Skip to content


Ramrakh and ors. Vs. Creditors, Rani Co-operative Society - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil References No. 37 to 45 and 57 of 1966
Judge
Reported in1969WLN193
AppellantRamrakh and ors.
RespondentCreditors, Rani Co-operative Society
Cases ReferredMukan Chand v. Indar Singh
Excerpt:
rajasthan relief of agricultural indebtedness act, 1957 - section 3--whether debt relief court is a civil court.;we are definitely of the opinion that the debt relief courts are courts and as they decide civil matters they are civil courts.;(b) civil procedure code - section 113 and order 46 rule 1--whether debt relief court can make reference to high court.;in our view because of order 46, rule 1 civil procedure code no reference couldhave been made by the debt relief courts of bilara and pali to this court under section 113 civil procedure code.;(c) constitution of india - article 14 and rajasthan relief of agricultural indebtedness act--section 4(b)--whether section 4(b) hit by article 14 of the constitution.;there could be no distinction between the debt of a state or that of any..........section 113 of the civil procedure code. the first nine references have been made by the judge, debt relief court, bilara, in cases in which various debtors had filed separate application under section 6 of the rajasthan relief of agricultural indebtedness act, 7 hereinafter called the act,. in all these cases various co-operative societies registered the rajasthan co-operative societies act, 1953 were shown as creditors. it was argued before the learned judge on behalf of these 30 societies that the act does not apply to the liability in respect of any sum due to any society registered or deemed to have been registered under the rajasthan co-operative societies act 1953 and as such the debt relief court was not empowered to pass any order in respect of their debt under the provisions.....
Judgment:

D.M. Bhandari, C.J.

1. These ten cases are references under Section 113 of the Civil Procedure Code. The first nine references have been made by the Judge, Debt Relief Court, Bilara, in cases in which various debtors had filed separate application under Section 6 of the Rajasthan Relief of Agricultural Indebtedness Act, 7 Hereinafter called the Act,. In all these cases various co-operative societies registered the Rajasthan Co-operative Societies Act, 1953 were shown as creditors. It was argued before the learned Judge on behalf of these 30 societies that the Act does not apply to the liability in respect of any sum due to any society registered or deemed to have been registered under the Rajasthan co-operative Societies Act 1953 and as such the Debt Relief Court was not empowered to pass any order in respect of their debt under the provisions of the Act They also relied on Section 146(2) of the Rajasthan Co-operative Societies Act 1965 with lays down hat nothing contained in the Rajasthan Relief of Agricultural Indebtedness Act, 1957, shall apply to the loans advanced by the Co-operative societies under the Rajasthan Cooperative Societies Act. On behalf of the debtors, it was contended that both these provision were ultra vires the Constitution as they denied the debtor equality before the law. The learned Judge, therefore made these references under Section 113 Civil Procedure Code after formulating three questions. The first two questions formulated are as follows:

(1) Whether Section 4(b) of the Rajasthan Relief of Agricultural Indebtedness Act 1957 is hit by Article 14 of the Indian Constitution it being discriminatory?

(2) Whether Section 146 Sub-section (2), of the Rajasthan Co-operative Societies Act 1965 is, also a discriminatory one and as such it is also hit by Article 14 of, the Constitution?

2. The third question also purports to contain what is in the first two questions and it need not be mentioned.

3.Similar question also arose before the Debt Relief Court, Pali in a case and the said court has also made a reference under Section 113 Civil Procedure Code and that reference is tenth case noted above.

4. Notices of these references were given to the parties and in the last reference No. 57 of 1966 notices was also given to the Advocate General, Rajasthan.

5. A preliminary point has been raised by the Additional Advocate General that these references are not maintianable, as they do not arise out of any proceedings is a suit or appeal. He has argued that the power of a court to state a case and refer the same for the opinion of the High Court is subject to such conditions.

6. In that case, there is some discussion on the question whether a Debt Relief Court is a Civil Court or not and the view taken is that it is a special Tribunal created ad-hoc for the special purposes of the C.P. and Bazar Relief of Indebtness Act. But the decision in that case is based on the view that proceedings in the Debt Relief Courts are not suits and the provisions of Order 46, Rule 1 are not attracted. Looking to the provisions of the Act we are of the view that the Debt Relief Courts in Rajasthan are established under Section 3 of the Act and they are courts, Section 3 of the Act runs as follows:

'Section 3 Establishment of Debt Relief Courts.' - Notwithstanding anything contained in the Rajasthan Civil Courts Ordinance, 1950 (Rajasthan Ordinance VIII, of 1950) the State Government may establish Debt Relief Courts with such jurisdiction as it may determine and may appoint persons possessing the prescribed qualifications to be judges of such courts.

7. This Section clearly shows that the State Government is to establish Debt Relief Courts. The other provisions of the Act show that these Courts have to determine civil disputes between the parties and grant relief. The opening part of Section 3 mentions that Debt Relief Courts are to be established by the State Government notwithstanding anything contained in the Rajasthan Civil Courts, Ordinance, 1950. That Ordinance refers to the establishment of regular Civil; Courts. These words were not necessary if the Debt Relief Court were not courts and were mere Tribunals. In view of the aforesaid provisions we are definitely of, the opinion that the Debt Relief Courts are courts and as they decide civil matters, they are civil courts.

8. It is however, contended that Section 113 Civil Procedure Code can be applied only to a court to which the Civil Procedure Code applies. Reference in this connection has been made to Raja Setrucharlu Ramabhadra Raja Bahadur and Ors. v. Maharaja of Jeypore and Ors. AIR 1916 PC 150. The Civil Procedure Code applies to all the Courts of Civil Judicature. The Premable to the Code itself shows that the Code was enacted for the purposes of consolidating and amending the laws relating to the procedure of the courts of civil Judicature. Section 141 of the Civil Procedure Code lays down that the procedure provided in the Civil Procedure Code in regard to suits is to be followed as far as it can be made applicable in all proceedings in any court of civil jurisdiction.

9. It may be said that there is a special provision in Section 16 directing the, Debt Relief Court to follow the same procedure as is followed by a Court of original civil jurisdiction and that this gives an indication that the Debt Relief Court is not a court of original civil jurisdiction and is merely Tribunal. This is the basis of the reasoning of the Nagpur High Court in holding the Debt Relief Court a Tribunal and not a court of civil jurisdiction. In our humble opinion, if the other provision of the Act unmistakably point out that a Debt Relief Court is Court of Civil jurisdiction, the mere presence of Section 16 in the Act would not make such a court not a Court of civil jurisdiction. The Madras High Court in Thummalalapal Viswanadhan v. Sokala Chand Chunnilal and Ors. applied Section 141 Civil Procedure Code to the proceedings under Madras Agriculturists Relief Act without there being any provision for the applicability of that Section to the proceedings under that Act., We may also point out that the Privy Council in Raja Setrucharlu Ramabhadau Raju Bahadur and Ors. v. Maharaja of Jeypur and Ors. AIR 1916 PC 150 which was a case in which a British Indian Court had ordered the sale of property situated in the scheduled-districts to which the Code did not at all apply, held that the provisions of Section 17 of the Code of Civil Procedure would not be attracted. In our view, the Debt Relief Court is a Court of civil judicature to which the Civil Procedure Code applies and on that account it can not be said that Section 113 of the Civil Procedure Code would not apply because it is not a Court.

10. The real difficulty however, is that Section 113 Civil Procedure Code lays down that it will apply subject to such conditions and limitations as may be prescribed, certain conditions and limitations have been prescribed under Order 46 Rule 1 and we have to examine whether the conditions and limitations mentioned in this rule are fulfilled in this case. It is argued on behalf of the debtors in these cases that the Debt Relief Court should be taken to be hearing a suit when they are hearing an application under Section 6 of the Act and, therefore, a reference is permissible by such a Court. The provisions of Civil procedure Code clearly show that a suit originated by filing a plaint and not otherwise. It has been held by their Lordships of the Privy Council in Hans Raj Gupta and Ors. v. Dehra Dun-Mussoorie Electric Tramway Co. Ltd. AIR 1933 PC 63 that under Section 3 of the Limitation Act the word 'suit' ordinarily means, and apart from some context must be taken to mean, a civil proceeding instituted by the presentation of a plaint and that a claim against a company in liquidation not made by a proceeding instituted by the presentation of a plaint context be considered to be a 'suit' instituted within that section.

11. The Limitation Act is in pari materia with the Civil Procedure Code and the same meaning mUst be given to a suit instituted in the Civil Procedure Code. Thus, in our view because of Order 46, Rule 1 Civil Procedure Code no reference could have been made by the Debt Relief Courts of Bilara and Pali to this Court under Section 113 Civil Procedure Code.

12. But the matter does not end here. Article 228 of the Constitution imposes a duty on this Court that if this Court is satisfied that a case pending in a Court subordinate to it involves a substantial question of law as to the interpretation of the Constitution the determination of which is necessary for the disposal of the case, it may withdraw the case and may either dispose of the case itself, or determine the said question of law and return the case to the court from which the case has been so withdrawn. We are satisfied that this case involves a substantial question as to the applicability of Article 14 to the Act. But Article 228 is attracted only when such question arises before a court subordinate to the High Court. We have, therefore, to examine the point whether the Debt Relief Court is subordinate to this Court or not. It has been argued before us that the Debt Relief court under the Act is neither subject to the appellate or revisional jurisdiction of this Court and as such it is not subordinate to this Court. A revision application, however, lies to the District Court under Section 17 of the Act and the District Court is empowered to revise the order of a Debt Relief Court. It is conceded that a District Court is subordinate to the High Court, but it is urged that simply because of this fact a revision application lies to the District Court, which is subordinate to the High Court, the Debt Relief Court can not be treated as subordinate to the High Court. This argument is not acceptable to us. We may refer to Section 3 of Civil Procedure Code which runs as follows:

Section 3 For the purposes of this Code the District Court is subordinate td the High Court, and every Civil Court of a grade inferior to that of a District Court and every Court of Small Causes is subordinate to High Court and District Court.

13. Thus under Section 3 of the Civil Procedure Code, for the purposes of the Civil Procedure Code, every Civil Court of the grade inferior to that of a District Court is subordinate to the High Court no matter whether any revision application lies directly to the High Court or not. In the matter of subordination of Courts to the High Court. Article 228 of the Constitution must be interpreted in the same light. The principle laid down in Section 3 Civil Procedure Code is based on common sense and this common sense interpretation must be adopted while interpreting Article 228 of the Constitution. There can not be doubt that a Debt Relief Court is inferior to a District Court and District Court while performing its duty under Section 17 of the Act can not be treated as persona designata but it is a court which is subordinate to the High Court. Further, the District Court has been enumerated as one of the Court subordinate Court to the High Court is the Rajasthan Civil Court Ordinance, 1950 under which the Court of District Judge is established. In this view of the matter, we do not find any difficulty the Debt Relief Court as subordinate to the High Court.

14. In the circumstances of these cases, we withdraw all these matters form the Debt Relief Courts where they are pending and proceed to decide the question of law regarding the applicability of Article 14 of the Constitution to the provisions of the Act.

15. The Act has been enacted to provide for the relief to the agriculturists in the State of Rajasthan from indebtedness as the preamble mentions. In the objects & reasons for introducing the Rajasthan Relief of Agriculture Indebtedness Bill (No. 13 of 1957) and following has been mentioned:

The problem of agricultural indebtedness in the State has assumed considerable magnitude. Because of sheer necessity agriculturists are compelled to pay exorbitant rates of interest Not only this but the interest which accrues on loans is from time to time added to the principal amount and the burden on the debtor goes on increasing, resulting in his inability, to pay his debts in full.

There exist scattered pieces of legislation applicable to different areas of the State. The provisions thereof are however defective and wanting in many respects. With a view to dealing adequated with problem in question Government considers it desirable to have a uniform law enacted for the whole of the State with all the requirements of the day embodied therein. The bill is designed to achieve this object.

16. Thus, the object from which the Act has been enacted is to grant relief to the agriculturists who may have become victims at the hands of the unscrupulous money-lenders charging exorbitant rates of either simple or compound interest. As observed by their Lordships of the Supreme Court in Gamini Krishanyya and Ors. v. Guraza Seshachalam and Ors. : [1965]1SCR195 any beneficial measure of this kind should, as far as permissible, be interpreted in such a way as to carry out the main object which the Legislature had in view.

17. The scheme of the Act is that by filing an application under Section 6 a debtor may get discharge of the debt of a creditor under Section 8(2) or get debt determined under Section 10 and in the process of the determination get the debt reduced in case the conditions provided under Section 10 are satisfied. The creditor is also empowered to make an application under Section 6 of the Act. The debt has been defined in Section 2(c) as including all liabilities owing to a creditor in cash or kind, secured or unsecured, but under Section 4 it has been laid down that the Act will not affect the claim in respect of several matters mentioned in that section. Section 4(b) mentions that the Act will not affect the claim due in respect of any liability in respect of any sum due to any society registered or deemed to be registered under the Rajasthan Co-operative Societies Act, 1953 (Rajasthan Act IV of 1953) In this case, we are concerned only to determine whether Section 4(b) is ultra vires and should be struck down in as much as it is discriminatory to exclude from the purview of the Act the claim of a Co-operative Society.

18. Article 14 of the Constitution offers equality before law or equal protection of laws within the territory of India and it lays down as a fundamental right that the State shall not deny to any persons such equality before law or equal protection of the laws. The Legislature has excluded the Co-operative Societies from being affected by the operation of the Act. We have to determine whether in doing so, the Legislature has discriminated in a manner not warranted by Article 14 which prohibits and arbitrary discrimination.

19. Under the Act, law has classified the persons against whom an agriculturist can seek protection and also those against whom he can not seek protection, and a registered co-operative society is one against whom it has been laid down that a debtor can not claim protection. We have to examine whether there is sufficient justification for this.

20. The Rajasthan Co-operative Societies Act 1953, which has been replaced by the Rajasthan Co-operative Societies Act, 1965 (Act No. 13 of 1965) makes elaborate provisions for the management of the co-operative societies for the investment of its funds. Section 65 makes restrictions on giving loans. It runs as follows:

Section 65 Restriction in loans : (1) A Co-operative Society shall not make a loan to any person other than a member; Provided that with general or special sanction of the Registrar a Co-operative Society may make loans to another co-operative society.

(2) Notwithstanding anything contained in Sub-section (1) a co-operative society may make a loan to depositor on the security of his deposit.

(3) The Government may, by general or special order, prohibit or restrict the lending of money on the security of movable property or on mortagage of immovable property by any society or class of societies.

(4) The lending policy of a financing bank shall be approved by the Government.

21.There are also restrictions placed on a registered co-operative society under Section 66 when the loan is given to a non-member. The other provisions of that Act also show that the formation and working of the co-operative societies is for the promotion of common economic need among the members so as to bring prosperity in agriculture and industry. It is expected that a registered co-operative society would not advance loan to its members or even non-members on an exorbitant rates of interest and would not try to explicit its debtors. The registered co-operative societies stand by a class in themselves and when their claims against their debtors are excluded from the operation of the Act, it can not be said that the Legislature has acted with unjustifiable discrimination in excluding them from the operation of the Act.

22. In Lachhman Dass v. State of Punjab AIR 1963 SC 22 it has been held that special procedure for the recovery of dues from customers of the State Bank was not a contravention of Article 14 of the Constitution. The same view was taken by the Supreme Court in Mannalal and Anr. v. Collector of Jhalawar and Ors. : [1961]2SCR962 . The same view may be taken with respect to the debts of the co-operative societies. In our view, taking all those circumstances into consideration, it can not be said that the Legislature while excluding the co-operative societies from the purview of the operation of the provisions of the Act acted in a manner which may be called discriminatory under Article 14 of the Constitution.

23. In Nathudan v. State of Rajasthan 1964 RLW 437 Jagat Narayan J. has taken the view that Section 4(j) of the Act which excluded any sum of money due to Government by way of or towards payment of loan was hit by Article 14 of the Constitution. In this case, we are not called upon to make any pronouncement with reference to Section 4(j). We may however, mention, with respect that the only reasoning given in that judgment for holding that Section 4(j) was hit by Article 14 is that the following observations of the Supreme Court made in Mukan Chand v. Indar Singh : [1964]6SCR903 while considering the provisions relating to the exclusion of the State debt from the purview of the Rajasthan Jagirdars Debt Reduction Act were equally applicable to Section 4(j) of the Act

We think that the High Court was right in holding that the impugned part of Section 2(c) infringes Article 14 of the Constitution. It is now well-settled that in order to pass the test of permissible classification, two conditions must be fulfilled namely, (1) that the classification must be founded on an intelligible differentiation which distinguishes persons of things that are to be put together from others left out of the group, and (2) that the differential must have a rational relationship to the object sought to be achieved by the statute in question. In our opinion, condition No. 2 above has clearly not been satisfied in this case. The object sought to be achieved by the impugned Act was to reduce the debts secured on Jagir lands which had been resumed under the provisions Rajasthan Land Reforms and Resumption of Jagirs Act. The Jagirdar's capacity to pay debt had been reduced by the resumption of his lands and the object of the Act was to ameliorate his condition. The fact that the debts are owed to a Government or local authority or other bodies mentioned in the impugned part of Section 2(e) has no rational relationship with the object sought to be achieved by the Act. Further, no intelligible principle underlines the exempted categories-of-debt.

24.In our humble opinion, the provisions of the Rajasthan Jagirdaris Debt Reduction Act and the object and reason for the enactment of that Act are entirely different. In the Supreme Court case, their Lordships examined the scheme of that Act. Their Lordships took notice of the preamble of that Act which stated in plain that the object of the Act was to scale down the debts of Jagirdars whose lands have been resumed under the provisions of the Rajasthan land Reforms and Resumption of Jagirs Act. Section 3 of that Act provided for the reduction of secured debt in accordance with the formula given in schedule I at the time of passing of the decree and their apportionment where necessary between Jagir and non-Jagir property Section 4 provided for the reduction of secured debts. Section 5 directed a court to pass a fresh decree after the reduction of secured debt. Clause (1) of Section 7 provided for the execution of the decree against the compensation and rehabilitation grant payable in respect of Jagir lands of the judgment debtor. Their Lordships pointed out the objects sought to be achieved by that Act was to reduce the debts secured on Jagir lands which have been resumed under the provisions of the Rajasthan Land Reforms and Resumption of Jagirs Act, and that on that account the Jagirdar's capacity to pay debts has been reduced and the object of that Act was to ameliorate their condition. Taking this view of the object of that Act, it was held that there was no reasonable classification for sustaining impugned part of Section (e)2. The Rajasthan Jagirdar's Debt Reduction Act had a different purpose and the main consideration in enacting that Act was that as there was reduction in the assets of the jagirdars by force of law, his debts must be reduced. Under these circumstances, there could be no distinction between the debt of a State or that of any other person. It can not, therefore, be said that the considerations which prevailed for holding that there was discrimination in enacting that portion of Section 2(e) of that Act are the same while enacting Section 4(b) of the Act. In our opinion Section 4(b) of the Act is not hit by Article 14 of the Constitution.

25. Having decided this point of law, we remand the cases for decision to the respective courts from which, have been withdrawn.


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