SHATRUGHAN Vs. BALIA
LAWS(RAJ)-1967-1-28
HIGH COURT OF RAJASTHAN
Decided on January 24,1967

SHATRUGHAN Appellant
VERSUS
BALIA Respondents

JUDGEMENT

- (1.) THIS is a writ application by Shatrughan under Art. 226 of the Constitution against an order of the District Judge. Jaipur, dated the 3rd May, 1963, upholding an order of the Munsiff, Jaipur District, Jaipur, as a Debt Relief Court, dated the 24th March, 1962, by which the latter had ordered that the claim of the petitioner do stand discharged as against the debtors Balia and Dalia who were applicants before that Court.
(2.) THE material facts are these. It appears that Shatrughan had dealings in grain with respondents Balia and Dalia and two other persons Bhura and Narain who are not before us. THEse dealings are said to have commenced some time in 1946. On the 25th May, 1952, all the four debtors had obviously gone into account with the petitioner and found that grain weighing 501 Maunds as specified in the writing Ex. 1 was due from them to the said Shatrughan and they also agreed by that writing to repay it in a certain manner which is also described at length therein but which we need not repeat here for our present purposes. It further appears that after the writing Ex. 1 had been executed that is thumb marked by all of them the debtors failed to pay one instalment for the Rabi crop of Smt. 2011 whereupon the petitioner Shatrughan filed a suit against them for the recovery of Rs. 160/-being the price thereof. This suit was decreed by the small cause Court, Jaipur, on the 15th July, 1955, vide Ex. 3. According to the petitioner, this decree was fully satisfied by the debtors. Respondents Nos. 1 and 2 and their co-debtors further failed to pay the instalments which had thereafter fallen due. Consequently the petitioner instituted another suit against them in the court of the Civil Judge, Jaipur District, Jaipur for a sum of Rs. 3579/9/- being the price of the grain together with the interest due thereon. This suit was filed on the 16th December, 1959. During the pendency of that suit, the said respondents made an application under S. 6 of the Rajasthan Relief of Agricultural Indebtedness Act, 1957 (Act No. 28 of 1957, hereinafter called the Act) in the court of the Civil Judge, Jaipur District, Jaipur as the debt relief court. In this petition, the respondents claimed that they were agriculturists and inter alia stated that the petitioner Shatrughan had filed a suit against them and two others for the recovery of Rs. 3579/9/- in the court of the Civil Judge, himself and that there was no other claim outstanding against the respondents. This application was filed on the 8th October, 1960, and it seems that it was returned to them for presentation to the proper court by an order of the Civil Judge, Jaipur District, Jaipur (as debt relief court) on the 27th January, 1961, and another application to the same effect was filed before the Munsiff Jaipur District, Jaipur, (as debt relief court) on the 28th January, 1961. As in the previous application, a prayer was also made in the subsequent one that an inquiry be made into the claim of the creditor and suitable relief be granted to the respondents in accordance with the Act. After a notice was issued to the creditor Shatrughan under S. 7 of the Act, he filed his statement of claim under S. 8 (1) of the Act on the 13th February, 1962. THEreupon an objection was immediately raised on behalf of the respondents that as the creditor had not produced a full and true statement of the claim of all previous transactions between him and them leading to the claim nor his account-books or copies thereof, the same may be held to have been discharged under S. 8 (2) of the Act. This contention seems to have been raised as a preliminary objection and the court fixed the case for arguments thereon for the 24th March, 1962. On the last-mentioned date, it heard the arguments and held that the petitioner's claim stood discharged. In coming to this conclusion, the learned munsiff found that no statement of account had been filed by the creditor nor had he filed the documents or account-books or copies thereof and he further held that in case the latter had been lost as stated by the creditor, still it was obligatory on him to furnish the statement of account of all previous transactions between him and the debtor leading to the claim of 501 maunds of grain without which it would not be possible to determine the debt at all. According to the learned Munsiff, the creditor was under a legal obligation to show what was the quantum of the original debt and how it had swelled from time to time. THE learned Munsiff further went on to observe that unless such a statement of claim was filed, "the question of taking evidence of the parties does not arise. THE question of taking the evidence of the parties will arise only when the debts due on different dates have been shown by the creditor and their validity and subsisting character of the debt has to be determined under S. 9 of the Act. Had this not been the meaning and object of this Act. then in every case the creditor will file this application that his account books have been lost and he cannot furnish the data on which the original amount has given and how much amount was given. " This is how he sums up his findings on the whole case : "in view of all that has been discussed above, I am inclined to hold that as the applicant (creditor) has failed to furnish any statement of account leading to claim as required under S. 8 (2) of the Act, his claim is hereby discharged and he is therefore not entitled to get any relief from this court. " Against this order, the petitioner went in revision to the learned District Judge, Jaipur District, Jaipur, but without any success. This has led to the present writ application. It has to be regretted that no body has appeared before us on behalf of the respondents debtors. We have, however, very carefully looked into this case in the light of all the relevant provisions of the Act and have come to the conclusion that this petition must be allowed. We shall now briefly state our reasons which have induced us to come to this conclusion. Now before we deal with the relevant provisions of the Act, we may state at once that we are fully alive to the object underlying it which is, to put succinctly, to make adequate provisions for the relief of agriculturists from indebtedness in this State. This Act, therefore, lays down a simple and inexpensive machinery for the determination and settlement of the debts of the debtors falling within the scope thereof (See the definition of 'debtor' in this connection as given in clause (cc) of S. 2 which lays down that : "debtor means an agriculturist or a member of a Scheduled Caste or a Scheduled Tribe who is liable for debts aggregating to one thousand rupees or more exclusive of claims in respect of liabilities mentioned in Sec. 4. " Sec. 4 specifies certain liabilities to which the Act has been made expressly inapplicable. The we come to S. 5. This provides for abatement or stay of suits or insolvency petitions. Where a suit or insolvency petition has been filed against a debtor in a competent court of law and where in such a case an application has been made to the debt relief court under s. 6 or s. 6-A and has been admitted and is pending, then in such a case, provision has been made for the abatement of the suit or the insolvency petition but where the debtor intimates to the civil court that he proposes to file such an application before the Debt Relief Court, then the former court is required to stay proceedings in that court fixing a period not exceeding 90 days within which the application to the Debt Relief Court must be made. Sec. 6 then deals with applications to the Debt Relief Court. An application under this section may be filed either by a debtor or by a creditor or by a surety of the debtor also. This section then also lays down the requirements which such an application must contain. Sec. 6-A provides for the machinery for recording of any settlement which may be arrived at between a debtor and his creditors as a whole or any one or more of them. Under S. 7, it is provided that upon the admission of an application under sec. 6 or 6-A, all the creditors of the applicant shall be joined as parties to the proceedings and the Debt Relief Court shall fix a date of hearing and cause notice of such date together with a copy of such application to be served on all such creditors of the applicant and shall also cause copies of such notice and application to be affixed to the court house. The next important section is S. 8. We may reproduce it here in extenso: - 8. Submission of claims by creditors - (1) On or before the date fixed for the hearing of the creditors under sec. 7, which shall not be earlier than two months from the date of service of notice or of the issue of proclamation under Order V, Rule 20 of the first Schedule to the Code of Civil Procedure, 1908 (Central Act V of 19 (3), every creditor shall submit a statement of his claim signed and verified in the manner prescribed by Order VI Rule 15, of the First Schedule to the said Code. Such statement shall be submitted in person, by an agent, by a pleader or by registered post and every claim not so submitted shall be deemed for all purposes and all occasions to have been discharged as against such debtor or debtors. Provided, that it the Debt Relief Court is satisfied that for good and sufficient cause any creditor was unable to submit his claim, it may extend the time upon such conditions as to costs as it may think fit and may receive the claim. (2) On the date on which the case is fix ed for hearing, every creditor shall produce the documents in his possession or control on which he bases his claim. He shall also furnish a full and true statement of accounts of all previous transactions between him and his debtor leading to the claim and his account books or copies thereof, if any, in his possession or control. If such documents and statements are not produced at such hearing or at any adjourned hearing fixed for the purpose by the Debt Relief Court, the Court may declare such claim to be discharged for all purposes and occasions against such debtor or debtors. Provided that if the Debt Relief Court is satisfied that any creditor was, for good sufficient cause, unable to produce such documents or statements, it may on such conditions as to costs as it may think fit, extend the date for the purpose and may revive the claim. " Sec. 9 thereafter lays down that on the day fixed for hearing of the case or on any subsequent day to which the hearing may be adjourned, the Debt Relief Court shall require proof of the validity and subsisting character of the debts, and sec. 19 deals with determination and scaling down of debts. Then follows sec. 11 which deals with the preparation of a scheme of repayment and transfer of debtor's property in lieu thereof. Sec. 11-A again provides for settlement during the pendency of the proceedings and lays down that if the Debt Relief Court is satisfied that the settlement has been made by the debtor with his creditors voluntarily and is for his benefit, the court may make order in terms of such settlement. Then the next important section is sec. 16 which provides that the Debt Relief Court in regard to proceedings under this Act shall, so far as practicable, have the same powers and shall follow the same procedure as it would have and follow if it were a court of original civil jurisdiction. Sec. 17 then provides for a revision against an order of a Debt Relief Court to the District Court, and sec. 18 provides for review by a Debt Relief Court or the District Court. We may lastly advert to sec. 21 which enacts a bar against the jurisdiction of civil courts in matters pending before or adjudicated upon by a Debt Relief Court. This is a brief resume of the provisions of the Act in so far as they have any bearing on the question raised before us. Turning back to S. 8 under the second sub-section whereof the claim of the petitioner before us was discharged by the tribunals below, we should like to point out that under its first sub-section, every creditor is required to submit a statement of claim duly signed and verified in the manner prescribed by Order VI, R. 15 of the Code of Civil Procedure on or before the date fixed for hearing under S. 7 and it is further provided that where such a statement has not been duly submitted as provided under the section, every claim shall be deemed to have been discharged as against the petitioner's debtor or debtors for all purposes and all occasions. A proviso has also been added to this sub-section which lays down that if the claim has not been submitted within the time allowed by the first sub-section for good and sufficient cause, then the court may extend a further opportunity to the creditor to do so upon such conditions as to costs as it may think fit. We may state at once that the claim in the present case has not been thrown out by the Debt Relief Courts below under this sub-section. Coming then to the second sub-section it lays down the following requirements : (1) Every creditor shall produce the documents in his possession or control on which he bases his claim; (2) In addition, he must also furnish a full and true statement of accounts of all previous transactions between him and his debtor leading to the claim; and (3) He must also produce all his account-books or copies thereof. If any, in his possession or control. Then the sub-section goes on to provide for the consequence of the non-compliance with the aforesaid requirements, and that is that if such documents and statement of account together with the account-books, if any, are not produced as required by the Court on the first date of hearing or at any adjourned hearing fixed for the purpose, then the court has a discretion to declare such claim to be discharged for all purposes and on all occasions against such debtor or debtors. A proviso has also be|en added to this sub-section which lays down that if the creditor satisfies the court that he Was unable to produce the documents or statement of account etc. earlier for good and sufficient cause, it may order that the date for the purpose be extended and the claim be revived. This is undoubtedly the normal procedure which has been laid down by the Act, and we have no doubt that it should be followed with all the care and attention which it deserves so that the interests of the debtors who are usually illiterate and ignorant are not sacrificed at the hands of clever or scheming creditors. A difficulty, however, arises in a certain class of cases, and the present one seems to us to belong to that class where the contention of the creditor supported by his affidavit dated the 13th February 1962 is that he has lost his account-book and the statement of accounts contained therein, and that it is not possible for him to reconstruct the accounts on the basis of recollection with any approach to accuracy whatsoever. The question is: does the Legislature intend that the Debt Relief Courts should throw out such claims summarily and without let or hindrance. On giving our most careful and anxious consideration to this matter, we do not think that that could have possibly been the intention of the Legislature. In such a case we would expect the Debt Relief Court to carefully direct its attention to and then answer two questions. In the first place, it must apply its critical mind to the version put forward by the creditor that he has lost his account-book and the statement of accounts contained therein as alleged by him and whether such an assertion has been made in good faith and is worthy of belief. If the answer to this question should turn out in the negative, we have no doubt that the discharge of the claim under sub-sec. (2) would seem to be perfectly justified. But if the story of the loss of the books is a genuine one and should not be worthy of rejection, then we think that it would be an unmerited hardship to the creditor if his claim is thrown out summarily on this ground alone. In such a case, the court should further see whether the creditor has any other material in writing which he still has in his possession and could produce and whether he has actually produced it. And if he has done all that lies in his power in such circumstances to do, then we think that it would be nothing but a wanton or capricious exercise of judicial discretion in such a case to throw out his claim merely on the ground that he has not been able to furnish a full and true statement of account of all previous dealings between himself and his debtor or that he has not been able to produce his account-books or copies thereof, the simple reason being that he has lost the only account-book that he had which contained the entire history of the previous dealings extending over a number of years. It may be that a creditor may possess a number of books containing the accounts of his debtor such as a cash-book and a ledger and so on, and in such a case the mere loss of one of those such books would not be a sufficient justification for him not to produce the remaining books which would be still in his possession and which we think he must produce if he wants to avoid the consequence of noncompliance with sub-section (2) of sec. 8. At the same time, we have no hesitation in saying that this provision does not contemplate that a creditor's claim has necessarily to be thrown out of hand where it may not be possible for him to furnish a detailed statement of account of all previous transactions between him and his debtor leading to his claim and/or his account-books or copies thereof where for example he has lost the same and his story to that effect may inspire confidence. In this connection we should also like to invite attention to the difference in the language of the two sub-sections of sec. 8 inasmuch as whereas under the first sub-sec. a claim not submitted by the creditor in accordance with the provisions thereof shall or must be deemed to have been discharged for all purposes and for all occasions against the debtor or debtors concerned, sub-section (2) does not repeat that peremptory language but only provides that on a failure of compliance with the provisions of the second sub-section, the court 'may' declare such claim to be discharged. But it has not been made obligatory to do so. The tribunals below seem to us to have fallen into a manifest error of law in assuming that noncompliance with the provisions of sub-sec. (2) must also be necessarily visited with the penalty of discharging the claim. Before we conclude our discussion on this aspect of the case, we should also like to invite attention to sec. 9 of the Act which lays down that on the date fixed for hearing of the case or on any subsequent day to which the hearing may be adjourned, the Debt Relief Court shall require proof of the subsisting character of the debts. By this section, where a claim has not been thrown out under sec. 8 or should not have been so thrown out according to law, a duty has been laid on the Debt Relief Court to require the creditor to prove the validity and subsisting character of his debts against the debtor. This necessarily involves that an opportunity should be given to the latter to lead evidence for satisfying the purposes of sec. 9. Now having regard to the facts and circumstances of this case as alleged by the petitioner he did produce certain proof in the shape of the original Khata executed by the two respondents and the other two co-debtors before the Debt Relief Court and he also produced certified copies of the plaint and the judgment and decree in the earlier case filed by him for the recovery of Rs. 160/- which was decided by the small cause Court Judge, Jaipur District, on the 15. 7. 1955. It is further submitted that the past dealings between the parties right from 1946 were contained in a single account-book which, as ill-luck would have it, he had lost on the 19th August, 1960, while he was travelling from Jaipur to his home village Samod in a bus and that he had lodged a report about that loss at the police station Chomu on the 20th August, 1960, vide Ex. 6, and, therefore, it was impossible for him to produce that account-book which had not been recovered in spite of all possible search having been made for it and without which also it was not possible for him to re-construct by sheer memory the entire statement of accounts lasting between him and the respondents from 1946 to 1952. In this affidavit filed in this behalf the petitioner also swore that he had not charged any interest on the grain advanced to the debtors during this period. As already stated, it does not seem to us that the Debt Relief Courts below have at all applied their minds to the genuineness or otherwise of the story put forward by the petitioner with the result that their judgments do not contain any finding on the question of loss one way or the other. That to our mind, is a grave error committed by those tribunals. The further error committed by them is that in such circumstances they did not further apply their minds to the question that the creditor was still entitled to be furnished an opportunity of proving the validity and the subsisting nature of his debts against the debtors to which opportunity he was entitled under sec. 9 of the Act so much so that in spite of the prima facie case put forward by the creditor, there was nothing on the side of the debtors to counteract it and the primary court namely the Mun-siff did not even care to examine the debtors as regards the veracity of the petitioner before that court. While we are on this aspect of the case, we should also like to refer to sec. 16 of the Act which makes the procedure of a civil court applicable to a Debt Relief Court in so far as it may be practicable to do so. Sec. 16 reads as follows - 16. Application of civil court to Debt Relief Court - The Debt Relief Court, in regard to proceedings under this Act, shall so far as practicable, have the same powers and shall follow the same procedure as it would have and follow if it were a court of original civil jurisdiction. " That being so, we are definitely disposed to think that in a case like the present the debt relief court would have been certainly well advised to have examined the debtors on oath with respect to the claim put forward by their creditor before that court and it would then have been in a much better position than it ever was, on the procedure followed by it, to be able to determine the debt payable by the respondent, if any, within the meaning of sec. 10. Again, if the debtors had been examined, as they should have been, the possibility of a mutual settlement under sec. 11-A could not be ruled out.
(3.) FROM the discussion that we have made above, it is manifest that the tribunals below have fallen into serious and obvious errors of law which are sufficient to attract our certiorari jurisdiction. In the result, we allow this application, set aside the order of the Mun-siff, Jaipur District, Jaipur (as a Debt Relief Court) dated the 24th March, 1962, and the order of the District Judge, Jaipur District Jaipur, upholding it, dated the 3rd May, 1963, and send the case back to the Munsiff for a fresh trial and disposal according to law in the light of the observations made above. There will be no order as to costs in this Court. .;


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