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PETITIONER: RAJKUMARI KAUSHALYA DEVI

       Vs.

RESPONDENT: BAWA PRITMA SINGH AND ANOTHER.

DATE OF JUDGMENT: 20/04/1960

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. GUPTA, K.C. DAS

CITATION:  1960 AIR 1030            1960 SCR  (3) 570  CITATOR INFO :  R          1964 SC1379  (7)

ACT:        Mortgage-Whether  a  "pecuniary  liability  "-The  Displaced        Persons  (Debts  Adjustment) Act (LXX of 1951), SS.  2  (6),        sub-cls. (a)   (b) (c), 13, 15, 16 (5), 17, 21.

HEADNOTE: The appellant executed two usufructuary mortgages in  favour of  the respondents in 1946 with respect to  two  properties situated  in Ferozepur city and herself took the  properties on  lease  on  the  same date.   The  respondents  filed  an application  under  s. 13 of the  Displaced  Persons  (Debts Adjustment) Act, LXX of 1951, for recovery of the  principal sum  due  and  also  the arrears  of  rent.   The  appellant contested  the application on the ground, inter  alia,  that the  liability was not a debt under the Act as it was not  a pecuniary  liability  and  that  mortgages  in  relation  to properties  situated  now in India were not covered  by  it. The   Tribunal   allowed  the  application  and   passed   a preliminary decree for sale.  The appellant’s appeal to the, High  Court and another under the Letters Patent  were  both dismissed.  On appeal by special leave: Held,  that a mortgage debt would create a pecuniary  liabi- lity  upon  the  mortgagor  and  would  be  covered  by  the definition of the word " debt " in s. 2 (6) of the Act. There is nothing in any provision of the Act which would cut down the plain meaning of the words "pecuniary liability" as used  in s. 2(6) read with sub-cl. (c) thereof  or  restrict those  wide words to liability other than that secured by  a mortgage. Under  sub-cl. (c) of S. 2(6) a displaced person to  whom  a mortgage  debt  is  due from any  other  person,  whether  a displaced   person  or  not,  ordinarily  residing  in   the territories to which the Act extends can take the benefit of this Act. 571  The interest of the prior mortgagee or the subsequent mort- gagee if any would not be affected by a decree passed on  an application under s. 13 of the Act.

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JUDGMENT:        CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 38 of  1960.        Appeal  by special leave from the judgment and  order  dated        October 6, 1958, of the Punjab High Court in Letters  Patent        Appeal No. 52 of 1954, arising out of the judgment and order        dated June 15, 1954, of the said High Court in First  Appeal        from Order No. 149 of 1953.        Y. Kumar, for the appellant.        Bakshi Man Singh and Sardar Singh, for the respondents.        1960.  April 20.  The Judgment of the Court was delivered by        WANCHOO,  J.-This is an appeal by special leave against  the        judgment  of  the  Punjab  High  Court.   The  brief   facts        necessary for present purposes are these.  The appellant had        executed  two  usufructuary mortgages with  respect  to  two        properties  situate  in  Ferozepore city in  favour  of  the        respondents in 1946.  She also took both properties on lease        on  the  same  date.   An  application  was  filed  by   the        respondents  under  s. 13 of the  Displaced  Persons  (Debts        Adjustment)  Act,  No. LXX of 1951 (hereinafter  called  the        Act),  for recovery of the principal sum due as well as  the        rent  which was said to be in arrears.  The application  was        resisted  by the appellant on various grounds, one of  which        was that no such application lay as the liability was not  a        debt  under the Act.  The tribunal negatived the  contention        of  the appellant and passed a preliminary decree for  sale.        Six  months’  time was allowed to the appellant to  pay  the        decretal  amount,  failing  which the  respondents  were  at        liberty  to  get  a  final decree  prepared  and  bring  the        properties  to  sale.  The appellant went in appeal  to  the        High  Court but the appeal was dismissed.  Then there was  a        Letters Patent Appeal, which was also dismissed.  The appel-        lant then applied for and was granted special leave by  this        Court, and that is how the matter has come up before us.        The  only  point  for  our  consideration  is  whether   the        liability created under a mortgage is a debt within        572        the  meaning  of s. 2(6) of the Act.  The relevant  part  of        that provision runs as follows:-        "  ’Debt’  means any pecuniary  liability,  whether  payable        presently or in future, or under a decree or order of  civil        or revenue court or otherwise, or whether ascertained or  to        be  ascertained, which        (a)  in the case of a displaced person who has left or  been        displaced  from  his  place of residence  in  any  area  now        forming  part of West Pakistan, was incurred before he  came        to reside in any area, now forming part of India;        (b)in the case of a displaced person who, before and after        the 15th day of August, 1947, has been residing in any  area        now forming part of India, was incurred before the said date        on  the  security of any immovable property situate  in  the        territories now forming part of West Pakistan :        Provided  that where any such liability was incurred on  the        security  of immovable properties situate both in India  and        in  West  Pakistan, the liability shall  be  so  apportioned        between  the said properties that the liability in  relation        to each of the said properties bears the same proportion  to        the  total amount of the debts as the value of each  of  the        properties  as at the date of the transaction bears  to  the        total value of the properties furnished as security, and the        liability,  for  the purposes of this clause, shall  be  the        liability  which  is  relatable  to  the  property  in  West        Pakistan;        (c)is  due  to a displaced person from  any  other  person

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      (whether  a displaced person or not) ordinarily residing  in        the territories to which this Act extends;        x              x              x              x        The  contention  on  behalf of the  appellant  is  that  the        liability under a mortgage is not a pecuniary liability  and        therefore s. 2(6) will not apply to a mortgage debt.  It  is        further  urged  that  the  scheme  of  the  Act  shows  that        mortgages  in relation to properties situate in what is  now        India are not covered by the Act at all.        573         Debt  is  defined  in  s. 2(6)  as  meaning  any  pecuniary        liability and has been restricted by the three subclauses in        the  sub-section with reference to the person who  might  be        owing the debt or to whom the debt might be owed.   Sub-cls.        (a) and (b) refer to the debts owed by a displaced person as        defined in the Act while sub-cl. (c) refers to a debt due to        a  displaced person.  Sub-cl. (c) has therefore to be  taken        independently  of sub-cls. (a) and (b), for it refers  to  a        creditor who is a displaced person while the other two  sub-        clauses refer to a debtor who is a displaced person.   Under        subcl. (c) a displaced person who is a creditor can  recover        the  debt  due  to  him from any  other  person,  whether  a        displaced person or not, who is residing in the  territories        to  which  the  Act extends.  The  main  contention  of  the        appellant in this connection is that a mortgage debt is  not        a pecuniary liability and therefore does not fall within the        definition of debt at all.  We are of opinion that there  is        no  force  in  this  contention.   The  words  "   pecuniary        liability " will cover any liability which is of a  monetary        nature.   Now the definition of a mortgage in s. 58  of  the        Transfer  of Property Act, No. 4 of 1882, shows that  though        it  is  the transfer of an interest  in  specific  immovable        property,  the  purpose  of the transfer is  to  secure  the        payment  of money advanced or to be advanced by way of  loan        or  to secure an existing or future debt or the  performance        of  an  engagement  which  may  give  rise  to  a  pecuniary        liability.  The money advanced by way of loan, for  example,        which  is  secured  by  a  mortgage,  obviously  creates   a        pecuniary liability.  It is true that a mortgage in addition        to creating the pecuniary liability also transfers  interest        in the specific immovable property to secure that  liability        ;  none  the  less  the loan or debt  to  secure  which  the        mortgage is created will remain a pecuniary liability of the        person  creating  the mortgage.  Therefore a  mortgage  debt        would  create a pecuniary liability upon the  mortgagor  and        would be covered by the definition of the word "debt" in  s.        2(6).   We  may in this connection refer  to  the  Displaced        Persons (Institution of Suits) Act, No. XLVII of 1948, which        has been practically repealed by the        75        574        Act.  In that law, suits relating to immovable property were        specially  excepted  under  s.  4,  but  there  is  no  such        provision  in the Act.  Again s. 6 of the Displaced  Persons        (Legal  Proceedings) Act, No. XXV of  1949, which  has  also        been  repealed  by the Act mentions decrees  or  orders  for        payment of money while in s. 15 of the Act which deals  with        the  same  matter those words are omitted and  the  words  "        proceedings  in  respect  of any debt "  are  used  instead.        There  can  be  no doubt in consequence that the  Act  is  a        comprehensive  law  dealing  with  all  kinds  of  pecuniary        liability.  We are therefore of opinion that s. 2(6) clearly        includes  a  mortgage debt and under sub-el. (c)  thereof  a        displaced  person to whom such a debt is due from any  other        person,  whether  a  displaced  person  or  not,  ordinarily

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      residing  in  the territories to which the Act  extends  can        take the benefit of this Act.        Let  us now see whether there is anything in the  scheme  of        the  Act which in any way militates against the plain  words        of s. 2(6).  Learned counsel for the appellant in the  first        place  refers to sub-el. (b) of s. 2 (6) in this  connection        and  points out that that subclause specifically deals  with        mortgage debts secured on any immovable property situate  in        the territories forming part of West Pakistan.  It is  urged        that there was a specific provision with respect to mortgage        debts  in relation to immovable properties in West  Pakistan        and  that  if it were intended that  mortgage  of  immovable        properties situate in what is now India would also be  dealt        with under the Act there would have been a similar  specific        provision  in the Act.  Further it is pointed out  that  the        proviso  to subel. (b) to s. 2(6) provides for  apportioning        the  mortgage debt in cases where the property on which  the        debt  is secured is both in West Pakistan and in  India  and        restricts  the application of sub-cl. (b) only to that  part        of  the  debt  which was secured on  the  property  in  West        Pakistan and thus excludes from the operation of sub-el. (b)        that part of the debt which is secured on property in India.        That is undoubtedly so.  The reason however for this special        provision is to be found in the later provision contained in        s.  16 by which a charge was created on compensation  to  be        given to a        575        displaced  person with respect to the mortgage debt  secured        on  immovable property in Pakistan or in the  alternative  a        charge  was  created on property given in exchange  for  the        property  in  Pakistan on which the debt was  charged.   The        special  provision there-,. fore in sub-cl. (b) of  s.  2(6)        would not in these circumstances cut down the plain  meaning        of the words used in sub-cl. (c) or restrict the wide  words        " pecuniary liability " to liability other than that secured        by a mortgage.  Incidentally we may mention that subcl.  (b)        itself  shows that pecuniary liability includes  a  mortgage        debt, for it shows that any liability which was incurred  on        the  security  of  any immovable property  situate  in  West        Pakistan would be a debt within the meaning of s. 2 (6)  and        therefore a pecuniary liability.        It  is  next urged that when the  legislature  excepted  the        property in India which was encumbered from being dealt with        under   sub-el.  (b)  so  far  as  displaced  debtors   were        concerned,  there  is  no reason why  it  should  allow  the        displaced creditors to proceed under the Act with respect to        mortgage  debts.   This  argument,  however,  overlooks  the        provision in sub-cl. (a) under which a displaced debtor  can        take the benefit of the Act, once it is held that the  words        "  pecuniary liability " also include mortgage debt.  As  we        have  said  before sub-cl. (b) was dealing  with  a  special        situation  which was worked out in s. 16 of the Act and  the        general right of a displaced debtor to take advantage of the        Act  is to be found in sub-cl. (a) and that  subclause  will        cover a mortgage debt as it is a pecuniary liability.        Reliance  was then placed on s. 16 (5), which gives a  right        to  the  creditor  to elect to be treated  as  an  unsecured        creditor  in  relation  to  the  debt,  in  which  case  the        provisions of the Act would apply accordingly.  It was urged        that this sub-section requires that a creditor must make  an        election before he can take the benefit of this Act.  We are        of  opinion that this argument has no force, for sub-s.  (5)        of s. 16 only deals with a situation which arises where  the        mortgage,  charge or lien was on immovable property  situate        in West Pakistan.  It does not deal at all with cases

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      576        where the mortgage, charge or lien is on immovable  property        situate outside West Pakistan.        Reference was then made to s. 17 of the Act.  It deals  with        debts secured on movable properties.  That section is  again        concerned  with displaced debtors and provides how  equities        will  be  worked  out between a  displaced  debtor  and  his        creditor with respect to debts secured on movable  property.        We  see  nothing  in this section which  can  cut  down  the        amplitude of the words used in s. 2 (6)(c).        Reference was then made to s. 21 which provides for  scaling        down  debts.   That is however a general  provision  dealing        with debts of all kinds and there is nothing in that section        which  shows  that the word " debt " as defined in  s.  2(6)        refers  only  to  claims for money and does  not  include  a        mortgage debt.        Thus  we see nothing in any provision of the Act or  in  its        scheme which would cut down the meaning we have given to the        words " pecuniary liability " as used in s. 2 (6) read  with        sub-cl. (c) thereof.        It was also urged that if mortgage debts on property situate        in  India  were covered by the Act, there  is  no  machinery        (like  s.  16) for enforcement of the creditors’  rights  in        respect thereof.  This is not correct.  Section 10  provides        for  the claim of a displaced creditor against  a  displaced        debtor  and  s.  13 provides for the claim  of  a  displaced        creditor  against  any other person who is not  a  displaced        debtor.   Section 11 then provides how an application  under        s.  10  A-ill be dealt with and under sub-s. (2)  thereof  a        decree can be passed under certain circumstances against the        displaced debtor.  Similarly under s. 14 (2) a tribunal  can        pass  such decree in relation to an application under s.  13        as it thinks fit.  These decrees are executable under s.  28        of the Act.  Therefore even when the debt is a mortgage debt        there is provision in the Act for enforcement of that  debt,        though  of  course  this provision  is  different  from  the        provision  contained  in s. 16, which was dealing  with  the        special  situation of properties under ,mortgage situate  in        West Pakistan.        We  may also refer to s. 3 of the Act which lays  down  that        the provisions of the Act and of the Rules        577        and Orders made thereunder shall have effect notwithstanding        anything  inconsistent therewith contained in any other  law        for the time being in force.  The effect of this  overriding        provision is to make a suit like the present maintainable in        spite  of  the provisions applying to such  suits  in  other        laws.        The last contention on behalf of the appellant is that if s.        2  (6)  (c)  empowers  a  displaced  creditor  to  make   an        application  under  s. 13 even with respect  to  a  mortgage        debt,  there  will  be  hardship  to  prior  mortgagees   or        subsequent  mortgagees inasmuch as these persons  cannot  be        dealt  with under the Act.  Section 13 empowers a  displaced        person  claiming a debt from any other person who is  not  a        displaced person to apply within one year of the coming into        force  of the Act in any local area to the  tribunal  having        jurisdiction  in  the matter.  The  provision  is  obviously        enacted to give relief for a short period only.  Section  25        of  the Act provides for the regulation of  all  proceedings        under  the  Act by the provisions contained in the  Code  of        Civil Procedure save as expressly provided in the Act or  in        any  rules made thereunder.  But assuming that in  spite  of        this  provision,  0.  XXXIV,  r. 1  of  the  Code  of  Civil        Procedure  will not apply to proceedings under the  Act  and

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      all those having an interest in the mortgage security cannot        be  joined  as parties as required by 0. XXXIV,  r.  1,  the        interest of prior or puisne mortgagees cannot in any case be        affected   by  the  decree  passed  under  the   Act.    The        Explanation to 0. XXXIV, r. 1, shows that a prior  mortgagee        need  not  be made a party to a suit for sale  by  a  puisne        mortgagee.   So far therefore as a prior mortgagee  is  con-        cerned, his rights will not be affected by the decree passed        under s. 13 of the Act, just as his rights are not  affected        by  the decree passed under 0. XXXIV.  So far as  mortgagees        subsequent to the displaced creditor who applies under s. 13        are concerned, their interests will also not be  jeopardized        by  the decree which may be passed under s. 13.  Even  under        0. XXXIV, which requires puisne or subsequent mortgagees  to        be  joined as parties in a suit for sale, a decree  obtained        in  a suit to which the subsequent mortgagee was not  joined        as a party does not affect his rights and the        578        proceedings  in such a suit are not binding on him so as  to        affect  his rights under the second mortgage.  He  can  thus        follow  the property by suing his mortgagor, even though  it        may have been sold under the decree of an earlier  mortgagee        in  a  suit  to which he was not a  party.   Therefore,  the        interest of the prior mortgagee or the subsequent mortgagee,        if  any,  would  not be affected by a decree  passed  on  an        application under s. 13 and there is no reason therefore  to        cut down the plain meaning of the words used in s. 2 (6) (c)        on  the  ground  that the proceedings under  the  Act  would        prejudicially   affect  the  rights  of  prior   or   puisne        mortgagees.        There is therefore no force in this appeal and it is  hereby        dismissed with costs.        Appeal dismissed.