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Nur Mia and anr. Vs. Noakhali Nath Bank Ltd. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1939Cal298
AppellantNur Mia and anr.
RespondentNoakhali Nath Bank Ltd.
Cases ReferredRamendra Nath Mandal v. Dhananjoy
Excerpt:
- .....of the act. the learned munsif who has made the reference has formulated the question thus:if the debt in question is a protected one being a liability to a bank included in the reserve bank act schedule the question is whether any debt settlement board has any jurisdiction to entertain any application regarding it. and the further question is whether when a debt settlement board takes cognizance of a debtor's liability to a bank of the requisite description, the civil court is competent to ignore it altogether on the ground that the notice issued by the debt settlement board is perfectly ultra vires.2. the learned munsif in his letter of reference has taken the trouble to give a useful summary of the relevant cases already decided by this court. he himself is of opinion that the court.....
Judgment:

S.K. Ghose, J.

1. The questions for decision arise out of a reference under 0rder 46, Rule 1, Civil P.C., and a civil revision case started on a petition. In both cases the Court had received notice for stay of proceedings under Section 34, Bengal Agricultural Debtors Act of 1935. In both cases, the common question is whether the Court on receipt of such notice has jurisdiction to go into the question whether the debt in respect of which a proceeding is pending is a debt as denned in the Bengal Agricultural Debtors Act and, if the Court finds that the debt does not come within the definition, whether in that case the Court can disobey the notice for stay under Section 34. In both cases the creditors are the Naokhali Nath Bank Limited, but the judgment-debtors are different. In the reference case, the creditors instituted the suit on 3rd March 1938. Thereafter, a notice under Section 34, Bengal Agricultural Debtors Act, was received and in pursuance thereof proceedings were stayed. The plaintiff then filed an application for vacating the stay order. It appears that by an order of the Government of India dated 9th December 1937 which was published in the Gazette on 11th December 1937, the Noakhali Nath Bank Limited, was included in Schedule 2 to the Reserve Bank of India Act. So, the contention is that the debt in this case comes within the exception mentioned in Sub-Clause (vi), Clause (8) of Section 2 of the Act. The learned Munsif who has made the reference has formulated the question thus:

If the debt in question is a protected one being a liability to a Bank included in the Reserve Bank Act Schedule the question is whether any Debt Settlement Board has any jurisdiction to entertain any application regarding it. And the further question is whether when a Debt Settlement Board takes cognizance of a debtor's liability to a Bank of the requisite description, the Civil Court is competent to ignore it altogether on the ground that the notice issued by the Debt Settlement Board is perfectly ultra vires.

2. The learned Munsif in his letter of reference has taken the trouble to give a useful summary of the relevant cases already decided by this Court. He himself is of opinion that the Court cannot refuse to stay the proceeding after receipt of the notice under Section 34 and that the creditors must take their objection to the Debt Settlement Board. In some of the reported cases, this Court has pointed out that the Act has set up its own tribunal and has laid down the principle that where the Act has expressly provided that certain matters are to be decided by that tribunal, the Civil Court must refrain from going into those matters, but where there is no express provision in respect of the tribunal under the Act the ordinary Court must act in the exercise of its powers. Following this principle it has been pointed out in cases under Section 34 of the Act that it is for the Court to decide whether there is a proceeding pending before it and whether that proceeding is in respect of a debt which is the subject-matter of an application under Section 8 or a statement under Sub-section (1) of Section 13, as intimated in the notice : see Form 15 prescribed by Rule 73. Thus it has been held that if an execution sale has already taken place the debt is wiped out from the proceeding and the notice under Section 34 cannot operate, for there is nothing to stay. The Act defines what is a 'debt' under the Act and what is a 'debtor.' It does not include all kinds of debt but there are certain exceptions as mentioned in Clause (8) of Section 2. The definition of 'debtor' is narrower because even though there may be a 'debt' as defined in Clause (8), the person who is liable for that 'debt' may not be a 'debtor' within the meaning of Clause (9) of Section 2. Who is to decide the question whether there is a debt and whether the person who is liable for that debt is a debtor within the meaning of the Act. This is provided for in Sections 18 and 2 0rder It will be seen that the relevant terms of the two Sections are somewhat different. Section 18 (1) runs thus:

If there is any doubt or dispute as to the existence or amount of any debt, the Board shall decide whether the debt exists and determine its amount:

Provided that a decree of a Civil Court relating to a debt shall be conclusive evidence as to the existence and amount of the debt as between the parties to the decree.

3. Section 20 runs thus:

If any question arises in connexion with proceedings before a Board under this Act, whether a person is a debtor or not, the Board shall decide the matter.

4. We are not here concerned with the question regarding a debtor. We are here concerned with the question regarding a debt and so the construction of Section 18 is relevant. Mr. Gupta for the creditor in this Court has contended that the provision in Section 18 assumes that the debt is one which comes under the definition of debt as laid down in Clause (8) of Section 2 and on that assumption the only question which the Board is to go into is whether that debt is nil and, if it is not nil, what is the amount of it. I think this contention is correct and it is confirmed by the provision since the decree of the Civil Court which concludes the question before the Board surely does not decide the point whether the debt is one under the Act or not. This is also confirmed by Sub-sections (2), (3) and (4) of Section 18 which deal with the question of the amount. In this connexion, see also Section 36, Clause (a). It is noteworthy that dismissal of the applications by the Board is provided for by Section 17 which expressly lays down the grounds upon which dismissal may be made and these grounds do not specifically include the ground of jurisdiction. This is quite consistent with the fact that the Act creates a special jurisdiction and the procedure laid down in proceedings under the Act assumes that the matter dealt with is one which comes within the four corners of the definition of the terms 'debt' and debtor.' Section 8, for instance, which starts with the application, lays down that the application is to be by a 'debtor' for the settlement of his 'debt.' Thereafter the subsequent proceedings as provided for in the Act assume that the party before the> Board is a 'debtor' and the matter dealt with in the application is 'debt' as defined in the Act. Where there is no 'debt' as defined in the Act, the Act does not apply. In a recent matter before this Court we have already held that Section 34 does not apply to the case of persons who are not applicants before the Board. Upon these considerations, I am of opinion that it is for the Court on receipt of notice under Section 34 to decide the question, not only that there is a proceeding pending before it, but also that the subject-matter of that proceeding is a debt as defined in the Act. If the Court finds it is not such a debt, then the notice under Section 34 cannot operate so as to stay the proceedings in the Court. In my judgment therefore the point referred by the learned Munsif should be decided thus. The Civil Court after receipt of notice under Section 34, Bengal Agricultural Debtors Act, has jurisdiction to enter into the question whether the debt, in respect of which the proceeding is pending before it, is a debt within the meaning of Clause (8) of Section 2 and if it finds that it does not come within that definition, it should not stay proceedings in pursuance of the notice.

5. This point also arises in Civil Revision Case No. 937 of 1938 and the answer must be the same. There is however a further point which arises in that case. The petitioner in that case filed an application under the Bengal Agricultural Debtors Act. on 26th September 1937. The decree-holder Bank started execution in Execution Case No. 22 of 1938 on 3rd February 1938. A notice under Section 34 of the Act was issued on 8th April 1938 and served on the same day on the Subordinate Judge. As mentioned already the Bank was included in the schedule of the Reserve Bank of India on 9th December 1937. The Subordinate Judge by his order dated 11th April 1938 decided that the notice of stay under Section 34 should be disregarded and execution should proceed. From these facts, the second point raised in the revision case is whether the Noakhali Nath Bank Limited, having been included in the Schedule subsequent to the-filing of the application before the Board, can get protection under Sub-Clause (vi) of Clause (8) of Section 2. It is contended for the debtor in this case that, since at the time of the application to the Board the Nath Bank was not included in the Schedule of the Reserve Bank, it cannot claim that its debt should be protected. The answer to that turns on the question whether the debt must be a protected one at the time of the application to the Board or at the time of the stay order. It seems to me that only the latter point of time is material. This is in accordance with Section 34 and consistent with my answer on the first point, since it is for the Court to decide on receipt of the notice whether the subject - matter of the application pending before it is a debt within the meaning of the Act. That being so, if at the time of the notice the debt is not a debt as defined in the Act, the notice has no force as against the Court. In that view, I think, that in this case the Court may disregard the notice to stay the proceeding under Section 34. The result is that the order as made by the Subordinate Judge on 11th April 1938 must be upheld. A copy of the judgment should be transmitted to the Court of the Second Munsif, Noakhali, and such Court shall proceed to dispose of the case in conformity 'with the decision of this Court. The rule stands discharged. There will be no order for costs.

B.K. Mukherjea, J.

6. I agree with my learned brother in the decision which he has arrived at both in the reference as well as in the revision case. The reference has 'been made by the Munsif Second Court, Noakhali, under Order 46, Rule 1, Civil P.C., and it is in connexion with Small Cause Court Suit No. 49 of 1938 of that Court. The suit was commenced by the plaintiff Bank against the defendant, one Fazlul Karim for recovery of a sum of Rs. 245 due as principal and interest upon a note of hand executed by the defendant in favour of the plaintiff. The suit was instituted on 3rd March 1938 and on 15th March following a notice under Section 34, Bengal Agricultural Debtors Act, was received by the 'Court, requesting it to stay the suit. The Munsif stayed the suit and on 26th March 1938 the plaintiff made an application for vacating the order of stay on the ground that the notice was wholly without jurisdiction, inasmuch as the plaintiff Bank being a scheduled Bank the money due to it was not a debt under Section 2, Clause (8), Sub.clause (vi), Bengal Agricultural Debtors Act, and consequently the Debt Settlement Board was incompetent to entertain any application for the settlement of such a debt. The point on which the learned Munsif entertained a reasonable doubt and which is referred to us for our opinion is, as to whether the Civil Court on receipt of a notice under Section 34, Bengal Agricultural Debtors Act, was competent to investigate the character of the liability in question, upon a prayer of the decree-holder for ignoring the notice on the ground that the debt was not a debt within the meaning of the Act.

7. I agree with 'my learned brother that the question formulated by the Munsif must be answered in the affirmative. The Bengal Agricultural Debtors Act is undoubtedly a special Act which confers special jurisdiction upon the tribunal set up by it, to deal with certain specified cases and it lays down new remedies and new procedure. The jurisdiction that the Debt Settlement Board exercises within the limits of its authority must be deemed to be exclusive and cannot concurrently be exercised by the Civil Court. This is apparent from the whole scheme and structure of the Act and particularly from Sections 33 to 36 which are intended to stay the hand of the Civil Court or to render its orders and decisions nugatory when they come into conflict with anything which is done by the Board under the provisions of the Statute. The Board however can exercise its jurisdiction only in certain limited and special Cases which are laid down in the Act itself. The intention of the Act, as we gather from the Preamble, is to give relief to a particular class of debtors only and the expressions 'debt' and 'debtor', as defined in the Act, have been used in a rather restricted and limited sense. Certain class of liabilities which would ordinarily come with in the meaning of the word 'debt' are specifically excluded from the scope of the Act and even when a liability is a debt, the person saddled with it is not necessarily a debtor. In order to be a debtor and to have the requisite competency to invoke the provisions of the Act, a person must fulfil certain requirements which are enunciated in Section 2, Clause (9) of the Act. It is a 'debtor' thus defined who can present an application for settlement of his debt under Section 8 of the Act. It seems therefore that the Act does not come into operation at all when there is no debt within the meaning of the Act, and the Debt Settlement Board cannot also exercise its functions in the matter of settlement of debts unless the applicant before it is a debtor as defined in the Statute. The question is whether the Board itself can decide as to whether the particular liability is a debt or the applicant before it is a debtor which would entitle it to exercise its jurisdiction under the Act. Ordinarily when a tribunal exercises a subordinate or special jurisdiction the question whether the condition essential to give it jurisdiction is present or not is left to the ordinary Courts of the land. I agree however with Ameer Ali J. in holding that there is no inherent obstacles to a Civil Court being vested with exclusive and final powers in the matter of determining the limits of its own authority : vide Baijnath Tamakuwalla v. Tormull : AIR1938Cal455 . The question therefore narrows down to this, as to how far the Legislature either expressly or by implication has endowed the Debt Settlement Board with authority to determine the matters which are necessary to enable it to exercise its powers under the Act.

8. As I have said above, the proceeding is initiated before the Board by an application for settlement of debt under Section 8, Bengal Agricultural Debtors Act, and the application must be made by a debtor, and unless the debtor has already made the application, by any of his creditors. Sections 10 and 11 lay down the form of the application and the statement it should contain. The Sections that follow set out the procedure that is to be adopted by the Board in disposing of the application and unless the application is dismissed summarily under Section 17 of the Act, notices are to be served on all persons named in the petition and the Board should proceed to settle the debt in the manner laid down in the Act. Section 20 then lays down that if any question arises in connexion with a proceeding before the Board under this Act whether a person is debtor or not the Board shall decide the matter. There is no ambiguity with regard to the provision of this Section and in my opinion it is established beyond doubt that the Board is given exclusive jurisdiction to decide as to whether or not a person is a debtor within the meaning of the Act and is competent to make an application under |S. 8 of the Act. The decision of the Board in this matter can be revised only by the appellate tribunal that is constituted under Section 40 of this Act and the Civil Court cannot exercise any concurrent jurisdiction in this matter. This is well established by a series of cases in this Court and reference may be made only to the cases in Harish Chandra Pal v. Chandra Nath Saha : AIR1938Cal369 , Soilabala Dasjaya v. Nityananda Sarkar : AIR1938Cal375 and Baijnath Tamakuwalla v. Tormull : AIR1938Cal455 . The question now is as to whether the Board is also given authority by the Statute to decide the question as to whether a liability is a debt at all within the meaning of the Act. The answer to this question, in my opinion must, be in the negative. Stress is laid in this connexion on the provision of Section 18 (1) of the Act, the wording of which is as follows:

If there is any doubt or dispute as to the existence or amount of any debt, the Board shall decide whether the debt exists and determine its amount.

9. In my opinion the word 'debt' here has, the same meaning that is given to it by Section 2, Clause (8) of the Act, and the enquiry; contemplated by this Section is not one as to whether the liability amounts to a debt at all within the meaning of the Act but whether a debt as defined by the Act and] which is alleged by the party to exist, exists as a fact and if so what is its amount. The word 'existence' cannot have reference to the character of the liability and this is I. clear from the proviso which lays down' that a decree of the Civil Court relating to a debt shall be conclusive evidence as to the existence or amount of the debt as between the parties to the decree. It is obvious that the Civil Court cannot say anything as to whether the liability of the judgment-debtor is a debt within the meaning of the Act or not. This interpretation is also borne out by the marked difference in the language which exists between Sections 18 and 20 of the Act. Under Section 20 if any question arises before the Board as to whether a person is a debtor or not, the Board shall decide the matter. But in Section 18 there are no words to show that the Board has authority to decide as to whether a particular liability amounts to a debt within the meaning of the Act or not. It presupposes that there is an allegation of debt as defined in the Act, the only dispute being with regard to its existence and amount. It is significant to note that Section 17 of the Act which enumerates the circumstances under which an application under Section 8 could be summarily dismissed does not provide for throwing out such an application in limine on the ground that the liability was not a debt.

10. If we now look at Sections 33 and 34 of the Act, we find that they are intended to stay the hands of the Civil Court only when there is a debt included in an application under Section 8, or statement under Section 1 of the Act and a suit or proceeding in respect of the debt is pending before it. It has been held already in a series of cases by this Court, vide the cases in Jagabandhu Gobinda Chandra Probhat Chandra Roy Choudhury Firm v. Bhusai Bepari : AIR1938Cal256 , Ramendra Nath Mandal v. Dhananjoy mondal : AIR1938Cal261 and Jatindra mohan mandal v. Elahi Bux (1938) 42 C.W.N. 530, that when a debt is satisfied by an execution sale and no proceeding in respect of a debt can be said to be pending before a Civil Court, the Court is not bound to stay any proceeding by way of confirmation of sale or otherwise even if this proceeding is expressly mentioned in the notice under Section 34, Bengal Agricultural Debtors Act. I think that it is equally correct to say that the Court can refuse to stay a proceeding or a suit if it is satisfied upon enquiry that there is no proceeding or suit pending before it which is in respect of any debt as defined by the Bengal Agricultural Debtors Act. I think that no anomaly or conflict of jurisdiction is likely to arise as has been suggested by Mr. Hamidul Huq. As I have already held, the Board is not given exclusive jurisdiction to decide as to whether a liability is a debt or not and its assumption of jurisdiction depends upon the fact that there is a debt. A decision of the Civil Court that there is no debt, is, therefore, binding upon the Board which must refuse to proceed in the matter any further.

11. Coming now to the revision case it may be said at the outset that one point that is involved in this rule is identical with that which is raised in the reference that is just disposed of. The rule was obtained by certain judgment-debtors and it is directed against an order of the Subordinate Judge refusing to stay certain execution proceedings on receipt of a notice under Section 34, Bengal Agricultural Debtors Act. The decree-holders are the Noakhali Nath Bank Ltd., and they obtained a decree against the judgment-debtors for a sum of about Rs. 2763 in the year 1935. On 26th September 1937, the judgment-debtors applied for settlement of their debts under Section 8, Bengal Agricultural Debtors Act. On 9th December 1937 when the proceeding was pending before the Debt Settlement Board the plaintiff bank was included in the list of scheduled banes. On 3rd February 1938 the bank started execution proceedings against the judgment-debtors and on 8th April 1938, the executing Court received a notice under Section 34, Bengal Agricultural Debtors Act. The Court refused to stay proceedings on the ground that the decree-holders being a scheduled bank the debt due to them was not a debt within the meaning of the Bengal Agricultural Debtors Act and consequently the Debt Settlement Board had no jurisdiction to entertain an application for settlement of the debt under Section 8 of the Act or to send down a notice under Section 34 of the Act.

12. Two points have been raised on behalf of the petitioners in this rule. In the first place it is said that the Court on receipt of a notice under Section 34 of the Act was bound : to stay the proceeding; and was not competent to enter into and decide the question as to whether the liability was a debt or not. This question has been sufficiently discussed in connexion with the reference mentioned above. In view of the reasons given there the contention of the learned advocate for the petitioner on this point must be overruled. It is contended in the second place that even if the Civil Court had jurisdiction to investigate the matter, it was bound to stay the execution proceedings under Section 34, Bengal Agricultural Debtors Act, inasmuch as the liability was certainly a debt at the time when the application for settlement of debt was made and any subsequent change in the constitution of the bank could not alter its nature.

13. I may say at the outset that I agree with Mr. Gupta in holding that Section 34 is not the proper Section which is applicable to the facts of the present case. It seems to me that Sections 33 and 34 are complementary Sections. Section 33 contemplates a case when an application has been made before the Debt Settlement Board prior to the starting of a suit or proceeding in the Civil Court and this Section imposes a bar upon the Civil Court and precludes it from entertaining any such suit or application. Section 34 on the other hand applies to cases where a suit or proceeding is already started in a Civil Court and this fact is brought to the notice of the Debt Settlement Board when an [application for settlement of debt is made before it. In such cases it is obligatory on the Board to issue notice under Section 34 of the Act. As in this case the execution case was filed long after the application for settlement of debt was presented before the Debt Settlement Board, Section 33 is, in my opinion, the proper Section applicable and not Section 34. But the distinction is not very much material for our present purposes for even if Section 33 is the proper Section to be applied, the Court is nevertheless obliged to stay the proceeding without any notice if it is apprised of the fact and there is no doubt that it was so apprised here that an application for settlement of debt has already been presented to the Board. The question therefore that really arises is, as to whether the Civil Court was bound to stay the proceeding when the debt included in the application before the Board had ceased to be a debt before the suit or proceeding was commenced in the Civil Court. In order that the Civil Court might be called upon to exercise its powers under Section 33 or Section 34 of the Act, it is necessary under both these Sections that there must be a suit or proceeding pending in respect of a debt. If the liability had ceased to be a debt at the time when the suit or proceeding was commenced in the Civil Court, it cannot be said that any suit or proceeding in respect of any debt was pending before such a Court and neither of the Sections obliges the Civil Court to stay its hand under such circumstances. Looked at from this point of view the Civil Court in this case was perfectly justified in refusing to stay the proceeding when the notice was served upon it under Section 34, Bengal Agricultural Debtors Act.

14. It is argued by Mr. Huq that it would lead to anomalous consequences if the material time is taken to be the time when the suit or proceeding is commenced in the Civil Court. It is said that as the liability was a debt at the time of the application under Section 8, the Board had jurisdiction to proceed under the Act. If Sections 33 and 34 which are intended to assist the Board in the work of settling a debt, be held not to be applicable to such cases, there will be a clear conflict of jurisdiction. I do not think that there is really any substance in this contention. If, as I have already held, the liability is not a debt, it does not come within the purview of the Act at all and the Board has no jurisdiction to exercise in this matter. In my opinion if what was a debt before had ceased to be so prior to its being settled by the Board, the latter loses all jurisdiction in respect of the same and cannot proceed any further in the matter. For these reasons, I agree that this rule should be discharged.


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