JUDGMENT
Mehar Singh, J.
(1) This is an appeal by the Punjab Medical Education and Relief Society, with registered office at Jullundur, appellant, from the judgment, dated 9-1-1956, of a learned Single Judge of this Court, under Clause 10 of the Letters Patent, by which judgment the learned Single Judge reversed the order, dated 1-12-1954, of the Tribunal under the provisions of the Displaced Persons (Debts Adjustment) Act, 1951, (Act No. LXX of 1951), dismissing the application of the Punjab National Bank Limited, the respondent, under S. 16 of the Act on the ground that no such application is competent under that provision on behalf of or by the respondent.
(2) The appellant was a registered society at Lahore before the petition of the country. It had mortgaged its immovable property to the respondent for something like Rs. 2,41,000/-. The respondent sought by an application under S. 16 of the Act, determining of its mortgage debt due form the appellant and for it, after determination, being treated as a first charge upon the compensation payable to the appellant under the Act. The application was opposed by the appellant on the ground that no such application is competent on behalf of the respondent, it not being a displaced person with in the meaning and scope of the Act; and it is this position taken on behalf of the Appellant that was accepted by the Tribunal, but on appeal the learned Single Judge did not agree with the Tribunal and reversed its order.
(3) It is admitted on both sides that within the meaning and scope of the expression ‘displaced person’ as defined in S. 2(10) of the Act, the respondent is not such a person. In Clause (8) of S. 2 of the Act the expression ‘displaced creditor’ is defined to mean a displaced person to whom a debt is due from any other person, whether a displaced person or not. In Clause (10) of the same section the definition of ‘displaced person’ is given and it is not denied by anybody that the appellant is such a person. It is further an accepted position that the respondent is not a displaced creditor. In Chapter II of the Act, S. 5 deals with an application by a displaced debtor for adjustment of his debts.
The section contains details provisions about what are to be contents of such an application and one of the particulars required (S. 5(2)(e)(i)) is a schedule containing full particulars of all debts of the displaced debtor, whether owing jointly or individually, with the names and addresses of his creditors and joint debtors. Section 6 empowers the Tribunal to dismiss the application under S. 5 for non-compliance with the requirements of that section. Section 7 provides for the issue of notice of the application to the respondents and S. 8 concerns the objections of the respondents by filing their written statements.
Sub-section (1) of S. 9 provides that “if there is a dispute as to whether the applicant is a displaced person or not or as to the existence or the amount of the debt due to any creditor or the assets of any displaced debtor, the Tribunal shall decide the matter after taking such evidence as may be adduced by all the parties concerned and shall pass such decree in relation thereto as it thinks fit”. Sub-section (2) of this section merely deals with the situation if the respondent or respondents do not appear. Section 10 provide for a claim by a displaced persons against a displaced debtor, in other words it provides for a claim by a creditor, who is a displaced person, against a displaced debtor.
Section 11 relates to procedure upon an application under the preceding S. 10, but sub-s. (1) of this section provides that, on service of notice of the application under S. 10 upon him the displaced debtor can make an application on his own behalf under S. 5, and when he does that, it will be treated as an application under S. 5, and all other provisions of the Act are made applicable to that application accordingly. So far the provisions are that an application may be moved by a displaced debtor (S. 5) or by displaced creditor (S. 10), but no reference is made to any application by any other creditor, though reference to the word ‘creditor’ finds place in Ss. 5 and 9(1). But no provision so far has been made for an independent application by a creditor, who is not a displaced person. Then sub-section (1) of S. 12 says:
“Any creditor of a displaced debtor may make an application to the Tribunal stating that the displaced debtor, who has made an application under S. 5 or sub-section (2) of S. 11, has concealed any part of his assets, and the Tribunal shall, after giving due notice thereof to the displaced debtor, determine the matter.”
Sub-section (2) of this section concerns the decision to be made by the Tribunal in that connection. It is to be noted that even under sub-section (1) of S. 12 a creditor of a displaced debtor has no right to move an independent application, in other words an application on his own unconnected with any proceedings under the Act. He can only make an application under that provision if a displaced debtor’s application under S. 5 or under sub-s. (2) of S. 11 is pending before the Tribunal, but not otherwise.
He joins in, in the proceedings pending before the Tribunal, but he has no right to initiate proceedings under sub-section (1) of S. 12. Section 13 deals with the claim of a displaced creditor against a person who is not a displaced debtor. Section 14 deals with procedure concerning an application under the preceding S. 13. Section 15 provides for consequences of an application by a displaced debtor under S. 5 of sub-section (2) of S. 11. So far there is no provision in any of the sections from S. 5 to S. 15, in Chapter II, under the heading ‘debt adjustment proceedings’, which gives right to a creditor, other than a displaced creditor, to originate proceedings under any of those sections. Then comes S. 16 and sub-section (1) and (2) of that section are:
“Section 16(1). Where a debt incurred by a displaced person is secured by a mortgage, charge or lien on the immovable property belonging to him in West Pakistan, the Tribunal may, for the purpose of any proceeding under this Act, require the creditor to elect to retain the security or to be treated as an unsecured creditor.
(2) If the creditor elects to retain the security he may apply to the Tribunal, having jurisdiction in this behalf as provided in S. 10, for a declaration of the amount due under his debt.”
Sub-sections (3) and (4) of S. 16 deal with the rights of the creditor, who has made election to retain his security, in regard to property referred to in sub-section (1), and provide in detail how his rights are to be adjusted and safeguarded. Sub-section (5) of the same says that “where a creditor elects to be treated as an unsecured creditor, in relation to the debt, the provisions of this Act shall apply accordingly”. After referring to sub-section (1), (2) and (3) of S. 16 the learned Single Judge said that “in my judgment the Tribunal has erred in holding that the Bank has no locus standi to apply under Ss. 16 (2) and (3) of the Act”, and no other reason is to be found in support of the conclusion arrived at by the learned Single Judge.
This judgment of the learned Single Judge was followed by Gurnam Singh J. in Punjab National Bank Ltd. v. Sardari Lall Kochhar, F. A. F. O. No. 115 of 1955, D/- 27-3-1957, and in that case the learned Judge has gone into the matter in a little more detail. The consideration that prevailed with him to concur with the previous option of Harnam Singh J. was that the word ‘creditor’ as used in sub-secs. (2) and (3) of S. 16 is unqualified and consequently any creditor can take advantage of the provisions of S. 16. This case has been relied upon by the learned counsel for the respondent to support the position that he has taken on behalf of the respondent.
(4) It is immediately clear on reading sub-sec (1) of S. 16 that the power of the Tribunal to require the creditor to make election under that sub-section is only for the purposes of any proceedings under the Act; in other words, if no proceeding sunder the Act are before the Tribunal, under sub-section (1) of S. 16 the Tribunal cannot require a creditor to make election as referred to in that sub-section. Sub-section (2) of S. 16 enables a creditor to apply, after he has made election to retain the security, for a declaration of the amount due under his debt by the Tribunal.
The learned counsel for the respondent urges that the provision in sub-section (2) stands out independently and gives a right to a creditor, even other than a displaced creditor, to originate proceedings before the Tribunal under this sub-section. He has had to argue that such a creditor can make election of the type referred to in sub-secs. (1) and (2) of S. 16 before coming to the Tribunal and having done so, he can make an application for declaration of the amount due under his debt under sub-section (2) of that section.
In taking this approach to the case the learned counsel does not seem to have kept in view sub-section (5) of S. 16 because if such a creditor makes such election not in any proceedings already pending under the Act before the Tribunal but outside, it is not clear how such election by him is to be treated as if he was an unsecured creditor, in relation to his debt, and the provisions of the Act are to apply to him accordingly. The position of an unsecured creditor, other than a displaced creditor, is to be considered by the Tribunal in applications by a displaced debtor under S. 5 and sub-section (2) of S. 11 and such a creditor has no other means of brining his case before the Tribunal under any provision of the Act.
The only meaning of sub-section (5) of S. 16 is that the election by the creditor is made in proceedings before the Tribunal under the provisions of the Act and when he has made election to retain his security, then to him apply sub-secs. (2) and (3), and possibly (4) having regard to the circumstances of the case, but if he has elected to be treated as an unsecured creditor, then in relation to his debt the provisions of the Act apply as taking his debt to be unsecured. If, as pointed out, he can make an election as urged by the learned counsel for the respondent outside and is not compelled to do so in the presence of the Tribunal in proceedings under the Act, sub-section (5) of S. 16, to my mind, becomes meaningless and redundant.
The learned counsel for the respondent then says that the right of a creditor, other than a displaced creditor, under sub-section (2) of S. 16 is, after election to retain his security, to obtain a declaration of the amount due under his debt so that he may have benefit of the provisions of sub-section (3) of the same section. He contends that since he is to have a declaration as referred to in sub-section (2), it follows that he has been given a right to originate proceedings under that sub-section.
But then similar determination of a debt of a creditor due from a displaced person is made under sub-section (1) of S. 9 and sub-section (1) of S. 12, in circumstances referred to in those provisions, and yet such determination of the debt due to the creditor is not inferential of a right having been given to a creditor, other than a displaced creditor, to originate proceedings under those provisions before the Tribunal for such determination, because it is clear form those provisions that such determination is made when the question arises upon an application by a displaced debtor under S. 5 or sub-section (2) of S. 11. So that the mere fact that the Tribunal has to make a declaration or determination about the amount due to the creditor under his debt does not provide reason to conclude that an independent right has been given to a creditor, other than a displaced creditor, to originate proceedings by an application under sub-section (2) of S. 16.
The learned counsel for the respondent then refers to the expression ‘may apply’ as used in sub-section (2) of S. 16 and urges that a creditor, other than a displaced creditor, has been given a right to make an application under that provision, but that, in itself, does not lead to the conclusion that the application under sub-section (2) of S. 16 is of an originating nature. An analogy is available in sub-section (1) of S. 12 in which such a creditor has been given right expressly to make an application in the circumstances referred to in the sub-section and yet it still is not an originating application but is an application in pending proceedings under S. 5 or sub-section (2) of S. 11 before the Tribunal.
As I read sub-secs. (1) and (2) of S. 16, the only way to make a coherent and consistent reading of those provisions is that both sub-sections concern steps taken before the Tribunal by a creditor for the purposes of proceedings under the Act. The same is the effect of sub-section (5) of S. 16 as has been pointed out. Sub-section (1) of S. 16, empowers the Tribunal to require a creditor, when the proceedings are before it, for the purpose of the Act, to make election whether to retain his security or to be treated as an unsecured creditor.
When he has made election, there still remains the question of the determination of the amount due under his secured debt and for that purpose he has been given a right to make an application under sub-section (2) of S. 16 for a declaration of the amount due under his debt. If his election is to be treated as an unsecured creditor, then under sub-section (5) of S. 16 he is left to be treated as such under the provisions of the Act. Both sub-sections, to my mind, apply to only proceedings pending for the purposes of the Act and any steps under those sub-sections can only be taken in such proceedings.
It has been pointed out that in no section from S. 5 to S. 15 any provision is made to give a right of originating application to a creditor, other than a displaced creditor, and, as pointed out, no such right is given to such a creditor in any part of S. 16 either. In Chapter II there is no section thereafter in which any such right has been given to a creditor, other than a displaced creditor, to make an originating application; in fact, there is no such provision in any part of the Act to which the learned counsel for the respondent has been able to make reference.
(5) The learned counsel for the respondent refers to the fact that in some sections, such as S. 13 and sub-section (2) of S.33, the Legislature has expressly referred to the expression ‘displaced creditor’, whereas in other parts of the Act it has used the word ‘creditor’, and therefore, the use of the word ‘creditor’ in the Act, whenever it occurs, relates to any and every creditor, whether a displaced creditor or not, and I agree with this, but it is not clear how this helps the case of the respondent because, as already made clear, a displaced debtor can bring in any creditor in litigation under the Act before the Tribunal and in certain cases in proceedings initiated before the Tribunal by persons entitled to do so under the Act, a creditor, other than a displaced creditor, has been allowed to seek certain kind of redress.
It was, therefore, necessary of the Legislature, in the circumstances, to use these two expressions as it has done, but that does not help the case of the respondent. The learned counsel for the respondent then refers to sub-section (1) of S. 52 of the Act and points out that under that sub-section it is the duty of the Tribunal to communicate to the prescribed authority the amount of the prior charge declared under sub-section (3) of Section 16, among other matters, and they follow provisions in that section for the scaling down of the debt.
The learned counsel presses that this means that a creditor can obtain a declaration under sub-section (3) of S. 16 in his own right in originating proceedings, but it is difficult to see how this conclusion is available from sub-section (1) of S. 52, because that sub-section will apply equally and effectively when such a declaration is made under sub-section (3) of S. 16 in consequence of proceedings pending before the Tribunal for the purposes of the Act as referred to in sub-section (1) of S. 16. When such a declaration is made in such proceedings, it then becomes the duty of the Tribunal to deal with it as provided in sub-section (1) of S. 52. Reference to this sub-section is not helpful to the case of the respondent in the least.
(6) The consideration of the provisions of the Act, already referred to, leads to the conclusion that sub-secs. (1) and (2) of S. 16 have reference to proceedings pending before the Tribunal for the purposes of the Act and it is only when such proceedings are pending that a creditor, other than a displaced creditor, can make an application according to sub-secs. (2) and (3) of that section and no independent right has been given to such a creditor to originate proceedings either under sub-section (2) or sub-section (3) of S. 16. Similar view has been expressed by Falshaw J. in. In the matter of Indian Companies Act and of the Punjab National Bank Ltd., case No. 5 in Civil Original No. 88 of 1954, D/- 15-4-1955, and with reference to S. 16 the learned Judge says:
“Admittedly this section refers only to proceedings before a Tribunal constituted under the Act, either initiated by the debtor under S. 5 of the Act for the adjustment of his debts or by a creditor under S. 10 of the Act.”
It will be seen that the creditor under S. 10 of the Act is a displaced person and not any other creditor like the respondent in this case. In the view taken in this case this appeal succeeds with the result that the judgment of the learned Single Judge is reversed and the order, dated 1-12-1954, of the Tribunal, under the Act, at Jullundur, is restored. In the circumstances of the case, however, the parties are left to their own costs in this appeal.
Bhandari, C.J.
(7) I agree.
(8) Appeal allowed.
