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PETITIONER: BANK OF BARODA

       Vs.

RESPONDENT: MOTI BHAI AND ORS.

DATE OF JUDGMENT29/01/1985

BENCH: CHANDRACHUD, Y.V. ((CJ) BENCH: 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 thereunder, 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]

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     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]

JUDGMENT:       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.

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     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

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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

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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. 790