Kerala High Court
Narayani Amma And Ors. vs Kochu Pillai on 1 January, 1987
Equivalent citations: AIR1987KER170, AIR 1987 KERALA 170, ILR (1987) 2 KER 228, (1987) 1 KER LT 184, (1987) ILR(KER) 2 KER 228, (1987) KER LJ 280
JUDGMENT Sivaramannair, J.
1. Petitioner was the decree-holder in O.S. No. 56 of 1970 on the file of the Munsiff s Court, Varkala. That suit was filed on the basis of a promissory note executed by the respondent for an amount of Rs. 2,500/- on 14th August, 1968. The suit was decreed. Thereafter, the decree-holder filed E.P. No. 8 of 1972 for execution of the decree. The respondent-judgment-debtor filed E.A. No. 93 of 1978 claiming discharge of the debt as he was a debtor and the debt due was one falling under Act 17 of 1977. That application was opposed by the petitioner-decree-holder, stating that the application was not maintainable under S. 3 of the Act 17 of 1977, as the Judgment-debtor was not a debtor as defined in the Act. It was stated that the judgment-debtor had an annual income of more than Rs. 10,000/- and was having debts exceeding Rs. 3,000/-. He was said to be one of the judgment-debtors in the decree in O.S. No. 193 of 1970 for Rs. 4,000/-On 5-8-1978, the decree-holder filed interrogatories on the respondent-judgment-debtor. Since the latter had not answered the interrogatories, his application was dismissed on 7-8-1978. However, that was restored to file pursuant to orders of this Court in C.R.P. No. 320 of 1979. The respondent-judgment-debtor answered the interrogatories thereafter, denying question Nos. 1, 2 and 3. Thereafter, the judgment-debtor was examined as P.W.1. In his evidence, he stated that his annual income was only Rs. 1,200/-as pension and Rs. 50/- from his properties. He denied the suggestion that he was the judgment-debtor in O.S. No. 193 of 1970 and stated that the decree obtained by one Madhavan, on the basis of a chitty transaction in which he was the surety, had been fully discharged by the first defendant-judgment-debtor in that decree. The decree-holder (petitioner herein) was not examined as a witness. When it was discovered that the decree in O.S. No. 193 of 1970, which was produced by the petitioner decree-holder to make out that the respondent-judgment-debtor was not a debtor as defined in Section 2(4) of Act 17 of 1977, did not relate to the respondent E.A. No. 141 of 1980 was filed by the decree-holder seeking to substitute the decree in O.S. No. 193 of 1965 in the place of O.S. No. 193 of 1970 and to amend the affidavit dated 5-8-1978 with which the interrogatories were filed. The execution Court rejected E.A. No. 141 of 1980 for inordinate delay, absence of bona fides and lack of provision for amending the affidavit which was already filed about two years ago. It was found on the evidence of P. W. 1 that he had made out that he was a debtor as defined in Section 2(4) of Act 17 of 1977. The debt, admittedly, fell within the definition of Section 2(3) of that Act. The Court also found that the decree-holder had not succeeded in establishing her claim that the debt due to her was exempted from the definition of debt under Act 17 of 1977. With reference to Section 9 of that Act, the Court found that the decree-holder had not discharged the burden of proof cast on her and that the judgment-debtor was not entitled to protection under the provisions of that Act. The Court, therefore, allowed E.A. No. 93 of 1978 declaring that the debt due from the judgment-debtor to the petitioner-decree-holder was discharged under S. 3 of Act 17 of 1977. Petitioner challenges that order of the Munsiff in this petition under Section 115 of the Code of Civil Procedure.
2. Kochu Thommen, J. who heard the matter, felt that there was conflict between Ouseph Joseph v. Kochunny Moosa, 1983 Ker LT 867 : (AIR 1984 NOC 34) and E. K, Prarthanan Sangham v. Appunni, 1984 Ker LT 702 : (AIR 1985 NOC 192) the question of burden of proof placed on the decree-holder under S. 9 of the Act 17 of 1977. It was also felt that the decision in Georgekutty v. Thomas, 1980 Ker LT 641 to the effect that amounts already paid by a debtor before the coming into force of Act 17 of 1977, could be adjusted against accrued interest in deciding whether that person was a debtor under Section 2(4) of Act 17 of 1977 required reconsideration.
3. There are certain basic facts which are not in controversy in this petition. The original debt was Rs. 2,500/- on a pro note executed on 14-8-1968. The suit was decreed on 13-6-1970 with 6% interest till realisation, with costs amounting to Rs. 575.05. In various instalments commencing from 7-12-1972 and endingwith 13-3-1974, the decree-holder had paid Rs. 350/-. The accrued interest was Rs. 825/-. If the amount paid by the judgment-debtor was adjusted against such interest, there would be a balance of Rs. 2,795.50 due under the decree, excluding cost, which as stated above, was Rs. 575.05. If this calculation is correct, the amount of debt due at the commencement of Act 17 of 1977 would have been more than Rs. 3,000/-. The question is whether the amount of Rs. 350/- paid by the judgment-debtor is liable to be adjusted against interest. If it was not, the judgment-debtor would be a debtor under Section 2(4) of the Act.
4. Counsel for the petitioner referred us to Commentaries on Section 60 of the Contract Act (Pollock and Mulla) and the decisions reported in Appu v. Chandukutty, 1978 Ker LT 926, Georgekutty v. Thomas, 1980 Ker LT 641 and Meghraj v. Bayabai, AIR 1970 SC 161 to the effect that in the absence of definite appropriation by the debtor, the creditor can adjust and appropriate such payments towards interest. He justifies the statement filed on 29-10-1974 adjusting the amount paid towards interest oh the basis of the above decisions. Reference is also made to the decision in Parr's Banking Company v. Yates, (1898) 2 QB 460 in support of this proposition.
5. The basis of the decision in Appu v. Chandukutty, 1978 Ker LT 926 was that'll is not mentioned anywhere in the Statute that a sum already paid as interest or a consolidated payment made prior to the commencement of the Act should go in reduction of the principal amount due to the creditor. In other words, there is no provision in Section 2(4) for re-opening payments already made and re-adjustment of amounts paid, towards the principal amount, for the purpose of finding out whether the debt (excluding interest) exceeds three thousand rupees".
6. In Georgekutty v. Thomas, 1980 Ker LT 641, Janaki Amma, J., again held that exclusion of interest from the definition of debt under the Act did not affect appropriation effected prior to the Act in the absence of a specific provision in the Act for reopening the payments already made. It was held:
"What the Court is expected to do is to find out the balance amount due under the concerned transaction on the date of commencement of the Act and deduct from it the excluded category, viz., interest outstanding and find out whether the balance together with other liabilities of the claimant exceeded Rs. 3,000/-. If it did, the claimant is not entitled to relief under the Act."
7. Reference was made to the decision of the Privy Council in Venkatadri v. Parthasarathi, ILR 44 Mad 570 : (AIR 1922 PC 233); Rai Bahadur v. Radha, 26 Cal WN 153 : (AIR 1922 PC 26); Akbar v. Attar, AIR 1945 PC 170; Beninson v. Shiber, AIR 1946 PC 145, as also of the Federal Court in Shanmugam v. Annalakshmi, AIR 1950 FC 38, in support of the proposition that ordinarily, any sum paid towards the transaction should first be applied in discharge of interest and after interest was satisfied, in payment of principal.
8. On an examination of the provisions of Sections 2, 3, 4 and 11 of Act 17 of 1977, along with the perambulatory declaration of that enactment, we feel obliged to record out inability to accept the above decisions as applicable to the controversy on hand.
9. The preamble of Act 17 of 1977 is to the following effect:
"Whereas it is expedient to provide relief from indebtedness to certain persons in the State of Kerala."
10. Section 2(3) defined debt as "any liability in cash or kind, due from or incurred by a debtor on or before the date of commencement of the Act, whether payable under a contract, or under a decree or order of any Court" etc. Some exclusions are provided for. We are not concerned with any of them, except Clause (j). We will come to that provision later.
11. Debtor is defined in Section 2(4) as meaning "any person whose annual income does not exceed three thousand rupees, from whom any debt is due, but does not include, (i) any person from whom debt or debts exceeding three thousand rupees (excluding interest) is or are due".
12. We are concerned only with the above provision.
13. Interest is defined in Clause (6) as meaning "any amount or other thing paid or payable in excess of the principal amount borrowed or pecuniary obligation incurred, or, where anything has been borrowed in kind, in excess of what has been so borrowed, by whatsoever name such amount or thing may be called, and whether the same is paid or payable entirely in cash or entirely in kind or partly in cash and partly in kind and whether the same is expressly mentioned or not in the document or contract, if any".
14. Section 11 provides, that "the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in the Code of Civil Procedure, 1908 (Central Act 5 of 1908) or in any other law for the time being in force, or in any custom, usage or contract, or in any decree or order of a Court or other authority".
15. It is too late in the day to contend that an enactment in the nature of Act 17 of 1977, a beneficial and ameliorative provision enacted in favour of indigent and indebted persons should receive the most beneficial construction so as to enable the persons in whose favour the Act was enacted to obtain the benefits thereunder. This is clear from the decision of the Supreme Court reported in Fatechand v. State of Maharashtra, AIR 1977 SC 1825. In any case, it ought not be the effort of the Court to defeat the purpose of the enactment by interpretative exercises and obstruse technicalities. A provision in the nature of Section 11 for overriding other laws, contracts, decree or orders of Court or other authorities, is enacted for the purpose of avoiding complications of this nature or attempts to whittle down the beneficial provisions in favour of the debtors. We should keep in mind this cardinal factor that the provisions of other laws, contracts, decrees or orders of Court shall surrender to the desire of the legislature to bring succour to the deserving and the needy.
16. It is evident from a combined reading of Sub-sections (3), (4) and (6) of Section 2, that in ascertaining and quantifying the amount to find out whether a person is a debtor or not, the interest shall be excluded. The provisions of Section 6 make it absolutely clear that not more than the principal amount if cash was borrowed and nothing in excess of the thing if borrowed in kind, shall enter the reckoning. All such debts as are in excess of the principal amount are liable to be ignored in deciding as to who is a debtor with reference to the measure provided in Section 3(4)(i) of the Act.
The definition of principal amount in Section 2(9) is also helpful in this regard. It has been defined to mean, that "the amount originally advanced together with such sum, if any, as has been subsequently advanced, notwithstanding any stipulation to treat any interest as principal and notwithstanding that the debt has been renewed or included in a fresh document, whether by the same debtor or by his heirs, legal representatives or assigns or by some other person acting on his behalf or in his interest, and whether in favour of the same creditor or his -heirs, legal representatives or assigns or of any other person acting on his behalf or in his interest". It is evident that not more than the principal amount borrowed can enter the reckoning in deciding whether the debt exceeds Rs. 3,000/-for purposes of Section 2(4). Absence of any machinery or provision for adjustment of the amounts paid and appropriated cannot justify an assumption as was made in the decision reported in 1978 Ker LT 926, that interest which was directed to be excluded under Section 2(4)(i) would not take in amounts, which had already been appropriated as interest by the creditor in the absence of stipulation in the Act or any direction from the debtor. The hallowed concepts of contract law applicable to commercial transactions which might justify the above finding and which were the foundation of the decision in Parr's Banking Company v. Yates (supra) were deliberately displaced by the non obstante clauses in Act 17 of 1977 to bring some relief to the rural poor, the farmer, the village artisan and the like, whose back was broken by the burden of never ending indebtedness. The classic concepts of contract law in their pristine glory do not avail in this region.
17. To understand the import of the words used in a statute, we look at the definition clause, which is ordinarily the dictionary of the terms of the statute. Except when the context otherwise requires, the same expression shall have the same meaning throughout the statute. We do not find any justification to adopt the reasoning that the term "interest" which is sought to be excluded under Section 2(4)(i) is interest as ordinarily understood and not interest as defined in Section 2(6) of the Act. The observations contained in the decision reported in 1980 Ker LT 641, to the effect that the exclusion of interest in the definition of debt under the Act, does not affect appropriation effected prior to the Act in the absence of specific provision in the Act for reopening, cannot therefore be, correct. The observations in that decision to the effect that "what the Court is expected to do is to find out the balance amount due under the concerned transaction on the date of commencement of the Act and deduct from it the excluded category, viz., interest outstanding and find out whether the balance together with other liabilities of the claimant exceeded Rs. 3,000/-, "completely ignores the definition of 'interest' as "any amount or other thing "paid or payable" in excess of the principal amount borrowed or pecuniary obligation incurred". The above decision can be justified only if interest is defined as any amount or other thing 'payable' in excess of the principal amount borrowed or pecuniary obligation incurred. To accept that point of view, we should completely ignore some of the enacted portions of the statute, namely interest "paid" : that too, an important portion in the definition which should be the glossary to understand the import of the terms used in the statute.
18. We should also note that the effect of Section 11 of Act 17 of 1977 is to override any other law, decree or order of Court or other authority. Resort to the decisions rendered under other enactments for understanding the import of 'debt' and 'debtor' as defined in Specific terms in Act 17 of 1977 does not seem to us to be proper or justified. The principles enunciated therein may be good law in the case of other borrowings and obligations arising thereupon but cannot apply to 'debts' and 'debtors' defined in Act 17 of 1977.
19. We are, therefore, of the opinion that 1978 Ker LT 926 and 1980 Ker LT 641 were not correctly decided. For ascertaining whether a person who claims the benefit of Act 17 of 1977 is a debtor as defined in Section 2(4) of the Act, only the principal and nothing more shall be taken into account. The principal amount borrowed or the thing borrowed and nothing in excess thereof shall be debt. It is the admitted case that if that alone is taken into account, the judgment debtor would be a debtor as defined in Section 2(4) of the Act. We have no hesitation to hold that the lower Court was correct in granting relief under Section 3 of Act 17 of 1977 to the respondent judgment-debtor.
20. Some considerable arguments were addressed on the burden of proof as provided in Section 9 of Act 17of 1977. That section reads :
"Notwithstanding anything contained in any law for the time being in force, any suit or other proceeding, the burden of proving that a debtor is not entitled to protection under the provisions of this Act shall be on the creditor."
The provision seems to us to be absolutely clear. It casts the burden on the creditor to prove that the person who claims the benefit of the Act is not a "debtor".
21. We do not think that there is any conflict between the decisions in Ouseph Joseph v. Kochunny Moosa, 1983 Ker LT 867: (AIR 1984 NOC 34) and E. K. Prarthana Sangham v. Appunni, 1984 Ker LT 702 : (AIR 1985 NOC 192), on this question. In the former it was held by a Division Bench of this Court, that-
"a reading of Section 9 makes it abundantly clear that the normal rules applicable to burden of proof are not applicable so far as the provisions of this Act are concerned. Section 9 imposes an obligation on the debtor to initially prove that he is a debtor under the Act. The creditor is obliged to prove that the debtor is not entitled to protection under the provisions of this Act only when the initial burden is discharged by the debtor. The manner of discharging the initial burden by the debtor is either by examining himself on oath or by swearing to an affidavit. The creditor could he called upon to prove the contrary only if this initial burden is discharged in the manner mentioned above."
In the latter decision, another Division Bench of this Court held, that-
".....the judgment-debtor who claims a statutory discharge of the decree debt cannot succeed unless he proves that he is a "debtor" within the meaning of the Act. Once it is proved that the judgment-debtor is a "debtor" under the Act, the burden shifts to the creditor to prove under Section 9 that the debtor is not entitled to the benefits of the Act, In other words, the initial burden of proving that he is a "debtor" within the meaning of the Act is on the person who claims the statutory discharge of debt under Section 3 of the Act."
22. It appears to us that the effect of the above decisions is only that the person who claims to be a "debtor" must make out his claim. It is then for the person who disputes that claim to prove under Section 9 of the Act that the debtor is not entitled to the protection under the provisions of the Act. In that event, the burden shall be on the creditor who contests the claim. These two decisions were sought to be reconciled by M. P. Menon, J., in the decision reported in Khadija Umma v. Paru, 1986 Ker LT 725. A slightly different note was struck in that decision. But there is no departure from the basic tenor in that decision either. What M. O. Menon, J., held was that the distinction between initial burden and final burden of proof is unrealistic. It was, however, found that Section 9 casts the burden on the creditor, once the debtor establishes, prima facie, that his liability is a 'debt' under Section 2(3) and he is a 'debtor' under Section 2(4) of Act 17 of 1977. We need only state, that there is no conflict between those two decisions. In a beneficial legislation of this nature, a provision that the benefits of the legislation will be denied to the debtor only if such exclusion is proved by the creditor does not seem to us to be unreasonable. We are, therefore, of the opinion that it is for the creditor to prove that the debtor has not established, prima facie, his entitlement for the benefits of the Act.
23. We should also take note of the fact that the decree-holder-petitioner had not attempted to prove this burden in any manner. She had not examined herself as a witness. None other was examined. She sought to prove her case for exclusion of the respondent from the definition of "debtor" and thereby from the benefits of Section 3 of Act 17 of 1977 by pleading that the respondent herein was a judgment-debtor in the decree in O.S. No. 193 of 1970; an affidavit was filed to that effect and interrogatories were served on that basis as early as on 5-1-1978. It was only long thereafter that an attempt was made to correct the decree as in O.S. No. 193 of 1965. The execution Court rightly refused to take into account the belated production of a decree in substitution of what was mentioned in the affidavit filed by the decree-holder. We do not find anything wrong on the conclusion come to by the execution Court, that the decree-holder was not able to discharge his obligation to prove that the judgment-debtor was not entitled to the benefits of the Act. Nor are we satisfied that the decree-holder had made out that she was entitled to exemption of the debt in view of the provisions of Section 2(3)(j) of Act 17 of 1977. Even though it was pleaded that she was a widow and her income was less than Rs. 4000/- no proof was adduced to sustain that claim for exemption. The finding of the execution Court, in view of the scarcity of any material sustain her claim for exemption, cannot be held to be correct.
In this view, the Civil Revision Petition is liable to be and is hereby dismissed with costs.