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PETITIONER: STATE OF RAJASTHAN

       Vs.

RESPONDENT: MUKANCHAND AND OTHERS

DATE OF JUDGMENT: 26/02/1964

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. SHAH, J.C. AYYANGAR, N. RAJAGOPALA

CITATION:  1964 AIR 1633            1964 SCR  (6) 903  CITATOR INFO :  RF         1970 SC 564  (78)  F          1972 SC1053  (3,4)  RF         1974 SC2009  (23)  RF         1980 SC1789  (36)  RF         1981 SC1744  (23)  D          1985 SC 257  (12)  RF         1986 SC1541  (9)  RF         1988 SC1136  (10)  R          1989 SC2105  (4)

ACT: Jagirdar’s  Debt  Reduction Act (Rajasthan Act 9  of  1937)- Mortgages decree against ex-Jagirdar-Whether  executable-ss. 2(e) and 7(2) Validity of--Constitution of India, Art. 14. 904

HEADNOTE: Respondent  No.  1  obtained  a  mortgage  decree  for   Rs. 1,14,581/14/6 against one Rao Raja Inder Singh (the judgment debtor).   The  mortgage  money  was  advanced  under  three mortgages, and the mortgaged properties consisted of  Jagirs and some non-Jagir immovable property.  The latter  property was  sold in execution and Rs. 33,750/- paid to  the  decree holder  in  partial satisfaction of the  decree.   Then  the decree  holder filed an execution petition in the  Court  of the   District  Judge  for  the  balance  amount  i.e.   Rs. 99,965/3/6,   praying  for  attachment  of  the  amount   of compensation and rehabilitation grant which would be paid to the  judgment debtor on account of resumption of his  Jagir. The judgmment debtor submitted two applications in which  he claimed relief under ss. 5 and 7 of the Rajasthan Jagirdars’ Debt  Reduction  Act.  The decree holder, in his  reply,  to those  petitions  urged that the provisions relied  in  were ultra   vires   the   Constitution  of   India,   being   in contravention  of Arts. 14, 19 and 31 of  the  Constitution. Thereafter the decree holder moved a petition under Art. 228 of the Constitution before the High Court, praying that  the execution  case pending in the Court of the District  Judge, be  withdrawn from that court to the High Court.   The  High

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Court transferred the case to its file.  By its judgment the High  Court could held that apart from the later part of  s. 2(e)  excluding certain debts and s. 7 (2) of the  Act,  the rest  of  the  Act  was valid.  The  High  Court  granted  a certificate under Art. 133(1)(c) of the Constitution to  the State  of Rajasthan to file an appeal to this Court.   Hence the appeal:- Held:-(i)  That the impugned part of s. 2(e) infringes  Art. 14  of  the Constitution for the reason that  no  reasonable classification  is disclosed for the purpose  of  sustaining the  impugned part of s. 2(e).  It is now well-settled  that in order to pass the test of permissible classification, two conditions   must  be  fulfilled,  namely,  (1)   that   the classification   must   be  founded   on   an   intelligible differentiation  which distinguishes persons or things  that are  to be put together from others left out of  the  group, and   (2)  that  the  differential  must  have  a   rational relationship  to  the object sought to be  achieved  by  the statute  in  question.  The said condition No. 2  above  has clearly not been satisfied in this case.  The object  sought to  be achieved by the-impugned Act was to reduce the  debts secured on the Jagir lands which had been resumed under  the provisions  of the Rajasthan Land Reforms and Resumption  of Jagirs  Act.   The  fact  that  the  debts  are  owed  to  a Government  or local authority or other bodies mentioned  in the impugned part of s. (2) (e) has no rational relationship with the object sought to be achieved by the Act.   Further, no intelligible principle underlies the exempted  categories of  debts.   The reason why a debt advanced on behalf  of  a person by the Court of Wards is clubbed with a debt due to a State  or  a  scheduled bank and why a debt due  to  a  non- scheduled  bank is not excluded from the purview of the  Act is not discernible. Manna Lal v. Collector of Jhalwar. [1961] 2 S.C.R. 962, Nand Ram  Chhotey Lai v. Kishore Raman Singh, A.I.R.  (1962)  All 521 and  905 Jamnalal Ramlal Kimtee v. Kishendas and State of  Hyderabad, A.I.R. (1955) Hyd. 194, distinguished. (ii) Section   7(2)  is  valid  as  it  imposes   reasonable restrictions,  in  the interests of general public.  on  the rights  of  a secured creditor.  This sub-section  has  been designed with the object of rehabilitating a Jagirdar  whose Jagir  properties  have been taken over by the State  for  a public  purpose at a low valuation.  If this  provision  was not made, the Jagirdar would find it diffcult to start  life afresh  because  his future income and  acquired  properties would  be liable to attachment and sale for the  purpose  of satisfying the demands of such creditors.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 507 of 1961. Appeal  from the judgment and order dated February 18,  1959 of  the Rajasthan High Court in Civil Misc.  Case No. 10  of 1959. S.   K. Kapur and B. R. G. K. Achar, for the appellant. The respondent did not appear. February 26, 1964.  The Judgment of the Court was  delivered by SIKRI J.-This is an appeal directed against the judgment  of the Rajasthan High Court, which granted a certificate  under Art. 133(1)(c). One Mukanchand, respondent No. 1 in this appeal (hereinafter

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referred to as the decree-holder) obtained a mortgage decree on  February  12, 1954, for Rs. 1,14,581-14-6,  with  future interest at 6 per cent per annum, against one Rao Raja Inder Singh  (hereinafter  referred to as  the  judgment--debtor). The  mortgage money was advanced under three mortgages,  and the mortgaged properties consisted of 2 Jagirs and some non- jagir  immovable property.  The latter property was sold  in execution  and  Rs. 33,750/- paid to  the  decree-holder  in partial  satisfaction of the decree.  On December 14,  1956, the  decree-holder filed an execution petition in the  Court of the District Judge, Jodhpur, for Rs. 99,965-3-6,  praying for  attachment of the amount of compensation and  rehabili- tation  grant which would be paid to the judgment debtor  on account   of  resumption  of  his  jagir.   This  case   was registered 906 as  Execution Case No. 12/57.  On July 29, 1957,  the  judg- ment-debtor  made an application before the District  Judge, Jodhpur,  to the effect that the decretal amount  should  be reduced in accordance with s. 5 of the Rajasthan  Jagirdars’ Debt Reduction Act (Rajasthan Act IX of 1957).  On July  31, 1957,  the  judgment-debtor  submitted  another  application claiming that only half of his total jagir compensation  and rehabilitation grant money was liable to attachment under s. 7 of the said Act.  The decree-holder, in his reply to those petitions,  urged that the provisions relied on  were  ultra vires  the Constitution of India being in  contravention  of Arts. 14, 19 and 31 of the Constitution. On  December  3, 1957, the decree-holder  filed  a  petition under  Art.  228  of  the  Constitution,  praying  that  the execution  case No. 12 of 1957, pending in the Court of  the District Judge, Jodhpur, be withdrawn from that Court to the Rajasthan  High Court.  The High Court transferred the  case to  its file, and thereafter issued notice to the  State  of Rajasthan, as the constitutionality of the said Act had been challenged.  By its judgment, the High Court held that apart from  the  latter part of s. 2(e) excluding  certain  debts- hereinafter referred to as the impugned part and s. 7(2)  of the  Act, the rest of the Act was valid.  The State  applied for  leave  to appeal to the Supreme Court, and so  did  the decree-holder.   On  the  certificates  being  granted,  two appeals were filed in this Court.  The appeal of Mukhanchand (Civil  Appeal  No. 508/61) was, by order  dated  April  23, 1962, of this Court, held to have abated.  Therefore, we are not  concerned with the validity of the other provisions  of the Act. Although the validity of the other provisions is not now  in question, it is necessary to set out the relevant provisions of  the Act, because they have a bearing on the question  of the  validity of the impugned part of s. 2 (e) and s. 7  (2) of the Act; and these are reproduced below:               "Preamble-To  provide for the scaling down  of               debts of jagirdars whose jagir lands have been               resumed under the provisions of the  Rajasthan               Land  Reforms  and Resumption of  Jagirs  Act,               1952.....  907               S.    2(e)-"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  after  the               first day of January. 1949 or a debt due to: -               (i)   the Central Government or Government  of               any State;               (ii)  a local authority;

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             (iii) a scheduled bank;               (iv)  a co-operative society; and               (v)   a   waqf,  trust  or  endowment  for   a               charitable or religious purpose only; or               (vi)  a person, where the debt was advanced on               his behalf by the Court of Wards...               S. 3. Reduction of secured debt at the time of               passing   of   decree.-(1)    Nothwithstanding               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.               (2)(a)  Where the mortgaged property  consists               exclusively of jagir lands and such lands have               been resumed under the provisions of the  Act,               the  court shall first ascertain  whether  the               mortgagor  had the right, under the jagir  law               in  force  at the time the  mortgage-deed  was               executed,  to  mortgage the  jagir  lands,  or               failing that, whether specific permission  for               effecting  the mortgage was obtained from  the               competent authority, and whether the  mortgage               was   validly  subsisting  on  the   date   of               resumption of the jagir lands.               (b)   if the mortgage was legally and properly               made   and  was  validly  subsisting  on   the               aforesaid  date,  the court shall  reduce  the               amount  due  in accordance  with  the  formula               given in Schedule 1. 908               (3)   Where  the mortgaged  property  consists               partly of jagir lands as aforesaid and  partly               of  property other than such lands, the  court               shall  after taking action in accordance  with               the provisions of subclause (a) of sub-section               (2), proceed to distribute. the amount due  on               the  two properties separately  in  accordance               with the principles contained in section 82 of               the  Transfer  of Property Act,  1882  (IV  of               1882) as if they had been properties belonging               separately to -two persons with separate:  and               distinct  rights of ownership; and  after  the               amount due has been so distributed, reduce the               amount  due on the jagir lands  in  accordance               with the formula given in Schedule 1.               S.    4-Powers  to reduce secured  debt  after               passing of decree.-               (1)   Nothwithstanding anything in the Code of               Civil Procedure, 1908 (V of 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.               (2)   Where  the  mortgaged  property  charged               under the decree consists exclusively of jagir               lands  and such lands have been resumed  under               the  provisions  of the Act, the  court  shall               reduce  the amount due in accordance with  the               formula given in Schedule 1.               (3)   Where  the  mortgaged  property  charged               under  the  decree consists  partly  of  jagir               lands and partly of property other than  jagir

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             lands,  the court shall determine  the  amount               due on         the first day of January, 1949,               and distribute the same on the two  properties               separately  in accordance with the  principles               contained  in  section 82 of the  Transfer  of               Property  Act, 1882 (IV of 1882), as  if  they               had  been properties belonging to two  persons               with separate and distinct rights of ownership               and after the  909               amount due as respect the jagir lands has been               so  calculated. reduce it in  accordance  with               the formula given in Schedule 1.               S.    6-Satisfaction  of the decree-after  the               amount  due  has  been reduced  under  and  in               accordance  with the provisions of section  4,               the  decree  shall,  to  the  extent  of   the               reduction  so  effected, be  deemed,  for  all               purposes  and on all occasions, to  have  been               duly satisfied.               S.    7(2)-Notwithstanding  anything  in   any               law, the reduced amount found in the case of a               mortgagor  or judgment-debtor as the case  may               be,  under section 3 or section 4 as  respects               mortgaged  jagir  lands shall not  be  legally               recoverable   otherwise   than  out   of   the               compensation and rehabilitation grant  payable               to  such  mortgagor  or  judgment  debtor   in               respect of such jagir lands." We  may  mention  that  respondent No.  1  has  not  entered appearance  in  this  Court.  The learned  counsel  for  the State, Mr. S. K. Kapur, has urged that the High Court  erred in holding that these two provisions, i.e. impugned part  of s. 2(e) and s. 7(2), were void.  Regarding the impugned part of  s. 2(e), he contended that the debts mentioned  in  sub- cls. (i) to (vi) of s. 2(e) have been placed on a  different footing  from  debts  due to other  creditors,  because  the bodies and the authorities mentioned therein serve a  public purpose  or a public cause.  He urged that this  provided  a reasonable   basis  for  differentiating   between   private creditors and creditors mentioned in cls. (i) to (vi) above. Regarding  s.  7(2),  he urged that  it  imposed  reasonable restrictions,  in  the interest of general  public,  on  the creditors. Before examining the validity of the impugned provisions, it is  necessary  to  examine the scheme of the  Act.   As  the preamble states in plain terms, the object of the Act is  to scale  down debts of Jagirdars whose jagir lands  have  been resumed  under the provisions of the Rajasthan Land  Reforms and  Resumption of Jagirs Act.  Clause (e) of s.  2  defines ’debt’  to  mean  an  advance  in  cash  or  in  kind.   The definition  ,does not embrace dues of Government or a  local authority 910 in respect of taxes, land revenue, etc.  The definition then excludes  from the purview of the Act debts due  to  Central Government and other authorities and bodies mentioned in the clause.   We shall advert to them later when discussing  the validity of this exclusion. Section  3  provides  for  reduction  of  secured  debts  in accordance with the formula given in Schedule 1 at the  time of   passing  a  decree,  and  their   apportionment   where necessary, between jagir and non-jagir property.  Section  4 provides  for reduction of secured debts after a decree  has been  passed.   Section 5 directs a court to  pass  a  fresh

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decree  after  reduction of the secured  debts.   Section  6 provides  that  after  reduction  of  the  secured  debt  in accordance with the provisions of s. 4, the decree shall, to the  extent of the reduction so effected, be deemed for  all purposes  and on all occasions to have been duly  satisfied. Clause (1) of s. 7 provides for the execution of the  decree against the compensation and rehabilitation grant payable in respect  of the jagir lands of the judgment-debtor.   Clause (2)  of s. 7, which has been struck down by the High  Court, prohibits the recovery of the reduced amount with respect to jagir property from any property other than the compensation and rehabilitation grant payable to a jagirdar.  The  effect of  this  provision  is that the  other  properties  of  the jagirdar,  existing or which ’he may acquire hereafter,  are immune   from  being  proceeded  against  in  execution   or otherwise. We  think that the High Court was right in holding that  the impugned  part of s. 2(e) infringes Art. 14 of  the  Consti- tution.   It is now well-settled that in order to  pass  the test  of permissible classification, two conditions must  be fulfilled,  namely,  (1)  that the  classification  must  be founded    on   an   intelligible   differentiation    which distinguishes persons or things that are to be put  together from  others  left  out  of the  group,  and  (2)  that  the differentia must have a rational relationship to the  object sought  to be achieved by the statute in question.   In  our opinion,  condition  No.  2  above  has  clearly  not   been satisfied in this case.  The object sought to be achieved by the  impugned 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  911 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.  The  fact  that  the debts  are owed to a government or local authority or  other bodies  mentioned  in the impugned part of s.  2(e)  has  no rational relationship with the object sought to be  achieved by  the Act.  Further, no intelligible  principle  underlies the  exempted  categories of debts.  The reason why  a  debt advanced  on  behalf of a person by the Court  of  Wards  is clubbed  with a debt due to a State or a scheduled bank  and why a debt due to a non-scheduled bank is not excluded  from the purview of the Act is not discernible. In this connection, Mr. Kapur has relied on the decision  of this Court in Manna Lal vs.  Collector of Jhalwar (1).  This case  is clearly distinguishable because there a law  giving special facility for the recovery of dues to a bank owned by the  Government was held not to offend Art. 14 of  the  Con- stitution.    It  is  clear  that  the  government  can   be legitimately  put in a separate category for the purpose  of laying down the procedure for the recovery of its dues.  Mr. Kapur  further relied on Nand Ram Chhotey Lal  vs.   Kishore Raman Singh (2).  The judgment of the High Court undoubtedly supports him, but, with respect, we are unable to agree with the  ratio of the case.  The High Court was concerned  with. the U.P. Zamindars Debt Reduction Act (U.P. Act XV of 1953), which is substantially similar to the impugned Act The ratio of the High Court is: "It appears to us that the legislature had  to  make a distinction between debts due from  the  ex- zamindars  to  private  individuals and  the  debts  due  to scheduled   banks  or  to  Government   or   semi-Government authorities.   The  obvious reason appears to  be  that  the private money-lenders were considered to be a bane to  rural economy and perpetrating agricultural indebtedness.  It  was

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to save the cultivators from such unscrupulous  moneylenders that  such laws had to be enacted, the last in series  being the  Zamindars Debt Reduction Act." We consider there is  no force  in  these observations.  No such reason  is  apparent from the terms of the Act.  Non-scheduled banks (1)  [1961] 2 S.C.R. 962. (2)  AIR (1962) All. 521. 912 and all other private creditors cannot be said to be a  bane to rural economy. The third case relied on by Mr. Kapur-Jamnalal Ramlal Kimtee v. Kishendas and State of Hyderabad(1) does not contain  any discussion.   The High Court supported the exclusion on  the ground that "exclusion of certain class of debts under s.  3 of  the  impugned  Act  also  is  not  without   substantial justification  for public demands do not stand in  the  same position as ordinary demands." Apart from the fact that  all the  exempted  categories are not public demands,  the  High Court   does  not  seem  to  have  considered  whether   the differentia  had  any  rational relationship  sought  to  be achieved by the Act. In conclusion, agreeing with the High Court, we hold that no reasonable  classification is disclosed for the  purpose  of sustaining the impugned part of s. 2(e). Now,  coming to the question of the validity of s. 7(2),  we consider  that  this  sub-section is  valid  as  it  imposes reasonable restrictions, in the interest of general  public, on  the rights of a secured creditor.  A  secured  creditor, when  he advanced money on the security of  jagir  property, primarily looked to that property for the realisation of his dues.  Further, this sub-section has been designed with  the object  of rehabilitating a jagirdar whose jagir  properties have been taken over by the State for a public purpose at  a low valuation.  If this provision was not made, the jagirdar would  find  it difficult to start life afresh and  look  to other  avocations,  for  not  only  his  existing  non-jagir property but his future income and acquired properties would be liable to attachment  and   sale  for  the   purpose   of satisfying          the demands of such  secured  creditors. Accordingly, we hold that s. 7(2)  imposes        reasonable restrictions in the interest of general public. The  appeal is accordingly partly accepted, the decision  of the High Court in regard to s. 2(e) is confirmed and that in regard  to s. 7(2) is reversed.  As the respondent  was  not represented  and that appeal has only partly  succeeded,  we order the parties to bear their own costs in this Court. Appeal partly allowed. (1)AIR-(1955) Hyd. 194.  913