Rajammal v. Sriramulu Raja — 1987 DIGILAW 378 (MAD)

JUDGMENT Ratnam, J. 1. In this second appeal at the instance of the defendant in O.S. No. 24 of 1975, Sub Court, Tiruvannamalai, the only question that arises for consideration is, whether the lower appellate Court was right in negativing the claim of the appellant to the benefits under Tamil Nadu Debt Relief Act, 1976 (Act XXXI of 1976) (hereinafter referred to as the Act for short). The suit was laid by the respondent herein for the recovery of a sum of Rs. 5,369 stated to be due from the appellant under a promissory note dated 7.2.1969 executed by the appellant in favour of the respondent. The appellant, besides resisting the suit on the ground that the promissory note sued upon was not supported by consideration, claimed that she is a small farmer entitled to the benefits of the Act and as such, the entire debt should be deemed to have been discharged. 2. The trial Court found that the promissory note was fully supported by consideration and that though the appellant had originally owned 7 acres and 80 cents of land comprised in Sathanur Dam, ayacut, at the time of incurring the debt sued upon on 7.2.1969, she had sold almost all her lands, excepting an extent of 30 cents, and that therefore, she would be entitled to the benefits of the Act and the debt sued upon therefore stood discharged. On those conclusions, the suit was dismissed. However on appeal by the respondent, the learned Subordinate Judge found that the appellant was not a small farmer on the date of incurring of the debt and that her principal means of livelihood is doing business and therefore, she is not entitled to claim the benefits of the Act. On those conclusions, the appeal was allowed and a decree was granted in favour of the respondent as prayed for. It is the correctness, of this, that is challenged by the appellant in this second appeal. 3. Learned Counsel for the appellant strenuously contended that the appellant is entitled to the benefits of the Act as a small farmer. On those conclusions, the appeal was allowed and a decree was granted in favour of the respondent as prayed for. It is the correctness, of this, that is challenged by the appellant in this second appeal. 3. Learned Counsel for the appellant strenuously contended that the appellant is entitled to the benefits of the Act as a small farmer. According to the learned Counsel, though the appellant might have owned lands of an extent of 7.80 acres on the date when the debt was incurred, she was nevertheless entitled to the benefits of the Act, even if she had parted with substantially all her properties after the commencement of the Act and held on the date on which the matter came before Court, only such an extent of land, as would enable her to claim the benefits of the Act. 4. Before proceeding to consider this contention, it would be useful to briefly refer to the circumstances, which led to the passing of the Act. The avowed object of the Act was to give relief to landless agricultural labourers, rural artisans and small farmers in this State from the usurious practice of non-institutional sources of credit. Under Section 3(d) of the Act, creditor is defined as a person from or in respect of whom the debtor has borrowed or incurred a debt and includes the heirs of such persons. The expression 'debt' is defined in Section 3(e) of the Act as meaning, any liability in cash or in kind, whether secured or unsecured and whether decreed or not; but does not include arrears of tax due to the Central Government or a State Government or a Local Authority. 'Debtor' has been defined in Section 3(f) of the Act as meaning (1) landless agricultural labourer, or (2) rural artisan, or (3) a small farmer, who has borrowed or incurred any debt before the commencement of the Act. The expression 'Small farmer' is defined under Section 3(1) as a person, whose principal means of livelihood is the income derived from agricultural land and who holds, whether as owner, tenant, or mortgagee, with possession or partly in one capacity and partly in another, not more than two units of land in case where such person is a member of any of the Scheduled Tribes, and not more than one unit of land in any other case. Explanation II sets out the extents for purposes of calculating the unit of land held. Section 4 giving relief from indebtedness states that notwithstanding anything contained in Tamil Nadu Acts 4 of 1938, 23 of 1943, 26 of 1957, 38 of 1972, 15 of 1976 and 16 of 1976 or any other law for the time being in force or in any contract or instrument having force by virtue of any such law and save as otherwise expressly provided in the Act, with effect on and from the commencement of the Act (a) every debt advanced or incurred before the commencement of the Act (including interest, if any) and payable by the debtor to the creditor shall be deemed to be wholly discharged. The other provisions are unnecessary for the purpose of deciding the question that has arisen in this second appeal and need not therefore be noticed. It is seen that the relief by way of discharge given under Section 4(a) is available with effect on and from the commencement of the Act in relation to every debt incurred before the commencement of the Act and payable by the debtor to the creditor. There is no dispute that the provisions of the Act came into force on 29.7.1976. The debt in this case had been incurred under Ex. A1 on 7.2.1969. Therefore, the debt sued upon had been advanced on 7.2.1969 before the commencement of the Act on 29.7.1976. The relief from indebtedness is made available with effect from the date of commencement of the Act with reference to debts payable by a debtor to the creditor. The expression 'debtor' as noticed earlier has been defined in such a manner as to include a small farmer. It therefore follows that as a small farmer, the debt should be payable by the debtor to the creditor on the commencement of the Act in order that such a debtor as a small farmer, cap claim the benefits of the Act. That this is the intention of the Legislature is made clear from Section 4 relating to the relief from indebtedness. The relief is with effect from the date of commencement of the Act with reference to the debt incurred before the commencement of the Act, but payable by the debtor to the creditor on the date of commencement of the Act. The relief is with effect from the date of commencement of the Act with reference to the debt incurred before the commencement of the Act, but payable by the debtor to the creditor on the date of commencement of the Act. Only if the aforesaid conditions are satisfied, the benefit, of the statutory discharge under Section 4(a) of the Act can be availed of by a debtor. It may be that there are no words to the effect indicating that the debt should be payable by the debtor to the creditor at the commencement of the Act. But even so, the relief of discharge from indebtedness could not have been contemplated, unless such debts were also payable by the debtor on the date of commencement of the Act. In this case, there is no dispute that at the time of the commencement of the Act, the appellant had owned 7.80 acres of Sand. She would not be a small farmer as defined under Section 3(1) of the Act and also not a debtor under Section 3(f)(iii) of the Act. In other words, the appellant was not a debtor on the date of commencement of the Act, though the debt was advanced or incurred before its commencement. Since the appellant admittedly disposed of a substantial portion of her lands of 7.80 acres only after the incurring of the debt and the commencement of the Act, she could not take advantage of Section 4(a) giving relief from indebtedness. That relief, as stated earlier, is available to a debtor with reference to a debt advanced or incurred before the commencement of the Act and payable by the debtor on the date on which the provisions of the Act came into force and only in such an event, there is a statutory discharge of the indebtedness. It has also to be borne in mind that the availability or otherwise of the relief from indebtedness does not depend upon the point of time at which the proceedings are instituted for recovery of the amount or enforcement the claim. It has also to be borne in mind that the availability or otherwise of the relief from indebtedness does not depend upon the point of time at which the proceedings are instituted for recovery of the amount or enforcement the claim. If under the provisions of the Act, a debt or liability, is in any manner affected by its provisions on claim to that effect made by a person entitled to claim the benefits of that Act, the enforcement by Court of that liability should also be only subject to the impact of the statutory provisions on the liability. Viewed this way, the parting with of a substantial portion of the properties held by the appellant, after the commencement of the Act, would not enable her to claim the benefits of the Act. Likewise, if on the date of commencement of the Act, a person is entitled to the benefits of the Act with reference to a debt, his liability would have been touched upon or affected by the provisions of the Act, if he had otherwise fulfilled the requirements for claiming the benefits under the Act and the fact that there were subsequent acquisitions of properties, taking him outside the scope of the provisions of the Act, would not matter. On the facts of this case, as found by the lower appellate Court, it is clear that by reason of her large holdings, the appellant was not a small farmer and a debtor as such within the meaning of Section 3(f)(iii) of the Act on 29.7.1976 when the Act came into force, though the debt sued upon had been incurred earlier and she therefore would not be entitled to any relief from indebtedness as claimed by her. 5. There is also a related aspect, which may now be noticed. It is seen from para 2 of the plaint that the respondent has clearly and categorically stated that the appellant is not an agriculturist and that she is eking out her livelihood by carrying on business. This has not been refuted at all by the appellant. Under Section 3(1) of the Act, a small farmer in order to fall within the definition of 'debtor' under Section 3(f), should be a person, whose principal means of livelihood is the income derived from agricultural land. This has not been refuted at all by the appellant. Under Section 3(1) of the Act, a small farmer in order to fall within the definition of 'debtor' under Section 3(f), should be a person, whose principal means of livelihood is the income derived from agricultural land. On the facts of this case, it is seen that the respondent had categorically stated that the appellant is not an agriculturist and that her principal means of livelihood is the income derived from business. That has not been in any manner disputed by the appellant. Under those circumstances, the appellant could not be regarded as a small farmer as such falling under the definition of 'debtor' under Section 3(f)(iii) of the Act. Consequently, she cannot claim the benefits of the Act at all. There is therefore no substance in the second appeal, which is dismissed. There will be no order as to costs, since the counsel for the respondent did not advance any argument whatsoever to support the judgment of the lower appellate Court.