United Medical Agencies vs Abdulgafer Mahmudseth

This is a revision petition under S. 18 of the Karnataka Small Cause Courts Act, 1964 by the petitioner plaintiff who failed to secure a decree against the respondent defendant in S.C. No. 184 respondent-defendant in S.C. No. 184 of 1979 on the file of the Civil Judge, Hubli.

In the course of this order, the parties will be referred by the rank and position they had in the lower Court.

The plaintiff is a firm which filed the suit to recover a sum of Rs. 1,360.50, which included both principal and interset, advanced as loan to the defendant Abdul Gafar Mahmudseth Kathewadi. The defendant resisted the suit on the sole ground that he was a debtor within the meaning of that term under the Karnataka Debt Relief Act, 1980 and, therefore, the suit was not maintainable against him, while admitting the suit transaction, but denying the agreement to pay interest at the rate claimed which was 21% per annum.

In the light of the rival pleadings, the Court below formulated the following points for consideration:

(1) Whether the plaintiff is a registered partnership firm?

(2) Whether the defendant is a debtor under the provisions of the Karnataka Debt Relief Act?

(3) Whether the plaintiff proves defendant is not entitled for the benefit of the Karnataka Debt Relief Act?

(4) To what relief the parties are entitled to?

On point No. 1, the Court below held in favour of the plaintiff and on point No. 2 it held in favour of the Defendant and on Point No. 3, it declined to pass a decree in favour of the plaintiff.

Aggrieved by the same, the plaintiff has approached this Court contending, inter alia, that the order passed by the learned Civil Judge is contrary to law and therefore, is "liable to be set aside and the suit decreed inasmuch as (1) that the lower court erred in holding that the defendant was a debtor within the meaning of the term on his own admission that he had no income whatsoever at all, and, therefore, he could not be said to be a person who had income less than Rs. 4,800 (2) that the learned Civil Judge could not have given him any relief under the Karnataka Debt Relief Act as there was no plea to that effect in the written statement and (3) that the debt having been incurred after 1976 i.e., after coming into force of the Karnataka Debt Relief Act, 1976, the prohibition contained in the Act to pass a decree could not be operative in respect of a debt contracted after the coming into force of the said Act.

It is convenient to consider the third point first. The Karnataka Debt Relief Act, 1976 was replaced by an Ordinance i.e., Ordinance No. 19 of 1979 which, in turn, was made an Act known as the Karnataka Debt Relief Act, 1980 (Act No. 29 of 1980). Apart from certain changes between the Acts, i.e., Acts of 1976 and 1980, the substantial object and the operative provisions remain the same. Corresponding to S. 4 of 1976 Act there is Section 3 in the 1980 Act. Sections 3 and 4 in both 1976 Act and 1980 Acts respectively are declaratory in nature and character. They confer rights on the persons defined therein as debtors to get relief from indebtedness. Suffice it to extract S. 3 of 1980 Act which reads:

"3. Relief from indebtedness.-Notwithstanding anything contained in any law for the time being in force or in any contract or instrument haying force by virtue of any law or otherwise and save as otherwise expressly provided in this Act, with effect on and from the date of commencement of this Act-

(a) every debt incurred by a debtor before the date of commencement of this Act and payable by him to his credit oh such date shall be deemed to be wholly discharged;

(b) No civil court shall entertain any suit or other proceedings against the debtor or his surety for the recovery of any amount of such debt;

Provided that where any suit or other proceedings is instituted jointly against a debtor and some other person than a surety, nothing in this Section shall apply to the maintainability of such suit or proceeding in so far as it relates to such other person;"

As is seen from sub-clause (b) of S. 3 extracted above, there is a bar for any suit being entertained against a debtor or his surety for the recovery of any amount of such debt. Therefore, suit filed in 1979 would clearly be hit by this provision. Therefore, the question of 1976 Act being prospective is not of much help to the plaintiff as the 1980 Act is also prospective in application and covers the debt contracted in 1977. The learned Judge wisely or by ignorance has not mentioned in the course of his order whether he relied on the provisions of 1976 Act or the 1980 Act. That should not in any way, improve the case of the plaintiff. If there is a bar for the Civil Court to entertain a suit, that bar operates in respect of pending proceedings also resulting in there being no decree against the debtor, as defined under either of the Acts.

The next point for consideration is the first point whether the respondent defendant is a debtor within the meaning of the term as defined under S. 2(6) of the 1980 Act, Sri Rama Bhat, learned counsel for the petitioner plaintiff argued that persons having some income less that Rs. 4,800 alone come in the category of a ''debtor'' falling under clause (ii) of sub-sec. (6) of S. 2 of the 1980 Act i.e., "A person belonged to the weaker, section of the people."

"A person belonging to the weaker section of the people is defined under clause (ii) of sub-sec. (6) of S. 2 of 1980 Act which provides that persons whose annual income from all sources does not exceed four thousand and eight hundred rupees are "persons, belonging to the weaker section of the people" and, therefore, "debtors". So long as a person does not have income exceeding Rs. 4,800 from all sources, he would be a person belonging to the weaker section of the people and therefore a debtor", whether his income is Re. 1 or Rs. 4,800 or no income at all. Therefore, the argument of Sri Rama Bhat that a person with no income at all is not a person belonging to the weaker section of the people, is trying to put too literal a meaning and, therefore, not correct. The object of the Act is to wipe out the indebtedness of the weaker section. A person with no income at all is in a worse position than a person who is having income of say Rs. 2,000 only. Merely because, he does not have any income, on a. literal construction of the provision, it cannot be said that he does not belong to the weaker section of the people. The object of the definition of "persons belonging to the weaker section of the people" is to include all persons who are not having any income above Rs. 4,800. Therefore, the proper meaning to give is that it includes persons who have no income at all from any source also. Thus the plaintiff has to fail on his contention stated above.

Then what remains is the second contention that there was no plea for relief in the written statement. It is also not of much assistance to the plaintiff because S. 3 of 1980 Act as also S. 4 of 1976 Act are declaratory in character. But as is noticed from the narration of the contents of the pleadings, it is clear that the defendant claimed protection under the Karnataka Debt Relief Act. That amounts to a plea which is adequate to enable the Court to decide the issue as to whether the defendant respondent was entitled to the relief under the Act. The courts are bound to take notice of the legislative enactments. The Court below has correctly dismissed the suit of the plaintiff as the same was not maintainable in accordance with S. 3(b) of the 1980 Act. Therefore, I do not see any merit in in this revision petition. It is rejected.

The respondent was served but remained absent and unrepresented and in these circumstances, there is no reason to award costs in this revision petition.