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P.A. Seyed Mohamed Koya and anr. Vs. the Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKerala High Court
Decided On
Case NumberOriginal Petn. No. 2118 of 1969
Judge
Reported inAIR1972Ker85
ActsDebt Law; Laccadive Minicoy and Amindivi Islands (Debt Conciliation and Grant of Loans) Regulation, 1964 - Sections 2 and 9(2); Laccadive Minicoy and Amindivi Islands (Debt Conciliation and Grant of Loans) (Amendment) Regulation, 1970 - Regulation 3; Constitution of India - Articles 14, 19(1), 31(1) and 226
AppellantP.A. Seyed Mohamed Koya and anr.
RespondentThe Union of India (Uoi) and ors.
Appellant Advocate T.C. Karunakar,; P.K. Shamsuddin,; A.I. Mohammed Bashir
Respondent Advocate C. Sankaran Nair and; C.M. Kuruvilla, Advs.
DispositionPetition dismissed
Cases Referred and Deokinandan Prasad v. State of Bihar
Excerpt:
.....2 and 9 (2) of laccadive minicoy and amindivi islands (debt conciliation and grant of loans) regulation, 1964, regulation 3 of laccadive minicoy and amindivi islands (debt conciliation and grant of loans) (amendment) regulation, 1970 and articles 14, 19 (1), 31 (1) and 226 of constitution of india - petitioners obtained ad interim order of stay against enforcement of provisions of regulation on 11.04.1969 - original petition for amendment - petitioners enjoyed usufructs of debtors' property for more than two years after filing of present original petition - duty of petitioners to place all relevant facts before court which entitled them to succeed - having failed to do so petitioners cannot be allowed to take advantage of their failure and postpone benefits that debtors entitled..........of the loan advanced with a condition, express or implied, that during the subsistence of the debt the creditor shall be entitled to appropriate the usufruct from such trees in lieu of interest or principal or both; but does not include-- (i) arrears of wages; or (ii) land revenue or anything recoverable as an arrear of land revenue; or (iii) any debt due to a co-operative bank or co-operative society or to any banking company as defined in the banking companies act, 1949: or (iv) any money for the recovery of which a suit is barred by limitation:' the petitioners' contention is that the exclusion of 'any debt due to a cooperative bank or co-operative society or to any banking company as defined in the banking companies act. 1949'from the definition of 'debt' is arbitrary, as there.....
Judgment:
ORDER

M.U. Isaac. J.

1. The petitioners herein are two inhabitants of Androth Island which is one of the group of islands known by the name Laccadive, Minicoy and Amindivi Islands. In exercise of the powers under Article 240 of the Constitution of India, the President promulgated the Laccadive Minicoy and Amindivi Islands (Debt Conciliation and Grant of Loans) Regulation, 1964. This was amended by Regulation No. 3 of 1970. The object of the above Regulation is to provide for the conciliation of debts incurred by, and for the grant of loans to the inhabitants of the Union territory of Laccadive, Minicoy and Amindivi Islands. It is necessary to refer to some of the salient provisions of the Regulation. Section 2 (b) defines debt. Section 3 provides for establishment of Tribunals. Section 4 provides for filing of application by a debtor before the Tribunal for settlement of debt. Sections 5, 6, 7 and 8 deal with the procedure to be followed by the Tribunal on receipt of an application. Section 9 fixes the maximum amount allowable to a creditor in settlement of a debt, and it also deals with the power of the Tribunal in the said matter. Section 10 provides for an appeal to the prescribed authority from any order passed by the Tribunal on application under Section 4; and Section 11 provides for a revision to the Administrator from the order passed by the appellate authority under Section 10. It is not necessary to refer to the other provisions of the Regulation.

2. The petitioners allege that the first petitioner's mother has taken a lease of the usufructs of certain coconut trees from the fifth respondent for a loan given to him, and that the second petitioner has also taken a similar lease of the usufructs of cocoanut trees from the 6th respondent for another loan given to him. The petitioners further allege that respondents 5 and 6 have filed applications before the fourth respondent the Debt Conciliation Tribunal, Androth Island under Section 4 of the Regulation for settlement of the above debts. The petitioners also state 'that other debtors of the petitioners are also likely to file applications before the fourth respondent under the provisions of the Regulation and the fourth respondent is likely to proceed with the trial of these applications'.

The petitioners do not disclose who these other debtors, nor any particulars regarding any of the debts including the debts due from respondents 5 and 6. such as the dates on which debts were incurred, the amounts of the debts and the terms and conditions of the contracts regarding the discharge of the debts. The petitioners contend that the definition of 'debt' in Section 2 (b) of the Regulation in so far as it excludes from its ambit any debt due to a Co-operative Bank or Co-operative Society or to any banking company, and Section 9 (2) of the Regulation which provides that the money equivalent of the coconuts or copra realised by the creditor shall be computed on the basis of the average market price of coconuts and copra for three years preceding the year in which the application under Section 4 is made are unconstitutional. They pray that the said provisions may be accordingly declared as unconstitutional and invalid,and that the fourth respondent be refrained from enforcing the provisions of the Regulation against them.

3. Respondents 1 and 3 are the Union of India and the Administrator of the Islands. They along with the 4th respondent have filed a counter-affidavit opposing the petitioners' contentions. The counter-affidavit states the circumstances under which the Regulation was issued as follows :--

'The said regulation was enacted, in order to regulate the conciliation of debts and to impose restrictions on creditors harassing debtors and exacting large amounts of money by way of interest. The inhabitants of the Islands are poor and their livelihood is from the yield of coconut trees and from fishing operations, carried on by them in fair weather. The community is economically very backward. The backwardness of the islands is relatable to several circumstances -- historical, geographical and economic. The span of activity is considerably restricted due to the situation of these islands far away from the main land in the Arabian Sea. Commercial crops are not grown nor are food grains cultivated. Marketing facilities for even such goods, as are produced, are very rare. Monsoon also places the people at considerable disadvantages and they are not able to carry on fishing during the Monsoon season. As already stated, the yield from coconut trees is the mainstay of a sizable , percentage of the population-They are not in a position to bargain their wares to advantage also. In this set up, the poor and needy section of the population were forced to obtain loans from certain others in order to meet their requirements. It happens very often that few coconut trees owned by a person are pledged. The income therefrom is adjusted towards the debt. A detailed survey was undertaken, and it was noticed that as much as 80 per cent, of the islanders were indebted and that even their normal resources of livelihood are jeopardized as a result of the exaction practised on them by the creditors. A legislation to provide for the conciliation of debts and for the grant of loans to the islanders on reasonable terms became imperative. In view of the social and economic necessity, the President promulgated the Regulation aforesaid, in exercise of the powers conferred under Article 240 of the Constitution of India'.

These respondents contend that the attack against the constitutional validity of Sections 2 (b) and 9 (2) of the Regulation cannot be sustained. They further contend that, in so far as the petitioners have not disclosed the particulars of any debts and have not shown with reference to any such debt how they would be affected by the impugned provisions of the Regulation, they are not entitled to any reliefs on hypothetical basis. They also refer to the application filed by the 2nd petitioner against the 5th respondent, and state that the said application was disposed of on the merits, and that the petitioners' remedy, if aggrieved thereby, is to file an appeal to the appellate authority under Section 10 of the Regulation.

4. I shall first deal with the petitioners' contention regarding the constitutional validity of the definition of debt in Section 2 (b) of the Regulation. That section reads :--

'debt' means all liabilities owning to a creditor immediately before the date on which an application is made under Sub-section (1) of Section 4, in cash or in kind, secured or unsecured whether payable under a decree or order of a Civil Court or otherwise, and whether mature or not, and includes any such liability under an agreement, whether oral or written,--

(i) whereby specified number of coconut trees belonging to the debtor are put in possession of the creditor for a specific period, giving the latter the right to enjoy their usufruct at an agreed rate in terms of money per tree per year so put in possession in lieu of interest or principal or both; or

(ii) whereby certain quantity of dried copra or raw coconuts are agreed to be delivered during the subsistence of the debt by the debtor to the creditor at regular intervals and at an agreed specified rate in lieu of interest or principal or both; or

(iii) whereby specified number of coconut trees belonging to the debtor are put in possession of the creditor in consideration of the loan advanced with a condition, express or implied, that during the subsistence of the debt the creditor shall be entitled to appropriate the usufruct from such trees in lieu of interest or principal or both; but does not include--

(i) arrears of wages; or

(ii) land revenue or anything recoverable as an arrear of land revenue; or

(iii) any debt due to a co-operative bank or co-operative society or to any banking company as defined in the Banking Companies Act, 1949: or

(iv) any money for the recovery of which a suit is barred by limitation:'

The petitioners' contention is that the exclusion of 'any debt due to a Cooperative Bank or Co-operative Society or to any Banking Company as defined in the Banking Companies Act. 1949'from the definition of 'debt' is arbitrary, as there is no rational basis for excluding this particular class of debt from the definition, and such an arbitrary exclusion or favourable treatment of a particular class vitiates the whole provision Counsel for the petitioners referred me to certain observations in a concurring judgment of Raman Nayar, J. in the Full Bench decision of this Court in Catholic Bank of India Ltd v. George Jacob, AIR 1968 Ker 3 (FB). His Lordship has only posed certain questions, and has not expressed any opinion in the matter. These observations do not, therefore, give any support to counsel's contention. In my view, the decision of the Supreme Court in State of Rajasthan v. Mukan Chand, AIR 1964 SC 1633 is an authority for the proposition that, if an exception or exclusion of a particular thing or person from a statutory provision dealing with a general class of things or persons is discriminatory, it does not affect the whole provision, but it only vitiates the particular exemption or exclusion. I am unable to see why an invalid or unconstitutional exemption or exclusion of a thing or a person from a general provision should vitiate the said provision, which is otherwise valid. The contention advanced by the petitioners in this respect cannot, therefore, be sustained. The petitioners are not persons who are in any manner affected by the exclusion of the particular class of debts from the definition of 'debt' in Section 2 (b) of the Regulation. They are not, therefore, entitled to question the validity of the definition on such a ground.

5. I shall now deal with the petitioners' contention regarding the validity of Section 9 (2) of the Regulation. Section 9 reads:--

'9. (1) No creditor shall be allowed a greater amount in satisfaction of both the principal and interest of a debt other than twice the amount of the principal and accordingly--

(i) if in the course of the proceedings before the tribunal, it is found that any of the creditors has received from his debtor twice or more than twice the amount of the principal in cash or in kind by way of realisation of coconuts or copra under the terms of the agreement relating to the debt, the tribunal shall pass orders that the debt shall be deemed to have been fully discharged and shall declare that the debtor shall, from the date of the order, be in lawful possession of the property or coconut trees secured for the debt that is deemed to have been discharged;

(ii) if, in the course of such proceedings, it is found that with respect to any debt, the amount received in cashor in kind by way of realisation of coconuts or copra as aforesaid, by the creditor falls short of twice the amount of the principal, the tribunal shall pass orders that only such amount as, together with the amount already so received, will be equal to twice the amount of the principal, shall be repayable with respect to such debt,

(2) For the purposes of Clauses (i) and (ii) of Sub-section (1) the money equivalent of the coconuts or copra realised by the creditor shall be computed in the prescribed manner on the basis of the average market price of coconuts or copra as the case may be, for three years immediately preceding the year in which the debtor makes the application under Sub-section (1) of Section 4.'

The petitioners' contention is that the price of coconut and copra has been steadily increasing during the last 20 years, that the price in 1965 is about eight times the price during the year 1945-50, that the fixation of the same basis, namely the average market price of coconut or copra for the three years immediately preceding the year in which the debtor makes the application for settlement of the debt for computing the money equivalent of the coconuts or copra realised by the creditor would deprive some of the creditors of even the principal amount of the loan, and Section 9 (2) which fixes such a basis for computation is violative of Article 19(1)(f) of the Constitution. There was controversy at the Bar whether the right of the petitioners is a fundamental right, Counsel for respondents 1, 3 and 4 contended on the authority of the decisions of the Supreme Court in Shantabai v. State of Bombay, AIR 1958 SC 532 and A. K. Mehboob Co. v. State of M. P., AIR 1966 SC 1637 (1639), that the petitioners' right to take the usufructs of coconut trees in satisfaction of the loans advanced by them are only benefits under contracts and that they are not property which is entitled to any protection under Article 19(1)(f) or Article 31 of the Constitution,

These cases relate to contracts entered into between zamindari owners and third parties, under which third parties obtained rights to enter into the zamindari lands and take certain produces therefrom. The zamindari rights had been statutorily abolished earlier. The persons who had obtained rights under contract to take usufructs from some of these zamindari lands filed writ petitions in the Supreme Court under Article 32 of the Constitution to quash certain orders which the Government passed preventing them from entering on the lands and exercising these rights. Inboth these cases, the Supreme Court held that the petitioners had only certain rights under contracts, and such rights do not constitute a right to property.

The position is entirely different In the instant case.' The petitioners are creditors, who have given their amounts on loan for the discharge of which they have taken leases of coconut trees from the debtors, on condition that the creditors would take the usufructs of the trees till the debts are wiped off by the price of the coconuts calculated at agreed rates. They have got the right to take the usufructs till the debts are wiped off or to get back the amounts advanced by them. Such a right is certainly property; and a law which affects it would be violative of Article 19(1)(f) of the Constitution unless it be one which imposes only reasonable restrictions in the interest of the general public or for the protection of the interests of any Scheduled Tribe as provided in Clause (5) of the above Article. Reference may in this context be made to the decisions of the Supreme Court in State of M. P. v. Ranojirao Shinde, AIR 1968 SC 1053 and Deokinandan Prasad v. State of Bihar, AIR 1971 SC 1409. In the former case, it was held that a cash grant is property within the meaning of Articles 19(1)(f) and 31(1) of the Constitution, while in the latter case, it was held that the right of a Government servant to receive pension under the service rules is property within the meaning of the said Articles.

6. There can be no doubt that the mode of computation provided in Section 9 (2) of the Regulation for settlement of debts would affect the right, or in other words the property of the creditors. Therefore, the question for further consideration is whether the said provision imposes only reasonable restrictions as mentioned in Article 19(5). A person who attacks the constitutional validity of a law has to establish with reference to positive facts, and not on hypothetical basis, that the impugned law offends any provision of the Constitution. The Regulation is a law made to give relief to the agricultural debtors of the Islands who were being oppressed and harassed by exacting creditors, exploiting the peculiar circumstances of the Islands. Section 9 provides for recovery of the whole principal debt and interest thereon not exceeding the principal. The computation prices of coconuts were fixed under the contracts at unconscionably low rates by the exploiting creditors. So, legislation had to be made to nullify such provisions in the contracts and to substitute a reasonable basis of computation.

It was rightly conceded by counsel for the petitioners that a law which provides for recovery of the principal and a reasonable rate of interest thereon would be protected by Clause (5) of Article 19 of the Constitution. In order to show that Section 9 (2) would not be entitled to the said protection, the petitioners have to establish that the said provision would deprive them of their right to recover the principal debts and a reasonable rate of interest thereon. The petitioners have not stated in this Original Petition what are the amounts of the debts due to them, when they were incurred and how much they have actually recovered so far by calculating the value of coconuts realised by them at the prevailing market rates. I am unable to visualise a situation where any creditor would be deprived of the 'principal by the application of Section 9 (2) of the Regulation. At any rate the petitioners have not established that they have been in any manner unreasonably affected by the said provision. I, therefore reject the petitioners' attack against the constitutional validity of Section 9 (2) of the Regulation based on Article 19(1)(f) of the Constitution.

7. It was also contended by counsel for the petitioners that Section 9 (2) of the Regulation is yiolative of Article 14 of the Constitution, as the said section fixes the same basis for computation of the money equivalent of the coconuts or copra realised by a creditor for settlement of debts, irrespective of the duration of the debt and the ratio that the actual amount realised by a creditor on the basis of the prevailing market prices of coconuts or copra bears to the principal amount of the debt. He pointed out that, if the debt was only of just three years' duration the creditor would on the basis of the computation provided under Section 9 (2) get almost twice the principal amount inclusive of the interest, while in the case of a debt of a long duration, the creditor would receive only a much less amount, as during the earlier period the price of coconuts and copra would be very low. It is submitted that such a provision is discriminatory. There is force in this contention, provided that the debts which would arise for settlement under Section 9 of the Act would be different in character as stated by the petitioners' counsel.

I am told by counsel appearing for respondents 1, 3 and 4 that the practice or custom prevailing in the matter of debts of the kind dealt with in the Regulation is to settle accounts at intervals and renew the transactions by executing fresh contracts for the outstanding principal and interest, and that ordinarily no debt would be of a longer duration than three years. Whatever that may be, the petitioners have no case that they have been subjected to any discriminatory or unfavourable treatment, compared with other creditors, as a result of the operation of Section 9 (2) of the Regulation, The contention that this provision is violative of Article 14 of the Constitution is not one which the petitioners have specifically raised in the Original Petition. As already stated, they have not given any particulars of the debts due to them. The contention is, therefore, devoid of any factual basis.

8. Counsel for the petitioners submitted that, in case I consider that the petitioner's contention that Section 9 (2) is violative of Articles 19(1)(f) and 14 of the Constitution cannot be sustained without the necessary averments regarding the debts due to them and as to how they are actually aggrieved by the said provision, they should be given an opportunity to amend the Original Petition, There is no question of giving any such opportunity at this late stage. The petitioners obtained an interim, order of stay against the enforcement of the provisions of the Regulation on 11-4-1969; and that order is still in force. This means that they have enjoyed the usufructs of the debtors' property for more than two years after the filing of this Original Petition. It was the duty of the petitioners to place all the relevant facts before the court which would entitle them to succeed. Having failed to do that without any excuse whatso ever, they cannot be allowed to take advantage of their failure, and protract or postpone the benefits that the debtors are entitled to have under the Regulation, by asking for another opportunity at this late stage to amend the petition. Counsel for the petitioners had not been also able to tell me when the debts concerned in this case were incurred, and how Section 9 (2) would offend the petitioners' fundamental right under Article 19(1)(f) or 14 of the Constitution on the particular facts of the case. I, therefore, decline to adjourn this case for giving an opportunity to amend the petition.

9. On the facts alleged in the petition, the contentions put forward by the petitioners cannot succeed and this Original Petition is accordingly dismissed. The petitioners will pay the costs of the contesting respondents.


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