http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7

PETITIONER:

JOSHI GIRJADHARJI AND ANOTHER

Vs.

RESPONDENT:

LACHMANJI PANTH AND OTHERS.

DATE OF JUDGMENT:

25/04/1952

BENCH:

DAS, SUDHI RANJAN

BENCH:

DAS, SUDHI RANJAN

SASTRI, M. PATANJALI (CJ)

FAZAL ALI, SAIYID

MUKHERJEA, B.K.

CITATION:

1952 AIR 218 1952 SCR 645

ACT:

U.P. Debt Redemption Act (XIII of 1940), ss. 2 (9), 21-

"Loan", "Suit to which Act applies"., meanings of--Decree

on mortgage--Person who is not agriculturist when advance is

made-Whether entitled to relief.

HEADNOTE:

A mortgage was executed by several persons on the 28th

July, 1931. The term of the mortgage, namely six years,

expired in July 1937, the mortgagees instituted a suit in

May 1938 and a decree was passed in March 1939. An applica-

tion for relief under the U.P. Debt Redemption Act (XIII of

1940) was made on 11th April, 1942, and this application was

resisted on the ground that S, one of the mortgagors, had

been assessed to income-tax and was therefore not an agri-

culturist, and the suit was not consequently "a suit to

which the Act applied." The evidence showed that S was

earning a monthly salary of Rs. 90 and that from February

1932 he had been assessed to income-tax till the year 1936.

The High Court held, relying on the Full Bench ruling in

Ketki Kunwar v. Ram Saroop (I.L.R. 1943 All. 35), that under

sec. 21 of the Act the mortgage money could be recovered

only from the mortgaged property and not personally and

that the proviso to sec. 2 (9) of the Act had therefore no

application and the question whether S was an agriculturist

on the date of the mortgage was immaterial. As S was admit-

tedly an agriculturist on the date of the suit, the High

Court held that the judgment debtors were entitled to relief

under the Act. On appeal

Held, that, assuming that the proviso to sec. 2 (9) applied

and that in order to be a "loan" within the meaning of the

Act it must be shown that the advance was made to one who at

the date of the advance was an agriculturist, S was not an

agriculturist on the 28th. July, 1931, as the Indian Finance

(Supplementary and Extending)Act of 1931 which reduced the

taxable minimum from Rs. 2,000 to Rs. 1,000 was passed only

in November 1931 and income-tax was first deducted from his

salary only in February, 1932.

Quaere: Whether the Full Bench decision in Ketki Kuwar

v. Ram Saroop (I.L.R. 1943 All. 35) is correct.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 64 of

1951. On appeal from the Judgment and

646

Decree dated the 16th April. 1948, of the High Court of

Judicature at Allahabad (Malik C.J. and Prasad J.) in

First Appeal No 358 of 1943 arising out of the ent and

Decree dated the 22nd February, 1943, Judgment and Decree

dated the 22nd February, 1943 of the Court of the

Additional Civil Judge Benares, in Original Suit No. 33 of

1938.

Gopi Nath Kunzru (K. B, Asthana, with him) the appel-

lants.

Krishna Shankar for the respondents.

1952. April 25. The judgment of the Court was

delivered by

DAs J. - This appeal arises out of an application by

five out of ten judgment-debtors made under section 8 of the

U.P. Debt Redemption Act (No. of 1940) for ascertaining the

amount due by them in accordance with the provisions of

sections 9 and 10 of that Act and for amending the decree

passed on March 31, 1939, by the Additional Civil

Judge, Banaras, in O.S. No. 33 of 1938. The facts materi-

al for the purposes of this appeal may now be briefly

stated.

By a mortgage deed executed on June 22, 1922, Madho Ram,

Sita Ram, Jai Ram aud Lakshman, all sons of Pandit Raja

Ram Pant Sess, mortgaged cer-tain immovable properties in

favour of Damodarji, son of Kamta Nathji, owner of the Kothi

Joshi Shivanath Vishwanath for the due repayment of the sum

of Rs. 8,000 advanced on that date by a cheque together with

interest thereon at 12 annas per cent per mensem with quar-

terly rests. On July 28, 1931, the said mortgagors and

their sons executed a mortgage over the same properties in

favour of Kothi Kamta Nathji Vishwanathji for the due

repayment of Rs. 3,000 with interest thereon at twelve annas

per cent per mensem with quarterly rests. It is recited in

the deed that the sum of Rs. 8,000 was advanced on this date

by a cheque and that the amount was utilised in paying up

the amount due under the earlier

647

mortgage deed to Damodarji proprietor of Kothi Shivanath

Vishwanath.

In 1935 the U.P. Agriculturists' Relief Act (No. XXVII

of 1934) came into force. On May 1938, Girjadharji, son of

Damodarji, and Murlidharji, minor son of Gangadharji who was

another son of Damodarji, filed suit No. 33 of 1938 in the

Court of the Additional Civil Judge, Banaras, against the

mortgagors and their sons for the recovery Rs. 9,477-2-0

due as principal and interest up to date of suit and for

further interest under the mortgage deed of July 28, 1931.

It appears from the judgment of the High Court under'appeal

that in their written statement the mortgagors claimed the

benefit of the U.P. Agriculturists' Relief Act (No. XXVII of

1934). The plaintiffs contended that the mortgagors were

members of a joint Hindu family and as Sita Ram one of the

mortgagors was assessed to income-tax the mortgagors were

not agriculturists as defined in section 2 (2) of that Act

and, therefore, could not claim the benefit conferred on the

agriculturists by that Act. The trial Court, by its judgment

dated March 31, 1939, held that though Sita Ram was assessed

to incometax for the year 1931-32, the amount of such in-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7

cometax did not exceed the amount of cess payable on the

land held by him and consequently the second proviso to

section 2 (2) did not apply to him and he was, therefore, an

agriculturist and as the other mortgagors were also agricul-

turists all of them were entitled to the benefits under the

Act. Accordingly, after scaling down the interest, a sum

of Rs. 9,497-14-1 was declared to be due for principal,

interest and costs up to March 31, 1939, and a preliminary

mortgage decree for sale was passed in that suit.

In 1940 the U.P. Debt Redemption Act (No. XIII of 1940)

came into force. On April 11, 1942, five of the judgment-

debtors made an application under section 8 of this Act

before the Additional Civil Judge, Banaras, who passed the

decree. In the petition it was stated that the debt was

actually advanced in 1922, that the petitioners were agri-

culturists within

648

the meaning of Act XIII of 1940, that the decreeholders can

only get interest at the reduced rate of Rs. 4-8-0 per

cent. per annum from 1922, and that after adjustment of

accounts nothing will be found ,outstanding against the

petitioners. The prayer was that an account of the money-

lending business be made from the beginning of 1922 and the

decree in suit No. 33 of 1938 be modified by reducing the

amount due thereunder. The decree-holders filed a petition

of objection asserting, inter alia, that the petitioners

were by no means agriculturists, that they and the respond-

ents Nos. 3 to 7 were members of a joint Hindu family at the

time of the execution of the mortgage deed of July 28, 1931,

that Sita Ram used to pay income-tax at the date of the

mortgage in suit and paid even at the time of the applica-

tion, that all the members of the petitioners' family were

not agriculturists within the meaning of the Act and were,

therefore, not entitled to the benefits thereof, that the

debt advanced under the mortgage deed of July 28, 1931, was

not a "loan" as defined in the Act and, therefore, the Act

did not apply. It will be noticed that although the judg-

ment-debtors-applicants specifically prayed for the accounts

being taken from 1922, when the loan was said to have been

actually advanced, the decree-holders, in their petition of

objection, did not contest that position.

At the hearing of the application before the Additional

Civil Judge, the learned pleader for the decree-holders

admitted that with the exception of Sita Ram the remaining

judgment-debtors were agriculturists under Act No. XIII of

1940 but that as Sita Ram was a party to the mortgage in

suit they were not entitled to the benefit of the Act. Two

witnesses, namely Suraj Mani Tripathi and Sita Ram, were

examined on behalf of the judgment-debtors applicants. Sita

Ram stated that since 1907 he had been a teacher in Harish

Chandra Intermediate College of Banaras, that in 1930 his

salary was Rs. 90 per month, that since February 1932 to

1936 he paid incometax and that after that he paid no in-

come-tax.

649

His evidence was corroborated by Suraj Mani Tripathi who was

the Accountant of the College from 1930 to 1042. Referring

to the College Acquittance Roll Suraj Mani Tripathi deposed

that the pay of Sita Ram was Rs. 90 per month throughout

1930, that in 1930 no income-tax was levied, that in 1931

also his salary was Rs. 90 per month and that no income-tax

was deducted in 1931 too, that the first deduction of in-

come-tax from his salary was made in February 1932. No

rebutting evidence was adduced by the decree-holders on the

hearing of the application under section 8 of the Act of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7

1940. The income-tax assessment form filed during the trial

of the mortgage suit and marked as exhibits is dated Febru-

ary 9, 1933, and shows that on that date Sita Ram was as-

sessed at Rs. 1-14-0 as income-tax on Rs. 180 for the year

1931-32.

By his judgment delivered on February 22, 1943, the

Additional Civil Judge found that Sita Ram was not assessed

to income-tax either at the date of the application under

section 8 or at the date of the mortgage of 1931 and, there-

fore, held that the applicants were agriculturists and that

the case related to a loan as defined in Act XIII of 1940.

He then went on to discuss the question whether the account

should be reopened from June 2, 1922, when the earlier

mortgage was executed or from July 28, 1931, when the mort-

gage in suit was executed. The decree-holders who did not

adduce any evidence on the hearing of the application evi-

dently relied on the evidence adduced in suit No. 33 of

1938. After discussing that evidence the learned Judge came

to the conclusion that so far as the judgment-debtors were

concerned the mortgagees in the two mortgages were one and

the same. He adversely commented on the non-production of

the books of account by the decree-holders. Re-opening

the accounts from June 2, 1922, the learned Judge concluded

that the whole of the principal and interest payable accord-

ing to the Act had been fully discharged and that nothing

remained due by the judgmentdebtors under the decree in suit

No. 33 of 1938. He

650

accordingly declared that the decree stood discharged in

full and directed a note to that effect to be made in the

Register of Suits.

The decree-holders having appealed to the High Court, a

Division Bench (B. Mallik, C.J. and'Bind Basni Prasad J.) by

its judgment delivered on April 16, 1948, held that the

question whether Sita Ram was or was not an agriculturist on

July 28, 1931, was not material as it was not denied that

all the judgment, debtors were agriculturists on the date

of suit. Reference was made by the learned Judges to section

21 and it was stated that by reason of that section the

mortgage amount could be recovered only from the mortgaged

property and not personally from the mortgagors and accord-

ingly the proviso to the definition of "loan" in section 2

(9) of the Act had no application and it was, therefore, not

necessary to show that the borrowers were agriculturists at

the date when the advance was made and that as the

judgment-debtors were admittedly agriculturists at the date

of the suit, the case was fully covered by the Full Bench

decision of that High Court in Ketki Kunwar v. Ram Saroop

(1). The High Court, therefore, dismissed the appeal on

this point alone. The question whether the account should

be reopened from 1922 or from 1931 was not raised by the

decree-holders at all. ]he decree-holders have now come up

on appeal before us on a certificate granted by the High

Court under section 110 of the Code of Civil Procedure.

Sri G.N. Kunzru appearing in support of this appeal has

strongly questioned the correctness of the Full Bench deci-

sion relied on by the High Court and the interpretation put

by the High Court on section 21 and section 2(9) of the Act.

As we think this appeal can be decided on a simpler ground

we do not consider it necessary, on this occasion, to

express any opinion on either of these questions which are

by no means free from doubt.

(1) I.L.R. [1943] All. 35; A.I.R. 1942 All. 390; (1942) A.

L.J. 578.

651

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7

The present application has been made under section 8 of

the U. P. Debt Redemption Act, 1940, subsection (1) of

which, omitting the proviso, runs as' follows:--

"Notwithstanding the provisions of any decree, or of any

law for the time being in force, an agriculturist or a

workman liable to pay the amount due under a decree to which

this Act applies passed before the commencement of this Act,

may apply to the Civil Court which passed the decree or to

which the execution of the decree has been transferred, for

the amendment of the decree by reduction according to the

provisions of this Act of the amount due under it, and on

receipt of such application the Court shall, after notice to

the opposite party, calculate the amount due from the appli-

cant in accordance with the provisions of sections 9 and 10

and shall amend the decree accordingly."

It is clear from the wording of the sub-section that

there are three pre-requisites for exercise of the right

conferred by it, namely, (1) that the application must be by

an agriculturist and (2)that that agriculturist must be

liable to pay the amount due under a decree to which this

Act applies and (3) that that decree was passed before the

commencement of this Act. That the judgment-debtors appli-

cants were agriculturists at the date when suit No. 33 of

1938 was filed and also in 1942 when the application under

section 8 was made is conceded by Sri G.N. Kunzru. The

decree in that suit was passed on March 31, 1939, which was

well before the commencement of the Act. The only question

that remains is whether the amount was due under a decree to

which the Act applies. Under section 2(6) of the Act the

phrase "decree to which this Act applies" means a decree

passed before or after the commencement of this Act in a

suit to which this Act applies. Section 2(17) defines the

phrase "suit to which this Act applies" as meaning any suit

or proceeding relating to a loan. The question then,

arises: was the decree under which the judgment-debtors

applicants are liable passed in a suit

652

relating to a loan ? Loan is thus defined in sec-

tion 2(9):

'Loan' means an advance in cash or kind made before the

first day of June, 1940, recoverable from an agriculturist

or a workman or from any such person and other persons

jointly or from the property of an agriculturist or workman

and includes any transaction which in substance amounts to

such advance, but does not include an advance the liability-

for the repayment of which has, by a contract with the

borrower or his heir or successor or by sale in execution of

a decree been transferred to another person or an advance by

the Central or Provincial Government to make advances or by

a co-operative society or by a schedule bank:

Provided that an advance recoverable from an agricul-

turist or from an agriculturist and other persons jointly

shall not be deemed to be a loan for the purposes of this

Act unless such advance was made to an agriculturist or to

an agriculturist and other persons jointly."

In order to be a "loan" the advance must be recoverable from

an agriculturist. The word "recoverable" seems, prima facie,

to indicate that the crucial point of time is when the

advance becomes recover-able, i.e., when the amount advanced

becomes or falls due. Under the mortgage of 1931 the date

of redemption was 6 years from the date of execution, i.e.,

in July 1937. Sri Kunzru concedes that Sita Ram was not as-

sessed to income-tax.since 1936. Assuming, but without

deciding, that the proviso to section 2 (9) applies and that

in order to be a "loan" it must be shown that the advance

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7

was made to one who, at the date of the advance, was an

agriculturist as defined in section 2(3) of the Act the

question has yet to be answered, namely, had Sita Ram ceased

to be an agriculturist by reason of clause (b) of the provi-

so to section 2(3), that is to say, by reason of his being

assessed to income-tax on July 28, 1931. According to the

evidence of Surai Mani Tripathi and Sita Ram

653

income-tax was first deducted at the source in the month of

February 1932 by the College authorities and the actual

assessment was made on February 9, 1933. Therefore, Sita Ram

was not assessed to incometax on July 28. 1931. It is not

disputed that the taxable minimum was reduced from Rs. 2,000

perannum to Rs. 1,000 per annum by the Indian Finance

(Supplementary & Extending)Act, 1931, which was enacted on

November 26, 1931. Therefore, at the date of the advance,

i.e., on July 28, 1931, Sita Ram Whose salary was below Rs.

2,000 per annum was not only not actually assessed to in-

come-tax but was not even liable to such assessment. The

evidence of Suraj Mani Tripathi shows that the first deduc-

tion of incometax out of the salary was in the month of

February 1932 and the income-tax assessment form for 1931-32

(Ex.S) shows that tax was assessed on Rs. 180 which was

evidently salary for February and March 1932 being the last

two months of the assessment year. The position therefore is

that Sita Ram was not assessed to income-tax at the date of

the advance in 1931 or on the due date under the deed, i.e.,

in July 1937, or on the date of suit in 1938 or on the date

of the application under section 8 in 1942. It consequently

follows that he was an agriculturist on all these dates.

The other judgment-debtors were admittedly agriculturists.

Therefore, the application under section 8 was made by

persons who were all agriculturists and who were liable to

pay under a decree to which the Act applies, i.e., under a

decree passed in a suit relating to a loan as defined by

section 2(9). The Courts below therefore, were right in

their conclusion that the judgment-debtors applicants were

entitled to the benefit of the Act.

Sri G.N. Kunzru finally submitted that in any case the

accounts could not be taken from 1922, for the mortgagees

under the two mortgages were different. We have already

pointed out that this point was not specifically taken in

the decree-holders' petition of objection. The trial Court

held as a fact that so far as the judgment-debtors were

concerned the

654

mortgagees were the same in both the mortgages. Although in

the petition of appeal to the High Court it was alleged

that the mortgagees were different and the accounts could

not be reopened from 1922, that ground was not specifi-

cally urged before the High Court. The determination of

that question must necessarily involve an investigation into

facts. We do not think, in the absence of a plea in this

behalfin the decree-holders' petition of objection and also

in view of their failure and neglect to raise this question

before the High Court, it will be right for this final court

of appeal, at this stage and in the circumstances of this

case, to permit the appellants to raise this question of

fact.

The result, therefore, is that this appeal must stand dis-

missed with costs.

Appeal dismissed.

Agent for the appellants: C.P. Lall.

Agent for the respondents: Nannit Lal.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7