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PETITIONER: STATE BANK OF TRAVANCORE

       Vs.

RESPONDENT: MOHAMMED MOHAMMED KHAN

DATE OF JUDGMENT21/08/1981

BENCH: CHANDRACHUD, Y.V. ((CJ) BENCH: CHANDRACHUD, Y.V. ((CJ) SEN, A.P. (J) ERADI, V. BALAKRISHNA (J)

CITATION:  1981 AIR 1744            1982 SCR  (1) 338  1981 SCC  (4)  82        1981 SCALE  (3)1253  CITATOR INFO :  RF         1986 SC1499  (16)

ACT:      Kerala Agriculturists.  Debt Relief  Act (Act 11) 1970- Whether a  debt owed  by an  Agriculturist falls  within the purview of section 2(4).

HEADNOTE:      The  respondent  had  an  overdraft  account  with  the Erattupetta Branch  of the  Kottayam orient Bank Ltd. at the foot of  which he owed a sum of over Rs. 3000/- to the Bank. The said  Bank which  was a  ’Banking Company’ as defined in the Banking  Regulation Act,  1949, was amalgamated with the appellant Bank with effect from June 17, 1961. The appellant Bank filed  a suit  (O,S, 28  of  1963)  in  the  Sub-Court, Meenachil, against the respondent for recovery of the amount due from  him in  the overdraft  Account with  the  Kottayam orient Bank,  the right  to recover  which had  come  to  be vested in  the appellant  as  a  result  of  the  scheme  of amalgamation.  The   suit  was  decreed  in  favour  of  the appellant but  when it took out execution proceedings in the Sub-Court, Kottayam,  the respondent  filed  an  application under section  8 of  the Kerala  Agriculturists’ Debt Relief Act claiming  that being an agriculturist within the meaning of  that  Act,  he  was  entitled  to  the  benefit  of  its provisions including  those relating  to the scaling down of debts.  The   learned  Subordinate   Judge   dismissed   the application  holding:   (i)  that  the  respondent  was  not entitled to  the benefit of the provisions regarding scaling down of  the debt because the debt, having been once owed by him to  the Kottayam  orient Bank  Ltd. which  was a Banking Company as  defined in the Banking Regulation Act, 1949, was outside the  purview of  section S of the Act which provided for the  scaling down  of debts  owed by agriculturists; and (ii) that he was only entitled to the benefit of the proviso to section  2(4) (l) of the Act under which the amount could be repaid in eight half yearly instalments      The Revision  Application preferred  by the  respondent was referred  to the  Full Bench  of the  High Court. It was contended on behalf of the appellant Bank that the debt owed to it  by the  respondent was excluded from the operation of

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the Act  by reason  of section  2 (4) (a) (ii) and section 2 (4) (1)  of the  Act. By its judgment dated February 1, 1978 the  High   Court  rejected  that  contention,  allowed  the Revision  Application  and  held  that  the  respondent  was entitled to  all the relevant benefits of the Act, including the benefit of scaling down of the debt and hence the appeal by special leave. 339      Dismissing the appeal, the Court ^      HELD: 1:1.  The appellant  Bank will not be entitled to the benefit  of the exclusion contained in section 2 (4) (a) (ii) of  the Kerala Agriculturists’ Debt Relief Act, 1970 in view of  clause (B)  of the  proviso to  the section and the respondent’s claim  to the  benefits of  the Act will remain unaffected by that provision. [345H, 346 A]      1: 2. The respondent is admittedly an agriculturist and he owes  a sum of money to the appellant Bank under a decree passed in  its favour  by the  Sub-Court, Meenachil, in O.S. No. 28  of 1963.  The liability which the respondent owes to the appellant Bank is, therefore a "debt" within the meaning of section 2 (4) of the Act. [344 F-G]      However, since  the appellant  Bank, namely,  the State Bank of  Travancore, .  is  a  subsidiary  bank  within  the meaning of  section  2  (k)  of  the  State  Bank  of  India (Subsidiary Banks)  Act, 1959  and also  as contemplated  by sub-clause (ii)  of clause  (a) of  section 2(4) of the Act, the  decretal  amount  payable  by  the  respondent  to  the appellant Bank  will not  be a  debt within  the meaning  of section 2(4) of the Act. [345 C-D]      1: 3. By reason of clause (B) of the proviso to section 2 (4) (a) (ii) of the Act, which proviso is in the nature of an exception to the exceptions contained in the said section the amount  payable to  a  subsidiary  bank  is  not  to  be regarded as  a debt  within the  meaning of the Act, only if the right  of the  subsidiary bank to recover the amount did not arise by reason of any transfer effected by operation of law subsequent  to July  1,  1957.  Here,  the  notification containing the  scheme of  amalgamation was published on May 16. 1961. Thus, the right of the appellant Bank, though is a subsidiary Bank,  to recover  the amount from the respondent arose by  reason of a transfer effected by operation of law, namely, the  scheme of  amalgamation, which came into effect after July 1, 1957. [345 D-E, G]      2: l.  The State Bank of Travancore, is not a ’company’ properly  so  called.  It  is  a  subsidiary  bank.  It  was established by the Central Government in accordance with The Act of  1959 and  is not  a ’company  and, therefore  not  a banking company.  Therefore, the  decretal  debt  which  the respondent is  liable to pay to the appellant is not owed to a "banking  company". It was indeed not owed to any "banking company" at all on July 14, 1970 being the date on which the Act came into force. [346 G-H, 347 A]      3: 1.  The exclusion  provided for  in  clause  (I)  of section 2  (4) of  the Act can be availed of, if the debt is due to  a banking company at the time of the commencement of the Act. [352 D-E]      3: 2.  The object of the Act is to relieve agricultural indebtedness.  In   order  to   achieve  that   object,  the legislature  conferred   certain  benefits  on  agricultural debtors but,  while doing  so, it  excluded a class of debts from  the  operation  of  the  Act,  namely,  debts  of  the description mentioned  in clauses  (a) to  (n) of  section 2 (4). One  class of debts taken out from the operation of the Act is  debts owed  to banking  companies, as  specified  in

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clause (1). The reason for this exception being that, unlike money lenders who 340 exploit needy  agriculturists and impose upon them harsh and onerous terms  while granting  loans to them, representative institutions, like banks and banking companies, are governed be their  rules and  regulations which  do not  change  from debtor to  debtor and  which, if  anything, are  intended to benefit the weaker sections of society. [348 A-C]      3: 3.  Relief to agricultural debtors who have suffered the oppression  of private  money-lenders,  has  to  be  the guiding  star   which   must   illumine   and   inform   the interpretation of  the beneficient  provisions of  the  Act. When  clause   (1)  speaks   of  a   debt  due  "before  the commencement" of  the Act  to a  banking  company,  it  does undoubtedly mean  what it  says, namely,  that the debt must have been  due to  a banking company before the commencement of the  Act. But it means something more: that the debt must also be  due to a banking company at the commencement of the Act. Reading  into the  clause the  word "at"  which is  not there, is  the only  rational manner  by which  meaning  and content could be given to it, so as to further the object of the Act. [349 B-E]      Further clause  (I) speaks  of a  debt due  before  the commencement of  the Act,  what it  truly means to convey is not that  the debt should have been due to a banking company at some  point of  time before  the commencement of the Act, but that it must be a debt which was incurred from a banking company before the commencement of the Act. [349 E-F]      Thus, the application of clause (I) is subject to these conditions: (i)  The debt  must have  been incurred  from  a banking company;  (ii) the  debt must  have been so incurred before the  commencement of the Act; and (iii) the debt must be due  to a banking company on the date of the commencement of the  Act. These are cumulative conditions and unless each one of  them is  satisfied, clause (I) will not be attracted and the exclusion provided for therein will not be available as an  answer to the relief sought by the debtor in terms of the Act. [349G-H, 350 A]      3: 4.  Section 2  (4) which  defines a  "debt"  had  to provide that  debt means a liability due from or incurred by an agriculturist "on or before the commencement" of the Act. It  could  not  be  that  liabilities  incurred  before  the commencement of  the Act  would be  "debts" even though they are not  due on  the date  of commencement  of the  Act. The words "on or before the commencement" of the Act are used in the context  of liabilities  "due from  or incurred"  by  an agrieculturist. For  similar reasons,  clause (j) had to use the expression "at the commencement" of the Act, the subject matter of that clause being debts due to widows. The benefit of the  exclusion provided  for in  clause (j) could only be given to widows to whom debts were due "at the commencement" of the  Act. The  legislature  could  not  have  given  that benefit in respect of debts which were due before but not at the commencement  of the Act. Thus, the language used in the two provisions  is suited  to the  particular subject matter with which  those provisions  deal and  is apposite  to  the context in which that language is used. [350 C-F]      3:5. The  object of  the Act  being to  confer  certain benefits on  agricultural debtors,  the legislature would be under an  obligation, while  excepting a certain category of debts  from   the  operation   of  the   Act,  to   make   a classification which  will answer  the test  of article  14. Debts incurred from banking companies and

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341 due to  such companies  at the commencement of the Act would fall into  a separate and distinct class, the classification bearing a  nexus with  the  object  of  the  Act.  If  debts incurred from  private money-lenders  are brought within the terms of  clause (I) on the theory that the right to recover the debt  had passed on to a banking company sometime before the  commencement   of  the   Act,  the   clause  would   be unconstitutional for  the reason that it accords a different treatment to  a category  of debts without a valid basis and without the classification having a nexus with the object of the Act. [350G-H, 357A-B]      State of  Rajasthan v.  Mukanchand [1964]  6  SCR  903; Fatehchand Himmatlal  v. State  of Maharashtra, [1977] 2 SCR 828, applied.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1376 of 1978.       (Appeal  by special  leave from the judgment and order dated the  1st February,  1978 of  the Kerala  High Court in M.F.A. No. 53 of 1977)      L.N. Sinha,  Attorney General, J. M. Joseph, K John and Shri Narain for the Appellant. D      C.S. Vaidlyanathan, (A.C.), for the Respondent.       The Judgment of the Court was delivered by      CHANDRACHUD, C.J.  The question  which arises  in  this appeal by  special leave  is whether  a  debt  owed  by  the respondent, an  agriculturist, to  the  appellant-The  State Bank of  Travancore-falls within  the purview  of the Kerala Agriculturists’ Debt  Relief Act,  11 of  1970,  hereinafter called ’the Act’.      The  respondent  had  an  overdraft  Account  with  the Erattupetta Branch  of the Kottayam Orient Bank Ltd., at the foot of  which he owed a sum of over Rs. 3000/- to the Bank. The said  Bank which  was a  ’Banking Company’ as defined in the Banking  Regulation Act,  1949, was amalgamated with the appellant Bank  with effect  from June 17, 1961 in pursuance of a  scheme of amalgamation prepared by the Reserve Bank of India in  exercise of the powers conferred by section 45 (4) of the  Banking Regulation Act and sanctioned by the Central Government under  sub-section (7)  of section  45. Upon  the amalgamation, all  assets and  liabilities of  the  Kottayam Orient Bank  stood transferred  to the  appellant Bank.  The notification containing the scheme of amalgamation was 342 published in  the Gazette  of India Extra-ordinary dated May 16, 1961 .      The appellant filed a suit (O.S. No. 28 of 1963) in the Sub Court, Meenachil, against the respondent for recovery of the amount  due from  him in  the overdraft Account with the Kottayam Orient Bank, the right to recover which had come to be vested  in the  appellant as  a result  of the  aforesaid scheme of  amalgamation. That  suit was decreed in favour of the appellant, but when it took out execution proceedings in the Sub-Court,  Kottayam, the  respondent filed  a  petition under section  8 of  the Act seeking amendment of the decree in terms  of the  provisions  of  the  Act.  The  respondent claimed that  he was  an agriculturist within the meaning of the Act  and was  therefore entitled  to the  benefit of its provisions, including  those relating to the scaling down of debts. The  learned  Subordinate  Judge  assumed,  what  was evidently not  controverted,  that  the  respondent  was  an

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agriculturist.  But   the  learned   Judge  held   that  the respondent was  not entitled to the benefit of the provision regarding scaling  down of the debt because the debt, having been once  owed by  him to  the Kottayam  Orient Bank  Ltd., which was  a ’Banking  Company as  defined  in  the  Banking Regulation Act,  1949, was  outside the purview of section 5 of the Act which provided for the scaling down of debts owed by agriculturists.  According  to  the  learned  Judge,  the respondent was  only entitled  to the benefit of the proviso to section 2 (4) (l) of the Act under which the amount could be repaid in eight half-yearly instalments. Since the relief which the  respondent had asked for was that his debt should be scaled  down and  since he  was held not entitled to that relief, his application was dismissed by the learned Judge.      The respondent preferred an appeal to the High Court of Kerala, the  maintainability of  which was challenged by the appellant on the ground that no appeal lay against the order passed by  the Subordinate Judge on the application filed by the respondent  under section  8 of  the Act. The High Court accepted the preliminary objection but granted permission to the respondent  to convert  the appeal into a Civil Revision Application and  dealt with  it as  such.  In  view  of  the general importance  of the questions involved in the matter, the revision application was referred by a Division Bench to the Full Bench.      It was  contended in  the High  Court on  behalf of the appellant, Bank  that the  debt owed to it by the respondent was excluded 343 from the operation of the Act by reason of section 2 (4) (a) (ii) and section 2 (4) (1) of the Act. By its judgment dated February 1,  1978 the  High Court  rejected that contention, allowed  the   Revision  Application   and  held   that  the respondent was  entitled to all the relevant benefits of the Act, including  the benefit  scaling down  of the  debt. The Bank questions  the correctness  of that  judgment  in  this appeal.      Section 8  of  the  Act  provides,  in  so  far  as  is material, that  where, before the commencement of the Act, a court has  passed a  decree for, the repayment of a debt, it shall, on  the application  of a  judgment-debtor, who is an agriculturist, apply  the provisions  of the  Act to  such a decree and  shall amend  the decree  accordingly. It  is  in pursuance of this section that the respondent applied to the executing Court for amendment of the decree. Section 4(1) of the Act  provides that notwithstanding anything contained hl any law or contract or in a decree of any court, but subject to the  provisions of  sub-section (5), an agriculturist may discharge his  debts in the manner specified in sub-sections (2) and  (3). Sub-section  (2) of section 4 provides that if any  debt   is  repaid   in  seventeen   equal  half  yearly instalments together with interest at the rates specified in section 5,  the whole debt shall be deemed to be discharged. Sub-section  (3)  specifies  the  period  within  which  the instalments have  to be  paid.  The  respondent  claims  the benefit of  the provision  contained   in  section  4 (1) of the Act.      In order  to decide  whether the respondent is entitled to the  relief claimed  by him,  it would  be  necessary  to consider the  provisions of  sections 2 (1) and 2 (4) of the Act. The  short title of the Act shows that it was passed in order to give relief to indebted agriculturists in the State of Kerala.  The State  Legislature  felt  the  necessity  of passing the  Act because,  the Kerala  Agriculturists’  Debt Relief Act,  31 of  1958, conferred benefits on agricultural

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debtors in respect of debts incurred by them before July 14, 1958 only.  The Statement  of objects and Reasons of the Act slows that  the agricultural indebtedness amongst the poorer sections of  the community showed an upward trend after July 14,  1958   owing  to   various  economic  factors.  A  more comprehensive legislation  was therefore  introduced by  the State Legislature  in  the  shape  of  the  present  Act  in substitution of  the Act of 1958. The Act came into force on July 14, 1970.      Section  2   (1)  of   the   Act   which   defines   an "agriculturist" need not be reproduced because it was common ground at all stages bet- 344 ween the  parties that  the respondent  is an  agriculturist within the meaning of the definition in section 2 (1).      Section 2  (4) of the Act, in so far as is material for our purposes, reads thus: "Section 2  (4):"debt" means  any liability in cash or kind,                whether secured  or unsecured,  due  from  or                incurred by an agriculturist on or before the                commencement of  this  Act,  whether  payable                under a  contract, or under a decree or order                of any  court, or  otherwise,  but  does  not                include:-      (a) any sum payable to:-           (i)  the Government of Kerala or the Government of                India or the Government of any other State or                Union territory or any local authority; or           (ii) the  Reserve Bank  of India or the State Bank                of India  or any  subsidiary bank  within the                meaning of  clause (k)  of section  2 of  the                State Bank of India (Subsidiary Act, 1959, or                the Travancore  Credit Bank  (in liquidation)                constituted under  the Travancore Credit Bank                Act, IV of 1113:           Provided that the right of the bank to recover the      sum did not arise by reason of:-      (A)  any assignment made or      (B)  any  transfer   effected  by   operation  of  law,           subsequent to the 1st day of July, 1957". As  stated   above,  the   respondent   is   admittedly   an agriculturist and  he owes  a sum  of money to the appellant Bank under  a decree  passed in its favour by the Sub-Court, Meenacil, in  O.S. No.  28 of  1963. The liability which the respondent owes  to the appellant Bank is therefore a "debt" within the  meaning of section 2 (4) of the Act. But certain liabilities are excluded from the ambit of the definition of "Debt". The  liabilities which  are thus  excluded from  the definition of  debt are  specified in  clauses (a) to (n) of section 2  (4). We  are concerned  in this  appeal with  the liabilities specified  in clause  (a) (ii) and clause (1) of section 2 (4), which are excluded from 345 the operation  of clause  2 (4).  We will first consider the implications of  the exclusion  provided for  in  sub-clause (ii) of  clause (a)  of section  2 (4).  Under the aforesaid sub-clause, any  sum payable to a subsidiary bank within the meaning of  section  2  (k)  of  the  State  Bank  of  India (Subsidiary  Banks)   Act,  1959,   is  excluded   from  the definition of  "debt". Section  2 (k)  of the  Act  of  1959 defines a  "subsidiary bank" to mean any new bank, including the Hyderabad  Bank and  the Saurashtra Bank. The expression "new bank" is defined in section 2 (f) of the Act of 1959 to mean any of the banks constituted under section 3. Section 3 provides that  with effect  from such  date, as  the Central

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Government may  specify, there  shall be constituted the new banks specified  in the  section. Clause  (f) of  section  3 mentions the  State Bank of Travancore amongst the new banks which may  be constituted  under section 3. It is thus clear that  the   appellant  Bank,   namely,  the  State  Bank  of Travancore, is  a subsidiary  bank as  contemplated by  sub- clause (ii)  of clause  (a) of  section 2 (4) of the Act. If the matter  were to  rest there, the decretal amount payable by the  respondent to  the appellant Bank will not be a debt within the  meaning of  section 2  (4) of the Act, since the appellant is a subsidiary bank within the meaning of section 2 (k)  of the  State Bank  of India  (Subsidiary Banks) Act, 1959. But  by reason of clause (B) of the proviso to section 2 (4)  (a)  (ii)  of  the  Act,  the  amount  payable  to  a subsidiary bank  is not  to be regarded as a debt within the meaning of the Act, only if the right of the subsidiary bank to recover  the amount  did  not  arise  by  reason  of  any transfer effected  by operation of law subsequent to July 1, 1957. The  proviso is  thus in the nature of an exception to the exceptions  contained in  section 2  (4) (a) (ii) of the Act.      The respondent  initially  owed  a  sum  exceeding  Rs. 3000/- to the Erattupetta Branch of the Kottayam Orient Bank Ltd. which  was amalgamated  with the  appellant  Bank  with effect from June 17, 1961 pursuant to an amalgamation scheme prepared by  the Reserve  Bank of  India.  All  the  rights, assets and  liabilities of  the Kottayam  Orient  Bank  were transferred to  the  appellant  Bank  as  a  result  of  the amalgamation. The  notification  containing  the  scheme  of amalgamation was  published on May 16, 1961. Thus, the right of the  appellant Bank,  though it  is a subsidiary Bank, to recover the  amount from the respondent arose by reason of a transfer effected by operation of law, namely, the scheme of amalgamation, which  came into  effect after  July 1,  1957. Since clause (B) of the proviso to section 2 (4) (a) (ii) is attracted, the  appellant Bank  will not  be entitled to the benefit of the exclusion contained in section 2 (4) (a) 346 (ii) of the Act and the respondents claim to the benefits of the Act will remain unaffected by that provision.      That  makes  it  necessary  to  consider  the  question whether the  appellant Bank  can get the advantage of any of the other  exclusionary clauses  (a) to (n) of section 2 (4) of the  Act. The only other clause of section 2 (4) which is relied upon  by the  appellant in this behalf is clause (1), according to  which the  word ’debt’ as defined in section 2 (4) will not include:-           "any debt exceeding three thousand rupees borrowed      under  a   single  transaction   and  due   before  the      commencement  of  this  Act  to  any  banking  company;      (emphasis supplied)           Provided that  in the  case of  any debt exceeding      three  thousand   rupees  borrowed   under   a   single      transaction and due before the commencement of this Act      to any  banking company, any agriculturist debtor shall      be entitled  to repay  such debt  in eight  equal half-      yearly instalments  as provided  in sub-section  (3) of      section 4,  but the  provisions of  section 5 shall not      apply to such debt."       The  question for  consideration is whether the amount which the  respondent is  liable to pay under the decree was "due before  the commencement  of the  Act  to  any  Banking Company".      Turning first  to the  question whether  the  appellant Bank is  a banking  company, the  learned Subordinate  Judge

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assumed that  it is, but no attempt was made to sustain that finding in the High Court. Shri Abdul Khader, who appears on behalf of  the appellant conceded before us that it is not a banking company.  The  concession  is  rightly  made,  since according to  section 2(2)  of the  Act,  ’Banking  Company’ means a banking company as defined in the Banking Regulation Act, 1949. Section S(c) of the Act of 1949 defines a banking company to  mean any Company which transacts the business of banking in  India (subject to the provision contained in the Explanation to  the section). Thus, in order that a bank may be a  banking company,  it is  in the  first place necessary that it  must be  a "company". The State Bank of Travancore, which is  the  appellant  before  us,  is  not  a  ’company’ properly so  called. It  is a  subsidiary bank  which  falls within the  definition of  section 2(k) of the State Bank of India (Subsidiary  Banks) Act,  1959. It  was established by the Central  Government in  accordance with  the Act of 1959 and is not a ’company’ and 347 therefore, not  a banking  company. It  must follow that the decretal debt  which the  respondent is liable to pay to the appellant is  not owed  to a  banking company. It was indeed not owed  to any  banking company  at all  on July 14, 1970, being the  date on  which the Act came into force. It may be recalled that  the respondent  owed a  certain sum exceeding three thousand  rupees to  the Kottayam  Orient Bank Ltd., a banking company,  on an  overdraft account.  That  Bank  was amalgamated with the appellant Bank with effect from May 16, 1961, as  a result of which the latter acquired the right to recover the amount from the respondent. It filed Suit No. 28 of 1963 to recover that amount and obtained a decree against the respondent.      lt is precisely this small conspectus of facts, namely, that the  amount was  at one  time owed to a banking company but was not owed to a banking company at the commencement of the Act,  which raises  the question  as  regards  the  true interpretation of clause (1) of section 2 (4).       The  fact that the amount which the respondent owes to the appellant  was not owed to a banking company on the date on which  the Act came into force, the appellant not being a banking company,  does not  provide a  final solution to the problem under  consideration. The  reason for  this is  that clause (1)  of section 2(4) speaks of a debt "due before the commencement" of  the Act  to any  banking company,  thereby purporting to  make the state of affairs existing before the commencement of  the Act decisive of the application of that clause. The  contention of the learned Attorney General, who led the  argument on  behalf of  the appellant,  is that the respondent owed  the debt before the commencement of the Act to a  banking  company  and,  therefore,  the  appellant  is entitled to  claim the benefit of the exclusion provided for in clause  (1). The  argument is  that, for  the purposes of clause (1),  it does  not matter to whom the debt is owed on the date  of the commencement of the Act: what matters is to whom the debt was owed before the commencement of the Act.      The learned Attorney General is apparently justified in making this  submission which rests on the plain language of clause (1)  of section  2(4), the plain, grammatical meaning of the  words of the statute being generally a safe guide to their interpretation.  But having  considered the submission in its  diverse implications,  we find  ourselves unable  to accept it. 348 In order to judge the validity of the submission made by the Attorney General,  one must  of necessity have regard to the

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object and  purpose of  the Act. The object of the Act is to relieve agricultural  indebtedness. In order to achieve that object,  the   legislature  conferred  certain  benefits  on agricultural debtors  but, while  doing so,  it  excluded  a class of  debts from the operation of the Act, namely, debts of the  description mentioned  in  clauses  (a)  to  (n)  of section  2(4).  One  class  of  debts  taken  out  from  the operation of  the Act is debts owed to banking companies, as specified in  clause (1).  The reason  for this exception is obvious. It  is notorious  that money  lenders exploit needy agriculturists and  impose upon them harsh and onerous terms while granting  loans to them. But that charge does not hold true in  the case of representative institutions, like banks and banking  companies. They are governed by their rules and regulations which  do not  change from  debtor to debtor and which, if  any thing,  are intended  to benefit  the  weaker sections of  society. It is for this reason that debts owing to such  creditors are  excepted from  the operation  of the Act.      A necessary  implication and  an inevitable consequence of the  Attorney General’s  argument is  that  in  order  to attract the  application of  clause (1) of section 2 (4), it is enough to show that the debt was, at some time before the commencement of  the Act, owed to a banking company; it does not matter whether it was in its inception owed to a private money-lender and,  equally so, whether it was owed to such a money-lender on  the date  of the  commencement of  the Act. This argument,  if accepted,  will defeat the very object of the Act.  The sole test which assumes relevance according to that argument  is whether  the debt  was owed,  at any  time before the commencement of the Act, to a banking company. It means that it is enough for the purpose of attracting clause (1) that,  at some  time in  the past,  may be in a chain of transfers, the  right to  recover the  debt was  vested in a banking company.  A simple  illustration will  elucidate the point. If  a private  money-lender had  initially granted  a loan to  an agricultural  debtor on  usurious terms  but the right to  recover that  debt came  to be vested in a banking company some  time before  the commencement  of the Act, the debtor will  not be  able to avail himself of the benefit of the provisions  of the  Act because,  at some  point of time before the  commencement of  the Act, the debt was owed to a banking company.  And  this  would  be  so  irrespective  of whether the  banking company  continues to  be  entitled  to recover the debt on the date of the commencement of the Act. Even if it assigns its 349 right to  a private  individual, the debtor will be debarred from claiming  the benefit  of the  Act because,  what is of decisive importance,  according to  the  Attorney  General’s argument  is   the  fact   whether,  some  time  before  the commencement of  the Act,  the debt  was due  to  a  banking company. We do not think the Legislature could have intended to produce such a startling result.      The plain  language of  the clause,  if interpreted  so plainly, will  frustrate rather  than further  the object of the Act.  Relief to  agricultural debtors, who have suffered the oppression  of  private  moneylenders,  has  to  be  the guiding  star   which   must   illumine   and   inform   the interpretation of the beneficent provisions of the Act. When clause (1) speaks of a debt due "before the commencement" of the Act  to a banking company, it does undoubtedly mean what it says,  namely, that  the debt  must have  been due  to  a banking company  before the  commencement of the Act. But it means something  more: that  the debt  must also be due to a

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banking company at the commencement of the Act. We quite see that we  are reading  into the clause the word "at" which is not there  because, whereas it speaks of a debt due "before" the commencement  of the  Act, we  are reading the clause as relating to  a debt  which was  due "at"  and  "before"  the commencement of  the Act  to any  banking company.  We would have  normally   hesitated  to  fashion  the  clause  by  so restructuring it  but we  see no  escape from  that  course, since that  is the only rational manner by which we can give meaning and  content to  it, so  as to further the object of the Act.      There is  one more  aspect of the matter which needs to be amplified  and it  is this:  When clause  (1) speaks of a debt due  before the  commencement of the Act, what it truly means to convey is not that the debt should have been due to a  banking   company  at  some  point  of  time  before  the commencement of  the Act,  but that  it must be a debt which was incurred  from a banking company before the commencement of the Act.      Thus, the application of clause (1) is subject to these conditions: (i)  The debt  must have  been incurred  from  a banking company;  (ii) the  debt must  have been so incurred before the  commencement of the Act, and (iii) the debt must be due  to a banking company on the date of the commencement of the  Act. These are cumulative conditions and unless each one of  them is  satisfied, clause (1) will not be attracted and the exclusion provided for there- 350 in will  not be  available as an answer to the relief sought by the debtor in terms of the Act.      Our attention  was drawn by the Attorney General to the provisions of  sections 2  (4) and  2 (4) (j) of the Act the former using  the expression "on or before the commencement" of the  Act and the latter "at the commencement" of the Act. Relying upon  the different  phraseology used  in these  two provisions and  in clause  (1) inter  se, he  urged that the legislature has  chosen its words carefully and that when it intended to  make the  state of  affairs existing  "at"  the commencement of the Act relevant, it has said so. We are not impressed by  this submission. Section 2 (4) which defines a "debt" had  to provide  that debt means a liability due from or  incurred   by  an   agriculturist  "on   or  before  the commencement" of  the Act.  It could not be that liabilities incurred before the commencement of the Act would be "debts" even though  they are not due on the date of commencement of the Act.  The words  "on or  before the commencement" of the Act are  used in  the context  of liabilities  "due from  or incurred" by  an agriculturist.  For similar reasons, clause (j) had  to use  the expression "at the commencement" of the Act, the  subject matter  of that  clause being debts due to widows. The  benefit of the exclusion provided for in clause (j) could only be given to widows to whom debts were due "at the commencement" of the Act. The legislature could not have given that benefit in respect of debts which were due before but not  at the  commencement of the Act. Thus, the language used in  the two  provisionals on which the learned Attorney General relies  is suited  to the  particular subject matter with which  those provisions  deal and  is apposite  to  the context in which that language is used. We have given to the provision of  clause  (1)  an  interpretation  which,  while giving effect  to the  intention of  the legislature  in the light of  the object of the Act, brings out the true meaning of the  provision contained  in  that  clause.  The  literal construction will  create an anomalous situation and lead to absurdidities and injustice. That construction has therefore

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to be avoided.      Any other  interpretation of  clause (1)  will make  it vulnerable to  a constitutional  challenge on  the ground of infraction of  the guarantee  of equality. The object of the Act  being   to  confer  certain  benefits  on  agricultural debtors, the legislature would be under an obligation, while excepting a  certain category of debts from the operation of the Act, to make a classification which will answer the test of article 14. Debts incurred from banking companies and due to such  companies at the commencement of the Act would fall into 351 a separate  and distinct class, the classification bearing a nexus with  A the  object of the Act. If debts incurred from private money-lenders are brought within the terms of clause (1) on  the theory  that the  right to  recover the debt had passed  on   to  a   banking  company  sometime  before  the commencement   of    the   Act,    the   clause   would   be unconstitutional for  the reason that it accords a different treatment to  a category  of debts without a valid basis and without the classification having a nexus with the object of the Act.       In  State of  Rajasthan v. Mukanchand section 2 (e) of Jagirdar’s Debt  Reduction Act, 1937 was held invalid on the ground that it infringed Article 14 of the Constitution. The object of  that Act was to reduce the debts secured on jagir lands which  had been  resumed under  the provisions  of the Rajasthan Land  Reforms and  Resumption of  Jagirs Act.  The Jagirdar’s capacity  to pay  debts had  been reduced  by the resumption of  his lands  and the  object of  the Act was to ameliorate his  condition. It  was held that no intelligible principle underlies the exempted category of debts mentioned in section 2(e) since the fact that the debts were owed to a government or  to a local authority or similar other bodies, had no  real relationship  with  the  object  sought  to  be achieved by  the Act.  In Fatehand  Himmatlal  v.  Slate  of Maharashtra,  in   which  the   constitutionality   of   the Maharashtra Debt  Relief Act,  1976 was  challenged, it  was held by this Court that the exemption granted by the statute to credit  institutions and  banks  was  reasonable  because liabilities due  to Government,  local authorities and other credit institutions  were not  tainted by  the view  of  the debtor’s exploitation.  Fatehchand would be an authority for the proposition  that clause  (1), in the manner interpreted by us, does not violate Article 14 of the Constitution.      Shri  Vaidyanathan,   who  appears  on  behalf  of  the respondent, contended  that the  claim made by the appellant Bank falls  squarely under section 2 (4) (a) (ii) of the Act and that  if the appellant is not entitled to the benefit of the   specific    provision   contained   therein,   it   is impermissible to  consider whether  it can claim the benefit of some  other exclusionary  clause like clause (1). Counsel is right to the extent that the appellant is not entitled to claim the  benefit of  the provision  contained in section 2 (4)(a)(ii) because of Proviso B to that 352 section. The  simple reason in support of this conclusion is that the right of the appellant to recover the debt arose by reason of a transfer effected by operation of law subsequent to July  1, 1957.  We have already dealt with that aspect of the matter. But we are not inclined to accept the submission that if  a particular  case falls under a specific clause of section 2  (4)  which  is  found  to  be  inapplicable,  the creditor is debarred from claiming the benefit of any of the other clauses  (a) to  (n). The  object of  the exclusionary

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clauses is  to take  category  of  debts  from  out  of  the operation of  the Act  and there  is no  reason  why,  if  a specific clause  is inapplicable,  the creditor  cannot seek the benefit  of the other clauses. The exclusionary clauses, together, are  certainly exhaustive  of  the  categories  of excepted debts  but to make those clauses mutually exclusive will be  to impair unduly the efficacy of the very object of taking away  a certain  class of debts from the operation of the Act.  We are  not  therefore,  inclined  to  accept  the submission made  by the  learned counsel  that section 2 (4) (a) (ii)  is exhaustive  of all  circumstances  in  which  a subsidiary bank  can claim  the benefit of the exceptions to section 2 (4).       For these reasons we affirm the view of the High Court that the exclusion provided for in  clause  (1)  of  section 2 (4)  of the  Act can be availed of if the debt is due to a banking company  at the time of the commencement of the Act. We have  already indicated  that the  other condition  which must be satisfied in order that clause (1) may apply is that the debt  must have  been incurred  from a  banking  company before the commencement of the Act.      For these reasons we dismiss the appeal. Appellant will pay the costs of the respondent throughout. S.R.                                       Appeal dismissed. 353