Muthu Goundan vs Peria Goundan and Another

Alfred Henry Lionel Leach, C.J.—This matter raises the question whether a Debt Conciliation Board is entitled to give a certificate u/s 18 of

the Madras Debt Conciliation Act, 1936, when it will be bound eventually to dismiss u/s 17 of the Act a petition for the settlement of the

petitioner''s debts. The respondent applied to the Debt Conciliation Board, Namakkal, for a settlement of his debts under the provisions of Section

4 of the Act. His only creditor was the petitioner in these proceedings, who has security. The petitioner appeared before the Board and informed it

that he was not prepared to agree to a settlement of his debt. Before there can be a settlement of debts under the Act creditors representing more

than fifty per cent, of the total amount of debts must agree to a settlement. If no amicable settlement is arrived at within twelve months from the

date of the application the Board is bound by virtue of the provisions of Section 17 to dismiss the application. In this case the Board did not at

once dismiss the petition as the result of the petitioner''s objection, but proceeded to consider what would be the amount payable by the

respondent to the petitioner if the debt was sealed down in accordance with the provisions of the Madras Agriculturists'' Relief Act. The Board

had no power to scale down the debt, as was pointed out by this Court in Jonnalagadda Ramaswami Chetti Vs. T.K. Ramachandra Rao, . The

Board did not, however, purport to scale down the debt. It merely considered what would be the figure arrived at if the provisions of the Madras

Agriculturists'' Relief Act were applied. It found that on this basis the debt due to the petitioner would be reduced to Rs 1,954. Thereupon the

respondent expressed his willingness to pay this amount with interest at 61/4 per cent, from 1st October, 1937, till the date of payment. The Board

considered that this was a reasonable offer and granted a certificate u/s 18(1) of the Madras Debt Conciliation Act. The petitioner says that the

Board had no power to pass this order and therefore it should be quashed.

Sub-section (1) of Section 18 states that where, during the hearing of any application made u/s 4, any creditor refuses to agree to an amicable

settlement, the Board shall, if it is of opinion that the debtor has made such creditor a fair offer which the creditor ought reasonably to accept, grant

the debtor a certificate, in such form as may be prescribed in respect of the debts owed by him to the creditor. The effect of a certificate is that

when a creditor, sues in a Civil Court for the recovery of his debt the Court cannot allow the plaintiff any costs in the, suit, or any interest on the

deist after the date of the certificate in excess of simple interest at six per cent per annum on the principal amount due on the date pi the certificate.

This provision is contained in Sub-section (2). Rules have been f farmed under the Act and they contain the form of certificate to be given u/s

18(1). The form reads as follows:

This is to certify that during proceedings No. of under the Madras Debt Conciliation Act, 1936, between (debtor) on the one hand and (creditor)

on the other hand, for the settlement of an alleged debt of Rs. the said creditor has, in our opinion, refused a fair offer of settlement made by the

said debtor, which the said creditor ought reasonably to have accepted.

The following particulars of the debt were furnished by the said creditor u/s 10(1) of the Act.

Action u/s 18 does not depend on a majority of the creditors agreeing to a settlement of the debts owing to them. The opening words of Sub-

section (1), of Section 18, namely, ""Where, during the hearing of any application u/s 4"" make it quite clear that the certificate can be granted during

the pendency of the proceedings if a fair offer has been made by the debtor and has been refused by the creditor. The form of certificate given in

the rules emphasizes this. The fact that the Board may have to dismiss a debtor''s petition as the Board will have to do in this case, does not

deprive it of the right of exercising its power of certifying, that a reasonable offer has been refused. As the Board did not purport to scale down the

debt under the provisions of the Madras Agriculturists'' Relief Act, but merely took into consideration the provisions of that Act in order to

consider what would be a fair offer by the, respondent, it cannot be said that it has acted contrary to or without jurisdiction or even contrary to

law.

The petitioner''s application for a writ of certiorari must be dismissed with costs.