- (1.) THIS second appeal arises out of proceedings under the Encumbered Estates Act. Respondent no. 1 presented an application under Section 4 of the Encumbered Estates Act and, in the written statement filed by him under Section 8 of the Act, he showed certain debts as payable by him, including a debt to a firm, Sheikh Mohammad Hashim Haji Pir Mohammad. A written statement was filed under Section 9 on behalf of the firm by the two partners, Abdul Sattar and Abdul jabbar, and they also claimed the same amount as had been shown by the landlord applicant in his written statement. When the learned Special Judge came to consider the amount due from the landlord applicant to these creditors, Abdul Sattar and Abdul Jabbar, the question arose whether the claim of Abdul Sattar and Abdul Jabbar could be entertained in view of Section 69 of the indian Partnership Act. The claim of Abdul Sattar and Abdul Jabbar was in respect of a 'sarkhat' executed in the year 1933, but before the 1st October 1933, by the landlord in favour of the firm, sheikh Mohammad Hashim Haji Pir Mohammad. The application under Section 4 of the encumbered Estates Act was presented on the 27th October 1936 and the claim of Abdul Sattar and Abdul Jabbar was made before the learned Special Judge on the 12th August, 1937. Up to that date the firm, Sheikh Mohammad Hashim Haji Pir Mohammad, was not registered, though it was claimed that it had been registered subsequently. The trial court on the 26th May 1943 held that there was no proof that the firm had ever been registered and that consequently the claim was barred under Section 69 of the Indian Partnership Act. The contention on behalf of the partners of the firm that they were protected under Section 74 (b) of the Indian Partnership Act was rejected by the trial court on the ground that the right in respect of which the claim had been filed had not accrued to Abdul Sattar and Abdul Jabbar before the commencement of the partnership Act. On appeal, the learned Judge of the lower appellate Court agreed with the trial court and confirmed the order disallowing the claim of these persons. They have, therefore, come up in second appeal to this Court.
(2.) THE first point that we had to consider in connection with this appeal was whether the proceedings under the Encumbered Estates Act for determination of a claim of a creditor were at all governed by the provisions of Section 69 of the Indian Partnership Act. This argument had to be considered in view of the language of Subsections (1) and (2) of Section 69 wherein a bar was placed against the institution of a suit only. Our attention has, however, been drawn to sub-section (3) of Section 69 which makes the provisions of Sub-sections (1) and (2) of that section applicable even to a claim of set-off or other proceedings to enforce a right arising from a contract. It is obvious that the claim by the appellants in these Encumbered Estates Act proceedings for determination of the liability of the landlord to them and for passing a decree in respect of the amount found due is a proceeding to enforce a right arising from the contract and is fully covered by the language used in Sub-section (1) of Section 69.
(3.) NORMALLY, Section 69 would bar such a claim unless the person putting forward the claim can rely on the benefit of Section 74 so that the provisions of Section 69 may not be applied to his case. The relevant portions of Section 74 are as follows : "nothing in this Act or any repeal effected thereby shall affect or be deemed to affect (a) any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of this Act, or (b) any legal proceeding or remedy in respect of any such right, title, interest, obligation or liability, or anything done or suffered before the commencement of this Act or. . . . . ";