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Champaklal Chhabilrai Bhatt Vs. the Commonwealth Assurance Co., Ltd. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberCivil Revision Application No. 23 of 1948
Judge
Reported in(1949)51BOMLR781
AppellantChampaklal Chhabilrai Bhatt
RespondentThe Commonwealth Assurance Co., Ltd.
DispositionApplication allowed
Excerpt:
.....(3) of section 19, therefore, clearly contemplates the transfer of a suit, appeal or any other proceeding from an ordinary civil or revenue court to a special court, even when an application under section 4 is not pending before such special court. the act obviously intended that both the creditor as well as the debtor should have a certain amount of time after the board was established under the act, and if section 37(1) had not been enacted, if a debtor wanted to have a suit pending against him transferred, he would have been hurried to make in an application even before the last date upon which it could be made. all that section 19(1) requires is that the question should be involved and not that the court should be satisfied that the questions could reasonbly be said to arise. as..........no. 2 denied the very existence of the debt, he could not properly claim to be a debtor until the suit debt was proved against him. the learned judge remarked that on this being done, the transfer of the suit would have to be considered. he accordingly filed the application and made no order as to costs. it is against this order that this application has been filed in revision.2. a debt adjustment board was created at ahmedabad under bombay act xxviii of 1939 on february 1, 1947. this act was repealed by bombay act xxviii of 1947 which came into force on may 27, 1947. under section 4(1) of the bombay agricultural debtors' relief act-act xxviii of 1947 of 1947,any debtor ordinarily residing in any local area for which a board was established under section 4 of the repealed act on or.....
Judgment:

Rajadhyaksha, J.

1. This revision application has been referred to a division bench by Mr. Justice Weston as it involves a somewhat difficult) question of the interpretation of Section 19 of the Bombay Agricultural Debtors' Relief Act of 1947 as to under what conditions a pending suit must be transferred from the ordinary civil Court to a special Court. The suit out of which the present revision application arises was filed on a promissory note executed by defendant No. 2 personally and on behalf of Messrs. Dave & Company, Ahmedabad, who are defendant No. 1 and by defendant No. 3. Defendant No. 2 admitted the execution of the note, but contended that the promissory note was taken from him by undue influence, fraud and misrepresentation. The suit was filed in the Court of the Civil Judge, Senior Division, Poona. After the written statement was filed, defendant No. 2 made an application asking that the suit be transferred to the Debt Adjustment Board at Ahmedabad where this defendant was said to reside claiming that he was a 'debtor' within the meaning of the Bombay Agricultural Debtors' Relief Act, and that his debts did not exceed Rs. 15,000. The learned trial Judge declined to order the transfer under Section 19 of the Act being of the opinion that as defendant No. 2 denied the very existence of the debt, he could not properly claim to be a debtor until the suit debt was proved against him. The learned Judge remarked that on this being done, the transfer of the suit would have to be considered. He accordingly filed the application and made no order as to costs. It is against this order that this application has been filed in revision.

2. A Debt Adjustment Board was created at Ahmedabad under Bombay Act XXVIII of 1939 on February 1, 1947. This Act was repealed by Bombay Act XXVIII of 1947 which came into force on May 27, 1947. Under Section 4(1) of the Bombay Agricultural Debtors' Relief Act-Act XXVIII of 1947 of 1947,

any debtor ordinarily residing in any local area for which a Board was established under Section 4 of the repealed Act on or after the 1st of February 1947, or his creditor may make an application before the 1st August 1947 to the Court for the adjustment of his debts.

As the Board in this ease was established on February 1, 1947, any application made to the Board either by the creditor or by the debtor had to be made before August 1, 1947. The suit against the defendants was filed on October 25, 1946, and the application for the transfer of the suit on the ground that defendant No. 2 was a debtor and that his total debts did not aggregate to more than Rs. 15,000 was filed on July 29, 1947. Under Section 19(1), all suits, appeals, applications for execution and proceedings other than revisional in respect of any debt pending in any civil or revenue court shall, if they involve the questions whether the person from whom such debt is due is a debtor and whether the total amount of debts due from him on the date of the application exceeds Rs. 15,000 be transferred to the Court. By an amendment of the Act by Bombay Act LXX of 1948, the words 'on the date of the application' have been deleted. The question was argued before Mr. Justice Weston as to whether in the absence of an application having been before the Board by a debtor or a creditor under Section 4 of the Act an application for a transfer of the suit to the Board could be maintained. The learned Judge had held in Parsappa Channappa v. Madeppa Basappa Bugade (1948) Civ. Appln. No. 1222 of 1947 on June 29, 1948 (Unrep.) that a transfer under Section 19 of the Act may be made only when an application under Section 4 of the Act has in fact been made. The learned Judge based his decision on the words 'on the date of the application' occurring in Sub-section(1) of Section 19. In the present revision application, the learned Judge expressed his view that although he was not very happy about his interpretation of Section 19(1) in Parsappa Channappa's case, there was a good deal to be said for the view that Section 4 was the dominating section of the Act. He further went on to observe:

No suit, appeal or application for execution ordinarily involves the questions whether a person from whom a debt is due is a debtor under the Bombay Agricultural Debtors' Relief Act, or that of the total amount of debts due from him does not exceeed a particular amount, and, if au ordinary suit or other proceeding is to be made to involve these questions, it would seem arguable that this must be done by express pleading. The application to be made under Section 4 by a debtor has to be in a prescribed form when the debtor has to give details, of his debts and of his assets. It Would not seem therefore in accord with the policy of the Act that, when seeking a transfer under Section 19, all that a debtor has to do is to make, as in the present case, a mere application asserting that he is a debtor, a statement apparently inconsistent with his pleading in the suit, and that his debts do not exceed Rs. 15,000, and that he should not be required to give the details which are required to be given in any application under Section 4.

He therefore referred the following questions to a division bench:

(1) Whether without making an application under Section 4 a debtor can apply to a Court for transfer, under Section 19, of a pending matter which does not of itself involve the questions set out in Section 19?

(2) If the answer is in the affirmative, whether a simple demand for transfer is sufficient?

3. Section 19(1) of the Act requires that all suits, appeals, applications for execution and proceedings, including revision applications under the Dekkhan Agriculturists' Relief Act, 1879, in respect of any debt pending in any civil or revenue Court shall, if they involve the questions whether the person from whom such debt is due is a debtor and whether the total amount of debts due from him on the date of the application exceeds Rs. 15,000, be transferred to the Court, which has taken the place of the Board by reason of the new Bombay Agricultural Debtors' Relief Act of 1947. This section does not in terms require that before the transfer can be ordered there must be in existence an application before the Court. Indeed it would seem from the wording of the section itself that it is within the power of the Civil or Revenue Court suo motu to transfer all suits, appeals, applications for execution, etc. then in respect of any debt pending before it to the special 'Court', if they involve the question whether the person from whom a debt is due is a debtor and whether the total amount of debts due from him exceeds Rs. 15,000. Ordinarily therefore if the Court were to act suo moto, the Civil or Revenue Court would not be in a position to know whether any application is pending before the Court, and if that is the proper construction of Section 19(1), it would appear that the existence or otherwise of an application under Section 4 before a special 'Court' is immaterial, so far as the question of transfer of the pending suits to that Court is concerned. Mr. Justice Weston in deciding Parsappa Channappa's case was largely impressed by the words' 'on the date of the application' occurring in Sub-section (1) of Section 19 as it stood before its amendment by Act LXX, of 1948, and he considered that the existence of these words meant that there must be an application under Section 4 pending before the special 'Court.' He thought that the question of a transfer in a suit, appeal or an application can arise only when there has been an application under Section 4. But these words, which induced the learned Judge to take the view that an application under Section 4 must be pending before the special 'Court' before a transfer could be ordered under Sub-section(l) of Section 19, have been deleted, and if the learned Judge had to decide that application under the amended Act, he would probably have taken a different view, for he realised that in the view that he took Section 19(5) of the Act becomes meaningless. Under Sub-section (3) of Section 19 'when any suit, appeal, application or a proceeding is transferred to the Court under Sub-section (1) or Sub-section (2), the Court shall proceed as if an application under Section 4 had been made to it.' The words 'as if an application under Section 4 had been made to it' would clearly indicate that a transfer can be ordered even if such an application is not pending before it. If an application was pending before the special Court and included the debt in respect of which a suit was pending before the ordinary civil or revenue Court, then it was within the power of the special Court under Sub-section (2) to give a notice thereof to such civil or revenue Court, and on receipt of such notice, such other Court was bound to transfer the suit, appeal or application to the special Court. Sub-section (3) of Section 19, therefore, clearly contemplates the transfer of a suit, appeal or any other proceeding from an ordinary civil or revenue Court to a special Court, even when an application under Section 4 is not pending before such special Court. We are therefore of opinion that it is not necessary that an application under Section 4 of the Act should be pending before a special Court before a suit, appeal or an application for execution pending before a civil or revenue Court could be transferred to such special Court on the ground that they involve the questions whether the person from whom the debt is due was a debtor and whether the total amount of his debts exceeds Rs. 15,000. This very point came up before Mr. Justice Bavdekar in Kanku v. Krishna Joti (1947) C.R.A. No. 449 of 1947, decided by Bavdekar J., on December 17, 1947 and he expressed his opinion as follows:-

I am rather inclined to think that Section 37(1) was intended to meet the circumstances in which no application for adjustment of debts was made to a Board, because the time or the last date for making an application had not yet arrived. The Act obviously intended that both the creditor as well as the debtor should have a certain amount of time after the Board was established under the Act, and if Section 37(1) had not been enacted, if a debtor wanted to have a suit pending against him transferred, he would have been hurried to make in an application even before the last date upon which it could be made. Section 37(1) seems to have been enacted in order to meet those cases in which an application had not been made to a Board.

4. In Somabhai Shanabhai v. Narandas Zaverdas (1948) 51 Bom. L.R. 461 the Chief Justice and Mr. Justice Bavdekar held that under Section 19(1) only such suits, appeals, applications for execution and proceedings can be transferred which were pending at the date when an application under Section 4 could be made to the special Court set up under the Act. Undoubtedly they were dealing with a case where the time for making an application under Section 4 had expired and thereafter a suit was filed in an ordinary civil Court. While the suit was pending, an application was made by the debtor that the proceedings should be transferred to the Board as under Section 19(1) of the Act all pending suits and proceedings had to be transferred if they involved the question whether the person from whom the debt was due was a debtor and whether the total amount of debts due from him exceeds Rs. 15,000, The learned Judges held that the power to transfer proceedings under Section 19 could be exercised only in respect of such proceedings as were pending at the time when an application under Section 4 could be made to the special Court set up under the Act. Their view therefore was that even if no application was in fact made, it was open to the civil and revenue Courts to transfer proceedings which were pending up to the last date on which such applications could be made. This decision has been followed in a recent judgment of the Chief Justice and Mr. Justice Gajendragadkar in Jamietram Gaurishanker Joshi v. Patal Chaturbhai (1948) F.A. No. 354 of 1944, decided by Chagla C.J. and Gajendragadkar J., on August 17, 1948(Unrep.).

5. The first question set out by Mr. Justice Weston also involves the consideration of the point as to when it can be said that a matter, pending before a civil or revenue Court, involves questions mentioned in Section 19(1). As the learned Judge has pointed out, no suit, appeal or application for execution ordinarily involves the questions whether a person from whom a debt is due is a debtor under the Bombay Agricultural Debtors' Relief Act, or whether the total amount of debts due from him does not exceed Rs. 15,000. It seems to be the view of the learned Judge that if an ordinary suit or other proceeding is to be made to involve these questions, it must be done by express pleading. Section 19 of the Act merely says that before a suit, appeal, application or other proceeding is ordered to be transferred to the special Court, they must involve questions whether the person from whom such debt is due is a debtor' and whether the total amount of debts due from him on the date of the application exceeds Rs. 15,000. Whether this question should arise out of the pleadings of the parties or whether it may arise by reason of an independent application made to the Court for the transfer of the proceedings is not very clear. But it seems to us that the questions may reasonably be regarded to be involved in a suit if they arise in any application made in the course of the suit. They need not, in our opinion, necessarily arise out of the pleadings of the parties. If such a limited construction were to be placed on Sub-section (1) of Section 19, it would be difficult to apply the section so construed in respect of appeals or applications for execution in which there are generally no pleadings as such. This question also arose before Mr. Justice Bavdekar in Kdnku v. Krishna Joti and he expressed his view as follows:-

It may be, of course, that a question may be involved in a suit, because it is involved in an application made in the suit, and it is conceivable that if the Act had given a person, who is sued for the recovery of a debt, the right to make an application to the Court contending that he is a debtor and the total amount of debt due from him does not exceed Rs. 15,000 and to have the suit transferred to the Board, then it may, perhaps, have been possible to say that the application for transfer involves a question whether such a person is a debtor and the total amount of debts due from him exceeds Rs. 15,000 or not.

And he concluded by saying:

The section must, therefore, be interpreted to mean that where there is a suit for the recovery of a debt and any application is made to the Court that it should be transferred on the ground that the defendant is a debtor arid the total amount due from him does not exceed Rs. 15,000 the suit must be transferred to the Debt Adjustment Board.

In another matter which came up before Mr. Justice Gajendragadkar in Ramchan-dra Shankar v. Ganpati Kesu (1948) C.R.A. No. 564 of 1947, decided by Gajendragadkar J., on March 3, 1947(Unrep.) it was argued before him that an application made by a debtor asking for the transfer of a suit was not a part of the pleading in the suit, and any allegations made by him in that application cannot justify the finding that the question as to the total debts of the debtor also arose in the suit. The learned Judge expressed his inability to accept the contention and stated that if Section 19(1) was to be construed in that technical way, it was difficult to conceive of any suits in which the second question could appropriately arise. With respect, we are in agreement with the view taken by Mr. Justice Bavdekar and Mr. Justice Gajendragadkar and hold that the questions as to whether a person from whom a debt is due is a debtor or not and whether the total amount of his debt exceeds Rs. 15,000 or not are questions which may be said to be involved in a suit, appeal, application for execution, etc., if they arise out of any application made in those proceedings and they need not necessarily arise out of the pleadings of the parties. Although the matter was not argued before them, this view appears to have been accepted by the Chief Justice and Mr. Justice Gajendragadkar in Jamietram Gourishankar's case where in appeal an order for transfer of the suit to the special Court set up under the Bombay Agricultural Debtors' Relief Act, 1947, was passed when an application was made to them for the transfer of the appeal on the ground that the respondent was a debtor and that his debts did not exceed Rs. 15,000. We are, accordingly, of the opinion that it is open to a debtor to apply to a civil or revenue Court for transfer, under Section 19(1), of a pending matter which does not by itself involve the questions set out in Section 19, even though no application has been made to the Court under Section 4 of the Act. We therefore answer the first question referred to us by Mr. Justice Weston in the affirmative. We may say here that Mr. Bhalerao who appears for opponent No. 1 has not disputed this construction of Section 19(2) of the Act.

6. In this case the application for a transfer of the suit was made on July 29, 1947, i.e. before August 1, 1947, the last date fixed for making an application to the Court under Section 4(1) of the Act. The position that would arise if the proceedings were pending on August 1, 1947, but the application was made after that date, does not fall to be considered in this revision application. Presumably such a case would fall within the ruling of the division bench of this Court in Somabhai Shanabhai v. Narandas Zaverdas that under Section 19(2) only such suits, appeals, applications for execution and proceedings can be transferred as were pending at the date when an application under Section 4 could have been made to the special Court, although the learned Judges had there to deal with a case where even the suit itself was instituted long after the date when an application under Section 4 could have been made. But we desire to express no opinion on the point, as in the present case not only was the suit pending at the relevant date, but even the application for transfer was made before that date.

7. With regard to the second question, we think that a simple demand for a transfer by means of an application is sufficient to enable the civil or revenue Court to transfer the proceedings. It is undoubtedly true, as the learned Judge has pointed out, that this application would give no details as regards the debts and assets such as the debtor would have had to give if he had made an independent application for the adjustment of his debts under Section 4. When the matter goes before the special Court on a transfer being ordered under Section 19(1) the provisions of Sub-section (3) of Section 19 would come into play, and the special Court will have to proceed as if an application under Section 4 had been made to it. It would presumably be open to the special Court, on the proceedings being transferred to it, to call upon the debtor to furnish all the necessary details. We therefore answer the second question put to us by saying that an application for a transfer of the proceedings under Sub-section (1) of Section 19 would be sufficient to enable the Court to make an order for the transfer, if the allegations justifying the transfer, viz. that the person from whom the debts were due was a debtor and that the total amount of his debts did not exceed Rs. 15,000, were made in such an, application.

8. Although Mr. Bhalerao on behalf of opponent No. 1 did not seriously challenge these conclusions, he contended that on merits the application should not be transferred. He argued that on the record that was available, it could not be said that the questions whether defendant No. 2 was a debtor and whether the total amount of his debts exceeded Rs. 15,000 did arise. In this connection he referred us to a certain statement of defendant No. 2 which was recorded by the learned Judge in which defendant No. 2 stated that he did not cultivate the lands personally, but that his servants cultivated the lands and that there were no debts owed by him. All that Section 19(1) requires is that the question should be involved and not that the Court should be satisfied that the questions could reasonbly be said to arise. It does not appear to us that it was open to the Court to go into the question whether the allegations made in the application for transfer are reasonable, and whether on the pleadings of the parties the question can be said reasonably to arise. As pointed out by Mr. Justice Gajendragadkar in Somabhai Mathurbhai v. Babarbhai Bhaiji-bhai (1948) C.R.A. No. 403 of1947, decided by Gajenragadkar J., on March 15, 1948 (Unrep.) the Judge before whom an application for transfer is made has not to decide on merits either of the two questions. As soon as he is satisfied that the said two questions are involved in the proceedings before him, he must transfer them for decision on merits by the special Court. It is quite true that sometimes frivolous applications may be made contending that the person from whom the debts are due was a debtor and that the total amount of the debts due from him did not exceed Rs. 15,000, After the proceedings are transferred to the special Court, it is not inconceivable that the special Court may come to the conclusion that the two conditions are not satisfied. In that event, the suit would have to be re-transferred to the Court. But as Mr. Justice Gajendragadkar has pointed out in Ramchandra Shankar v. Ganpati Kesu under the plain words of Section 19(1) of the Act such hardship could not be avoided.

9. The next point that was urged by Mr. Bhalerao was that in this case only one of the defendants has pleaded for the special privilege given to a debtor under the Bombay Agricultural Debtors' Relief Act and that the two other defendants had made no such plea. He therefore suggested that it was not proper that the suit should be transferred to the special Court and urged that if the suit was to be transferred with respect to defendant No. 2 who had claimed the status of a debtor, the regular civil Court should be directed to proceed with the suit as against the other two defendants. The position, as it would arise if only one of the defendants claimed the privileges arising under the Bombay Agricultural Debtors' Relief Act was considered by me in Musa Hasafji Vsman Bhamarda v. Keshavlal Chunilal : AIR1947Bom88 . I held then that:

Under the amended Section 87 of the Bombay Agricultural Debtors' Relief Act, 1939, (which corresponds to Section 19 of the Act of 1947) the Court, within whose local area a Debt Adjustment Board has been established, is bound to transfer a suit to the Board (a special Court under the Act of 1947) even in a case where the Question involved is whether one of the two or more defendants is a debtor under the Act and whether the total amount of the debts does not exceed Rs. 15,000.

10. We therefore think that this is a case in which the application made for the transfer of the proceedings to the special Court must be allowed. We therefore vacate the order made by the learned Judge and direct that the proceedings be transferred to the special Court.

11. The rule is therefore made absolute with costs.


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