Judgement

KHALID,J. :- agree with my learned brother that the appeal has to be allowed. The Act involved in this appeal is an anachronism today because it was enacted to benefit the land-holders and zamindars. On a consideration of the facts and circumstances. I feel that equity is in favour of the appellant more than the respondents. The respondents made an application to the Collector, under Section 4 of the Act which was transmitted to the Special Judge, under Section 6 of the Act. He exercised his option under Section 24 and prayed for exemption of the house which is the subject matter of this appeal. This application was allowed as early as 26-3-43. It was long thereafter, on 4-5-58. that he entered into an agreement to sell the house to the appellant herein. Subsequently he made an application to include this house also in the properties to be sold in the proceedings under the Act. The appellant on being informed of this, objected to the request. The Collector rejected this request by his order dated 23rd June. 1961. From this order it is seen that there was an earlier order dated 14-6-45, by which permission to sell the house was rejected by the Deputy Commissioner. There was a mortgage on the property, but before the agreement a decree on the strength of the mortgage had been passed. Under these circumstances, it comes with little grace from the respondents to contend that the agreement to sell, even granting that it would come within the mischief of Section 7, cannot be accepted. Since the mortgage had been extinguished by its merger into a decree, the charge under it has disappeared and in the proceeding, under the Act only a simple decree can be passed. What is more, an order produced before us, dated 7-5-76 shows that no proceedings are pending under the Act at present. In view of the finality of the matter, we do not propose to go into the questions of law regarding public policy, Section 7 contemplates and the authorities bearing on it.

2. Under these circumstances, the judgment of the High Court, in my opinion, is more in accord with fair play and justice. The appeal has to be allowed as indicated by my learned brother.

3. However, I am of the view that the respondent has to be compensated in some measure by way of equity. I direct the appellant to pay a sum of Rs. 20,000/- to the respondent, taking into account the fact that the property would have escalated in price many times by now.

4. Since we are allowing the main appeal, no orders are necessary in the other appeal.

OZA, J. :- 5. These appeals have been filed after obtaining leave of this Court against the judgment passed by the High Court of Allahabad, Lucknow Bench in Civil Second Appeal No. 49 of 1971 decided on 13th April, 1976.

6. The facts necessary for the disposal of this appeal are that the appellant filed a suit for specific performance of the contract of sale of the house in dispute situated in Pratapgarh (Uttar Pradesh). The agreement was made by the respondent in favour of the appellant on 4th May, 1958 for sale of the house in dispute for the consideration of Rs. 6,000/- within 5 years. Rs. 1500/- were paid as the earnest money by the appellant to the respondent on the date of agreement. Further a sum of Rs. 2510/- was paid on 7-7-58 and on 6-12-59 a further sum of Rs. 10/- was paid. It appears that this house was earlier mortgaged in favour of Thakur Aditya Prasad Singh by the predecessors of the respondent. The respondent Surendra Bahadur Singh filed an application under S. 4 of the U.P. Encumbered Estates Act (U.P. Act No. XXV of 1934) (Act for short) to the Collector and Collector had transmitted the same to the Special Judge under S. 6 of the Act. Subsequently the respondent-debtor had submitted an application to the Collector that the disputed house may not be sold in the proceedings under the Act and may be exempted as provided in S. 24 of the Act. On 26-3-43 the Collector in exercise of powers under S. 24 exempted this house from sale in t