1. This revisional application raises a short question Under Section 24, Sub-section (2) of the B. A. D. B. Act. The petitioners applied for adjustment of their debts under Section 4 of the Act. Their case was that they had executed two mortgages in favour of the opponents on 7-2-1935 and 7-6-1937 for Rs. 200/-and Rs. 125/- respectively. A repayment of Rs. 165-7-0 had been alleged in the petition and the adjustment of debts was claimed on that footing. Pending this application, the petitioner sought for leave to convert their petition into one under Section 24, Sub-section (2), B. A. D. R. Act. It is clear that they were unable to establish their status as debtors within the meaning of Section 2. Sub-section (5) of the Act and they sought to rely upon their status as agricultural labourers.
The learned trial Judge allowed the original application to be converted into one under Section 24, Sub-section (2) and held that the petitioners as agricultural labourers were entitled to the adjustment of their debts under the provisions of the said section. On taking accounts as required by the Act, the learned trial Judge came to the conclusion that Rs. 206/8/- were due from the debtors to the creditors and so an award was passed to that extent. The creditors preferred an appeal and it was urged on their behalf that, since the transactions in question were admittedly mortgages, the petitioners, who claimed to be agricultural labourers, were not entitled to invoke the provisions of Section 24, Sub-section (2) of the Act.
The lower appellate Court has upheld this plea and in the result the application for adjustment of debts made by the petitioners has been dismissed. It may be added that the lower appellate Court has also considered the merits of the award and has come to the conclusion that, if the petitioners were entitled to claim adjustment, the amount due from them would be Rs. 192/- and not Rs. 206/8/- as found by the learned trial Judge.
It is the dismissal of their application by the lower appellate Court that has given rise to the present revisional application and so the only point which arises for decision 13 whether the provisions of Section 24, Sub-section (2) can be invoked by an agricultural labourer for the adjustment of his debt when the transaction between him and his creditor is admittedly, and even in form, one of Mortgage.
2. Section 24, Sub-section (2) affords a special facility to agricultural labourers to claim adjustment of their debts and in claiming the benetit of tnis sub-section Legislature has deliberately exempted agricultural labourers from proving their status' as debtors within the meaning of Section 2, Sub-section (5). Section 2, Sub-section (5) requires that, before an applicant can be held to be a debtor, he must not only be indebted, but must hold land used for agricultural purposes as required by Sub-clause (ii) of Section 2(5) (a) and must have cultivated an agricultural land as required by Sub-clause (iii) of Section 2(5) (a) of the Act, He has also to prove that his annual income from sources other than agricultural and manual labour does not exceed 33% of his total annual income or does not exceed Rs. 500/-, whichever is greater.
Now, it is clear that, if a person who was an agriculturist and who owned lands has been reduced to the position of a landless labourer because he has either transferred his lands by ostensible sale-deeds or has conveyed them by way of security for the debts borrowed by him, it would be impossible for him to satisfy the tests laid down by Section 2, Sub-section. (5) of the Act. It is also equally clear that, if any class of agricultural debtors is entitled to the protection of the Act, it is these debtors who have become landless labourers as a result of their indebtedness.
That is why Section 24, Sub-section (2) provides that the debt due from an agricultural labourer who Owns no land should be adjusted even though he may not be able to prove his status as a debtor as defined by Section 2, Sub-section (5). The last part of Sub-section (5) of Section 2 lays down that, when a declaration has been made in favour of an agricultural labourer as contemplated by the earlier part of the Sub-section, the applicant shall, notwithstanding anything contained in the definition of 'debtor' in Sub-section (5) of Section 2, be deemed to be a debtor for the purposes of the Act and the Court shall proceed to deal with his application as if it was an application made under Section 4.
In other words, once the agricultural labourer obtains a declaration from the Court as mentioned by Section 24, Sub-section (2), he would be regarded as a debtor even though he may not satisfy the tests laid down by Section 2 Sub-section (5) and the application made by him under Section 24 Sub-section (2) would be dealt with as if it was an application made by a debtor under Section 4 of the Act. This position is quite clear. The difficulty, however, arises when one considers the first part of Section 24, Sub-section (2). The first part of that sub-section provides that any agricultural labourer may make an application before 1-8-1947 claiming that any transfer of land by him or any other person through whom he inherited it was a transfer in the nature of a mortgage.
Then the sub-section adds that, on hearing the application, the Court shall, notwithstanding, anything to the contrary contained in any law, custom, or contract, declare the transfer to be a mortgage, if it is satisfied that the circumstances connected with the transfer showed it to, be in the nature of a mortgage. It would thus be seen that, if this part of the sub-section is literally construed, it can only apply to applications made by agricultural labourers where they have transferred their property by conveyances in the form of ostensible sale-deeds, though in substance and in truth the transactions evidenced by the said conveyances are in the nature of mortgages.
In such a case, the usual tests recognised by Judicial decisions are applied, material circumstances attending the execution of the transaction are taken into account, and a declaration is granted in a proper case to the agricultural labourer that the transaction in question, though ostensibly a sale-deed, is in reality a mortgage. The last part of this sub-section then provides that, once a declaration about the real nature of a transaction is thus made in favour of an agricultural labourer, he would be regarded as a debtor and his application would be dealt with under the provisions of the Act.
3. It has been held by the lower, appellate Court that the provisions of Section 24, Sub-section (2) can be invoked by an agricultural labourer only where the transaction impugned is in form an ostensible sale-deed. The argument is that, unless the transaction impugned has taken the form of an ostensible sale-deed, the Court is not required to adjudicate upon the real nature of the transaction and with, out such an adjudication there would be no occasion or justification for making a declaration in favour of the agricultural labourer that the transaction is in reality a mortgage, and that it is only where such a declaration is made that the agricultural labourer can be regarded as a debtor under the last part of Section 24, Sub-section (2).
This view postulates that the condition precedent for treating applications made under Section 24, Sub-Section (2) as made under Section 4 and for conferring the status of a debtor on an agricultural labourer is that a declaration should have been made in favour of the said labourer by a Court of competent jurisdiction that the impugned transaction is a mortgage and not a sale. It may be conceded that, on a literal construction of Section 24, Sub-section (2), this inference may be regarded as possible. But, on the other hand, this inference is so wholly and patently inconsistent with the object of Section 24, Sub-section (2) that it would be unreasonable to adopt such a mechanical and literal construction of this sub-section.
The E. A. D. B. Act was passed because Legislature thought it to be expedient to consolidate and, amend the law for the relief of agricultural debtors in the province of Bombay, and, as I have already mentioned, in granting relief to agricultural debtors highest priority was intended to be given to such debtors who had become landless labourers by reason of their indebtedness. If the view taken by the lower appellate Court was accepted, it would lead to this most anomalous result that, whereas an agricultural labourer can claim adjustment of his debts notwithstanding the fact that the transaction impugned is an ostensible sale, he would not be entitled to the same benfit where the transaction is admittedly and in form a mortgage.
If the policy of the Act was to provide the benefit of adjustment for debts due from agricultural labourers, it would be obvious that a claim for adjustment of a debt made by an agricultural labourer where the transaction is admittedly in the nature of a mortgage and where no adjudication in regard to the nature of the transaction is required, should be recognised without any difficulty. That is why I am disposed to think that Section 24, Sub-section (2) must; be liberally construed and the higher right given to the agricultural labourer to establish the real nature of the transaction between him and his creditor should be deemed to include the lesser and the lower right of claiming the adjustment of his debts when the transaction between him and his creditor has not even taken the form of an ostensible sale-deed, but is in form and in substance a mortgage-deed.
An agricultural labourer, in such a case, should be regarded to be a debtor as soon as it is shown to the satisfaction of the Court that the debt whose adjustment he seeks to obtain is even in form ft debt and needs no adjudication in Court. The right claimed by an agricultural labourer in EUC& a case is obviously of the same kind as the right conferred upon an agricultural labourer in respect of ostensible sale-deeds and compared to the latter right it is a lesser and a smaller right and must be deemed to be included within the meaning of Section 24, Sub-section (2). I must, therefore, hold that the view taken by the lower appellate Court against the petitioners is not well-founded.
4. My attention has been invited to two judgments delivered by the learned Chief Justice bearing on this point. In Civil Revn. Appin. No. 335 of 1951, D/- 22-6-l51 (Bom) (A), the learned Chief Justice rejected the argument urged before him by the petitioner that, where the tiansaction is admitted to be a mortgage, Section 24 Sub-section (2) cannot be invoked by an agricultural labourer. iP. this particular case, the nature of the impugned transaction has been declared by a previous decision between the parties pronounced by a Court of competent jurisdiction, and the learned Chief Justice held that the provisions of Section 25, Sub-section (i) would be applicable to the proceedings before him and that made the argument urged by the petitioner untenable.
The view taken by the learned Chief Justice in this re visional application appears to me to be consistent with the construction which I am disposed to put on Section 24, Sub-section (2). This judgment has been relied upon by Mr. Chandrachud on behalf of the petitioners. On the other hand. Mr. Abhyan-kar has relied upon another judgment of the learned Chief Justice in Civil Revn. Appln. No. 1663 of 1952. D/- 10-7-1953 (Bom) (B). In this case, the learned Chief Justice was considering another aspect of the argument urged before him under Section 24, Sub-section (2).
He was emphasizing the fact that, after a declaration is made in favour of an agricultural labourer as provided for by the first part of Section 24, Sub-section (2), the agricultural labourer would automatically be treated as a debtor even though he may not satisfy the tests of the definition of a debtor under Section 2, Sub-section (5). In the case before the learned Chief Justice, no declaration had yet been made in favour of the agricultural labourer. 'If no declaration is made', observed the learned Chief Justice, 'then the debtor can only avail himself of the provisions of the Act provided he proves his status as a debtor. But if a declaration is made that the transaction challenged Is a mortgage, then the applicant becomes a debtor for the purposes of the Act' and it would be unnecessary to try the preliminary issues about the said status.
Mr. Abhyankar contends that the observation of the learned Chief Justice that, if no declaration is made, then the debtor can only avail himself of the provisions of the Act provided he proves his status indicates that the learned Chief Justice was disposed to construe the section literally. I do not think that this would be a fair way of reading this judgment. Reading the judgment as a whole, I am not satisfied that the learned Chief Justice really intended to lay down that, if an agricultural labourer came to the Court for adjustment of a debt evidenced by a mortgage deed, his claim would be rejected on the ground that there was no occasion to adjudicate upon the nature of the debt and so Section 24, Sub-section (2) would not apply.
The observation on which Mr. Abhyankar relies must be confined to the facts with which the learned Chief Justice was dealing and it need not be read as a general observation approving of the literal and mechanical construction of Section 24. Besides, as I have just mentioned, the learned Chief Justice himself has adopted a liberal construction of Section 24, Sub-section (2) in the other judgment to which I have just referred.
5. In the result, the revisional application, must be allowed, the order passed by the lower appellate Court must be set aside and an award directed to be drawn between the parties holding that the petitioners would be liable to pay Rs. 192/-to the opponents. Rule absolute. The petitioners would be entitled to their costs throughout.
6. Application allowed.