points out, has filed an application before the
Claims Officer under s. 14 of the Act, cannot, in law, take
away his ordinary right to enforce his claim as against the
non-vested properties. Counsel also points out that in
order to enable the appellant to work out his rights as
against the non-vested properties, he made a request to the
learned Judge for withdrawing ,his claim petition.
According to learned counsel, inasmuch as his client has two
independent remedies in respect of the two sets of
properties, viz., of making a claim under the Act in respect
of the vested properties and of having recourse to his
right, under the ordinary law to enforce the mortgage
liability as against the non-vested properties, the
appellant cannot be forced to make any election. The
application made by the appellant, for withdrawal, was for
the purpose of enforcing his rights, as against the non-
vested properties and that request should have been allowed.
Mr. Jha, learned counsel for the respondents, pointed out
that the Act gives jurisdiction to the authorities to
adjudicate upon all claims arising under a mortgage when a
claim petition is filed under s. 14 of the Act and
therefore, in this case, inasmuch as the appellant had filed
an application under s. 14, it should be considered that the
appellant had elected to adopt the remedies
available to him under the Act.
(1) [1962] Supp. 3 S.C.R. 564.
66
Mr. Jha referred us to the Full Bench decision of the Patna
High Court in Sukhdeo Das’ case,(1) referred to earlier. In
that 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
mortgage money. 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.
These later observations have also been approved by another
Full Bench of the same High Court in Siddheshwar Prasad v.
Rain Saroop(2). In this case, the High Court poses one of
the questions arising for consideration thus : ’What is the
remedy of the mortgagee where the mortgaged property partly
vests and partly not?’. In discussing this question, the
High Court has held that s. 4(d) will be a bar to a suit or
execution proceeding, so far as vested properties are
concerned : but the creditor-mortgagee will be entitled to
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prosecute the suit or execution proceedings as regards the
estate or portions of estates which have not Vested in the
State. But the High Court also observes
"Where the mortgaged property consists of both
vested and non-vested property it is open to
the creditor to make an election as to the
choice of his remedies. He may give up his
right of filing a claim under section 14 with
respect to the vested estate, and prosecute
the suit or execution proceeding so far as
estates which have not vested, in the Civil
Court. Or he may give up his remedy in the
Civil Court and prosecute his claim solely
under section 14 before the claims officer."
Here, again, it will be noted that the opinion expressed by
the Patna High Court, that so far as claims relating to
properties which have vested in the State are concerned, the
procedure indicated in the Act will have to be followed and
that s. 4(d) will be a bar to a suit or execution
proceedings in respect of the vested estates, is correct.
Considerable reliance has been placed by learned counsel for
the respondent, on the observations of the Full Bench that a
creditor will have to make an election as to the choice of
his remedies.
No doubt, the observations extracted above, prima facie,
support the contentions of the learned counsel for the
respondent.
(1) A.J.R. 1958 Pat. 630.
(2) A.I.R. 1963 Pat. 412.
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But the question is whether those observations are
justified, having due regard to the various provisions
contained in the Act. We have referred to the two decisions
of this Court in Sailendra Narayan’s case(1) and Krishna
Prasad’s case(2), dealing with cases of mortgages,
comprising wholly of properties which have vested in the
State under the Act. We have also referred, in the earlier’
part of this judgment, to the principles laid down by those
decisions to the effect 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 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 s. 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
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with reference to estates that have vested in the State. In
our opinion, the prohibition contained in ss. 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.
We are further of opinion that, while in respect of the
estates, 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 s. 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.
(1) [1962] Supp. 2 S.C.R. 119.
(2) [1962] Supp. 3 S.C.R. 564-
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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 s. 14, must be considered to have elected his remedy
under the Act, and therefore he should not be permitted to
withdraw the claim.
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 s. 14 of the Act.
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 respondent, 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 appellant’s request for withdrawing the
claim being granted, more especially, in view of the limited
request made by him, to which we will advert presently.
As we have already indicated, the appellant’s 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
appellant’s 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
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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 his 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.
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We accordingly grant the request of the appellant to with-
draw Claim Case No. 14 of 1956 filed by him before the
Claims Officer, Gaya, in terms of the appellant’s
application dated November 9, 1959, and made to the Board.
But, as and when the appellant seeks any remedy, to enforce
his mortgage, as against. the properties which have not
vested under the Act, that Tribunal or Court may have to
apply the principle of Marshalling.
In the result, the appeal is allowed and the claim petition
is permitted to be withdrawn, as indicated above. We make
it very clear that we have not expressed any opinion on the
various findings.. recorded, either by the Claims Officer,
or by the learned Judge.
Inasmuch as the appellant himself initiated the proceedings
under s. 14 of the Act, which brought about this situation,
we direct that the parties will bear their own costs in this
appeal.
G.C.
Appeal allowed.
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