1931 JTR(SC) 31
1931 AIR(PC) 160 ; 1930 58 LawReportsInd.App. 215 ; 1931 AllLJ 495 ; 1932 35 LW 384 ; 1932 59 ILR(Cal) 1
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD MACMILLAN, SIR GEORGE LOWNDES, AND SIR DIN SHAH MULLA.
NAWAB BAHADUR OF MURSHIDABAD - Appellant
Versus
KARNANI INDUSTRIAL BANK INDUSTRIAL LIMITED - Respondents
On Appeal from the High Court at Calcutta.
Decided On : March 16. 1931.
Rents from inalienable properties are attachable if the holder has a disposing power over the income. Such rents do not constitute a "pension" (exempt from attachment) unless they are periodical payments made directly by the Government to the pensioner.
Act
Referred
:CIVIL PROCEDURE CODE
: S.60(1)(g), S.51(d), S.50(d)
(A) Code of Civil Procedure, 1908 - Sections 51 and 60(1) - Execution of decree - Appointment of receiver - Attachment of rents - Inalienable properties - Where a statute renders immovable properties inalienable but imposes no restriction on the enjoyment of rents, the judgment-debtor possesses a disposing power over such income for his own benefit - Appointment of a receiver for the rents of such properties to satisfy a money decree is competent and does not contravene the purpose of the settlement or public policy, provided the income is not restricted from being used by the holder.
(B) Code of Civil Procedure, 1908 - Section 60(1)(g) - Pensions Act, 1871 - Transfer of Property Act, 1882 - Section 6 - Definition of "pension" - The term "pension" implies periodical payments of money by the Government to the pensioner - Rents derived from properties held by a person, even if intended for the maintenance of a specific rank or dignity, do not constitute a political pension and are therefore not exempt from attachment.
Facts of the case:
A decree-holder applied for the appointment of a receiver for the rents, issues, and profits of certain immovable properties held by the judgment-debtor under a settlement confirmed by statute. The properties were rendered inalienable by the settlement, and the income was intended for the maintenance of the holder's rank and dignity. The lower court initially dismissed the application, but the appellate court appointed a receiver to satisfy money decrees obtained against the judgment-debtor.
Findings of Court:
The court found that while the properties themselves were inalienable, the rents were not. The holder had the power to dispose of the income as he pleased unless the government exercised its special power to intervene. Furthermore, these rents did not qualify as a "pension" because they were derived from property ownership rather than direct government payments.
Issues: Whether the appointment of a receiver for rents of inalienable properties intended for the maintenance of a title's dignity is legally permissible and whether such rents are exempt from attachment as political pensions.
Ratio Decidendi: The court held that a disposing power over income exists if there is no statutory restraint on its enjoyment, making it liable to attachment under Section 60 of the Code of Civil Procedure. Additionally, "pension" refers specifically to periodical payments made by the Government; income from property, regardless of its intended purpose, does not fall under this exemption.
Result: Appeal dismissed.
(B) Code of Civil Procedure, 1908 - Section 60(1)(g) - Pensions Act, 1871 - Transfer of Property Act, 1882 - Section 6 - Definition of "pension" - The term "pension" implies periodical payments of money by the Government to the pensioner - Rents derived from properties held by a person, even if intended for the maintenance of a specific rank or dignity, do not constitute a political pension and are therefore not exempt from attachment.
Facts of the case:
A decree-holder applied for the appointment of a receiver for the rents, issues, and profits of certain immovable properties held by the judgment-debtor under a settlement confirmed by statute. The properties were rendered inalienable by the settlement, and the income was intended for the maintenance of the holder's rank and dignity. The lower court initially dismissed the application, but the appellate court appointed a receiver to satisfy money decrees obtained against the judgment-debtor.
Findings of Court:
The court found that while the properties themselves were inalienable, the rents were not. The holder had the power to dispose of the income as he pleased unless the government exercised its special power to intervene. Furthermore, these rents did not qualify as a "pension" because they were derived from property ownership rather than direct government payments.
Issues: Whether the appointment of a receiver for rents of inalienable properties intended for the maintenance of a title's dignity is legally permissible and whether such rents are exempt from attachment as political pensions.
Ratio Decidendi: The court held that a disposing power over income exists if there is no statutory restraint on its enjoyment, making it liable to attachment under Section 60 of the Code of Civil Procedure. Additionally, "pension" refers specifically to periodical payments made by the Government; income from property, regardless of its intended purpose, does not fall under this exemption.
Result: Appeal dismissed.
Pension - The court agreed with the definition that 'pension' implies periodical payments of money by the Government to the pensioner, distinguishing it from rents derived from property ownership.
Solicitor for appellant: H. S. L. Polak.
Solicitors for respondents: Oswald Hickson, Collier & Co.
Judgement
Appeal (No. 54 of 1930) from an order of the High Court in its appellate jurisdiction (July 15, 1929)
Law Rep. 58 Ind. App. 215 ( 1930- 1931) Nawab Bahadur of Murshidabad v. Karnani Industrial
73
reversing an order of Lort-Williams J.
The appellant as Nawab Bahadur of Murshidabad had succeeded to the benefit of a settlement of immovable properties contained in an indenture of 1891, which was confirmed by Act XV. of 1891, to which it is scheduled. The respondent bank, in execution of money decrees which it had obtained against the appellant, applied to the High Court to appoint a receiver of the rents, issues and profits of properties included in the settlement.
Lort-Williams J. dismissed the application, but upon appeal a receiver was appointed by Rankin C.J. and C. C. Ghose J.
The material terms of the indenture appear from the judgment of the Judicial Committee.
1931. Feb. 13. Dunne K.C. and Dube for the appellant. E. B. Raikes K.C, and M. R. Jardine for the respondents.
March 16. The judgment of their Lordships was delivered by
LORD MACMILLAN. By an order dated July 15, 1929, the High Court of Judicature at Fort William in Bengal, allowing an appeal from an order of Lort-Williams J., appointed a receiver of the rents, issues and profits of certain properties in Calcutta in execution of several decrees obtained against the present appellant by the respondent bank. The sole question is whether it was competent to make this appointment in view of the terms of the Moorshedabad Act (XV. of 1891), which has reference to these properties.
The purpose of that Act was to confirm and give effect to an indenture between the Secretary of State and the then Nawab Bahadoor of Moorshedabad, dated March 12, 1891. The indenture, which is duly confirmed by the Act and scheduled thereto, narrates at great length the circumstances which led up to it. It appears that the then Nawab Bahadoor, the appellants predecessor, who was the eldest son of the late Nawab Nazim of Bengal, Behar and Orissa, had agreed to relinquish the latter title with its appurtenant rights in consideration of his receiving the titles of Nawab Bahadoor of Moorshedabad and Amir-ul-Omrah, carrying with them the precedence, rank, dignity and privileges of the premier noble of Bengal, Behar and Orissa and also in consideration of provision being made for the maintenance and support of the older of these titles for the time being and for the maintenance of the honour and dignity of his station.
On these and other recitals the Secretary of State covenanted " for the due maintenance and support of the said titles of Nawab Bahadoor of Moorshedabad and Amir-ul-Omrah and the position and station thereto attaching and of the honour and dignity thereof " to pay to the Nawab Bahadoor and his lineal heirs male in perpetuity an annual sum of Rs.2,30,000 by monthly instalments of Rs. 19,166-10-8, and further agreed and declared that the immovable properties mentioned in the schedules to the indenture (which include the properties of the rents of which the High Court has] appointed a receiver) should " henceforth and forever be held and enjoyed by the said Nawab Bahadoor and such one among his lineal heirs male as may be successively entitled to hold the said titles in perpetuity with and subject to the incidents, powers, limitations and conditions as to inalienability and otherwise " thereafter in the indenture contained.
The first of these conditions is in the following terms " First. The said Nawab Bahadoor shall not nor shall any of his successors in the said titles sell, mortgage, devise or alienate the said properties respectively or any of them otherwise than by lease or demise for a term not exceeding 21 years and
Law Rep. 58 Ind. App. 215 ( 1930- 1931) Nawab Bahadur of Murshidabad v. Karnani Industrial
74
under a rent without bonus or salamee."
The indenture also provided as follows " In case the said Nawab Bahadoor or any of his lineal heirs male successors to the titles shall at any time in contravention of the terms of these presents attempt to sell, mortgage, devise or alienate (otherwise than by such lease or demise as aforesaid) any of the immovable properties aforesaid or shall by a course of extravagance or by waste or mismanagement of their said immovable properties in the opinion of the Secretary of State for the time being disable himself from duly maintaining the dignity of the said position and station, then, and from time to time whenever and as often as the same shall happen, it shall be lawful for the Secretary of State for the time being at his discretion to enter into and upon the said immovable properties and to hold and take possession thereof and also to take and retain the said monthly sum of Rs.19,166-10-8 payable from the Government Treasury at Berhampore as hereinbefore mentioned for such period during the lifetime of the Nawab Bahadoor of Moorshedabad and Amir-ul-Omrah so acting as aforesaid as to the said Secretary of State shall seem necessary or expedient, and the net rents, issues and profits of the said immovable properties and the said monthly sum of Rs. 19,166-10-8 so to be received and taken by the Secretary of State as aforesaid shall be applied for the benefit of the said Nawab Bahadoor of Moorshedabad and Amir-ul-Omrah for the time being for the maintenance of the position and dignity of the said Nawab Bahadoor of Moorshedabad and Amir-ul-Omrah for the time being in such manner as the Secretary of State in his discretion shall think proper."
The fifth section of the confirming statute is in the following terms " (5.) All property, movable and immovable, mentioned in the said indenture or in any of the schedules thereto .... shall descend and subject to the provisions of the said indenture, be enjoyed for ever by the Nawab Bahadoor of Moorshedabad for the time being."
The contention of the appellant, to which Lort-Williams J. gave effect, but which the High Court on appeal rejected, was that to appoint a receiver of the rents of any of the properties embraced in the indenture would defeat the intention of the Government as expressed in the statute and indenture by depriving the Nawab Bahadoor pro tanto of income designed for the maintenance of his exalted position and would be against public policy. It was also submitted that the appointment of a receiver might prove embarrassing and place the Court in an invidious position in the event of the exercise by the Secretary of State of his power of entering into possession of the properties and applying the rents for the Nawabs benefit.
In considering the question thus raised, it is important to bear in mind the provisions of the Code of Civil Procedure on the subject of execution. By s. 51 the Court is empowered on the application of a decree-holder to order execution of the decree (inter alia) (d) by appointing a receiver. Then by s. 60, sub-s. 1, there is rendered liable to attachment and sale in execution of a decree all saleable property, movable or immovable, belonging to the judgment-debtor or over which or the profits of which he has a disposing power which he may exercise for his own benefit, with certain enumerated exceptions.
Now while the Moorshedabad Act renders the immovable properties to which it relates inalienable except to the limited extent permitted, it imposes no restriction on the enjoyment of the rents by the Nawab Bahadoor for the time being. So long as he is entitled to draw the rents he may dispose of them as he pleases. It is true that the income of the properties was conferred on him to enable him to maintain his dignity and station, but should he fail so to apply it the Secretary of State is given the special power of stepping in and drawing the rents himself and applying them for the Nawabs benefit. Unless and until the Secretary of State intervenes the Nawab may employ his income as he chooses, nor is there any restraint on anticipation imposed by the statute or the indenture. The Nawab therefore
Law Rep. 58 Ind. App. 215 ( 1930- 1931) Nawab Bahadur of Murshidabad v. Karnani Industrial
has a disposing power over the income. Once this is established no question of public policy is involved, and their Lordships are unable to see that either the terms of the statute or the indenture are contravened by aiding the creditors of the appellant to effect payment out of his income of the debts which he has incurred. The appointment of a receiver in the present case is, of course, subject to the special powers of the Secretary of State, and should the latter at any time decide to intercept the rents the receivers powers will be superseded. This is fully recognized by the Appellate Courts judgment.
Before their Lordships the additional point was taken on behalf of the appellant that the rents in question formed part of a political pension, and were thus exempt from attachment under head (g) of the enumerated exceptions in s. 60, sub-s. 1, of the Code of Civil Procedure. This belated attempt to assimilate the rents to a political pension plainly fails.
Their Lordships agree with the view expressed in Lachmi Narain v. Makund Singh (I. L. R 26 A. 617.), that the word " pension " alike in the Pensions Act (XXIII. of 1871) and in the Civil Procedure Code, and their Lordships may add also in the Transfer of Property Act (IV. of 1882), s. 6, " implies periodical payments of money by Government to the pensioner." The appellant draws the rents in question not as a pensioner, but as the limited owner of the properties which yield them.
Their Lordships, finding themselves as they do in complete, agreement with the judgment of the learned Chief Justice and his colleague, will humbly advise His Majesty that the appeal be dismissed. The respondent bank will have its costs of the appeal.