1. A rather interesting question arises on this civil revision application. A Board under the Bombay Agricultural Debtors' Relief Act of 1939 was set up in the Khed taluka on 1st January, 1942. The last day for making applications tor adjustment of debts under Section 17 was 1st June, 1943. On 7th July, 1942, one Rajguru applied for the adjustment of the debt due by the husband of the petitioner, Thakuji. Notices were issued under Section 31 of the Act and in reply to the notice a statement was submitted by the petitioner, on 19th December, 1946, Thakuji having died in the meanwhile.
In that statement she challenged five transactions of sale. Her case was that Thakuji had purported to sell three lands by three transactions of 1925, 1927 and 1931 to the brother of opponent No. 1 Kasambhai and there were two other transactions also purporting to be sales in favour of one Tarvade and these two lands had been ultimately transferred by Tarvade to Kasambhai and in partition between opponent No. 1 and Kasambhai all these five lands had gone to the share of opponent No. 1. The petitioner, therefore, contended in this statement that these transactions should be declared to be mortgage transactions and accounts should be taken in respect of these mortgages.
2. Now, opponent No. 1 had filed two suits in Civil Courts, being suits Nos. 177 of 1946 and 183 of 1946, claiming possession of these lands from the petitioner. He had also filed a tenancy application in respect of these lands before the Revenue Court and that tenancy application was No. 1020 of 1948. An order was passed by consent on 27th February, 1948, transferring these two suits Nos. 177 of 1946 and 183 of 1946 to the Debt Adjustment Court. A consent order was also taken transferring the tenancy application also to the Debt Adjustment Court.
The Debt Adjustment Court held that all these five transactions were mortgages and passed an award adjusting the debts due under these mortgages on 5th September, 1950. An appeal was preferred to the District Court and the District Court held that the civil Court bad no jurisdiction to transfer the two suits Nos. 177 of 1948 and 183 of 1946 to the Debt Adjustment Court, that equally the tenancy application No. 1020 of 1948 should not have been transferred to the Debt Adjustment Court, and therefore modified the award passed by the trial Court by deleting from it the provision with regard to the adjustment of these mortgages.
On merits the learned District Judge held that the trial Court was right in coming to the conclusion that the transactions were mortgages and not sales. It is from this order of the District Judge that this revision application is preferred.
3. Mr. Desai's contention is that these two suits Nos. 177 of 1946 and 183 of 1946 were pending in the civil Court when the statement was filed by the petitioner on 19th December, 1946. According to Mr. Desai the relevant and material date in this case is 19th December, 1946, when the petitioner for the first time made an application to the Debt Adjustment Court challenging the transactions, and with reference to that date the two suits must be looked upon as pending suits and therefore they were liable to be transferred under Section 19 of the new Act. Mr. Desai concedes that if that argument is sound, then as far as the tenancy application is concerned, it was filed after the statement of 19th December, 1946, and therefore as far as the transfer of the tenancy application was concerned, he cannot contend that that transfer was a valid or a proper transfer.
4. Now, under the old Act an application by a debtor had to be made under Section 17(1) within the time specified under that section, and as already pointed out in this particular case the last date for making such an application was 1st June, 1943. Under Section 17(2) a creditor was entitled to make an application if an application had not been made by a debtor. Then Section 31 provides for notice to be given on receipt of an application for adjustment of debts and the notice is to be given to the debtor unless the debtor himself is an applicant and to every creditor other than the creditor who is himself an applicant whose names and addresses are given in the application, and the section also provides for the giving of a general notice requiring the debtor and all creditors to submit a statement in the prescribed form within one month from the date of the service Of the notice or the publication of the general notice whichever is later, and there is a proviso which empowered the Board to extend time for the submission of the statement.
It is clear that the scheme of the Debt Adjustment Act is to prevent multiplicity of proceedings and the object of Section 17 and Section 31 is that all the creditors of the debtor should be brought before the Court and his debt should be adjusted ultimately in a proceeding which should be a consolidated proceeding. Section 32 provides for debts being discharged where an application for adjustment has not been made, and Mr. Desai draws my attention to the fact that under Section 32 a debt due from a debtor in respect of which a statement is not submitted to the Board by the creditor in compliance with the provisions of Section 31 is also discharged.
Section 45 confers power upon the Board to declare transactions purporting to be a sale to be in the nature of a mortgage and the provision is that notwithstanding anything contained in any law, custom or contract, whenever it is alleged during the course of the hearing of an application made under Section 17 that any transaction purporting to be a sale of land belonging to a debtor was a transaction in the nature of a mortgage, the Board shall declare the transaction to be so. The contention of Mr. Desai is that once there is an application under Section 17, it is open to the debtor at any time to allege that a particular transaction is a mortgage and the Court is bound to adjudicate upon that contention.
Therefore, it is urged that inasmuch as the application of Rajguru was made and was pending, it was open to the debtor at any stage during the pendency of that, application to allege that a particular transaction was a mortgage, and therefore when the petitioner alleged on 19th December, 1946, that the five transactions were mortgages it was incumbent upon the Court to adjudicate upon the contention put forward by the petitioner.
In my opinion it is not correct to read Section 45 to mean that in an application under Section 17 which is not concerned with a particular transaction it is open to a party to make an allegation with regard to the nature of that transaction being a mortgage or a sale. When Section 45 says that during the course of the hearing of an application made under Section 17 it is open to a debtor to allege that a transaction is a mortgage and not a sale, it means that the question of that transaction directly arises in that application.
In this case, for instance, if all that was before the Court was the application of Rajguru and nothing more, it would not have been open to the Court to go into the question as to whether the transactions with opponent No. 1 were mortgages or sales. It is only if a proper application is before the Court against opponent No. 1 or to which opponent No. 1 is a party, or where in an application the transaction with opponent No. 1 is properly challenged, that liberty is given to the debtor at any stage of such an application to challenge a particular transaction and ask the Court to adjudicate that it is a mortgage and not a sale.
5. But the real question that I have to consider is whether the application made by the petitioner on 19th Decemoer, 1946, for the determination of the five transactions was an application which was in time. It cannot be disputed that if the petitioner had made an independent application under Section 17(1), that application would have been barred, because, as I have already pointed out, the last date for making such an application was 1st June, 1943, and the question that falls for determination is whether the Legislature has enlarged the time for making such an application merely because a creditor has made an application and the debtor has been given an opportunity to make a statement and in that statement to apply for adjustment of debts instead of making an independent application for adjustment of debts under Section 17(1).
In my opinion, on principle such a contention cannot be accepted. A particular facility is given to a debtor under Section 31 when there is already an application by a creditor for adjustment of debts. The law does not require that the debtor should make a separate independent application under Section 17(1). A statement made by the debtor under that section serves the same purpose as an application under Section 17(1). But that statement to the extent that it applies for adjustment of debts of other creditors and to the extent that it challenges certain transactions must be as much in time as if an independent application under Section 17(1) was made.
Mr. Desai says that under Section 31 a certain time is fixed within which a statement has to be submitted and that time can be extended. If the debtor complies with the provision of Section 31 and his application is in time, there is no reason why hp should be deprived of the benefit conferred upon him by Section 31. Mr. Desai says that in this case I must assume -- and I am prepared to assume -- that although the statement was submitted as late as 19th December, 1946, it must have been submitted by reason of time having been extended by the Court. If it had not been so, it would not have been taken on file, and Mr. Desai says that once it is assumed that the statement of 19th December, 1946, was in time within the meaning of Section 31, the debtor cannot be deprived of raising the questions which he has raised by that statement,
Now, this statement of 19th December, 1946, is partly in the nature of a written statement and partly in the nature of a counterclaim. To the extent that it is an answer to the claim made by Rajguru it is a written statement and no question of limitation would arise in the way of the Court considering the defence put forward by the petitioner to the claim made by Rajguru. But to the extent that the petitioner wanted to challenge the five transactions, it is in the nature of a counterclaim and on ordinary principles of pleadings the counterclaim must be as much in time as a plaint would be if the party had filed a plaint instead of a counterclaim.
Therefore, the facility given by the Legislature to the debtor is limited to this extent that although the debtor may not file an independent application under Section 17, if he files a statement under Section 31 that statement must be within time, the time being judged not from the point of view of Section 31 but from the point of view of Section 17.
6. In my opinion, therefore, it was not competent to the petitioner to challenge the transactions in favour of opponent No. 1 on 19th December, 1946, when she could not have challenged those transactions if she had filed an independent application under Section 17(1). It would be impossible to accept the contention that although the Court would have been barred from considering the application of the petitioner if it had been made under Section 17(1), the Court is not barred merely because that application is made in the form of a statement submitted under Section 31. Section 31 is purely procedural, whereas Section 17(1) deals with substantive rights, and the right of the debtor to challenge a transaction Is lost if the challenge is not made within the time limited by Section 17(1).
The learned District Judge, with respect to him, has not considered the matter from the point of view of the competency of the application made by the petitioner on 19th December, 1946. He has rather considered the question as to whether' the transfer of the two suits was a proper transfer or not. If the application itself was incompetent, no further question need have arisen with regard to the transfer of the suits and the application should have been dismissed on the ground that it was beyond time.
7. But turning to the question of the transfer of the suits, Mr. Desai has drawn my attention to Section 19(1) and Section 19(2). Section 19(1) has been construed fairly often by this Court and what we have laid down is that only those suits are liable to be transferred which were pending at the date when an application for adjustment of debts could have been made under Section 4; in other words, if a suit was filed after the time to make an application for adjustment of debts had expired, such a suit would not be liable to transfer,
Section 19(1) deals with the liability of suits, appeals, etc. being transferred generally. Section 19(2) deals with a specific case and that provides for the giving of the notice by the Debt Adjustment Court and that notice is to be given when there is an application for adjustment of debts made to the Court under Section 4 or a statement submitted to the Court under Section 14, and Mr. Desai says that whatever might have been the position under Section 19(1) the position is different under Section 19(2), and Mr. Desai's contention is that Inasmuch as a statement was submitted to the Court under Section 14, which corresponds to Section 31 of the old Act, it was obligatory upon the Bombay Agricultural Debtors Relief Act Court to give notice to the civil Court with regard to the two suits pending before it and that civil Court was bound to transfer these suits to the Debt Adjustment Court.
Mr. Desai says that inasmuch as these suits were pending prior to 19th December, 1946, and as they dealt with a matter with regard to which exclusive jurisdiction had been conferred upon the Debt Adjustment Court, the suits could not go on but must be transferred to the Debt Adjustment Court. In my opinion, when Section 19(2) speaks of an application made to a Court under Section 4 or a statement submitted to a Court under Section 14, the point of time with regard to both is identical.
A statement submitted to a Court under Section 14 within the meaning of Section 19(2) must be a statement which has' been submitted within the time within which an application for adjustment of debts could be made under Section 4, and that is made clearer still by the Legislature providing that the suits, appeals, applications, etc. which are to be transferred under Sub-section (2) are the very suits, appeals, applications, etc. which are liable to be transferred under Sub-section (1).
Therefore, there is no distinction with regard to the liability of suits being transferred under Sub-section (1) and Sub-section (2) of Section 19. The only difference is that under Section 19(1) suits, appeals, etc. are liable to be transferred whether there is an application for adjustment of debts or a statement under Section 14 or not. In the case of Sub-section (2) as soon as there is an application for adjustment of debts or a statement under Section 14, an obligation is cast upon the Debt Adjustment Court to give notice to the Civil Court and an obligation cast upon the civil Court on the receipt of the notice to transfer the suits, appeals, etc. to the Debt Adjustment Court.
It seems to me that that is the only logical way to read Section 19(1) or Section 19(2), otherwise the result would be that suits filed long after the date for making an application for adjustment of debts has passed would be liable to be transferred merely because the debtor does not choose to file an application for adjustment of debts but takes his time over the filing of the statement under Section 14. That is not the general scheme of the Bombay Agricultural Debtors' Relief Act. The general scheme is that by the date provided in the Act by which applications for adjustment of debts are to be made all the debts of the debtor are to be adjusted. All matters concerned with the debts are to be tried by the special Court.
The jurisdiction of the civil Courts is excluded, but after that date has expired the debts which are not proved are extinguished and the civil Court resumes its jurisdiction to hear and dispose of cases filed after the date in question. A debtor is in no way prejudiced by this Interpretation that I am putting. As far as adjustment of debts is concerned, he benefits because if applications for adjustment of debts are not made within the time limited, the debts are discharged, and if a civil suit is filed subsequent to that date, he can always take up the defence that the debt is extinguished and no decree can be passed on that debt.
With regard to the challenging of transactions it may seem that this decision may prejudice the case of a debtor because, as in this case, the debtor wants to challenge a transaction in 1946 when the last date for making an application for adjustment of debts was somewhere in 1943. But there again there must be some finality with regard to the title to land.
The Legislature gave a very important right to the debtor to challenge transactions in the nature of a sale which could not be challenged under the ordinary law. But that right was not to be exercised indefinitely. That right could only be exercised up to the date fixed for the making of the application for adjustment of debts, once that time had expired, the right of the debtor to challenge these transactions disappeared, and therefore when on 19th December, 1946, the petitioner attempted to challenge transactions of 1925, 1927 and 1931, she had no longer the right to do so, because her right came to an end on 1st June, 1943.
Therefore, when opponent No. 1 filed suits in civil Courts In 1946, he could not be met by the defence on the Dart of the cetitioner that she had a right to challenge these transactions under the provisions of the Bombay Agricultural Debtors' Relief Act. The law required her to be more vigilant. Even though under Section 31 the time might have been extended for her to file the statement, if she wanted to challenge certain transactions, she could have only done It within the time limited by the law. Independently of this statement she could have herself made an application to challenge the transactions under Section 17(1) of the old Act.
8. Mr. Desai has drawn my attention to the forms under the Act and form No. 1, which is the form in which the statement is to be submitted by the debtor, far from helping Mr. Desai, in my opinion, is against him, because that form is identical with the form in which the debtor has got to make his application under Section 17(1). Therefore, as far as this form is concerned, the statement submitted by the debtor is looked upon as if it were an application under Section 17(1), and therefore to the extent that the statement submitted by the debtor under Section 31 is an application under Section 17(1), that application must be within time as much as if it had been made independently under Section 17(1). Therefore, in my opinion, the learned Judge below was right in the view that he took.
9. The result is that the application falls. Rule discharged with costs.
10. Rule discharged.