1. This revision by the judgment-debtor Shivalingeshwara Oil Mill, Haveri, represented by its Managing Partner, is directed against the Executing Court's order dated 31-3-1997 passed in Execution No. 6 of 1991 rejecting its contention that it is a 'debtor' within the meaning of the Karnataka Debt Relief Act, 1980 (Act of 1980) and, therefore, its liability under the money decree in execution is deemed to have been discharged by virtue of Section 3 of the Act.
2. Certain undisputed facts giving rise to this revision are that O.S. No. 29 of 1978 for recovery of Rs, 26,635/- with interest was filed by the respondent (hereinafter referred to as 'the decree-holder') against the petitioner-firm (hereinafter referred to as 'the judgment-debtor'). That suit was decreed by the Trial Court on the basis of compromise between the parties making the decree amount payable in three equal instalments. The first instalment was paid by the judgment-debtor on 15-2-1979. He defaulted in payment of the balance amount under the decree. Therefore, execution of the decree for the balance amount was taken out by the decree-holder in Execution No. 6 of 1991 before the Court below. The judgment-debtor firm objected to execution of the decree against it on the plea, inter alia, that it is a 'debtor' under the Act of 1980 and, therefore, its liability under the decree was discharged by virtue of the provisions thereof.
3. An enquiry was conducted by the executing Court on the judgment-debtor's plea of its being a debtor under the Act of 1980. In a suit or other proceeding in a Court when a question arises whether a party thereto is a debtor under the Act, Section 6(1) thereof casts a duty on the Trial Court to frame a preliminary issue as to whether any such person is not a debtor under the Act and to decide it before other questions are considered. Sub-section (2) of Section 6 casts the burden on the decree-holder of proving that such a person is not a 'debtor' under the Act. To discharge the burden so placed by Section 6(2) of the Act, the decree-holder gave his evidence as P.W. 1 and examined one Shivabasappa Banappanavar as P.W. 2. Documents Exs. P-1 to P-10 were also produced in evidence to support their statements at the trial.
4. The Managing Partner of the judgment-debtor also gave his rebuttal evidence as D.W. 1 and produced Ex. D-l order copy of the Sales Tax Department and Ex. D-2 Sales Tax Return for the period 21-10-1979 to 7-11-1980 of the judgment-debtor firm.
5. The Trial Court has, on consideration of the arguments canvassed before it by both parties, held that the judgment-debtor being a firm, a non-living statutory person, and regard being had to the object of the Act, it does not answer the definition of a 'debtor' contained in Section 2(6) of the Act, and, therefore, it cannot be called a 'debtor' under the Act.
6. Learned Counsel for the judgment-debtor strenuously argued assailing the legality and correctness of the finding of the Court below. He argued that, admittedly the judgment-debtor Oil Mill had been closed and it was not carrying on its business and that no material was placed on record from the decree-holder's side proving that it had any property or source of income whatever, and, therefore, the definition of the 'debtor' contained in Section 2(6) of the Act squarely applies in this case. So arguing, he maintained that the judgment-debtor was thus a 'debtor' within the meaning of Section 2(6) of the Act and its liability under the decree was clearly discharged by virtue of Section 3 thereof and that the Court below has erred in arriving at the contrary conclusion. It was therefore submitted that the impugned order does not sustain in law. Reliance was placed by him on a decision of the Supreme Court in M.M. Ipoh and Others v Commissioner of Income-tax, Madras , and the decision of the Karnataka High Court in N.G. Venkatarathnam v N.S. Nagendra Gupta.
7. Per contra, learned Counsel for the respondent decree-holder argued otherwise in support of the order under revision. His contention was that a firm is not a legal person and, therefore, the definition of 'person' contained in the General Clauses Act cannot be imported in the Act of 1980 in the absence of the express definition of the 'person' contained therein. Reliance was placed by him on a decision of the Andhra Pradesh High Court in Commissioner of Income-tax, Andhra Pradesh-III v G. Parthasarathy Naidu and Sons, and the decision of Supreme Court in M/s. Agarwal and Company v Commissioner of Income-tax, Uttar Pradesh.
8. The authority of this Court in the case of N.G. Venkatarathnam, supra, relied on for the judgment-debtor is distinguishable and inapplicable to the facts of the case in hand. In that case, on dissolution of a partnership firm, one of its partner had obtained a money decree against another partner on the basis of the accounts settled between them. During execution of the decree, the judgment-debtor was entitled to raise a plea that he was a debtor within the meaning of Section 4 of the Karnataka Debt Relief Act (25 of 1976) and claim the relief thereunder. The instant case is not a case of one partner of a dissolved firm enforcing his claim to money against another partner and seeking execution of the decree for recovery thereof. Evidently, the judgment-debtor in the case of N.G. Venkatarathnamt supra, was a natural person and not a firm as is the case obtainable in the case on hand. Therefore, this authority of our High Court does not support the case of the judgment-debtor firm herein.
9. Proposing to rely on certain decisions of the Supreme Court rendered under the Income-tax Act, 1961, dealing with the expression 'person' defined under Section 2(31) thereof, a faint attempt was sought to be made by the learned Counsel for the judgment-debtor to impress upon the Court that the definition of the word 'person' contained in the General Clauses Act would be squarely applicable in interpretation of that word occurring in the Act of 1980. In MM. Ipoh's case, supra, the Supreme Court said that the term 'person' defined in Section 2(9) of the Income-tax Act, 1922 as including a Hindu Undivided Family squarely attracts applicability of this definition contained in Section 3(42) of the General Clauses Act, 1897. The Supreme Court observed in that case that the inclusive definition in the General Clauses Act would also apply to the Income-tax Act and it is in this backdrop of the inclusive definition of 'person' contained in both Section 2(9) of the Income-tax Act, 1982 and Section 3(42) of the General Clauses Act, the Supreme Court held therein that a firm being a body of individuals would be a person within the meaning of the Income-tax Act as well. But, this exposition of the definition of the term 'person' contained in both the aforesaid Acts made by Supreme Court cannot be extended and held as applicable in interpretation of expression 'person' contained in the Act of 1980 since such an interpretation would be totally repugnant to the object and the subject as well of this enactment. The same view has been reiterated by the Supreme Court in its later decision in Agarwal and Company's case, supra.
10. In Dulichand Laxminarayan v Commissioner of Income-tax, Nagpur, the Supreme Court has ruled that the word 'person' in Section 4 of the Partnership Act means only the legal person, natural or artificial, and that a firm is not a person since it is not an entity or person in law but is merely an association of individuals. Therefore, the Supreme Court held that in these circumstances, to import the definition of 'person' occurring in Section 3(42) of the General Clauses Act into Section 4 of the Indian Partnership Act will be totally repugnant to the subject of partnership law.
11. Following the decision of the Supreme Court in Dulichand Laxminarayan's case, supra, and in other cases, a Full Bench of the Andhra Pradesh High Court in G. Parthasarathy Naidu's, case, supra, laid down several emerging legal propositions. The relevant of them for our purpose are.-
'(1) The concept of partnership law is that a firm is not an entity or a person in law but only a compendious mode of designating persons who have agreed to carry on the business in partnership.
(2) xxx xxx xxx.(3) xxx xxx xxx. (4) Under the Income-tax law a firm is an independent and distinct juristic person for the purpose of assessment as well as for recovery of tax as it is a 'person' within the meaning of Section2(31) of the Act, having its own entity and personality. It is also a separate entity under Sales Tax Law. (5) to (10) xxx xxx'.
12. To appreciate rival contentions of both sides in the light of legal propositions adverted to above, it is essential to deal with the relevant provisions contained in Sections 2(6)(ii), 2(11) and 6 of the Act. Sub-section (6) of Section 2 defines the 'debtor' as being a person falling within any of the categories of persons stated in clauses (i), (ii) and (iii) thereof. For our purpose, the category enumerated in sub-clause (ii) of Section 2(6) is relevant; which is extracted below.-
xxx xxx xxx xxx (6) 'Debtor' means a person who is.-
(i) xxx xxx xxx; (ii) a person belonging to the weaker section of the people; or
(iii) xxx xxx xxx; and from whom a debt is due'.
Section 2(11) defines 'weaker section of the people' as the persons, whose annual income from all sources does not exceed four thousand and eight hundred rupees. In proviso (i) to Section 2(11), the person who shall not be deemed to belong to the weaker section of the people are stated. The judgment-debtor herein does not belong to any of these class of persons. Proviso to Section 2(11) states that if a person and members of his family own immovable property anywhere in India, the market value of which is not less than Rs. 10,000/- shall also not deemed to belong to the weaker section of the people. Section 3 is the principal provision of the Act which provides to a debtor, defined under Section 2(6), relief from indebtedness and it runs.-
'3. Relief from indebtedness.--Notwithstanding anything contained in any law for the time being in force or in any contract or instrument having force by virtue of any law or otherwise and save as otherwise expressly provided in this Act, with effect on and from the date of commencement of this Act.-
(a) every debt incurred by a debtor before the date of commencement of this Act and payable by him to his creditor on such date shall be deemed to be wholly discharged;
(b) no Civil Court shall entertain any suit or other proceeding against the debtor or his surety for the recovery of any amount ofsuch debt:
Provided that where any suit or other proceeding is instituted jointly against a debtor and some other person, other than a surety, nothing in this section shall apply to the maintainability of such suit or proceeding insofar as it relates to such other person;
(c) all suits and other proceedings including appeals, revisions, attachments or execution proceedings, pending on the date of commencement of this Act against any debtor or his surety for the recovery of any such debt shall abate'.
As indicated above, Section 6 deals with the burden or proof and its sub-section (2) states that the burden of proving that a person is not a debtor under the Act lies on the creditor.
13. The word 'person' is not defined under the Debt Relief Act. Therefore, the material point which calls for consideration is whether the definition of 'person' contained in sub-section (28) of Section 3 of the Act of 1899, could be adopted for the purpose of interpretation of this term occurring in the Act of 1980 in the context of this Act.
14. The Act of 1980 is the Karnataka Act. The relevant portion of Section 3 of the Act of 1899, which is also a Karnataka Act, containing the definition of the expression 'person' reads.-
'3. Definitions.--In this Act, and in all Mysore Acts and Karnataka Acts made after the commencement of this Act, unless there is anything repugnant in the subject or context.-
XXX XXX XXX XXX
(28) 'Person' shall include any company or association or body of individuals, whether incorporated or not;'
The opening words 'Unless there is anything repugnant in the subject or context' of Section 3 prescribe the qualification for applicability of the definitions of the terms defined by it in interpretation of the provisions of other Acts of Karnataka State wherever those terms occur and when they are not expressly defined in their respective enactments. This limitation is that the subject of any such enactment or the context thereof does not admit of applicability of the definition of any of the terms contained in Section 3 of the Act of 1899 because of its frustrating effect on or repugnancy with the object of any other respective enactment. In other words, for the applicability of the terms defined under Section 3 of the Act of 1899 for the purpose of construction of the provisions of other enactments of the State wherever such terms occur, the condition precedent is that they shall not be repugnant to the subject or the context of the enactment.
15. It is an indisputable position in the case in hand that the judgment-debtor firm is not a legal or juristic person. It is a non- statutory person. The preamble of the Act of 1980 declares that this Act was enacted by the State of Karnataka to provide relief from indebtedness to small farmers, landless agricultural labourers and weaker sections of the people in the State. The judgment-debtor firm was an Oil Mill. It is a non-statutory entity as has been rightly observed by the learned Judge of the Court below. As already said, the term 'person' is not defined by any express provision of the Act of 1980. There cannot be any dispute that the judgment-debtor firm consisting of its partners is a body ofindividuals for the purpose of carrying on its business, though not incorporated. Thus it falls within the ambit of the inclusive definition of the term 'person' as contained in Section 3(28) of the Act of 1899. But then the significant question which arises for determination is whether this definition of the 'person' under Section 3(28) of the Act of 1899 could he adopted as the definition of this term occurring in Section 2(6) of the Act of 1980 in relation to the judgment-debtor firm. The deciding factor for this question is the object and spirit of the Act of 1980. What has to be ascertained in this regard, in view of the rider 'unless there is anything repugnant in the subject or context' contained in Section 3 of the Act of 1899 is that whether the object or the context of the Act of 1980 tends to get frustrated or defeated if the definition of 'person' in the Act of 1899 is applied in interpretation of the said term occurring in the definition of 'debtor' in Section 2(6) of the Act of 1980. The preamble of the Act of 1980 which sets out the object of the Act and its Section 3 which deals with the subject of enactment i.e., relief from indebtedness, throws abundant light for decision of this significant aspect of the point in question. These integral parts of the Act of 1980 make it crystal clear that the relief from indebtedness which the Act aims to provide is meant for the small farmers, landless agricultural labourers and weaker sections of the people in the State of Karnataka with the avowed object of ameliorating their economic exploitation and plight in furtherance of the State policy enshrined in Article 46 of the Constitution of India, and that such a relief is exclusively provided to the individual natural persons who are irretrievably afflicted with this economic plight in society due to their exploitation by the affluent classes and not to any juristic or non-statutory person like a partnership firm or a joint Hindu family. Therefore, the object and context of the Act of 1980 irresistibly leads to the intention of the legislature that any juristic or non-juristic person as defined by sub-section (28) of Section 3 of the Act of 1899 is beyond the purview of the Act of 1980 and the adoption of the definition of the term 'person' contained in that Act for interpretation of this word occurring in the Act of 1980 would be repugnant to and offending the object and spirit thereof. In that view of the matter, I find that the definition of the word 'person' contained in Section 3(28) of the Act of 1899 cannot be applied for interpretation of that word occurring in any of the provisions of the Act of 1980. As such, the view so taken by the Court below is entitled to be upheld. The petitioner-judgment-debtor in the case in hand, therefore, cannot be stated and held a 'debtor' falling within the definition of this term contained in Section 2(6) of the Act of 1980 and, therefore, it is not entitled to seek benefit of the relief from indebtedness under the decree in execution by virtue of Section 3 thereof. For these reasons, the order impugned cannot be faulted with and it is entitled to be upheld.
16. For the reasons aforesaid, the revision is dismissed. Parties to bear their own costs in the circumstances.