R.B. Chaudhary Raghuraj Singh Vs.
Murari Lal & Ors  INSC 66 (16 March 1967)
16/03/1967 WANCHOO, K.N.
CITATION: 1967 AIR 1631 1967 SCR (3) 199
U.P. Zamindar's Debt Reduction Act (15 of
1953), ss. 2(m), 3 and--4--"Suit relating to secured debt" and
"decree relating to secured debt", meaning of.
A suit was filed by the respondents, on the
basis of a promissory note executed in their favour by the appellant, and a
decree was passed against the appellant. The decree provided for payment of the
amount due in installments and contained a default clause under which the whole
decree could be executed. The decree also created a charge on certain immovable
properties of the appellant. As default was committed by the appellant, the
respondents sought execution of the decree. The appellant thereupon applied to
the Court which passed the decree, under s. 4 of the U.P.
Zamindar's Debt Reduction Act, 1953 to reduce
the decretal amount. The first Court and the High Court on appeal, dismissed
the appellant's application.
In appeal to this Court,
HELD : Section 4 of the Act did not apply in
the present case, and therefore the decretal amount could not be reduced.
Section 3 of the Act provides for the
reduction of debt at the time of the passing the decree in "a suit ....
relating to secured debt", and s. 4 provides for reduction of the debts
after the passing of "a decree...... relating to a secured debt".
Whether the debt was secured or not is a matter that has to be tested, both for
s. 4 as well as for s. 3, on the date the suit was filed. If on that date the
debt was secured, as per the definition of a secured debt in s. 2(m) of the
Act, by a mortgage or a charge under s. 100 of the Transfer of Property Act, the
suit would be relating to a secured debt and so would be the decree which might
later be passed in that suit. But if on that date, the debt was not secured it
cannot be said that the decree related to a secured debt simply because the
decree created a charge.
The legislature could not have intended, that
the fact that the decree created a charge should result in converting what was
an unsecured debt into a secured debt for the purpose of s. 4. [202 A, C-G; 203
E, H; 204 A-B]
CIVIL APPELLATE JURISDICTION : Civil Appeals
Nos. 952 and 953 of 1964.
Appeals by special leave from the judgment
and order dated July 24, 1961 of the Allahabad High Court in Execution First
Appeal No. 440 of 1953 and Civil Revision No. 1402 of 1953.
C. B. Agarwala and K. P. Gupta, for the
appellant (in both the appeals).
S. P. Sinha and S. Shaukat Hussain, for
respondent No. 1 (in both the appeals).
200 The Judgment of the Court was delivered
by Wanchoo, J. These are two connected appeals by special leave from a common
judgment of the Allahabad High Court. The facts necessary for present purposes
may be briefly indicated. The appellant borrowed some money on a promissory
note from the respondents' predecessors. The suit was filed by the respondents
on the basis of the promissory note and a decree for Rs. 2,71,000/and odd was
passed against the appellant. The decree provided for 20 installments payable
half-yearly. The decree also provided for one or more installments for pendente
lite and future interest beyond the twentieth installment. The first installment
was payable in November 1938 and thereafter each installment was payable on or
before July 31 and December 31 each year. There was also a default clause
providing that in case there were three defaults in the payment of installments,
the whole decree could be executed. Finally the decree created a charge on 1 8
villages belonging to the appellant. It may be added that the charge was
created under s. 3 of the U.P. Agriculturists' Relief Act, No. XXVII of 1934.
The appellant paid the first 17 installments in time. He paid the eighteenth installment
on July 31, 1948 but this was late as by then the 20th installment had also
fallen due. As the 19th and 20th installments as well as pendente lite and
future interest had not been paid the decree was put in execution by the
respondents on April 26, 1951 for recovery of Rs. 49,000/and odd by the sale of
a kothi and an Ahata belonging to the appellant. The decreeholder respondent
also prayed that in case the whole amount was notrealised from the sale of the
above property, zamidari property on which a charge bad been created might be
put to sale.
The appellant raised objections under s. 47
of the Code of Civil Procedure against the execution. He also filed an
application under ss. 4 and 8 of the U.P. Zamindar's Debt Reduction Act, No. XV
of 1963, (hereinafter referred to as the Act). It is unnecessary to refer to
the objections in detail, for in the present appeals we are concerned only with
one point, namely, whether s. 4 of the Act applies to the present case. Under
that section the appellant had applied to the court which passed the decree to
reduce the amount as provided therein. Further in his objection under s. 47 of
the Code of Civil Procedure the appellant claimed the same relief. That is how
there were two proceedings in the first court, one under s. 4 of the Act and
the other an objection under s. 47 of the Code of Civil Procedure. The first
court held that s. 4 of the Act did not apply. In consequence it held that the
amount for which execution had been taken out was not liable to reduction. It
therefore dismissed both the application Linder s. 4 as well as the objection
Linder s. 47 of the Code of Civil Procedure.
There was also a question 201 Of limitation,
but we are not concerned in the present appeals with that question.
This gave rise to two proceedings before the
The appellant went in appeal against the
dismissal of his objection under s. 47 of the Code of Civil Procedure. He also
filed a civil revision against the dismissal of his application under s. 4 of
the Act. The two matters were heard together by the High Court, which held that
s. 4 did not apply and therefore the amount could not be reduced.
The High Court having refused to grant leave
to the appellant, he secured special leave from this Court; and that is how the
matter arises before us.
The Act was passed in 1953 to give relief to
zamindars whose lands had been acquired by the State under the U.P.
Zamindari Abolition and Land Reforms Act, No.
1 of 1951.
Section 2 defines certain terms out of which
it is necessary to refer to the following -.
" (m) 'secured debt' means a debt
secured by mortgage of an estate and other immovable property;
(i) 'mortgage' with its cognate expressions
shall have the meaning assigned to it in the Transfer of Property Act, 1882 and
includes a charge as defined in section 100 of that Act;
(o) 'suit to which this Act applies' means
any suit or proceeding relating to a debt whether secured or otherwise;
(e) 'decree to which this Act applies' means
a decree passed either before or after the commencement of this Act in a suit
to which this Act applies;
(f) 'debt' means an advance in cash or in
kind and includes any transaction which is in substance a debt but does not
include an advance as aforesaid made on or before the first day of July
1952.........." Certain debts are exempt from this definition but we are
not concerned with them in the present appeals.
It will be seen from these definitions that a
decree in a suit based on any debt is a decree to which the Act applies and
such decrees can be of two kinds, namely, (i) those based on a secured debt,
and (ii) those based on an unsecured debt. A secured debt is a debt secured by
a mortgage and includes a debt secured by a charge under s. 100 of the Transfer
of Property Act.
202 Then comes s. 3 which provides for
reduction of debt at the time of passing of decree Sub-section (1) thereof lays
down that " notwithstanding anything in any law, agreement or document, in
any suit to which this Act applies relating to a secured debt, the court shall,
after the amount due has been ascertained, but before passing a decree, proceed
as hereinafter stated." Then follow provisions as to the manner in which
the debt, would be reduced, but we are not concerned with the details there of
Section 3 therefore applies to a case where a decree relating to a secured debt
had not been passed before the Act came into force. In such a case the court
passing the decree has to reduce the amount in the manner provided in that
section. It is however clear that before the court can act under s. 3, it has
to come to the conclusion that the debt in question is a secured debt i.e. a
debt secured by a mortgage or a charge under s. 100 of the Transfer of Property
Act. The mortgage or the charge must be there on the date of the suit and the
suit must be with respect to a secured debt. The date therefore on which the
court has to see whether the debt in the suit before it is a secured debt or
not is the date on which the suit is filed. The High Court seems to be in error
when it held that under the definition of "secured debt" only such
debts as are secured by a mortgage come in and not debts which are secured by a
charge. It seems to have overlooked that part of the definition of the word
"mortgage" which lays down that a mortgage will include a charge as
defined in s. 100 of the Transfer of Property Act. Therefore, even though a
debt may be secured by a charge it will be a secured debt for the purpose of s.
3 provided the charge was there before the date of the suit. We have referred
to s. 3 in some detail because we are of opinion that the interpretation to be
put on s. 3 will have a direct bearing on the interpretation of the words of s.
4 where also the material words are the same as in s. 3.
Section 4 provides for reduction of debts
after passing of decrees, and sub-s. (i) thereof reads thus :
"(1) Notwithstanding anything in the
Code of Civil Procedure, 1908, or any other law-the court which passed a decree
to which this Act applies relating to a secured debt, shall, on the application
either of the decree-holder or judgment-debtor, proceed as hereinafter
stated." Then come provisions as to the reduction of debt; but we are not
concerned with the details thereof.
The question that has been posed before us is
the meaning of the words "a decree...... relating to a secured debt".
The 203 comparable words in S. 3 Are "a suit relating to a secured
debt". As we have already said, so far as S. 3 is concerned it is the date
on which the suit is filed which has to be seen to determine whether the suit
relates to a secured debt as defined in the Act. It has been urged on behalf of
the appellant that S. 4 applies undoubtedly to a case where the debt was a
secured debt at the tithe the, suit was filed.
But it is further urged that in an
application under s. 4, the court may also take into account the fact that
though the debt may not have been a secured debt on the date the suit was filed
in which the decree was passed, the decree having created a charge the debt
becomes secured and the decree relates to a secured debt, the relevant date in
such a case being the date on which the application under s. 4 has been made to
the court. It is said that the words "a decree relating to secured
debt" means a decree which has secured a debt whether the debt was secured
before the suit was filed or not.
We are of opinion that this meaning cannot be
given to the words "a decree relating to a secured debt". We have already
indicated that the comparable words in S. 3 are the same and there the words
"a suit relating to a secured debt" clearly mean a suit which is
based on a debt which was secured before the suit was filed. On the same
reasoning when s. 4 speaks of "a decree relating to a secured debt"
it means a decree passed in a suit which was based on a secured debt as on the
date of the suit. The legislature could not have intended by using these words
in s. 4 that the fact that the decree created a charge should result in
converting what was an unsecured debt into a secured. debt for the purpose of
s. 4. It seems to us that if one were to ask in a case of this kind whether the
decree related to a secured debt or not, the answer would clearly be that the
decree does not relate to a secured debt but to an unsecured debt based on a
promissory note. It is true that the decree itself created a charge but that is
very different from saying that the decree relates to a secured debt. We have
no doubt that if the legislature intended that a decree which relates to an
unsecured debt but which itself creates a charge for any reason would also be
covered by s. 4, it would have used different and appropriate words to convey
that idea. Thus to our mind, as the words "suit relating to a secured
debt" mean a suit relating to a debt which was secured on the date the
suit was filed, a decree relating to secured debt must also mean the same thing
i.e. decree in respect of a debt which was secured when the suit in which the
decree was passed was filed. The mere fact that the decree created a charge for
certain reasons, as in this case, under the U.P. Agriculturists Relief Act, is
no reason for holding that the decree relates to a secured debt. Whether the
debt was secured or otherwise is a matter which in our opinion has to be tested
both for s. 4 as well as for s. 3 on the 204 date the suit is filed. If on that
date the debt was secured, the suit would be relating to a secured debt and so
would be the decree which might later be passed in that suit. But if on the
date of the suit the debt was not secured it cannot be said that the decree
related to a secured debt simply because the decree created a charge for some
reason or other. We are therefore of opinion that the High Court was right in
the view it took that this case was not covered by s. 4 of the Act.
The appeals therefore fail and are hereby
dismissed with costs--one hearing fee.