Skip to content


Kuttappa Kurup Vs. Sreedharan Unni and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKerala High Court
Decided On
Case NumberC.R.P. No. 3721 of 1976
Judge
Reported inAIR1979Ker50
ActsKerala Agriculturists Debt Relief Act, 1970 - Sections 15, 15(3), 15(7), 16 and 16(1); Insolvency Act
AppellantKuttappa Kurup
RespondentSreedharan Unni and anr.
Appellant Advocate H. Sivaramakrishna Iyer, Adv.
Respondent Advocate T.L. Viswanatha Iyer and; P.S. Narayanan, Advs.
DispositionPetition dismissed
Cases ReferredKunhamma v. Uduppuru
Excerpt:
- .....it is also clear from the provisions of section 16 that secured creditori do not stand outside the scheme of settlement, that they have to look for satisfaction of their secured debts to the balance of the assets, and rank as unsecured creditors in proportion to the debts due to them. they have only a preferential right to payment over the unsecured creditors. that the scheme of the settlement and the scope of the section are such as we have understood, was the view taken with respect to the almost identical provisions of the travancore debt relief acts (acts 2 and 3/1116). the provisions of these acts were elaborately discussed by a full bench in padmanabha pillai padmanabha pillai v. ouseph chacko (1943-33 trav lj 787), krishnaswamy iyer, c. j. in the course of his judgment, referred.....
Judgment:

Gopalan Nambiyar, C.J.

1. The case has been referred to a Pall Beach at it was felt that the Division Bench ruling in Soolapani Variyar v. Padmavathy Amma (1966 Ker LR 512) contained certain observations which may require re-consideration.

2. The question arises on a petition filed by way of objection to the report of the receiver in connection with an application under Section 15 of the Agriculturists Debt Relief Act for settlement of debts. The objection filed by Revision Petitioner, a usufructuary mort-gagee from the debtor, was that he cannot immediately be dispossessed, nor possession taken from him, and that the properties subject to the usufructuary mortgage, taken possession of by the receiver should be restored to him. The court below dismissed the application.

3. Section 15 of Act 11 of 1970 provides for applications by persons unable to pay their debts. Section 15 (3) lists the particulars to be contained in the application. Clauses (d) and (e) of the same which are particularly important read as follows :--

'15. (3) An application under Sub-sec. (1) shall contain the following particulars, namely;

(a) to (c) xx xx xx xx (d) the particulars of all his property including claims due to him together with a specification of the value of such property and the place or places at which any such property is to be found and the details of any mortgage, lien op charges thereon;

(e) a statement that he unconditionally leaves all his assets in the control of the Court.'

Clause 7, on which some reliance is sought to be placed by counsel for the revision-petitioner and which has been referred to also in the order of reference made to the Full Bench, enacts that the procedure prescribed in the Insolvency Act, 1955 shall, mutatis mutandis, be applicable to the proceedings under the section. Section 16 (1) of the Act may also be usefully quoted:

'16. Settlement of liabilities by Court: (1) The court shall, after determination of the admissibility and the amount of each claim under Sub-section (6) of Section 15, settle the liabilities of the debtor in the manner mentioned thereunder, namely :--

(a) One-fourth of the entire assets, not exceeding six thousand five hundred rupees in value shall be allotted and given over to the debtor subject only to such liabilities by way of public revenue due on land or any tax, cess, fee, rent, jenmikaram or such other dues chargeable thereon by virtue of any enactment for the time being in force;

Provided that in such allotment, the homestead in which the debtor lives shall, on his application, be allotted to his share;

(b) after payment of all liabilities by way of public revenue due on land or any tax, cess, fee, rent, jenmikaram or such other dues chargeable by virtue of any enactment for the time being m force, all the remaining assets shall be distributed and made over to the creditors;

Provided that secured creditors shall, in the order of mutual priority, be paid in preference to unsecured creditors, and after payment of all debts due to the Government or to any local authority, the balance of the assets shall be distributed amongst unsecured creditors in proportion to the debts due to them.'

Reading Section 15 (3) in the light of Section 16 (1) it appears to us that what is contemplated by Section 15 is a complete and effective settlement of debts for that purpose, 'debts' are understood in a wide and comprehensive sense as including even property which is the subject-matter of a mortgage or charge. Section 15 (3) (d) proceeds on that footing. It is also clear from the provisions of Section 16 that secured creditori do not stand outside the scheme of settlement, that they have to look for satisfaction of their secured debts to the balance of the assets, and rank as unsecured creditors in proportion to the debts due to them. They have only a preferential right to payment over the unsecured creditors. That the scheme of the settlement and the scope of the section are such as we have understood, was the view taken with respect to the almost identical provisions of the Travancore Debt Relief Acts (Acts 2 and 3/1116). The provisions of these Acts were elaborately discussed by a Full Bench in Padmanabha Pillai Padmanabha pillai v. Ouseph Chacko (1943-33 Trav LJ 787), Krishnaswamy Iyer, C. J. in the course of his Judgment, referred to Section 16 (3) (e) of the Act read with Sub-clause (c) thereof and pointed out that the word 'assets' in Sub-clause (e) was used in its wider sense meaning all the properties of the debtor whether charged or not, the charges, mortgages and simple debts all being intended to be shown as liabilities under Sub-section (b). From the provisions which we have extracted earlier the same is the scheme of Section 15 of Act 11 of 1970. The learned Judge considered the argument that the usufructuary mortgagee stand outside the section and cannot be affected by the Act or by Section 19 thereof, and observed that this was an over statement of the position. It was pointed out that secured debts and simple money claims, all come into the scheme of the settlement: that the proceedings are for full settlement of all debts. It was therefore held that the usufructuary mortgagees do come within the scheme of administration provided under the Act.

4. A Division Bench of this Court in Soolapani Variyar v. Padmavathy Amma (1966 Ker LR 512) referred to the decision and approved the above Full Bench ruling of the Travancore High Court. After noticing the passages from the judgment of Chief Justice Krishnaswami Iyer, Justice Nokes and Justice Abraham, the Division Bench concurred with the statement of the principle by the learned Chief Justice. Justice Nokes, at page 797, in his separate judgment, had also pointed out that the word 'assets' used in the Act means property or gross assets, and that the entire assets may include even lands subject to usufructuary mortgage.

5. There is also a judgment of Krishna Iyer, J. of this court (as he then was) in Kunhamma v. Uduppuru (1969 Ker LR 481) construing the provisions of Sections 15 and 18 of the Agriculturists Debt Relief Act, 31 of 1958 almost similarly worded. Observed the learned Judge :

'8. The property sold under Ext. P-3 covered the totality of the rights in the property that belonged to the 1st defendant and a sum of Rs. 3,000/- was fixed as the price, regardless of encumbrances. The purchaser took the property subject to the burden attached to it. The vendor has bargained for and secured the price of his interest whatever it may be, and the purchaser thereafter becomes the owner of the property. The whole property, burdened though with the encumbrances, is his. Therefore, under Section 15, when he unconditionally leaves all his assets 'in the control of the Court' he makes over the whole property. There is no scope for a dissection of the entire property into the equity of redemption and the mortgage and claiming that the mortgage is altogether unaffected by the proceedings under Section 15. It is a specious argument which has no merit, in commonsense and in law, and casuistry cannot prevail in Court'.

6. With the above exposition of the scope and content of the sections, we are in respectful agreement. It is therefore clear that when the debtor leaves his assets under the control of the court, the assets thus left have to be understood in a wide and comprehensive sense. It is further clear that a usufructuary mortgagee is also within the scheme of the settlement. The position is thus clear from the statutory provisions and the judicial expositions noticed. We find it unable to grant the prayer made by the revision petitioner that the property which is the subject of the usufructuary mortgage in his favour be restored to his possession by the receiver who seems to have taken charge of the assets of the debtor.

7. It was stated by the learned Judges that one of the points for consideration would be whether by reason of Section 15 (7) of the Act attracting the provisions of the Insolvency Act, any difference would be made to the position expounded in 1966 Ker LR 512. We do not think that these provisions would make any difference. For the one thing, it attracts only the procedure under the Insolvency Act; for another under the Insolvency Act a secured creditor is outside the scheme of Insolvency. But under the provisions of the Act here in question, he is not outside the scheme of settlement. We are therefore of the view that Section 15 (7) does not make any difference to the position that we have stated. 1966 Ker LR 512 does not require reconsideration. We affirm the judgment of the court below and dismiss the revision petition, in the circumstances., without costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //