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Tuka Krishna Khot Vs. Dhanu Krishna Khot - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberCivil Reference No. 5 of 1946
Judge
Reported inAIR1947Bom320; (1947)49BOMLR219
AppellantTuka Krishna Khot
RespondentDhanu Krishna Khot
Excerpt:
.....relicf act (bom. xxvlii of 1939, as amended by bom. act viii of 1945), section 37(1)-transfer of suit-debt adjustment board-question whether transaction is sale or mortgage-dekkhan agriculturists' belief act (xvii of 1879), section 15d-suit for account-whether such suit is 'suit for the recovery of a debt.';a suit which raises the question whether the impugned transaction is a sale ox mortgage should not be transferred to the debt adjustment board, under section 37(i) of the bombay agricultural debtors' relief act, 1939, as amended by bombay act viii of 1945, before the court has found the transaction to be really in the nature of a mortgage. even after the transaction is found to be a mortgage, the suit cannot be transferred to the board under section 37(1) unless it is duly..........under section 17 or a statement submitted under section 31. it provides that in the case of such debts the board shall give notice to the courts where suits or other proceedings in reference to them may be pending and on receipt of such notice courts shall transfer the said suits or proceedings to the board. under sub-section (3) it is provided that if any suit or proceeding is transferred to the board either under sub-section (1) or sub-section (2), the board shall proceed as if an application had been made to it under section 17. in dealing with the matters pending before them if the boards find against the debtor on the two preliminary issues, they would have under sub-section (4) to retains fer the suits or proceedings to the courts from which they had been transferred to the.....
Judgment:

Gajendragadkar, J.

1. This is a reference made by the Civil Judge, Junior Division, Islampur, through the District Judge at Satara, referring certain questions of law which arise under the Bombay Agricultural Debtors' Relief Act, 1939, as amended. The plaintiff has filed a suit for accounts under Section 15D of the Dekkhan Agriculturists' Relief Act, 1879. The transaction in suit purports to be a sale and is evidenced by a deed executed in 1939. It is the plaintiffs case that this transaction is in the nature of a mortgage and as such he has sued for accounts under Section 15D. The defendant contends that the transaction is a sale out and out, and resists the plaintiff's claim for accounts. Pending the suit in July 1946 the plaintiff applied to the learned Judge that the suit should be transferred to the Debt Adjustment Board at Shirala under Section 37 of the Bombay Agricultural Debtors' Relief Act. The defendant resisted this request on the ground that the present suit is not for the recovery of a debt and does not, therefore, fall under Section 37(1) of the said Act. The learned Judge felt that the questions of law arising on this application are of considerable importance, and since he entertains a reasonable doubt as to the answers to the said questions, he has made the present reference; accordingly he has drawn up a statement of facts of the case and has set out two points on which doubt is entertained. It is clear that the decree which the learned Judge may pass in this suit is not subject to an appeal and the reference is thus competent under O. XLVI, Rule 1. The two questions submitted to us are:

(1) Whether a sale mortgage suit ought to be transferred to the Board under Section 37 of the Bombay Agricultural Debtors' Relief Act, 1939, as amended by Bombay Act No. 8 of 1945, before the Court has found the transaction to be really in the nature of a mortgage ?

(2) Whether a mere account suit under Section 15D of the Dekkhan Agriculturists' Relief Act, 1879, is a suit for the recovery of a debt, which can be transferred to the Board under Section 37 of the Bombay Agricultural Debtors' Relief Act, 1939, as amended by Bombay Act No. 8 of 1945, before it is properly converted into a suit for redemption ?

2. Before dealing with the points referred to us in this reference it would be convenient if the broad features of the Bombay Agricultural Debtors' Relief Act are examined. It is obvious that the Act has been passed for the relief of agriculturist debtors in the Province of Bombay, and for reasons which it may not be easy to appreciate Legislature has taken the view that the best way of affording such relief to the agriculturist debtors in this Province would be to leave the disputes arising between them and their creditors to be determined by Boards set up under this Act. It may be that Legislature was apprehensive that if these disputes are left to be determined by the civil Courts, the remedies of appeals and revisional applications which are ordinarily available to parties aggrieved by decisions of such civil Courts may unduly protract the proceedings and may not result in speedy relief to the debtors in question. However that may be, there is no doubt that Legislature intended that it is the Boards set up under this Act that should determine all material questions relating to the claims against agriculturist debtors falling within the purview of the Act. Under Section 17(1) within eighteen months from the date on which a Board is established in any area, any debtor may make an-application to the Board for the adjustment of his debts. Such an application has to set out the particulars mentioned in Section 21(1). If the debtor (does not make such an application, it is competent to the creditor to apply under Section 17(2), and the details which a creditor has to set out in his application are mentioned in Section 22(2). An application made under Section 17 either by a debtor or his creditor would not be entertained by the Board unless the total amount of debts claimed as being due from him on a certain date is not more than Rs. 15,000 (s. 26). It is provided that if more applications than one are made to the same or different Boards by or in respect of the same debtor or one or more of the joint debtors, such applications shall be dealt with by any one of such Boards as may be specified by the respective Judges mentioned in Section 17(4) (b). Section 28 also permits the consolidation of such applications. Section 19 requires every creditor and debtor to file a true and correct statement before the Board, notwithstanding the fact that any application has not been filed under Section 17. It is permissible under the said section either for the creditor or the debtor to issue a notice to the other party calling upon him to file a statement before the Board. Sections 23 and 24 deal with settlement of disputes between the creditors and their debtors, and Section 27 provides that an application for adjustment under Section 17 or one for recording a statement under Section 23 shall not be withdrawn without the leave of the Board. Section 32 is in the nature of a penalty, since it provides that if in respect of any debts to which the Act applies no application for adjustment or settlement is made as required by this Act, the said debt shall be deemed to have been duly discharged. Section 35 sets out the two issues which the Boards shall decide as preliminary issues, namely:

(a) Whether the person for the adjustment of whose debts the application has been made is a debtor;

(6) Whether the total amount of debts claimed as being due from such person on 1st January 1939 does not exceed Rs. 15,000.

In determining the first question the Boards may often have to consider whether transactions which purport to be sales are in fact such sales or are mere mortgages, and under Section 45 power is conferred upon the Boards to declare the real character of such transactions after considering the circumstances connected with them. Section 38 provides for the manner in which the accounts are to be taken. Under Section 47 the Boards have to ascertain the extent of the property of the debtor and that of his liabilities to co-operative societies. The value of the debtor's property is to be ascertained under Section 50, and the paying capacity of the debtor is to be determined under Section 51. Section 52 provides for the scaling down of the debts payable by the debtors and Section 54 deals with awards which the Boards have eventually to make. Such awards when registered are executable as decrees of a Court under Section 63. Any alienations made by the debtor shall not be valid except with the consent of the Provincial Government. Against the awards made under Section 54 one appeal is provided for under Section 10, and Section 12 lays down the grounds on which alone the appellate Court can modify or set aside the awards. Under Section 73 it is provided that no civil Court shall entertain or proceed with any suit or proceeding in respect of any matter pending before the Board or the Court under this Act, or the validity of any procedure or the legality of any award, order or decision of the Boad or of the Court, or the recovery of any debt made payable under the award. Under Section 85, as from the date on which a Board is established for any local area the Dekkhan Agriculturists' Belief Act shall cease to have force in such area or in respect of such class of debtors in such local area, as the case may be. Section 1 of the Act enumerates the sections which come into force at once and those which may come into operation after notifications in the Official Gazette are issued in that behalf. It would thus appear that the scheme of the Act is self-contained and the object of Legislature is obviously to bring all agriculturist debtors in this Province within the jurisdiction of the Boards established under this Act with a view to determine their liability once and for all, and to provide for the satisfaction of their debts in a speedy and a systematic manner after scaling down the debts as mentioned in the Act.

3. Legislature was obviously aware of the fact that several suits may be pending between agriculturist debtors and their creditors in Courts of law in which same or similar questions may be raised for the decision of the civil Courts. Section 37 of the Act deals with such suits. The said section consists of five sub-sections. Sub-section (1) deals with suits, applications for execution and proceedings for the recovery of any debt against a person pending at any time in any civil or revenue Court, and it provides that if such suits, applications and proceedings involve the question whether such person is a debtor under this Act and whether the total amout of debts due from him on the relevant date does not exceed Rs. 15,000, they shall be transferred to the Board to which an application for adjustment of the debts of such person under Section 17 lies. This sub-section, as set out, is the result of an amendment made in 1945. The original Section 37 related to suits and applications for execution in which the question involved was the recovery of any debt from a person who is a debtor and all proceedings arising in or out of such suits or applications. It may be noticed that the words 'for the recovery of any debt' have been added by the amendment. Sub-section (2) deals with cases where an application for adjustment of debts has been made under Section 17 or a statement submitted under Section 31. It provides that in the case of such debts the Board shall give notice to the Courts where suits or other proceedings in reference to them may be pending and on receipt of such notice Courts shall transfer the said suits or proceedings to the Board. Under Sub-section (3) it is provided that if any suit or proceeding is transferred to the Board either under Sub-section (1) or Sub-section (2), the Board shall proceed as if an application had been made to it under Section 17. In dealing with the matters pending before them if the Boards find against the debtor on the two preliminary issues, they would have under Sub-section (4) to retains fer the suits or proceedings to the Courts from which they had been transferred to the Boards, and when such matters are retransferred to the Courts, it is provided under Sub-section (5) that the Courts shall proceed with them and the Boards will have no further jurisdiction in respect thereof.

4. The main question which we have to decide on the present reference is whether a suit filed by an agriculturist debtor under Section 15D of the Dekkhan Agriculturists' Relief Act is a suit for the recovery of a debt as contemplated by Section 37(1) If it is, the civil Court where it is pending will have to transfer it to the Board. Under Section 15D an agriculturist mortgagor may sue for an account of the amount of principal and interest remaining unpaid on the mortgage and for a decree declaring that amount. Such a suit can be instituted by an agriculturist even though the transaction which he alleges to be a mortgage is evidenced by a document which purports to be a sale. In such a case the agriculturist may have to prove that in fact the transaction was a mortgage and not a sale as it purports to be. If he succeeds in proving this contention, accounts would be made of the amount due under the mortgage and the said amount would be declared in the decree in the said suit. The suit in which the present reference has been made is precisely of this type. It is a suit filed by the debtor against his creditor and in its initial stages, at any rate, the decree asked for by the plaintiff is one for declaring the amount due under the mortgage. In our opinion it is impossible to hold that such a suit is for the recovery of a debt. Section 37 (1), as amended, clearly refers to suits filed by creditors for the recovery of their debts against their debtors. A suit filed by an agriculturist under Section 15D cannot obviously be regarded as such a suit. Under Sub-section (3) of Section 15D, however, it is open to the plaintiff to apply to the Court to pass a decree for redemption of the mortgage, and if the Court grants the said application, a decree for redemption may be passed. Thus a suit for accounts can and may be converted into a suit for redemption under the provisions of Sub-section (3) of Section 15D. Even then it cannot be regarded as a suit for the recovery of a debt. 'It is in a sense a suit for the repayment of the debt, since by asking for a decree for redemption the plaintiff shows his willingness to pay up the debt and redeem the mortgage. Under Section 15D(3) it is likewise open to the mortgagee to apply to the Court to pass a decree for foreclosure or sale as the case may be, and the Court, if it thinks fit, may grant his application. It seems to us that in the case of a suit under Section 15D if the mortgagee applies for a decree for foreclosure or sale, the suit can well be regarded as converted into one for the recovery of a debt. At that stage it will have to be transferred to the Board under Section 37 (1). It is obvious that in a suit under Section 15D if the Court finds that the transaction in question is not a mortgage as alleged by the plaintiff, but is a sale, then no question of taking accounts can arise, and there would be no occasion to convert the suit into one either for redemption or for foreclosure or sale. It is only if the plaintiff agriculturist proves his allegation that the transaction is a mortgage that the suit may, at the option of the plaintiff or the defendant, be converted into a suit for redemption, or foreclosure or sale respectively. In our opinion it is only when the mortgagee applies for converting the suit into one for foreclosure or sale that the suit can be regarded as one for the recovery of a debt.

5. It is quite clear that even in the initial stages of such suits it would be open to the agriculturist to apply under Section 17 and move the Board under Section 37(2). In that ease the Board shall issue a notice to the Court, and the Court shall transfer the suit to the Board; in every case of this character where the plaintiff moves for a transfer of the suit to the Board, he may well be directed to make an application to the Board under Section 17 in that behalf. In Raghusing Bhavansing v. Ogeppa : AIR1947Bom71 Mr. Justice Lokur took the view that this would be the proper remedy for the debtor to take in such eases.

6. The question as to whether suits under Section 15D of the Dekkhan Agriculturists' Relief Act fall within Section 37(1) of the Bombay Agricultural Debtors' Relief Act was considered by a Division Bench of this Court in In re. Reference under Order XLVI. C.P.C. (1942) 45 Bom. L.R. 445 Section 37 which was construed in the said case, however, was the original unamended section. It was held that in a suit relating to a transaction which is said by one side to be a mortgage and by the other side to be a sale, that question has to be determined by the Court before transferring the suit to the Debt Adjustment Board. It was also observed that a mere suit for accounts under Section 15D, where a debt is admitted or established, and the only question is as to the amount, is a suit involving a question as to the recovery of a debt, and, therefore, falls within the provisions for transfer contained in Section 37. Beaumont C.J., who delivered the main judgment, considered the scheme of the whole Act and came to the conclusion that 'pending suits should not be transferred under Section 37, until the Court has determined that the debtor is a debtor within the meaning of the Act.' It may be pointed out that in the said case the question as to whether the Board would be bound by the finding of the Court was not considered, though, apparently, it was assumed that the said finding would be regarded as binding between the parties when the matter goes before the Board. It would thus appear that the provisions of Section 37 were somewhat liberally construed by this Court in order to facilitate the transfer to the Boards of all suits where questions relating to the debts of agriculturists were involved. Thereafter Legislature thought it fit to amend Section 37 with the result that under Sub-section (1) of Section 37 as amended pending suits which have to be transferred to the Boards are required to be suits 'for the recovery of a debt' against agriculturists. That being so, while deciding the questions which have been raised in the present reference the decision in In re. Reference under Order XLVI. C.P.C., may not be of much assistance. I may point out that in regard to suits falling under Section 16 of the Dekkhan Agriculturists' Relief Act the position may probably be somewhat different. In suits filed under the said section the agriculturist debtors initially ask only for accounts of the debts due from them to their creditors and decrees declaing such amounts may ordinarily be passed. But Section 17 provides that while passing decree under Section 16, the Court may, even without the application of either party to the suit, besides declaring the amount due, direct that such amount shall be paid by instalments with or without interest, and it further provides that if such instalments are not paid as directed, execution of the decree may be enforced by the defendant in the same manner as if he had obtained a decree in a suit to recover a debt. It may be arguable that suits falling under Section 16 may be regarded as suits for the recovery of debts. But the position with regard to Section 15D is, as I have already stated, substantially different.

7. There is, however, one point in regard to suits under Section 15D, which it is necessary to mention. I have already pointed out that if after the Court makes a finding in favour of the agriculturist that the transaction in question is in the nature of a mortgage, the defendant applies for a decree for foreclosure or sale, the suit could then be reasonably regarded as one for the recovery of a debt. At that stage the Court will have to transfer the suit to the Board under Section 37(1), When the suit is thus transferred to the Board, the Board may still have to consider the preliminary issues as required by Section 35 of the Act, and the finding of the Court that the transaction is a mortgage may apparently not be binding on the Board, though ordinarily such a finding would obviously be res judicata between the parties. In ease the Board comes to the conclusion that the transaction is not a mortgage, the suit would be retransferred to the Court for disposal on that basis under Sub-section (4) of Section 37. It seems to us that the findings made by the Board on the preliminary issues would be binding on the civil Court whereas the findings made by the Courts in suits pending before them may apparently not bind the Boards when they are transferred to them There does not appear to be any express provision in the Act under which the Boards could be held to be bound by findings made by civil Courts. On the other hand, under Section 73(ii) it is expressly provided that the validity of any proceedings or the legality of any award, order or decision of the Board cannot be challenged in any civil Court, and the effect of the provisions of Sub-sections (4) and (5) of Section 37, in our opinion, seems to be that when the matters in question are retransferred to civil Courts the civil Courts would have to deal with them on the basis that the findings already made by the Board are good and binding between the parties. It is thus not altogether unlikely that Courts may regard some transactions as sales and the Boards may treat them as mortgages and vice versa. That is why we are disposed to think that even as regards suits under Section 15D it may, in some cases, be infructuous for civil Courts to proceed to try them. So long as it is possible that the disputes arising in such suits may go before the Board by reason of the provisions of Section 37(2) any findings which Courts may make in such suits would not necessarily be effective or final, since as soon as the suits in which the said dealings are made are transferred to the Boards, the Boards will proceed to consider the merits of the said questions over again. It is conceivable that after a suit under Section 15D is decided against the agriculturist debtor on the ground that the transaction in suit is a sale and not a mortgage, and an appeal is preferred by him, even such an appeal may have to be transferred to the Board if in the meanwhile an application is made by the debtor under Section 17 (1). In fact in some cases second appeals pending in this Court have had to be transferred to the Boards because notices had been issued by the Boards under Section 87(2) in regard to the disputes involved in the said second appeals. This position is undoubtedly anomalous, and it is desirable that this anomaly, which may possibly arise in some cases as a result of the defective drafting of the provisions of Section 37, should as far as possible be avoided. In our opinion the best way to avoid a possible conflict of findings would be for the Courts to direct plaintiffs who have filed suits under Section 15D to apply to the Boards under Section 17 and take steps to move for a transfer of their suits under Section 37(2). It is quite true that civil Courts in which suits under Section 15D are filed would be entitled to proceed with the suits until notice is received by them either under Section 37(2) or until such suits are converted into suits for the recovery of debts. But if in adopting such a course a conflict of findings is likely to ensue, it may not be inadvisable to stay the suits, enabling the plaintiffs to apply under Section 17 (1) with a view to have such suits transferred under Section 37(2). If such a course is adopted, we think it may save the time of the Court and avoid embarrassment to the litigants and to the Boards. In view of the decision of this Court in In re. Reference under Order XLVI. C.P.C., it is somewhat surprising that an amendment should have been made in Section 37 which has the effect of curtailing the powers of the Courts in transferring suits under Section 15D to the Boards. The object of the Act obviously is to refer all the disputes about the debts of agriculturists to the Boards. It would therefore be reasonable to assume that the object of making the amendments in Section 37 was to facilitate the transfer of all such disputes to the Boards. From that point of view the introduction of the clause 'suits for the recovery of any debt' in Section 37(1) cannot be regarded as carrying out the said object at all. On the contrary, it limits the application of the said sub-section only to such suits as can properly be called suits for the recovery of debts, and thus makes it necessary for the Courts to proceed with suits under Section 15D until they are converted into suits for the recovery of debts. It is to be hoped that Legislature may make further appropriate amendments in Section 37 so as to make it clear that all suits in which disputes as regards the debts of agriculturists are involved should be transferred to the Boards; and no room should be left for any possibility of conflicting findings being recorded by civil Courts and the Boards. It is necessary that the position created by the amendment of Section 37 made in 1945 should be remedied without delay. Meanwhile it would be expedient, we think, if civil Courts before whom suits under Section 15D are pending adopt the course which we have suggested above.

8. Our answer to the first question, however, is that a sale mortgage suit ought not to be transferred to the Board under Section 37(2) as amended by Bombay Act. No. VIII of .1945 before the Court has found the transaction to be really in the nature of a mortgage. We may add that even after the transaction is found to be a mortgage, the suit cannot be transferred to the Board under the said subsection unless it is duly converted into a suit for the recovery of a debt.

9. Our answer to the second question is that a suit for accounts under Section 15D of the Dekkhan Agriculturists' Relief Act is not a suit for the recovery of a debt which can be transferred to the Board and does not become such a suit unless the defendant applies for a decree for foreclosure or sale. In our opinion, even it; such a suit is converted into one for redemption, it does not become a suit for the recovery of a debt.


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