25 April 1952
Supreme Court
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JOSHI GIRJADHARJI AND ANOTHER Vs LACHMANJI PANTH AND OTHERS.

Case number: Appeal (civil) 64 of 1951


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PETITIONER: JOSHI GIRJADHARJI AND ANOTHER

       Vs.

RESPONDENT: LACHMANJI PANTH AND OTHERS.

DATE OF JUDGMENT: 25/04/1952

BENCH: DAS, SUDHI RANJAN BENCH: DAS, SUDHI RANJAN SASTRI, M. PATANJALI (CJ) FAZAL ALI, SAIYID MUKHERJEA, B.K.

CITATION:  1952 AIR  218            1952 SCR  645

ACT:  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.

HEADNOTE:       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 applica- tion 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  agri- culturist,  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  admit- tedly  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.

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JUDGMENT: 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) the  appel- lants. 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 materi- al    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  quar- terly  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  in-

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cometax  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 agricul- turists 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  judgment- debtors   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  agri- culturists 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  money- lending 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  respond- ents 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  applica- tion, 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  judg- ment-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 position.      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  in- come-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  in- come-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

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1940.  The income-tax assessment form filed during the trial of the mortgage suit and marked as exhibits is dated  Febru- ary  9, 1933, and shows that on that date Sita Ram  was  as- sessed  at Rs. 1-14-0 as income-tax on Rs. 180 for the  year 1931-32.     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, there- fore, held that the applicants were agriculturists and  that the  case related to a loan as defined in Act XIII of  1940. 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  mort- gage  in suit was executed.  The decree-holders who did  not adduce  any evidence on the hearing of the application  evi- dently  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 accord- ing  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 accord- ingly  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  deci- sion 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. [1943] All. 35; A.I.R. 1942 All. 390; (1942)  A. L.J. 578. 651

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   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 appli- cant 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  appli- cants  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  sec- tion 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  agricul- turist  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 as- sessed  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

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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 provi- so  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  in- come-tax  but was not even liable to such  assessment.   The evidence of Suraj Mani Tripathi shows that the first  deduc- tion  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  agriculturists. 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  specifi- cally  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  dis- missed with costs. Appeal dismissed. Agent for the appellants: C.P. Lall. Agent for the respondents: Nannit Lal.

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