PETITIONER: STATE OF RAJASTHAN Vs. RESPONDENT: MUKANCHAND AND OTHERS DATE OF JUDGMENT: 26/02/1964 BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. SHAH, J.C. AYYANGAR, N. RAJAGOPALA CITATION: 1964 AIR 1633 1964 SCR (6) 903 CITATOR INFO : RF 1970 SC 564 (78) F 1972 SC1053 (3,4) RF 1974 SC2009 (23) RF 1980 SC1789 (36) RF 1981 SC1744 (23) D 1985 SC 257 (12) RF 1986 SC1541 (9) RF 1988 SC1136 (10) R 1989 SC2105 (4) ACT: Jagirdar's Debt Reduction Act (Rajasthan Act 9 of 1937)- Mortgages decree against ex-Jagirdar-Whether executable-ss. 2(e) and 7(2) Validity of--Constitution of India, Art. 14. 904 HEADNOTE: Respondent No. 1 obtained a mortgage decree for Rs. 1,14,581/14/6 against one Rao Raja Inder Singh (the judgment debtor). The mortgage money was advanced under three mortgages, and the mortgaged properties consisted of Jagirs and some non-Jagir immovable property. The latter property was sold in execution and Rs. 33,750/- paid to the decree holder in partial satisfaction of the decree. Then the decree holder filed an execution petition in the Court of the District Judge for the balance amount i.e. Rs. 99,965/3/6, praying for attachment of the amount of compensation and rehabilitation grant which would be paid to the judgment debtor on account of resumption of his Jagir. The judgmment debtor submitted two applications in which he claimed relief under ss. 5 and 7 of the Rajasthan Jagirdars' Debt Reduction Act. The decree holder, in his reply, to those petitions urged that the provisions relied in were ultra vires the Constitution of India, being in contravention of Arts. 14, 19 and 31 of the Constitution. Thereafter the decree holder moved a petition under Art. 228 of the Constitution before the High Court, praying that the execution case pending in the Court of the District Judge, be withdrawn from that court to the High Court. The High Court transferred the case to its file. By its judgment the High Court could held that apart from the later part of s. 2(e) excluding certain debts and s. 7 (2) of the Act, the rest of the Act was valid. The High Court granted a certificate under Art. 133(1)(c) of the Constitution to the State of Rajasthan to file an appeal to this Court. Hence the appeal:- Held:-(i) That the impugned part of s. 2(e) infringes Art. 14 of the Constitution for the reason that no reasonable classification is disclosed for the purpose of sustaining the impugned part of s. 2(e). It is now well-settled that in order to pass the test of permissible classification, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentiation which distinguishes persons or things that are to be put together from others left out of the group, and (2) that the differential must have a rational relationship to the object sought to be achieved by the statute in question. The said condition No. 2 above has clearly not been satisfied in this case. The object sought to be achieved by the-impugned Act was to reduce the debts secured on the Jagir lands which had been resumed under the provisions of the Rajasthan Land Reforms and Resumption of Jagirs Act. The fact that the debts are owed to a Government or local authority or other bodies mentioned in the impugned part of s. (2) (e) has no rational relationship with the object sought to be achieved by the Act. Further, no intelligible principle underlies the exempted categories of debts. The reason why a debt advanced on behalf of a person by the Court of Wards is clubbed with a debt due to a State or a scheduled bank and why a debt due to a non- scheduled bank is not excluded from the purview of the Act is not discernible. Manna Lal v. Collector of Jhalwar. [1961] 2 S.C.R. 962, Nand Ram Chhotey Lai v. Kishore Raman Singh, A.I.R. (1962) All 521 and 905 Jamnalal Ramlal Kimtee v. Kishendas and State of Hyderabad, A.I.R. (1955) Hyd. 194, distinguished. (ii) Section 7(2) is valid as it imposes reasonable restrictions, in the interests of general public. on the rights of a secured creditor. This sub-section has been designed with the object of rehabilitating a Jagirdar whose Jagir properties have been taken over by the State for a public purpose at a low valuation. If this provision was not made, the Jagirdar would find it diffcult to start life afresh because his future income and acquired properties would be liable to attachment and sale for the purpose of satisfying the demands of such creditors. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 507 of 1961.
Appeal from the judgment and order dated February 18, 1959
of the Rajasthan High Court in Civil Misc. Case No. 10 of
1959.
S. K. Kapur and B. R. G. K. Achar, for the appellant.
The respondent did not appear.
February 26, 1964. The Judgment of the Court was delivered
by
SIKRI J.-This is an appeal directed against the judgment of
the Rajasthan High Court, which granted a certificate under
Art. 133(1)(c).
One Mukanchand, respondent No. 1 in this appeal (hereinafter
referred to as the decree-holder) obtained a mortgage decree
on February 12, 1954, for Rs. 1,14,581-14-6, with future
interest at 6 per cent per annum, against one Rao Raja Inder
Singh (hereinafter referred to as the judgment–debtor).
The mortgage money was advanced under three mortgages, and
the mortgaged properties consisted of 2 Jagirs and some non-
jagir immovable property. The latter property was sold in
execution and Rs. 33,750/- paid to the decree-holder in
partial satisfaction of the decree. On December 14, 1956,
the decree-holder filed an execution petition in the Court
of the District Judge, Jodhpur, for Rs. 99,965-3-6, praying
for attachment of the amount of compensation and rehabili-
tation grant which would be paid to the judgment debtor on
account of resumption of his jagir. This case was
registered
906
as Execution Case No. 12/57. On July 29, 1957, the judg-
ment-debtor made an application before the District Judge,
Jodhpur, to the effect that the decretal amount should be
reduced in accordance with s. 5 of the Rajasthan Jagirdars’
Debt Reduction Act (Rajasthan Act IX of 1957). On July 31,
1957, the judgment-debtor submitted another application
claiming that only half of his total jagir compensation and
rehabilitation grant money was liable to attachment under s.
7 of the said Act. The decree-holder, in his reply to those
petitions, urged that the provisions relied on were ultra
vires the Constitution of India being in contravention of
Arts. 14, 19 and 31 of the Constitution.
On December 3, 1957, the decree-holder filed a petition
under Art. 228 of the Constitution, praying that the
execution case No. 12 of 1957, pending in the Court of the
District Judge, Jodhpur, be withdrawn from that Court to the
Rajasthan High Court. The High Court transferred the case
to its file, and thereafter issued notice to the State of
Rajasthan, as the constitutionality of the said Act had been
challenged. By its judgment, the High Court held that apart
from the latter part of s. 2(e) excluding certain debts-
hereinafter referred to as the impugned part and s. 7(2) of
the Act, the rest of the Act was valid. The State applied
for leave to appeal to the Supreme Court, and so did the
decree-holder. On the certificates being granted, two
appeals were filed in this Court. The appeal of Mukhanchand
(Civil Appeal No. 508/61) was, by order dated April 23,
1962, of this Court, held to have abated. Therefore, we are
not concerned with the validity of the other provisions of
the Act.
Although the validity of the other provisions is not now in
question, it is necessary to set out the relevant provisions
of the Act, because they have a bearing on the question of
the validity of the impugned part of s. 2 (e) and s. 7 (2)
of the Act; and these are reproduced below:
“Preamble-To provide for the scaling down of
debts of jagirdars whose jagir lands have been
resumed under the provisions of the Rajasthan
Land Reforms and Resumption of Jagirs Act,
1952…..
907
S. 2(e)-“debt” means an advance in cash or
in kind and includes any transaction which is
in substance a debt but does not include an
advance as aforesaid made on or after the
first day of January. 1949 or a debt due to: –
(i) the Central Government or Government of
any State;
(ii) a local authority;
(iii) a scheduled bank;
(iv) a co-operative society; and
(v) a waqf, trust or endowment for a
charitable or religious purpose only; or
(vi) a person, where the debt was advanced on
his behalf by the Court of Wards…
S. 3. Reduction of secured debt at the time of
passing of decree.-(1) Nothwithstanding
anything in any law, agreement or document, in
any suit to which this Act applies relating to
a secured debt, the court shall, after the
amount due has been ascertained, but before
passing a decree, proceed as hereinafter
stated.
(2)(a) Where the mortgaged property consists
exclusively of jagir lands and such lands have
been resumed under the provisions of the Act,
the court shall first ascertain whether the
mortgagor had the right, under the jagir law
in force at the time the mortgage-deed was
executed, to mortgage the jagir lands, or
failing that, whether specific permission for
effecting the mortgage was obtained from the
competent authority, and whether the mortgage
was validly subsisting on the date of
resumption of the jagir lands.
(b) if the mortgage was legally and properly
made and was validly subsisting on the
aforesaid date, the court shall reduce the
amount due in accordance with the formula
given in Schedule 1.
908
(3) Where the mortgaged property consists
partly of jagir lands as aforesaid and partly
of property other than such lands, the court
shall after taking action in accordance with
the provisions of subclause (a) of sub-section
(2), proceed to distribute. the amount due on
the two properties separately in accordance
with the principles contained in section 82 of
the Transfer of Property Act, 1882 (IV of
1882) as if they had been properties belonging
separately to -two persons with separate: and
distinct rights of ownership; and after the
amount due has been so distributed, reduce the
amount due on the jagir lands in accordance
with the formula given in Schedule 1.
S. 4-Powers to reduce secured debt after
passing of decree.-
(1) Nothwithstanding anything in the Code of
Civil Procedure, 1908 (V of 1908) or any other
law, the court which passed a decree to which
this Act applies relating to a secured debt
shall, on the application either of the
decree-holder or judgment-debtor, proceed as
hereinafter stated.
(2) Where the mortgaged property charged
under the decree consists exclusively of jagir
lands and such lands have been resumed under
the provisions of the Act, the court shall
reduce the amount due in accordance with the
formula given in Schedule 1.
(3) Where the mortgaged property charged
under the decree consists partly of jagir
lands and partly of property other than jagir
lands, the court shall determine the amount
due on the first day of January, 1949,
and distribute the same on the two properties
separately in accordance with the principles
contained in section 82 of the Transfer of
Property Act, 1882 (IV of 1882), as if they
had been properties belonging to two persons
with separate and distinct rights of ownership
and after the
909
amount due as respect the jagir lands has been
so calculated. reduce it in accordance with
the formula given in Schedule 1.
S. 6-Satisfaction of the decree-after the
amount due has been reduced under and in
accordance with the provisions of section 4,
the decree shall, to the extent of the
reduction so effected, be deemed, for all
purposes and on all occasions, to have been
duly satisfied.
S. 7(2)-Notwithstanding anything in any
law, the reduced amount found in the case of a
mortgagor or judgment-debtor as the case may
be, under section 3 or section 4 as respects
mortgaged jagir lands shall not be legally
recoverable otherwise than out of the
compensation and rehabilitation grant payable
to such mortgagor or judgment debtor in
respect of such jagir lands.”
We may mention that respondent No. 1 has not entered
appearance in this Court. The learned counsel for the
State, Mr. S. K. Kapur, has urged that the High Court erred
in holding that these two provisions, i.e. impugned part of
s. 2(e) and s. 7(2), were void. Regarding the impugned part
of s. 2(e), he contended that the debts mentioned in sub-
cls. (i) to (vi) of s. 2(e) have been placed on a different
footing from debts due to other creditors, because the
bodies and the authorities mentioned therein serve a public
purpose or a public cause. He urged that this provided a
reasonable basis for differentiating between private
creditors and creditors mentioned in cls. (i) to (vi) above.
Regarding s. 7(2), he urged that it imposed reasonable
restrictions, in the interest of general public, on the
creditors.
Before examining the validity of the impugned provisions, it
is necessary to examine the scheme of the Act. As the
preamble states in plain terms, the object of the Act is to
scale down debts of Jagirdars whose jagir lands have been
resumed under the provisions of the Rajasthan Land Reforms
and Resumption of Jagirs Act. Clause (e) of s. 2 defines
‘debt’ to mean an advance in cash or in kind. The
definition ,does not embrace dues of Government or a local
authority
910
in respect of taxes, land revenue, etc. The definition then
excludes from the purview of the Act debts due to Central
Government and other authorities and bodies mentioned in the
clause. We shall advert to them later when discussing the
validity of this exclusion.
Section 3 provides for reduction of secured debts in
accordance with the formula given in Schedule 1 at the time
of passing a decree, and their apportionment where
necessary, between jagir and non-jagir property. Section 4
provides for reduction of secured debts after a decree has
been passed. Section 5 directs a court to pass a fresh
decree after reduction of the secured debts. Section 6
provides that after reduction of the secured debt in
accordance with the provisions of s. 4, the decree shall, to
the extent of the reduction so effected, be deemed for all
purposes and on all occasions to have been duly satisfied.
Clause (1) of s. 7 provides for the execution of the decree
against the compensation and rehabilitation grant payable in
respect of the jagir lands of the judgment-debtor. Clause
(2) of s. 7, which has been struck down by the High Court,
prohibits the recovery of the reduced amount with respect to
jagir property from any property other than the compensation
and rehabilitation grant payable to a jagirdar. The effect
of this provision is that the other properties of the
jagirdar, existing or which ‘he may acquire hereafter, are
immune from being proceeded against in execution or
otherwise.
We think that the High Court was right in holding that the
impugned part of s. 2(e) infringes Art. 14 of the Consti-
tution. It is now well-settled that in order to pass the
test of permissible classification, two conditions must be
fulfilled, namely, (1) that the classification must be
founded on an intelligible differentiation which
distinguishes persons or things that are to be put together
from others left out of the group, and (2) that the
differentia must have a rational relationship to the object
sought to be achieved by the statute in question. In our
opinion, condition No. 2 above has clearly not been
satisfied in this case. The object sought to be achieved by
the impugned Act was to reduce the debts secured on jagir
lands which had been resumed under the provisions of the
‘Rajasthan Land Reforms and Resumption of
911
Jagirs Act. The Jagirdar’s capacity to pay debts had been
reduced by the resumption of his lands and the object of the
Act was to ameliorate his condition. The fact that the
debts are owed to a government or local authority or other
bodies mentioned in the impugned part of s. 2(e) has no
rational relationship with the object sought to be achieved
by the Act. Further, no intelligible principle underlies
the exempted categories of debts. The reason why a debt
advanced on behalf of a person by the Court of Wards is
clubbed with a debt due to a State or a scheduled bank and
why a debt due to a non-scheduled bank is not excluded from
the purview of the Act is not discernible.
In this connection, Mr. Kapur has relied on the decision of
this Court in Manna Lal vs. Collector of Jhalwar (1). This
case is clearly distinguishable because there a law giving
special facility for the recovery of dues to a bank owned by
the Government was held not to offend Art. 14 of the Con-
stitution. It is clear that the government can be
legitimately put in a separate category for the purpose of
laying down the procedure for the recovery of its dues. Mr.
Kapur further relied on Nand Ram Chhotey Lal vs. Kishore
Raman Singh (2). The judgment of the High Court undoubtedly
supports him, but, with respect, we are unable to agree with
the ratio of the case. The High Court was concerned with.
the U.P. Zamindars Debt Reduction Act (U.P. Act XV of 1953),
which is substantially similar to the impugned Act The ratio
of the High Court is: “It appears to us that the legislature
had to make a distinction between debts due from the ex-
zamindars to private individuals and the debts due to
scheduled banks or to Government or semi-Government
authorities. The obvious reason appears to be that the
private money-lenders were considered to be a bane to rural
economy and perpetrating agricultural indebtedness. It was
to save the cultivators from such unscrupulous moneylenders
that such laws had to be enacted, the last in series being
the Zamindars Debt Reduction Act.” We consider there is no
force in these observations. No such reason is apparent
from the terms of the Act. Non-scheduled banks
(1) [1961] 2 S.C.R. 962.
(2) AIR (1962) All. 521.
912
and all other private creditors cannot be said to be a bane
to rural economy.
The third case relied on by Mr. Kapur-Jamnalal Ramlal Kimtee
v. Kishendas and State of Hyderabad(1) does not contain any
discussion. The High Court supported the exclusion on the
ground that “exclusion of certain class of debts under s. 3
of the impugned Act also is not without substantial
justification for public demands do not stand in the same
position as ordinary demands.” Apart from the fact that all
the exempted categories are not public demands, the High
Court does not seem to have considered whether the
differentia had any rational relationship sought to be
achieved by the Act.
In conclusion, agreeing with the High Court, we hold that no
reasonable classification is disclosed for the purpose of
sustaining the impugned part of s. 2(e).
Now, coming to the question of the validity of s. 7(2), we
consider that this sub-section is valid as it imposes
reasonable restrictions, in the interest of general public,
on the rights of a secured creditor. A secured creditor,
when he advanced money on the security of jagir property,
primarily looked to that property for the realisation of his
dues. Further, this sub-section has been designed with the
object of rehabilitating a jagirdar whose jagir properties
have been taken over by the State for a public purpose at a
low valuation. If this provision was not made, the jagirdar
would find it difficult to start life afresh and look to
other avocations, for not only his existing non-jagir
property but his future income and acquired properties would
be liable to attachment and sale for the purpose of
satisfying the demands of such secured creditors.
Accordingly, we hold that s. 7(2) imposes reasonable
restrictions in the interest of general public.
The appeal is accordingly partly accepted, the decision of
the High Court in regard to s. 2(e) is confirmed and that in
regard to s. 7(2) is reversed. As the respondent was not
represented and that appeal has only partly succeeded, we
order the parties to bear their own costs in this Court.
Appeal partly allowed.
(1)AIR-(1955) Hyd. 194.
913