08 October 1953
Supreme Court
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DEPUTY COMMISSIONER, HARDOI Vs RAMA KRISHNA NARAIN AND OTHERS.

Case number: Appeal (civil) 59 of 1951


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PETITIONER: DEPUTY COMMISSIONER, HARDOI

       Vs.

RESPONDENT: RAMA KRISHNA NARAIN AND OTHERS.

DATE OF JUDGMENT: 08/10/1953

BENCH: MAHAJAN, MEHR CHAND BENCH: MAHAJAN, MEHR CHAND MUKHERJEA, B.K. JAGANNADHADAS, B.

CITATION:  1953 AIR  521            1954 SCR  506

ACT:  U.   P. Encumbered Estates Act, 1934, s. 11  (2)-Proceedings  under s. 11(2)-Appeal from order rejecting claim-  Creditors  who did not take active steps-Whether necessary parties.

HEADNOTE: Creditors who did not take an active part in the proceedings are  not  necessary  parties  to an  appeal  from  an  order rejecting a claim made in a proceeding under section 11  (2) of  the U. P. Encumbered Estates Act, 1934.   The  technical rules  of the Civil Procedure Code regarding the  impleading of  parties should not be applied to such proceedings.   The matter should be viewed in a more liberal way, regard  being always  had to the fact that there is no  collusion  between the debtor and the claimant. I  Rameshwar  v.  Ajodhia Prasad  (A.I.R.  1941  Oudh  580), Chaudhri Bishuanth Prasad v. Sarju Saran Tewar (A.I.R.  1942 Oudh  16),  Lakshmi Narain v. Satgurnath (A.I.R.  1942  Oudh 339)  and Benares Bank Ltd. v. Bhagwandas (A.I.R. 1947  All. 18) overruled.

JUDGMENT: APPELLATE JURISDICTION: Civil Appeal No. 59 of1951. Appeal  from the Judgment and Decree dated the 22nd  August, 1944,  of the High Court of Judicature at  Allahabad  (Verma and  Hamilton JJ.) in First Appeal No. 345 of  1940  arising out of the Judgment and Decree dated the 24th August,  1940, of the Court of the Special Judge, 1st Grade of Shahjahanpur in Miscellaneous Case No. 52 of 1940 and Original Suit No. 2 of 1938. Chaudhry  Niamutullah (Gopalji Mehrotra, with him)  for  the appellant. Onkar  Nath Srivastava for respondent No. 5. 1953.   October 8. The Judgment of the Court was delivered by MAHAJANN J . 507 MAHAJAN J.-This appeal is before us on a certificate granted by  the High Court of Judicature at Allahabad under  section 110  of  the Code of Civil Procedure and the only  point  it raises  is whether the appeal preferred by the appellant  to

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the High Court was imperfectly constituted, inasmuch as  all the creditors were not impleaded as parties to that appeal. The  facts are that on the 28th October, 1936, Rama  Krishna Narain  and others submitted an application under section  4 of  the  U.  P. Encumbered Estates Act, 1934,  to  the  sub- divisional  officer, Tilhar, Shahjahanpur, praying that  the provisions  of  the  -said Act be  applied  to  them.   This application was eventually transferred by the sub-divisional officer  to  the court of the special  judge,  first  grade, Shahjahanpur.  The landlords on 26th August, 1938, submitted a written statement to the special judge under section 8  of the  Act and therein stated inter alia that they had a  pro- prietary  interest  to the extent of ten annas share  in  52 items  of  taluqdari villages which formed  part  of  taluka Bharawan.   A  notice of this application was  published  as required  by  section 11(1) of the Act in the  U.P.  Gazette dated  13th  May, 1939.  On 30th November,  1939,  Raja  Dev Singh, who subsequently became a ward of the Court of Wards, filed  a claim petition under section 11(2) of the  Act  and alleged  therein  that he was the proprietor of 6  1/2  pies share in 47 items of property mentioned in schedule (A)-  of the   landlords’   written  statement.   This   claim   was. disallowed  by  the  special judge by an  order  dated  24th August,  1940, and it was held that Raja Dev Singh  was  not the  owner of the property claimed by him in  his  objection petition.   The  Deputy Commissioner of Hardoi  who  is  the Court  of Wards of Bharawan estate filed an  appeal  against this  decision of the special judge to the High Court.   All the applicant-landlords were impleaded as respondents in the appeal along with the Unao Commercial Bank Ltd., one of  the creditors  who had taken part in the proceedings before  the special  judge at that stage.  It does not appear  from  the record  that  the other creditors had either  filed  written statements 67 508 under  section  10  or  had made  any  allegation  that  the landlords  had secreted any property.  Their names were  not mentioned  in the memorandum of parties annexed to the  memo of costs, and in these circumstances they were not impleaded as  respondents in the appeal.  Subsequently  the  appellant made  an application for impleading them as  respondents  in the  appeal  and  prayed that he be  given  the  benefit  of section  5 of the Indian Limitation Act.   This  application was rejected, and eventually the appeal was dismissed on the ground  that it was. defective and could not be  entertained in  the absence of all the creditors as respondents  in  the appeal.   The, cross-objection filed by the Unao  Commercial Bank with respect to costs was allowed. The  appellant on 21st November, 1944, filed a petition  for leave  to appeal to His Majesty in Council.  It was  alleged in this application that the valuation of the subject-matter of  the  appeal  in the trial court in the  High  Court  and before  His Majesty in Council was over Rs. 10,000 and  that though  in  the result the judgment and decree of  the  High Court affirmed the judgment and decree of the trial court  , a substantial question of law affecting not only the parties but of general interest was involved.  The High Court  with- out  deciding  whether  the  appeal  raised  a   substantial question of law granted leave to the appellant under section 110  of the Code of Civil Procedure on the ground  that  the judgment  of the High Court being -one of variance, and  the value  of the subject.-matter in dispute in the trial  court as  well  as in the appeal to His Majesty in  Council  being over Rs. 10,000, the case fulfilled the requirements of that

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section.  Mr. Srivastava who represented the debtors-landlords before us raised a preliminary objection that the certificate under section  110 of the Civil Procedure Code was  defective  and the appeal was thus incompetent and could not be entertained by  us.   He contended that the only variation made  by  the High Court in the judgment of the trial judge was in respect of  costs and such a variation in the matter of  costs  only did not invoice the decree a decree of variance, and that 509 being.  so, the ground on which the High Court  had  granted the  certificate  was erroneous and  the  certificate  being defective  this appeal could not be heard.  In our  opinion, this contention is without force.  It is no doubt true  that costs  are not taken into consideration and are  treated  as extraneous to the subjectmatter of a suit, and variation  in the  matter  of  costs  does not  make  the  decree  of  the appellate court a decree of variance; but as already stated, the  appellant  did  not pray for the  certificate  on  that ground.  He had expressly alleged that the decree being  one of affirmance he was entitled to a certificate, because  the subject  of the suit as well as of the appeal was a  sum  of orver  Rs.  10,000  and  the  case  involveda4   substantial question of law.  It is obvious that the ground on which the appeal was dismissed by the High Court raises a question  of law of importance to the parties and that being so, on  that ground  alone  the appellant was entitled to  a  certificate under  section I 10, Civil Procedure Code.  The  certificate therefore  is  good,  though the -around  on  which  it  was granted is erroneous.  It is always open to an appellant  to support  the  certificate on grounds other  than  those,  on which  it  has  been  actually ordered  to  be  given.   The preliminary objection therefore fails. In  order to determine whether the creditors  are  necessary parties  in proceedings under chapters 3 and 4 of  the  U.P. Encumbered  Estates Act, 1934, it is necessary to  refer  to the relevant provisions of the Act.  The law was enacted for giving  relief  to  encumbered estates in U.  P.  Section  4 provides  that  any  landlord, who is subject  to  or  whose immoveable  property or any part thereof is encumbered  with private  debts,  may make an application in writing  to  the Collector  of  the  district, stating  the  amount  of  such private debts and also of his public debts both decreed  and undecreed and requesting that the provisions of this Act  be applied to him.. The section gives an option to the landlord who  is subject to private debts to make an application  for obtaining  relief  under  the provisions of  the  Act.   The Collector  then  transmits the application  to  the  special judge appointed under the Act. 510 The  direct  consequence  of  the  acceptance  of  such   an application  by  the  collector is that  the  creditors  are deprived  of  their  rights of  proceeding  against  such  a landlord  in  civil or revenue courts in  respect  of  their debts  and  all  attachments made in  execution  of  decrees become  null and void and no process in execution can  issue after  that  date.  The provisions of the  Act  are  clearly detrimental  to the contractual rights of the creditors  and to their remedies in civil law and such a statute can by  no stretch of imagination be described to have been enacted for the  benefit  of creditors.  Section 8 of  the  Act  confers power on the special judge of calling upon the applicant  to submit  to him within a period to be fixed -by him  in  this behalf,  a  written statement  containing  full  particulars respecting  the  public  and private debts to  which  he  is

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subject or with which his immoveable property is encumbered; of the nature and extent of his proprietary rights in  land; of the nature and extent of his property which is liable  to attachment and sale; and lastly, of the names and  addresses of  the creditors, so far as can be ascertained by him.   If the applicant fails to submit a written statement as  called for or furnish the information referred to in the proviso to sub-section  (2), the special judge is empowered to  dismiss the  application.  The landlord is not required  to  implead any creditors as party respondents in his written statement, but  he has to furnish information, regarding the names  and addresses  of his creditors so far as they are known  to  or can   be  ascertained  by  him  and  his  failure  to   give information  may result in a dismissal of  the  application. Section  9  requires  the special judge to  publish  in  the official  gazette  a  notice in  English  calling  upon  all persons  having  claims  in respect of  private  debts  both decreed and undecreed against the person or the property  of the  landlord to present to the special judge  within  three months  from  the date of the publication of the  notice,  a written  statement of their claims.  He is also required  to cause copies of such notice to be published in such paper or papers as he may direct and to exhibit it at his own office, at the office of the collector and at some                             511 conspicuous place where the landlord resides.  He is further directed  to  send a copy of the notice and a  copy  of  the written  statement  under sub-section (1) of  section  8  by registered  post  to each of the creditors whose  names  and addresses are mentioned in the statement under clause,(d) of sub-section (1) of section 8. Section 10 provides that every claimant  referred  to  in section 9 shall  in  the  written statement  of  his claim give full particulars  thereof  and shall  state  so  far  as - they are  known  to  or  can  be ascertained by him, the nature and extent of the  landlord’s proprietary rights in the land and the nature and extent  of the  landlord’s  property other than proprietary  rights  in land.   The  provisions of this section not only  require  a creditor  to give particulars of his own debt but also  give him  opportunity to contend that the landlord  has  secreted some property.  Section 11 (1) of the AA directs the special judge to publish a notice specifying the property  mentioned by  the applicant under section 8 or by any  claimant  under section 10.  The object of the provisions made in section 11 (1)  is to find out the extent of the property that  can  be utilized to-wards liquidation of the debts ascertained under the  subsequent  provisions  of the  Act.   Section  11  (2) provides as follows:- Any  person  having any claim to the property  mentioned  in such notice shall, within a period of three months, from the date  of  the  publication of the  notice  in  the  official gazette make an application to the special judge stating his claim  and  the special judge shall  determine  whether  the property  specified  in the claim, or any  part  thereof  is liable to attachment sale or mortgage in satisfaction of the debts of the applicant." Sub-section (3) directs the special judge to determine  such claims before he proceeds to determine the amount due to any creditor  under section 14.  He is further directed  not  to pass  any  decree  under section 14 until the  expiry  of  a period of one month from the last day on which he determines a  claim under section 11.  Sub-section (4) off  section  11 provides  that any order passed by the special  judge  under this section shall be 512

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deemed  to  be  a  decree of  a  civil  court  of  competent jurisdiction.   Section 13 enacts that every claim,  decreed or undecreed against the landlord shall, unless made  within the  time prescribed be deemed for ;III purposes and on  all occasions  to  have been duly discharged.  Section  14  lays down the procedure for determination of the amount of debts. The  judge  is  directed  to give  notice  of  the  date  of enquiring into the claims of the creditors to the  different claimants  and  to the person who has made  the  application under ,section 4. He is directed to examine each claim after hearing  all  such parties as desire to be heard  and  after considering  the  evidence, if any, produced by  them.   The section  lays down them mode of calculating interest on  the amount  of such claims and provides for the  application  of the provisions of the Usurious Loans Act to the  proceedings under the Act.  Sub-section (7), provides as follows:----    "If the special judge finds that any amount is due to the claimant be shall pass a simple money decree for such amount together  with  any costs which he may allow in  respect  of proceedings  in  his court and of proceedings in  any  civil court stayed under the provisions of this Act, together with pendente lite and future interest at a rate not greater than the  rate  specified in section 27 and if he finds  that  no amount  is due, he may pass a decree for costs in favour  of the landlord.  Such decree shall be deemed to be a decree of a’  civil  court  of competent jurisdiction  but  no  decree against  the landlord shall be executable within the  United Provinces except under the provisions of this Act."  Section 18 provides that subject to the right of appeal or revision, the  effect  of  a decree of the special  judge  under  sub- section  (7)  of  section  14 shall  be  to  extinguish  the previously  existing  rights,  if  any,  of  the   claimant, together  with  all rights, if any, of mortgage or  lien  by which the same are secured and, where any decree is given by the special judge to substitute for those rights a right  to recover  the amount of the decree in the manner and  to  the extent  specified  in  the Act.   Section  45  provides  for appeals  and  revisions against orders and  decrees  of  the special judge. 513 It  is apparent from the provisions of the Act  cited  above that  the U.P. Encumbered Estates Act is no more,  nor  less than,  a  code for the administration of the assets  of  the landlord-debtor and for giving relief to him in a number  of ways  against the contractual rights of his  creditors.   It clearly  deprives  the creditors of any remedies  that  they would   ordinarily  have  in  ordinary  civil   courts   and extinguishes the mortgages held by them.  Sectional(2) deals with claims of third parties to the property alleged by  the landlord  as belonging to him and the judge is  required  to determine  whether such property is liable to attachment  or sale.  It is noteworthy that under section 14(1) the special judge is directed to follow a certain procedure, but no such procedure is prescribed under section 1 1(2).  In section 14 he is required to fix a date and to give notice of the  date of  inquiring  into the claims of the creditors to  all  the claimants.  There is no such parallel requirement in respect of claims of third parties under section 11(2), though as  a matter of practice similar procedure is also followed in  an enquiry under this section. The   question   that  requires   consideration   in   these circumstances is -whether the rules of the first schedule to the Code of Civil Procedure should be rigorously applied  to proceedings  under the Encumbered Estates Act,  and  whether the creditors who are no doubt’ .persons interested in those

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proceedings and who would ultimately be entitled to  recover their  decretal debts from the property the extent of  which falls for determination in an enquiry under section II,  are necessary  parties  in  the enquiry, or  are  merely  proper parties  thereto and as such entitled only to notice of  the proceedings.   Order 1, Rules I and 3 of the Code  of  Civil Procedure,  provide in regard to the persons who are  to  be joined  as  plaintiffs  or those who have to  be  joined  as defendants in suits.  Rule 1 is in these terms:- "All persons may be joined in one suit as plaintiff, in whom any right to relief in respect of or arising of the same act or  transaction or series of act transactions is alleged  to exist, whether 514 severally  or  in the alternative, where,  if  such  persons brought  separate suits, any common question of law or  fact would arise." Rule 3-provides:- "  All persons may be joined as defendants against whom  any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is  alleged to exist, whether jointly, severally or in the  alternative, where,  if separate suits were brought aaainst such  persons any common question of law or fact would arise." It  is  apparent that strictly speaking  the  provisions  of these   rules   cannot  be  applied   to   the   proceedings contemplated  by  the U. P. Encumbered Estates  Act.   These proceedings cannot be. described as suits.  It was  conceded at  the  Bar that an inquiry into third party  claims  under section  11(2)  cannot  be described  as  a  suit.   Neither section  8 nor section 1 1 provides that the creditors  have to be impleaded as parties respondents in such an  objection application.  As already said, the section provides that the applicant  has  to give information about the names  of  the creditors and the amounts due to them.  Till the time that a decree  is passed under section 14 in favour of any  of  the creditors  it  cannot  be,  said that any  one  of  them  is entitled to share in the property of the debtor.  It is only when  a claim has been made under section 10 by  a  creditor and  it  has ripened into a decree that he  is  entitled  to share  in the assets of the landlord.  But if he  commits  a default in submitting a written statement of the claim under section  10, the claim stands discharged under  section  13. In  this particular case it is not clear whether any of  the creditors  except the Unao Commercial Bank had made a  claim under section 10.  It is also -not clear whether any  decree under  section  14 has been passed in favour of any  of  the creditors.  An inquiry for the determination of the  quantum of  the debts of the landlord can only be made  after  third party  claims  have  been settled under  the  provisions  of section  11(2).   In  view  of  these  provisions  it  seems difficult to hold that the technical and 515 strict  rules  as to impleading of parties can  have  appli- cation   to  proceedings  under  section  11  of  the   U.P. Encumbered Estates Act.  It is true that the creditors  must be given notice and opportunity to say whether the  landlord has secreted any property, but if they do not do so and  are content  with  the  disclosures made by  the  landlord  they cannot  be said to have any further interest in the  quantum of  the property which the landlord has mentioned under  the provisions  of section 8 in his written statement.  In  that situation,  if  a third party claims any  item  of  property mentioned  by  the landlord in the  written  statement,  the controversy at that stage lies only between the landlord and

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the claimant, though in the result the creditors may  either be  benefited or deprived of some of the ’assets  which  the landlord   discloses  in  the  application  as   liable   to attachment  and sale towards payment of decrees that may  be passed in favour of the creditors. It can well be assumed that the fight at that stage being  a bona  fide fight between the objector and the landlord,  the interests of the creditors will be fully represented by  the landlord and any decision obtained in his favour or  against him would be binding on all the creditors on the  principles enacted  in  explanation 6 to section I 1,  Civil  Procedure Code.   If, therefore, in such a contest the claimant  loses and  the landlord succeeds, then in an appeal  against  that decision  he  need  only implead the  landlord  as  a  party respondent  and  it  is not necessary  to  implead  all  the creditors   as  respondents  merely  on  the   ground   that ultimately  they would be affected by-the result, either  to their  benefit or to their detriment.  The court has  power, if  it  considers  that the presence  of  the  creditors  is necessary at the hearing, to give them notice of the  appeal so that they may have the opportunity of placing their  con- tentions before it.  The observance of such a procedure  may well  conduce to a fair hearing of the appeal, even  if  the creditors have raised no plea of any kind before the special judge.  In a case, however, where the creditors raise a plea that  the  landlord  has secreted certain  property  and  it should be included in the schedule and such property is then claimed by a third                             516 party,  they  may well be regarded as real  parties  to  the controversy  and failure to implead them may result  in  the appeal being imperfectly constituted.  In the situation that arises in the present case the appeal should have been  held to be properly constituted because all those who raised  any controversy  whatsoever as to the ownership of the  property in dispute were impleaded. We  are  fully conscious of the fact that the view  that  we have  expressed above is not in conformity with a number  of decisions  of  the Oudh Chief Court and the  Allahabad  High Court.  It is therefore necessary to examine those decisions in order to see whether the reasons given therein are  sound or erroneous. In Rameshwar v. Ajodhia Prasad(1) a Bench of the Oudh  Court held that all the creditors who were impleaded as parties to the  application under the Act are necessary parties  to  an appeal  by  the  objector against an  adverse  order  passed against him under section 11. -This judgment proceeds on the assumption  that all the creditors having been impleaded  as parties  to  the  application  and  not  having  been   made respondents  in  the appeal, the appeal  became  imperfectly constituted.   In this case the question whether  under  the provisions  of  the Encumbered Estates Act an  applicant  is required to implead creditors as parties to the  application was neither argued nor considered; on the other hand, it was assumed  that  all  the creditors have to  be  impleaded  as parties  in the application made by the claimants under  the Act.   That  assumption  is, of  course,  erroneous.   Under section   4  the  applicant  is  entitled  to  request   the collector, that the provisions of the Act be applied to  him and  relief  given to him under its provisions.  He  is  not required  even  to  give information  about  the  names  and addresses of creditors and no question of impleading  anyone as  a respondent arises at that stage.  When  the  collector has  forwarded this application to the special  judge,  then the special judge is empowered to call upon the applicant to

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file  a written statement and therein he is bound  %to  give information About the (1)  A.I.R. 1941 Oudh 580,                             517 names  and  addresses of his creditors so far  as  they  are known  to him or can be ascertained by him.  In the  written statement  which he is called upon to file on a  requisition by  the special judge he is not called upon to  implead  any persons as parties, in the sense in which that term is  used in the Code of Civil Procedure.  This decision therefore  is not of any help on the point that was argued before us. In  Chaudhri  Bishunath  Prasad v.  Sarju  Saran  Tewari(1), another  Bench of the Oudh Court held that an  enquiry  into the indebtedness of the landlord is to be carried out by the special  judge  in the presence of all the  creditors,  that though  it  is  true that each  creditor  is  interested  in establishing  his  own  debt against  the  landlord,  he  is further  interested that the landlord should not be  allowed to  withhold  any property from the court, and  that  if  ’a claimant  under section I I sets up a title to the  property shown  by the landlord to belong to him, although  the  real contest  may for the time being be between the  claimant  on the  one hand and the landlord on the other hand, it  is  to the  ultimate interest of the entire body of  the  creditors that the property should be held to belong to the  landlord, and  if the decision is in favour of the landlord,  all  the creditors will be entitled to have their debts satisfied out of  such property; but if, however, the decision is  against them, the property will go out of the reach of the creditors and  will not be available to them for the  satisfaction  of their debts.  It was further held that as all. the creditors had  not  been joined as parties to the appeal and  as  they were interested in the result of the appeal, it could not be held that they were wholly unconcerned in the result of  the case  and  therefore the appeal was  not  maintainable.   It seems  to us that in making these observations  the  learned Judges did not clearly bear in mind the distinctions between the provisions of sections 11 and 14 of the Act.  Section 14 lays  down a definite procedure so far as the  enquiry  into the claims of creditors is concerned . Each creditor has  to establish his claim against the landlord as he (1)  A.I.R. 1942 Oudh 16. 518 would  do if he had filed a suit against him.  This  enquiry is made after the quantum of the property of the debtor  has been ascertained under section 11.  As already pointed  out, if any creditor raises any dispute as to the quantum of  the property  as he is entitled to raise such a dispute  in  his written statement filed under section 10, in that  situation it  may  well  be  held that such  a  creditor  is  directly interested  in  the  enquiry under section 11 ;  but  it  is difficult to see that all other creditors who have  accepted the  list  of  property  filed by the  debtor  as  true  are directly  interested in the enquiry under that  section  and are  as such necessary parties and that  without  impleading them the enquiry cannot proceed.  Rules I and 3 of  Schedule I Of the Code of Civil Procedure do not lay down that  every person who is ultimately interested in the result of a  suit should  be impleaded as a defendant.  All that  these  rules insist  upon  is  that  all  persons  should  be  joined  as defendants  against whom any right to relief is  alleged  to exist,  provided  that such right arises in respect  of  the same  act or transaction or series of acts  or  transactions and  the  case is one where common question of law  or  fact would  arise.  It is not possible to hold that the  objector

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can claim any right to relief against the creditors as such. The right to relief in the enquiry under section 11 is  only against the landlord who alleges himself to be the owner  of the  property  which the claimant says belongs to  him,  and creditors have no right of interest in the property  claimed by  the  objector.  The test of ultimate  benefit  therefore laid  down by the Oudh Court for holding that all  creditors are necessary parties in the enquiry under section 11 of the U.P.  Encumbered Estates Act does not fulfil the  conditions laid  down in the Code for impleading parties as  plaintiffs or as defendants.  If they are not necessary parties in  the true  sense of the term in the enquiry under section  11,  a fortiori  failure  to  implead them as  respondents  in  the appeal detective. In Lakshmi Narain v. Satgurnath(1) another Bench of the Oudh Court took the’ same view.  In this case. (1)  A.I.R. 1942 Oudh 339. 519 the  earlier decisions of the Oudh Court were  followed  The view  was  reiterated  that creditors  are  parties  in  the proceedings under the Encumbered Estates Act. In  Benares  Bank Ltd., Benares v. Bhagwandas  (1),  a  Full Bench  of the Allahabad High Court considered this  question and expressed the same opinion as had been expressed in  the Oudh  decisions referred to above.  Mr. Justice Braund,  who was  one  of the Judges constituting the  Full  Bench,  with great  reluctance shared the opinion of the majority  merely out  of respect for the opinion of Pathak J. and it  appears that,  left to himself, he would have held  otherwise.   The majority  judgment was delivered by Pathak J. He  enunciated two  tests  for  deciding whether a  certain  person  was  a necessary  party in a proceeding: (1) that there must  be  a right  to some relief against such party in respect  of  the matter  involved in the proceedings in question, and (2)  it should  not be possible to pass an effective decree  in  the absence  of  such party, and proceeded to observe  that  the creditors  of a landlord who have claimed relief  under  the Encumbered   Estates  Act  are  necessary  parties  to   the proceedings under that Act and that the object of the Act is to compel the landlord to surrender his entire property  for the  benefit of his creditors and to liquidate the debts  of all the creditors in accordance with and to the extent  per- mitted by the Act.  There can be no question that these  are the  true  tests  for  determining whether  a  person  is  a necessary  party to certain proceedings but the question  is whether  judged on these tests the creditors of  a  landlord under  the  U. P. Encumbered Estates Act can be said  to  be necessary parties in an enquiry under section 11.  It  seems to  us  that  in  the first  instance  it  is  an  incorrect assumption  to make that the object of the Act is  to  grant relief  to  the  creditors of a landlord; it  is  quite  the converse.   The object of the Act is to grant relief to  the landlord whose estate is encumbered with debts, by  scaling, down the debts and by depriving the creditors of their (1)  A.I.R. 1947 All. 18. 520 civil  remedies.  The creditors are allowed to  prove  their debts and obtain decrees from the special judge according to the  provisions of and to the extent allowed by the Act  and they  lose  all  their rights on securities  held  by  them. Coming  to  the application of the tests laid  down  by  the learned Judge, it is not possible to hold that any right  of relief exists in an objector under section 11 as against the creditors.   It  is also difficult to see how  an  effective decree cannot be passed as regards title to the property  in

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the absence of creditors.  One test of the effectiveness  of a decree is whether that decree can be executed without  the presence of creditors as regards property decreed in  favour of a claimant.  It is obvious that in execution  proceedings a  warrant of attachment and for delivery of possession  can only  be issued against the owner, viz., the  landlord,  and not against the creditors.  In these proceedings the special judge  can  give  no  relief to  the  objector  against  the creditors.   So on the tests mentioned by the learned  Judge it is clear that the creditors of a debtor are not necessary parties  in  these  administrative  proceedings  under   the Encumbered  Estates Act, though they may be given notice  of those  proceedings and afforded opportunity to  watch  those proceedings  in  order to see that no property  is  secreted from  them and it is preserved for satisfaction  of  decrees that may eventually be passed in their favour. In  his judgment Pathak J. proceeded to observe that  though the landlord is a, party to the dispute under section 11, it is obvious that the main party who is vitally interested  in that  dispute is the entire body of creditors,  because  the issue  that  arises  out of such a  -claim  is  whether  the property which is the subject matter of the claim is  liable for the satisfaction of the debts due to the entire body  of creditors.  This statement also, in our opinion is not  very precise.   It  is not correct to say that the  result  of  a decision,in  such  a  claim makes the  property  liable  for satisfaction  of debts due to the entire body  of  creditors who had made claims at that stage.  The property is only 521 liable  for  satisfaction  of decrees  that  may  be  passed subsequently  under section 14.  It may well be that of  the persons who have been disclosed as creditor under section 8, a number of them may not at all be interested in the  result of  the  decision of the claim under section II.  It  is  an overstatement  to  make that the main party who  is  vitally interested in the dispute is the entire body of creditors ’. The  dispute relates to title to property and  according  to all  principles  of  impleading of parties  it  is  not  the eventual  benefit  that a person may derive from  a  certain decision  that  is the crucial test in  deciding  whether  a party is a necessary party or merely a proper party.  Pathak J. proceeded to observe as follows : "Could it be suggested that in a suit under Order XXI,  rule 63,  Civil Procedure Code, the decree holders who desire  to seize the property belonging to the judgment-debtor are  not necessary parties?" With great respect again, this analogy is not very happy  or apposite.   Under  Order  XXI,  rule  63,  it  is  only  the attaching  creditor who has the right to file a suit  or  of being  impleaded  as defendant in a suit  by  the  judgment- debtor.   AR the creditors of the judgment debtor  who  have not  attached  the property are not necessary parties  in  a suit under Order XXI, rule 63, though after the decision  in that  suit  they may be entitled to share  in  the  rateable distribution of the property if they make an application for that purpose.  In a way it is true to say that in all  suits by  a creditor against a debtor where the debtor owes  to  a number  of creditors, every other creditor is interested  in seeing that that creditor’s suit is dismissed or his debt is considerably cut down; but from that it does not follow that in  a  suit on a promissory note by a creditor  against  the debtor  all the other creditors are necessary  parties.  The eventual  interest of a party in the fruits of a  litigation cannot  be  hold to be the true test of  impleading  parties under the Code of Civil Procedure and it is rather difficult

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to hold that where that is not the true test under the Code, that  should  be  adopted as A test  in  proceedings  of  an administrative 522 character under the U. P. Encumbered Estates Act. it  cannot be  forgotten  that under the provisions of  section  11  no provision  has  been  made for issuing  notice  to  all  the creditors.   Reference  may also be made to  rule  6  framed under  the Encumbered Estates Act.  This rule provides  that the proceedings under this Act shall be governed by the Code of  Civil  Procedure  so far as  they  are  applicable.   As already pointed out, the provisions of Order 1, rules 1  and 3, cannot aptly be held applicable in such proceedings.   We cannot  uphold  the  view of Pathak J.  that  all  creditors become  parties  to  the proceedings under the  Act  in  the technical  sense of the term after a notice has been  served upon them and in any event after they have filed the written statements,  that they continue to remain’ as parties  until the  debts  are  liquidated  or  proceedings  terminated  in accordance with the provisions of the Act.  This seems to be too  wide  a statement of the law on the point.  Can  it  be said that after each individual creditor obtains a decree in respect  of  his claim under section 14, each one  of  these creditors  has  to  be impleaded as a  party  in  an  appeal preferred  by  that creditor or by the debtor.   It  is  not possible  to  give  an answer in  the  affirmative  to  such proposition.   no  hesitation  in  saying  that  though   he ultimately abondoned  n thinking that in.  We have therefore Mr.  Justice  Braund,  his view,  was  right  administrative proceedings  technical  rules of the First Schedule  of  the Code  of  Civil Procedure regarding  impleading  of  parties should  not be invoked and that the matter should be  viewed in  a more liberal way, regard always being had to the  fact that  there  is  no collusion between  the  debtor  and  the claimant  and  that  there are persons  who  are  bona  fide litigating  in  respect of the title of the  claimant  under section  11,  and if there has been such a bona  fide  fight which  results in a decree in an appeal against that  decree it  is sufficient that those who took an active part in  the proceedings  under  section  II are impleaded.   It  is  not necessary to implead each and every creditor who either  did pot appear or put forward a written statement under 523 section  10 or took no active part in the proceedings  under section  11(2).   In the view that we have taken it  is  not necessary to decide the question whether the High Court  was right in not exercising its powers under Order XLI, rule 20, in impleading the creditors as respondents to the appeal.  For the reasons given above we allow this appeal, set aside the  judgment of the High Court and remand the case to  that court  for hearing the appeal in accordance with law on  its merits.   If the High Court thinks fit that the presence  of any  creditors  would help the court in arriving at  a  true decision of the matter it in its discretion may give  notice to  the  creditors  of the date of  hearing,  We  leave  the parties to bear their own costs of this appeal. Appeal allowed. Agent for the appellant: C. P. Lal. Agent for respondent No. 5: S. S. Shukla.