Arumugha Nadar v. Kumara Pillai — 1980 DIGILAW 459 (MAD)

ORDER:— This appeal is directed against the order in I.A No, 111 of 1976 in O. S. No. 60 of 1972 on the file of the Sub-Court, Nagercoil, scaling down the decree amount from Rs. 19,158.75 to Rs. 11,493 42 at the instance of the first defendant on the ground that he is an agriculturist entitled to the benefit of Act IV of 1938 as amended by Act VIII of 1973. The plaintiff-decreeholder has filed this appeal questioning the correctness of the findings of the Court below that the first defendant-respondent is an agriculturist. 2. On 7th May, 1960, one Adikesavaperumal executed a hypothecation bond for Rs. 12,500 in favour of one Ponnammal. On 30th October, 1962, the mortgagor, Adikesavaperumal expired leaving Kumara Pillai, the first defendant as his sole heir. As the said first defendant was a lunatic, the Official Receiver, Nagercoil, was appointed as the guardian of his property and one Kesava Piliai was appointed as his personal guardian in O.P. No. 73 of 1962 The Official Receiver realised some income from the properties of the first defendant and paid in all on various dates between 4th August, 1969 and 23rd December, 1971, Rs. 2,210. The mortgagee, Ponnammal assigned the mortgage on 5th April, 1972 In favour of the plaintiff Arumugha Nadar who had filed the suit O S. No. 60 of 1972 on 22nd April, 1972, against the first defendant represented by the Official Receiver On 12th February, 1974, a compromise decree was passed for Rs 19,158 75. On 30th November, 1975. the personal guardian of the first defendant Kesava Pillai had filed I. A. No. 113 of 19 6 for scaling down the decree on the ground that the judgment-debtor is an agriculturist. 2. The decree holder resisted the said application for scaling down the debt on the ground that the original mortgagor Adikesavaperumal was assessable to agricultural income-tax and income tax, as such the first defendant was not entitled to the benefits of Act IV of 1938 as amended by Act VIII of 1973, that the first defendant not having claimed the benefit of the said Act even before the passing of the decree, is not entitled to claim the benefit subsequent to the passing of the decree and that the first defendant who is the son of the debtor cannot claim the benefit of the Act. 3. 3. The Court below held that as the plaintiff has not produced any certificate from the Agricultural Income-tax Officer to show that the mortgagor Adikesavaperumal or his son was assessed to agricultural income-tax, disentitling them to claim the benefit of the Act, and as it is indisputable that Adikesavaperumal and his son had got saleable interest in the landed properties, they have to be held to be agriculturists as contemplated by section 3 (2) (a) of the Act on the two crucial dates namely: (1) on the date of the debt; and (2) on the date of recovery thereof through the process of the Court. The Court below also held that the legal representative of the original debtor is entitled to claim the benefits of the Act in case he has proceeded against as regards the properties of the deceased in his hands as he has satisfied the requirements of the definition of ‘agriculturist” under the said Act. 4. The learned counsel for the appellant does not dispute the finding of the Court below that the first defendant as legal representative of the original debtor is entitled to claim the benefits of the Act if he satisfies the definition of an agricultural. But what the learned counsel submitted is that the Court below is in error in holding that the original mortgagor and his son the first defendant were agriculturists only because they had admittedly saleable interest in agricultural lands and that as the decreeholder (appellant) had not adduced evidence to prove that they had been assessed to agricultural incometax, or income-tax it must be assumed that they answer the definition of “agriculturist”. The learned counsel points out that though the appellant had not actually proved that the original debtor as well as his son, the first defendant, were in fact assessees under the Agricultural Income-tax Act or under the Income-tax Act, if there are materials on record to indicate the possibility of their being assessed to agricultural income-tax and income-tax, the onus of proving that their income from the agricultural lands and their then income were such as not to bring them within the taxable limit, and as the first defendant has not discharged that onus, the application for scaling down should have been dismissed on the ground that they have not been shown to be agriculturists. 6. 6. In this case the original debt was on 7th May, 1968, and the suit was filed on 22nd April, 1972. and a compromise decree was passed on 12th February, 1974. The order appointing the Official Receiver as the property guardian of the first defendant refers to A and B Schedule properties. A Schedule consists of 169 acres of land and a house thereon B Schedule consists of 32 cents of nanja land with building thereon, 9 81 acres of coconut garden, 9.93 acres of salt pans, and 24.39 acres of garden lands with a well with an oil engine. B Schedule also includes movables and as electric motor and water pumpsets in Thamarakulam village and very many items of moveables available in the salt factory at Tuticorin. Thus the original mortgagor possessed not only agricultural lands but also exclusive coconut garden and extensive salt pans wherein a salt factory has been located. The order appointing the Official Receiver as the property guardian of the first defendant also refers the licence No. 9 standing in the name of the mortgagor for exploiting salt pans and running the salt factory The said order clearly shows that the original mortgagor in addition to having saleable interest in agricultural lands had also owned an extensive coconut garden and also extensive salt pans which are being exploited by the mortgagor by taking out a licence under the Central Excise and Salt Act. In respect of the coconut garden the original mortgagor might have been assessed to agricultural income-tax, In respect of his business as a manufacturer of salt, he should have been assessed to income-tax and a person carrying on business in salt manufacture, he should also have been assessed to profession tax. Besides, the Schedule to the mortgage decree gives the properties which are the subject-matter of the hypothecation bond. That Schedule refers to the mortgaged property as 3.42 acres of salt pans including reservoir, well etc. The mortgaged property itself is a salt pan including reservoirs, wells etc., and that also refers to the salt pan being worked under licence No 9. Thus the mortgagor was exploiting the salt pans and manufacturing salt under licence No. 9. 7. That Schedule refers to the mortgaged property as 3.42 acres of salt pans including reservoir, well etc. The mortgaged property itself is a salt pan including reservoirs, wells etc., and that also refers to the salt pan being worked under licence No 9. Thus the mortgagor was exploiting the salt pans and manufacturing salt under licence No. 9. 7. It is in the light of these facts the learned counsel for the appellant submits that once a debtor shows that he has got a saleable interest in agricultural lands, the onus shifts to the creditor to prove that the debtor will come under any of the provisos to the definition of “agriculturist” and that onus is not constant but again shifts to the debtor to prove that the other properties owned or the business carried on by him will not disable them from claiming the benefits of the Act. In support of the said plea the learned counsel refers to the decision of the Supreme Court in Nageswarasami v. Viswa sundara1. In that case a mortgage debt was sought to be scaled down by a defendant who happened to be a purchaser of the equity of redemption. Though he was found to be an agriculturist on the date of the application for scaling down, the question arose as to whether the original debtor was an agriculturist on the date of the debt. It was argued that as the mortgage debt was in respect of agricultural lands, the mortgagor should be taken to be an agriculurist. But the Supreme Court pointed out that there is no warrant for any such assumption merely on the basis that the mortgaged properties were agicultural lands, that on the facts of that case it is not known whether the mortgagor did possess any estate which would bring him under any of the provisos attached to the definition of “agriculturist” and that, therefore, in the circumstances the applicant for scaling down should be deemed to have failed to show that the original debt was payable by an agriculturist. Reference has also been made to an unreported Bench decision of this Court in Chengalvaraya Mudaliar and another v. C Santhanagopala Iyengar2, wherein the Bench has held that if a person having a saleable interest in agricultural lands is shown to have been carrying on business in rice mill by a creditor, then it is possible to draw an inference that the debtor would have been paying profession (ax in the absence of proof by the debtor that the rice mill business is such as to not involve payment of any profession tax. Veeraswami, C. J, speaking for the Bench had observed: “The only question is whether the appellants are agriculturists. The appellants were carrying on business in a rice mill. The capacity of the rice mill is 15 H. P. From this the Subordinate Judge inferred that they would have been paying profession tax, if not any other tax. It is contended that appellants were not paying professional tax. if that be so, it would have been very easy for them to produce the accounts before the Judge, which they failed to do. The fact that they were not paying professional tax could also be established by other means. Something was said on the question of burden. It is never constant it shifts. Once it was established, and quite rightly too, that the appellants owned a rice mill, which was running, and they were carrying on the business in running the rice mill and when the appellants failed to produce the accounts, we cannot say that the Subordinate Judge was wrong in drawing an inference that they would have been paying professional tax. Once it was established, and quite rightly too, that the appellants owned a rice mill, which was running, and they were carrying on the business in running the rice mill and when the appellants failed to produce the accounts, we cannot say that the Subordinate Judge was wrong in drawing an inference that they would have been paying professional tax. If that be so, the Judge could well bring the appellants within the proviso to section 3 (ii) of the Act.” Reference has also been made to an unreported decision of this Court in E. Radhakrishna v. M. S. A. Subrarmania Mudaliar and another1, wherein a creditor had contended that the debtor, in addition to his having a saleable interest in agricultural lands, was carrying on a transport business of his own by operating a bus with a route permit and therefore it is possible to infer that the debtor should have been paying profession tax for such business and as such he is not entitled to claim the benefits of Act IV of 1938 as an agriculturist, This Court, after referring to the decisions in Venkayya v. Sivagami Achi2; Periaswami Pillai v. Sivathia Pillai3, Suryanarayanamoorthi v. Satyanarayanamuthi4and M. Sundaresan Chettiar v. A. Muthuvelavendan5, all dealing with the question of burden of proof, expressed the view that the onus is not always on the decreeholder to prove that the debtor is not entitled to the benefits of the Act, that the onus will shift to the judgment-debtor and the material placed before the Court by the creditor leads to the inference that the judgment-debtor would fall within any of the provisos to the definition of agriculturist and in such a case the debtor has to prove that the said inference is not possible and that he does not in fact fall within any of the provisos to the definition of agriculturist. 8. The decision of the Supreme Court lays down the proposition that merely from the fact that the debtor had a saleable interest in agricultural lands there is no warrant for an assumption that the debtor is certainly an agriculturist and that it is necessary to see whether the debtor, in addition to possessing a saleable interest in agricultural lands, is possessed of other assets which might bring him within any of the provisos attached to the definition of agriculturist. The decisions of this Court in L. P. A. No. 127 of 1975 and C. M. A. No. 609 of 1976 have laid down that if the creditor proves that the debtor in addition to his having a saleable interest in agricultural lands possessed other properties or carried on other business which might result in the debtor being liable for income-tax, or agricultural income-tax or profession tax, or property tax, the onus shifts to the debtor to prove that the other assets or the business carried on by him did not involve him in any such liability and, therefore, he does not come under any of the provisos to the definition of agriculturist. 9. In this case, even the property mortgaged by the original debtor was salt pans with reservoirs wells etc. which was being exploited under a licence. The order of the Court appointing the Official Receiver as the property guardian of the first defendant who is the son of the original debtor clearly shows that the first defendant is possessed of not only a saleable interest in agricultural lands but also possessed of considerable extent of coconut garden and considerable extent of salt pans and also a salt factory in Tuticorin with a licence for manufacturing salt. The possession of an extensive coconut thope would involve an assessment under the Agricultural Income-tax Act. Working of salt pan and the manufacture of salt would have involved the first defendant to an assessment to profession tax as well as income-tax. In those circumstances, it is for the first defendant to prove by producing the accounts and other materials that the possession of a coconut thope does not involve him in any liability to agricultural income-tax and that the salt manufacture does not involve him in any liability by way of profession tax or Income-tax. But he has not produced any materials in that regard. As the Court below has erroneously proceeded on the basis that the onus is always on the creditor to prove that the debtor is not an agriculturist and as the lower Court has not adverted to this aspect of the case, I consider that in the interest of justice the matter should be remitted back to the Court below for a fresh consideration in the light of the observations made above. 10. 10. The Civil Miscellaneous Appeal is, therefore, allowed and the matter is remitted to the Court below for fresh disposal. There will, however, be no order as to costs. R.S. ----- Appeal allowed end remanded.