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Narasiyana Venkappa Vs. P. Thimmappa and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKarnataka High Court
Decided On
Case NumberSecond Appeal No. 249 of 1952-53
Judge
Reported inAIR1959Kant204; AIR1959Mys204; ILR1958KAR897; (1958)36MysLJ948
ActsDebt Law; Mysore Debt Conciliation Board Act, 1937 - Sections 2, 4, 4(1), 6(1), 8(3), 10(2), 12, 12(2), 15(5) and 16; Code of Civil Procedure (CPC), 1908 - Sections 9 - Order 8; Debt Conciliation Board Act - Sections 4, 10(1) and 14; Punjab Relief of Indebtedness Act, 1934
AppellantNarasiyana Venkappa
RespondentP. Thimmappa and ors.
Appellant AdvocateM.P. Somasekhara Rao, Adv.
Respondent AdvocateV.S. Sadasivan, Adv.
Excerpt:
.....by section 10(1) of the act. ' from these it will he seen that on the failure by the creditor to file a statement as required under section 10(1) of the act, there will be a statutory discharge. the only question that has to be considered is as to whether there is a statutory discharge in view of the respondents' failure to comply with the requirements of section 10(1) of the act. under section 10(1) even a creditor whose debt is admitted must file a statement of debts owed to him and on his failure to do so he is subject to the penalties imposed under sub-section (2). the words 'every debt' in sub-section (2) of section 10 makes no distinction between secured and unsecured creditor. krishnamurthy, the learned counsel for the decree-holders (respondents) contends that language used in..........advanced on behalf of the appellant. this section docs not make any distinction between a debt admitted by the debtor and a debt which is not admitted. it does not also make any distinction between a secured debt and an unsecured debt. incidentally it may be mentioned that the debt under consideration is a secured debt.the learned counsel for the appellant placed considerable reliance on the decision of his lordship happell j. in govinda reddi v. rami reddi reported in air 1943 mad. 725. in that case his lordship considered the scope and effect of section 10(1) and 10(2) of the madras debt conciliation act. section 10(1) and 10(2) of the madras act and the mysore act are identical. in that case his lordship held:'under section 10(1) even a creditor whose debt is admitted must.....
Judgment:
ORDER

K.S. Hegde, J.

1. This is an execution appeal. The appellant is the legal representative of the first judgment-debtor. The respondents decree-holders filed Ex. Case No. 440/50-51 on the file of the Munsiff, sagar, to exe-cue the decree obtained by them in O. S. No. 145 of 1929-30 on the file of that Court. The execution application was resisted by the judgment-debtor on several grounds. His objections were overruled. He went up in appeal to the learned subordinate Judge, Shimoga, in R. A. No. 15 of 1952-53. In the appeal also he failed. Meanwhile he died and his legal representative has come up in second appeal. In this appeal also several grounds were taken resisting the execution case. Only one of those grounds is pressed before me. It is contended that the judgment-debtor had Filed an application under Section 4 of the Debt Conciliation Board Act which shall be hereinafter called 'the Act' in Debt Conciliation case No. 15 of 1946-47 before the Debt Conciliation Board, Sagar. The said Board shall be hereinafter called 'the Board'. Notice under Section 10(1) of the 'the Act' was taken to the decree-holders and they were duly served.

They failed to file their statements as required by Section 10(1) of the Act. Consequently 'the Board' gave declaration duly discharging the debt in question. The declaration in question was purported to be made under Section 10(2) of the Act. This order has been made on 3-2-1948. It is urged that the said order is conclusive and binding on the parties and that the Civil Court has no jurisdiction to re-open the matter. As stated before the courts below have rejected this contention, mainly on the ground that the debt in question had been admitted by the judgment debtor in his petition filed before the Debt Conciliation Board. Hence the Debt Conciliation Board had no jurisdiction to give the declaration in question.

2. Under Section 10(1) of the Act, on the presentation of an application by the debtor and after examining the debtor, if the Board is of opinion that it is desirable to attempt to effect a settlement between him and his creditors, a notice shall be issued and served or published in the manner prescribed, calling upon every creditor of the debtor to submit a statement of debts owed to such creditor by the debtor. Such statement shall be in writing and shall be signed and verified in the manner prescribed by the Code of Civil Procedure, for signing and verifying claims and shall be submitted to the Board within two months from the date of service or publication of the notice as the case may be,

3. Section 10(2) of the Act is as follows:--

'Every debt of which a statement is not submitted to the Board in compliance with the provisions of Sub-section (1) shall be deemed for all purposes and all occasions to have been duly discharged.'

From these it will he seen that on the failure by the creditor to file a statement as required under Section 10(1) of the Act, there will be a statutory discharge. There is no provision in the Act which empowers the Board to pass an order of discharge. Hence the order passed by the Board on 3-2-1948 may be ignored as being superfluous. The only question that has to be considered is as to whether there is a statutory discharge in view of the respondents' failure to comply with the requirements of Section 10(1) of the Act.

4. A plain reading of Section 10(1) of the Act seems to support the contention advanced on behalf of the appellant. This section docs not make any distinction between a debt admitted by the Debtor and a debt which is not admitted. It does not also make any distinction between a secured debt and an unsecured debt. Incidentally it may be mentioned that the debt under consideration is a secured debt.

The learned Counsel for the appellant placed considerable reliance on the decision of his Lordship Happell J. in Govinda Reddi v. Rami Reddi reported in AIR 1943 Mad. 725. In that case his Lordship considered the scope and effect of Section 10(1) and 10(2) of the Madras Debt Conciliation Act. Section 10(1) and 10(2) of the Madras Act and the Mysore Act are identical. In that case his Lordship held:

'Under Section 10(1) even a creditor whose debt is admitted must file a statement of debts owed to him and on his failure to do so he is subject to the penalties imposed under Sub-section (2). The words 'every debt' in Sub-Section (2) of Section 10 makes no distinction between secured and unsecured creditor. Although under Section 14 of the Act a secured creditor cannot be affected by a settlement, unless 'he agrees to it, yet he is bound to file a statement under Section 10(1) and therefore, the debt due to a secured creditor, if he does not file a statement of account, shall be deemed to be discharged under Section 10(2) of the Ac'.'

This ease is apposite to the facts of the present case.

5. Sri V. Krishnamurthy, the learned Counsel for the decree-holders (respondents) contends that language used in Section 10(2) of the Act does not bring out clearly the intention of the Legislature. According to him on a true interpretation, Section 10(2) applies only where the creditor does not file a statement where the same is not admitted. It is strongly urged that there is no meaning in wiping out an admitted debt and Legislature could not have intended to adopt a course which does not stand to reason and nothing so bad could have been intended by a Legislature.

Sections 10(1) and 10(2) are rules of pleadings, somewhat, similar to those contained in Order VIII of the Civil Procedure Code. According to the Respondents, the language used in the section does not bring out clearly the Legislative intention and it is appropriate for Courts to effectuate the true intention of the Legislature. Reliance is placed on the decisions reported in 2 D. L. R. 911 (Shambhoji Rao v. P. Ramachandriah) and Bayysna Veeraraghava Rao v. Debt Conciliation Board, Bezwada, AIR 1941 Mad 873.

In the case reported in 2 D. L. R. 911 their Lordships Paramasiviah and Medapa JJ. held that the object in calling for a statement of debts by the creditors is with a view to elicit whether there are debts other than those mentioned by the Debtor himself in his application due to the creditors and also to ascertain the extent of debts in case of difference between the parties and not with a view to elicit any information as regards the existence of the debts already mentioned by the debtor.

Hence this statement cannot be taken to be a statement relating to the debt already mentioned by the debtor, unless the creditor disputes the correctness of the amount of debt. In the case reported in AIR 1941 Mad 873 his Lordship Leach C. J. observed that when a creditor fails to file a statement under Section 10(1), he should be precluded from disputing the debtor's figures, but there can be no justification for depriving him of what the debtor has acknowledged to be due to him.

It will be seen that the observations found in the above cases are more or less obiter. In the Mysore case the decision was founded on two grounds. In that case their Lordships held that in the notice served on the creditor, the portion relating to the penal consequences for not filing a statement of debts had been scored off, and hence the same could not be made the basis of imposing any penal consequences on the creditor. They have also held that the failure to file a statement in respect of admitted debts does not bring into operation the penalties provided under Section 10(2) of the Act.

In the Madras case the decision was rendered on an entirely different point. The observations relating to the scope of Section 10(2) was made by one of the judges as a general remark. Though it is possible to distinguish these two cases, these observations have their own importance A number of decisions have been cited before me by both the sides. But most of them have no direct bearing on the question that has arisen for consideration.

6. As the point involved is an important one and is likely to come up for consideration before the lower Courts constantly, it is desirable to set the controversy at rest by a bench decision. Hence I direct that these papers may be posted before my Lord the Chief Justice for referring the same to a bench.

7. Sri V. Krishnamurthy, the learned Counsel for the respondents, has urged before me a number of other contentions. I have not found any substance in them and hence I have not referred to them.


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