Gopal Tao Ekbote, J.
1. This is a revision, petition filed by the defendant against an order made by the First additional Judge, City Civil Court, Hyderabad on 27-1-1966 whereby the learned Judge declined to transfer the case to the Special Court.
2. The necessary facts are that the respondent instituted O. S. No. 83 of 1965 in October 1965 before the lower Court on the foot of a mortgage for recovery of a sum of Rs. 15,383. The mortgage deed was executed on 16th October, 1959. It relates to a house bearing No. 1-7-176 situated at Bakara, Mushirabad in Hyderabad City.
3. The defendant-petitioner filed I. A. No. 883 of 1965 requesting the Court to transfer the case under Section 19(1) of the Hyderabad Agricultural Debtors' Relief Act (XVI of 1956) hereinafter called 'the Act', to the special Court constituted under the Act, as he is a debtor.
4. This application was resisted by the plaintiff mainly on the ground that the petitioner is not a debtor and as the suit has been filed after the notified date, it cannot to be transferred to the special Court. It was further contended that the petitioner is not an agriculturist and since the amount was not borrowed for agricultural purposes but was borrowed for the purpose of business and as the property is a house situate within the city of Hyderabad, the provisions of the Act do not apply.
5. Relying upon the decision of a single Judge in Gouramma v. Yadgir Reddy, 1965-2 Andh Wr 215, the learned Judge held that the suit cannot be transferred to the special Court and consequently dismissed the application.
6. When this revision came before our learned brother, M. Krishna Rao, J., the correctness of the above said decision was challenged. the case therefore was directed to be posted before a Division Bench. That is how the matter has come before us.
7. It is common ground that the debt was incurred under the mortgage deed only on 16-10-1959 and the suit thereupon was laid in October 1965. In these circumstances, the real question which arises for consideration is whether the provisions of the act apply to such a debt.
8. The Act came into force from the date of its publication in the Hyderabad Gazette dated 5-7-56. The date of filing the application for adjustment of debts under section 4 was prescribed by the State Government to be 4-2-1960. The important question therefore which has to be answered in this enquiry is whether the act applies to a debt incurred after the commencement of the Act on 5-7-1956.
9. In order to answer that question effectively the scheme of the Act has to be correctly appreciated. According to the preamble, it is an Act to consolidate and amend the law for the relief of agricultural debtors in the former State of Hyderabad. This Act repealed the Debt Conciliation Act, 1349 Fasil and abolished all Boards established under the repealed Act.
10. Section 2 (5) defines the term 'debt' which reads as follows:
'debt' means any liability in cash or kind whether secured or unsecured due from a debtor whether payable under a decree or order of any civil Court or otherwise and includes mortgage money the payment of which is secured by the usufructuary mortgage of immovable property but does not include arrears of wages payable in respect of agricultural or manual labour, or any liability for the recovery of which remedy is barred by limitation'.
11. Section 3 makes the act inapplicable to certain transactions.
12. It is section 4 which is more relevant. It can be considered as the pivot round which the other provisions of the Act move. Any action or inaction under Section 4 produces results in regard to the debts of the debtor which term is also defined in Section 2 (6). Section 4 as it orginally stood enjoined that the applications for adjustment of debts may be filed 'within three months from the commencement of this Act'. These words were substituted by Hyderabad Ordinance No. VI of 1956 promulgated on 31st October, 1956 by the following words:
'within such time as Government may by notification fix in this behalf'.
Section 4 (1) was further amended by the Amendment Act XI of 1958. Ordinance VI of 1956 was repealed and the present sub-section was substituted in the place of the previous one. By a notification subsequently issued the date for the purpose of section 4 (1) was prescribed by the Government as 4-2-1960. The Rules were framed under the Act and were published in the Gazette. Section 4 directs that any debtor may within the prescribed date make an application to the Court for the adjustment of his debts. Section 5 directs every creditor and debtor to file a true and correct statement before the Court notwithstanding the fact that no application has been filed under section 4.
13. Section 8 enjoins that if any debtor arrives at a settlement in respect of any debt due to the creditor an application may be filed within 30 days from the date of such settlement to the Court.
14. Section 11 provides that no application under section 4 or section 8 shall be entertained unless the total amount of debt due on the date of the application is not more than Rs. 15,000.
15. Section 13 provides for the consolidation of applications filed under Section 4.
16. Section 16 provides that if no application is made within the time prescribed under Section 4 or if no application for recording settlement is made under section 8 or if made is withdrawn and no fresh application is made under Section 4, and if no statement is submitted by the creditor in compliance with section 5, the debt shall stand extinguished.
17. Section 18 directs the Court to decide certain points as preliminary issues.
18. Section 19 relates to transfer of pending suit, appeals, applications and proceedings suit, to the Court established under the Act.
19. Section 22 is more important. It relates to the mode of taking accounts. It provides that separate accounts for principal and interest shall be taken. It further directs the manner in which such accounts shall be taken. Sub-section (2) relates to the transactions which commenced before 1-1-31 and provides the mode for taking the accounts of such debts. Sub-section (3) relates to the transactions which commenced after 1-1-1931 but were held before 1-1-1943, and provides the mode of taking accounts of such debts. Sub-section (4) concerns itself with transactions which commenced after 1-1-1943 and prescribes the mode of taking accounts for the same. Sub-section (6) expressly states 'the accounts of principal and interest shall be made up to the date of the institution of the application' and further provides that 'the aggregate of the balance if any appearing due on both such accounts against the debtor on that date shall be deemed to be the amount due at that date..........'
20. Section 30 declares that the paying capacity of the debtor shall be deemed to be 60% of the value of all the property of the debtor.
21. Keeping in view the said paying capacity of the debtor, Section 31 directs the scaling down of the debts whether secured. unsecured or composite.
22. After the debts are thus scaled down, the court is directed to make an award under Section 32 and to prepare a scheme for adjustment of debts through land mortgage banks.
23. Section 34 state that no amount in excess of the debts scaled down be recoverable as the excess amount would be deemed to have been extingusihed by virtue of that section.
24. The award thus made then would be registered under Section 51.
25. The Act further provides that in case it is found that the income of the debtor and his moveable property are not sufficient to liquidate the debt within twelve years the Court shall adjudicate the debtor insolvent.
26. Section 63 empowers the Government to authorise any person to advance loans to debtors.
27. The above said scheme of the Act would make it abundantly plain that the real object of the Act is to relieve the agricultural debtor of all his debts outstanding on the date of the Act, to take accounts of the debts and then scale down and determine the amount payable keeping in view his paying capacity and to substitute the land mortgage bank as the creditor of the debtor in the place of the original creditors after they are paid in accordance with the Act, to declare the debtor insolvent in case it is found that he has not enough movable property to clear off the debts within 12 years and thus give him relief by providing protection of insolvency. The whole purpose and object of the Act therefore is to relieve an agricultural debtor of the heavy burden of debts in which he was found to have been placed and to provide him an opportunity to start his life anew and join the forces released for improving the agricultural production.
28. That this is so would be clear if it is remembered that the Act was brought into force soon after the Rural Credit Survey Report was presented to the Central Government. According to the All India Rural Credit Survey 1951-52 conducted by the Reserve Bank of India, the non-institutional agencies comprising the agriculturist money leaders, professional money lenders, relatives, landlords, traders and commission agents together accounted for 93% of the total borrowings of cultivators. The institutional agencies consisting of the Government, the co-operatvies and the commercial banks accounted for the balance of 7%. It is in the light of this report that steps were taken by various states to relieve the agricultural debtors of their existing liability of debts so that they can start a new life. The Hyderabad Act was substantially based upon the Bombay Agricultural Debtors Relief Act 1947. That Act does not provide for the scaling down of the debts created after the coming into force of the Act. Both the Bombay and the Hyderabad Acts do not make any provision for the scaling down of the debts which are incurred after the Act. Section 13 of the Madras Agriculturists Relief Act (IV of 1938) provides for the rate of interest payable by agriculturists on new loans incurred after the commencement of that Act. No such provision appears in the Hyderabad Act.
29. The absence of such a provision in the Hyderabad Act is quite understandable if we bear in mind that Money-lenders Act which was in force had already regulate and controlled not only the money-lending business but also had prescribed the rate of interest beyond which no money-lender can charge interest.
30. Although the private money-lenders and other agencies continue to provide bulk of agricultural credit, their business was controlled on the one hand and on the other the credit policy has been oriented since the publication of the Rural Credit Survey Report to provide an effective alternative agency both from the point of the individual and from the broader point of nation. since then the objective of the agricultural credit policy has been to create conditions favourable for the development of co-operative credit societies so that they may discharge their responsibilities in the agriucultural developement programmes satisfactorily. It is thus evident that on the one hand the existing debts were taken over by the land mortgage banks, which for more than three decades were almost wholly developed as institutional agencies for the transfer of the past agricultural debts from the money-lenders to themselves and on the other expanded institutional credit policy and the various schemes of assistance to the agriculturists coupled with the regulation and control of the money-lending business and placed the agriculturists on the new road of agricultural progress. The cultivator were thus relieved from the onerous liability to pay heavy rate of interest which quite often range between 25 to 70 per cent and were also relieved from the yoke of the money-lenders who were advancing money on personal security of the agriculturist and on the implied understanding to sell the produce to the leader who was often a middle man. If these steps taken are borne in mind. it would be clear, that there is nothing surprising if the act makes provisions for the satisfactory adjustment of the agriculturists' debts which were existing on the date of the Act without making any person for the adjustment of debts which he might incur after the Act, because other enactments had provided satisfactorily for the protection in that behalf of the agriculturists.
31. Not only form the object and scheme of the Act it becomes clear that the Act does not apply to the future debts, but there is enough internal evidence to warrant and substantiate such a conclusion.
32. The definition of the 'debt' speaks of liability secured or unsecured due from a debtor. Now, the word 'due' according to the Law Lexicon by Sri P. Ramanatha Ayyar as a noun means:
'Capital of being justly demanded; claimed as of right; owing and unpaid, remaining unpaid; payable........'
Whether the word 'due' is used as a noun or as an adjective in the definition of 'debt', in either case it would mean an existing obligation or owing and unpaid liability which would point only in the direction of existing debt at the commencement of the Act. We do not however desire to rest our conclusion only on the meaning of the word' due' but would like to rest it on other provisions also.
33. Section 4 had orginally provided only three months for the filing of applications for adjustment of debts which clearly means that the debts existing at the commencement of the Act alone were thought of being adjusted. It would be meaningless to say that the debts incurred subsequent to the Act could also be adjusted under Section 4, particularly when only three months' time was fixed for filing applications for adjustment. If even debts incurred after the Act but before the notified date ought to come within the purview of the Act it would enable the debtor to incur a debt after the Act and apply for the relief under the Act the very next day. This could not have been intended. It is relevant to refer to Section 63 of the Act in this behalf which authorises the Government to authorise a person to give loans to debtors after the Act comes into force. The subsequent amendments only strengthen this understanding of the section. Even from Section 6 the same conclusion can be drawn. Section 11 which makes the Act applicable only to a debtor whose total amount of debts does not exceed Rs. 15,000/- also states that this liability of debts must be determined as 'on the date of the application (under Section 4 of the Act). Section 16 forces us to the same conclusion. If no application is filed under Section 4 for which time is prescribed the debt would be deemed to have been extinguished.
34. Section 19 then lends further support. It speaks of transfer of pending suits etc., on the date of the application under S. 4.
35. Any doubt, if still lingers is completely removal by Section 22 which provides the mode of taking accounts. It speaks of three periods. The first relates to transactions commenced before 1st January 1931, the second to the period between 1-1-1931, and 1-1-1943, and third pertains to the transactions commenced on or after 1-1-1943. It is plain that the third period stops at the commencement of the Act and does not relate to any transanctions commenced subsequent thereto. That is made plain in sub-s, (6) of S. 22. That provision directs to make up the accounts to the date of the institution of the application under Section 4 and declares the amount due at that date. Furthermore, not only the paying capacity of the debtor is determined as on date of the application under Section 4 but the debts payable under Section 22 are scaled down according to Section 31 and the excess of the said amount is considered as extinguished under Sec. 34.
36. Thus from the object and the scheme of the Act as well as from the various provisions of the Act itself it can safely be held that the debts created after coming into force of the Act and during the period prescribed for making an application under Section 4 are not covered by the provisions of the Act. The Act is not applicable to such debts.
37. We were referred to a decision of Chandrasekhara Sastry, J. in 1965-2 Andh WR 215. The facts as they appear from the judgment are that the suit promissory note was executed on 30th September, 1959. The suit was filed on 30th August, 1962, that is after the date notified under Sec. 4 of the Act, that is to say, 4-2-1960. It was contended before the learned Judge that only suits filed before the notified date could be transferred to the special Court. As the suit was filed subsequent to the notified date before which date alone any application for adjustment of the debts could be filed under Section 4, the suit could not be transferred under Section 4, the suit could not be transferred under Section 19 (1) of the Act. Following State Bank of Hyderabad v. Mukundas, : AIR1964AP236 (FB), the learned Judge held that-
'the lower Court had no jurisdiction to transfer the suit to the file of the Munsif's Court at Shadnagar, as in the present case the suit was admittedly filed long after the notified date'.
38. The question which we have considered was not raised before the learned Judge. If the debt was incurred for first time on 30-9-1959, then according to out view the provisions of the Act would not apply. That means even Section 19 (1) of the Act also would not apply. The conclusion of the learned Judge therefore nevertheless remains valid. That decision, however, does not consider or decided. It was assumed in that case that the provisions of the Act applied to the suit debt. That assumption in our view cannot from a precedent for the proposition with which we are concerned. In that view there the learned Judge was right in holding that the civil Court had no jurisdiction to transfer the case to the special Court as the suit was filed subsequent to the notified date. If the attention of the learned Judge was drawn to this aspect of the case, the question decided could not have arisen for consideration at all.
39. The same comment has to be made in reference to Pullaiah Shetti v. Moinuddin Ahmed, 1963-1 Andh Wr 170, which was decided by one of us (Gopal Rao Ekbote, J.) In that case, the date of the promissory note was 21-8-1956 and the suit was laid on 27-1-1959. Both the said dated it is plain, are subsequent to the Act. The suit, however was laid before the notified date. If the debt was incurred for the first time on 21-8-1956 when the promissory note was executed, according to our view, the Act would not apply to such a case. That question, however was not argued and therefore was not considered and decided in that case.
40. We were also referred to Moinuddin Ahmed v. Aita Pedda Pulliah Setty, 1960-1 Andh WR 131, M. A. Ansari, J. held:
'In the view of Section 19 (3) of the Hyderabad Agricultural Debtors Relief Act, it is not necessary that an application should be pending in the other Court in order to transfer a pending case from a civil Court. The Court where the suit is pending being satisfied about some issues which the other Court has to determine, first, has to transfer the case to the other Court'.
From the judgment it is not clear as to when the debt was incurred on the foot of the promissory note. That decision, however, does not consider the question as to whether the Act applies to a debt incurred subsequent to the Act.
41. Mr. Justice Ansari in the above said decision thought that the provisions of the Hyderabad Jagirdar Debt Settlement Act are similar to the provisions of the Act. He therefore placed reliance of Triambak Lal v. Veeranna, 1958-1 Andh WR 387 = (AIR 1958 Andh Pra 361) (FB), to support the conclusion at which he had reached. Chandrasekhara Sastry J. in his judgment also thought that the Hyderabad Jagirdar Debt Settlement Act (XII of 1952) correspond to the provisions of the Act substantially. The learned Judge therefore relied upon the Full Bench decision of this Court in : AIR1964AP236 (FB) in support of the conclusion to which he had reached.
42. The Full Bench decision referred to above therefore becomes relevant and should be considered in detail. The facts of that case that the suit was laid by the State Bank of Hyderabad on 31st July 1956 for recovery of Rs. 40,869-1-10 as due on a cash credit account from defendants 1 to 5 as principal debtors and the 6th defendant as a guarantor as per the ledger account. The said cash credit account was opened with the Bank in February 1951. The balance was struck on 29th June, 1956. Suit notice was issued on 5-7-1956. The defendants denied the claim. After trial, the suit was decreed on 25-7-1959. Thereafter E. P. No. 17 of 1960 was filed on 22nd December 1959. The judgment-debtors applied for a transfer of the execution proceeding to the Jagirdars Debt Settlement Board under Section 25 (1) of the Hyderabad Jafirdars Debt Settlement Act which provision is in pari materia with Section 19 (1) of the Act.
43. The main point urged before Narasimham, J. was that Section 25 (1) of the said Act did not apply to the debt dated 25-7-1959 (the date on which the decree was passed by the trial Court ).The learned Judge referred three questions for consideration of a Division Bench or a Full Bench as may be appropriate. The first of the three questions is relevant for our purpose. It runs as follows:
'Whether on a true construction of Section 25 (1) of the Act, it has application to suits, appeals and applications for execution and proceedings other than revisional in respect of debts not existing on or before the notified date under Section 11 of the Act, pending in any Civil or Revenue Court involving the questions as set out in that section'.
The matter was then placed before a Division Bench consisting of Satyanarayana Raju and Kumarayya JJ. The learned Judges thought that the matters involved important questions which should be decided by the Full Bench and therefore referred the matter to a Full Bench.
44. Kumarayya, J., who spoke for the Full Bench, at the outset observed:
'The question proceeds on the assumption that the debts which are the subject-matter of execution proceeding or the debts which will not be in existence on the notified date i.e., 30th June, 1953. The correctness of this assumption, no doubt, has been challenged by Mr. R. V. Rama Rao, nut since the whole case is not referred to us the argument should not detain us'.
The learned Judge then proceeded to answer the first question. Making a reference to the earlier Full Bench decision in 1958-1 Andh WR 387 = (AIR 1958 Andh Pra 361) (FB), the learned Judge observed:
'By this provision (Section 25 (1) the position of the parties ion pending legal proceedings has been equated to those who make a direct application under Section 11. But to come thus consturctively within the ambit of Section 11, it is however necessary that the suit or other proceeding must relate to a debt in respect of which an application under Section 11 could be made to the Board. It is also necessary that it should be before the Court on the notified date for Section 11, contemplates an application before the notified date. Of course, if an application has been made to the Board under Section 11, subsequent filing of audit or initiation of other proceedings in any Court will not affect the situation and such proceedings shall be transferred on the notice given by the Board. That in short seems to be the clear intendment of Section 25'.
It was however argued that the expression 'pending' occurring in Sec. 25 is of wider amplitude and covers all cases of debt whether incurred before or subsequent to the notified date. This contention was negatived. It was held:
'To attract this provision, therefore, it is essential that the debts should be such as can be dealt with by the Board under the provisions of the Act. Otherwise, the transfer would be of no avail. The requirement of an application under Section 11 to be necessarily made with due details of the debts before the notified date to the Board for taking cognisance of the matter, necessarily implies that debts subsequent to that date are not within the competence of the Board to be settled or scaled down. Such limitation is consistent with the policy of an emergency measure which has for its object affording relief to the jagirdar-debtors to enable them to tide over the sudden and unexpected situation treated by the advent of the Regulations and to adjust themselves to the changed circumstances. The various provisions of the Act are replete with clear indications that the debts to be determined and scaled down by the Board are only such debts as were existing on the date of application under Section 11........... Thus the entire scheme of the Act makes it abundantly clear that matters concerned with debts prior to the date of application alone (which date, of course, cannot extend beyond the notified date under Section 11) are within the cognizance and competence of the Board. It follows that only cases relating to such debts and no other debts are liable to be transferred to it under Section 25 (1)'.
The learned Judge went on to observe:
'It follows therefore that in order to transfer a pending suit, it is necessary that the Board should be competent to deal with such questions in accordance with the Act. That is possible only when the case otherwise satisfies the requisites referred to above, to wit, that it is a pre-notification debt in respect of which the proceeding has been pending on the notified date'.
45. It will be evident from the above said extracts that the Full Bench categorically found that the debt incurred after the notification prescribing the date before which application under Section 11 can be filed are not covered by the provisions of the said Act. That answer had to be given because the question itself was posed as to whether Section 25 applies to the pending suits, etc., in respect of debts not existing on or before the notified nature. That question has been answered that the Act does not apply to such debt. If the question were to be as to whether the said Act applies to the debts incurred after the Act came into force, then the Full Bench had to consider that question and answer it. Since that question was not posed, it is natural that is was not answered. The Full Bench decision however substantially supports our conclusion at least to the extent that the debts incurred after the notified date are not governed by the provisions of the Act which as stated earlier are very much similar to the Jagirdars Debt Settlement Act. We have considered this question which directly arose in this case and have no hesitation in reaching the conclusion taking support from the Full Bench decision that the provisions of the Act do not apply to the debts incurred after the Act although they might have been incurred before the notified date. It will therefore not be correct to place reliance upon the Full Bench decision to support a proposition that although the Jagirdars Debts Settlement Act would not apply to debts incurred after the notified date, it would apply to debts after the commencement of Act but before the notified date. On the analogy and parity of reasons given by the Full Bench the debts incurred during that period also have necessarily to be excluded from the operation of the Act. In fact that position is clear from a decision of the Bombay High Court on which reliance was placed by the Full Bench, Babibai Thakuju v. Fazluddin Usmanbhai, : AIR1954Bom282 , Chagla C. J. who spoke for the Court, expressed himself thus:
'Section 19 (1) has been construed fairly often by this Court and what we have laid down is that only those suits are liable to be transferred which were pending at the date when an application for adjustment of debts could have been made under Section 4 (corresponding to Sec. 11). In other words, if a suit was filed after the time to make an application for adjustment of debts and expired such a suit would not be liable to transfer'.
46. This decision makes it abundantly clear that the Act applies to the debts which were existing on the date when the Act came into force. An application for adjustment of such debts however can be made on or before the prescribed date. Suits and other proceedings pending on the date of the application actually filed or on the date when the application could have been equated with an application filed either by the creditor or by the debtor under Section 4 for adjustment of debts. If no application under Section 4 filed or no statement of account is furnished and no suit or other proceeding was pending on or before the notified date. Section 16 declares that the debts shall stand extinguished debt would be misconceived and consequently no question of transfer of such a suit can possibly arise.
47. What must necessarily follow from the above said discussion is that the Full Bunch accepts in principle the approach which we have made to this question and goes a long way in expressing the view which we have taken. Where it falls short of is that it does not decide as to whether the provisions of the Act are applicable to the debts incurred between the date when the Act came into force and the notified date. Whereas the Full Bench is silent on that matter, we have shred of doubt that the provisions of the Act do not apply even to such debts.
48. Bearing in mind the principles enunciated above, if we look to the facts of the present case, it would be evident that since the debt was incurred for the first time on 16-10-1959, which date although was subsequent to the commencement of the Act was before the notified date. This debt therefore is not governed by the provisions of the Act. In that view of the matter, no question of transfer of such a suit can arise. The conclusion of the lower Court therefore appears to us to be correct, although we reached that conclusion (by) altogether a different route.
49. The revision petition therefore is dismissed with costs.
50. Petition dismissed.