CASE NO.: Appeal (civil) 13382-83 of 1996 PETITIONER: BHAVSINGH (DEAD) BY LRS. RESPONDENT: KESHAR SINGH AND ORS. DATE OF JUDGMENT: 10/09/2003 BENCH: M.B. SHAH & DR. AR. LAKSHMANAN JUDGMENT:
JUDGMENT
2003 Supp(3) SCR 607
The Judgment of the Court was delivered by
SHAH, J. : These appeals are filed against the judgment and order dated
11.9.1993 and order dated 21.3.1994 passed by the High Court of Madhya
Pradesh, Jabalpur Bench at Indore, in M.P. No. 274 of 1987 and in review
petition bearing MCC No. 550 of 1993. By the impugned judgment and orders,
the High Court allowed the writ petition filed by respondent No. 1
(deceased) and his son, respondent no. 2, namely, Narendra Kumar and set
aside the order dated 11.2.1986 passed by the competent authority – SDO
holding that the appellant was entitled for a declaration that the sale
transaction in question was prohibited transaction of loan as contemplated
under Section 2(0 of the Madhya Pradesh Samaj Ke Kamjor Vargon Ke Krishi-
Bhumi Dharakon Ka Udhar Dene Walon Ke Bhumi Hadapane Sambandhi Kuchakron Se
Paritran Tatha Mukti Adhiniyam, 1976 (M.P. Act No. 3 of 1977) (hereinafter
referred to so ‘the Act of 1977’) and was null and void under Section 7(2)
of the Act. The order for handing over possession of the land in question
admeasuring 9.71 acres situated in village Kanadia to the appellant Bhav
Singh son of Bheraji was also set aside.
The aforesaid order was passed on an application filed by the appellant
claiming relief under Section 5 of the Act of 1977 contending that the
transfer of the land by registered sale deed dated 20.7.1960 for a sum of
Rs. 2500 was a mortgage transaction as said transfer was for the loan
amount. R was his contention that at the time of said transaction, it was
agreed upon by the parties that whenever the appellant re-pays the amount
of Rs. 2500 possession of the land in question would be redelivered to the
appellant. It was his case that despite the fact that full amount had been
repaid, the respondent has not restored the possession of the land
mortgaged by him. That application was allowed by the S.D.O. by order dated
29th January 1982.
Being aggrieved by the said order, respondents preferred appeal before the
Collector, Indore, which was dismissed on 8th December, 1982. That order
was challenged by filing Misc. Petition No. 724 of 1982 before the High
Court of Madhya Pradesh at Indore. The High Court allowed the said petition
and set aside the order of the SDO and remanded the matter directing that
the case be disposed of on merits after holding fresh enquiry.
During the fresh enquiry, as stated in the order, witnesses were examined
on behalf of the parties and written arguments were also submitted before
the SDO. After considering the written submissions made by the parties and
appreciating the evidence which was led before him, the SDO rejected the
contention that the present proceedings were barred by the principles of
res-judicata on the ground that in the previous proceedings initiated by
the appellant under the provisions of the M.P. Anusuchit Jan Jati Rini
Sahayata Adhiniyam, 1967 (hereinafter referred to as ‘Debit Relief Act’),
it was held that the transfer deed was not a mortgage and was not covered
by the Debt Relief Act. The contention that application was time barred was
rejected taking into consideration relevant facts. No contention was raised
that proper opportunity of leading evidence or cross-examining the
witnesses was not given. SDO further held that there was a money lending
transaction between the appellant and deceased respondent and that the
aforesaid instrument was executed as a sale-deed but deceased – respondent
No. 1 had assured the appellant that after the amount of loan is repaid,
the land in question would be restored to him. He considered the evidence
on record indicating that the appellant was to repay a sum of Rs. 2000 on
account of the debt incurred by him from the respondent but because there
was emergent need, he further took a loan of Rs. 500. Thus, the appellant
owed a total sum of Rs. 2500, upon which the respondent was charging
interest @ 1.5% per month. He also arrived at the conclusion that the
market value of the land at the relevant time was much higher than Rs.
7000. Thereafter, the S.D.O. passed the impugned order holding that the
transaction was null and void under Section 7(2) of the Act of 1977. That
order was confirmed in appeal by the Additional Collector, Indore (MP) by
judgment and order dated 27th February, 1987. He also negatived the
contention that the proceedings were barred by the principles of res-
judicata as both the Acts are different. He also negatived the contention
that S.D.O. has not made proper enquiry and, therefore, the entire
proceedings were unconstitutional.
That judgment and order was challenged by filing the writ petition before
the High Court. The High Court arrived at the conclusion that previous
application filed by the appellant under the Debt Relief Act was decided
against the appellant and it was held that the transaction was of sale and
not of a mortgage. In such a situation, the principles of res-judicata
would be attracted otherwise there would be no finality in the matter and
the purchaser of the land would be subject to harassment all the time.
Learned counsel Mr. Jain appearing on behalf of the appellant submitted
that the aforesaid findings recorded by the High Court are, on the face of
it, illegal and erroneous. He pointed out that the amplitude of the
‘prohibited transaction’ under the Act is much wider than what is provided
under the Debt Relief Act. As against this, learned senior counsel Mr.
Gambhir submitted that the High Court rightly arrived at the conclusion
that the present proceedings are barred by the principles of res-judicata
in view of the previous decision whereby the application filed by the
appellant was rejected and it was held that the transaction between the
parties was not a mortgage but outright sale.
For appreciating the contention raised by the parties, we would first refer
to Preamble as well as Section 2(f) of the Act 1977, which are as under :
“An Act to better economic condition of holders of agricultural land in the
weaker sections of the people by providing further relief from agricultural
indebtedness by nullifying the land grabbing designs resorted to in many a
form by lenders of money while and after extending credit to them and
matters connected therewith.
Whereas a holder of agricultural land in the weaker sections of the people
is quite often compelled to seek loan from private money lending agencies
to meet his various obligations of urgent nature;
And whereas such private agencies seldom if ever advance loan to him
without security of land, his only wherewithal;
And whereas due to ignorance of niceties of law or urgency of financial
need or both, he falls an easy prey to them scarcely realizing the legal
consequences arising out of the documents which he executes or which they
get executed from him seemingly by way of security for the loan;
And whereas it is necessary to relieve the holders of agricultural land in
the weaker sections of the people from such exploitation by nullifying such
past transactions of loan as also to put a stop to such transactions”.
2. Definitions. – In this Act, unless the context otherwise requires, –
(f) “prohibited transaction of loan” means a transaction in which a lender
of money advances loan to a holder of agricultural land against security of
his interest in land, whether at the time of advancing the loan or at any
time thereafter during the currency of the loan in any of the following
modes, namely :
(i) agreement to sell land with or without delivery of possession;
(ii) outright sale of land with or without delevery of possession
accompanied by separate agreement to re-sell it;
(iii) outright sale of land with or without delivery of possession with a
distinct oral understanding that the sale shall not be acted upon if the
loan is re-paid;
(iv) outright sale of land with or without delivery of possesion with a
condition incorporated in the sale deed to re-sell it on re-payment of the
loan;
(v) transaction in any modes other than those specified in clauses (i) to
(iv) affecting interest in land including a fraudulent transaction or a
transaction designed to defeat the provisions of any law regulating money
lending or interest, for the time being in force, and includes all those
transactions in which a lender of money has, after the appointed day but on
or before the date of publication of this Act in the Gazette, obtained
possession of land of the holder of agricultural land through court or by
force or otherwise or obtained a decree for such possession towards
satisfaction of loan.”
From the aforequoted preamble of the Act, it is amply clear that the object
of the Act is to provide further relief to the weaker sections of the
people agriculturists from agricultural indebtedness by nullifying the land
grabbing designs resorted to by the money lenders while and after extending
credit to them. Section 2(f) defines the phrase “prohibited transaction of
loan” and inter alia declares that a transaction of outright sale of land
would also be covered by the phrase “prohibited transaction of loan” if
there was a distinct oral understanding that the sale shall not be acted
upon if the loan is repaid. Further, Section 6 provides for enquiry to be
carried out by Sub-Divisional Officer on an application which may be filed
by an holder of agricultural land who belongs to weaker section of the
people. Sub-section (4) of Section 6 provides that, in that enquiry, for
the purpose of ascertaining the true nature of transaction of loan, SDO
shall collect, as far as may be, information with respect to the following
facts, namely :
(i) the amount of principal money, (ii) the market value of the land at the time of transaction;
(iii) adequacy of the amount of principal money as consideration for sale
in the context of then market value under clause (ii);
(iv) whether the consideration shown in the document was paid in whole or
in part privately or before the Sub-Registrar.
(v) whether possession of the land was actually delivered to the lender of
money as per recitals in the said document. If not, when and in what manner
the lender of money obtained possession of the land;
(vi) what were the terms of the actual agreement between the lender of
money and the holder of agricultural land including the rate of interest;
(vii) the extent of urgency for the loan and the availability of other
sources to the holder of agricultural land to obtain the same;
(viii) payment, if any, made by the holder of agricultural land to the
lender of money towards the loan;
(ix) whether the lender of money is registered money lender or not;
(x) any other surrounding circumstances which the Sub-Divisional Officer
may deem fit to consider.
Thereafter, Section 7 inter alia provides that if after enquiry, the SDO is
satisfied that the transaction of loan in substance is a prohibited
transaction of loan, he shall declare such transaction to be void and pass
an order setting aside the transfer of land to the lender of money
consequently restoring the possession of land to the holder of the
agricultural land.
After following the aforesaid procedure, the authorities below arrived at
the conclusion that during currency of loan transaction, sale deed was
executed by the appellant in favour of respondent No. 2. The SDO also
arrived at the conclusion that there was a distinct oral understanding that
the sale shall not be acted upon if the loan is repaid. For this purpose,
SDO took into consideration that the appellant was indebted for a sum of
Rs. 2000/- and thereafter he took further loan of Rs. 500 and for the said
amount sale deed was executed. It is stated in the sale-deed that appellant
was agriculturist and the sale consideration was Rs. 2500 but it is not
mentioned that amount of Rs. 2500 was paid in cash. He arrived at the
conclusion that market value of the land at the relevant time was more than
Rs. 7000/-. Admittedly, the appellant belongs to Bagri community which is a
Schedule Tribe. He was entitled to get the benefit under the Act, if the
transfer was for the loan amount with distinct oral understandings as
stated above.
Therefore, it cannot be said that the order passed by the SDO which was
confirmed in apeal by the Additional Collector was, in any way, erroneous
on facts.
The next question would be – whether the present proceedings are barred by
principles of res-judicata presuming that principles of res-judicata are
applicable to such proceedings.
For appreciating this contention, it would be necessary to refer to the
relevant provisions of the Debt Relief Act, under which previous
application was filed for relieving the appellant from the debt incurred by
him. Under the said Act, definition of the debt is given under Section
2(4), which reads as under :
“2. In this Act, unless the context otherwise requires : (4) “Debt”
includes;
(i) all liabilities owing to a creditor in cash, or kind, secured or
unsecured, payable under a decree or order of a Civil Court or otherwise,
and subsisting on the appointed date whether due or not due;
(ii) arrears of wages or salary subsisting on the appointed date.”
Section 8 of Debt Relief Act provides for filing of an application by the
creditor and also the debtor. If the creditor has not filed his claim
application against the debtor, sub-section (4) of Section 8 provides that
debtor is discharged from his liability. Sub-section (3) empowers the
debtor also to apply to the Debt Relief Court. Section 14 provides that the
Court shall calculate the interest in accordance with the rate specified in
the First Schedule or such lower rate of interest as may have been agreed
between the parties. Section 14(4) also empowers the Debt Relief Court of
reduce the principal amount determined under sub-section (1) in accordance
with Second Schedule appended to the Act. Thereafter, the Act further
provides for preparation of a scheme of repayment of the debt.
Hence, it is apparent that the provisions of the Debt Relief Act and the
Act of 1977 operate in different fields. Debt Relief Act provides for
relief to the debtor, who belongs to Schedule Tribe by scaling down the
principal amount and the rate of interest as provided under the Schedule.
As against this, the Act of 1977 is of wider amplitude and even if there is
outright sale transaction by a debtor, it would be considered to be
prohibited transaction of ‘loan’ and that can be declared null and void
under the provisions of the Act. The Legislature has specifically stated in
the preamble that the Act was for providing further relief to the holders
of agricultural land from agricultural indebtedness by nullifying the land
grabbing designs resorted to by money lenders. Therefore, it provides not
only for nullifying of mortgage deeds but also outright sale of land if
conditions mentioned therein are satisfied.
Further, the relief which is required to be granted under the provisions of
the Act of 1977 is altogether different from the relief which is granted
under the Debt Relief Act. One provides for declaring the sale transaction
to be null and void while other provides only for scaling down the amount
of the debt and the interest. Therefore, even in the previous proceedings
if it is held that the transaction was not a mortgage but a sale, that
would not mean that in the present proceedings, the appellant can not prove
that the sale deed was executed for the loan amount with a specific
understanding that on refund of the amount, property was to be redelivered
to the transferor. In this view of the matter, even though in a previous
proceeding there was a specific finding that the deed was not a mortgage
deed (which is a fact), the present proceeding would not be barred by the
principles of res-judicata. The cause of action and reliefs in the first
and second proceedings are altogether different. This is also provided
under Section 3 of the Act of 1977 by giving over-riding effect to the
provisions of the Act. It inter alia provides that the provisions of the
Act and the Rules made thereunder shall have effect notwithstanding
anything inconsistent therewith contained in any other law for the time
being in force.
The learned counsel for the respondent submitted that enquiry held by the
SDO was defective. In our view, no such contention was raised before the
Additional Collector who heard the appeal. In any set of circumstances,
from the written submissions which are reproduced in the judgment and order
passed by the SDO, no such contention is appeared to have been taken.
Hence, this contention is without any substance.
Learned counsel for the respondents lastly submitted that these appeals
abate as the appellant has not brought on record all the heirs of the
deceased respondent no. 1 as party-respondents. In the present case, it is
admitted fact that the sale-deed were executed in favour of respondent No.
2. who is the son of deceased respondent No 1. The sale transaction was
between the appellant and respondent No. 2. No doubt, it was for a loan
given by respondent No. 1 but the question involved in this proceeding is
for declaration of sale deed executed in favour of respondent No. 2 to be
null and void and that can be granted even without bringing on record the
other heirs of respondent No. 1. In the alternative, from the facts of the
present case, it has been rightly pointed out by the learned counsel for
the appellant that the estate is fully represented by respondent No. 2.
Hence, there is no question of abatement of appeal. In this view of the
matter, we have thought it fit not to issue notice to remaining legal heirs
of respondent No. 1 on an application filed by the appellant.
In the result, the appeals are allowed. The impugned judgments and orders
passed by the High Court are set aside and quashed. The judgment and order
passed by the SDO is restored. There shall be no order as to costs.