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K.V. Bhaskara Rao and anr. Vs. S. Naranappa - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKarnataka High Court
Decided On
Case NumberSecond Appeal No. 540 of 1947-48
Judge
Reported inAIR1951Kant10; AIR1951Mys10
ActsDebt Law; Mysore Debt Conciliation Act, 1937 - Sections 4 and 10
AppellantK.V. Bhaskara Rao and anr.
RespondentS. Naranappa
Appellant AdvocateR.v. Srinivasaiya, Adv.
Respondent AdvocateM.P. Somasekhara Rao, Adv.
DispositionAppeal dismissed
Excerpt:
.....the failure of the court to suspend the proceedings on the matter being brought to its notice makes the subsequent proceedings void. 'in calculating the period of limitation for any suit filed in, or proceedings before, a civil court for the recovery of a debt which was the subject of any proceedings under this act, the time during which such proceedings were pending as well as the time taken for the obtaining of certified copies of the order of the board shall be excluded......execution of decrees and such a section has to be strictly construed. construing the section as it ought to be, it is clear that the jurisdiction of a court to proceed in respect of a debt is affected only if an application filed under section 4 is in respect of that debt. it is not denied that the application filed did not mention the debt in respect of which proceedings were going on in court. the court was not bound to suspend the proceedings under section 26 in respect of a debt for settlement of which no application had been tiled before the debt conciliation board, the courts were right in dismissing the application to set aside the sale and this appeal is dismissed with costs. advocate's fee rs. 15.
Judgment:

Vasudevamurthy, J.

1. The appellants were judgment-debtors 12 and 14 in the trial Court. The respondent obtained a decree in O. S. No. 90/41-42 on the file of the Munsiff of Sagar against fifteen persons including the appellants, who were then minors represented by a Court Clerk as their guardian ad litem, for recovery of Rs. 324-2-0 being the kandayam amount paid by the plaintiff towards the defendants' family, lands. In execution of that decree the respondent brought some immoveable properties of the judgment-debtors to sale and purchased them himself on 2-7-42. The sale was duly confirmed and the respondent obtained possession of the properties through Court. It appears that during the pendency of that execution case, on 2-7-42 judgment-debtors 3 and 11 had filed an application No. 1 of 42-43 before the Debt Conciliation Board, Sagar Taluk, for a settlement of the debts said to be due by their family, and on the same day and before the court sale was held they had filed in the Munsiff's Court at; Sagar an application for stay of sale along with an acknowledgment they had obtained from the office of the Board for receipt of the application. The Court, however, rejected the application and did not stay the sale, which went through and was held and confirmed on 2-7 1945 as stated above The appellants (of whom the 12th had since attained majority) made an application to the Court under Sections 47 and 151, Civil P C., saying that the sale was, in the circumstances, held without jurisdiction and also vitiated by irregularities and fraud and was, therefore, invalid and that it may be cancelled. The learned Munsiff of Sagar dismissed their application and on appeal his order was confirmed by the District Judge of Shimoga. The present second appeal hag been filed against his order.

2. It is contended by Mr. R. V. Sreenivasaiya, the learned advocate for the Appellants that under Section 26 Mysore Debt Conciliation Act, V. [6] of 1937 when an application dad been made to a Board under Section 4 of the Act, the execution proceedings then pending before the Munsiff was bound to have been suspended and not having been done so the subsequent court-sale is void. It is admitted by Mr. Sreenivasaiya that the application made to the Board by judgment-debtors 3 and 11 was dismissed for default without notice of it being served on the decree-holder and that this particular decree debt which was under execution was not included in than application. In fact the application for stay of sale (I. A. No. 3) made by judgment-debtors 3 and 11 in the execution case was rejected by the learned Munsiff on the ground that they had not shown that their application was for settlement of the said debt.

3. It appears to be clear from the wording of Section 26 of the Act that it is only any suit or other proceeding then pending in respect of any debt for the settlement of which application has been made to the Board that is liable to be suspended. Mr. Sreenivasaiya, however, has argued rather ingeniously that the decree debt in question became the subject of those proceedings as soon as an application was filed under Section 4 of the Act for conciliation of their debts by judgment-debtors 3 and 11 irrespective of whether the same was expressly included in their application or not, and that the general scheme of the Act is to decide upon and conciliate on all the debts of the debtor He relies in support of his argument on the reasoning involved on a consideration of the three cases which he cites, viz. In re Siddappa Chettiar, AIR (29) 1942 Mad 738 : (204 I C 409); Madana Palli Laksmikantha Nidhi Ltd. v. Raghunatha Chary v. AIR (31) 1944 Mad 24 (210 I C 606); Champat v. Ismail Khan, AIR (31) 1944 Nag. 142 (ILR (1944) Nag 264) and a reference to Section 28, Debt Conciliation Act. He points out that under Section 28 in computing the period of limitation for a suit or other proceedings filed before a civil Court for the recovery of a debts which wag the subject; of any proceedings under the Act certain deductions obtained are permissible.

4. In In re, Siddappa Chettiar, A. I. R. (29) 1942 Mad. 738: (204 I. C. 409), it has been held that Section 10 Clause (2), Madras Debt Conciliation Act, (which appears to be quite similar to the Mysore Act) is not limited only to debts which have been shown by the debtor in his application under Section 4 and that the effect of Section 10 (2) is that any debt not included in the creditor's statement is for all purposes deemed to have been discharged. In Madanapalli Laksmikantha, Nidhi Ltd. v. Raghunatha Charylu, A. I. R. (31) 1944 Mad. 24: (210 I. C 606) which has referred to with approval the case in In re Siddappa Chettiar, A. I. R. (29) 1942 Mad 738 : (204 I. C. 409), it has been held that a creditor who had notice of an application by the debtor is bound to disclose in his statement under that section all the debts which he has to recover from the debtor whether the same is disclosed in the debtor's petition or not, and if he fails to do so the debts will be deemed to be discharged.

5. In Champat v. Ismail Khan, A. I. R. (31) 1944 Nag. 142: (I. L. R. (1944) Nag. 264), which was a case under the C. P, Debt Conciliation Act, it has been held that Section 10 gave the Board ample powers not only to enter into the merits regarding admitted debts, but to try and bring debtor and creditor to an agreement even in a case where the debt was denied and that even debts which a creditor moves to have included in the proceedings and which are denied by the debtor are subject of those proceedings to which Section 23 of that Act (corresponding to Section 28 of our Act) would be applicable.

6. Me Sreenivasaiya, therefore, contends on the strength of the decision in Ratnasabapathi Iyer v. Subramania Pillai : AIR1946Mad285 that when a judgment-debtor files a petition under Section 4, the Court executing the decree has no jurisdiction to proceed with the execution until the petition under Section 4 has been dismissed and that the sale which has taken place is a nullity. In Sitarama Reddy v. B. Somappa, A. I. R. (30) 1943 Mad. 549: (209 I C. 395) which is also relied upon by Mr. Sreenivasaiya and referred to in Ratnasabapathi Iyer v. Subramania Pillai : AIR1946Mad285 , it hag been held that even if the executing Court did not know of the existence of such an application a sale held in execution afterwards would be a nullity as the executing Court would ipso facto lose its jurisdiction. With great respect to Horwill J. who has decided that case, I think that it is not supported by the wording of Section 26 (corresponding to Section 26 of our Act), and such a construction of Section 26 is likely to lead to abuse of its provisions by judgment-debtors and great inconvenience and uncertainty regarding court sales. The word shall be suspended' in our Act can only mean that the Civil Court is bound to pass an order suspending the further proceedings and cannot proceed with the execution when the fact of the application having been filed before the Board in respect of the concerned debt is brought to its notice,

7. The cases relied on by Mr. Sreenivasaiya are, however, all cases in which the debt in question had been included in the application before the Board or which the creditor was bound to include in his statement of debts owed to him and to do which he had been served with notice. A debt which is not included in the debtor's application and in respect of which the creditor has not yet been notified and called upon to make a statement by a notice under Section 10 (1) and in fact which was dismissed for default before that stage was reached as in the present case, cannot be the subject of any proceedings under the Act.

8. Mr. Somasekhara Rao, the learned advocate for the respondent, contends on the strength of the two cases in Subasini Debi v. Adharchandra, A. I. R. (36) 1949 Cal. 105 and Chandu Kunhan v. Ukkappan : (1948)2MLJ177 that when the Munsiff, before whom an application for stay of proceedings had been made, dismissed it and had directed execution to proceed, the party affected was bound to have that order vacated by appropriate appellate proceedings and as he did not do so he cannot now get the sale cancelled or treated as a nullity on that ground. Those decisions no doubt supported that contention and would bar an application under Section 47 by a judgment-debtor who has made and failed in an application for stay as in the present case. But in the light of the finding that Section 26 has no application at all to this case as the decree debt had neither been included in the debtor's application nor was even the subject of any proceedings before the Board, that aspect of the matter need not be considered further.

9. In the result this appeal fails and is dismissed with costs (Advocate's fee Rs. 15).

Mallappa J.

10. I agree with the decision, but would like to add a few words. Section 36, Mysore Debt Conciliation Act, makes it obligatory on the Courts to suspend proceedings in respect of a debt for the settlement of which an application has been made under Section 4. It does not say that the filing of an application under. Section 4 has the effect of suspending proceedings in any Court in respect of that debt. If it said so the filing of the application under Section 4 would make the subsequent proceedings in respect of that debt in any Court void The section directs that the proceedings shall be suspended on the filing of the application. The Court can suspend the proceedings if the filing of the application is brought to its notice and not otherwise. The failure of the Court to suspend the proceedings on the matter being brought to its notice makes the subsequent proceedings void. Unless the wording of Section 26 is construed as implying that the filing of the application should be brought to its notice, great hardship would be caused. If the wording of the section is construed as if it states that the filing of the application itself operates as suspension of proceedings, all that a judgment-debtor need do to harass a decree-holder or a stranger purchaser in execution of a decree against him is to file an application under Section 4 and keep quiet. Even if the application under Section 4 is without notice to creditor dismissed for default and is not by any means such a report to the Court, brought to the notice of decree-holder purchaser or stranger purchaser the sale becomes void if such a construction is possible. The sale need not be set aside and the purchaser may realise after great delay that the sale conveyed no title to him. If this is the effect of Section 26 it has to be stated that it causes very great hardship not evidently intended and the section needs amendment. The point does not arise for consideration in this case except to point out the hardship that the section is causing to purchasers in execution of decrees and the desirability of construing it strictly.

11. As regards the decisions relied on to show that even debts not mentioned in the application under Section 4 have to be regarded as subject-matter of proceedings under the Act, all that need be said is that the decisions are not applicable to the point under consideration. The point for consideration in this case is not whether the debt not mentioned in the application before a Debt Conciliation Board is the subject of any proceedings under that Act. That is a point for consideration in computing the period of limitation under Section 28 (1) which is as follows: 'In calculating the period of limitation for any suit filed in, or proceedings before, a civil Court for the recovery of a debt which was the subject of any proceedings under this Act, the time during which such proceedings were pending as well as the time taken for the obtaining of certified copies of the order of the board shall be excluded.'

With this may be compared Section 26, which is as follows:

''When an application has been made to a board under Section 4, any suit or other proceedings then pending before a civil Court in respect of any debt for the settlement of which application has been made shall be suspended until the board has dismissed the application.'

Section 26 as it stands is already causing considerable hardship and inconvenience to innocent purchasers in sales held in execution of decrees and such a section has to be strictly construed. Construing the section as it ought to be, it is clear that the jurisdiction of a Court to proceed in respect of a debt is affected only if an application filed under Section 4 is in respect of that debt. It is not denied that the application filed did not mention the debt in respect of which proceedings were going on in Court. The Court was not bound to suspend the proceedings under Section 26 in respect of a debt for settlement of which no application had been tiled before the Debt Conciliation Board, The Courts were right in dismissing the application to set aside the sale and this appeal is dismissed with costs. Advocate's fee Rs. 15.


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