Bank of Baroda Vs. Moti Bhai & Ors
[1985] INSC 14 (29 January 1985)
CHANDRACHUD, Y.V. ((CJ) CHANDRACHUD, Y.V.
((CJ) ERADI, V. BALAKRISHNA (J)
CITATION: 1985 AIR 545 1985 SCR (2) 784 1985
SCC (1) 475 1985 SCALE (1)181
ACT:
Bar to jurisdiction of civil courts - Suit
for recovery of a demand loan sanctioned to agriculturist by a Bank under a
promissory note duly covered by hypothecating the standing crop of his lands
and supported with two guarantors for the repayment of the loan-Maintainability
of the Suit-Rajasthan Tenancy Act (Act 3 to 1955) sections 43, 207 and 256 read
with Entry 35 of Third Schedule, scope of.
HEADNOTE:
The appellant Bank filed a suit for the
recovery of the amount of loan together with interest thereon granted to
Respondent No. I who had not only executed a promissory note but also a bond
hypothecating the standing crop of his lands situated at Khandu and Surjipada
in Rajasthan. Respondents 2 and 3 being guarantors for the repayment of the
loan were also proceeded against. The Trial Court overruled the preliminary
objection raised by the Respondents as to the maintainability of the Suit, in
view of sections 207 and 256 of the Rajasthan Tenancy Act, 1955. But the High
Court, while allowing- the Civil Revision Application set aside the judgment of
the Trial Court and dismissed the suit.
Hence the appeal by special leave of the
Court.
Allowing the appeal, the Court.
^
HELD: 1.1 A combined reading of sections 207
and 256 of the Rajasthan Tenancy Act, 1955 would show that the jurisdiction of
the civil courts is barred only in respect of suits and applications of the
nature specified in the Third Schedule to the Act and in respect of suits or
applications based on a cause of action in respect of which any relief could be
obtained by means of a suit or application of the nature specified in the Third
Schedule.
The civil court has no jurisdiction to
entertain a suit or proceeding with respect to any matter arising under the Act
or the Rules made there under, provided that a remedy by way of a suit,
application or appeal or otherwise is provided in the Act. the long title of
which shows that it was passed in order "to consolidate" and amend
the law relating to tenancies of agricultural lands and to provide for certain
measures of land reforms and matters connected therewith.
[787C-D; 788A] 1.2. Entry 35 is described in
the Third Schedule as a "General" entry, that is to say, not
relatable to any particular section of the Act. The 785 suit filed by the Bank
cannot fall under this "General" or "residuary" entry. A
loan given by a Bank to an agriculturist, which is in the nature of a
commercial transaction, is outside the contemplation of the Act and cannot be
said to be in respect of any matter arising under the Act. [787G; 788A-B] 1.3.
The business of the Bank, in so far as lending transactions are concerned, is
not to lend moneys on mortgages but the business is to lend moneys. In this
particular case, the Bank lent a certain sum of money to respondent 1 in the
usual course of its commercial business and nothing could be further removed
from the contemplation of the Act than such a transaction. It is only by way of
a collateral security that the Bank obtained a hypothecation bond and a deed of
mortgage from respondent 1 and a letter of guarantee from respondents 2 and 3.
The assumption that the mortgage has executed in pursuance of section 43 of the
Act and, therefore, residuary Entry 35 of the Third Schedule is attracted, is
not correct. [788G-H; 789A]
2. On the question of jurisdiction, one must
always have regard to the substance of the matter and not to the form of the
suit. Approaching the matter from that point of view, primarily and basically
the suit filed by the Bank is one for recovering the amount which is due to it
from the respondents on the basis of the promissory note executed by respondent
No. I and the guarantee given by respondents 2 and 3. The reliefs sought for
also make it clear that the suit is not one to enforce the mortgage and, even
assuming that it is, the mortgage not having been executed under section 43 of
the Act, nor being one relatable to that section, the residuary Entry 35 can
have no application. If that entry is out of way, there is no other provision
in the Act which would apply to the instant suit and therefore, the civil court
has jurisdiction to entertain the suit filed by the appellant Bank. [789C-E]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1321 of 1980.
From the Judgment and Order dated the 15th
February, 1976 of the High Court of Rajasthan at Jodhpur in S. B. Civil
Revision No. 320 of 1978.
P. G. Gokhale and Mr. B. R. Agarwala for the
Appellant.
Dalveer Bhandari for the Respondents.
The Judgment of the Court was delivered by
CHANDRACHUD, C.J. The appellant, the Bank of Baroda, agreed through its Banswara
Branch to sanction a demand loan facility in the sum of Rs.36,000 in favour of
respondent l.
In consideration thereof, respondent I
executed a demand promissory note in favour of the Bank on June 18, 1973. He
also executed a bond hypothecating the standing Crop of his lands situated at
Khandu and 786 Surjipada in Rajasthan Respondents 2 and 3 are the guarantors
for the repayment of the loan. In order to further secure the repayment of the
loan, respondent 1 executed a deed of simple mortgage in favour of the Bank,
ill respect of the lands at Khandu and Surjipada.
The respondents having failed to repay the
loan, the appellant filed against them a suit in the court of the learned
District Judge, Banswara, for recovering a sum of Rs. 52,000 and odd which was
due ` on the loan transaction.
Respondents raised a preliminary objection to
the maintainability of the suit on the ground that the claim in the suit was
essentially one for enforcing the mortgage executed by them in favour of the
Bank and, therefore, the Revenue court had the exclusive jurisdiction to
entertain the suit, by reason of the provisions contained in the Rajasthan
Tenancy Act 3 of 1955, (hereinafter called "the Act"). That objection
was overruled by the learned District Judge but, in a civil revision
application filed by the respondents, the High Court upheld it. According to
the High Court, "the execution of the mortgage deed by defendant No. l in
favour of the plaintiff in respect of his tenancy rights in agricultural land
also forms the essential part of the cause of action of the plaintiff and as
such, the suit is triable by a revenue court". The correctness of this
view is questioned by the plaintiff in this appeal by special leave.
Section 207 of the Act reads thus;
207. Suit and applications cognizable by
revenue court only.-(1) All suits and applications of the nature specified in
the Third Schedule shall be heard and determined by a revenue court.
(2) No court other than a revenue court shall
take cognizance of any such suit or application or of any suit or application
based on a cause of action in respect of which any relief could be obtained by
means of any such suit or application.
Explanation:-If the cause of action is one in
respect of which relief might be granted by the revenue court, it is immaterial
that the relief asked for from the civil court is greater than, or additional
to, or is not identical with, that which the revenue court could have granted.
Section 256 of the Act, which is
complementary to section 207, reads thus;
787 "256. Bar to Jurisdiction of civil
courts.-(1) Save as otherwise provided specifically by or under this Act, no
suit or proceeding shall lie in any civil court with respect to any matter
arising under this Act or the Rules made thereunder, for which a remedy by way
of suit, application, appeal or otherwise is provided therein.
(2) Save as aforesaid, no order passed by the
State Government or by any revenue court or officer in exercise of the powers
conferred by this Act or the Rules made there under shall be liable to be
questioned in any civil court".
A combined reading of these two sections
would show that the Jurisdiction of civil courts is barred only in respect of
suits and applications of the nature specified in the Third Schedule to the Act
and in respect of suits or applications based on a cause of action in respect
of which any relief could be obtained by means of a suit or application of the
nature specified in the Third Schedule.
The civil court has no jurisdiction to
entertain a suit or proceeding with respect to any matter arising under the Act
or the Rules made thereunder provided that a remedy by way of a suit,
application or appeal or otherwise is provided in the Act.
The legal position on the question of
jurisdiction which is stated above requires examination of the various entries
in the Third Schedule. That Schedule is divided into three parts, the first of
which is called "Suits", the second is called
"Applications", and the third is called "Appeals". We are
concerned in this appeal with the 35 entries which are comprehended in the
first part which deals with suits. It is common ground, and the High Court has
not held to the contrary, that none of the specific entries I to 34 is
applicable to the suit filed by the appellant Bank.
The argument is that the residuary Entry 35
would govern the suit and, therefore, by reason of sections 207 and 256 of the
Act, the Revenue court alone could entertain it. Entry 35 is described in the
Third Schedule as a "General" entry, that is to say, not relatable to
any particular section of the Act. The description of the entry as
"General" is given in Column 2 of the Third Schedule which is headed
"Section of Act." the third column of the Schedule carries the
heading "Description of suit, application or appeal". Under that
column, the relevant description runs thus:
"Any other suit in respect of any matter
arising under this Act, not specifically provided for elsewhere in this
Schedule".
788 We are unable to appreciate how the suit
filed by the Bank can fall under this "General" or residuary entry.
The suit of the Bank to recover the loan is not in respect of any matter
arising under the Act. The long title of the Act shows that it was passed in
order "to consolidate and amend the law relating to tenancies of
agricultural lands, and to provide for certain measures of land reforms and
matters connected therewith". A loan given by a Bank to an agriculturist,
which is in the nature of a commercial transaction, is outside the
contemplation, of the Act and can, by no stretch of imagination be said to be
in respect of any matter arising under the Act.
The High Court has relied on section 43 of
the Act in order to come to the conclusion that the deed of mortgage was
executed by respondent 1 in favour of the Bank in accordance with that section
and, therefore, the suit for the sale of the tenancy rights of the mortgagee by
enforcement of the mortgage is a suit in respect of a matter arising under the
Act. The High Court holds that such a suit would attract the residuary entry
since the matter to which it relates has not been specifically provided for
elsewhere in the Third Schedule. With respect, we are unable to accept this
line of reasoning. Section 43 (1) of the Act, which is relevant for this purpose,
reads thus:
"43. Mortgage:-(1) Khateder tenant, or,
with the general or special permission of the State Government or any officer
authorised by it in this behalf, a Ghair Khatedar tenant, may hypothecate or
mortgage his interest in the whole or part of his holding for the purpose of
obtaining loan from the State Government or a Land Development Bank as defined
in the Rajasthan Co- operative Societies Act, 1965 (Act 13 of 1965) or a Co-
operative Society registered or deemed to be registered as such under the said
Act or any Scheduled Bank or any other institution notified by the State
Government in that behalf" The High Court is in error in saying that `it
cannot be disputed' that the mortgage was executed by respondent 1 in pursuance
of section 43. The business of the Bank, in so far as lending transactions are
concerned, is not to lend moneys on mortgages but the business is to lend
moneys. In this particular case, the Bank lent a certain sum of money to
respondent 1 in the usual course of its commercial business and nothing could
be further removed from the contemplation of the Act than such a transaction.
It is only by way of a collateral security that the Bank obtained a
hypothecation bond and 789 a deed of mortgage from respondent 1 find a letter
of guarantee from A respondents 2 and 3. The entire judgment of the High Court
is based on the assumption that the mortgage was executed in pursuance of
section 43 of the Act and, therefore, residuary Entry 35 of the Third Schedule
is attracted. Once it is appreciated that the mortgage executed by respondent I
is outside the scope of the Act, the reasoning of the High Court has to be
rejected.
On the question of jurisdiction, one must
always have regard to the substance of the matter and not to the form of the
suit. If the matter is approached from that point of view, it would be clear
that primarily and basically, the suit filed by the Bank is one for recovering
the amount which is due to it from the respondents on the basis of the
promissory note executed by respondent 1 and the guarantee given by respondents
2 and 3. The relief sought by the Bank is that the suit should be decreed for
the repayment of the amount due from the respondents. By the second prayer, the
Bank has asked that "in case of non-payment of the decretal amount"
the mortgaged property should be brought to sale and if the proceeds of that
sale are not enough to meet the decretal liability, the other movable and
immovable properties of the respondents should be put at sale. The suit is not
one to enforce the mortgage and, even assuming for the purpose of argument that
it is, the mortgage not having been executed under Section 43 of the Act, nor
being one relatable to `that section, the residuary Entry 35 can have no
application. If that entry is out of way, there is no other provision in the
Act, which would apply to the instant suit. The civil court has therefore,
jurisdiction to entertain the suit filed by the appellant Bank.
For these reasons, we set aside the judgment
of the High Court and restore that of the District Court. The suit shall be
disposed of expeditiously. The appellant will be entitled to its costs of this
appeal from the respondents.
S. R. Appeal allowed.
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