Perumal Gounder vs Chinna Kuppanna Gounder

Ratnam, J.—The Defendant in Original Suit No. 687 of 1979, District Munsif''s Court, Erode, is the Petitioner in this civil revision petition,

on 12th September 1974, according to the case of the Respondent, the Petitioner borrowed a sum of Rs. 2,000 and executed a promissory note

in favour of the Respondent promising to repay the said sum together with interest thereon at 12 per cent per annum and that a sum of Rs. 2,555

remained to be recovered from the Petitioner under the promissory note. The suit was filed by the Respondent to recover this amount on the

footing that the Petitioner is not entitled to the benefits of any of the debt laws. The Petitioner filed a written statement contending that only a sum of

Rs. 1,000 had been received by him under the promissory note and therefore, the promissory note was supported by consideration only to that

extent and that the entire interest up to 10th September 1977 had also been paid. The Petitioner further contended that he is not carrying on any

business, that he is also not assessed to sales tax and that he is entitled to the benefits of Tamil Nadu Act XVII of 1976. In an additional written

statement, the Petitioner raised a plea that he is a debtor within the meaning of Tamil Nadu Act XIII of 1980 (hereinafter referred to as the Act) as

his annual house hold income is less than Rs. 4,800 and that the suit should, therefore be dismissed as abated in accordance with the provisions of

the Act.

Consistent with the plea raised that he is entitled to the benefits of the Act, the Petitioner appears to have moved the Tahsildar of Bhavani for the

issue of a certificate as regards the income and also to the effect that the Petitioner is a debtor entitled to the benefits of the Act. Alleging that

application was still pending before the Tahsildar, Bhavani and that the enquiry therein stood posted to 25th August 1980, the Petitioner prayed for

the stay of the trial of the suit Original Suit No. 687 of 1979 before the District Munsif''s Court, Erode, till the disposal of the application filed by

the Petitioner by the Tahsildar, Bhavani. That application was dismissed by the learned District Munsif, Erode, by his order dated 22nd September

1980, in the following terms:

Suit already posted in the list. Defendant does not proceed with the case. Petition is highly belated. Hence rejected.

It is the correctness of this order that is challenged by the Petitioner in this civil revision petition.

Since in the civil revision petition important questions touching the scope of the provisions of the Act in relation to the respective jurisdiction of

the civil Court as well as that of the Tahsildar under the Act arise and the Respondent has not appeared through Counsel, it has become necessary

to appoint Mr. N.R. Chandran, as amicus curiae to assist the Court.

The learned Counsel for the Petitioner contends that the Petitioner is a debtor within the meaning of the Act and that the concerned Tahsildar

has already been moved for a certificate to that effect and since those proceedings are still pending the proceedings before the civil Court should

be stayed till the disposal of the proceeding before the Tahsildar. On the other hand, it is contended by Mr. N.R. Chandran that with reference to

proceedings already initiated and pending before civil Courts and matters which had already proceeded to a decree, the Tahsildar is not

empowered under the Act to adjudicate upon them and therefore the pendency of any proceeding for a certificate before the concerned Tahsildar

is of no consequence. It is also further submitted that with reference to money claims before a civil Court whether in the stage of a pending suit or a

decree pending execution or its subsequent stages, there is no machinery in the Act to work out the rights of debtor by making an application

before the concerned Tahsildar and therefore, there is no need to await the certificate or the decision of a Tahsildar with reference to the claim by

the Petitioner of the benefits under the Act and that such relief, if any, may even be made available by the Court, if, in the course of the

proceedings, it comes to the conclusion that a person is a debtor entitled to the benefits of the Act. In this context, it is also pointed out that except

as part of an adjudication under Sections 5 and 6 of the Act, there is no provision under the Act for the issue of a certificate by a Tahsildar

regarding annual household income and that in money claims or decrees before civil Courts, the certificate with reference to the annual household

income, would, at best, be a piece of evidence in support of the claim of a person that he is entitled to the benefits of the Act and may not even be

conclusive of the question and therefore, there is no justification to hold up the proceedings before the civil Court.

In order to appreciate the contentions advanced, it is necessary to briefly advert to the definitions and other provisions of the Act as well as the

rules framed with a view to ascertain whether those provisions or rules compel the civil Court to stay its hands till such time as the proceedings

initiated by a person claiming the benefits of the Act before a Tahsildar are terminated. Section 3 of the Act contains the definitions. u/s 3(a), annual

house hold income means the aggregate of the gross annual income from all sources of all members of a family during the year ended on 31st

December 1979. Family in relation to a person is defined in Section 3(e) as the individual, wife or husband as the case may be of such individual

and their unmarried minor children. The appended explanation states that the word minor used in Section 3(e) f would take in persons, who had

not completed 18 years of age Section 3(b) defines a creditor as a person from or in respect of whom a debtor has barrowed or incurred a debt

and includes the heir of such person. The expression debt is defined u/s 3(c) as meaning any liability in cash or any kind whether secured or

unsecured and whether decreed or not; but does not include arrears of taxes due to the Central Government or a State Government or a local

authority. Section 3(d) defines a debtor as a person from whom any debt is due and whose annual household income does not exceed Rs. 4,800.

A proviso added by Tamil Nadu Act X of 1981 sets out those cases where a person shall not be deemed to be a Debtor. Sections 3(f) and (g)

define the words interest and person. A Tahsildar is defined u/s 3(h) of the Act as including a Deputy Tahsildar in independent charge of a taluk or

sub-taluk and any other officer of the Revenue Department not below the rank of a Deputy Tahsildar empowered by the State Government to

exercise the powers and perform the functions of a Tahsildar under the Act. Section 3(i) proceeds to define transferee of the creditor. Section 4

enumerates the different categories of cases where relief is made available to debtors. As per Section 4(1)(a) to (c) of the Act, on and from the

date of the commencement of the Act, (a) every debt advanced or incurred before 1st January 1980 (including interest, if any) and payable by the

debtor to the creditor shall be deemed to be fully discharged; (b) no civil Court shall entertain any suit or other proceedings against the debtor for

the recovery of any amount on such debt (including interest, if any) and (c) all suits and other proceedings (including appeals, revisions, attachments

and execution proceedings) pending at the commencement of the Act against any debtor for the recovery of any such debt (including interest, if

any) shall abate. A proviso to Section 4(1)(b) of the Act is to the effect that, if a suit or proceeding is instituted against two persons, one of whom

is not a debtor, then, nothing in that section will apply as regards the maintainability, of the suit or proceeding in so far as it relates to the person,

who is not a debtor. Likewise, a proviso to Section 4(1)(c) of the Act makes it clear that nothing therein shall apply to the sale in respect of any

such debt or:

(i) any movable property held and concluded before the commencement of this Act (Act 13 of 1980 and)

(ii) any immovable property confirmed before such commencement;

Section 4(1)(d) makes provision for the release of a debtor under going detention in the civil prison in execution of any decree for money passed

against him by a civil Court in respect of any such debt. Sections 4(1)(e) and 4(1)(f) of the Act provide for the return of the movable property

pledged by a debtor and for the redemption of a mortgage executed by the debtor in favour of the creditor. The explanation appended to Section

4(1)(f) states that the debtor is not entitled to a refund of any part of any debt repaid or interest paid or recovered from him before the

commencement of the Act. Section 4(2) of the Act declares that nothing contained in the Act shall apply to any debtor, who is entitled to the

benefits of Tamil Nadu Debt Relief Act, 1976, (President''s Act XXXI of 1976) only in so far as any debt to which that Act applies is concerned.

Section 5 of the Act enables a debtor to make an application for the return of the movable property pledged by him. Such an application should be

made in the prescribed form containing such particulars as may be prescribed to the Tahsildar having jurisdiction over the area where the creditor

has his ordinary place of business and should be supported by an affidavit as well as a certificate from the prescribed authority as to the annual

household income of the debtor. A time limit upto 31st January, 1981 for filing such applications has now been fixed by Tamil Nadu Act X of

1981. Section 5(2) content plates the giving of an opportunity to the creditor as well as the debtor to make representations and the passing of an

order, if the debtor is entitled to relief u/s 4, that the movable property pledged by the debtor be returned and directing the creditor to produce the

same on or before the date specified in the order. Section 5(2)(a)(iii) of the Act provides for the dismissal of an application if it is found that the

debtor is not entitled to relief u/s 4. Sections 5(3) to 5(10) of the Act are provisions intended to give effect to the adjudication made by the

Tahsildar u/s 5(2) of the Act and it is unnecessary to notice those provisions in detail. Section 6(1)(a) of the Act contemplates the making of an

application by a debtor for an order releasing the mortgaged property and also for the grant of a certificate of redemption and the requirements are

similar to those u/s 5(1)(a). The contents of and the supporting documents required in such an application are enumerated in Section 6(1)(b). A

time limit upto 31st January, 1981 has now been provided for making such applications. Section 6(2)(a) provides for the giving of a reasonable

opportunity to the creditor as well as the debtor to make their representations and in case it is found that a debtor is entitled to the benefits u/s 4 of

the Act, another releasing the mortgaged property shall be passed and a certificate of redemption should also be issued which shall be admissible

as evidence of redemption before a Court of law or other authority. If it is found that the debtor is not entitled to relief u/s 4, and order for

dismissal of the application filed u/s 6(1) shall be made u/s 6(2)(a)(ii) of the Act. Section 6(3)(a) relates to the publication of a list of those debtors

who had made an application u/s 6(1) and Section 6(3)(b) provides that if a debtor has not made an application within the time specified in Sub-

section (i), then such a debtor shall not be entitled to the relief under the Act. These provisions are comparable to Section 5(3)(a)(d) of the Act.

Section 6(4) bars the creditor or the transferee of the creditor from transferring or otherwise assigning his interest or exercising his right of

foreclosure in respect of the mortgaged property pending the passing of the orders u/s 6(2) of the Act. Section 6(5) enables the Tahsildar in a case

where the mortgaged property has been transferred or any right therein has been assigned to any one of the institution referred in Clause (h) of

Section 12 by the creditor, to recover from the creditor such amount as is due to such institution in respect of the mortgaged property, as if it were

an arrear of land revenue, for payment to the institution. Section 7 declares the finality of the orders of the Tahsildar passed u/s 5 or Section 6 of

the Act, subject, of course, to an appeal u/s 8 and states that every such order u/s 5 or Section 6 shall not be called in question in any Court. u/s 8,

any person aggrieved by an order of the Tahsildar under the provisions of the Act is given a right of appeal to such authority as may be prescribed

by the state Government. Section 8(2) declares the finality of the appellate decision and Section 8(3) provides that pending disposal of any such

appeal, any movable property pledged by a debtor who is a party to such an appeal shall not be either returned or disposed of under the Act and

that the Tahsildar shall not order the release of the mortgaged property or grant a certificate of redemption and the creditor or the transferee of the

creditor shall not transfer, or otherwise assign his interest in or exercise his right of foreclosure in respect of the property mortgaged by the debtor.

Section 9 lays an embargo upon the appearance of advocates on behalf of a party to the proceedings under the Act. Section 10 provides for

penalty for failure to furnish the statement or to comply with the orders under Sections 5 and 6 or filing false affidavits under those sections or for

otherwise contravening the provisions of the said sections. Section 11 makes provision for the punishment of offences under the Act committed by

a company. Section 12 enumerates the category of debts and liabilities not affected by the provisions of the Act. Section 13 enables the State

Government to make rules for carrying out the purposes of the Act.

In G.O. Ms. No. 1067, Revenue, dated 21st April 1980, rules have been framed by the Government to give effect to the provisions of the Act

in the exercise of the powers conferred u/s 13 of the Act. Rule 3(1) to (3) contains the details of the form of the applications, the form of the

affidavit to be filed by the debtors u/s 5(1)(a) and 6(1)(a) of the Act and the authority to issue the certificate. Rules 4 and 5 provide for the period

within which and the mode by which orders passed by the Tahsildar should be communicated to the creditor and the debtor. Rule 6 relates to the

publication of the list of debtors who have made applications u/s 5(1)(a) and Section 6(1)(a) of the Act. Rule 7 provides for the form of certificate

u/s 5(5) of the Act. Rule 8 contemplates maintaining of a register with reference to receipt of applications u/s 5(1)(a) and 6(1)(a) of the Act and

also moveable properties produced, recovered of deposited. Under Rule 9, the Tahsildar is empowered to issue a receipt for immovable property.

Rule 10 provides for the issue of a certificate of redemption in Form 8 u/s 6 of the Act. Rule 11 provides for the procedure relating to preferring as

well as hearing of the appeals.

The provisions of the Act referred to above clearly contemplate the granting of relief to a debtor as defined in the Act. The definition of the word

debt in the Act is wide enough to take in money claims (decreed or not) mortgage claims arising out of pledges etc. Though the definition of the

word debt is wide in the sense that it contemplates a variety of indebtedness, secured or unsecured, yet, with reference to money claims, the

provisions of the Act or the rules do not contemplate the Tahsildar as an authority constituted under the Act to adjudicate upon such claims. While

defining Tahsildar u/s 3(h) of the Act, it is stated that he is one empowered by the State Government to exercise the powers and perform the

functions of a Tahsildar under the provisions of the Act. The relief available to a debtor u/s 4(1)(a) of the Act is worked out by an application u/s 5

of the Act and by Rules 3 and 9 framed under the Act. Likewise relief in cases falling u/s 4(1)(f) of the Act is worked out by resorting to Section 6

of the Act and Rules 3 and 10 framed thereunder. But in cases falling u/s 4(1)(a) to (d) of the Act, there is no machinery provided at all 1o

investigate the claim of a person that he is a debtor entitled to the benefits of the Act and to adjudicate thereon and make available relief from

indebtedness or arrest as the case may be. No rules have also been framed relating to this aspect. Statutorily, therefore, Tahsildar has been

constituted a functionary to work out relief only with reference to matters falling under Sections 5 and 6 of the Act dealing with the pledge of

movable property and mortgages. The Tahsildar functioning under the provisions of the Act has not been in any manner empowered to deal with

claims arising in suits on promissory notes or decrees for recovery of money before the civil Courts. The absence of the conferment of a power on

the Tahsildar to deal with such matters falling Sections 4(1)(a) to (d) of the Act indicates that matters which are already before the civil Court either

as a suit or as a decree or other proceedings in execution of such a decree will have to be adjudicated upon by the civil Court in the process of

considering the claim of a person before it that he is a debtor entitled to the benefits of the Act. If that was not the intention, then one would expect

clear statutory provisions in the Act to include decrees of Courts and pending suits, as appropriate subjects falling within the scope of an

adjudication by a Tahsildar for working out relief claimed by a debtor.

Section 4(1)(a) merely declares that every debt advanced of incurred before 1st January 1980 and payable by a debtor to a creditor shall be

deemed to be wholly discharged. u/s 4(1)(b), there is no bar against the institution of a suit, but only as regards the entertaining of any suit.

Designedly, the expression entertain has been used in Section 4(1)(b) instead of the familiar phraseology en suit shall be institution. This deliver a

departure is indicative that even after the institution of the suit for the recovery of a debtor will be open to the Court to adjudicate upon at claim by

a person that he is a dab or and thereafter refuse to entertain the suit as against such a debtor. The proviso contemplates he institution of suits or

other proceedings against two or more persons one of whom is a debtor and the other or others are not and in such a case, the suit or proceeding,

in so far as it relates to persons other than the debtor, is not in any manner, affected by the relief granted in Section 4(1)(a). This would again point

out that the court has to consider the en certainability of the suit or other proceeding in the light of the claim for benefits under the Act made by a

party. Section 4(1)(c) provides for the abatement of suits and other proceeding pending at the commencement of the Act against and debtor for

the recovery of any such deb. That again contemplated that the claim of a party that he is a debtor entitled to the benefits of the Act must be

investigated before the proceedings can be declared to have abated. The absence of statutory provisions empowering the Tahsildar to perform

these functions under the provisions of the Act has already been referred to. A fair interpretation of Sections 4(1)(a) to (d) of the Act coupled with

the absence of a provision enabling the Tahsildar to deal with in any manner matters pending before civil Courts, would inevitably lead to the

conclusion that where matters are pending before the civil Court, be they suits of decrees already passed and in the process of execution or other

proceedings the civil Court will have to consider the claim of a person that he is debtor and afford relief. Sections 5 and 6 of the Act provide for

the machinery to work out relief in two specified cases viz., pledge and mortgage and cannot therefore be made applicable to cover cases of

indebtedness of a debtor on other claims.

Sections 5 and 6 appear to apply only to cases where the creditor or the debtor has not resorted to court. On the return of the articles pledged

by the debtor to the creditor, the relationship of pledger and pledgee is terminated. Likewise, the redemption of mortgage provided u/s 6 if

permitted by the Tahsildar would snap the relationship of mortgagor and the mortgagee between the debtor and the creditor and a certificate of

redemption granted by the Tahsildar in the prescribed form would be evidence of redemption. That would mean that the relationship of mortgagor

and the mortgagee no longer subsists and the mortgage cannot form the subject matter of a suit before a civil court. In other words, the exercise of

the powers conferred on the Tahsildar under Sections 5 and 6 of the Act and the granting of relief u/s 4(1)(e) and (f) of the Act, would really wipe

out the cause of auction itself for the institution of the suit, be it on a pledge or on a mortgage It is in this sense that cases of pledges and mortgages

not already forming the subject matter of suits before the civil Court can be Adjudicated upon by the Tahsildar exercising powers under Sections 5

and 6 of the Act and in no other case. In all other cases, where matters have come before the civil Court either as a suit or a decree in the process

of execution or other proceeding, when a suit or puts forth a claim that he is a debtor within the meaning of the Act, the civil Court has necessarily

to investigate and ascertain whether such a claim is made out or not, and thereafter proceed to grant relief under Sections 4(1)(a) to (d) of the Act

or refuse it. In the course of such proceedings, even if a Tahsildar''s certificate which is relevant only for purposes of Sections 5and 6 of the Act is

relief upon by a person claiming to be a debtor, that would be just a price of evidence to be considered along with other evidence and has no

higher probative value. The conclusion is irresistible that apart from cases covered by Sections 5 and 6 of the Act the Tahsildar has no power

under the Act to adjudicate upon other claims and all other matters have to be dealt with by the civil Courts before which suits, execution or other

proceedings have been either initiated or are pending.

A question may also arise as regards matters under Sections 5 and 6 of the Act committed to the adjudication of the Tahsildar, but which have

already proceeded to a decree. Even in Such cases, it seems to me that it is only the civil Court which has to consider the question whether a

person is entitled to the benefits of the Act as a debtor and if so, to grant relief as provided under Sections 4(1)(a) to (d). This also stands to

reason because a decree of a civil court validly passed and legally effective and enforceable cannot be undone by a Tahsildar acting under the

provisions of the Act In the absence of a provision in the Act for ripping open decrees already passed by the civil Courts (which certainly cannot

be done by the Tahsildar acting under the provisions of the Act) it would be quite in keeping with the object of the legislation that even in such

cases, the courts should when a claim to benefits under the Act is made, investigate the claim and afford appropriate relief under Sections 4(1)(a)

to (d) of the Act, as the case may be.

To got over this position, attention was drawn to two communications viz., letter No. 57005, DRI, 80-2, dated 1st August 1980 and letter

No. 60508, DRI, 80-3, dated 8th October 1980 of the Revenue Secretary, Government of Tamil Nadu, in the nature of clarificatory instructions

to Collectors to show that promissory notes would also fall and be included within the ambit of the powers of the Tahsildar to grant relief under the

Act in view of the wide definition of the word debt in the Act. The need for clarification was born out of the realisation and recognition that no

specific machinery provision for money claims, decrees etc., was made in the Act. In spite of the wide definition, as already pointed out, there is no

machinery section provided for granting relief by the Tahsildar in cases falling under Sections 4(1)(a) to (d) of the Act. To say that such a

machinery provision is necessary only in cases of pledge of movable properties and mortgages where there may be a need to restore the pledged

articles or the mortgaged property to the debtor after declaring that a person is a debtor within the meaning of the Act and therefore the debt is

wiped out, and not in others, is without any basis. It is well known that a negotiable instrument like a promissory note when sued upon, is

superseded by the decree. In the case of promotes also there must be something to indicate that the promisor is a person who is entitled to the

Benefits of the Act and consequently, the negotiable instrument is not enforceable. In its absence the debtor is likely to be exposed to a claim either

by the promisee or an assignee from him, In the absence, therefore, of specific statutory provisions to work out the relief regarding money claims

pending or decreed, resort cannot be had to instructions issued by the Revenue Department to include other cases not falling under Sections 5 and

6 of the Act merely on the basis of the definition of a debt. In any case, secretarial instructions cannot be a substitute for statutory provisions, which

are not there.

Having regard to the aforesaid considerations, the suit against the Petitioner in the instant case has been instituted by the Respondent before a

civil Court and if the Petitioner is entitled to the benefits of the Act it is open to the Petitioner to establish that claim before the civil Court and seek

the benefits under Sections 4(1)(a) to (c) of the Act and for this purpose, it is unnecessary that the trial of the suit should be stayed till the disposal

of an application by the Tahsildar. Under these circumstance, the order of the court below dismissing the application has to be sustained, though

for very different reasons. The civil revision petition fails and is dismissed. No costs.

Before parting with this case, this Court records the valuable, assistance rendered by M.N.R. Chandran, who appeared as amicus curiae and

placed all the relevant materials before the Court.