Joshi Girjadharji & ANR Vs.
Lachmanji Panth & Ors  INSC 24 (25 April 1952)
DAS, SUDHI RANJAN SASTRI, M. PATANJALI (CJ)
FAZAL ALI, SAIYID MUKHERJEA, B.K.
CITATION: 1952 AIR 218 1952 SCR 645
U.P. Debt Redemption Act (XIII of 1940), ss.
2 (9), 21"Loan", "Suit to which Act applies"., meanings
of--Decree on mortgage--Person who is not agriculturist when advance is
made-Whether entitled to relief.
A mortgage was executed by several persons on
the 28th July, 1931. The term of the mortgage, namely six years, expired in
July 1937, the mortgagees instituted a suit in May 1938 and a decree was passed
in March 1939. An application for relief under the U.P. Debt Redemption Act
(XIII of 1940) was made on 11th April, 1942, and this application was resisted
on the ground that S, one of the mortgagors, had been assessed to income-tax
and was therefore not an agriculturist, and the suit was not consequently
"a suit to which the Act applied." The evidence showed that S was
earning a monthly salary of Rs. 90 and that from February 1932 he had been
assessed to income-tax till the year 1936.
The High Court held, relying on the Full
Bench ruling in Ketki Kunwar v. Ram Saroop (I.L.R. 1943 All. 35), that under
sec. 21 of the Act the mortgage money could be recovered only from the
mortgaged property and not personally and that the proviso to sec. 2 (9) of the
Act had therefore no application and the question whether S was an
agriculturist on the date of the mortgage was immaterial. As S was admittedly
an agriculturist on the date of the suit, the High Court held that the judgment
debtors were entitled to relief under the Act. On appeal Held, that, assuming
that the proviso to sec. 2 (9) applied and that in order to be a "loan"
within the meaning of the Act it must be shown that the advance was made to one
who at the date of the advance was an agriculturist, S was not an agriculturist
on the 28th. July, 1931, as the Indian Finance (Supplementary and Extending)Act
of 1931 which reduced the taxable minimum from Rs. 2,000 to Rs. 1,000 was
passed only in November 1931 and income-tax was first deducted from his salary
only in February, 1932.
Quaere: Whether the Full Bench decision in
Ketki Kuwar v. Ram Saroop (I.L.R. 1943 All. 35) is correct.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 64 of 1951. On appeal from the Judgment and 646 Decree dated the 16th
April. 1948, of the High Court of Judicature at Allahabad (Malik C.J. and
Prasad J.) in First Appeal No 358 of 1943 arising out of the ent and Decree
dated the 22nd February, 1943, Judgment and Decree dated the 22nd February,
1943 of the Court of the Additional Civil Judge Benares, in Original Suit No.
33 of 1938.
Gopi Nath Kunzru (K. B, Asthana, with him)
Krishna Shankar for the respondents.
1952. April 25. The judgment of the Court was
delivered by DAs J. This appeal arises out of an application by five out of ten
judgment-debtors made under section 8 of the U.P. Debt Redemption Act (No. of
1940) for ascertaining the amount due by them in accordance with the provisions
of sections 9 and 10 of that Act and for amending the decree passed on March
31, 1939, by the Additional Civil Judge, Banaras, in O.S. No. 33 of 1938. The
facts material for the purposes of this appeal may now be briefly stated.
By a mortgage deed executed on June 22, 1922,
Madho Ram, Sita Ram, Jai Ram aud Lakshman, all sons of Pandit Raja Ram Pant
Sess, mortgaged cer-tain immovable properties in favour of Damodarji, son of
Kamta Nathji, owner of the Kothi Joshi Shivanath Vishwanath for the due
repayment of the sum of Rs. 8,000 advanced on that date by a cheque together
with interest thereon at 12 annas per cent per mensem with quarterly rests. On July 28, 1931, the said mortgagors and their sons executed a mortgage over the same
properties in favour of Kothi Kamta Nathji Vishwanathji for the due repayment
of Rs. 3,000 with interest thereon at twelve annas per cent per mensem with
quarterly rests. It is recited in the deed that the sum of Rs. 8,000 was
advanced on this date by a cheque and that the amount was utilised in paying up
the amount due under the earlier 647 mortgage deed to Damodarji proprietor of
Kothi Shivanath Vishwanath.
In 1935 the U.P. Agriculturists' Relief Act
(No. XXVII of 1934) came into force. On May 1938, Girjadharji, son of
Damodarji, and Murlidharji, minor son of Gangadharji who was another son of
Damodarji, filed suit No. 33 of 1938 in the Court of the Additional Civil
Judge, Banaras, against the mortgagors and their sons for the recovery Rs.
9,477-2-0 due as principal and interest up to date of suit and for further
interest under the mortgage deed of July 28, 1931.
It appears from the judgment of the High
Court under' appeal that in their written statement the mortgagors claimed the
benefit of the U.P. Agriculturists' Relief Act (No. XXVII of 1934). The
plaintiffs contended that the mortgagors were members of a joint Hindu family
and as Sita Ram one of the mortgagors was assessed to income-tax the mortgagors
were not agriculturists as defined in section 2 (2) of that Act and, therefore,
could not claim the benefit conferred on the agriculturists by that Act. The
trial Court, by its judgment dated March 31, 1939, held that though Sita Ram
was assessed to incometax for the year 1931-32, the amount of such incometax
did not exceed the amount of cess payable on the land held by him and
consequently the second proviso to section 2 (2) did not apply to him and he
was, therefore, an agriculturist and as the other mortgagors were also agriculturists
all of them were entitled to the benefits under the Act. Accordingly, after
scaling down the interest, a sum of Rs. 9,497-14-1 was declared to be due for
principal, interest and costs up to March 31, 1939, and a preliminary mortgage
decree for sale was passed in that suit.
In 1940 the U.P. Debt Redemption Act (No.
XIII of 1940) came into force. On April 11, 1942, five of the judgmentdebtors made an application under section 8 of this Act before the Additional Civil
Judge, Banaras, who passed the decree. In the petition it was stated that the
debt was actually advanced in 1922, that the petitioners were agriculturists
within 648 the meaning of Act XIII of 1940, that the decreeholders can only get
interest at the reduced rate of Rs. 4-8-0 per cent. per annum from 1922, and
that after adjustment of accounts nothing will be found ,outstanding against
the petitioners. The prayer was that an account of the moneylending business be
made from the beginning of 1922 and the decree in suit No. 33 of 1938 be
modified by reducing the amount due thereunder. The decree-holders filed a
petition of objection asserting, inter alia, that the petitioners were by no
means agriculturists, that they and the respondents Nos. 3 to 7 were members of
a joint Hindu family at the time of the execution of the mortgage deed of July
28, 1931, that Sita Ram used to pay income-tax at the date of the mortgage in
suit and paid even at the time of the application, that all the members of the
petitioners' family were not agriculturists within the meaning of the Act and
were, therefore, not entitled to the benefits thereof, that the debt advanced
under the mortgage deed of July 28, 1931, was not a "loan" as defined
in the Act and, therefore, the Act did not apply. It will be noticed that
although the judgment-debtors-applicants specifically prayed for the accounts
being taken from 1922, when the loan was said to have been actually advanced,
the decree-holders, in their petition of objection, did not contest that
At the hearing of the application before the
Additional Civil Judge, the learned pleader for the decree-holders admitted
that with the exception of Sita Ram the remaining judgment-debtors were
agriculturists under Act No. XIII of 1940 but that as Sita Ram was a party to
the mortgage in suit they were not entitled to the benefit of the Act. Two
witnesses, namely Suraj Mani Tripathi and Sita Ram, were examined on behalf of
the judgment-debtors applicants. Sita Ram stated that since 1907 he had been a
teacher in Harish Chandra Intermediate College of Banaras, that in 1930 his
salary was Rs. 90 per month, that since February 1932 to 1936 he paid incometax
and that after that he paid no income-tax.
649 His evidence was corroborated by Suraj
Mani Tripathi who was the Accountant of the College from 1930 to 1042.
Referring to the College Acquittance Roll Suraj Mani Tripathi deposed that the
pay of Sita Ram was Rs. 90 per month throughout 1930, that in 1930 no
income-tax was levied, that in 1931 also his salary was Rs. 90 per month and
that no income-tax was deducted in 1931 too, that the first deduction of income-tax
from his salary was made in February 1932. No rebutting evidence was adduced by
the decree-holders on the hearing of the application under section 8 of the Act
of 1940. The income-tax assessment form filed during the trial of the mortgage
suit and marked as exhibits is dated February 9, 1933, and shows that on that
date Sita Ram was assessed at Rs. 1-14-0 as income-tax on Rs. 180 for the year
By his judgment delivered on February 22,
1943, the Additional Civil Judge found that Sita Ram was not assessed to
income-tax either at the date of the application under section 8 or at the date
of the mortgage of 1931 and, therefore, held that the applicants were
agriculturists and that the case related to a loan as defined in Act XIII of
He then went on to discuss the question
whether the account should be reopened from June 2, 1922, when the earlier
mortgage was executed or from July 28, 1931, when the mortgage in suit was
executed. The decree-holders who did not adduce any evidence on the hearing of
the application evidently relied on the evidence adduced in suit No. 33 of
1938. After discussing that evidence the learned Judge came to the conclusion
that so far as the judgment-debtors were concerned the mortgagees in the two
mortgages were one and the same. He adversely commented on the non-production
of the books of account by the decree-holders. Re-opening the accounts from
June 2, 1922, the learned Judge concluded that the whole of the principal and
interest payable according to the Act had been fully discharged and that
nothing remained due by the judgmentdebtors under the decree in suit No. 33 of
1938. He 650 accordingly declared that the decree stood discharged in full and
directed a note to that effect to be made in the Register of Suits.
The decree-holders having appealed to the
High Court, a Division Bench (B. Mallik, C.J. and'Bind Basni Prasad J.) by its
judgment delivered on April 16, 1948, held that the question whether Sita Ram
was or was not an agriculturist on July 28, 1931, was not material as it was
not denied that all the judgment, debtors were agriculturists on the date of
suit. Reference was made by the learned Judges to section 21 and it was stated
that by reason of that section the mortgage amount could be recovered only from
the mortgaged property and not personally from the mortgagors and accordingly
the proviso to the definition of "loan" in section 2 (9) of the Act
had no application and it was, therefore, not necessary to show that the
borrowers were agriculturists at the date when the advance was made and that as
the judgment-debtors were admittedly agriculturists at the date of the suit,
the case was fully covered by the Full Bench decision of that High Court in
Ketki Kunwar v. Ram Saroop (1). The High Court, therefore, dismissed the appeal
on this point alone. The question whether the account should be reopened from
1922 or from 1931 was not raised by the decree-holders at all. ]he
decree-holders have now come up on appeal before us on a certificate granted by
the High Court under section 110 of the Code of Civil Procedure.
Sri G.N. Kunzru appearing in support of this
appeal has strongly questioned the correctness of the Full Bench decision
relied on by the High Court and the interpretation put by the High Court on
section 21 and section 2(9) of the Act.
As we think this appeal can be decided on a
simpler ground we do not consider it necessary, on this occasion, to express
any opinion on either of these questions which are by no means free from doubt.
(1) I.L.R.  All. 35; A.I.R. 1942 All.
390; (1942) A. L.J. 578.
651 The present application has been made
under section 8 of the U. P. Debt Redemption Act, 1940, subsection (1) of
which, omitting the proviso, runs as' follows:-"Notwithstanding the
provisions of any decree, or of any law for the time being in force, an
agriculturist or a workman liable to pay the amount due under a decree to which
this Act applies passed before the commencement of this Act, may apply to the
Civil Court which passed the decree or to which the execution of the decree has
been transferred, for the amendment of the decree by reduction according to the
provisions of this Act of the amount due under it, and on receipt of such
application the Court shall, after notice to the opposite party, calculate the
amount due from the applicant in accordance with the provisions of sections 9
and 10 and shall amend the decree accordingly." It is clear from the
wording of the sub-section that there are three pre-requisites for exercise of
the right conferred by it, namely, (1) that the application must be by an
agriculturist and (2)that that agriculturist must be liable to pay the amount
due under a decree to which this Act applies and (3) that that decree was
passed before the commencement of this Act. That the judgment-debtors applicants
were agriculturists at the date when suit No. 33 of 1938 was filed and also in
1942 when the application under section 8 was made is conceded by Sri G.N.
Kunzru. The decree in that suit was passed on March 31, 1939, which was well
before the commencement of the Act. The only question that remains is whether
the amount was due under a decree to which the Act applies. Under section 2(6)
of the Act the phrase "decree to which this Act applies" means a
decree passed before or after the commencement of this Act in a suit to which
this Act applies. Section 2(17) defines the phrase "suit to which this Act
applies" as meaning any suit or proceeding relating to a loan. The
question then, arises: was the decree under which the judgment-debtors
applicants are liable passed in a suit 652 relating to a loan ? Loan is thus
defined in section 2(9):
'Loan' means an advance in cash or kind made
before the first day of June, 1940, recoverable from an agriculturist or a
workman or from any such person and other persons jointly or from the property
of an agriculturist or workman and includes any transaction which in substance
amounts to such advance, but does not include an advance the liability for the
repayment of which has, by a contract with the borrower or his heir or
successor or by sale in execution of a decree been transferred to another
person or an advance by the Central or Provincial Government to make advances
or by a co-operative society or by a schedule bank:
Provided that an advance recoverable from an
agriculturist or from an agriculturist and other persons jointly shall not be
deemed to be a loan for the purposes of this Act unless such advance was made
to an agriculturist or to an agriculturist and other persons jointly." In
order to be a "loan" the advance must be recoverable from an
agriculturist. The word "recoverable" seems, prima facie, to indicate
that the crucial point of time is when the advance becomes recover-able, i.e.,
when the amount advanced becomes or falls due. Under the mortgage of 1931 the
date of redemption was 6 years from the date of execution, i.e., in July 1937.
Sri Kunzru concedes that Sita Ram was not assessed to income-tax since 1936.
Assuming, but without deciding, that the proviso to section 2 (9) applies and
that in order to be a "loan" it must be shown that the advance was
made to one who, at the date of the advance, was an agriculturist as defined in
section 2(3) of the Act the question has yet to be answered, namely, had Sita
Ram ceased to be an agriculturist by reason of clause (b) of the proviso to
section 2(3), that is to say, by reason of his being assessed to income-tax on
July 28, 1931. According to the evidence of Surai Mani Tripathi and Sita Ram
653 income-tax was first deducted at the source in the month of February 1932
by the College authorities and the actual assessment was made on February 9,
1933. Therefore, Sita Ram was not assessed to incometax on July 28. 1931. It is
not disputed that the taxable minimum was reduced from Rs. 2,000 perannum to
Rs. 1,000 per annum by the Indian Finance (Supplementary & Extending)Act,
1931, which was enacted on November 26, 1931. Therefore, at the date of the
advance, i.e., on July 28, 1931, Sita Ram Whose salary was below Rs. 2,000 per
annum was not only not actually assessed to income-tax but was not even liable
to such assessment. The evidence of Suraj Mani Tripathi shows that the first
deduction of incometax out of the salary was in the month of February 1932 and
the income-tax assessment form for 1931-32 (Ex.S) shows that tax was assessed
on Rs. 180 which was evidently salary for February and March 1932 being the
last two months of the assessment year. The position therefore is that Sita Ram
was not assessed to income-tax at the date of the advance in 1931 or on the due
date under the deed, i.e., in July 1937, or on the date of suit in 1938 or on
the date of the application under section 8 in 1942. It consequently follows
that he was an agriculturist on all these dates.
The other judgment-debtors were admittedly
Therefore, the application under section 8
was made by persons who were all agriculturists and who were liable to pay
under a decree to which the Act applies, i.e., under a decree passed in a suit
relating to a loan as defined by section 2(9). The Courts below therefore, were
right in their conclusion that the judgment-debtors applicants were entitled to
the benefit of the Act.
Sri G.N. Kunzru finally submitted that in any
case the accounts could not be taken from 1922, for the mortgagees under the
two mortgages were different. We have already pointed out that this point was
not specifically taken in the decree-holders' petition of objection. The trial
Court held as a fact that so far as the judgment-debtors were concerned the 654
mortgagees were the same in both the mortgages. Although in the petition of
appeal to the High Court it was alleged that the mortgagees were different and
the accounts could not be reopened from 1922, that ground was not specifically
urged before the High Court. The determination of that question must
necessarily involve an investigation into facts. We do not think, in the
absence of a plea in this behalfin the decree-holders' petition of objection
and also in view of their failure and neglect to raise this question before the
High Court, it will be right for this final court of appeal, at this stage and
in the circumstances of this case, to permit the appellants to raise this
question of fact.
The result, therefore, is that this appeal
must stand dismissed with costs.
Agent for the appellants: C.P. Lall.
Agent for the respondents: Nannit Lal.