Bansilal
& Ors Vs. Mohammad Israil & Ors [2001] Insc 562 (19 October 2001)
D.P.
Mohapatra & K.G. Balakrishnan D.P. Mohapatra,J.
One
Sheikh Ibrahim executed two mortgage deeds on 30.4.1923 and 9.4.1924 in respect
of 4.00 acres and 8.00 acres of his land respectively in favour of Sunderbai
wife of Latulal. On 11.4.1939 the said Sunderbai transferred her rights as a
mortgagee to Sundersa Gulabsa Jain. Sundersa Gulabsa Jain filed two Regular
Civil Suits for recovery of the mortgage dues and in the alternative for
foreclosure of the right of redemption.
The
mortgages were described as Lahan Gahan mortgages During the pendency of the
suits the Central Provinces and Berar Relief of Indebtedness Act, 1939 (C.P. Berar
Act No. XIV of 1939) (for short the Act) came into force and the suits were
transferred to the Debt
Relief Court
established under the said Act. On the application made by the
defendant-mortgagor a scheme for repayment of the loan was framed under the Act
and the mortgage dues were made payable by instalments falling due on 1st March
every year as per the order of the Debt Relief Court. The instalment which fell due on 1.3.1948 was not paid by
the mortgagor. The next instalment was due on 1.3.1949. On account of a
temporary legislation titled Central Provinces Berar Relief of Agriculturist
Debtors (Temporary measures) Act, 1949 (No. XXIV of 1949) enforced under the
provisions of the Act whereby the date of instalment was postponed by one year
from 1.3.1949 to 1.3.1950. The instalment which was due on 1.3.1950 was also
not paid by the original mortgagor. Thus he committed two consecutive defaults
in payment of instalments. The creditor-plaintiff filed an application under
section 13(3) of the Act on 31.8.1949 for a certificate as provided in the said
section. Finally, the Deputy Commissioner ordered issuance of the certificate
under section 13(3) of the Act on 24.9.1962 which was confirmed by the High
Court in Special Civil Application No.716 of 1964 by order dated 4th April, 1966. In the meantime the debtor
deposited the entire mortgage dues in the Court on 30.5.1964.
Thereafter,
on 17.1.1967 the creditors filed an execution petition with the prayer for
delivery of possession of the mortgage properties from the debtors on the
ground that the certificate issued by the Dy. Commissioner under section 13(3)
of the Act operates as a final decree for foreclosure, and therefore, they were
entitled to possession of the mortgage properties. In the said proceeding
judgment-debtors filed an application under section 47 of the Code of Civil
Procedure read with section 151 of the Code contending inter alia, that
possession of the mortgaged property should not be delivered to the creditors.
They contended that the final decree as referred to in section 13(3) of the Act
should be treated as a final decree for sale and not a final decree for
foreclosure of the mortgaged property.
The Executing Court accepted the execution petition
filed by the creditors holding that the certificate operated as a final decree
for foreclosure. Consequentially the objections filed by the debtors were
rejected. The Court directed issuance of the warrant of delivery of possession.
The
said order was confirmed by the Extra Assistant Judge, Amravati in Civil Appeal No. 55 of 1969.
Feeling
aggrieved by the said order the judgment debtors preferred second appeal No.277
of 1971 in the Bombay High Court which was decided in their favour vide
judgment dated 2.2.1983 in which the learned single Judge of the High Court
held, inter alia, that the effect of the certificate under section 13(3) of the
Act was that it gave to the creditors only the right to recover the entire
amount due in one lump-sum as if it were a final decree for recovery of money
and it could not operate as a final decree for foreclosure. Consequently, the
second appeal was allowed, the orders of the trial court and the appellate
court were set aside and the warrant of delivery of possession was quashed. The
execution petition (original darkhast) was sent to the trial court for disposal
in accordance with the law. The said judgment is under challenge in this appeal
filed by the successors of the original plaintiff (assignee mortgagee
creditor). The respondents in the appeal are the successors of the original
defendant (mortgager debtor).
On analysis
of the facts and the findings recorded by the trial court, the appellate court
and the High Court the question that arises for determination is what is the
nature and effect of the certificate issued under section 13(3) of the Act. To
put it differently, the question is whether the certificate amounts to a final
decree for realisation of the mortgage dues by sale of the mortgaged property
or it amounts to final decree of foreclosure of the right of redemption of the
mortgaged properties.
The
learned counsel appearing for the appellants reiterated the case of the party
that the certificate amounts to a final decree of foreclosure of the mortgaged
properties and in execution of such a decree the decree-holder was entitled to
recover possession of the properties from the judgment- debtor.
Per
contra learned counsel appearing on behalf of the respondent contended that the
certificate was nothing more than a final decree for realisation of the
mortgage dues in a lump-sum by sale of the mortgaged properties.
Since
the answer to the question formulated earlier depends on the interpretation of
section 13(3) of the Act and its interaction with other relevant provisions of
the Act it will be helpful to quote sections 12 and 13 of the Act in extenso :
12.
Provisions governing payment of instalments
(1)
Every instalment shall be payable on or before the date fixed by the order of
the Debt Relief Court, and this may, at the option of the debtor, be paid
either to the Deputy Commissioner or to such other Revenue Officer as he may
authorize in this behalf or to the creditor who shall pass a receipt therefor
in such form as may be prescribed.
(2)
When the land revenue or rent, as the case may be, due by the debtor is
suspended or remitted, in whole or part, the instalment shall be suspended and
shall become payable one year after the last of the remaining instalments. No
interest shall be charged on such suspended instalment.
13.Provisions
when default made in payment of instalments (1) If any instalment is not paid
on or before the due date, the creditor may apply, within eighteen months from
the date of default, to the Deputy Commissioner within whose jurisdiction the
debtor ordinarily resides or earns his livelihood or to such other Revenue
Officer as may be appointed in this behalf by the State Government, for the
recovery of such instalment as an arrear of land revenue, and thereupon the
Deputy Commissioner or such other revenue Officer shall recover such instalment
as an arrear of land revenue.
(2) If
the instalment or part thereof is irrecoverable, the Deputy Commissioner or
other Revenue Officer may certify accordingly.
(3) If
an instalment or part thereof is certified as irrecoverable under sub-section
(2) or if two consecutive instalments remain in arrears, the Deputy
Commissioner, on the application of the creditor, shall pass an order that the
order of the Debt Relief Court fixing instalments shall cease to have effect,
and the balance remaining due shall be recoverable as if a decree, and in the
case of a mortgage, lien or charge as if a final decree had been passed by a
court of civil jurisdiction.
(3-A)
Revisions of order under sub- section(3). The State Government may, at any
time, for the purpose of satisfying itself as to the legality or propriety of
any order passed by, or as to the regularity of the proceedings of, the Deputy
Commissioner under sub-section (3) call for and examine the record of any case
pending before, or disposed of by, the Deputy Commissioner and may pass such
order in reference thereto as it thinks fit:
Provided
that it shall not vary or reverse any order affecting any question of right
between private persons without having given to the parties interested notice
to appear and be heard in support of such order.
(4) If
an instalment is recoverable as an arrear of land revenue, the Deputy
Commissioner or Revenue Officer appointed under sub-section (1) shall, as far
as may be, follow the procedure laid down in the Central Provinces Land Revenue
Act, 1917 (11 of 1917) or the Berar Land Revenue Code, 1928 as the case may be,
for the recovery of Government dues as arrears of land revenue.
(emphasis
supplied) The other provisions of the Act which may be of assistance in
interpreting the aforementioned sections are sections 14,15 and 27. The said sections
are also quoted for the sake of convenience :
14.
Application of sums recovered under Section 13(1) When the Deputy Commissioner
or other Revenue Officer recovers any sums under sub-section (1) of Section 13,
he shall, in the first instance, apply the sum realized from the sale of any
immovable property to the amount payable on account of the debt which is
secured by a mortgage or lien on such property in accordance with the scheme
drawn up by the Debt Relief Court, or if the sum is insufficient towards such
repayment rateably. If there is any surplus, such surplus shall be applied for rateable
repayment of further instalments, if any, under the scheme and the balance, if
any, returned to the debtor.
15.
Invalidity of transfer made by debtors in certain circumstances (1) No transfer
of immovable property shall be valid if made by a debtor, in respect of whose
debts proceedings are pending under Section 5 or 6, unless made with the
sanction of the Debt
Relief Court.
(2)
Every transfer of immovable property made by a debtor in respect of whose debts
a scheme has been prepared under sub- section (1) of Section 11, shall be void
unless made with the sanction of the Deputy Commissioner within whose
jurisdiction the debtor ordinarily resides or earns his livelihood. The Deputy
Commissioner shall not sanction any transfer of such property unless he is
satisfied that such transfer will not defeat the claims of any creditor the
payment of whose claims has been ordered by such scheme.
27.
Readjustment of instalments fixed under Central Provinces and Berar Debt
Conciliation Act- (1) In any local area to which the State Government may, by
notification, apply this section, a debtor whose debts did not exceed rupees
twenty- five thousand at the time of making an application under the Central
Provinces and Berar Debt Conciliation Act, 1933 (hereinafter referred to as the
said Act), and the settlement of whose debts was effected under the said Act
may, notwithstanding anything contained in the said Act or in this Act, apply
to a Debt Relief Court to readjust the instalments fixed in the agreement
registered under the said Act.
(2) If
on an application made under sub- section (1), the Debt Relief Court is satisfied that the instalments
are beyond the (paying) capacity of the debtor, it may readjust the instalments
so as to bring them within his (paying) capacity but not so as to reduce the
total amount payable by him under the said agreement.
(3)
The rights under the said agreement shall thereupon be extinguished and the instalments
so readjusted shall be deemed to be instalments fixed under this Act.
(4) On
an application being made under sub-section (1), the proceedings; if any,
pending before a Revenue Officer under Section 13 of the Central Provinces and Berar
Debt Conciliation Act, 1933 for the recovery of an amount due in accordance
with the terms of the agreement to which the application relates shall, if so
required by the Debt Relief Court, be stayed. The proceedings shall be,
resumed, if the application is rejected.
(5) If
an application made under sub- section (1) is rejected, the debtor shall not be
entitled to make another application to the Debt Relief Court.
The
specific question for consideration relates to interpretation of section 13(3).
What do the expressions in the case of a mortgage, lien or charge as if a final
decree had been passed by a court of civil jurisdiction mean. Does it mean that
a deemed decree for foreclosure of the mortgaged property comes into existence
automatically when the order of the Debt Relief Court ceases to have effect and
the creditor-mortgagee can straightaway proceed to any execution for recovery
of possession of the mortgaged property or steps have to be taken for sale of
mortgaged property in accordance with the provisions in Order 34 of the Civil
Procedure Code. While deciding this question it has to be kept in mind that in
the mortgage deed it is stipulated that in case the mortgagor does not pay the
mortgage loan within the time stipulated then the property shall stand foreclosed.
A further question in this connection is what is the effect of the Act on the
mortgage transaction in the case. On perusal of the relevant provisions of the
Act it is clear to us that the Act, which was intended to make provision for
relief of indebtedness of agriculturists, was in the nature of a temporary
statute initially for a period of three years. In the Act various provisions
have been made enabling the agriculturists to get relief from indebtedness by
seeking intervention of the statutory authorities who are empowered to draw a
schedule of time by providing reasonable instalments and to further revise the
schedule of payment in an appropriate case. In case of default in payment of
the debt by the debtor according to the schedules the creditor is required to
apply to the Revenue Officer authorised by the State Government for recovery of
such instalment as arrear of land revenue and thereupon such revenue officer
shall recover such instalment as an arrear of land revenue. In sub-section (2)
of the said section it is provided that if the instalment or part thereof is
irrecoverable the authorised officer may certify accordingly.
In
sub-section (3) of the section the consequences which follow in a case in which
the authority has certified the instalment or part thereof as irrecoverable
under sub-section (2) or if two consecutive instalments remain in arrear then
the Dy. Commissioner on the application of the creditor shall pass an order
that the order of the Debt Relief Court fixing instalment shall cease to have
effect and the balance remaining shall be recoverable as if a decree, and in
the case of a mortgage, lien or charge as if a final decree has been made by a
Court of Civil jurisdiction.
On a
fair reading of the provisions of the Act referred to above, it is clear that
the statute has only attempted to help the agriculturists by making it easier
for them to pay the accumulated dues in instalments and has further safeguarded
their interest by providing for adjudication of the matters relating to recoverability
or otherwise of the loan amount from the debtor. Only in extreme cases in which
the debtor has not merely defaulted in payment of instalments fixed by the
authority but outstanding amount is found to be not recoverable as arrear of
land revenue then in such a case the statute authorises the creditor to proceed
for realisation of his dues as if the final decree has been passed in his favour
by a court of civil jurisdiction.
What
the provisions of the Act, as we read them, provide is that in a case where the
debtor fails to utilise the benefits given to him under the statute and it is
not possible to realise the amount from him according to the procedure
prescribed under the Act then the creditor is to realise his dues by proceeding
on the basis that there is a deemed decree in his favour. In such a case
recourse has to be taken to the provision of Order 34 of the CPC for execution
of a final decree which is made clear in the last part of section 13(3). The
provisions of the Act neither specifically nor by reasonable inference can be
said to lay down that in a case where conditions specified in section 13(3) are
complied with a decree for foreclosure of the mortgage shall be deemed to have
been passed and the creditor can straightaway, without taking any other step
file an execution petition for delivery of possession of the mortgaged
property.
In
that view of the matter the High Court in this case rightly interpreted the
decree to be one for realisation of the entire amount due in lump-sum and
rightly directed the executing court to proceed in the matter accordingly.
Thus,
there being no merit in the appeal, it is dismissed but in the circumstances of
the case without any order for costs.
J.
(D.P.Mohapatra)
..J.
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