Patna High Court
Madho Singh vs The State Of Bihar And Ors. on 7 November, 1977
Equivalent citations: AIR1978PAT172, 1978(26)BLJR32, AIR 1978 PATNA 172
JUDGMENT Shambhu Prasad Singh, J.
1. The Bihar Money-lenders Act, 1974 (hereinafter referred to as 'the Act') after it was passed by the Bihar Legislature received the assent of the President of India on the 20th of March, 1975. The Act as passed in Hindi was published in the Bihar Gazette (Extraordinary) dated 25th of March, 1975. An authoritative English text of the Act was published in the Bihar Gazette (Extraordinary) dated 29th of April, 1975. However, another authoritative English text of it was published in the Bihar Gazette (Extraordinary) dated 25th of July, 1975 superseding the authoritative English text published earlier in the Bihar Gazette (Extraordinary) dated 29th of April, 1975. The provisions of the Act referred to in this judgment are as published in the Bihar Gazette (Extraordinary) dated 25th of July, 1975.
2. The Act came into force immediately after the publication in the Bihar Gazette as Section 1 (3) of it provides that it shall come into force at once. Section 12 of the Act reads as follows:--
"12. Usufructuary mortgages and their redemption -- Notwithstanding anything to the contrary contained in any agreement, the principal amount and all dues in respect of an usufructuary mortgage relating to any agricultural land, whether executed before or after the commencement of this Act, shall be deemed to have been fully satisfied and the mortgage shall be deemed to have been wholly redeemed on expirv of a period of seven years from the date of the execution of the mortgage bond in respect of such land and the mortgagor shall be entitled to recover possession of the mortgaged land in the manner prescribed under the rules:
Provided that if the mortgage bond had been executed before the commencement of this Act nothing in this section shall entitle the mortgagor to claim any accounts or profits from the mortgagee by the reason of the benefit of redemption of the mortgage under this provision."
The Bihar Money-lenders Rules, 1975 (hereinafter referred to as 'the Rules') were published in the Bihar Gazette (Extraordinary) dated 29th July 1975. The Rules were framed under Section 47 of the Act which conferred power on the State Government to make rules by notification in the official gazette for carrying out all or any of the purposes of the Act. Rules 9 and 10 of the Rules prescribe the manner in which the mortgagor shall be entitled to recover possession of the mortgaged lands as envisaged by Section 12 of the Act. When mortgagors made applications under Rule 10 (1) of the Rules before the Collector to eject the mortgagees from the mortgaged properties and notices of such applications were sent to the mortgagees, a large number of applications under Articles 226 and 227 of the Constitution of India were filed before this Court challenging the vires of S. 12 of the Act and rules 9 and 10 of the Rules. One of such applications (Kailash Pati Singh v. State of Bihar) was disposed of by a bench of this Court of which I was also a Member. That judgment is reported in AIR 1976 Pat 248. That judgment held that S. 12 of the Act and Rules 9 and 10 of the Rules were not ultra vires. Grounds were taken in that writ application of Kailash Pati Singh that Section 12 of the Act was ultra vires as it was violative of the fundamental rights conferred upon a citizen by Part III of the Constitution specially Article 19. As, at the time the case was heard, the Presidential Order dated 8th of Jan., 1976 issued under Article 359 (1) of the Constitution suspending the right to move any Court for enforcement of such rights was in force and the writ case had to remain pending in this Court during the period the said order remained in force, learned counsel appearing for the petitioner did not press that ground. The vires of Section 12 of the Act was, therefore, examined in that case only on grounds other than the one that S. 12 of the Act was violative of fundamental rights conferred upon a citizen by Part III of the Constitution.
3. Madho Singh, the petitioner of the present case before us, filed a writ application before this Court for quashing the notice issued to him under rule 10 of the Rules read with Section 12 of the Act. He also made a prayer for declaring Section 12 of the Act and the Rules ultra vires. That writ application was numbered as C. W. J. C. No. 2919 of of 1975. By its judgment dated 28th of March, 1975, the same Bench which had disposed of Kailash Pati Singh's case dismissed the writ application. That order has been made annexure 4 to the present writ application. That order gives no separate reason but merely states that as in Kailash Pati Singh's case the Act and Rules were held intra vires, the application was being dismissed. After the said Presidential order dated 8th of Jan. 1976 was withdrawn, the present writ application was filed by the petitioner on 7th of April, 1977. The writ application was admitted on 12th of May, 1977 and it was stated in the same order:--
"Let it be placed before Hon'ble the Chief Justice for placing it before an appropriate Bench at the time of hearing as vires of Section 12 of the Bihar Moneylenders Act, 1'974 (Bihar Act 22 of 1975) is challenged on the ground that it contravenes Articles 14 and 19 of the Constitution."
By the above quoted observation it was intended that in view of the provisions of Article 228A of the Constitution (introduced by the 42nd Amendment) the vires of the Act can be determined only by a Bench of not less than five Judges of the Court and the case may be placed before such a Bench. However, this case and another case, C. W. J. C. No. 936 of 1977, in which also the vires of Section 12 of the Act was challenged on the said ground, were placed before a Division Bench for hearing. That Bench again directed that the two cases be placed before Hon'ble the Chief Justice for constituting an appropriate Bench for hearing them. Reference was made in that order to Article 228A of the Constitution. The detailed order which is dated 26th of July, 1977 was passed in C. W. J. C. No. 936 of 1977. The order in this case of that date merely reads as follows :--
"Vide order of the date in C. W. J. C. No. 936 of 1977"
That is how this case has come up before a Bench of five Judges for hearing. C. W. J. C. No. 936 of 1977 could not be listed for hearing along with this case as adjournment was taken in that case on the ground of illness of the senior counsel appearing therein for the petitioner.
4. Mr. Balbhadra Prasad Singh appearing for the petitioner in this case has urged only two points before us, viz.,
(i) that Section 12 of the Act is ultra vires Articles 14 and 19 of the Constitution And
(ii) that the four mortgages details whereof are given in annexure 2 to, the writ application were not subsisting on the date the Act came into force on account of an agreement of contract for sale between the parties dated 20th of Nov. 1974 (annexure 2 to the writ application) and as such even if Section 12 is held intra vires, it had no application to the mortgages in question.
The petitioner of this writ application prays for quashing of the orders contained in annexures 1/1 and 1/2 passed by respondents Nos. 3 and 2 respectively. Annexure 1/1 is an order dated 3-5-1976 23-7-1976 of the Collector Aurangabad (respondent No. 3) ordering ejection of the mortgagee from the mortgaged lands. Annexure 1/2 is an order dated 25-1-1977 of the Commissioner, Patna Division, Patna (respondent No. 2) dismissing the application for revision under Section 46 of the Act filed by the petitioner before him. While facts need not be stated in detail for decision of the first point raised by learned counsel for the petitioner, all the necessary facts shall have to be stated for deciding the second point urged by him. I propose to deal first with the first point raised by learned counsel for the petitioner and to state the facts of the case necessary for the decision of the second point while dealing with that point. It may, however, be stated here that the petitioners of C. W. J. C. No. 936 of 1977 made a verbal prayer before us that they may also be heard on the question of the vires of Section 12 of the Act. Senior counsel appearing in this case for the petitioners from before was Mr, Kailash Roy who is not coining to Court on account of illness, but they engaged another senior counsel Mr. Basudeva Prasad for submitting arguments on their behalf on the said question. As the decision in the case may affect the petitioner in C. W. J. C. No. 936 of 1977, we thought it proper to grant their prayer and Mr. Basudeva Prasad made his submissions on the said question on their behalf.
5. Mr. Balbhadra Prasad Singh, learned counsel for the petitioner, though has contended that Section 12 of the Act contravenes the fundamental rights of the petitioner guaranteed under both the Articles 14 and 19 of Part III of the Constitution, he has emphasised more on the contravention of Clause (f) and (e) of Article 19 (1). He has not put much emphasis on the contravention of the provisions of Article 14 by the said section. Article 14 states that the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. It is now well settled that the article is contravened only if persons or class of persons who are equal are treated as un-equals or who are unequal are treated as equals. Where there are reasonable grounds for not treating two persons equal or two. classes of persons equal the article is not contravened. In other words, when there is reasonable differentia on the basis of which a distinction can be made between persons or classes of persons, the article is not contravened. The Act, specially Section 12 thereof, has been passed for the benefit of agricultural debtors. The preamble to the Act itself states that it was being enacted to consolidate and amend the law relating to regulation of money-lending transactions and to grant relief to debtors in the State of Bihar. Mr. Singh did not contest that such a law was within legislative competence of the State Legislature under Entry No. 30 of List II (State List) of the Seventh Schedule to the Constitution which reads -
"Money-lending and money-lenders, relief of agricultural indebtedness." If agricultural debtors of the State can constitute a class by themselves and be distinguished from others then it cannot be said that, as Section 12 grants relief to them and not to debtors who have executed usufructuary mortgages relating to non-agricultural lands, it is ultra vires Article 14 of the Constitution. In view of the recent decision of the Supreme Court in Fatehchand Himmatlal v. State of Maharashtra (AIR 1977 SC 1825), holding the Maharashtra Debt Relief Act (3 of 1976) as valid, there is no scope left for taking a view different from one that the agricultural debtors are so much oppressed that they constitute a class by themselves and if any relief is granted to them the law containing such a relief cannot be ultra vires Article 14. True it is that the said decision nowhere refers to Article 14 or 19 of the Constitution for it was given when the emergency was in existence, but the observations made in the judgment amply indicate that the Supreme Court would have come to the same conclusion even if the vires of the Maharashtra Debt Relief Act had been challenged on the ground that it contravened the provisions of Articles 14 and 19 of the Constitution. Perhaps, it was on account of this decision that Mr. Singh did not emphasise too much on the contravention of the provisions of Article 14 by Section 12 of the Act.
6. Mr. Singh, however, has strongly urged that Section 12 of the Act is ultra vires Article 19 (1) (f) and (g) of the Constitution. According to Mr. Singh, the said section takes away the fundamental right of the petitioner to hold property under Article 19 (1) (f) and to carry on the trade or business of money lending under Article 19 (1) (g) of the Constitution. Referring to Article 19 (5) and (6), Mr. Singh has submitted that no doubt they authorise the State to make laws imposing reasonable restrictions on the exercise of any of the rights conferred under Sub-clauses (f) and (g) of Article 19 (1), but maintained that the restrictions imposed by Section 12 on the aforesaid rights of the petitioner under Clauses (f) and (g) of Article 19 (1) were not reasonable. He has strongly urged that once the petitioner has been able to show that Section 1'2 of the Act imposes restrictions on the fundamental rights of the petitioner guaranteed under Article 19 (1) (f) and (g), it was for the State to establish that the restrictions imposed were reasonable and, according to Mr. Singh the State in the instant case has completely failed to establish that.
7. In view of the recent decision of the Supreme Court in Fatehchand Him-matlal's case (AIR 1977 SC 1825), the contention of Mr. Singh that Section 12 imposes restrictions on any right of the petitioner relating to trade or business has to be overruled. The vires of the Maharashtra Debt Relief Act was challenged in that case before the Supreme Court on the ground that it was viola-tive of Article 301 of the Constitution. Article 301 of the Constitution provides that subject to the other provisions of Part XIII of the Constitution, trade, commerce and intercourse throughout the territory of India shall be free. Under Article 304 (b) of the Constitution, the State can impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest. Dealing with these two articles, Krishna Iyer, J. speaking on behalf of the Supreme Court, held that narrow deleterious pattern of money lending prevailing in the country cannot be classed as trade and, therefore, Article 301 cannot be summoned. The learned Judge has observed -
"Thus the critical question is as to whether money-lending and the class of money lenders who have been preying upon the proletarian and near proletarian segments of Indian society for generations may be legally legitimated as 'traders' or 'businessmen', and then ans-^ered the question in the negative."
8. It has been contended on behalf of the petitioner that while Article 301 of the Constitution uses the expression "trade, commerce and intercourse", Article 19 (1) (g) refers to "trade or business" and that the decision of the Supreme Court in Fatehchand Himmatlal's case (AIR 1977 SC 1825), can have no application to the business of money lending. It has been emphasised that, according to the Act itself, money lending is a business for Section 5 (2) requires that every money-lender in his application for registration shall state the name and style under which he carries on or desires to carry on business as a money-lender and also the principal places of his business. In my opinion, there is no substance in this contention for even though the word business is not there in Artcile 301, the question whether unconscionable money-lending is business or not was considered in the said decision and answered in the negative.
9. It was Observed in Kailash Pati Singh's case (AIR 1976 Pat 248), by a Bench of this Court that there could not be a dispute that the interest of a mortgagee of a usufructuary mortgage is a tangible property and it can be extinguished only in accordance with law. Relying on this observation learned counsel for the petitioner has submitted that so long the mortgage subsists a usufructuary mortgagee has right to hold property mortgaged to him and as S. 12 of the Act puts restrictions on this right of the mortgagee, it restricts his right to hold property. On the other hand, it has been submitted on behalf of the mortgagor (respondent No. 4) that the mortgagor is the owner of the property and a usufructuary mortgagee has no right to hold the property mortgaged. If he is dispossessed by the mortgagor, his right will be only to sue for the realisation of the mortgage money and not to claim recovery of the property mortgaged. I do not consider it necessary to go into this controversy and proceed on the assumption that the mortgagee has the right to hold the property mortgaged to him so long the mortgage subsits or not redeemed. At least, he has got right to resist the mortgagor from dispossessing him unless he is actually dispossessed. Therefore, the question whether the restrictions imposed by Secion 12 of the Act on the mortgagee's right to hold the property guaranteed to him under Clause (f) of Article 19 (1) is reasonable or not to protect it under Clause (5) of Article 19 does arise for consideration in the case. Really a mere finding that the restriction is reasonable will not save Section 12 of the Act. It will be further necessary to hold that the restriction imposed by Section 12 on the right to hold property is in the interest of the general public to bring it within the purview of Clause (5) of Article 19 and then only it can be held that such a restriction could be imposed and Section 12 of the Act is not ultra vires Article 19 (1) (f) of the Constitution.
10. Mr. Balbhadra Prasad Singh, learned counsel appearing for the peti-tioner, conceded that the expression 'general public' in Clause (5) of Article 19 of the Constitution may mean even a particular class of the general public and even if the restriction is in the interest of a class of the general public, if that class on the basis of a reasonable differentia can be distinguished from others, and at the same time reasonable, the restriction will not be ultra vires Article 19 (1) (f).
11. In paras. 25 to 27 of the decision in Fatehchand Himmatlal's case (AIR 1977 SC 1825), the learned Judge has referred to certain journals and books which justify the conclusion that agricultural debtors form a class by themselves and that any curb on the Maha-jans indulging in money lending will be a reasonable restriction for "The country has been in the grip of Mahaians. It is the bond of debt that has shackled agriculture." Both Mr. Balbhadra Prasad Singh and Mr. Basudeva Prasad have urged that authors of the articles in the journals and of the books referred to in the said judgment being living persons, their opinion was not relevant as evidence for coming to the conclusion as stated above and really the conclusions arrived by the Supreme Court in that judgment were not on account of the statements in the journals and books but on account of affidavits filed on behalf of the State of Maharashtra in the case with necessary facts and figures to show that money lenders of that State were unscrupulous and oppressive and debtors, specially agricultural debtors, were to be saved from them,
12. It is true that the counter affidavit, as originally filed, on behalf of the State in the case before us was perfunctory, but for the ends of justice we permitted the State to file supplementary counter affidavit and the petitioner a reply to it while the case was being heard. Mr. Balbhadra Prasad Singh was fair enough to say that he would have no objection to the filing of a supplementary counter affidavit on behalf of the State. Perhaps, he realised that if the restrictions imposed by the Act are held not reasonable merely on the ground that there was no proper affidavit on behalf of the State in the instant case and, therefore, S. 12 of the Act is held ultra vires, but in another case where a proper affidavit is filed on behalf of the State the said section of the Act is held intra vires, that will lead to anomalous results. In the supplementary counter affidavit filed on behalf of the State of Bihar it has been stated, inter alia, that the problem of rural indebtedness has assumed enormous proportion on account of the fact that unscrupulous money-lenders are charging various rates of interest taking unjustified advantage of the weaker section of the people in the rural area and that Section 12 was enacted to give relief to economically weaker section of the people from such indebtedness. It is further stated that by and large the agriculturists in Bihar are extremely poor and always in debt. Due to this and other facts mentioned in para. 8 of the supplementary counter-affidavit the money-lenders are generally able to make unconscionable bargain as a result oi which the debtors remain perpetually in debt.
On the basis of certain surveys held in the State, certain annexures have been appended to the supplementary counter affidavit disclosing that in the 10 districts mentioned in annexure A/1 there are as many as 18640 families in debt, that these families have mortgaged 5974.345 acres of land and the amount of money borrowed for the lands mortgaged as aforesaid is Rs. 1,43,13,037.88 paise. Annexure A/3 shows that in the district of Ranchi, Palamau, Hazaribagh including Giridih, Dhanbad, Singhbhum and Santhal Paraganas the number of families indebted in lakhs is 23.80, that average indebtedness per family is 108.04 and total amount of debt in crores is 30.20. A note on the result of survey and tribal indebtedness in the districts of Chotanagpur division and the district of Santhal Paraganas has been appended as Annexure 'B'. It is asserted in the supplementary counter affidavit that if Rs. 100/- is advanced by the creditor as a mere loan he would be entitled to produce worth Rs. 12/- per annum by way of legitimate interest, but in practice he takes sufficient area of land to yield two or three times the amount o,f legitimate interest and it has been found that in this wav the creditors earn the interest at the rate of 30 per cent by way of produce and the principal amount could be liquidated in less than seven years.
13. In the reply filed on behalf of the petitioner to the supplementary counter affidavit, technical objection has been raised as to. the competency of an assistant of the Revenue and Land Reforms Department swearing an affidavit alleging the facts stated in the supplementary counter affidavit. Attempt has been made to deny other assertions made in the supplementary counter affidavit as well. It is further stated therein that at one stage the State Government wanted to make S. 12 of the Act applicable only for the mortgagors possessing lands equal to a marginal farmer or having the lands below the marginal farmer. It is also stated that enormity of indebtedness of tribal people in the division of Chotanagpur and the district of Santhal Parganas cannot be a ground for applying S. 12 to the whole of the State of Bihar. It is claimed that many of the mortgagors come from rich class of the people who lead their life luxuriously and possess more lands than the mortgagees. A schedule has also been attached to this reply and marked annexure '1' which, according to statements made in para 15, shows that from the original mortgage deeds on the basis of which the schedule has been prepared it will appear that in each and every mortgage deed it is written that if the mortgagee is dispossessed from the lands mentioned in the mortgage deed, the mortgagee will be entitled to recover principal amount along with 12 per cent of the interest on the principal amount from the date of dispossession and this shows that by and large the mortgagors have executed the mortgage deeds and have also given their lands in mortgage keeping in their mind that mortgagee will get 12 per cent of interest on the principal amount in a year. In my opinion, the supplementary counter affidavit filed on behalf of the State of Bihar read together with the journals and books referred to in paras 25 to 27 of the judgment of the Supreme Court in Fatehchand Himmatlal's case (AIR 1977 SC 1825), do show that in most of the cases money lending transactions in this State are unconscionable, money lenders and agricultural debtors of this State form classes by themselves and in the interest of a particular class of general public, namely, agricultural debtors, the State Legislature in its wisdom thought it necessary to. put restrictions on the right of the mortgagee money-lenders to hold property under usufructuary mortgage beyond seven years which was reasonable in the circumstances prevailing in the State. The fact that there may be some money lenders who may not be doing unconscionable transactions or that there may be some cases where the mortgagors possessed more lands and are economically better placed than the mortgagees by itself may not be a ground for holding that the restriction imposed by Section 12 of the Act is not in the interest of general public and not reasonable so as to make it ultra vires Article 19 (1) (f) of the Constitution. In determining such questions it is the condition of the class as a whole which has to be taken into consideration and not only oi a few of that class.
14. To the reply filed by the petitioner to the supplementary counter affidavit of the State, no doubt, a chart has been appended which has been described as schedule 1 and made anne-xure '1' to it. According to the facts stated in the reply, this chart may prove only this much that in all the mortgages mentioned in the chart there was a stipulation that if the mortgagee be dispossessed he will be entitled to realise the mortgage money together with interest at the rate of 12 per cent per annum thereon. The further assertion in the reply that this stipulation establishes that from the lands mortgaged the mortgagees could not have derived income worth more than 12 per cent interest oi the mortgage money is not at all convincing. The assertion is mere argumentative. It is manifest that as under the existing law the -mortgagees could not have realised interest at the rate of more than 12 per cent per annum on the mortgaged money even if there would have been a stipulation otherwise, the said stipulation had to be incorporated in the mortgage deeds as a matter of compulsion. Apart from this argumentative assertion there is no denial in the reply of the assertion made in para 10 (e) of the supplementary counter affidavit that in practice the mortgagee takes sufficient area of land to yield two or three times the amount of legitimate interest i.e., at the rate of 12 per cent per annum and the creditor mortgagee earns interest of 3D per cent per annum by way of produce so as to liquidate the principal amount within less than seven years. Besides, the reply does not disclose as to what is the basis for the petitioner's stating the total lands of the mortgagors and the mortgagees of the deeds mentioned in annexure 1. It is not claimed in the reply that the said Schedule, i.e., annexure 1' mentions all the mortgages even of one village to which the petitioner belongs. The reply does not state what is the percentage of the mortgages the mortgagors whereof possess more lands than the lands possessed by the mortgagees in the village. Mere picking up certain mortgagee which may suit the purpose of the petitioner and preparing a chart thereof is not enough for doubting the assertions made in the supplementary counter affidavit.
15. In support of his contention that we may take judicial notice of the notorious fact stated in articles in the journals and books referred to in paras 25 to 27 of the decision of the Supreme Court in Fatehohand Himmatlal's case (AIR 1977 SC 1825), though the writers of such articles and books may be living persons, learned Advocate General has drawn our attention to paragraph 108 at page 79 of Volume 17 of Halsbury's Laws of England, 4th Edition, which reads as follows :--
"108. Notorious fact. The court takes judicial notice of matters with which men of ordinary intelligence are acquainted, whether in human affairs, including the way in which business is carried on, or human nature, or in relation to natural phenomena. In order to equip himself to take judicial notice of a fact, the judge may consult appropriate sources, or he may hear evidence. He may also act upon his general knowledge of local affairs, but he may not import into a case his own private knowledge of particular facts, even if those facts have been proved in previous proceedings."
The learned author has cited decisions in support of these observations to which I need not refer to. In Law of Evidence by Woodroffe and Ameer Ali, 13th (1973) Edition, Vol. II, at page 1433, the learned Commentators have dealt with "matters that may be judicially noticed." They say that facts of which judicial notice may be taken are not limited to those of the nature specifically mentioned in Clauses (1) to (13) of Section 57 of the Evidence Act. It is stated-
"Besides the matters mentioned in these clauses there are numerous others which are considered too notorious to require proof ... ... The court is entitled to take judicial notice of facts of general knowledge such as land values differ very materially in different towns in which municipalities are established......
As Judges must bring to the consideration of the questions they have to decide their knowledge of the common affairs of life, it is not necessary on the trial of an action to give formal evidence of matters with which men of ordinary intelligence are acquainted ... ... In the economic fields, Courts have taken notice of such notorious facts as the world economic depression during certain years, Sambhalpur in Orissa being a surplus district as regards rice... ... That many rich persons doing money lending or paddy lending business do so without certificates to avoid payment of income-tax or that persons having sufficiently large yield of paddy can afford to have much more than the quantity of gold in question, can be the subject of judicial notice ... ... the court can take judicial notice of the notorious fact from the press reports that Gheraos and the Government attitudes towards them met with adverse reception in many quarters...... It will not be possible to compile a complete list of the facts of which courts can take judicial notice, because we cannot enumerate everything which is so notorious in itself or so distinctly recorded by public authority that it would be supperfluous to prove it... ... Thus, our courts have taken judicial notice of facts like ... ... particular districts having been the scene of frequent and recent dacoities, and particular parts of the country having been surplus rice areas." The learned Advocate General drew our attention to the aforesaid paragraphs in support of his said contention. In my opinion, on the basis of the facts stated in the supplementary counter affidavit of the State and our general knowledge as to conditions of agricultural debtors in the country particularly in the State of Bihar and also in view of the observations made by the learned Judge of the Supreme Court in Fatehchand Himmat-lal's case, we can take judicial notice of the fact that agricultural debtors are weaker and oppressed section of the society and money lenders while lending money to them on execution of usufructuary mortgages make unconscionable bargaining.
16. Mr. Balbhadra Prasad Singh has also brought to our notice certain decisions on the question as to in what circumstances the court may take judicial notice of certain facts. They (omitting those which have no direct bearing on the. question) are (1) Read v. Bishop of Lincoln. (1892) AC 644; (2) Garuradhwaja Prasad Singh v. Saparandhwaja Prasad Singh, (1900) 27 Ind App 238 (PC); (3) Boodhan Gope v. Mst. Saira, 20 Cal LJ 516 : (AIR 1914 Cal 907 (2)) and (4) Hurpurashad v. Sheo Dayal, (1876) 3 Ind App 259 (PC). He has also placed before us certain passages from the Halsbury's Laws of England, 3rd Edition, Vol. 15, in para. 722 at page 404. The ratio of these decisions and the statement of law in the said passage in the Halsbury's Laws of England relied on by Mr. Singh cannot be said to be counter to the view taken by me in this case. Undoubtedly a Court is entitled to take judicial notice of matters with which men of ordinary intelligence are acquainted and to act upon his general knowledge of local affairs. Besides as stated earlier, the relevant facts and circumstances have been brought to our notice by the supplementary counter affidavit filed on behalf of the State and along with that affidavit we can certainly refer to what is stated in the articles in journals and books by authors though living acquainted with such affairs as mentioned by them in their articles and books as was done by the Supreme Court in Fatehchand Himmatlal's case (AIR 1977 SC 1825).
17. Learned counsel for the petitioner, Mr. Balbhadra Prasad Singh, has cited certain decisions, namely, (1) Saghir Ahmad v. State of U. P. (AIR 1954 SC 728), (2) Khyerbari Tea Co. Ltd. v. State of Assam (AIR 1964 SC 925) and (3) Vrajlal Manilal and Co. v. State of Madhya Pradesh (AIR 1970 SC 129) in support of this contention that once a person establishes that any of his fundamental rights under Article 19 (1) has been infringed, it is for the State or the person, who alleges that the restriction which infringes the right is reasonable, to prove that it is so. Though there are some observations in P. A. Seyed Mohamed Koya v. Union of India (AIR 1972 Ker 85) a case cited by Mr. Basudeva Pra-sad that it was for the petitioners of the case who alleged infringement of fundamental rights to establish that they had been in any manner unreasonably affected by the impugned provision of the Act vires of which was challenged, the decisions mentioned above, cited by Mr. Singh, do support his contention. However, the question on whom the onus lies to prove reasonableness of the restriction is not of much importance in this case for it has been held after discussing the materials on the record that the State has been able to prove that the restriction is reasonable.
18. Our attention has also been drawn by Mr. Balbhadra Prasad Singh to the decisions in (1) K. T. Moopil Nair v. State of Kerala (AIR 1961 SC 552). (2) State of rajasthan v. Mukan Ohand (AIR 1964 SC 1633), (3) Hari Chand Sarda v. Mizo District Council (AIR 1967 SC 829), (4) Mohd. Faruk v. State of Madhya Pra-desh (AIR 1970 SC 93), (5) Badri Prasad v. Collector Central Excise (AIR 1971 SC 1170) and (6) Shree Meenakshi Mills Ltd. v. Union of India (AIR 1974 SC 366) as to what should be the test for determining whether the restriction is reasonable or not. The decision in State of Rajas-than's case is really not a decision on Article 19 (5) of the Constitution. With reference to Art 14 it was pointed out in that case that in order to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are to be put together from others left out of the group and (ii) that the differentia must have a rational relationship to the object sought to be achieved by the statute in question. In Md. Faruk's case, there was a complete prohibition of the trade and that case, therefore, is clearly distinguishable on facts. The decisions in the cases of K. T. Moopil Nair etc, Hari Chand Sarda and Badri Prasad are also distinguishable on facts. The decision in Shree Meenakshi Mills' case really is not a decision in favour of the petitioner. In this case after examining the provisions of Cotton Textiles (Control) Order (1948), it was held that notifications issued in the year 1973 fixing control price on cotton yarn were not invalid on the ground of unreasonableness or arbitrariness for the control price was in the interest of the country as a whole for just distribution of basic necessity. So is the decision of Kerala High Court in Md. Koya's case (AIR 1972 Ker 85) cited by Mr. Prasad (holding that Section 9 (2) of the Laccadive Minicoy and Amindivi Islands (Debt Conciliation and Grant of Loans) Regulation was not ultra vires Article 19 (1) (f) or Article 14 of the Constitution. Mr. Singh also has drawn our attention to certain passages in the well-known case of Kesavanand Bharati v. State of Kerala (AIR 1973 SC 1461) laying down that it is for the court to examine whether any law is entitled to immunity. In fact, we are examining that question in relation to Section 12 of the Act with reference to arguments advanced by learned counsel who have made their submission before us.
19. Mr. Basudeva Prasad in his arguments has submitted that whether a restriction imposed on a fundamental right is reasonable or not has to be decided in the light of directive principles contained in Part IV of the Constitution. According to him, if any restriction is imposed in furtherance of the directive principles mentioned in Part IV of the Constitution, then it is reasonable, but if it is not in furtherance of any of the directive principles, it must be held un-reasonable. Before the insertion of Article 31C by the Constitution (25th Amendment) Act, 1971, directive principles contained in Part IV of the Constitution were not of such relevance in determining the question whether a restriction imposed on fundamental rights is reasonable or not Article 31C now stands further amended by the Constitution (42nd Amendment) Act, 1976. According to the language of this Article, as it was originally introduced by the Constitution (25th Amendment) Act, no law giving effect to directive principles contained in Article 39 of the Constitution could be held to be void on the ground that it infringed any of the fundamental rights conferred by Articles 14, 19 or 31 of the Constitution. According to the Article, as it stands after 42nd Amendment of the Constitution, no law giving effect to the policy of the State securing all or any of the principles laid down in Part IV can be declared to be void on the ground that it abridges any of the rights conferred by Articles 14, 19 or 31 of the Constitution.
In the State of Madras v. Sm. Champa-kam Dorairajan (AIR 1951 SC 226) a case cited by Mr. Prasad himself it was held that the directive principles of the State policy cannot override the provisions found in Part III but have to conform to and run as subsidiary to the Chapter of fundamental rights. The contention that certain communal general order fixing proportionate seats for different communities in colleges of Madras State could not be declared bad on the ground that it infringed fundamental rights for it was in furtherance of the directive principles contained in Article 46 was rejected by the Supreme Court. After the insertion of Article 31C. now there is scope for the argument that any restriction imposed on fundamental rights conferred by Articles 14, 19 or 31 in furtherance of the directive principles is reasonable though, according to me, that argument may not be sound. The effect of Article 31C, in my opinion, is that a restriction imposed on fundamental rights conferred by Articles 14, 19 and 31 in furtherance of directive principles even if unreasonable will be valid and cannot be challenged. However, the other part of the argument of Mr. Prasad that if the restriction is not in furtherance of the directive principle it must be held unreasonable has to be rejected without much discussion for it is well established principle of law that converse in law is not always true.
20. It has been contended by learned Advocate General that the restriction imposed by Section 12 of the Act is in furtherance of directive principles contained in Article 39 (b) and (c) and Article 46 and, therefore, it cannot be declared ultra vires Articles 14 and 19 (1) (f) of the Constitution. Mr. Balbhadra Prasad Singh in reply has urged that Section 12 of the Act cannot be saved on the ground that it is in furtherance of directive principles contained in Article 46 for it was enacted before the Constitution (42nd Amendment) Act. He has further urged that Section 12 cannot be said to be in furtherance of the directive principles contained in Article 39 (b) and (c). The reason given by Mr. Singh for his argument that Section 12 of the Act cannot be saved by Article 31C, as it stands after 42nd Amendment of the Constitution is that the section was void at its very inception and it could not be made valid by an amendment of the Constitution introduced subsequently. A reply to this is to be found in paragraph 42 of the judgment of the Supreme Court in M. P. V. Sunderaramier and Co. v. State of Andhra Pradesh (AIR 1958 SC 468) which may be quoted with advantage :--
"Now, in considering the question as to the effect of unconstitutionality of a statute, it is necessary to remember that unconstitutionality might arise either because the law is in respect of a matter not within the competence of the Legislature, or because the matter itself being within its competence, the provisions offend some constitutional restrictions. In a Federal Constitution where legislative powers are distributed between different bodies, the competence of the Legislature to enact a particular law must depend upon whether the topic of that legislation has been assigned by the Constitution Act to that Legislature. Thus, a law of the State on an Entry in Last I, Sch. VII of the Constitution would be wholly incompetent and void. But the law may be on a topic within its competence, as for example, an Entry in List II, but it might infringe restrictions imposed by the Constitution on the character of the law to be passed, as for example, limitations enacted in Part III of the Constitution. Here also the law to the extent of the repugnancy will be void. Thus, a legislation on a topic not within the competence of the Legislature and a legislation within its competence but violative of constitutional limitations have both the same reckoning in a Court of law, they are both of them unenforceable. But does it follow from this that both the laws are of the same quality and character, and stand on the same footing for all purposes ? This question has been the subject of consideration in numerous decisions in the American Courts, and the preponderance of authority is in favour of the view that while a law on a matter not within the competence of the Legislature is a nullity, a law on a topic within its competence but repugnant to the constitutional prohibitions is only unenforceable. This distinction has a material bearing on the present discussion. If a law is on a field not within the domain of the legislature, it is absolutely null and void, and a subsequent cession of that field to the Legislature will not have the effect of breathing life into what was a still-born piece of legislation and a fresh legislation on the subject would be requisite. But if the law is in respect of a matter assigned to the Legislature but its provisions disregard constitutional prohibitions, though the law would be unenforceable by reason of those prohibitions, when once they are removed, the law will become effective without re-enactment"
Mr, Prasad has Rone further and has submitted that the restriction imposed by Section 12 of the Act cannot be in furtherance of the directive principles contained in either Article 39 (b) or (c) or Article 46 of the Constitution. Having held that agricultural debtors are weaker section of the people I would have no hesitation in holding that Section 12 of the Act is in furtherance of the directive principle contained in Article 46, namelv, protecting them from social injustice and all forms of exploitation. I am not prepared to agree with the submission of Mr. Prasad that whether a section of the people is weaker or not for the purposes of Article 46 is to be determined with reference to their castes and not with reference to their economic condition. I have doubts, however, as to whether Section 12 of the Act can be said to be in furtherance of the directive principle as contained in Article 39 (b) and (c) of the Constitution. Be that as it may, I do not consider it necessary to examine this aspect of the matter in any further detail for the learned Advocate General did not emphasise much on Article 31C of the Constitution. He merely referred to it in a passing manner. His main stand has been that the restriction imposed bv Section 12 is reasonable and in the interest of general public under Article 19 (5) itself and, therefore, the section cannot be held ultra vires Article 19 (1) (f). It has already been held earlier that the restriction imposed by Section 12 is reasonable and in the interest of the general public being in the interest of a class of it.
21. Mr. Basudeva Prasad has also strongly urged that Section 12 of the Act is ultra vires Article 14 for it makes a discrimination between usufructuary mortgagees who have been in possession for seven years or more and those who have not been in possession for seven years. He has also urged that the section is ultra vires Article 14 of the Constitution as it makes a discrimination between usufructuary mortgagees of agricultural lands and non-agricultural lands. There is an intelligible differentia between usufructuary mortgagees of agricultural lands and usufructuary mortgagees of non-agricultural lands and, in my opinion, the section cannot be held to be ultra vires Article 14 on that score. In my opinion, there is also no force in the argument of Mr. Prasad that Section 12 of the Act differentiates even 'between the usufructuary mortgagees of agricultural lands, viz., between those who have been in possession for seven years or more and those who have not been in possession for seven years. The section proceeds on the assumption as asserted in the supplementary counter affidavit filed on behalf of the State that in the prevailing circumstances in the State the principal mortgage money would stand liquidated out of the usufruct of the land mortgaged within seven years. Therefore, if the section has not been made applicable to the usufructuary mortgagees who have not been in possession for seven years, it cannot be held ultra vires Article 14 on that ground. Mr. Prasad has also emphasised that there was no nexus between the period of seven years fixed by Section 12 of the Act for liquidation of the mortgage debt and the object to be achieved bv the Act and, therefore, the section is ultra vires Article 14 of the Constitution. In view of the assertion made in para 10 (e) of the supplementary counter affidavit of the State, already referred to earlier, the State has been able to show that there is a rational relationship between the period of seven years fixed for liquidation of the mortgage debt of a usufructuary mortgage and the object to be achieved bv the statute in question. It has also been contended that as mortgage debts of other kinds of mortgagees in possession of the land mortgaged such as mortgagees in case of mortgages by conditional sale or mortgagees of anomalous mortgages have been left untouched by Section 12 of the Act it is ultra vires Article 14. An answer to this submission is to be found in para 56 of the judgment of the Supreme Court in the case of State of Gujarat v. Shri Ambica Mills Ltd. (AIR 1974 SC 1300) wherein it has been held that omission to confer the benefit on some who may also have been allowed to avail of it, does not make the statute ultra vires.
22. At this stage I must dispose of yet another argument of Mr. Basudeva Prasad, namely, that the Act, specially Section 12 of it. is beyond the legislative competence of State Legislature. He has not challenged, however, that the Act is covered by Entry 30 of List II (State List) of the Seventh Schedule to the Constitution, but submitted that it is a colourable legislation and, therefore, beyond the legislative competence of the State Legislature. In support of this contention he has placed reliance on certain observations of the Supreme Court in para. 1'6 of the judgment in Jayvant-singhji v. State of Gujarat (AIR 1962 SC 821). In that paragraph, S. K. Das, J. speaking on behalf of the majority of the Judges of the Supreme Court constituting the Bench, with reference to certain earlier judgments of that Court said that coloura'ble legislation was that which although apparently a legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed those powers, transgression being veiled by what appears, on proper examination, to be a mere pretence or disguise. It cannot be doubted that such a legislation is a colourable legislation, but on the facts of this case it is not possible to hold that Section 12 of the Act is a colourable legislation. Mr. Prasad was not able to substantiate that Section 12 of the Act is a colourable legislation. This argument of Mr. Prasad, therefore, also has to be rejected. Mr. Prasad also has cited certain decisions as to what should be the test for deciding whether a restriction imposed on fundamental rights is reasonable or not and a nexus can be said to exist between a particular date or period fixed and referred to in the impugned legislation and the object to be achieved by the statute. Since these decisions also reiterate the very principles enunciated with reference to these matters in the decisions cited by Mr. Balbhadra Prasad Singh I have no.t discussed the decisions cited by Mr. Prasad on these questions separately.
23. After having given anxious consideration to all the arguments advanced by Mr. Balbhadra Prasad Singh, learned counsel for the petitioner, and Mr. Basu-deva Prasad challenging the vires of Section 12 of the Act, I am of the opinion that the section is not ultra vires any of the aforesaid articles of the Constitution and I hold accordingly.
24. I now proceed to examine the second point urged by Mr. Balbhadra Prasad Singh, as noted in para. 4 of this judgment, and to state facts of the case necessary for the decision of that point The petitioner is Karta of a ioint Hindu family. On l'6th of June, 1967, respondent No. 4, Rajendra Prasad Singh, executed four registered deeds of usufructuary mortgage, one in the name of the petitioner himself and other three in the names of Shree Singh, Prasidh Singh and Binod Singh respectively, who are members of the joint family of which the petitioner is the Karta. The total amount of mortgage money under all the four mortgage deeds was Rs. 18,500/-. The total area of land mortgaged was 2.545 acres in three plots all situate in village Dumra. Police Station Haspura, in the district of Aurangabad, the village to which the petitioner belongs. The lands mortgaged to Shree Singh, Prasidh Singh and Binod Singh measuring 0.625 acre were in plot No. 1819, the total mortgage money of the three deeds being Rupees 5,000/-. The lands mortgaged measuring 1.92 acres to the petitioner for a consideration of Rs. 13,500/- were in plot Nos. 2727 and 2729. Admittedly a period of seven years has elapsed from 16th of June, 1967, the date of the execution of the mortgage deeds, but the case of the petitioner is that on 20th of Nov., 1974 (before coming into force of the Act) respondent No. 4 entered into an agreement with the petitioner whereby it was agreed upon and settled that respondent No. 4 would convey under a proper deed his right to redeem by way of sale in favour of the petitioner in respect of the mortgage executed in the name of the petitioner, i. e. in respect of 1.92 acres of land in plots Nos. 2727 and 2729 and that in lieu thereof the petitioner would pay to him a consideration of Rs. 25,000/-. It is alleged by the petitioner that respondent No. 4 on the very date executed a deed of contract for sale, a true copy of which has been annexed as Annexure 3 to the writ petition.
According to the said deed which was executed in the pen of respondent No. 4, the latter acknowledged receipt of a sum of Rs. 22,500/- (Rs. 18,500/-) being the mortgage money of the four mortgages which was due from respondent No. 4 to the petitioner and members of the joint family and Rs. 4,000/- (in cash) and the remaining sum of Rs. 2,500/- was to be paid by the petitioner on the date of the execution of a sale deed by respondent No. 4 in favour of the former. Thus all the four mortgages stood redeemed on that very date and respondent No. 4 gat back possession of the property mortgaged. He again put the petitioner in possession of 1.92 acres of land which was subject-matter of the mortgage in the name of the petitioner on that very date. Thus, according to the petitioner, there were no subsisting mortgages on the date the Act came into force to which Section 12 of it could apply. A supplementary affidavit filed on behalf of the petitioner further says that he had filed Title Suit No. 124 of 1975-76 against respondent No. 4 in the Court of Sub-Judge Auranga'bad. Admittedly this suit was for specific performance of the said contract for sale (Annexure 3) and was instituted on 11th of Nov., 1975. According to, the supplementary affidavit of the petitioner he filed a copy of the plaint of this suit before the Collector (respondent No. 3) during the pendency of the proceeding. According to Mr. Balbhadra Prasad Singh, learned counsel for the petitioner, once this fact of institution of a guit by the petitioner and execution of a deed of contract for sale in his favour by respondent No. 4 for enforcement of which the said suit was filed was brought to the notice of respondent No. 3, he should have stayed his hands and should not have passed any order in the proceeding under the Act pending before him.
No counter affidavit has been filed on behalf of the respondent No. 4 in this Court, but it appears from Annexure 1/1 to the writ petition, the impugned order, that he challenged the claim of the petitioner that there was an execution of an agreement of contract for sale by him. What was the case of respondent No. 4 in the courts below has been more elaborately stated in the order (Annexure 1/2) of the Commissioner (respondent No. 2). As that order shows the case of respondent No. 4 was that he did not enter into any agreement with the petitioner on 20th of Nov., 1974 for sale of any land and had not executed any agreement to sell any of his lands and that, therefore, there was no question of the mortgages having been redeemed before coming into force of the Act.
25. I do not find it possible to accept the argument advanced by learned counsel for the petitioner that as soon as respondent No. 3 was informed of the execution of the agreement of contract for sale and of the institution of the suit for enforcement thereo,f he was bound to stay his hands and could not have gone on with the proceeding under the Act Sub-rule (3) of Rule 10 of the Rules provides that on receipt of application from the mortgagor for ejecting the mortgagee the Collector shall issue a notice in the prescribed form to the mortgagee or his legal representative to show cause by a date to be specified in the notice why the mortgagor should not be put in possession. Sub-rule (4) of the said rule says that if no cause is shown on or before the date specified in the notice or by such other date as may be extended by the Collector, or if the cause shown is in the opinion of the Collector not satisfactory, he shall pass an order in writing to eject the mortgagee from the mortgaged property and put the mortgagor in possession and for that purpose he may use such force as may be necessary. According to this sub-rule, before passing an order for ejectment of the mortgagee the Collector has to form an opinion whether the cause shown by the mortgagee is satisfactory or not. This opinion of the Collector must be objective and thus judicial or at least quasi-judicial in nature. According to Section 12 of the Act itself, the mortgagor shall be entitled to recover possession of mortgaged land from the mortgagee in the manner prescribed under the rules. Thus, the Collector has got jurisdiction to decide whether the cause shown by the mortgagee is satisfactory or not. If he stays his hands and refuses to decide the question as aforesaid, he will be shirking his statutory responsibility. In other words, he will be refusing to exercise the jurisdic-tion vested in him.
As it appears from the impugned order (Annexure 1/1) the petitioner mortgagee had filed only a copy of an agreement which he claimed to be the agreement between the parties but that copy was neither original nor even a certified copy. In the circumstances, the Collector (respondent No. 3) rightly held that no evidentiary value could be attached to it. Further, as the order shows, respondent No. 4, the mortgagor, challenged the claim of the mortgagee about the execution of the agreement for sale (Annexure 3) by him. Mr. Balbhadra Prasad Singh, learned counsel for the petitioner, himself has urged that respondent No. 3 could not have gone into the question whether the said agreement was genuine or not even for the purposes of a prima facie finding on the question. The Act contains no section that the order passed under Section 12 of the Act shall be final. Therefore, it cannot be said that any judgment or decree of a civil court cannot override an order of ejectment under the section. In the circumstances, the petitioner is not likely to be prejudiced as to his claim in the suit by the impugned orders. If his suit succeeds he will be entitled to get a deed of sale executed by respondent No. 4 or on his failure to do so by the court itself. Section 54 of the T. P. Act defines contract for sale as "A contract for sale of immoveable property is a contract that a sale of such property shall take place on terms settled between the parties" and further adds. "It does not, of itself, create any interest in or charge on, such property." It is thus manifest that so, long the contract is not enforced the petitioner cannot claim that he is entitled to be in possession of the mortgage property on the basis of the contract for sale.
26. It has been urged toy learned counsel for the petitioner that the petitioner can rely on the doctrine of part performance as he has been put in possession of the property agreed to be sold and terms of the sale are embodied in the agreement (Ext. 3). In the suit, the petitioner being the plaintiff cannot take any advantage of the doctrine of part performance. Only a defendant can take advantage of that doctrine. In the proceeding under the Act also he cannot take advantage of the doctrine of part performance unless he Droves to the satisfaction of the revenue authorities that there has been a contract as alleged bv him and he has been put in possession of the property. The execution of the contract as well as the fact that the petitioner (has been out in possession of the property on account of the contract were denied by respondent No. 4 before the revenue authorities and according to learned counsel for the petitioner himself, those authorities could not have gone into the question as to, the case of which party was true. Acceptance of the contention of learned counsel for the petitioner bv this Court will lead to absurd results namely, that even if a mortgagee sets up a false case of an agreement for sale between the parties in respect of the mortgaged property made prior to the coming into force of the Act. the mortgagor will be deprived of cheap and speedy remedy provided to him for getting back possession of the mortgaged property from the mortgagee after completion of seven years from the date of the execution of an usufructuary mortgage. The contention of learned counsel for the petitioner, therefore, has to be rejected.
27. Learned counsel for the petitioner in his arguments in support of point No. 2 has placed reliance on a large number of English decisions and I now propose to refer to them briefly. They are Queen v. Pearson ((1870) 5 QB 237); Mountnoy v. Collier ((1853) 118 ER 573); King v. Taunton St. Marv ((1815) 105 ER 685); Queen v. Calling ((1852) 117 ER 1493); Short v. Short, (1960) 1 WLR 833: Regina v. Wimbledon Justices, (1953) 1 QB 380; Howorth v. Sutcliffs, (1895) 2 QB 358; Thames Launches Ltd. v. Trinitv House Corporation (Deptford strong), (1961) 1 Ch D 197; R. v. Manchester Legal Aid Committee, (1952) 2 QB 413 and Rex v. Chancellor of St. Edmundsbury and Ipswich Diocese, (1948) 1 KB 195. The decisions reported in (1870) 5 QB 237. (1853) 118 ER 573, (1852) 117 ER 1493, (1953) 1 QB 380 and (1895) 2 QB 358 are of cases where there were specific provisions of law ousting the jurisdiction of the Court. Therefore, they are not authorities in support of the contention of learned counsel for the petitioner. The decision reported in (1815) 105 ER 685 is a case where the earlier statute under which there could be an indictment stood repealed bv a subsequent statute and in the circumstances it was held that the court could not pass an order of indictment. The decision reported in (1960) 1 WLR 833 is a case in which it was held that the court which had passed the order had a discretion to act or not to act and the superior court would not interfere with that discretion. In the case reported in (1961) I Ch D 197 a civil proceeding was pending from before and at a later stage a criminal proceeding was started which involved substantially the same issues which were raised in the civil proceedings. In the circumstances, it was held that the High Court had jurisdiction to issue an injunction staying criminal proceedings. The cases reported in (1952) 2 QB 413 and (1948) 1 KB 195 discuss scope of various writs and if facts of those cases are examined, they are of no, help to the petitioner before us. Thus, none of these decisions really support the contention of learned counsel for the petitioner.
28. Reference may be made to decisions in Ellappa Naicker v. Sivasubra-manian Manigaram (AIR 1937 Mad 293) and Kukaji v. Misrilal (AIR 1952 Madh B 6). The former is a decision of Varadachariar, J. who held in that case that where in pursuance of an agreement to sell certain mortgaged property to the mortgagee, possession is transferred to the mortgagee but the title to the property intended to be sold in discharge of the mortgage debt has not passed to the mortgagee, the mortgage cannot be deemed to have been extinguished. In the latter decision, relying on the decision in Thota China Subba Rao v. Mattapalli Raju (AIR 1950 PC 1) it has been laid dawn that the equity of redemption cannot be held to be extinguished by mere agreement to convey. In Thota China Subba Rao's case it has been held that so long right of redemption is not extinguished, a suit for redemption is not barred. It is an extreme case where there was an earlier decree for redemption but it was not in the prescribed form and in the circumstances it was held that a second suit for redemption, was not barred. It has already been noticed that according to Section 54 of the Transfer of Property Act, a person in whose favour a contract for sale is made does not acquire any interest in the property on the basis of the contract itself and such a contract cannot have the effect of extinguishing the mortgage. These decisions are against the contentions of learned counsel for the petitioner in support of second point raised by him.
29. In the result, I find that the petitioner is not entitled to. a writ as prayed for by him. His application is accordingly dismissed. In the circumstances of the case, there will be no order as to costs.
K.B.N. Singh, C.J.
30. I agree.
Sarwar Ali, J.
31. I agree. But in deference to the arguments advanced by the learned counsel in this case, I add a few words of my own.
32. The problem of exploitation of the debtors by money-lenders is an age old problem. That is why we find the rule Damdupat evolved even in ancient times. ("Damdupat is an institution of law deriving from Smriti" Derrett's Introduction to Modern Hindu Law. 1963 Edition, P. 521). Coming to more recent times, the State legislature in this State enacted the Bihar Money-lenders Act, 1938 (Act 3 of 1938) and the Bihar Money-lenders (Regulation of Transactions) Act 1939 (Act 7 of 1939) to provide much needed relief to the debtors and to regulate transactions in money-lending.
33. Section 5 of Act 7 of 1939 fixed the maximum rate of interest. This was 9 per cent per annum in case of secured loan and 12 per cent per annum in case of unsecured loan. The percentage has been increased to 12 per cent, and 15 per cent, respectively, after the consolidation and amendment of the law in relation to money-lending by Act 22 of 1975. Act 7 of 1939, apart from laying down the maximum rate of interest chargeable, prohibited agreement for payment of compound interest (Section 8). It prescribed the maximum amount of interest which may be decreed (Section 7). It further empowered the courts to reopen certain transactions (Section 8). These benefits, however, were not available to usufructuary mortgagors. (See Thakur Sahu v. Ramsarup Mahto. AIR 1950 Pat 201). The Act, unfortunately, did not evolve legal mechanism which could ensure that usufructuary mortgagees did not obtain usufruct greater than permissible rate of interest for secured creditors. Mortgagees of agricultural land were, thus, able to get over the provision relating to the maximum rate of interest prescribed by law. The failure to correctly tackle the problem of agricultural indebtedness so far as usufructuary mortgagees are concerned led to the introduction of Section 12 in Act 22 of 1975. The reality of the situation had to be and was appreciated by the legislature. It was patently clear that the mortgagor and the mortgagees in relation to agricultural lands did not have equal bargaining power. The legislature could not view with complete neutrality and equanimity the patent consequences of this disparity. Effective and real relief had to be provided to the usufructuary mortgagees. This, it appears to me has now been done by enacting Section 12 in Act 22 of 1975.
As I understand the argument, the complaint is not in relation to the removal of the indebtedness of the oppressed and the weak. What the learned counsel contends is that the provision is so worded, and its sweep is so large, that all mortgagees irrespective of the percentage of return thev were deriving out of the transactions would be subject to the law in relation to redemption after seven years. It was contended that the provision may be good in relation to some of the mortgagees where the usufruct derived year after year was much larger than the permissible rate of interest. But even those who were factually deriving income equal to permissible rate of interest would, as a result of the impugned provision, lose even their capital. Thus the net which was cast for the sinners would be catching the virtuous as well. To illustrate it was contended that it was possible that some land holders might have created usufructuary mortgages in order to obtain capital for investing in more lucrative pursuits, like business or manufacturing operations. There may be cases, where the idle rich, of improvident habit, take advances and spirit them way. The law should and could have been so enacted by the legislature as would have made it possible to help the weak and the exploited section of the society, without heaping benefits on the undeserving. It was, therefore, contended that Section 12 of Act 22 of 1975 as at present worded, imposed unreasonable restriction on the right of the mortgagees under Article 19 (1) (f) of the Constitution, the restriction being disproportionate to the purported aim of the legislation. Judged from the point of view of Article 14 the provision was characterised as a case of over inclusion.
34. The State on the other hand says that essentially it is the weak and exploited section of the society which is going to be benefited by the legislation. In any event, it is a matter of common knowledge, of which the Court can and should take judicial notice, that usufructuary mortgagees in effect make advances at rates which bear no relationship to the statutorily permissible interest. Indeed it is invariably twice or thrice the permissible rate. The period of seven years fixed by the legislature is more than enough to pay off even the principal taking into consideration the legally permissible rate of interest. The petitioners counter this by saying that the stand of the State is only an assertion, unsupported by data materials, or governmental surveys. It cannot be said that all the transactions are of the nature aforesaid. The arguments advanced on behalf of the petitioners are plausible but for the reasons which I shall briefly discuss, and those given by S. P. Singh, J., in the leading judgment, the petitioners' contention cannot be accepted. The counter-affidavit, as also the learned Advocate General, in the course of argument, emphasised that the Courts should take judicial notice of matters which are known to each and all of us, facts which are notorious.
The argument, in my view, is correct, Judges cannot and do not sit within 'ivory towers'. Not to take notice of matters which are notorious is to shut our eyes in the face of reality. It is true that Judges cannot act on their own private knowledge or belief regarding the facts of a particular case, but they are entitled to use the knowledge of common affairs of life, which men of ordinary intelligence possess. There are matters which are so notorious or clearly established that evidence of their existence is unnecessary. Speaking of this State (and that is what is relevant), I have no doubt, that the usufruct derived by usufructuary mortgagees of agricultural lands is at least twice (and in many cases even thrice) the legally permissible rate of interest for secured creditors. I have also no hesitation in holding that what has been just stated is a notorious fact. It is to be observed that a return of 22 per cent interest is sufficient to pay off the principal in seven years, reckoning the interests at twelve per cent per annum. In my view, therefore, the illustrations given by the learned counsel for the petitioners are more hypothetical than real. Taking all these into consideration there is neither unreasonableness nor over inclusion in relation to the impugned provision. Even if there be isolated cases of the nature suggested by Mr. Singh the answer is provided by the observations of Krishna lyer, J. In Fatehchand v. State of Maharashtra (AIR 1977 SC 1825 at p. 1841) which is as follows:--
"Every cause claims its martyr and if the law, necessitated by practical considerations, makes generalisations which hurt a few, it cannot be helped by the court. Otherwise, the enforcement of the Debt Relief Act will turn into an enquiry into scrupulous and unscrupulous creditors, frustrating, through endless litigation, the instant relief to the indebted which is the promise of the legislature."
35. I may follow the footsteps of Krishna Iyer, J. in emphasising that the State should not rest on its oars by enacting Section 12 of the Act. What is imperative is to provide facility for the agriculturists and farmers to take advances at legal and permissible rate of interest through State organised agencies or banks. It would be unrealistic to pretend that the provision of Section 12 of the Act, although giving much needed relief, would solve the problem of the agriculturists and farmers specially the small farmers. I think I can do no better than to again quote the observations of Krishna Iyer, J. which forcibly brings out the necessity for providing alternative source of credit:
"...... mere farewell to existing debts is prone to prove a teasing illusion or promise of unreality unless the Administration fills the credit gap by an easy, accessible and need based network of humane credit agencies, coupled with Employment opportunities for the small man. The experience of the past has not inspired adequate confidence. Authoritative official pronouncement, however, owns that "Arrangements so far made to give credit and inputs (for rural credit) have had only limited impact. The problem is a vast one and seems to be growing in size. Rural banks, credit societies, farmers' service societies all these have to be strengthened and their activities expanded. To give purposeful direction to this task and to ensure that the interests of agriculturists and farmers, especially the small farmer, are looked after, there is need for an Apex Agricultural Development Bank in India." And I might add, the credit agencies should be free from corruption."
Hari Lal Agrawal, J.
36. Having had the advantage of perusing the judgments of my learned brothers Shambhu Pd. Singh J. and S. Sarwar Ali, J., I do not think that I can add anything useful and I respectfully agree with the views expressed by them.
B.S. Sinha, J.
37. I agree, A primary question which falls for determination is whether Section 12 of the Bihar Money-Lenders Act, 1975 is in the interest of general public and reasonable so as not to be ultra vires Article 19 (1) (f) of the Constitution. Rural indebtedness, which is the result of unconscionable bargains, is a historical fact. Since long, attempts have been made to ameliorate the condition of persons in the grip of debt, but the economically weaker section, like the marginal farmers, the rural labourers with pittance of land, and the small farmers have been unable to break the shackles of indebtedness.
38. For the reasons given in the leading judgment of my learned brother S. P. Singh, J. I have no hesitation in arriving at the conclusion that the agricultural debtors are the economically weaker section of the society who are victims of unconscionable bargains and Section 12 of the Act provides for the liquidation of their debts. It is reasonable to expect that the provision will go to great lengths in eradicating agricultural indebtedness and will have beneficial effect on the economically weaker section in the countryside. If in the process, the cause claims its martyrs, for whom Shri Balbhadra Pd. Singh valiantly pleaded, it cannot be helped.
39. With respect, I fully endorse the suggestion expressed by Mr. Justice Krishna Iyer in Fatehchand's case (AIR 1977 SC 1825) which has been referred to by my learned brother Sarwar Ali, J. in the concluding portion of his judgment.