P. NIRATHILINGAM v. ANNAYA NADAR AND ORS.

The Judgment of the Court was delivered by { D.P.' MOHAPATRA, J. The effect of institution of a civil suit by the B creditor on 'the proce~ing initiated on the application filed by the debtor under the TatJlil Nadu Debt Relief Act, 1980 (Act XIII of 1980) (for short 'the Act') is the question that falls for deteqnination in this. case. ' . A learned single Judge of the High Court of/Madras held that on filing c of the civil suit the Special Tahsildar who was tile coo;ipetent aut~nty under the Act ceased to have jurisdictiort 'in the ~atter and the decision of the civil · court. would be binding on the parties. The judgment was confirmed by the Division Bench. Therefore, the debtor has filed this appeal assailing the judg- . ment in Writ Appeal No. 971196 confirming the judgment of. the learned single Judge in Writ Petition No. 3409/1983. D The shot resume of the.fa6ts r~levant for appreciating the case may be stated thus :

The appellant herein mortgaged his land measuring about 3.07 acres for E a sum of Rs. 10,000 in favour of one Ramummal wife of Madasami Raja on - 28.2.1965. The said mortgage was assigned in favour of the respondent No. 1 for consideration ori. 12.6.1974. The appellant filed the application dated 11.9.1980 before the Special Tahsildar (Debt ReFet), Sivakasi, seeking relief under the provisions of the Act on the ground that 'the annual household income during 1979 ·was Rs. 3600 and the immovable prpperties owned by him were F worth Rs. 22,840. The assignee-creditor, respondeht no.l herein, opposed the application. When the application was pending before the Special Tahsildar the assignee creditor filed O.S. No. 123/81 on 25.4.1981 in the Sub-Court, Ramanathapuram, which was re-numbered as O.S. No. 150/81 on the file of Sub-Court, Srivilliputhur. G The Speci!ll Tahsildar, on inquiry came to the conclusion that the annual · household income of the appellant's family during 1979 did not exceed Rs. 4,800 and the value of the immovable properties did not exceed Rs. 25,000, and therefore, the appellant was entitled to the relief provided under the Act. H The appeal filed by the respondent No. 1 (assignee~creditor) before the Rev-

P. NIRATHILINGAM v. ANNAYA NADAR [MOHAPATRA, J.] 611 enue Divisional Officer, Sivakasi, against the said order was dismissed on the ground of limitation.

Aggrieved by the said order the respondent No .. 1 filed Writ Petition No. "\ 3409/83 in which the learned single Judge relying on the judgment of .the Division Bench in K. V.S.P. Subramanian Chettiar v. R.D.O., Ara?tangi, Pudukottai Dis(rict, (1982) II MLJ 375, held that the Special Tahsildar could not have passed the order granting relief to the appellant on 8.1.1982 long after institution of the civil suit by the respondent no. 1 and during the pendency of the said suit before the competent civil court. On the said finding the writ petition was allowed and the order of the Special Tahsildar as cpnfirmed by the appellate authority was set aside. The learned single Judge left it to the c parties to vindicate their claims before the civil court in the pending civil suit. The operative portion of the judgment of the learned single Judge runs as follows :

"In this view, the impugned orders are quashed, However, liberty is D reserved to the third respondent to seek adjudication before the civil court where the suit is pending on the question "as to whether he is entitled to the benefits of the Act. Ifthe court comes to the conclusion that the third respondent herein is entitled to the benefits of the Act then the court has to dispose of the suit in accordance with section 4 of the Act. The writ petition is allowed. No costs." E

.. On appeal, filed by the appellant, the Division Bench of the High Court relying on the decision in K. V.S.P. Subramanian case (supra) confirmed the judgment of the learned single Judge. The Division Bench made the following observations on the point : F "The fact remains that the suit was pending on the date when the second respondent passed the order granting relief which had the consequence of nullifying the civil suit filed and pending before the competent civil court. The learned Judges of the Division Bench did ) not base their conclusions on the ground that the suit had been filed G earlier in point of time, the real test or criteria being the pending of the suit dehors the date of its filing as on the date of consideration by the competent authority. When the case is one of the total lack of jurisdic- tion, the fact that the creditor participated in the proceedings or he kept quiet without objecting to the jurisdiction had no significance, since H

612 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R. · A it is a. well settled principle of law· that the jurisdiction cannot be conferred on authorities by mere consent of parties, where it is totally .wanting and the statutory authorities.could not daini.to havejurisdie- . 'tion to function under an Act; merely because the parties before them ,.._ agreed to p~ticipate in the proceedings. Fo.r the· same r~ason, we ar~ {

B qf the view that the reliance pla~ed·on Section 7 of the:Act and the pnality given to th~ orders p~ssed under the Act subject to the o;ders pass~d on appeal, will not be of any hell' to the. appellant where it is a case of absolute and total want of jurisdiction on the original author~ ity. The ~rder passed by.,the authority which .suffered total want of jurisdiction 'fOUld be a riullity and there is no question of attaching any c finality to such an order. For all the reasons sta~ed above, we see no merit in the above appeal. The appeal, therefore, fails and shall stand disinissed.".

On. the facts and circl.lmsta!lces dis.sum~d above the point formulated D earlier ~ises for determination. · ' . . We have heard Mrs.' Revathy Raghavan, learned counsel appeared for the appeliant N~ne appear~d fo~ the respondents despite service of notice . Since the question involved in the case is ~f .considerable importance deteqni- nation of which depends Oil 'interpretation of the relevant provisions of:the E Act, we requested Mr. S. Ganesh, Senior Advocate' to act as amicus curaie, for assisting the CoQrt which he· readily accepted.

Before proceeding to consider the corre.ctness or otherwise of the judg~ mentsrendered by the High Court it will be convenient to notice some relevant· F provisions of the Act.

In the Preamble ': of the Act it is stated . :

"An Act to provide for the relief of ~ertaih indebte.d persons in the 'State· of Tamil Nadu. . ·G ,. Whereas it is expedient to provide relief to certain indebted per- sons in the State of Tamil Na?u from the usurious praetices·of pawn- brokers, money-lenders and othernon-instilutional sources of credit and to give relief from the debts due to such pawnbrokers, money- lenders, and other non-institutional sources of credit."

P. NIRATHILINGAM v. ANNAYA NADAR [MOHAPATRA, J.] 613 Section 3 of the Act contains definitions of different expressions used in .A the Act. They are as under :

3(a) "annual household income" means. the aggregate of the gross annual income from all sources of all the members of. a family during the year ending on the 31st December, 1979. B 3(b) "creditor" means a person from or in respect of whom the debtor has borrowed or incurred a debt and includes the heir of such person.

3(c) "debt" means nay liability in cash or in kind whether secured or unsecured and whether decreed or not, but does not include arrears of C taxes due to the Central Government or a State Government or a local authority.

3(d) "debtor''. means any person from whom any debt is due and whose annual household income does not exceed four thousand and eight hundred rupees. · D

The proviso .enumerates the class c:if persons who shall not be deemed t.o be·debtor. The proviso is not relevant for the purpose of the present case.

3(g) "person" means an individual or a family. E 3(i) "transferee of the creditor" means any person (including an insti- tution referred to in clause (h) of section 12) to whom :-

(i) the creditor h.as pledged the movable property pledged to him, by the debtor and includes any su.bsequent transferee to whom such p transferee has pledged such movable property and also includes . any person in possession of the property pledged or :

(ii) the creditor has transferred or otherwise assigned his interest in the property mortgaged by the debtor and includes any subse- . quent transferee to whom such transferee has transferred or ,G ! otherwise assigned his interest in the property mortgaged and also includes any person in possession of the proper!y mort- gaged.

Section 4 of. the Act contains the provision regarding relief from indebt- H

p. 614

A edness."In reads as follows :

4. Relief from indebtedness : (1) Notwithstanding anything con- tained in the Tamil Nadu Agriculturists Relief Act, 1938 (Tamil Nadu Act 1 of 1938), the Tamil Nadu Pawnbrokers Act, 1943 (Tamil Nadu ActXXIII of 1943) theTamil Nadu Money-Lenders 't ~ 'B Act, 1957 (Tamil Nadu ActXXIVof 1957) the Tamil Nadu Debt Relief Act, 197~ (Tamil Nadu Act XXXVIII of 1972), the Tamil Nadu Debt Relief Act, 1976 (President's ActXXXI of 1976), the Tamil Nadu Debt Relief Act, 1979 (Tamil Nadu Act XL of 1979) or in any other law for the time being in force or in any contract c c ·· or instrument having force by virtue of any such law and save as otherwise expressly provided in this Act, and in particular sub- section (2) with effect on and from the commencement of this Act.

D (a) every debt advanced or incurred before the first day of January, 1980 (including interest, if any) and payable by the debtor to the creditor shall be deemed to be wholly discharged;

(b) no Civil Court shall entertain any suit or other proceeding against the debtor for the recovery of any amount of such debt (including E interest, if any);

Provided that where any suit or other proceeding is instituted jointly against the debtor and any other persons, nothing in this ·'"I section shall apply to the maintainability, of such suit or proceed- F ing in so far as it relates to such other person; • (c) all suits and other proceeding (including appeals, revisions, attach- men ts or execution proceedings) pending at the commencement of this ·Act against any debtor for the recovery of any such debt (including interest, if any) shall abate; G { Provided that nothing in this clause shall apply to the sale, in respect of any such debt of -

(i) any movable property held and concluded before the commence- H ment of this Act

J.>. NIRATHILINGAM v. ANNAYA NADAR [MQHAPATRA, J.]· 615 (ii) any immovable property confirmed before such commen~ement. A (d) every debtor under going detention in a c_ivil prison in f!Xecution of any decree for money passed against Him a Ci vi~ Court in respect of any such debt (inctuding interest, if any) shall be released;

(e) every movable property pledged by .a debtor shall stand released in favour of such debtor and the creditor shall be bound to return the same, to the debtor forthwith;

(f) every mortgage executed by the debtor iti favour of the creditor shall stand redeemed and the mortgaged property shall be released in favour of such debtor. • ' v '

Explanation : Nothing in tltj.s section shall be construed a!!_ entitling any · debtor for refuri°d ofany part o(,;iny debt repaid or interest paid aiready by him or re~overed from him before the commeni;:ement of this Act. D (2) Nothing contained in this Act shall apply to any debtor. who is entitled to the benefits of the Tamil Nadu Debt Relief Act, 1976 0

(President;s Act XXXI Of 1976) ollly in so far as any debt to which ' .l ,

the Act applies, is concerned." ·· E Section 5 makes provision for the debtors to make application for the return of the movable property pledged by them. In sub-section (l)(a) it is laid down that every debtor referred to in clause (e) 'of sub-section (1) of section ,,. 4 shall make an application in such form and containing such particulars as may be prescribed to the Tahsildar having jurisdiction over the area ·where his creditor has his ordinary place of business for. an order for the return of the F movable property pledged by the debtor.·

In sub-section (2) of the said section power has been vested in the Tahsildar to pass an order after giving a reasonable opportunity to the creditor concerned and the debtor to make their representations for return of the immov~ G · able property pledged by the debtor if he is satisfied that the debtor is entitled to relief under section 4 and to pass art order dismissing· the application if he is. satisfied that the debtor is not entitled to such relief.

Under sub-section (3) it is laid down that where the Tahsildar has passed H

p. 616

. A · an order 'under sub-section (2) disinissing the application ·the creditor may subject to the provisions of sub-section (3) of section 8, dispose of in accord- ance with. the provisions of the Tai:nil . . Nadu Pawnbrokers Act, 1943 (Tai:nil Nadu Act XXII~ of 1943) or any other law for the time being in force relating to the sale of pledged articles, the movable prop~rty for the return. of which the B said application was 11).ade.

In clause (d) of sub-section (3) it is provided that where any debtor referred to in clause (e) of sub-section (1) of section 4, has not made any applic~tion in accordance with the provisions of and within the time specified in sub-section (1), then, such debtor shall not be entitled to reliefunderthis Act. c The Act, as noticed earlier, is intended for giving relief to a certain class of indebted persons in the State. For that purpose procedure. has been laid down in the Act for filing ~f application and for dealing· with the same. The Tahsildar is vested with the power to decide whether the applicant-debtor is entitled to relief under the Act and if he is satisfied that the applicant-debtor is entitled to such relief, he is to pass an order releasing the mortgaged property and granting a certificate of redemption in the prescribed form. The said certificate is to be taken· as admissible evidence of such redemption in. any proceeding before any Court or other authority. If, on the other had, the Tahsildar finds that the applicant-debtor is not entitled to the relief under the Act he is to pass an order dismissing the application. Finality is attached to the order of the Tahsildar subject to the appeal. under Section 8 of the Act. Further, the. order passed by the Tahsildar is not to be questioned in any Court. A sii:nilar pro- vision is made that the order of the appel~ate authority shall be final and shall not be questioned in any Court. ·

From the provisions of the Act the legislative scheme is clear that the scheme is not to allow interference by any Court with deterinination of the question of eligibility to receive benefit u.nder.the Act by the applicant-debtor by the Tahsildar and his ~rder is made ·~nal subject to !ffi ·appeal under section

G 8. The legislative intent is to vest the jurisdiction to deterinine the question relating to eligibility for the benefits under the Act in the statutory authorities, to the exclusion of the Court so that a debtor. who is entitled to the benefits under the. Act is able to enjoy such benefit without a hassle of a protracted litigation in a civil court or reven.ue court. The view taken by the High Court · H that if a civil suit for realisation of the amount or any other relief based on the.

P. NIRATHILINGAM v. ANNAYANADAR [MOHAPATRA,J.] 617

debt in question has been filed or on the filing of _such a suit the Tahsildar would A lose his jurisdiction to deal with the matter if accepted will defeat ~he very· purpose for which the legislature enacted the statute, that is, to grant relief to a certain class of debtors. If the view t~ken by the High Court is accepted then it would be easy for a creditor to prevent the debtor froin getting benefits '-" granted under the Act by filing civil suit relating to the debt. On the other hand B a in sectioq 4(b) declaration is made that any Civil Court which entertain any suit or other proceeding against the debtor for re~overy of ariy amount of such debt (including interest, if any); all .. suits and other proceedings (including appeals, revisions, attachments or execution proceedings) pending at the com- mencement of this Act against any_ debtor for the recovery of any such debt, · . C (including interest, if any) shall abate.

The principle is well settled_ that an interpretation of the statutory pro- vision which defeats the intent and purpose for which the statute was enacted should be avoided. The decision of the Madras High Court in K. V.S.P. Subramanian case (supra), holding that since the creditor had already filed D suits for recovery of the mortgage amount and the suits were pending the debtor, who is the defendant in those suits, has to seek adjudication before the Civil Court on the question as to whether he is entitled to the benefit and if the Court comes to the conclusion that he is entitled to the benefit of the Act then the Court has to dispose of the suit in accordance. with section 4 of the Act, E in our view, does not lay down the law correctly. Accepting this view will render the provision regarding abatement of the suit redundant.

We are consCiou.s of the position that the view taken by the Division Bench of the Madras High Court in K. V.S.P. Subramanian case (supra) has held the field for a good length of time. But as discussed earlier, the decision runs F co11nter to the very intent an·d purpose for which the enactment was made. In such a situation the decision needs to be corrected 'a:nd this has to be done despite the lapse of time.

The further question that arises for consideration is what is the appro- G ,. ~ priate course to be followed iri. a suit which was filed by the creditor against the debtor before the debtor made the application to the Tahsildar seeking relief under the Act; should it be dismissed immediately on filing or should it be suspended/stayed till the Tahsildar disposes of the application filed by the debtor. It is our view that in such a case the proper and reasonable course to H

p. 618

A be followed is to stay ·the proceeding in the suit till the Tahsildar/appellate authority disposes .of the proceeding under the statute. If it is held in that proceeding that the debtor is not entitled to the benefit under the Act then the civil suit may be proceeded with, if on the other hand it is held that the debtor is entitled to the benefits provided in the Act then the suit has to be dismissed B under section 4. In no case can it be held that by filing a civil suit for realisation V of the mortgage amount the proceeding pending before the Tahsildar or the appellate authority is to be dismissed without adjudication.

· On the discussions in the forgoing paragraphs the inescapable· conclusion is that the judgment of the learned single judge as confirmed by the Division C Bench is unsustainable. Accorqingly, the appeal is allowed. The Judgment under challenge is set aside. Hearing fee is assessed at Rs. 10,000.

We are beholden to Shri S. Ganesh, Senior Advocate for the assistance rendered to us in the ·case.

D N.J. Appeal allowed.

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