Rathnasabapathi Ayyar vs Subramania Pillai and Others

Alfred Henry Lionel Leach, C.J.—This is an appeal under Clause 15 of the Letters Patent. The question involved is one of interpretation of

Section 25 of the Madras Debt Conciliation Act, 1936. The section reads as follows:

When an application has beep made to a Board u/s 4, any suit or other proceeding then pending before a Civil Court in respect of any debt for the

settlement of which application has been made shall not be proceeded with until the Board has dismissed the application.

The appellant says that the section means that a Court which proceeds to order the sale of the property in execution of a decree when an

application has previously been made to a Debt Conciliation Board u/s 4 of the Act and is still pending acts without jurisdiction and its order can

be ignored.

In O.S. No. 112 of 1936 of the Court of the District Munsiff of Tiruvarur the second, third and fourth respondents obtained a mortgage decree

against the appellant. The decree was made final, whereupon the decree-holders proceeded in execution. On the 31st December, 1942, the

judgment-debtor applied for a stay of the proceedings on the ground that he had applied to the Debt Conciliation Board of Negapatam, u/s 4 of

the Act. His application was supported by an affidavit sworn by himself. It was opposed by the decree-holders and it was adjourned to the 7th

January, 1943, to enable them to file a counter affidavit. On the 7th January, 1943, the hearing was adjourned to the next day when the decree-

holders filed an affidavit denying that any application had been made by the judgment-debtor for the conciliation of his debts. On the strength of the

affidavit of the decree-holders the District Munsiff decided to proceed with the sale, but in his order he pointed out that the decree-holders had to

take "" the risk."" The sale was held on the same day and the mortgaged property was purchased by the first respondent. The sale was confirmed in

due course.

On the 13th February, 1943, the appellant filed an application in the District Munsiff''s Court asking for an order setting aside the sale on the

ground that the Court had no jurisdiction to sell the property. When the appellant applied for a stay of the execution proceedings on the 31st

December, 1942, it was a fact that he had filed an application for the conciliation of his debts. His application of the 13th February, 1943, was

based both on the ground that there had been material irregularity in the proclamation and conduct of the sale and on the ground of want of

jurisdiction in the Court. So far as the petition asked for relief on the ground of material irregularity in the proclamation and the conduct of sale was

concerned, it was out of time, but it was within time so far as it concerned the question of jurisdiction, as that contention fell within the decision of

the Full Bench of this Court in Rajagopala Iyer v. Ramanujachariar1.

The appellant''s application to the Debt Conciliation Board was dismissed by the Board on the 31st July, 1943. His application for the setting

aside of the sale was heard on the 4th September, 1943. It was dismissed because the District Munsiff considered that there was still no

satisfactory proof that the appellant had applied to the Debt Conciliation Board and that no useful purpose would be served by allowing the

application because it would merely mean that the property would have to be sold again. The appellant appealed to the Subordinate Judge, who

having admitted copies the appellant''s petition to the Debt Conciliation Board and the order of dismissing it, allowed the appeal on the ground that

the District Munsiff had no jurisdiction to order a sale of the property on the 8th January, 1943, because the petition before the Debt Conciliation

Board was still pending. The first respondent then appealed to this Court. The appeal was heard by Happell, J., who allowed it. The learned Judge

considered that the order of the District Munsiff directing the sale to be proceeded with could not be said to have been passed without jurisdiction

because there was no satisfactory proof before him that the appellant had filed an application u/s 4 of the Debt Conciliation Act. The appeal is

from the judgment of the learned Judge, who granted the necessary certificate.

The language of Section 25 of the Debt Conciliation Act is mandatory. It says in plain terms that a Civil Court shall not proceed with a suit or

other proceedings when an application u/s 4 has been made, until the Debt Conciliation Board has dismissed the application. The act of presenting

a petition u/s 4 takes away the jurisdiction of the Civil Court in execution proceedings until the application has been dismissed.

There are three decisions of this Court which conflict with the judgment of Happell, J. Two of them he referred to in his judgment and

considered that they were distinguishable. The third case, which was decided first in point of time and is a decision of a Division Bench, was not

considered by him. That case is Karnam Hirannayya Vs. Matan Thippeswami and Another, . The facts there are analogous to the facts in the

present case. During the pendency of the execution proceedings the judgment-debtor brought to the notice of the Court that he had made an

application u/s 4 of the Debt Conciliation Act, but the Court refused to stay the proceedings without seeing a certified copy of the application. The

judgment-debtor''s application for postponement of the sale was posted for hearing on the 23rd August, 1937, the date fixed for sale. On that date

the District Judge ordered the sale to proceed because there was nothing more than the petitioner''s statement to substantiate his petition. On the

24th August, the judgment-debtor made another attempt to get the proceedings stayed. This time he filed an affidavit sworn by his vakil to the

effect that an application had been made to the Debt Conciliation Board. In these circumstances the District Judge decided to stay further

proceedings and granted what he called an interim stay, posting the petition to the 27th August. On that date, after expressing some doubt, about

the feasibility of staying the sale after bids had been received, the District Judge thought that the difficulty could be avoided because the highest

bidder upto that point was the decree-holder himself and he had consented to allow his bid to await acceptance if the stay should be dissolved

thereafter. No date was fixed for the resumption of the sale. On the 1st November, the Debt Conciliation Board dismissed the judgment-debtor''s

application u/s 4. On the 3rd November, the District Judge resumed hearing of the petition for execution and passed all order accepting the bid

which the decree-holder had made on the 24th August. The appeal was heard by Burn and Stodart, JJ., who held that the District Judge acted

without jurisdiction when he allowed the sale, to proceed. The basis of the decision was the mandatory nature of the provisions of Section 25 of

the Debt Conciliation Act.

In H. Sitarama Reddy Vs. Bilehal Somappa and Another, Horwill, J., held that once an application has been filed u/s 4 of the Debt Conciliation

Act the jurisdiction of the C6urt is ipso facto taken away and this opinion was accepted by Kuppuswami Ayyar, J., in Pagolu Achutaramayya v.

Thimmaraju Ramamma (1944) 1 M.L.J. 298. These are the two cases which Happell, J., considered distinguishable. With great respect we do not

consider that they are distinguishable. They certainly have direct bearing on the question of the jurisdiction of a Court to execute a decree while a

petition to the Debt Conciliation Board is pending. In any event the decision of the Division Bench in Karnam Hirannayya Vs. Matan Thippeswami

and Another, is directly in point and governs this appeal.

We hold that inasmuch as the appellant had before the 31st December, 1942 filed a petition u/s 4 of the Debt Conciliation Act, the District

Muhsiff had no jurisdiction to proceed with the petition for execution until that petition had been dismissed. The sale had taken place in the

meantime and as the Court had no jurisdiction to sell the property, its action in so doing must be"" regarded as a nullity. It is well settled law that an

order or decree passed by a Court without jurisdiction has no validity and can be ignored.

The result is that we allow the appeal and restore the order of the Subordinate Judge. There will, however, be no order as to costs in this Court

or before Happell, J. Although the appellant has succeeded in this Court we consider that his object in filing this appeal has been merely to delay

the decreeholders obtaining their money. It is most regrettable that he should be so obstructive, but as the law is on his side we must set aside the

order of Happell, J. but without costs.