PETITIONER:
BANK OF BARODA
Vs.
RESPONDENT:
MOTI BHAI AND ORS.
DATE OF JUDGMENT29/01/1985
BENCH:
CHANDRACHUD, Y.V. ((CJ)
BENCH:
CHANDRACHUD, Y.V. ((CJ)
ERADI, V. BALAKRISHNA (J)
CITATION:
1985 AIR 545 1985 SCR (2) 784
1985 SCC (1) 475 1985 SCALE (1)181
ACT:
Bar to jurisdiction of civil courts - Suit for
recovery of a demand loan sanctioned to agriculturist by a
Bank under a promissory note duly covered by hypothecating
the standing crop of his lands and supported with two
guarantors for the repayment of the loan-Maintainability of
the Suit-Rajasthan Tenancy Act (Act 3 to 1955) sections 43,
207 and 256 read with Entry 35 of Third Schedule, scope of.
HEADNOTE:
The appellant Bank filed a suit for the recovery of
the amount of loan together with interest thereon granted to
Respondent No. I who had not only executed a promissory note
but also a bond hypothecating the standing crop of his lands
situated at Khandu and Surjipada in Rajasthan. Respondents 2
and 3 being guarantors for the repayment of the loan were
also proceeded against. The Trial Court overruled the
preliminary objection raised by the Respondents as to the
maintainability of the Suit, in view of sections 207 and 256
of the Rajasthan Tenancy Act, 1955. But the High Court,
while allowing- the Civil Revision Application set aside the
judgment of the Trial Court and dismissed the suit.
Hence the appeal by special leave of the Court.
Allowing the appeal, the Court.
^
HELD: 1.1 A combined reading of sections 207 and 256
of the Rajasthan Tenancy Act, 1955 would show that the
jurisdiction of the civil courts is barred only in respect
of suits and applications of the nature specified in the
Third Schedule to the Act and in respect of suits or
applications based on a cause of action in respect of which
any relief could be obtained by means of a suit or
application of the nature specified in the Third Schedule.
The civil court has no jurisdiction to entertain a suit or
proceeding with respect to any matter arising under the Act
or the Rules made thereunder, provided that a remedy by way
of a suit, application or appeal or otherwise is provided in
the Act. the long title of which shows that it was passed in
order "to consolidate" and amend the law relating to
tenancies of agricultural lands and to provide for certain
measures of land reforms and matters connected therewith.
[787C-D; 788A]
1.2. Entry 35 is described in the Third Schedule as a
"General" entry, that is to say, not relatable to any
particular section of the Act. The
785
suit filed by the Bank cannot fall under this "General" or
"residuary" entry. A loan given by a Bank to an
agriculturist, which is in the nature of a commercial
transaction, is outside the contemplation of the Act and
cannot be said to be in respect of any matter arising under
the Act. [787G; 788A-B]
1.3. The business of the Bank, in so far as lending
transactions are concerned, is not to lend moneys on
mortgages but the business is to lend moneys. In this
particular case, the Bank lent a certain sum of money to
respondent 1 in the usual course of its commercial business
and nothing could be further removed from the contemplation
of the Act than such a transaction. It is only by way of a
collateral security that the Bank obtained a hypothecation
bond and a deed of mortgage from respondent 1 and a letter
of guarantee from respondents 2 and 3. The assumption that
the mortgage has executed in pursuance of section 43 of the
Act and, therefore, residuary Entry 35 of the Third Schedule
is attracted, is not correct. [788G-H; 789A]
2. On the question of jurisdiction, one must always
have regard to the substance of the matter and not to the
form of the suit. Approaching the matter from that point of
view, primarily and basically the suit filed by the Bank is
one for recovering the amount which is due to it from the
respondents on the basis of the promissory note executed by
respondent No. I and the guarantee given by respondents 2
and 3. The reliefs sought for also make it clear that the
suit is not one to enforce the mortgage and, even assuming
that it is, the mortgage not having been executed under
section 43 of the Act, nor being one relatable to that
section, the residuary Entry 35 can have no application. If
that entry is out of way, there is no other provision in the
Act which would apply to the instant suit and therefore, the
civil court has jurisdiction to entertain the suit filed by
the appellant Bank. [789C-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1321 of
1980.
From the Judgment and Order dated the 15th February,
1976 of the High Court of Rajasthan at Jodhpur in S. B.
Civil Revision No. 320 of 1978.
P. G. Gokhale and Mr. B. R. Agarwala for the
Appellant.
Dalveer Bhandari for the Respondents.
The Judgment of the Court was delivered by
CHANDRACHUD, C.J. The appellant, the Bank of Baroda,
agreed through its Banswara Branch to sanction a demand loan
facility in the sum of Rs.36,000 in favour of respondent l.
In consideration thereof, respondent I executed a demand
promissory note in favour of the Bank on June 18, 1973. He
also executed a bond hypothecating the standing Crop of his
lands situated at Khandu and
786
Surjipada in Rajasthan Respondents 2 and 3 are the
guarantors for the repayment of the loan. In order to
further secure the repayment of the loan, respondent 1
executed a deed of simple mortgage in favour of the Bank,
ill respect of the lands at Khandu and Surjipada.
The respondents having failed to repay the loan, the
appellant filed against them a suit in the court of the
learned District Judge, Banswara, for recovering a sum of
Rs. 52,000 and odd which was due ` on the loan transaction.
Respondents raised a preliminary objection to the
maintainability of the suit on the ground that the claim in
the suit was essentially one for enforcing the mortgage
executed by them in favour of the Bank and, therefore, the
Revenue court had the exclusive jurisdiction to entertain
the suit, by reason of the provisions contained in the
Rajasthan Tenancy Act 3 of 1955, (hereinafter called “the
Act”). That objection was overruled by the learned District
Judge but, in a civil revision application filed by the
respondents, the High Court upheld it. According to the High
Court, “the execution of the mortgage deed by defendant No.
l in favour of the plaintiff in respect of his tenancy
rights in agricultural land also forms the essential part of
the cause of action of the plaintiff and as such, the suit
is triable by a revenue court”. The correctness of this view
is questioned by the plaintiff in this appeal by special
leave.
Section 207 of the Act reads thus;
207. Suit and applications cognizable by revenue
court only.-(1) All suits and applications of the
nature specified in the Third Schedule shall be heard
and determined by a revenue court.
(2) No court other than a revenue court shall
take cognizance of any such suit or application or of
any suit or application based on a cause of action in
respect of which any relief could be obtained by means
of any such suit or application.
Explanation:-If the cause of action is one in
respect of which relief might be granted by the revenue
court, it is immaterial that the relief asked for from
the civil court is greater than, or additional to, or
is not identical with, that which the revenue court
could have granted.
Section 256 of the Act, which is complementary to
section 207, reads thus;
787
“256. Bar to Jurisdiction of civil courts.-(1)
Save as otherwise provided specifically by or under
this Act, no suit or proceeding shall lie in any civil
court with respect to any matter arising under this Act
or the Rules made thereunder, for which a remedy by way
of suit, application, appeal or otherwise is provided
therein.
(2) Save as aforesaid, no order passed by the
State Government or by any revenue court or officer in
exercise of the powers conferred by this Act or the
Rules made there under shall be liable to be questioned
in any civil court”.
A combined reading of these two sections would show
that the Jurisdiction of civil courts is barred only in
respect of suits and applications of the nature specified in
the Third Schedule to the Act and in respect of suits or
applications based on a cause of action in respect of which
any relief could be obtained by means of a suit or
application of the nature specified in the Third Schedule.
The civil court has no jurisdiction to entertain a suit or
proceeding with respect to any matter arising under the Act
or the Rules made thereunder provided that a remedy by way
of a suit, application or appeal or otherwise is provided in
the Act.
The legal position on the question of jurisdiction
which is stated above requires examination of the various
entries in the Third Schedule. That Schedule is divided into
three parts, the first of which is called “Suits”, the
second is called “Applications”, and the third is called
“Appeals”. We are concerned in this appeal with the 35
entries which are comprehended in the first part which deals
with suits. It is common ground, and the High Court has not
held to the contrary, that none of the specific entries I to
34 is applicable to the suit filed by the appellant Bank.
The argument is that the residuary Entry 35 would govern the
suit and, therefore, by reason of sections 207 and 256 of
the Act, the Revenue court alone could entertain it. Entry
35 is described in the Third Schedule as a “General” entry,
that is to say, not relatable to any particular section of
the Act. The description of the entry as “General” is given
in Column 2 of the Third Schedule which is headed “Section
of Act.” the third column of the Schedule carries the
heading “Description of suit, application or appeal”. Under
that column, the relevant description runs thus:
“Any other suit in respect of any matter arising under
this Act, not specifically provided for elsewhere in this
Schedule”.
788
We are unable to appreciate how the suit filed by the
Bank can fall under this “General” or residuary entry. The
suit of the Bank to recover the loan is not in respect of
any matter arising under the Act. The long title of the Act
shows that it was passed in order “to consolidate and amend
the law relating to tenancies of agricultural lands, and to
provide for certain measures of land reforms and matters
connected therewith”. A loan given by a Bank to an
agriculturist, which is in the nature of a commercial
transaction, is outside the contemplation, of the Act and
can, by no stretch of imagination be said to be in respect
of any matter arising under the Act.
The High Court has relied on section 43 of the Act in
order to come to the conclusion that the deed of mortgage
was executed by respondent 1 in favour of the Bank in
accordance with that section and, therefore, the suit for
the sale of the tenancy rights of the mortgagee by
enforcement of the mortgage is a suit in respect of a matter
arising under the Act. The High Court holds that such a suit
would attract the residuary entry since the matter to which
it relates has not been specifically provided for elsewhere
in the Third Schedule. With respect, we are unable to accept
this line of reasoning. Section 43 (1) of the Act, which is
relevant for this purpose, reads thus:
“43. Mortgage:-(1) Khateder tenant, or, with the
general or special permission of the State Government
or any officer authorised by it in this behalf, a Ghair
Khatedar tenant, may hypothecate or mortgage his
interest in the whole or part of his holding for the
purpose of obtaining loan from the State Government or
a Land Development Bank as defined in the Rajasthan Co-
operative Societies Act, 1965 (Act 13 of 1965) or a Co-
operative Society registered or deemed to be registered
as such under the said Act or any Scheduled Bank or any
other institution notified by the State Government in
that behalf”
The High Court is in error in saying that `it cannot
be disputed’ that the mortgage was executed by respondent 1
in pursuance of section 43. The business of the Bank, in so
far as lending transactions are concerned, is not to lend
moneys on mortgages but the business is to lend moneys. In
this particular case, the Bank lent a certain sum of money
to respondent 1 in the usual course of its commercial
business and nothing could be further removed from the
contemplation of the Act than such a transaction. It is only
by way of a collateral security that the Bank obtained a
hypothecation bond and
789
a deed of mortgage from respondent 1 find a letter of
guarantee from A respondents 2 and 3. The entire judgment of
the High Court is based on the assumption that the mortgage
was executed in pursuance of section 43 of the Act and,
therefore, residuary Entry 35 of the Third Schedule is
attracted. Once it is appreciated that the mortgage executed
by respondent I is outside the scope of the Act, the
reasoning of the High Court has to be rejected.
On the question of jurisdiction, one must always have
regard to the substance of the matter and not to the form of
the suit. If the matter is approached from that point of
view, it would be clear that primarily and basically, the
suit filed by the Bank is one for recovering the amount
which is due to it from the respondents on the basis of the
promissory note executed by respondent 1 and the guarantee
given by respondents 2 and 3. The relief sought by the Bank
is that the suit should be decreed for the repayment of the
amount due from the respondents. By the second prayer, the
Bank has asked that “in case of non-payment of the decretal
amount” the mortgaged property should be brought to sale and
if the proceeds of that sale are not enough to meet the
decretal liability, the other movable and immovable
properties of the respondents should be put at sale. The
suit is not one to enforce the mortgage and, even assuming
for the purpose of argument that it is, the mortgage not
having been executed under Section 43 of the Act, nor being
one relatable to `that section, the residuary Entry 35 can
have no application. If that entry is out of way, there is
no other provision in the Act, which would apply to the
instant suit. The civil court has therefore, jurisdiction to
entertain the suit filed by the appellant Bank.
For these reasons, we set aside the judgment of the
High Court and restore that of the District Court. The suit
shall be disposed of expeditiously. The appellant will be
entitled to its costs of this appeal from the respondents.
S. R. Appeal allowed.
790