Velappa Pillai v. Govinda Pillai — 1965 DIGILAW 291 (KER)

JUDGMENT C. A. Vaidialingam, J. 1. In this appeal on behalf of the second defendant Judgment debter appellant, Mr. N. Govindan Nair, learned counsel challenges the order of the learned District Judge, Trivandrum dismissing an application filed by the appellant claming relief in respect of the decree in question under Kerala Act 31/1958. 2. The appellant had executed a sale deed and there is no controversy that in respect of the unpaid portion of the purchase money there was a hypothecation executed on 14-12-1119. The respondent obtained a decree on the basis of the hypothecation bond in O. S. 63/1123. 3. The appellant filed C.M.P. 2277/60 claiming relief under Kerala Act 31/58. Objection was taken by the decree holder to the claim made by the appellant, on the ground that the debt in question does not come within the purview of Act 31/58 in as much as it represents the balance of sale consideration payable by the appellant. 4. It will be seen that the decree holder relied upon the provisions contained in sub clause (vii) to S.2(c) which comes under the excepted category of debts from the purview of the Act. The claim of the respondent appears to have been that inasmuch as the liability under the hypothecation bond is one for which a charge is provided under sub clause (b) of clause (4) of S.55 of the Transfer of Property Act of 1882 the debt covered by the decree in question comes within the excepted category of debt as provided for in S.2(c)(vii) of the Act. Therefore the respondent prayed for the dismissal of the application filed by the appellant. 5. The learned District Judge is of the view that because of the Division Bench decision of this Court reported in Amarnatha Menon v. Malathi Amma ( 1960 KLT 10 ) the contentions of the decree holder will have to be accepted and accordingly the learned District Judge held that the liability in question comes within the excluded category of debts under S.2(c)(vii) of the Act. Therefore the learned District Judge held that the application filed by the appellant for relief under the Act is not maintainable and in consequence dismissed the same. 6. The order of dismissal passed by the learned District Judge is under attack by Mr. N. Govindan Nair, learned counsel for the appellant. Therefore the learned District Judge held that the application filed by the appellant for relief under the Act is not maintainable and in consequence dismissed the same. 6. The order of dismissal passed by the learned District Judge is under attack by Mr. N. Govindan Nair, learned counsel for the appellant. The learned counsel in turn pointed out that the decision relied upon by the learned District Judge does not apply and that on the other hand a later decision rendered by a Division Bench of this Court which is reported in Kunjukunju v. Ambujakshan ( 1962 KLT 254 ) applies. Based upon that decision the learned counsel pointed out that on the date when the sale deed was executed and when the hypothecation bond for the unpaid purchase money was executed the Transfer of Property Act of 1882 was not in force in the Travancore area and therefore the decree holder cannot contest the claim made by the appellant for relief under Act 31/58. 7. Mr. S. Nilakanta Iyer, learned counsel for the plaintiff respondent pointed out that the decision relied upon by the learned Judge in the order under attack directly lays down that under such circumstances the debt comes within the excepted category as provided for in S.2(c)(vii) of the Act. Even in the later decision reported in Kunjukunju v. Ambujakshan ( 1962 KLT 254 ) the learned Judges have accepted the position that if a debt comes under the category of liabilities referred to in S.2(c)(vii) that will come under the excepted category. Alternatively the learned counsel urged that certain observations contained in the later Division Bench judgment are too wide and those observations were not necessary for considering the point that directly arose for decision at the hands of the learned Judges. In fact, the learned counsel pointed out that in the earlier part of the judgment the learned Judges have approved of the decision of the Madras High Court as well as the decision in Amarnatha Menon v. Malathi Amma ( 1960 KLT 10 ) and therefore this contention of the appellant that the debt in question does not come under S.2(c)(vii) should not be accepted by this Court. 8. I have already mentioned the nature of the liability in respect of which the hypothecation bond was executed and the decree obtained on the same. 8. I have already mentioned the nature of the liability in respect of which the hypothecation bond was executed and the decree obtained on the same. In this connection one further aspect that is referred to by Mr. S. Nilakanta Iyer may be adverted to. That was to the effect that in Travancore area at the material time the common law recognised an unpaid vendor's lien. But in this case the parties themselves have chosen to give effect to the common law doctrine of the unpaid vendor's lien, by executing a hypothecation, which represented no doubt the unpaid purchase money. Therefore the learned counsel pointed out that that is a very vital distinction which has to be kept in view in considering as to whether the liability in question is not a liability which comes under S.2(c)(vii) of the Act. 9. S.2(c) of the Act defines the expression "debt" but there are as many as 11 clauses to the said definition which deals with, what 1 may call the exempted category of debts. That is, if a liability or a debt comes within any of those exempted categories, they are taken away from the purview of the statute. In particular, sub clause (vii) of S.2(c) refers to "any liability for which a charge is provided under sub clause (b) of clause (4) of S.55 of the Transfer of Property Act; 1882". Going by the wording of the sub clause referred to above it may probably be argued that if the particular liability which is sought to be enforced is of the category of the liability dealt with under S.2(c)(vii) the debt is taken out of the purview of the Act. 10. But that provision has been interpreted by this Court in both the decisions referred to in the earlier part of this judgment. I have already stated that the lower court has relied upon the decision of Mr. Justice M. S. Menon as he then was and Mr. Justice T. K. Joseph reported in Amarnath Menon v. Malathi Amma ( 1960 KLT 10 ). There the learned Judges had to consider the question as to whether the debtor whose liability was in respect of the unpaid vendor's lien was entitled to relief under Act 31/58. Justice M. S. Menon as he then was and Mr. Justice T. K. Joseph reported in Amarnath Menon v. Malathi Amma ( 1960 KLT 10 ). There the learned Judges had to consider the question as to whether the debtor whose liability was in respect of the unpaid vendor's lien was entitled to relief under Act 31/58. It is seen that the matter appears to have arisen from the Palghat area, which formed part of the original Madras area viz., Malabar, there can be no controversy that the Transfer of Property Act has been in force ever since it was passed. In that case it will be seen that a decree was passed for the balance of consideration under a sale deed executed by the decree holder in favour of the judgment debtor and therefore in consequence the question arose whether the liability under the decree can be scaled down under Act 31/58. In that connection the learned Judges consider the provisions contained in S.2(c)(vii) of the Act and they also take note of the fact that the liability is one in respect of which a charge is created by the sale under the Transfer of Property Act and ultimately the learned Judges hold that the liability in question stands excluded from the purview of debt under S.2(c)(vii) of the Act. 11. It will be seen that inasmuch as the proceedings arose from the Malabar area, wherein the Transfer of Property Act was in force, the learned Judges had no occasion to consider as to whether at the time the liability is incurred the provisions of the T. P. Act should have been in force or not. It is this decision that has no doubt been relied upon by the learned Judge for rejecting the application filed by the appellant. If this decision directly applies, there can be no controversy that the order of the learned Judge will have to be sustained. 12. But the contention of the learned counsel for the appellant is that in the later decision the learned Judges have held in a case coming from a non Malabar area that the provisions of S.2(c)(vii) will not apply till the date when the T. P. Act was made applicable to those areas. 13. In the decision reported in Kunjukunju v. Ambujakshan ( 1962 KLT 254 ) decided by the learned Chief Justice and Mr. 13. In the decision reported in Kunjukunju v. Ambujakshan ( 1962 KLT 254 ) decided by the learned Chief Justice and Mr. Justice P. Govindan Nair, the learned Judges had to consider a claim made by the party in those proceedings coming from the Travancore area as to whether the liability in question stands excluded under S.2(c)(vii) of the Act. No doubt the matter came before the learned Judges against an order passed by the Munsif's Court, Kottarakkara setting aside a sale under S.22(1)(ii)(b) of Act 31/58. The contention that was taken before the learned Judges was that such an application filed by the debtor was not maintainable because the debt in question was covered by S.2(c)(vii) of the Act. 14. The learned Chief Justice, delivering judgment on behalf of the Bench, has quoted with approval the observations of the Madras High Court in Varadaraja Perumal v. Palanimuthu (AIR 1941 Madras 118) dealing with analogous provisions contained in the Madras Agriculturists Relief Act 1938. The particular observations made by the Madras High Court which has found approval at the hands of the learned Judges of this Court was to the effect that the exclusion of liabilities of the categories of debts was not to depend on the actual subsistence of the charge but on the question whether in the beginning the liability was one belonging to that category in respect of which the Transfer of Property Act provided a charge. 15. There can be no controversy that the Madras. High Court would have had no occasion to consider ordinarily a case of an unpaid vendor's lien in respect of which a charge is not created under S.55(4)(b) of the T. P. Act because that Act was in force right from 1882. The learned Chief Justice also quotes with approval the decision in Amarnatha Menon v. Malathi Amma ( 1960 KLT 10 ) which related to a proceeding originating from the Malabar area where the T. P. Act was in force. Later on the learned Chief Justice adverts to a decision of Mr. Justice T. C. Raghavan reported in Pathrose v. Bhanu (1961 KLT 373). Certain observations from the learned Judge's judgment are quoted by the learned Chief Justice. The only part of the observations that is to be noted is. "................ Later on the learned Chief Justice adverts to a decision of Mr. Justice T. C. Raghavan reported in Pathrose v. Bhanu (1961 KLT 373). Certain observations from the learned Judge's judgment are quoted by the learned Chief Justice. The only part of the observations that is to be noted is. "................ the fact whether at the date of the sale the Transfer of Property Act applied to the sale or not is of no consequence." The learned Chief Justice, referring to this particular observation, emphatically expresses the disagreement of the Bench; and while recognising that what is material is the category of the liability, and not the subsistence of the charge, clearly states at page 257 of the reports that in order to come under the category of debts excluded the liability must be a liability for which a charge is provided under S.55(4)(b) of the T. P. Act 1882. But the more important principle laid down by the learned Chief Justice is, that it should be axiomatic that in order to provide a charge under the provision of the Transfer of Property Act referred by them that provision must have been in force on the date of the sale. Inasmuch as the matter originated from the Travancore area the learned Judge later on say that in the matters on hand before them the T. P. Act 1882 at the material time was not in force and therefore though the liability in that case is in respect of the unpaid purchase money it is not a liability which is excluded from the definition of the expression "debt" under S.2(c)(vii) of the Act. 16. That the learned Judges were fully conscious of the repurcusion, the principle laid down in cases arising from the Travancore - Cochin area, may have, is clearly borne out from the observations of the learned Chief Justice to the following effect: "We are aware that our interpretation will exclude from S.2(c)(vii) of Act XXXI of 1958 the vendor's lien that obtained in Travancore till 1-4-1951, the vendor's lien that obtained in Cochin till 1-1-1112, and the statutory charge under S.56(4)(b) of the Cochin Transfer of Property Act, XVII of 1111, which obtained from 1-1-1112 till 1 4 1951. But that is inevitable in the light of the wording employed by the Legislature." From the above "extract, it will be seen that by the learned Judge's holding that in order to attract the exemption provided under S.2(c)(vii) of the Act, the T. P. Act must have been in force the learned Judges held in effect that the creditors in the Travancore area till 1-4-51 and the Cochin area till 1-4-51 will not get the benefit of S.2(c)(vii) of the Act. The learned Judges also categorically state that such a conclusion is inevitable because of the clear wording of the statute. 17. Mr. S. Nilakanta Iyer no doubt pointed out that the observations of the learned Judges referred to above in Kunjukunju v. Ambujakshan ( 1962 KLT 254 ) were not necessary for the purpose of deciding the correctness or otherwise of an order passed by the Trial Court setting aside a sale under S.22 of the Act. It is not possible for me to accept this contention of the learned counsel because unless the liability was a debt the debtor was net entitled to file an application under S.22 of the Act. It was specifically on the ground that the liability stands excluded by S.2(c)(vii) that the decree holder contested the claim of the debtor and quite naturally the learned Judges had to consider whether S.2(c)(vii) will apply in respect of areas where the T. P. Act was not in force at the material time. Therefore the contention of the learned counsel for the respondent that even though this case comes from the Travancore area the common law of Travancore recognised the unpaid vendor's lien and the further contention that in this case a hypothecation bond was executed giving effect to that common law doctrine cannot assist the learned counsel for the respondent in view of the definite decision rendered by this Court in Kunjukunju v. Ambujakshan ( 1962 KLT 254 ). Therefore it follows that the debt in this case is not excluded under S.2(c)(vii) of the Act and therefore the claim of the petitioner to obtain relief under Act 31/1958 will have to be adjudicated upon by the lower court. 18. The order under attack in consequence is set aside and C. M. P. 2277 of 1960 remanded for fresh consideration regarding the nature of relief that the appellant is entitled to under Act 31/58. 18. The order under attack in consequence is set aside and C. M. P. 2277 of 1960 remanded for fresh consideration regarding the nature of relief that the appellant is entitled to under Act 31/58. It is open to the decree holder to raise any other objections that may be available to him excepting the one that has now been decided by this Court. The appeal is allowed in consequence and parties will bear their own Costs.