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Madhya Pradesh High Court · body

2000 DIGILAW 1124 (MP)

Shriram v. Kukhilal

2000-10-12

A.M.SAPRE

body2000
Short Note The short question that arises for consideration in this petition at the instance of creditor is whether the transaction in question can be said to be a transaction falling within the meaning of prohibited degree of transaction as defined within the meaning of section 2(7) of the M.P. Act No. 3/77 (for short Act) and whether the petitioner can be declared as lender of money as defined in section 2(d) of the Act. Facts in so far as they relate for the disposal of this petition need mention. Invoking the jurisdiction of the competent Authority under the Act for claiming protection of the Act, the respondent No. 1 filed an application under section 5 of the Act to the competent Authority (SDO) alleging inter alia that he is the owner of agricultural land measuring 1.338 hectares in village Gata in Tehsil Zhirnya. It was alleged that he had purchased cloth from the petitioner on credit. It was alleged that on finalisation of accounts a sum of Rs. 3,125/- was found outstanding. It was alleged that an agreement on 2.6.1980 was reached between the parties that a sum of Rs. 1.875/- would be paid by petitioner to the respondent No.4. the land in question would be sold to petitioner. It was alleged that in fact, the respondent No.1 had only purchased cloth worth Rs. 300/- and all amount over and above Rs. 300/- was claimed towards interest to make the bargain presentable and legal in the eyes of law. In effect, therefore, the complaint was that transaction in question is not the sale out and out and secondly it was essentially a prohibited degree transaction liable to be declared as such resulting in return of land to the respondent No.1 The reply of petitioner was that he sued the respondent No.1 on the strength of agreement dated 2.6.1980 in civil Court and obtained a decree in his favour. According to him the transaction in question does not relate to prohibited degree of transaction nor petitioner (NA in application) was a money lender. In substance therefore, the plea was to uphold the transaction in question to be that of legal and valid being unaffected with the provisions of act in question. According to him the transaction in question does not relate to prohibited degree of transaction nor petitioner (NA in application) was a money lender. In substance therefore, the plea was to uphold the transaction in question to be that of legal and valid being unaffected with the provisions of act in question. The SDO by its order dated 3.1.1991 dismissed the application on an appeal filed by the respondent No. 1-the Collector by impugned order dated 26.4.1993 (Annexure A) allowed the appeal and declared the transaction in question to be that of prohibited degree. Accordingly and as a consequence. the application filed by the respondent No. I stood allowed. It is this order. the petitioner challenges in this petition. Heard Shri Y.I. Mehta. learned counsel for the petitioner. Shri P.K. Saxena with Shri Mandloi learned counsel for respondent No. 1 and Shri P. Verma. learned Govt. Advocate for respondents No.2 and 3. The only submission made by the learned counsel for the petitioner while assailing the legality of the impugned appellate order is that the transaction in question does not fall within the meaning of the words 'prohibited transaction of loan' as defined under section 2(7) of the Act and hence. the impugned order suffers from this jurisdictional error. According to learned counsel. the transaction in question' if at all was that of sale and purchase of cloth on credit which resulted in entering into an agreement to purchase the land in question after adjustment of money found payable by the respondent No. 1 to petitioner. According to learned counsel whether cash is paid to petitioner against the purchase of cloth or sale deed executed would not change the nature of transaction and the same will remain a transaction of sale and purchase of cloth and secondly the transaction to purchase the land will remain an independent transaction of sale/purchase out and out. In reply, the submission of learned counsel for the respondent No.1 was for upholding of impugned order in its entirety. According to learned counsel. no flaw can be noticed in the impugned order and hence it must be upheld. Having heard the learned counsel for the parties and having perused the entire record of the case, I am of the view that petition has no substance. In other words, the impugned appellate order passed by Collector deserves to be upheld. According to learned counsel. no flaw can be noticed in the impugned order and hence it must be upheld. Having heard the learned counsel for the parties and having perused the entire record of the case, I am of the view that petition has no substance. In other words, the impugned appellate order passed by Collector deserves to be upheld. Perusal of three definitions namely - 2(c) holder of agricultural land. 2(d). lender of money and 2(f), prohibited transactions of loan would make it manifest that it is not necessary to prove that the person as in this case petitioner who is of the status of creditor must be engaged in the business of money lending. In other words. to attract the rigour of section 2(d) i.e. to make a person as lender of money, what is required to be shown is that he had advanced a loan to a holder of agricultural land - i.e. respondent No. 1 in this case. It is not in dispute that respondent No. 1 satisfies the requirement of section 2(c) and hence enjoys the status of holder of agricultural land. Secondly it is also not necessary that there has to be a only money transaction between such designated parties so as 10 attract the rigour of section 2(f) ibid. What is required is the transaction involving element of repayment of loan in terms of money or even one may say adjustment of repayment. It is also clear that to settle such transaction, if the land of holder of land is made the basis i.e. for sale to a creditor then certainly, the rigours of Act will apply. Admittedly, the transaction in question though initially began with repayment of price of cloth by the respondent No. 1 to petitioner. the petitioner included interest on the unpaid amount and then got the agreement of safe of land in question executed in his (petitioner) favour by showing the unpaid sale price of cloth as a sale price of land and some more. It is under this transaction, the petitioner got the land from the respondent No. l. Such transaction, in my opinion, do fall within the meaning of section 2(f) of the Act and can be declared null and void keeping in view the object underlined for such transaction. It is under this transaction, the petitioner got the land from the respondent No. l. Such transaction, in my opinion, do fall within the meaning of section 2(f) of the Act and can be declared null and void keeping in view the object underlined for such transaction. Accordingly and in view of aforesaid discussion, I do not find any merit in the submission made by learned counsel for the petitioner. The petition is accordingly dismissed. No cost.