Rajkumari Kaushalya Devi Vs. Bawa
Pritma Singh & ANR  INSC 83 (20 April 1960)
GUPTA, K.C. DAS
CITATION: 1960 AIR 1030 1960 SCR (3) 570
CITATOR INFO :
R 1964 SC1379 (7)
Mortgage-Whether a "pecuniary liability
"-The Displaced Persons (Debts Adjustment) Act (LXX of 1951), SS. 2 (6),
sub-cls. (a) (b) (c), 13, 15, 16 (5), 17, 21.
The appellant executed two usufructuary
mortgages in favour of the respondents in 1946 with respect to two properties
situated in Ferozepur city and herself took the properties on lease on the same
date. The respondents filed an application under s. 13 of the Displaced Persons
(Debts Adjustment) Act, LXX of 1951, for recovery of the principal sum due and
also the arrears of rent. The appellant contested the application on the
ground, inter alia, that the liability was not a debt under the Act as it was
not a pecuniary liability and that mortgages in relation to properties situated
now in India were not covered by it.
The Tribunal allowed the application and
passed a preliminary decree for sale. The appellant's appeal to the, High Court
and another under the Letters Patent were both dismissed. On appeal by special
Held, that a mortgage debt would create a
pecuniary liability upon the mortgagor and would be covered by the definition
of the word " debt " in s. 2 (6) of the Act.
There is nothing in any provision of the Act
which would cut down the plain meaning of the words "pecuniary liability"
as used in s. 2(6) read with sub-cl. (c) thereof or restrict those wide words
to liability other than that secured by a mortgage.
Under sub-cl. (c) of S. 2(6) a displaced
person to whom a mortgage debt is due from any other person, whether a
displaced person or not, ordinarily residing in the territories to which the
Act extends can take the benefit of this Act.
571 The interest of the prior mortgagee or
the subsequent mortgagee if any would not be affected by a decree passed on an
application under s. 13 of the Act.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 38 of 1960.
Appeal by special leave from the judgment and
order dated October 6, 1958, of the Punjab High Court in Letters Patent Appeal
No. 52 of 1954, arising out of the judgment and order dated June 15, 1954, of
the said High Court in First Appeal from Order No. 149 of 1953.
Y. Kumar, for the appellant.
Bakshi Man Singh and Sardar Singh, for the
1960. April 20. The Judgment of the Court was
delivered by WANCHOO, J.-This is an appeal by special leave against the
judgment of the Punjab High Court. The brief facts necessary for present
purposes are these. The appellant had executed two usufructuary mortgages with
respect to two properties situate in Ferozepore city in favour of the
respondents in 1946. She also took both properties on lease on the same date.
An application was filed by the respondents under s. 13 of the Displaced
Persons (Debts Adjustment) Act, No. LXX of 1951 (hereinafter called the Act),
for recovery of the principal sum due as well as the rent which was said to be
in arrears. The application was resisted by the appellant on various grounds,
one of which was that no such application lay as the liability was not a debt
under the Act. The tribunal negatived the contention of the appellant and
passed a preliminary decree for sale.
Six months' time was allowed to the appellant
to pay the decretal amount, failing which the respondents were at liberty to
get a final decree prepared and bring the properties to sale. The appellant
went in appeal to the High Court but the appeal was dismissed. Then there was a
Letters Patent Appeal, which was also dismissed. The appellant then applied for
and was granted special leave by this Court, and that is how the matter has
come up before us.
The only point for our consideration is
whether the liability created under a mortgage is a debt within 572 the meaning
of s. 2(6) of the Act. The relevant part of that provision runs as follows:"
'Debt' means any pecuniary liability, whether payable presently or in future,
or under a decree or order of civil or revenue court or otherwise, or whether
ascertained or to be ascertained, which (a) in the case of a displaced person
who has left or been displaced from his place of residence in any area now
forming part of West Pakistan, was incurred before he came to reside in any
area, now forming part of India;
(b)in the case of a displaced person who,
before and after the 15th day of August, 1947, has been residing in any area
now forming part of India, was incurred before the said date on the security of
any immovable property situate in the territories now forming part of West
Provided that where any such liability was
incurred on the security of immovable properties situate both in India and in
West Pakistan, the liability shall be so apportioned between the said
properties that the liability in relation to each of the said properties bears
the same proportion to the total amount of the debts as the value of each of
the properties as at the date of the transaction bears to the total value of
the properties furnished as security, and the liability, for the purposes of
this clause, shall be the liability which is relatable to the property in West
(c)is due to a displaced person from any
other person (whether a displaced person or not) ordinarily residing in the
territories to which this Act extends;
x x x x The contention on behalf of the
appellant is that the liability under a mortgage is not a pecuniary liability
and therefore s. 2(6) will not apply to a mortgage debt. It is further urged
that the scheme of the Act shows that mortgages in relation to properties
situate in what is now India are not covered by the Act at all.
573 Debt is defined in s. 2(6) as meaning any
pecuniary liability and has been restricted by the three sub clauses in the
sub-section with reference to the person who might be owing the debt or to whom
the debt might be owed. Sub-cls. (a) and (b) refer to the debts owed by a
displaced person as defined in the Act while sub-cl. (c) refers to a debt due
to a displaced person. Sub-cl. (c) has therefore to be taken independently of
sub-cls. (a) and (b), for it refers to a creditor who is a displaced person
while the other two sub clauses refer to a debtor who is a displaced person.
Under subcl. (c) a displaced person who is a creditor can recover the debt due
to him from any other person, whether a displaced person or not, who is
residing in the territories to which the Act extends. The main contention of the
appellant in this connection is that a mortgage debt is not a pecuniary
liability and therefore does not fall within the definition of debt at all. We
are of opinion that there is no force in this contention. The words "
pecuniary liability " will cover any liability which is of a monetary
nature. Now the definition of a mortgage in s. 58 of the Transfer of Property
Act, No. 4 of 1882, shows that though it is the transfer of an interest in
specific immovable property, the purpose of the transfer is to secure the
payment of money advanced or to be advanced by way of loan or to secure an
existing or future debt or the performance of an engagement which may give rise
to a pecuniary liability. The money advanced by way of loan, for example, which
is secured by a mortgage, obviously creates a pecuniary liability. It is true
that a mortgage in addition to creating the pecuniary liability also transfers
interest in the specific immovable property to secure that liability ; none the
less the loan or debt to secure which the mortgage is created will remain a
pecuniary liability of the person creating the mortgage. Therefore a mortgage
debt would create a pecuniary liability upon the mortgagor and would be covered
by the definition of the word "debt" in s. 2(6). We may in this
connection refer to the Displaced Persons (Institution of Suits) Act, No. XLVII
of 1948, which has been practically repealed by the 75 574 Act. In that law,
suits relating to immovable property were specially excepted under s. 4, but
there is no such provision in the Act. Again s. 6 of the Displaced Persons
(Legal Proceedings) Act, No. XXV of 1949, which has also been repealed by the
Act mentions decrees or orders for payment of money while in s. 15 of the Act
which deals with the same matter those words are omitted and the words "
proceedings in respect of any debt " are used instead.
There can be no doubt in consequence that the
Act is a comprehensive law dealing with all kinds of pecuniary liability. We
are therefore of opinion that s. 2(6) clearly includes a mortgage debt and
under sub-el. (c) thereof a displaced person to whom such a debt is due from
any other person, whether a displaced person or not, ordinarily residing in the
territories to which the Act extends can take the benefit of this Act.
Let us now see whether there is anything in
the scheme of the Act which in any way militates against the plain words of s.
2(6). Learned counsel for the appellant in the first place refers to sub-el.
(b) of s. 2 (6) in this connection and points out that that sub clause
specifically deals with mortgage debts secured on any immovable property
situate in the territories forming part of West Pakistan. It is urged that
there was a specific provision with respect to mortgage debts in relation to
immovable properties in West Pakistan and that if it were intended that
mortgage of immovable properties situate in what is now India would also be
dealt with under the Act there would have been a similar specific provision in
the Act. Further it is pointed out that the proviso to subel. (b) to s. 2(6)
provides for apportioning the mortgage debt in cases where the property on
which the debt is secured is both in West Pakistan and in India and restricts
the application of sub-cl. (b) only to that part of the debt which was secured
on the property in West Pakistan and thus excludes from the operation of
sub-el. (b) that part of the debt which is secured on property in India.
That is undoubtedly so. The reason however
for this special provision is to be found in the later provision contained in
s. 16 by which a charge was created on compensation to be given to a 575
displaced person with respect to the mortgage debt secured on immovable
property in Pakistan or in the alternative a charge was created on property
given in exchange for the property in Pakistan on which the debt was charged.
The special provision there-,. fore in sub-cl. (b) of s. 2(6) would not in
these circumstances cut down the plain meaning of the words used in sub-cl. (c)
or restrict the wide words " pecuniary liability " to liability other
than that secured by a mortgage. Incidentally we may mention that subcl. (b)
itself shows that pecuniary liability includes a mortgage debt, for it shows
that any liability which was incurred on the security of any immovable property
situate in West Pakistan would be a debt within the meaning of s. 2 (6) and
therefore a pecuniary liability.
It is next urged that when the legislature
excepted the property in India which was encumbered from being dealt with under
sub-el. (b) so far as displaced debtors were concerned, there is no reason why
it should allow the displaced creditors to proceed under the Act with respect
to mortgage debts. This argument, however, overlooks the provision in sub-cl.
(a) under which a displaced debtor can take the benefit of the Act, once it is
held that the words " pecuniary liability " also include mortgage
debt. As we have said before sub-cl. (b) was dealing with a special situation
which was worked out in s. 16 of the Act and the general right of a displaced
debtor to take advantage of the Act is to be found in sub-cl. (a) and that sub
clause will cover a mortgage debt as it is a pecuniary liability.
Reliance was then placed on s. 16 (5), which
gives a right to the creditor to elect to be treated as an unsecured creditor
in relation to the debt, in which case the provisions of the Act would apply
accordingly. It was urged that this sub-section requires that a creditor must
make an election before he can take the benefit of this Act. We are of opinion
that this argument has no force, for sub-s. (5) of s. 16 only deals with a
situation which arises where the mortgage, charge or lien was on immovable
property situate in West Pakistan. It does not deal at all with cases 576 where
the mortgage, charge or lien is on immovable property situate outside West
Reference was then made to s. 17 of the Act.
It deals with debts secured on movable properties. That section is again
concerned with displaced debtors and provides how equities will be worked out
between a displaced debtor and his creditor with respect to debts secured on
We see nothing in this section which can cut
down the amplitude of the words used in s. 2 (6)(c).
Reference was then made to s. 21 which
provides for scaling down debts. That is however a general provision dealing
with debts of all kinds and there is nothing in that section which shows that
the word " debt " as defined in s. 2(6) refers only to claims for
money and does not include a mortgage debt.
Thus we see nothing in any provision of the
Act or in its scheme which would cut down the meaning we have given to the
words " pecuniary liability " as used in s. 2 (6) read with sub-cl.
It was also urged that if mortgage debts on
property situate in India were covered by the Act, there is no machinery (like
s. 16) for enforcement of the creditors' rights in respect thereof. This is not
correct. Section 10 provides for the claim of a displaced creditor against a
displaced debtor and s. 13 provides for the claim of a displaced creditor
against any other person who is not a displaced debtor. Section 11 then
provides how an application under s. 10 A-ill be dealt with and under sub-s.
(2) thereof a decree can be passed under certain circumstances against the
displaced debtor. Similarly under s. 14 (2) a tribunal can pass such decree in
relation to an application under s. 13 as it thinks fit. These decrees are
executable under s. 28 of the Act. Therefore even when the debt is a mortgage
debt there is provision in the Act for enforcement of that debt, though of
course this provision is different from the provision contained in s. 16, which
was dealing with the special situation of properties under ,mortgage situate in
We may also refer to s. 3 of the Act which
lays down that the provisions of the Act and of the Rules 577 and Orders made
there under shall have effect notwithstanding anything inconsistent therewith
contained in any other law for the time being in force. The effect of this overriding
provision is to make a suit like the present maintainable in spite of the
provisions applying to such suits in other laws.
The last contention on behalf of the
appellant is that if s. 2 (6) (c) empowers a displaced creditor to make an
application under s. 13 even with respect to a mortgage debt, there will be
hardship to prior mortgagees or subsequent mortgagees inasmuch as these persons
cannot be dealt with under the Act. Section 13 empowers a displaced person
claiming a debt from any other person who is not a displaced person to apply
within one year of the coming into force of the Act in any local area to the
tribunal having jurisdiction in the matter. The provision is obviously enacted
to give relief for a short period only. Section 25 of the Act provides for the
regulation of all proceedings under the Act by the provisions contained in the
Code of Civil Procedure save as expressly provided in the Act or in any rules
made there under. But assuming that in spite of this provision, 0. XXXIV, r. 1
of the Code of Civil Procedure will not apply to proceedings under the Act and
all those having an interest in the mortgage security cannot be joined as
parties as required by 0. XXXIV, r. 1, the interest of prior or puisne
mortgagees cannot in any case be affected by the decree passed under the Act.
The Explanation to 0. XXXIV, r. 1, shows that a prior mortgagee need not be
made a party to a suit for sale by a puisne mortgagee. So far therefore as a
prior mortgagee is concerned, his rights will not be affected by the decree
passed under s. 13 of the Act, just as his rights are not affected by the
decree passed under 0. XXXIV. So far as mortgagees subsequent to the displaced
creditor who applies under s. 13 are concerned, their interests will also not
be jeopardized by the decree which may be passed under s. 13. Even under
0. XXXIV, which requires puisne or subsequent
mortgagees to be joined as parties in a suit for sale, a decree obtained in a
suit to which the subsequent mortgagee was not joined as a party does not
affect his rights and the 578 proceedings in such a suit are not binding on him
so as to affect his rights under the second mortgage. He can thus follow the
property by suing his mortgagor, even though it may have been sold under the
decree of an earlier mortgagee in a suit to which he was not a party.
Therefore, the interest of the prior mortgagee or the subsequent mortgagee, if
any, would not be affected by a decree passed on an application under s. 13 and
there is no reason therefore to cut down the plain meaning of the words used in
s. 2 (6) (c) on the ground that the proceedings under the Act would
prejudicially affect the rights of prior or puisne mortgagees.
There is therefore no force in this appeal
and it is hereby dismissed with costs.