PANCHAITI AKHARA Vs. BABU NEM CHANDRA

JUDGEMENT

(1.) The present appeal by a creditor, Sri Panchaiti Akhara, Kydganj, Allahabad arises out of proceedings under the Encumbered Estates Act. In order to appreciate the points that arise in this appeal, it would be necessary to give a few facts.

(2.) On 13-4-1930, Mutsaddi Lal, father of the respondents Nos. 1 and 2, and himself arrayed as respondent No. 11 in the appeal, executed a deed of simple mortgage in favour of the appellant. The mortgage deed was for a sum of Rs. 20,000/-, and by means of the deed, property in village Arai and a plot of land situate on the Zero Road, Allahabad, were mortgaged. In the year 1932, the two sons of Mutsaddi Lal brought a suit for partition of their shares against their father and arrayed the appellant also as a defendant in the suit. On 23-1-1933, the appellant filed a written statement resisting the suit for partition, and claiming that the mortgage executed by Mutsaddi Lal in favour of the appellant was binding on the sons also as it was executed in discharge of antecedent debts and was a valid and binding transaction. On 7-9-1933, the suit was compromised between the father and the sons and the village Arai was allotted to the share of the sons and the plot of land on the Zero Road was allotted to the wife of Mutsaddi Lal. The appellant was exempted from the suit and it was dismissed against the appellant with costs. This preliminary decree for partition was made final on 26-10-1933. The U. P. Encumbered Estates Act came into force with effect from 1-4-1935, and on 9-10-1935, an application was filed by Mutsaddi Lal alone, under Section 4, Encumbered Estates Act, which was in due course transmitted to the Special Judge, Allahabad. On 19-11-1935, Mutsaddi Lal filed his written statement under Section 8 of the Act and alleged that as a result of the partition he was allotted a share in certain other properties, which were not mortgaged to the appellant, and he showed those properties only as the properties belonging to him. The appellant filed his written statement on 12-3-1936, and the allegations made by him were that the alleged partition effected by means of the compromise decree was a fraudulent and collusive transaction and it was not binding upon the appellant. It was further pleaded that the property which was mortgaged to the appellant was Mutsaddi Lal's self-acquired property and, as Mutsaddi Lal belonged to the Jain Community, he was absolute owner of the property. As regards the mortgage, it was alleged that the mortgage was executed for legal necessity and for the payment of antecedent debts and it was a valid and binding transaction.

(3.) After the written statements had been filed, the entire properties, including the properties which had been allotted to the shares of the sons of Mutsaddi Lal and his wife, were all notified in the Government Gazette under Section 11 of the Act. After this publication in the gazette and within the time allowed by law, objections were filed under Section 11 by the sons, and also by the wife of Mutsaddi Lal claiming that they were the owners of the properties allotted to them by the compromise partition decree of 7-9-1933; and that the properties were not liable to attachment, sale or mortgage in satisfaction of the debts of Mutsaddi Lal. It was also pleaded that the said partition was valid and that the mortgage executed in favour of the appellant had not been executed for any valid necessity. The appellant contested the claim of the sons and of the wife and the learned Special Judge dismissed the objections. He held that the mortgage deed executed by Mutsaddi Lal in favour of the appellant was executed for payment of the antecedent debts of Mutsaddi Lal which had actually been satisfied out of the consideration received under the mortgage. The deed was held to be binding on the sons as under the Hindu law the pre-partition debts of the father continued to be binding on the sons even after the partition. He held that the property in village Arai and the plot of land on the Zero Road were liable to pay the debt under the mortgage in favour of the appellant.