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B. Vasudeva Rao Vs. K. Laxminarayana Bhatta - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKarnataka High Court
Decided On
Case NumberCivil Revn. Petn. No. 1221 of 1979
Judge
Reported inILR1984KAR1075; 1984(2)KarLJ354
ActsKarnataka Debt Relief Act, 1976 - Sections 3 and 4
AppellantB. Vasudeva Rao
RespondentK. Laxminarayana Bhatta
Appellant AdvocatePadubidri Raghavendra Rao, Adv.
Respondent AdvocateG.S. Visweswara, Adv.
Excerpt:
.....the legal representatives on record cannot be entertained. liberty given to make an application for condonation. - ' (underlining is mine). they have further said in the said case that unless the requirement of the words 'debt advanced' is satisfied, the provisions of the karnataka debt relief act will not come to the rescue of the debtor, though he might be a debtor within the meaning of the act. that being so, i hold that the learned civil judge was perfectly justified in coming to the conclusion that the judgment-debtor has a right to raise the contention under the act, whether he would ultimately prove that he is a debtor within the meaning of s. the use of the words 'in substance a debt' would clearly indicate that when the liability was incurred, it partook the character of..........which they claim relief is and the liability the discharge of which they seek arises out of a 'debt advanced'. these two conditions must co-exist.' (underlining is mine).they have further said in the said case that unless the requirement of the words 'debt advanced' is satisfied, the provisions of the karnataka debt relief act will not come to the rescue of the debtor, though he might be a debtor within the meaning of the act. in the said case, the question was whether the costs awarded in a suit would amount to a debt within the meaning of the act. it was held by the division bench of this court in the said case that the costs did not amount to a debt within the meaning of the act. the costs awarded in a decree might be a liability in cash. therefore, it cannot be considered that.....
Judgment:
ORDER

1. This revision by the decree - holder is directed against the order dated 3-1-1979 passed by the Principal Munsiff, Udupi in Execution Case No. 174 of 1976, holding that the execution petition abated.

2. The decree-holder sold some lands to one Sharadamma on 9-9-1959 by a registered sale deed for Rs.10, 000/-. Sharadamma did not pay the entire consideration. She paid Rs.6, 250/- to the decree-holder towards the consideration and thus the remaining amount of Rs.3, 750/- remained in her hands as unpaid purchase money. Sharadamma in turn sold a portion of the property (purchased by her) to the judgment-debtor K. Lakshminarayana Bhatta under a registered sale deed Exh. D.1 dated 15-2-1965 for Rs. 4,000/-. By that sale deed, she left Rs. 3,750/- in the hands of the judgment-debtor for paying it to the decree-holder towards the unpaid purchase money. The judgment-debtor in turn sold a portion of the property purchased by him to one Nerva Poojary, with a direction that he should pay Rs. 1,500/- out of the unpaid purchase money of Rs. 3,750/- to the decree-holder. It is undisputed that Nerva Poojary paid Rs. 1,500/-to the decree-holder towards the unpaid purchase money. It is also undisputed that the judgment-debtor has paid Rs. 500/- to the decree-holder. Thus in all Rs. 2,000/- has been paid towards the unpaid purchase money out of Rs. 3,750/-. The decree-holder filed a suit against the judgment debtor in order to recover the remaining amount and obtained a decree. He sued out execution in present execution case No. 174 of 1976 in order to recover the said decretal dues.

3. The judgment-debtor resisted the petition raising various grounds and he especially urged that he was a debtor within the meaning of the Karnataka Debt Relief Act, 1976 and that under S. 4 of the said Act, the debt stood wiped out and the proceedings thus stood abated.

4. The Munsiff, Udupi held that the judgment-debtor was a debtor within the meaning of the Karnataka Debt Relief Act and that the unpaid purchase money, remaining in the hands of the judgment-debtor, amounted to a debt within the meaning of the Karnataka Debt Relief Act, and thus the debt stood wiped out under S. 4 of the Karnataka Debt Relief Act, and thus he held that the execution proceedings abated within the meaning of S. 4(c) of the Karnataka Debt Relief Act.

5. Being aggrieved by the said order of the Munsiff, the decree-holder has preferred the present revision.

6. The word 'debt' has been defined by S. 3(b) of the Karnataka Debt Relief Act, 1976 (hereinafter called as the Act), as -

' 'debt' means any liability in cash or in kind, whether decreed or not and includes any amount which is in substance a debt, but does not include arrears of taxes due to the Central or the State Government or a local authority.'

Section 8 of the Act enumerates various categories of debts and liabilities, which do not come within the ambit of the Act. Those exceptions are -

'(a) Any rent due in respect of any property let out to such debtor;

(b) Any amount due under a hire-purchase agreement;

(c) Any amount recoverable as arrears of land revenue;

(d) Any liability arising out of breach of trust or any tortuous liability;

(e) Any liability in respect of wages or remuneration due as salary or otherwise for services rendered;

(f) Any liability in respect of maintenance whether under a decree of a Court or otherwise;

(g) A debt due to -

(i) The central government or any State Government;

(ii) Any local authority;

(iii)a credit agency as defined in the Karnataka Agricultural Credit Operations and

Miscellaneous Provisions Act 1974 (Karnataka Act No. 2 of 1975);

(iv) Any Government company within the meaning of the Companies Act, 1956;

(v) The Life Insurance Corporation of India;

(vi) A Co-operative Society; and

(h) Any debt which represents the price of goods purchased by such debtor.'

7. The learned counsel Sri Raghavendara Rao for the revision petitioner - decree-holder urged that the present decree amount comes at least within the ambit of S. 8(d) of the Act. Section 8(d) reads as -

'Any liability arising out of breach of trust or any tortuous liability.'

He referred me to the definition of the word 'trust' given in S. 3 of the Trusts Act, 1882. It reads as -

'As 'trust' is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner: the person who reposes or declares the confidence is called the 'author of the trust': the person who accepts the confidence is called the 'trustee': the person for whose benefit the confidence is accepted is called the 'beneficiary': the subject-matter of the trust is called 'trust-property' or 'trust-money': the 'beneficial interest' or 'interest' of the beneficiary is his right against the trustee as owner of the trust-property; and the instrument, if any, by which the trust is declared is called the 'instrument of trust.'

Therefore, in order to constitute a trust, three persons are necessary. One is the person, who creates the trust, who is legally called as the author of the trust; the other person would be the trustee, who has accepted the confidence of the author of the trust and the third person would be the person for whose benefit the confidence is accepted, who is legally known as the beneficiary. According to the learned counsel Sri Raghavendra Rao, when Sharadamma, who purchased property from the decree-holder, sold a portion of the property to the judgment-debtor with a direction to pay the unpaid purchase money to the decree-holder out of the sale consideration, the judgment-debtor would be the trustee and Sharadamma would be author of the trust and the decree-holder would be the beneficiary. It becomes clear that leaving the unpaid purchase-money in the hands of the judgment-debtor i.e., a portion of the sale consideration cannot be said to be an obligation annexed to the ownership of the property. It cannot be said to arise out of any confidence reposed in or accepted by the owner. The ownership in respect of which the trust is created must be belonging to the author of the trust. Therefore, it would be rather too much to say that the transaction in question would amount to a trust within the meaning of the Trusts Act. A popular notion of a trust would be quite something different from the legal concept of the trust. Therefore, the said argument advanced by the learned counsel Sri Raghavendra Rao is rejected.

8. The learned counsel Sri Raghavendra Rao brought to my notice the decision reported in Ganesh Bristo Desai v. Nagesh Bisto Desai (1977) 2 Kant L.J. 476. It was held in the said case by Govind Bhat, C. J., and Venkatachaliah, J., as -

'To be entitled to relief under the Act, the claimants must show that two conditions coalesce. The first is that they must show that they are debtors by the statutory standards. Secondly, they must show that the transaction respecting which they claim relief is and the liability the discharge of which they seek arises out of a 'debt advanced'. These two conditions must co-exist.' (Underlining is mine).

They have further said in the said case that unless the requirement of the words 'debt advanced' is satisfied, the provisions of the Karnataka Debt Relief Act will not come to the rescue of the debtor, though he might be a debtor within the meaning of the Act. In the said case, the question was whether the costs awarded in a suit would amount to a debt within the meaning of the Act. It was held by the Division Bench of this Court in the said case that the costs did not amount to a debt within the meaning of the Act. The costs awarded in a decree might be a liability in cash. Therefore, it cannot be considered that every liability would amount to a debt within the meaning of the Act. If one wants to have the benefit of S. 4 of the Act i.e., relief from indebtedness, he must establish that it amounts to a 'debt advanced'.

9. The learned counsel Sri Visweswara placed before me the decision in Venkatarathnam N. G. v. N. S. Nagendra Gupta : AIR1979Kant83 . The facts in the said case were -

'The judgment-debtor and decree-holder were partners in a firm and while settling accounts on dissolution, judgment-debtor had to pay Rs. 7,001/-, in respect of which a decree was obtained and put in execution.

Held, the decretal amount was a debt advanced within S. 4 of the Act and the judgment-debtor could claim the benefit of the Act.'

It has been held in that case, as -

'Thus, while construing the provisions of the present Act, it is necessary to bear in mind that the Act should be so construed as to advance the remedy and to suppress the mischief and not try to indulge in any intellectual hair splitting and legerdemain in interpreting the words with a view to maintain the mischief and hamper the remedy. The Act is meant for giving relief to the debtors and the word 'debtor' is defined in S. 3(c) of the Act. 'Debtor' means, (1) a small farmer. (2) a landless agricultural labourer; (3) a person belonging to weaker sections of the people. Section 4 of the Act contemplates that debts of these people incurred before the commencement of this section be wholly discharged. Thus, it is obvious that the purpose of the Act is the welfare of the weaker sections, viz., debtors as contemplated under S. 3 of the Act and while construing the relief, it is necessary to bear in mind, the intention of the legislature to give relief to these weaker sections as defined in S. 3(c) of the Act. Thus, considering the intendment of the legislation and the wordings used in S. 4 in the light of S. 3(b) and S. 8 of the Act. I have no hesitation to hold that the words 'debt advanced' in S. 4 of the Act have wider connotation as given to it under S. 3(b) of the Act, that they mean debt put forward and that it is not restricted only to loan advanced. That being so, I hold that the learned Civil Judge was perfectly justified in coming to the conclusion that the judgment-debtor has a right to raise the contention under the Act, whether he would ultimately prove that he is a debtor within the meaning of S. 3(c) of the Act, is a question of fact which the learned Munsiff has to decide.'

In the said Venkatarathnam's case, the Division Bench ruling reported in (1977) 2 Kant L.J. 476 has not been considered at all. However, there is a conflict between the decision rendered by the Single Judge and the decision rendered by the Division Bench. If there is a conflict between the decision of the Single Judge and the decision of the Division Bench, it is the ruling of the Division Bench that must have precedence. over the decision rendered by the Single Judge.

10. It is no doubt true that the unpaid, purchase money in the hands of the purchaser may amount to a liability. But every liability is not a debt within the meaning of S. 3(c) of the Act. The definition of the word 'debt' requires that amount should be in substance a debt.

The word 'in substance a debt' connotes something more than a simple liability. These, words connote that at the time when the liability was incurred there was a relationship of creditor and debtor. The use of the words 'in substance a debt' would clearly indicate that when the liability was incurred, it partook the character of a loan advance. Therefore, it cannot be said that the unpaid purchase money remaining in the hands of the purchaser would partake the character of a debt within the meaning of S. 3(c) of the Act. Section 4 of the Act, which gives relief to the debtors from indebtedness, reads as -

'Notwithstanding anything in any law for the time being in force or in any contract or instrument having force by virtue of any such law and save as otherwise expressly provided in this Act, with effect from the date of commencement of this section - (a) Every debt advanced before the commencement of this section including the amount of interest, if any, payable by the debtor to the creditor shall be deemed to be wholly discharged.'

In this section, the stress is on the word 'advanced'. The amount should be advanced as a debt. If it is not advanced as a debt, then the transaction would not amount to a debt at all. The word 'advanced' came to be interpreted in the said Venkatarathnam's case by the Single Judge as 'put forward'. In the case of money transaction, the question of putting forward or moving forward does not arise. The dictionary gives the meaning of the word 'advance' as move or bring forward. It only refers to the movements of person or an animal. It does not relate to any money transaction at all. If one were to take into consideration the usual words adopted in Courts to the effect that a lawyer advanced an argument, it only means that the lawyer put forward the arguments. Therefore, the meaning of the word 'advance' when it applies to non-monetary transactions may mean move or put forward. But when it applies to a money transaction, it only means either to pay, or lend. The said interpretation found in the decision of the Single Judge runs contrary to the Division Bench ruling.

11. Further S. 4(a) of the Act uses the words 'debtor and creditor'. When the words 'debtor' and 'creditor' are used, it cannot be held that simple existence of the liability would be sufficient to attract the provisions of the Act. A person is known to be a creditor only when he advances certain sum as a loan to the other. A person is known as a debtor only when he takes a loan from a person known as a creditor. 'Therefore, the specific use of the words 'debtor' and creditor, read along with the words 'debt advanced ', only means that the so called liability, in order to attract S. 4 of the Act, must partake the character of a debt and it must be advanced by a person known as creditor to a person known as a debtor. This interpretation gains strength from the Division Bench ruling because it held that the costs awarded in a suit did amount to a liability within the meaning of S. 3(c) but did not amount to a debt advanced. Therefore, under these circumstances, the unpaid purchase money now remaining in the hands of the judgment-debtor would not amount to a debt within the meaning of S. 3(b) of the Act.

12. The learned counsel Sri Visweswara submitted that the unpaid purchase money was not one of the exempted debts as per S. 8 of the Act. Section 8 of the Act is only rather enumerative and it is not exhaustive. By way of illustration, it has given eight categories of liabilities, which are not governed by the provisions of the Act. Merely because it is not enumerated in S. 8 of the Act, it does not mean that it would amount to a debt advanced within the meaning of Section 4 or that it would be a debt within the meaning of S. 3(b) of the Act. If we look to the Karnataka Debt Relief Act, 1980, S. 10, which deals with certain debts and liabilities not to be affected, has stated in cl. (i) as -

' any debt which represents the price of property whether movable or immovable purchased by such debtor.'

This clause has been inserted with a view to clarify the doubt that might have been entertained by the Courts while interpreting cl. (h) of S. 8 of the 1976 Act, which reads as -

'any debt which represents the price of goods purchased by such debtor.'

The simple insertion of cl. (i) in 1980 Act does not mean that the legislature intended, while enacting 1976 Act that the unpaid purchase money should amount to a debt. Section 10(m) of 1980 Act reads as -

'any sum decreed as costs by any Court.'

As held by this Court in (1977) 2 Kant LJ. 476, costs awarded by the Court will not amount to a debt at all within the meaning of the Act. Thus clause (in) was added in S. 10 of the 1980 Act, with a view to give effect to the decision of this Court and with a view to make the matters clearer. Therefore, under these circumstances, the said argument advanced by Sri Visweswara is rejected.

13. In the result, the order passed by the Munsiff is set aside. The revision is allowed. The case is remitted to the Court of the Munsiff, Udupi, D. K. for fresh disposal, according to law. Both the advocates are directed to keep their clients or their local, advocates present in the Court of the Munsiff, Udupi on 6-11-1984, in order to receive further instructions in the matter. No costs in this revision.

14. Revision allowed.


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