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PETITIONER: R.B. CHAUDHARY RAGHURAJ SINGH

       Vs.

RESPONDENT: MURARI LAL & ORS.

DATE OF JUDGMENT: 16/03/1967

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. BHARGAVA, VISHISHTHA

CITATION:  1967 AIR 1631            1967 SCR  (3) 199

ACT: U.P. Zamindar’s Debt Reduction Act (15 of 1953), ss. 2(m), 3 and--4--"Suit relating to secured debt" and "decree relating to secured debt", meaning of.

HEADNOTE: A  suit  was  filed by the respondents, on the  basis  of  a promissory  note executed in their favour by the  appellant, and  a decree was passed against the appellant.  The  decree provided  for payment of the amount due in  instalments  and contained  a  default clause under which  the  whole  decree could  be  executed.  The decree also created  a  charge  on certain  immovable properties of the appellant.  As  default was  committed  by  the appellant,  the  respondents  sought execution of the decree.  The appellant thereupon applied to the  Court which passed the decree, under s. 4 of  the  U.P. Zamindar’s  Debt Reduction Act, 1953 to reduce the  decretal amount.   The  first  Court and the High  Court  on  appeal, dismissed the appellant’s application. In appeal to this Court, HELD  :  Section 4 of the Act did not apply in  the  present case,  and  therefore  the  decretal  amount  could  not  be reduced. Section  3 of the Act provides for the reduction of debt  at the time of the passing the decree in "a suit ....  relating to  secured  debt", and s. 4 provides for reduction  of  the debts  after  the passing of "a decree...... relating  to  a secured  debt".   Whether the debt was secured or not  is  a matter  that has to be tested, both for s. 4 as well as  for s.  3, on the date the suit was filed. If on that  date  the debt was secured, as per the definition of a secured debt in s.  2(m) of the Act, by a mortgage or a charge under s.  100 of the Transfer of Property Act, the suit would be  relating to  a  secured debt and so would be the decree  which  might later be passed in that suit.  But if on that date, the debt was not secured it cannot be said that the decree related to a  secured debt simply because the decree created a  charge. The legislature could not have intended, that the fact  that the decree created a charge should result in converting what was an unsecured debt into a secured debt for the purpose of s. 4. [202 A, C-G; 203 E, H; 204 A-B]

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JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos.  952  and 953 of 1964. Appeals  by special leave from the judgment and order  dated July 24, 1961 of the Allahabad High Court in Execution First Appeal No. 440 of 1953 and Civil Revision No. 1402 of 1953. C.   B. Agarwala and K. P. Gupta, for the appellant (in both the appeals). S.   P.  Sinha and S. Shaukat Hussain, for respondent No.  1 (in both the appeals). 200 The Judgment of the Court was delivered by Wanchoo, J. These are two connected appeals by special leave from  a  common judgment of the Allahabad High  Court.   The facts   necessary  for  present  purposes  may  be   briefly indicated.    The  appellant  borrowed  some  money   on   a promissory  note  from the respondents’  predecessors.   The suit  was  filed  by the respondents on  the  basis  of  the promissory  note and a decree for Rs. 2,71,000/and  odd  was passed  against the appellant.  The decree provided  for  20 instalments  payable half-yearly.  The decree also  provided for  one  or more instalments for pendente lite  and  future interest   beyond  the  twentieth  instalment.   The   first instalment was payable in November 1938 and thereafter  each instalment was payable on or before July 31 and December  31 each  year.  There was also a default clause providing  that in  case  there  were  three  defaults  in  the  payment  of instalments,  the whole decree could be  executed.   Finally the decree created a charge on 1 8 villages belonging to the appellant.   It  may be added that the  charge  was  created under s. 3 of the U.P. Agriculturists’ Relief Act, No. XXVII of  1934.   The appellant paid the first 17  instalments  in time.   He paid the eighteenth instalment on July  31,  1948 but  this was late as by then the 20th instalment  had  also fallen  due.   As the 19th and 20th instalments as  well  as pendente  lite  and future interest had not  been  paid  the decree was put in execution by the respondents on April  26, 1951  for recovery of Rs. 49,000/- and odd by the sale of  a kothi and an Ahata belonging to the appellant.  The  decree- holder respondent also prayed that in case the whole  amount was  notrealised  from  the  sale  of  the  above  property, zamidari property   on which a charge bad been created might be put to sale. The  appellant raised objections under s. 47 of the Code  of Civil  Procedure  against the execution.  He also  filed  an application  under ss. 4 and 8 of the U.P.  Zamindar’s  Debt Reduction  Act, No. XV of 1963, (hereinafter referred to  as the  Act). It is unnecessary to refer to the  objections  in detail,  for  in the present appeals we are  concerned  only with  one point, namely, whether s. 4 of the Act applies  to the  present  case.  Under that section  the  appellant  had applied  to the court which passed the decree to reduce  the amount as provided therein.  Further in his objection  under s.  47 of the Code of Civil Procedure the appellant  claimed the same relief.  That is how there were two proceedings  in the first court, one under s. 4 of the Act and the other  an objection  under s. 47 of the Code of Civil Procedure.   The first  court  held that s. 4 of the Act did not  apply.   In consequence it held that the amount for which execution  had been  taken out was not liable to reduction.   It  therefore dismissed  both the application Linder s. 4 as well  as  the objection Linder s. 47  of  the  Code  of  Civil  Procedure. There was also a question

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201 Of  limitation,  but  we are not concerned  in  the  present appeals with that question. This  gave  rise to two proceedings before the  High  Court. The  appellant went in appeal against the dismissal  of  his objection  under s. 47 of the Code of Civil  Procedure.   He also  filed  a civil revision against the dismissal  of  his application  under  s. 4 of the Act.  The two  matters  were heard  together by the High Court, which held that s. 4  did not  apply  and therefore the amount could not  be  reduced. The  High  Court  having  refused  to  grant  leave  to  the appellant,  he  secured special leave from this  Court;  and that is how the matter arises before us. The Act was passed in 1953 to give relief to zamindars whose lands  had  been  acquired  by  the  State  under  the  U.P. Zamindari  Abolition  and Land Reforms Act, No. 1  of  1951. Section 2 defines certain terms out of which it is necessary to refer to the following -.               "  (m) ’secured debt’ means a debt secured  by               mortgage  of  an estate  and  other  immovable               property;               (i)   ’mortgage’ with its cognate  expressions               shall  have the meaning assigned to it in  the               Transfer of Property Act, 1882 and includes  a               charge as defined in section 100 of that Act;               (o)   ’suit  to which this Act applies’  means               any  suit  or proceeding relating  to  a  debt               whether secured or otherwise;               (e)   ’decree to which this Act applies’ means               a  decree  passed either before or  after  the               commencement  of this Act in a suit  to  which               this Act applies;               (f)   ’debt’  means an advance in cash  or  in               kind and includes any transaction which is  in               substance  a  debt  but does  not  include  an               advance  as  aforesaid made on or  before  the               first day of July 1952.........." Certain debts are exempt from this definition but we are not concerned with them in the present appeals. It  will be seen from these definitions that a decree  in  a suit based on any debt is a decree to which the Act  applies and  such  decrees can be of two kinds,  namely,  (i)  those based  on  a  secured  debt, and  (ii)  those  based  on  an unsecured  debt.   A  secured debt is a debt  secured  by  a mortgage  and includes a debt secured by a charge  under  s. 100 of the Transfer of Property Act. 202 Then comes s. 3 which provides for reduction of debt at  the time of passing of decree  Sub-section (1) thereof lays down that  "  notwithstanding anything in any law,  agreement  or document, in any suit to which this Act applies relating  to a  secured debt, the court shall, after the amount  due  has been  ascertained, but before passing a decree,  proceed  as hereinafter stated." Then follow provisions as to the manner in  which  the  debt,  would be  reduced,  but  we  are  not concerned  with  the details there of  Section  3  therefore applies to a case where a decree relating to a secured  debt had not been passed before the Act came into force.  In such a case the court passing the decree has to reduce the amount in the manner provided in that section.  It is however clear that before the court can act under s. 3, it has to come  to the  conclusion that the debt in question is a secured  debt i.e.  a debt secured by a mortgage or a charge under s.  100 of the Transfer of Property Act.  The mortgage or the charge must  be there on the date of the suit and the suit must  be

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with respect to a secured debt.  The date therefore on which the court has to see whether the debt in the suit before  it is  a secured debt or not is the date on which the  suit  is filed.   The  High Court seems to be in error when  it  held that under the definition of "secured debt" only such  debts as are secured by a mortgage come in and not debts which are secured by a charge.  It seems to have overlooked that  part of  the  definition of the word "mortgage" which  lays  down that  a mortgage will include a charge as defined in s.  100 of  the Transfer of Property Act.  Therefore, even though  a debt  may be secured by a charge it will be a  secured  debt for the purpose of s. 3 provided the charge was there before the  date  of the suit.  We have referred to s.  3  in  some detail because we are of opinion that the interpretation  to be  put  on s. 3 will have a direct bearing  on  the  inter- pretation of the words of s. 4 where also the material words are the same as in s. 3. Section  4 provides for reduction of debts after passing  of decrees, and sub-s. (i) thereof reads thus : "(1)   Notwithstanding  anything  in  the  Code   of   Civil Procedure,  1908, or any other law-the court which passed  a decree to which this Act applies relating to a secured debt, shall,  on  the application either of the  decree-holder  or judgment-debtor, proceed as hereinafter stated." Then come provisions as to the reduction of debt; but we are not concerned with the details thereof. The question that has been posed before us is the meaning of the words "a decree...... relating to a secured debt".  The 203 comparable  words in S. 3 Are "a suit relating to a  secured debt".  As we have already said, so far as S. 3 is concerned it  is the date on which the suit is filed which has  to  be seen to determine whether the suit relates to a secured debt as  defined in the Act.  It has been urged on behalf of  the appellant that S. 4 applies undoubtedly to a case where  the debt  was a secured debt at the tithe the, suit  was  filed. But  it is further urged that in an application under s.  4, the  court may also take into account the fact  that  though the  debt may not have been a secured debt on the  date  the suit  was filed in which the decree was passed,  the  decree having  created  a charge the debt becomes secured  and  the decree relates to a secured debt, the relevant date in  such a  case being the date on which the application under  s.  4 has  been made to the court.  It is said that the  words  "a decree  relating to secured debt" means a decree  which  has secured a debt whether the debt was secured before the  suit was filed or not. We  are of opinion that this meaning cannot be given to  the words  "a  decree  relating to a  secured  debt".   We  have already indicated that the comparable words in S. 3 are  the same and there the words "a suit relating to a secured debt" clearly  mean  a  suit which is based on a  debt  which  was secured  before the suit was filed.  On the  same  reasoning when s. 4 speaks of "a decree relating to a secured debt" it means a decree passed in a suit which was based on a secured debt as on the date of the suit.  The legislature could  not have  intended  by using these words in s. 4 that  the  fact that the decree created a charge should result in converting what  was  an unsecured debt into a secured.  debt  for  the purpose of s. 4. It seems to us that if one were to ask in a case  of this kind whether the decree related to  a  secured debt  or  not, the answer would clearly be that  the  decree does  not relate to a secured debt but to an unsecured  debt based  on  a promissory note.  It is true  that  the  decree itself  created  a charge but that is  very  different  from

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saying  that the decree relates to a secured debt.  We  have no  doubt  that if the legislature intended  that  a  decree which relates to an unsecured debt but which itself  creates a  charge for any reason would also be covered by s.  4,  it would  have used different and appropriate words  to  convey that idea.  Thus to our mind, as the words "suit relating to a  secured  debt" mean a suit relating to a debt  which  was secured on the date the suit was filed, a decree relating to secured  debt must also mean the same thing i.e.  decree  in respect  of a debt which was secured when the suit in  which the  decree  was passed was filed.  The mere fact  that  the decree  created  a charge for certain reasons,  as  in  this case, under the U.P. Agriculturists Relief Act, is no reason for holding that the decree relates to a secured debt.  Whe- ther the debt was secured or otherwise is a matter which  in our opinion has to be tested both for s. 4 as well as for s. 3 on the 204 date  the  suit  is filed.  If on that  date  the  debt  was secured, the suit would be relating to a secured debt and so would  be  the decree which might later be  passed  in  that suit.   But  if  on the date of the suit the  debt  was  not secured  it  cannot  be said that the decree  related  to  a secured debt simply because the decree created a charge  for some reason or other.  We are therefore of opinion that  the High Court was right in the view it took that this case  was not covered by s. 4 of the Act. The appeals therefore fail and are hereby dismissed with costs--one hearing fee. V.P.S. Appeals dismissed. 205