Skip to content


Laxman Babaji and ors. Vs. Akharam Sahebram - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai High Court
Decided On
Case NumberFirst Appeal Nos. 636 of 1951 and 633 of 1952
Judge
Reported inAIR1959Bom18; (1956)58BOMLR804; ILR1956Bom918
ActsDebt Law; Bombay Agricultural Debtors Relief Act, 1947 - Sections 4, 11, 14, 14(1), 15(1) and 15(2)
AppellantLaxman Babaji and ors.
RespondentAkharam Sahebram
Appellant AdvocateV.M. Tarkunde and ;B.J. Rele, Advs. In No. 636 of 51 and ;P.V. Kane, Adv. In No. 633 of 52
Respondent AdvocateP.V. Kane, Adv. In No. 636 of 51, ;V.M. Tarkunde and ;B.J. Rele, Advs. In 633 of 52
Excerpt:
.....to believe that he was not a 'debtor' within the meaning of the act or that in respect of his debt no application may lie under section 4 of the act.;a creditor of the of the defendant had filed a debt adjustment application against him and of that application a general notice under section 14 of the bombay agricultural debtors relief act, 1947, was issued. the plaintiff, in whose favour the defendant had passed a promissory note for a sum exceeding rs. 15,000, did not in answer to the general notice submit a statement of his claim. thereafter the defendant was adjudged a debtor and an award was made. on a suit filed by the plaintiff against the defendant to recover the amount of the promissory note, the defendant contended that as the plaintiff had failed to file his statement of..........of the act, the court negatived that argument and confirmed the judgment of the trial court holding that the debt due to the creditor was extinguished. we are unable to hold, relying upon the case, that a debt due to the creditor is extinguished when an award is made under the b.a.d.r. act even when the debtor has by his declaration, act or omission intentionally caused or permitted his creditor to believe that he was nota 'debtor' or that in respect of his debt no application may lie under section 4. in our view, the principle of keshav ganahyam's case (a), has no application where the debt due to a creditor is saved by section 15 (2). we, therefore, agree, though for different reasons, with the decision of the learned trial judge that the debt due to the plaintiff by the fourth.....
Judgment:

Shah, J.

1. The plaintiff filed Civil Suit No. 40 of 1950 in the Court of the Civil Judge, Senior Division, Ahmednagar, against the defendants who are brothers for a decree on a promissory note for Rs. 15,351/- executed by them on 25th July, 1947, after giving credit for Rs. 4,375//4/- received in part satisfaction of the dues under the promissory note. It was the plaintiff's case, that on 25th July, 1947, all the four defendants executed a promissory note agreeing to pay Rs. 15,351/- on demand together with interest at the rate of 12 per cent and that in part satisfaction of their liability under the promissory note the defendants had sent some jaggery to the plaintiff's shop for being sold on commission and the proceeds thereof were credited towards the account and the balance of Rs. 15,728/- remained due and payable by the defendants. The suit was resisted by all the defendants.

(After stating facts and discussing questions not material for reporting the judgment proceeds).

2. Then it was urged that as the 4th defendant was adjudged a debtor under the B.A.D.R. Act in an application filed by one of his creditors and an award was made the plaintiff was bound by the award and the liability of the 4th defendant under this promissory note in favour of the plaintiff was extinguished. The learned Judged Judge has found that one Gangadhar Vyankatesh filed a debt adjustment application against the 4th defendant and in that application a general notice under Section 14 of the B.A.D.R. Act was issued. In answer to the general notice requiring the creditors to filed their statements the plaintiff did not submit a statement of his claim. Thereafter the 4th defendant was adjudged a debtor and an award was made. It is conceded that the award did not deal with the debt due to the plaintiff under the promissory note executed by the fourth defendant. But it is urged that the plaintiff was required by law to file a statement of claim before the Debt Adjustment Court in answer to the general notice for the debt even if it exceeded Rs. 15,000/- and the plaintiff having failed to do so, the debt was extinguished. The learned trial Judge was of the view that the penalty of extinction of debts for failure to submit statement is incurred by only those creditors whoa re named in the debt adjustment application as creditors and who are served with notice under Section 14(a) and not by other creditors. WE are unable to accept that view. Section 15(1) applies in terms to 'every debt' and is not restricted to debts due to creditors who are named in the application for adjustment of debts and are served with notice under Section 14(a). But Sub-section (1) of Section is subject to Sub-section (2). Whereas Sub-section (1) provides that every debt due by a debtor in respect of which a statement is not submitted to the Court by the creditor incompliance with Section 14 shall be extinguished, it is provided by Sub-section (2) that

'nothing in this section shall apply to any debt due from any person who has by his declaration act or omission intentionally caused or permitted his creditor to believe that he is not a debtor for the purpose of this Act or that no application under Section 4 can be entertained in respect of any debt owed by such person to such creditor by reason of the provisions of Section 11.'

3. In our view, the 4th defendant had by his act and by his omission as well, intentionally caused the plaintiff to believe that he was not a debtor for the purposes of the B.A.D.R. Act, or that no application could lie for adjustment of his debts under Section 4. The fourth defendant had executed a promissory note for an amount exceeding Rs. 15,000/- and where a person's debts exceed Rs. 15,000/- in the aggregate he cannot claim the status of a debtor under the B.A.D.R Act. A bona fide admission of liability for an amount exceeding Rs. 15,000/- is a declaration or an act within the meaning of Sub-section (2) of Section 15 which intentionally caused the plaintiff to believe that the debts due by the fourth defendant could not be adjusted under the B.A.D.R. Act, Again the fourth defendant did not file a statement showing that the plaintiff was his creditor for a sum exceeding Rs. 15,000/- If the fourth defendant had shown in his statement of liabilities the debt due to the plaintiff, he could not have been declared a debtor. If, with a view to obtain the benefit of the B.A.D.R. Act, the fourth defendant as it must in the circumstances of the case be assumed deliberately withheld from the Court the information that he had executed a promissory note for Rs. 15,351/- in favour of the plaintiff, he cannot, in our judgment, claim that the liability due to the plaintiff is extinguished by virtue of Sub-section (1) of Section 15. In our view, the omission of the 4th defendant must also be deemed to have intentionally caused the creditor to believe that eh fourth defendant was not a debtor.

4. Strong reliance was placed by Mr. Tarkunde in support of his contention upon a case decided by this Court, Keshav Ganashyam v. Waman Rangaji, : AIR1953Bom340 (A), in which it was held that

'the expression 'all creditors' used in Section 14 of the Bombay agricultural Debtors Relief Act, 1947 is not limited to the class of creditors referred to Sub-clause (a) of the section, but refers to all the creditors of the debtor. Therefore, an award made under the Act is not only an award between the debtor and such of the creditors as are mentioned in the application made under Section 4 of the Act or upon whom notice has been served under Section 14(a) of the Act, but is also an award between the debtor and all his creditors, and the latter are bound by it.'

In that case in a suit to recover a debt due to a creditor who was not personally served with notice of he debt adjustment application it was held to be extinguished by virtue of Section 15(1), the creditor not having submitted a statement of his claim to the Debt Adjustment Court. Evidently after the statutory extinction of the debt due to him the creditor in Keshav Ghanshayam's case (A) was not interested in the award made by the Debt Adjustment Court, and ex hypothesi, a civil suit could not lie to enforce the debt. We are, however, unable to extend that principle to cases where the debtor has by his declaration, act or omission intentionally caused or permitted his creditor to believe that he is not a debtor for the purposes of the Act. By virtue of Section 15 (2) the debt due to such a creditor is not extinguished and in our judgment the award has not that effect. An award is in its very nature of the nature of a judgment which binds all creditors of the debtor whether they are served or not served with personal notice under Section 14. But the penalty which is prescribed by Section 14. But the penalty which is prescribed by Section 15(1) does not penalise those creditors who have been misled by any declaration, act or omission of the debtor. If the debt is not extinguished a suit to recover it will in the absence of any provision to the contrary be maintainable. We are not referred to any provision which enacts that a debt due by a debtor which is saved from extinction by virtue of Sub-section (2) of Section 15 must still be regarded as extinguished when an award is made under the Act. In Keshav Ganshaym's case (A), it does not appear to have been contended that the debt due to the creditor who had not filed a statement of his claim was not extinguished because of some declaration act or omission of the debtor. The Court in that case was not invited to consider whether the case of the creditor fell within the terms of Section 15 (2). The only argument advanced before the Court was that the decision of the Debt Adjustment Court adjudging the defendant a 'debtor' was not binding upon the creditor in a suit filed by him in the Civil Court, to recover the debt. Having regard to the scheme of the Act, the Court negatived that argument and confirmed the judgment of the trial Court holding that the debt due to the creditor was extinguished. We are unable to hold, relying upon the case, that a debt due to the creditor is extinguished when an award is made under the B.A.D.R. Act even when the debtor has by his declaration, act or omission intentionally caused or permitted his creditor to believe that he was nota 'debtor' or that in respect of his debt no application may lie under Section 4. In our view, the principle of Keshav Ganahyam's case (A), has no application where the debt due to a creditor is saved by Section 15 (2). We, therefore, agree, though for different reasons, with the decision of the learned trial Judge that the debt due to the plaintiff by the fourth defendant was not extinguished. We are in this case not called upon to consider the effect of this decision upon the award made under the B.A.D.R Act adjusting the debts due by the fourth defendant to his other creditors. (Rest of the judgment is not material for reporting.)

5. Order accordingly.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //