# NAUNIHAL KISHAN AND OTHERS v. R. S. CH. PRAT AP SINGH AND ANOTHER

- **Citation:** [1964] 2 S.C.R. 293
- **Court:** Supreme Court of India
- **Decided:** 1964
- **Case number:** Civil Appeal No. 594 of 1960
- **Bench:** S. K. DAs, A. K. Sarkar, M. HrnAYATULLAH, N. Rajagopala Ayyangar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/naunihal-kishan-and-others-v-r-s-ch-prat-ap-singh-and-another-2927
- **Pages:** 17

## Headnote

-
Displaced Person-Debt-Adjustment-Usufructuary mortgage-Whether mortgagor a debtor-Scaling down of mortgage
debt-Whether only in a suit for redemption of mortgageTribunal'a jurisdiction-"Value of the lanils"-How to be computed-Whether in terms of market value alone-Whether in term•
of
comparable Standard
acres-Displaced Persons
(Debt"
Adjustments) Act, 1951 (LXX of 1951) ss. 2 (6), 2 (9), 4, 5,
16, 29.
Both the appellants as well as the respondents originally
belonged to that part of Punjab which is now in Pakistan. In
1933 respondent No. 2 effected an usufructuary mortgage of a
certain land to the father of appellants Nos. 1 to 3 and to the
4th appellant's father to secure a sum of Rs. 39,000/-. Apart
from the provisions for the payment of interest the mortgage
deed also fixed a term of 10 years beyond which alone the
mortgagee could sue for the recovery of the mortgage money.
Four years after the execution of the mortgage deed the mortgagor sold a major portion of the property to one Guranditta Ram.
Out of the consideration for this sale a sum of Rs. 26,500/- was
<
left with the transferee to be paid in discharge of the mortgage.
This sum was not paid to the mortgagee and thus the entire
mortgage amount remained outstanding. On the partition of
the country in l 94 7 both the mortgagor as well as the mortgagee moved into India and they were "displaced persons''.
The mortgagor was as disp]aced person allotted agricultural
land in India on the basis of his original holding in Pakistan.
The appellants as the mortgagees entitled to possession of the
lands were put in possession of this land.
The respon'dents applied under s. 5 of the Displaced
Persons (Debts Adjustment) Act, 1951,
to get the mortgage
-
debts adjusted according to the provisions of s. 16 of the Act.
Certain objections raised by the appellants to this application
were overruled and the mortgage debt was scaled down.
An
appeal was preferred to the Punjab High Court and the Single
Judge who heard the appral dismissed it. A Letters Patent
Appeal preferred by the ap!Jellants was dismissed in limine
1963
March JJ
1963 -
Naunfril Kishan
v.
R. S. Ch. Pratap
Sin:h
294 StTPREME COURT REPORTS [1964] VOL.
and a certificate of fitness was refused. The present appeal is
by way of special leave granted by this Court.
The first contention raised before this Court was that the
first respondent was not a "debtor" within the meaning of
s. 2 (6) of the Act because there was no contractual relation·
ship of debtor and creditor between him and the displaced
creditor i. e. the appellants. The next contention was that
the liability under a mortgage debt could be scaled down and
adjusted unck!r the Act only in a suit for redemption filed by
the creditor and that it was incompetent for a debtor to invoke
the jurisdiction of the tribunal to effect the scaling down by an
application under s. 5. Finally it was argued that under 1he
proviso to s. 16 (4) of the Act the reduction of the debt has to
be in the •ame proportion as "the value of the lands" allotted
to the creditor in India bears to the "value of the lands'' left
by him in Pakistan and "value" according to the appellant
meant market value.
Held, that having regard to the terms of s. 16 ( 4) the
fact that the security was by way of usufructuary mortgage and
the debtor had the right to redeem were sufficient to enable the
beneficient provisions of the section being attracted. Apart
even from the terms of s. 16 (4) the liability under the mortgage in favour of the appellant would fall within the definition
of s. 2 (6).
Even a usufructuary mortgage, whatever its nature
is within the definition of 'debt' under s. 16 an<l it is wholly
immaterial whether or not tlte creditor is entitled to proceed
personally against the debtor and recover the amount of the
mortgage.
Lachhman Singh v. Natha Singh and Ors., I. L. R. 1941
Lah. 71, Manubhai Mahijibhai Patel v. Trikamlal Laxmidas,
I. L. R. 19.58 Born. 1429, Lahori Lal v. Kasturi Lal (1956)
58 P

## Text

2S.C.R.
SUPREME COURT REPORTS
293
NAUNIHAL KISHAN AND OTHERS
v.
R. S. CH. PRAT AP SINGH AND ANOTHER
(S. K. DAs, A. K. SARKAR, M. HrnAYATULLAH and
N. RAJAGOPALA AYYANGAR JJ.)
-
Displaced Person-Debt-Adjustment-Usufructuary mortgage-Whether mortgagor a debtor-Scaling down of mortgage
debt-Whether only in a suit for redemption of mortgageTribunal'a jurisdiction-"Value of the lanils"-How to be computed-Whether in terms of market value alone-Whether in term•
of
comparable Standard
acres-Displaced Persons
(Debt"
Adjustments) Act, 1951 (LXX of 1951) ss. 2 (6), 2 (9), 4, 5,
16, 29.
Both the appellants as well as the respondents originally
belonged to that part of Punjab which is now in Pakistan. In
1933 respondent No. 2 effected an usufructuary mortgage of a
certain land to the father of appellants Nos. 1 to 3 and to the
4th appellant's father to secure a sum of Rs. 39,000/-. Apart
from the provisions for the payment of interest the mortgage
deed also fixed a term of 10 years beyond which alone the
mortgagee could sue for the recovery of the mortgage money.
Four years after the execution of the mortgage deed the mortgagor sold a major portion of the property to one Guranditta Ram.
Out of the consideration for this sale a sum of Rs. 26,500/- was
<
left with the transferee to be paid in discharge of the mortgage.
This sum was not paid to the mortgagee and thus the entire
mortgage amount remained outstanding. On the partition of
the country in l 94 7 both the mortgagor as well as the mortgagee moved into India and they were "displaced persons''.
The mortgagor was as disp]aced person allotted agricultural
land in India on the basis of his original holding in Pakistan.
The appellants as the mortgagees entitled to possession of the
lands were put in possession of this land.
The respon'dents applied under s. 5 of the Displaced
Persons (Debts Adjustment) Act, 1951,
to get the mortgage
-
debts adjusted according to the provisions of s. 16 of the Act.
Certain objections raised by the appellants to this application
were overruled and the mortgage debt was scaled down.
An
appeal was preferred to the Punjab High Court and the Single
Judge who heard the appral dismissed it. A Letters Patent
Appeal preferred by the ap!Jellants was dismissed in limine
1963
March JJ
1963 -
Naunfril Kishan
v.
R. S. Ch. Pratap
Sin:h
294 StTPREME COURT REPORTS [1964] VOL.
and a certificate of fitness was refused. The present appeal is
by way of special leave granted by this Court.
The first contention raised before this Court was that the
first respondent was not a "debtor" within the meaning of
s. 2 (6) of the Act because there was no contractual relation·
ship of debtor and creditor between him and the displaced
creditor i. e. the appellants. The next contention was that
the liability under a mortgage debt could be scaled down and
adjusted unck!r the Act only in a suit for redemption filed by
the creditor and that it was incompetent for a debtor to invoke
the jurisdiction of the tribunal to effect the scaling down by an
application under s. 5. Finally it was argued that under 1he
proviso to s. 16 (4) of the Act the reduction of the debt has to
be in the •ame proportion as "the value of the lands" allotted
to the creditor in India bears to the "value of the lands'' left
by him in Pakistan and "value" according to the appellant
meant market value.
Held, that having regard to the terms of s. 16 ( 4) the
fact that the security was by way of usufructuary mortgage and
the debtor had the right to redeem were sufficient to enable the
beneficient provisions of the section being attracted. Apart
even from the terms of s. 16 (4) the liability under the mortgage in favour of the appellant would fall within the definition
of s. 2 (6).
Even a usufructuary mortgage, whatever its nature
is within the definition of 'debt' under s. 16 an<l it is wholly
immaterial whether or not tlte creditor is entitled to proceed
personally against the debtor and recover the amount of the
mortgage.
Lachhman Singh v. Natha Singh and Ors., I. L. R. 1941
Lah. 71, Manubhai Mahijibhai Patel v. Trikamlal Laxmidas,
I. L. R. 19.58 Born. 1429, Lahori Lal v. Kasturi Lal (1956)
58 P. L. R. 331, Rajkumari Kaushalya Devi v. Bawa Pritam
Singh, [!960] 3 S. C.R. 570.
Section 5 (I) of the Act enables a debtor to make an
application to the tribunal for the adjustment of his debts.
The amount due on or secured by a mortgage is a "debt"
within the meaning of s. 5 to settle which, an application could
be filed and the debt being a secured debt as contemplated by
s. 16 (4) the applicants were entitled to have an adjustment in
terms of that specified in the proviso to that section.
Under the relevant rules the rehabilitation authorities are
directed to take into accoullt the income yeild of the two sets
of land and thus the "value" of the land left behind in Pakistan
-
-
2 S.C.R.
SUPREME COURT REPORTS
295
ia reflected in ascertaining the "standard acres".
The nature
of the land left behind was taken into account and numerical
factors were prescribed based on these criteria for ascertaining
the equivalent of those lands in India. When the proviso to
s. 16 (I) spoke of 'value' it must have had in contemplation the
value as determined by the procedure for fixing the same
under the relevant rules.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 594 of 1960.
Appeal by special leave from the judgment and
order dated March 6, 1958, of the Punjab High
Court in Letters Patent Appeal No. 6 of 1958.
K. L. Gosain, G. L. Sareen and R. L. ](ohli,
for the appellants.
Roop Chand and Naunit Lal, for respondent
No. 1.
l'r"',aunit Lal, for respondent No. 2.
1963.
March 13.
The Judgment of the
Court was delivered by
AYYANGAR J.-The facts necessary to appreciate
the points involved in this appeal by special leave
against the Judgment of the High Court of Punjab
are briefly these.
By a registered deed of mortgage
dated March 6, 1933 Sham Singh who is respondent
No. 2 before us effected an usufructuary mortgage of
land measuring 7530 Kanals aud 19 Marlas situate in
village Mohanpur in the District of Multan (now
in Pakistan) to the father of appellants 1 to 3 and
to Topan Das-the father of the 4th appellant. The
sum secured by the mortgage was Rs. :J0,000/-. The
stipulation in the mortgage was that the income
derived from the properties transferred to the possession of the mortgagees was to be treated as interest
on Rs. 10,000/- out of the principal sum and that the
bitlance of Rs. 20,000/- was to carry a sum of
1963
}I aunihal Kishan
v.
R . S. Ch. Prat•P
Singh
1963
.Naunihal Ki.Jh4n
••
R. S. Ch. P1a1ap
SitJRh
Ay_1aniar J.
296
SUPREME COURT REPORTS [1964) VOL.
Rs. 1,650/- per annl¥Il as interest.
The deed further
fixed a term of 10 years beyond which the mortgagee
could sue for the recovery of the mortgage·money .
Subsequent to the deed of mortgage, about 4 years
thereafter, the mortgagor-Sham Singh sold a major
portion of the mortgaged property consisting of about
0,5li8 Kanals of land to Guranditta Ram and others.
Out of the consideration for this sale a sum of
Rs. 20,500/- was left with the transferee the same
being directed to be pa1d in disoharge of the mortgage.
The Sale to Guranditta Ram was subject to a pre·
emption claim and pre-emptor exercisHd his right!
to obtain that
relief.
Narain Singh-father of
Partap Singh,
the !st respondent-was the preemptor and in a suit filed by him he obtained on
February l <i, 1940 a decree for sale in his favour by
virtue of his right of pre-emption and in pursuance
of this decree he obtained symbolical possession of
the land, the mortagces still containuing to retain
the actual possession of the land.
The sum of
Rs. 26,500/-retained with the vendee under the sale
by Sham Singh was not paid over to the mortgagee
and thus the entire amount of the mortgage-money
remained outstanding.
'v\'hile things were in this state, the country was
partitioned in I !H 7 and both the mortgagor as well
as the mortgagees moved into India and they were
"displaced persons".
The owners of the property,
viz., the original mortgagor-respondent
l\o.
2
Sham Singh and the pre·emptor·vendec were, as
displai:e<l persons, allotted agricultural land in India
on the basis of their original holdings in Pakistan in
pursuance of the relevant rules under the Displac<-d
Persons
(Compensation and Rehabilitation) Rules.
The appellants as the morti:pgees entitled to possession of the lands were in June-July 1950, under
these rules put in possession of the properties allot·
tcd to both Sham Singh-the original mortgagoras well as of Pratap Singh-the legal representative
·"'-
-
-
-
2 S.C.R.
SUPREME COURT REPORTS
297
of the deceased pre-emptor (respondent No. I).
The total extent of land of which the respondent had
been put in possession was 51 standard acres and 9
units of land made up of 37.4 standard acres as
being the property belonging to the pre·emptorvelldee (respondent No. 1) and 14.5 standard acres
by virtue of the property allottable to Sham Singhthe original mortgagor (respondent No. 2).
The Union Legislature enacted in November,
Hl51 the Displaced Persons (Debts Adjustment) Act,
Hlbl (Act LXX of 1951) which we shall hereafter
refer to as the Act, being an Act to make provisions
for the adjustment and settlement of debts due by
displaced persons. Section 5 of the Act enabled an
application to be made by a "displaced debtor"
for the adjustment of his debts to a Tribunalwhich was defined as meaning "a civil court having
authority to exercise jurisdiction under the Act"
for the adjustment of the debts due by the applicant.
Section 16 made provision for the manner in which
debts secured on immovable property due by displaced debtors were to be reduced, settled and adjusted. Sham Singh as well as Pratap Singh made
separate applications under s. 5 of the Act seeking
to obtain the benefit of the settlement and adjustment provision contained in its s. 16. The two
applications were, in view of their having reference
to the same mortgage debt, consolidated and were
heard together by the Senior Sub-Judge, Karna! who
was the relevant Tribunal under the Act. Sevaral
objections were raised by the mortgagee-appellants
to these applications but they were overruled and
the mortgage debt was scaled down under s. 16 and
other relevant statutory provisions
which were
applicable in the manner we shall detail later. An
appeal was preferred from this decision to the High
Court of Punjab but the same was dismissed by the
learned Single Judge. A further appeal under the
Letters Patent to a Bench of the High Court wa1
/963
Na11nihal X'i~han
v.
R. S. Ch. Pratap
Singh
11yyantar J.
1963
Naunihal Kisll1n
v.
R. S. Ch. Pratop
Sin1h
A'-'°"l°' J.
298 SUPREME COURT REPORTS [1964] VOL.
dismissed in limine and a certificate of fitness being
refused, the appellants applied to this
Court for
special leave and this being granted, the appeal is
now before us.
Before we set out the grounds which have been
urged before us in support of the appeal it is parhaps
convenient that we extract the material portions of
some of the provisions of the Act on whose construction the appeal turns. The Act, as we stated, earlier,
was enacted inter alirt, for making provision for adjustment and settlement of debts due by displaced per·
sons.
A "displaced debtor" is defined as a displaced
person from whom a debt is due or is being claimed
(s. 2 (9) ). We might add that it is common ground
that both the appellant and the respondents
are
"displaced persons" as defined in the Act. The word
'debt' used ins. 2 (9) is defined in s. 2 (6) thus:
"2. (6).
'debt' means any pecuniary liability,
whether payable presently or in future; or
under a decree or order of civil or revenue court
or otherwise, or whether ascertained or to be
ascertained ....... , .......... "
Section () is the first of the sections in Chapter II
which is headed 'Debt Adjustment Proceedings'.
It reads :
"5. (1)
At any time within one year after the
date on which this Act comes into force in anv
-
local area, a displaced debtor may make a~
application for the adjustment of his debts to
the Tribunal within the local limits of whose
jurisdiction he actually and voluntarily resides,
I
or carries on business or personally works for
.
"
gain .................................. .
Sub.section (2) and (3) of this section specify what
the application under sub-s. (1) should contain but
-
-
-
2 S.C.R.
SUPREME COURT REPORTS
299
these need not detain us.
The next section which
is relevant, having regard to the points raised before
us, is s. 16 which reads :
"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 j urisdiction in this behalf as provided in section 10,
for a declaration of the amount due under his
debt.
(3) Where in any case, the creditor elects to
retain his security, if the displaced debtor receives any compensation in respect of any such
property as is referred to in sub-section (1), the
creditor shall be entitled-
(a)
Where the compensation is paid in cash,
to a first charge thereon :
Provided that the amount of the debt in
respect of which he shall be entitled to the
first charge shall be that amount as bears to
the total debt the same proportion as the compensation paid in respect of the property bears
to the value of the verified claim in respect
thereof and to that extent the debt shall be
deem~d to have been reduced;
(b)
where the compensation is by way of exchange of property, to a first charge on the property situate in India so received by way of exchange :
1963
1Vaunihal Kishan
v.
R. S Ch. Pratap
Singh
A_,~yangar J.
1963
'. ai.nihal KiJhon
v.
R. S. Ch. Prat op
Singh
A;7a11gar J.
300
SUPREKIB COURT REPORTS [1964)VOL.
Provided that the amount of the debt in
respect of which he shall be entitled to the first
charge shall be that amount as bears to the total
debt the same proportion as the value of the
property received by way of exchange bears to
the value of the verified claim in respect thereof and to that extent the debt shall be deemed
to have been reduced.
(4) Notwithstanding anything contained in
this section, where a debt is secured by a
mortgage of argricultural lands belonging to a
displaced person in \Vest Pakistan and the
mortgage was with possession, the mortgagee
shall, if he has been allotted lands in India in
lieu of the lands of which he was in possossion
in \Vest Pakistan, be entitled to continue in
possession of the lands so allotted until the
debt is satisfied from the usufruct of the lands
or is redeemed by the debtor r
Provided that in either case the amount of
the debt shall be only that amount as bears to
the total debt the same proportion as the value
of the lands allotted to the creditor in India
bears to the value of the lands left behind by
him in West Pakistan and to that extent the
debt shall be deemed to have been reduced.
(5) Where a creditor elects to be treated as an
unsecured creditor, in relation to the debt,
the provisions of this Act shall apply accordingly."
Section 29 (1) enacts':
"29. (1) On and from the 15th day of August,
1!)47, no interest shall accrue or be deemed to
have accrued in respect of any debt owed by a
displaced person, and no Tribunal shall allow
2 S.d.R.
SUPREME COURT REPORTS
§01
any future interest in respect of any decree or
order passed by it :
Provided that-
( a) where the debt is secured by the pledge of
shares, stocks,
Government securities or
securities of a local authority, the Tribunal shall allow for the period commencing
from the 15th day of August, 194 7, and
ending with the date of commencement of
this Act, interest to the creditor at the
rate mutually agreed upon or at a rate at
which any dividend or interest has been
paid or is payable in respect thereof,
whichever is less ;
(b) in any other case the Tribunal may, if it
thinks it just and proper to do so after tak·
ing into account the paying capacity of the
debtor as defined in section 32, allow, for
the period mentioned in clause (a), interest
at a rate not exceeding four per cent, per
annum simple."
We shall now proceed to detail the points that
were urged before us by learned Counsel for the
appellant : (1) The first contention raised before us
was that Pratap Singh-the representative of the
purchaser of the equity of redemption-was not a
"debtor" within s. 2 (6), because there was no contractual relationship between him and the displaced
creditor i. e., the appellants.
The argument was
broad! y on these Imes :
Section 2 ( 6) of the
Act defined the word 'debt' and the expression 'debt'
is employed in s. 2 (9) as also ins. 5 (1) under which
the application giving rise to this appeal was filed.
The
essence
of that
definition
is that it
involves
a
pecuniary
liability
on
the part
of the
'debtor'
enforceable
by a
creditor.
Thus it was urged that a mortgagor under a purely
1963
Naunihal Kishan
v.
R. S. Ch p,ala/J
~ingh
Ayyangar J.
1965
.·Vaunilutl !i;;ht1fl
v.
1'. s. Ch. Pr 4t"f'
.~in&h
302
SUPREME COURT REPORTS [1964] voL
usufructuary mortgage where there was no personal covenant to repay the loan, could not be said
to be a rlebtor and the amo11nt srcured under such
a mortgage could uot therefore be a "debt" within
the definition.
The position of a purchaser of the
equity of redemption vis-a-vis the mortgagee was,
learned Counsel urged, similar.
He further urged
that the fact in the case of a purchaser of the equity
of redemption, even if the mortgagee could bring a
suit for the recovery of the mortgage-money and in
enforcement of that liability the mortgaged property
could be sold was not sufficient to make him a debtor
as according to him the absence of a personal liability
to discharge the obligation out of his other property
not under mortgage was the essence of a debtor and
creditor relationship under the definition.
In support
of this submission learned Counsel referred us to two
decisions one of the Lahore High Court in Lr1chhman
Si1ll)h v. Sathn Sinyh (1), and the other of the Bombay High Court in N anubhai Jla!tijibhai Prttel v. 'l'rikam/al Lak8hmidri.< ('), turned on the meaning of the
expression 'debt' in the Punjab Relief of Indebtedness Act (Act VII of 1934) and it was held that tl1c
amount secured
by a pure usufructuary mortgage
whid1 neither stipulated for the personal liability of
the obligor to pay, nor conferred on the obligee the
right to recover the amount by the coercive machinery of law, could not be called a 'debt' in that
essence of the concept of 'debt' consisted in the
personal 1 iability of the obligor which the obligee
was entitled to enforce by action. This rlecision,
even apart from the terms of s- 16 of the An which
in terms includes an
usufructuary mortga~e in the
category of "a debt" for the purposes of the Act,
affords little assistance to the appellant before us,
because the mortgage of rn:i:l in
favour of the
appellant contains
a covenant on the part of the
mortgagor to repay the debt after 10 years and in
consequence the mortgagee was entitled to file a suit
(I) 1,L.R. 1941 Lab. 71,
(2) l.L,R. 1958 Dom. lt29
2 s.c.R.
SUPREME COURT REPORTS
'
303
1903
for the recovery of his debt and realise it from
the sale of the mortgaged property and also obtain
a personal decree under 0. XXXIV, r. 6 against the
mortgagor-Sham Singh-though he might not be
entitled to a personal decree against the purchaser
of the equity of redempti.on. The other decision
of the Bombay High Court dealt with the construction of the Bombay Agricultural Debtors' Relief
Act and the headnote specifies the point decided as
being that in the absence of an agreement making a
mortgagor personally liable to the mortgagee, a
purchaser of the equity
of redemption was not
entitled to apply under s. 4 of that Act for the adjustment of the mortgage debt, inasmuch as such a
mortgage debt was not "his debt" within the meaning
of s. 4. This extract sufficiently shows that decision
turned wholly upon the definitions contained in the
enactment before the court and could not be called in
aid as laying down any general propositions of
universal application.
On the other hand, there is
a clecision of the High Court of the Punjab in
Lahori Lal v. Kasturi Lal ('), in which the Bench
held that a debt as defined in s. 2 (6) of the Act now
under consideration was not' limited to
personal
liabilities only.
Naunihal Kishan
v.
R. S, Ch. Pratap
Singh
We consider that the Act has not left the
meaning of the expression "debt" where such debt •
is secured by a mortgage including an usufructuary
mortgage, in any manner of doubt, but on the other
hand by making specific provision therefore, has put
beyond the pale of argument that these are "debts"
which could be scaled down under it. We have
already extracted s. 16 of the Act which contains the
provision for adjustment of debts where these are
secured by mortgage on immovable property.
As
the property which is the security for the mortgagee
is situate in West Pakistan sub-s. (1) applies which
affords the creditor an option either to retain the
security or to be treated as an unsecured creditor.
(I) (1956) 58 P. L. R. 331,
Ayyangar I.
1963
. .\':Ju1.ihal l\i,han
..
U. 3'. Ch. Protap
Si11&li
304 suPREMt couR.T RtPoR.TS[1964J vat.
It is common ground that the appellant desired to
retain the security. Sub-section (2) therefore comes
into
pl"v and eu:ible' the crc..li!or to mo,·c the
Tribunal for a declaration regarding the amount due
to him in respect of that mortgage.
In the present
case the debtor himself having made the application
under s. 5, there was no need for any applicati011 by
the creditor.
The reliefa which a creditor might
obtain in case of his election to retain the security arc
set out in sub-ss.
(:l) and (4), the former being
applicable to simple mortgages and the latter where
the mortgage is usufructuary i.e., with possession.
Sub-section (4) which is relevant to the mortgage
debt involved in this appeal runs :
c
"{'l). Notwithstanding anything contained in
this ses;tion, where a debt is secured by
mortgage of agricultural lands belonging
to a displaced person in West Pakistan
and the mortgage was with possession, the
mortgagee shall, if he has been allotted
lands in India in
lieu of the lanps of
which he
was
m
possession i~ West
Pakistan, be
entitled to
contmuc in
possession of the lands so allotted un ti!
the debt is satisfied from the usufruct of
the lands or is redeemed by the debtor :-
Provided that
in
either
case
the
amount of the debt shall
be onlv that
amount as bears to the total debt the
same
proportion
as tlic value of the
lands allotted to the
creditor in India
bears to
the value or the l.inds
left
behind by him in \Vest Pakistan and to
that extent the debt shall be deemed
to have been reduced."
It was not disputed that the debt due to the
appellant was secured by a mortgage of agricultural
;
2 S.c.R..
SUPREME COURT REPORTS 305
lands and that those lands belonged to a displaced
person from West Pakistan. It was also common
ground that the mortgage in favour- of the appellant
was with possession.
It ought to be mentioned
that it was by virtue of provisions on the lines of
the opening words of sub-s. ( 4) contained in the rules
and executive orders which were in force in 1950,
that the appellant was put in possession of the 37.4
and 14.5 standard
acres belonging respectively to
Pratap Singh and Sham Singh. It is therefore very
difficult to appreciate the argument urged on behalf
of the appellant that the provisions of sub-s. ( 4)
of s. 16 are not attracted to the present case. In
the first place the words "and the mortgage is with
possession" are perfectly general and therefore apt
and
comprehensive
enough
to
include
not
merely usufructuary
mortgages
in which there
is personal convenant on the part of the mortgagor
to repay the debt, but also what are usually termed
"pure" usufructuary mortgages containing no such
personal covenant.
There is, therefore, no scope for
the argument based on the analogy of other enactments in which the word 'debt' has been construed
as indicating the necessity for a personal liability or
an obligation to repay on the part o~ the debtor.
Having regard to the terms of s. 16 ( 4) the security
being by way of usufructuary mortgage and the right
of a debtor to redeem are sufficient to enable the
beneficient provisions of the section being attracted.
It is only necessary to add that what might have been
apparent from what we have said earlier, viz., (I)
that the point based upon the definition of a 'debt'
in s. 2 (6) is wholly inapplicable to the case of Sham
Singh since the mortgage itself contained a personal
convenant and (2) that even in regard to Pratap
Singh, the other applicant, the contention has a verv
limited application since having regard to the
personal covenant the mortgagee had a right to sue
for the enforcement of his mortgage and recover the
money from the sale of the mortgaged property. So
1963
Naunihal !lishan.
v.
R. S. Ch. f'ratap
Singh
Ayyangar J.
1963
Nawtih.:JJ Ki1han
v.
R. S. Ch. Pral•P
Sinih
306 SUPREME COURT REPORTS [1964] VOL
that apart even from the terms of s. 16 (4) the
liability under the mortgage in favour of the appellant would squarely fall within
the <ldinition in
s. 2 (6).
The matter is, however, put beyond the
range of controversy
by the specific provision in
regard to all usufructuary mortgages by s. 16 (-!) of
the Act.
In this connection we might refer to the
decision of this Court in
Rajku1n<~r-i Kau8hulya Devi
v. Ba·wa Pritam Singh (1), where it wa5 ruled that
a mortgage-debt was within the definition of the word
'debt' ins. 2 (6) of the Act.
l\o doubt, that case
was not concerned with the distinction between cases
where the creditor has a right to proceed personally
against the debtor and cases where he has not, as in
the case of a pure usufructuary mortgage, but the
decision is useful as indicating that the expression
'pecuniary liability' ins. 2 (li) has to be understood
not in isolation but with reference to other provisions
of the Act and particularly s. I 6.
We arc, therefore,
clearly of the opinion that every usufructuary mortgage whatever its nature, is within the definition of
'debt' uuder the Act for the purpose of scaling down
under s. 16 and that it is wholly immaterial whether
or not the creditor is entitled to proceed persona II y
against the debtor and recover
th~ amount of the
mortgage.
(2)
The next contention urged by the learned
Counsel has been less substance than the one we have
just d;sposed of. It was sa;d that the liability under
a mortgage debt could be sci.led down and ad justed
under the Act only in a suit for redemption filed by
the creditor and that it was incompetent for a debtor
to invoke the jurisdiction of the Tribunal to effect
th~ scaling down and adjustment by an application
under s. 5.
We do not consider that this argument
merits serious consideration. Section 5 (1) of the
Act which we have extracted enables a "debtor" to
make an application to the tribunal for the adjustment of his debts.
In view of what we have stated
(I) ll!IOOJ 3 S.C.R, ~70.
-
2 s.c.:R.
SUPREME cou:RT REPORTS
3o7
earlier the amount due on or secured by the mortgage is a "debt" within the meaning ·of s. 5 to settle
which an application could be filed and the debt
being a ~ecured debt answering to the description
contained in the main part of s. 16 (4), the applicants
were entitled to have an adjustment in terms of that
specified in the proviso to that section.
Though this
point about the locus standi of the respondent-debtors
to file the application has been persisted in by the
appellants at every stage of these proceedings, we
consider that there is no merit in it and it has to be
rejected on the plain terms of s. 5 read with s. 16.
(3)
The third and last objection urged by the
learned Counsel turns on the language of the proviso
to s. 16 (4) which we shall extract once again:
"Provided that in either case the amount of
the debt shall be only that amount as bears to
the total debt the same proportion as the value
of the lands allotted to the creditor in India
bears to the value of the lands left behind him
in the West Pakistan and to that extent the
debt shall be deemed to have been reduced."
Learned Counsel pointed out that the scaling down
effected in the present case was on the following
basis. The total mortgage-debt under the mortgage
deed was computed at Rs. 51, 700/-calculating interest
as permitted by the relevant statutory provisions and
taking into account s. 29 which we have already extracted.
The correctness of this figure was not
disputed. The quarrel of learned Counsel was in
regard to what follows and that is stated in the order
of the Tribunal which has been confirmed by the
appellate Court in these terms :
"The total mortgaged land now belonging to
the petitioner (Pratap Singh) and respondent
No.
5 (Sham
Singh) has been assessed as
1~63
Naunihal Kish!n
v.
R. S. Ch. Pratap
Singh
AyJ411gar J,
1963
,,Vawrihai K ishan
..
II. S. Ch, P'<l•P
[Si•gh
Ayyen101 J.
308
SUPREME COURT REPORTS [i964] vot.
equivalent to 359 standard acres 14-3/4 units
(329 standard acres 13-:~/4 units of the petitioner
plus 22 standard acres G-1/'.! units of the respondent No. 5) and in lieu thereof the mortgagors
have been given in all 51 standard acres 9 units
(B7.4 to the petitioners and 14.5 to the respondent No. 5).
As provided under s. 16 (4) of
the Act the amount of the debt payable to
respondents I to 4 has been reduced in the same
proportion in which the land has been allotted
to the mortgagors.
For the land belonging to
them
the
mortgage
debt
amounting
to
Rs. 51,700/· when reduced to this proportion
comes approximately to Rs. 7,420/-."
It is this reduction that learned Counsel complains
as not justified by the proviso. The argument is that
under the proviso to s. Hi ('!) the reduction of the
debt has to bear the same proportion as "the value of
the lands" allotted to the creditor in India bears to
''the value of lands"
left by him in Pakistan.
"Value", learned Counsel says, means market value.
It is urged that value of neither crf the lands was
computed on that basis but that the Tribunal took
into account mer<'ly the proportion between the two
extents or areas i.r;.,
the standard acres left in
Pakistan compard to the standard acres allotted in
India in lieu thereof.
This contention that the
procedure adopted does not accord with the requirements of the proviso has been rejected by all the
Courts and, in our opinion, correctly.
The fallacy in
the argument of learned Counsel consists in ignoring
the fact that in computing the standard acres left by
a displaced person in Pakistan the rehabilitation
authorities are, under the relevant rules and instructions, directed to take into account the income yield
of the two sets of lands and thus the "value" of the
land left behind is
reflected
in ascertaining the
"standard acres." Thus though market value in the
sense of what a willing purchaser would pay for the
-
•
-
-
2
S.C.R.
SUPREME COURT REPORTS
309
land left behind was not ascertained-it was obviously not practicable to ascertain it-the rules etc.,
made sufficient provision for such a valuation to
be reflected in the computation of the area to be
allotted
instead. The nature of the land left
behind-whether it was canal-irrigated, well-irrigated
or dry or merely rain-fed-was taken into account
and numerical factors were prescribed based on these
criteria for ascertaining the equivalent of those lands
in India. It was after such a computation was made
that the
7531 Kanals
and odd of land which
belonged to the respondents was equated to 359 and
odd standard acres. If therefore
359 standard
acres were the equivalent in value of the land left
behind, regard being had to the circumstances we
have indicated, there cannot be any complaint that
there has been
a departure from the method of
adjustment specified in the proviso to s. 16 ( 4) when
the debt as ascertained and computed in accordance
with s. 29 of the Act and other relevant statutory
provisions was scaled down under~ .. 16 (4) by multiplying it by 51/359, or 1/7 th. We are further of
the opinic1n that when the provision in proviso to s. 16
(1) spoke of "value" it must have had in contemplation the value as determined by the procedure
for fixing the same under the relevant rules for the
computation of equivalents of property of displaced
persons left behind in Pakistan and the allotment of
evacuee property to them in India. There is no
substance, therefore, in this point either. These were
the only points urged before us.
The appeal fails
and is dismissed with costs.
Appeal dismissed.
---
1963
}/aunihal Kishan
v.
R S. Ch. Pratap
Singh
Ayyungar J.