Back
1943 Supreme(SC) 34
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD ATKIN, LORD THANKERTON, LORD PORTER, SIR GEORGE RANKIN AND SIR MADHAVAN NAIR.
BABU JYOTI BHUSHAN - Appellant
Versus
BABU SHIVA PRASAD GUPTA - Respondents
On appeal from the High Court at Allahabad.
Decided On : July. 20. 1943.
Solicitors for appellant Jyoti Bhushan: Douglas Grant & Dold. Solicitors for appellants Gokul Chand and others:A. L. Bryden & Co. Solicitors for respondent Shiva Prasad: Hy. S. L. Polak &Co.
A pecuniary liability arising from a partition decree for the purpose of equalizing shares (owelty) constitutes a "debt" under the United Provinces Encumbered Estates Act, 1934. The "repugnancy" clause does not permit courts to exclude debts based on policy or perceived unfairness.
Headnote:(A) United Provinces Encumbered Estates Act, 1934 - Section 2(a) - Definition of "debt" - Pecuniary liability - Obligation to pay money for equalization of shares in a partition decree (owelty) - Whether such liability constitutes a "debt" under the Act - The term "debt" includes any pecuniary liability except unliquidated damages - An obligation to pay money to equalize the division of property is a debt in the ordinary meaning and within the meaning of the Act - The phrase "unless there is anything repugnant in the subject or context" does not grant courts discretion to exclude specific types of debts based on policy considerations or perceived unfairness.
(B) Execution of Decrees - Priority of debts - Unsecured debts - Where a debtor landlord seeks benefit of the Act, unsecured creditors must be ranked according to the statutory priority - A claim arising from a partition decree, if unsecured, falls within the class of unsecured debts and cannot be given preferential treatment over other creditors.
Facts of the case:
A partition decree directed members of one branch of a joint family to pay a specific sum to another branch to equalize the value of allotted shares. The judgment-debtors applied for the benefits of an Act providing for the administration of encumbered estates to stay execution proceedings. The lower appellate court held that the Act did not apply to partitions among family members, viewing such an obligation as repugnant to the definition of "debt" and arguing that applying the Act would unfairly deprive a family member of their share.
Findings of Court:
The obligation to pay money for equalization (owelty) is a pecuniary liability and thus falls within the definition of "debt" under the Act. The court found that the statutory language does not allow for the exclusion of such debts based on the nature of the transaction or the relationship between the parties.
Issues: Whether a sum directed to be paid for equalization purposes in a partition decree constitutes a "debt" within the meaning of Section 2(a) of the United Provinces Encumbered Estates Act, 1934.
Ratio Decidendi: The definition of "debt" as "any pecuniary liability" is broad and inclusive. The qualifying phrase "unless there is anything repugnant in the subject or context" is not a source of judicial discretion to cut down the ordinary meaning of the word "debt" based on policy grounds. If a liability is pecuniary and not for unliquidated damages, it is a debt, regardless of whether it arises from a family partition. An unsecured creditor cannot be allowed to ignore the statutory liquidation process and attack the debtor's property independently if the Act applies.
Result: Appeals allowed.
Legal Category Hierarchy
-
family law
-
hindu law
- partition
-
hindu law
-
property law
- encumbered estates
-
practice and procedure
- execution proceedings
Judgement
Consolidated Appeal (No. 35 of 1942), by special leave, from a decree of the High Court (October 12, 1938), which had set aside an order made in execution proceedings by the Civil Judge of Allahabad (October 10, 1936) and had directed that execution of a partition decree, dated February 25, 1926, should proceed.
The following facts are taken from the judgment of the Judicial Committee This appeal arose out of execution proceedings taken to enforce a partition decree, dated February 25, 1926. The decree, which was based on an award, dated November 30, 1925, directed the members of one branch of a Hindu family to pay to the respondent Shiva Prasad, who represented another branch, the sum of Rs. 13,68,358 for the purpose of equalizing the values of the allotted shares. The
Law. Rep. 70 Ind. App. 209 ( 1942- 1943)
Babu Jyoti Bhushan V. Babu Shiva Prasad Gupta 104
question was whether the sum still due and unpaid in respect of that obligation was a " debt " within the meaning of the United Provinces Encumbered Estates Act, 1934 (United Provinces Acts XXV. of 1934 and IV. of 1935), herein referred to as "the Act” or whether, as held by the High Court, the Act had no application thereto. Sect. 2 of the Act was a definition section in the sense indicated by its opening words, and the first of a number of words and phrases therein defined or explained was the word "debt " "2. In "this Act, unless there is anything repugnant in the subject or "context (a) debt includes any pecuniary liability except " a liability for unliquidated damages, . . . ."
The branch whose members became by the partition decree judgment-debtors for the money now sought to be recovered was represented by the appellants Jyoti Bhushan and Gokul Chand together with their sons and grandsons. Those two families were, however, divided since 1934. On February 3, 1934, the respondent Shiva Prasad applied to the Civil Judge of Allahabad for execution of the partition decree against the appellants, and obtained an order for the attachment and sale of a house at Allahabad, and for the issue of transfer certificates to other courts in the Province—at Benares, Jaunpur and Gonda and also to a court at Calcutta. On October 5, 1936, Gokul Chand and his descendants applied to the Collector of Benares under s. 4 of the Act requesting that the provisions thereof be applied to him, and the Collector duly forwarded the application to the Special Judge pursuant to s. 6. On October 9 application was made by the same parties to the Civil Judge of Allahabad for a stay of the execution proceedings and recall of the transfer certificates; and on October 10 an order was made by the Civil Judge to that effect. On October 21 the appellant Jyoti Bhushan also applied to the Collector of Benares for the benefit of the Act, and the Collector forwarded his application also to the Special Judge as required by s. 6.
In that state of the proceedings the respondent Shiva Prasad, on February 19, 1937, applied to the High Court of Allahabad to set aside or vary the order of the Civil Judge dated October 10, 1936, staying the execution proceedings and recalling the transfer certificates. For some reason that application was made in revision under s. 115 of the Code, but it was treated as an appeal and was referred to a Full Bench. On October 12, 1938, Bennet, Ismail, and Verma JJ. allowed the appeal and directed that execution should proceed. In their joint judgment they said "We do not think that the "Act was intended at all to apply to the subject of partition "among the members of a joint family, and accordingly in "our opinion the subject is one which is repugnant to the "definition of the word debt in s. 2 (a) of the Act" (1). Hence in their view "the present Act does not apply the word " debt to the present case." The learned judges pointed out that under the Act the to decreed in the present case would come in the last of the six classes mentioned by s. 16, being merely an unsecured debt;
