Manimekalai Ammal and 5 others vs Swamidorai Padayatchi and 4 others

P. Shanmugham, J.—To resolve the conflict of views on the interpretation of Section 34 of the Tamil Nadu Debt Relief Act (Act 40 of

1979), this Full Bench has been constituted.

Several enactments have been made to provide relief to the indebted agriculturists and persons right from Act 4 of 1938, the Tamil Nadu

Agriculturists Relief Act. We are presently concerned with the debt relief legislations namely Ordinance 1 of 1975 replaced by the Tamil Nadu

Indebted Agriculturists (Temporary Relief) Act 10 of 1975, the Tamil Nadu Indebted Agriculturists (Temporary Relief) Act 15 of 1976 as

amended by the Tamil Nadu Debt Relief Laws (Amendment) Act of 1977, the Tamil Nadu Debt Relief Laws (Second Amendment) Act of 1977,

The Tamil Nadu Debt Relief Laws (Amendment) Act of 1978 and the Tamil Nadu Debt Relief Act 40 of 1979. A moratorium has been imposed

by the provisions of these Acts against institutions of suits during the subsistence of these Acts for a total period of 4 years, 4 months and 27 days.

The last of the Act that we are concerned with namely the Tamil Nadu Debt Relief Act, 1979 excludes the time for limitation and dissolution of

stay proceeding in respect of certain suits and applications from 15th January, 1976 to 13th June, 1979. The question that arises for consideration

here is whether there is a total bar of filing a suit under the Tamil Nadu Debt Relief Act 40 of 1978 so as to save the period of limitation from 15th

January, 1976 to 15th June, 1979.

This Court, in Sivasubramanian Alias Kandaswamy v. Mohindeed Pichai, 1986 (99) L.W. 198, Sri Varalakshmi Finance Syndicate v. R.

Govindarajulu, 1990 (2) L.W. 351, Gangan v. Kannamal, 1996 (2) L.W. 92 and Manickam Chettiar Vs. Ramanatha Devar, , have taken the view

that in respect of cases coming within the purview of scaling down provisions, the period from 15.1.1976 to 13.6.1979 has to be excluded.

However, in Sri Agastheeswarswami Devasthnam v. Rajagopal Konar, 1992 (1) L.W. 71, a different view was taken, holding that the

expression ""barred"" cannot be construed to cover even cases in which a suit could have been filed for scaled down amounts, and therefore, the

suits which were completely barred by the provisions of Act 40 of 1978 are alone entitled to have the benefit of exclusion of the entire period

between 15.1.1976 and 13.6.1979.

The Tamil Nadu Debt Relief Act 1978 (Act 40 of 1978) was enacted to provide relief for certain indebted persons in the State of Tamil Nadu.

The said Act came into force from 15.7.1978. Chapter II of the said Act dealt with the relief of indebtness and the scaling down of debts. As per

section 6 of the said Act, all debts payable by any debtor on 4.7.1978 shall be scaled down in accordance with the provisions of Chapter II.

Section 7(1)(a) providing for scaling down declared that where the principal amount advanced does not exceed Rs.500, the whole of the principal

amount together with interest thereon shall be deemed to be wholly discharged. Section 7(2)(i) also provided for the discharge of the amount if the

amounts already paid by the debtor towards the principal or interest or both are equal to or exceeds the aggregate amount as so scaled down.

Section 7(1)(b) states that where the principal amount exceeds Rs. 500 but does not exceed Rs. 5000 one-half of the principal amount so

advanced shall be deemed to be discharged and only the balance shall be repayable. Section 7(1)(c) provided that where then principal amount

exceeds Rs. 5000. but does not exceed Rs. 10,000 the interest shall be deemed to be wholly discharged and only the principal amount shall be

repayable.

Thus, the Act contemplated the discharge of certain amounts and recovery of the scaled down amounts. The provisions of this Act, provided for

permanent debt relief by way of liquidation or scaling down of debts as the case may be to specific classes of weaker sections of society consisting

of agriculturists and other indebted persons in the stale. It appears that when the provisions of the said Act were sought to be enforced and

implemented, the constitutional validity of these provisions was challenged and in the course of hearing such cases, certain difficulties came to be

noticed, necessitating re-examination of the provisions on the constitutional aspects and on such re-examination, the State came to a decision that

permanent debt relief shall be only by way of scaling down of debts. To give effect to the said object, the Tamil Nadu Debt Relief Act, 1979 (Act

40 of 1979) (hereinafter referred to as the 1979 Act) was enacted. Section 31 of the 1979 Act repealed the Tamil Nadu Debt Relief Act, 1978

and sub-section 29 thereof. Section 32 and 33, which are relevant for the purpose of this case, state as follows:

Pending Proceedings to abate, etc.-

(1)Section 8 of the Tamil Nadu General Clauses Act, 1891 (Tamil Nadu Act I of 1891) shall not apply to the repeal of the said Act by this Act.

(2) Every proceeding made or taken under the said Act and pending before the date of the publication of this Act in the Tamil Nadu Government

Gazette shall abate.

(3) No legal proceeding or remedy in respect of any right, privilege, obligation or liability acquired or incurred under the Said Act shall be

instituted, continued or enforced under the said Act.

Removal of doubt-(1) Any liability incurred or arising under any debt due form a debtor shall be deemed never to have been discharged under

the said Act, as if the said Act was not passed and every such debt shall be scaled down in accordance with the provisions of this Act.

(2) Nothing contained in this Section shall be deemed to invalidate any proceeding in which the order passed has been executed or satisfied in full

before the date of the publication of this Act in the Tamil Nadu Government Gazette.

Ordinarily, when an Act is repealed, it shall not affect the provisional operation of any enactment so repealed or anything duly done or suffered

under the repealed enactment. It shall not affect any right, obligation or liability acquired, accrued or incurred under the Act or under any enactment

so repealed. In other words, the proceedings taken under the earlier enactment would be valid. However, it is open to the legislation to make their

intention different. Contrary to the effect of repealing of an Act u/s 8 of the Tamil Nadu General Clauses Act, 1891. Section 32 of the 1979 Act

specifically provided that Section 8 of the Tamil Nadu General Clauses Act shall not apply. This makes it clear that there is no validity for any

proceedings taken under the earlier Act. It is further made clear by sub-section 2 of section 32 that all pending proceedings taken under the 1979

Act shall abate and that no legal proceedings or remedy in respect of any right, privilege, obligation, etc. shall be continued or enforced under the

said Act. Section 33, byway of removal of doubt has made it categorical that any liability incurred or arising under any debt due from the debtor

shall be deemed never to have been discharged under the 1979 Act as if the said Act was not passed and every such debt shall be scaled down in

accordance with the 1979 Act. Those proceedings, by virtue of which there was satisfaction or exclusion in full before 13.6.1979, alone were

saved. Therefore, we are of the view that after the coming into force of the 1979 Act, any step taken or right accrued have been wiped out. There

is no question or scope for considering whether suits could have been initiated under the 1978 Act for the purpose of considering the exclusion of

time u/s 34 of the 1979 Act.

Section 17 of the 1979 Act provided for the determination of the amount of debt due either by the debtor or by the creditor and it enabled the

debtor to obtain a certificate on the discharge of the amount so determined. There is no such provision under the 1978 Act to a debtor or a

creditor obliging to file the suit for recovery or for discharge. It was a liberty given to the creditor to seek for a decree after scaling down of debts.

In other words, the creditor is entitled to wait for the moratorium period to pass by for full recovery of the amount. A Division Bench of this Court

in Vaithiyalingam Chettiar v. Rangaswamy Padayatchi, 1988 (2) L.W. 330 held that a second suit for the balance of amount due was maintainable

and a claim is not barred under Order 2, Rule 2 or Section 11 of the Code of Civil Procedure. Their Lordships held that the intention of the

legislature was to deal with under the 1979 Act debts which are covered by the Tamil Nadu Act 1979 and provided for a different amount of

scaling down except any such of those cases where, by availing of the earlier enactments of 1978, an order had been secured and full satisfaction

had been obtained. In view of section 33 of the 1979 Act, the statutorily restored debt relating to the original debt recognised under the said Act

could be pursued with by the creditor as if the 1978 Act had not been passed after giving credit to whatever decree that has been secured in the

court proceeding by virtue of the repealed Act. Hence, the second suit filed is maintainable.

In Haribabu Naidu v. Alamelu Ammal, 1990 (2) MLJ 115, a learned Judge of this Court has taken the view that the Tamil Nadu Agriculturist

(Temporary Relief) Act 15 of 1976 made a distinction between stay of pending suits and bar of institution of suits for the duration; but the Act

nowhere expressly said that the suit should be dismissed for contravention of section 3, and any such dismissal is to misunderstand the object of the

Act and to misconstrue and misapply its provision. By so doing, the court would not only be infusing permanent life into a temporary legislative

measure, but it will also make the Act a weapon of destruction of the creditor''s right to recover a debt, and it is only a temporary postponement of

court process of recovery. The provisions of the 1978 Act permitting only suits for recovery of scaled down debts and not for the entire amount

under the terms and conditions of lending or borrowing would constitute a bar for the purpose of Section 34 as a total embargo placed from

recovering the debt. The law of limitation does not destroy the right, but only denies the remedy to enforce through courts beyond the period

prescribed. Hence, whenever there is room for doubt, benefit of the same should have given to the holder of rights and the construction otherwise

would bring about a more drastic situation than what was really intended by the statute. We concur with this view. Therefore, the expression ""bar

occurring in Section 34 of the Act need not be narrowly construed. By a combined reading of Sections 31,32,33 and 34, we have to hold that the

legislature could not have intended to provide for a contingency which did not exist and what they should have really intended is the application of

the section to cases covered by the rules of scaling down of debts under the 1979 Act and therefore, the whole period from 15.1.1976 to

13.6.1979 is to be excluded for computing the period of limitation for filing a suit for making application exclusion.

The provision of Sections 31,32,33 and Section 17 and its implication were not brought to notice of the learned Judge of this Court who dealt

with the case in Agastheeswaraswami Devasthnam'' case, 1992 (1) L.W. 71 referred to earlier. We, therefore, approve the view taken by this

court in the decisions in Sivasubrmanian Alias Kandasamy v. Mohindeed Pickai, 1986 (99) L.W. 198, Vaithiyalingam Chettiar v. Rangaswamy

Padyachi, 1988 (2) L.W. 330, Sri Varalakshmi Finance Syndicate v. R. Govindarajulu, 1990 (2) L.W. 351, Gangan v. Kannammal, 1996 (2)

L.W. 92 and Manickam Chettiar Vs. Ramanatha Devar, , referred to earlier. We answer the question holding that there is a total exclusion for the

period of limitation u/s 34 of the 1979 Act.

The second question for consideration is whether the protection extended under the Debt Relief Act is available to a debt incurred after the

DEbt Relief Act has come into force.

The debt Relief Laws either to the agriculturists or to the indebted persons were intended to give a temporary relief taking into account the

circumstances prevailing during a particular period. The preamble to the Tamil Nadu Indebted Agriculturists (Temporary Relief) Act 1975 (Act 10

of 1975) states that whereas there has been widespread drought: and whereas the agriculturists have borrowed debts and may, if freed for a time

form the pressure of creditors, be enabled to rehabilitate themselves and whereas it is in the interest of the general public that at the present time,

agriculturists be soared distractions and expenditure involved in litigation launched by the creditors, in order that the maximum possible advantage

may result in the State in the matter of production of crops, the said act came to be enacted. Similarly, the Tamil Nadu Indebted Persons

(Temporary Relief) Act 1976 (Act 16 of 1976) was enacted to provide temporary relief to certain indebted person in the State of Tamil Nadu.

This Court, in Sri Haribabu Naidu''s case referred to above, has traced his history of the legislation of the general scheme of these Debt Relief

Acts from the Tamil Nadu Ordinance 1 of 1975 to Tamil Nadu Debt Relief Laws (Amendment) Act 1978 and held that the various provisions

under these Acts barred the institution of suit for a short while and if the period was over, there was no obstacle to the court getting on with the

suit. The Court could not get on with the suit so long as the period still subsisted because the suit could not have even be instituted during that time.

But once the period goes, the bar could not have any longer harmed to stop its jurisdiction.

In Seth Khisram Khushiram v. Balaji Singh, 1990 L.W. 572, a learned Judge of this Court, after considering the definition of debt u/s 2(1) of

the 1976 Act, held that the protection under the Tamil Nadu Indebted Persons (Temporary Relief) Act 1975 is not available to debtor whose debt

is incurred after the Act has come into force. In order to get protection under the Act, the person against whom proceedings are instituted of

recovery of the debt should have been an indebted person within the meaning of the Act on the date when the Act came into force. In other words,

the debt should have been due from the indebted person on the date when the Act came into force. The said view was followed by another

learned Judge of this Court in Narayanaswamy Naicker v. Palaisamy Gounder, 1979 TLNJ 288. In that case, the plaintiff filed a suit on a

promissory note taken on 4.6.1975. The suit was filed for half of the amount as per the Tamil Nadu Act 40 of 1978. Subsequent to the incurring of

the debt, Act 15 of 1976, Act 2 of 1978 and Act 40 of 1978 have come into force. The Act 15 of 1976 replaced ordinance 7 of 1976

incorporating all the provisions of the Ordinance including Section 3 imposing bar of institution of suits for a further period of one year from

16.1.1976. This period of one year was further enlarged from time to time, and with the subsequent statutory amendments u/s 2 of the Tamil Nadu

Debts Relief Laws (Amendment) Act 1977; President''s Act 8 of 1977, the period of bar was extended from one year to one year and six mpnths.

Subsequently, the Tamil Nadu Legislature enacted the Tamil Nadu Debt Relief Act (Second Amendment) Act 1977 (Tamil Nadu Act 1 of 1977),

under which the period of bar was extended from one year was ultimately enlarged to two years and six months by the Tamil Nadu Debt Relief

Laws (Amendment) Act 1978 (Tamil Nadu Act 2 of 1978) since Act 15 of 1976 came into force on 16.1.1976. Section 3, as it finally stood,

imposed a bar against institutions of suits for a period of two years six months from the said date, that is to say, till 15.7.1978. Therefore, in

Narayanaswamy Naicker''s case, 1979 TLNJ 288 the learned Judge, following the decision in Seth Khiaram'' case held that the debt in question

will get the benefit of Act 15 of 1976 and Act 2 of 1978. Since the subsequent Acts have not been considered by the learned District Munsif and

as he had dismissed the suit as barred by the period of limitation, this court, in Narayanaswamy Naicker''s case, 1979 TLNJ 288 remanded the

matter to represent the plaint after excluding the period of bar of suits for the purpose of limitation. This is to mean that the period of limitation that

stood barred subsequent to the coming into force of Section 2 of the Tamil Nadu Debt Relief Laws (Amendment) Act 1977 and other enactments

had to be excluded.

We are in full agreement with the view taken, by Paul, J. in Seth Khiaram''s case, that the person against whom proceedings instituted for

recovery of debt should have been an indebted person within the meaning of the Act on the date when the Act came into force. We do not find

any apparent conflict with this view taken by Gokulakrishanan, J. in Narayasamy Naicker Case, 1979 TLNJ 288 referred to above. We answer

the question accordingly.

The second appeal are directed to be posted before the concerned court. No costs.