Rathnasabapathi Ayyer vs Subramania Pillai and Others

Leach, C.J.—This is an appeal under Clause 15 of the Letter''s Patent. The question involved is one of interpretation of Section 25, Madras

Debt Conciliation Act, 1936. The section reads as follows:

When an application has been 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 Munsif of Tiruvarur respondents 2, 3 and 4 obtained a mortgage decree against

the appellant. The decree was made final, whereupon the decree, holders proceeded in execution. On 3lst December 1942 the judgment-debtor

applied for a stay of the proceedings on the ground that he had applied to the Debt Conciliaion Board of Negapatam u/s � 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 7th January 1943 to

enable them to file a counter affidavit. On 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 Munsif decided to proceed with the sale, but in his order he pointed out that decree-holders had to take ""the risk."" he sale was

held on the same day and the mortgaged property was purchased by respondent 1. The sale was confirmed in due course.

On 13th February 1943 the appellant filed an application in the District Munsif''a 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 31st December 1942,

it was a fact that he had filed an application for the conciliation of his debts. His application of 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. Ramanujachariar AIR 1924 Mad. 431.

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

of the sale was heard on 4th September 1943. It was dismissed because the District Munsif 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

of the appellant''s petition to the Debt Conciliation Board and the order dismissing it, allowed the appeal on the ground that the District Munsif had

no jurisdiction to order a sale of the property on 8th January 1943 because the petition before. the Debt Conciliation'' Board was still pending.

Respondent 1 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 Munsif 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, Debt Conciliation Act. The appeal is from the judgment of the learned

Judge, who granted the necessary certificate. The language of Section 25, 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 Hirannayya v. Thippeswami AIR 1939 Mad. 215. 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, 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 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 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 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 up to 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 1st November the Debt Conciliation Board dismissed the judgment-debtor''s application u/s 4. On 3rd

November the District Judge resumed hearing of the petition for execution and passed an order accepting the bid which the decree-holder had

made on 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, Debt Conciliation Act.

In Sitarama Reddi v. Somappa AIR 1943 Mad. 549 Horwill J. held that once an application has been filed u/s 4, Debt Conciliation Act, the

jurisdiction of the Court is ipso facto taken away and this opinion was accepted by Kuppuswami Aiyar J. in P. Achyutaramayya Vs. T. Ramamma,

. These are the two cases which Hap. pell 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 Hirannayya v. Thippeswami AIR 1939 Mad. 215 is directly in point and governs this

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

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 decree-holders 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.