Roopchand Merlacha vs Sha Motaji Mokanaji

Wadsworth, J.—This petition raises a question under Madras Act XI of 1936. The petitioner was the judgment-debtor under a compromise

decree. On 27th October, 1939, a sale was ordered under that decree. At some date in November the petitioner presented an application to the

Debt Conciliation Board, which application was not in proper form and was consequently rejected on 2nd December, 1939, under the provisions

of Section 7 of the Act. At the time of the rejection an application for stay of execution of proceedings u/s 25 of the Act was pending before the

executing Court and on 8th'' December, 1939, the Court ordered a stay of the sale for two months. It is to be observed that at the time of this

order there was in fact no application pending and if there had been an application pending, the limitation of the period of stay to two months

seems to be not in accordance with the provisions of Section 25 of the Act which makes it obligatory upon the Court to stay proceedings until the

Board has dismissed the application, subject to the limitations imposed u/s 17 of the Act. The Court may, of course, when staying proceedings u/s

25, fix a date on which the matter shall be called in order to prevent it being lost sight of. But as I read Section 25 the Court has no power to go on

with the proceeding when the application is still pending, subject to the proviso that the Board is required to deal with the application u/s 17 within

one year. This order for stay for two months was questioned by the respondent on 19th December, 1939, when he applied to vacate the stay on

the ground that there was no pending application before the Debt Conciliation Board. On 20th December 1939, the petitioner re-presented his

application to the Board, as he is empowered to do u/s 7. He also applied again for a stay to the executing Court. On 21st December, 1939, the

learned Judge directed the previous stay order to continue to operate dismissing both the application of the respondent to vacate the stay and the

application of the petitioner for a fresh stay. This stay order in terms provided for only two months'' stay which would cease to operate on 8th

February, 1940. Consequently on 14th February, 1940, the respondent applied for the issue of the directions to the Commissioner to proceed

with the sale and the Judge ordered accordingly, and it is against this order the present revision petition is filed.

My attention has been drawn to a decision of Stodart, J., in Ellappa Chettiar, In Re: Ellappa Chettiar, , where the learned Judge held that when

one of several joint defendants had made an application to the Debt Conciliation Board and the other joint defendants had participated in that

application though they were not named as applicants and the application had been dismissed, it was not open to one of those other judgment-

debtors to file a fresh application and get a fresh stay under Sections 4 and 25 of the Debt Conciliation Act, the reasoning being that this would

permit an almost indefinite series of applications really by the same person for a relief which had already been refused and an indefinite series of

stays on the applications which really were not sustainable. It is not necessary for me to go into the merits of that decision, for it seems to me that it

has little bearing on the facts of the present case. I am of opinion that the word ""dismissed"" in Section 25 of the Act must include a rejection u/s 7,

for obviously a stay order can have no basis when there is no pending application. At the same time when an application is rejected u/s 7, the Act

itself expressly provides for a fresh application after remedying the defects, so that there can be no question of the rejection being a bar to further

proceedings and the fresh application cannot be deemed to be an abuse of the process provided by statute such as was the case before Stodart, J.

The position is that when a defective application is presented, it cannot provide the basis for a stay after it has been rejected; but there is no reason

why it should not provide a basis for a stay when the defect has been remedied and the application has been re-presented in the manner allowed

by Section 7. The learned Judge of the Court below has evolved the theory that an application presented under the powers given by Section 7 is

not an application u/s 4. This seems to me to be clearly erroneous. All that Section 7 provides is that when an application u/s 4 has been rejected

for a formal defect, there is no bar to a fresh application being made. This fresh application when made must be made under the only section which

provides for a substantive application to the Debt Conciliation Board, namely, Section 4 and must be made in the form prescribed by Section 4. It

seems to me to follow that when an application is rejected for a formal defect u/s 7, the stay will cease to operate, but that when that application is

re-presented, it becomes once more a subsisting application u/s 4 and the provisions of Section 25 will come into force and the executing Court

will be obliged, when the fact of this re-presented application is brought to its notice, to stay proceedings in execution. That stay will operate until

the application is dismissed, subject of course to the legal requirement that the application shall be disposed of within one year. In the view, which I

take, it is not competent to the Court to go on with the proceedings in execution while this application is pending and though the Court may fix a

date on which the matter shall be called as a matter of convenience, the Court has no power to say ""I will order stay for two months and no more"".

The duration of the stay is fixed by statute and is out of the hands of the Court altogether. In this view I hold that the lower Court''s directions to

the Commissioner to proceed with the sale while the application before the Debt Conciliation Board is pending are contrary to law and must be set

aside.

The petition is therefore allowed with costs here and in the Court below and the lower Court is directed to stay proceedings pending the

disposal of the application before the Debt Conciliation Board.