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Letters Patent Appeal No. 28 of 1948, decided on 27th March, 1951 under clause 10 of the Letters Patent against the decree of the Court of Cornelius, J. dated 3rd July 1948, passed in R. S. A. No. 728 of 1946.
Punjab Relief of Indebtedness Act (VII of 1934), S. 13 (4) Board ceasing to exist‑Question of "unavoidable absence" of creditor remaining undecided‑Jurisdiction of Civil Court Scope.
The question that the creditor was unavoidably absent at the hearing fixed by the Board, was, if the Board had been in existence, to be determined by the Board itself. Where the Board has ceased to exist and the question of "unavoidable absence" still remains undecided, the Legislature has made a provision, under subsection (4) by empowering a Civil Court to decide it.
Whenever on a plea taken by the debtor, the question of the discharge of the debt on account of the failure of the creditor to produce his documents or to put an appearance at the date fixed, is raised, in the course of the suit brought by the creditor for recovery of debt, which at one time came up for conciliation before the Debt Conciliation Board, the Civil Court must go into the matter and find out whether the Board had dealt with it, in exercise of the exclusive powers given to it under the Act. The Civil Court could not refuse to entertain this question.
A. I. R. 1949 E. P. P. 1 F. B. ref.
S. A. Hareem, for Appellant.
B. Z. Kaikaus, for Respondent.
This Letters Patent Appeal by the plaintiff, raises a question of some general importance. The plaintiff held two mortgages in the sum of Rs. 99 each executed by Muhammad Hussain respondent, on 3rd July 1937 and 19th of April 1939 over the same house. On the earlier mortgage, the interest on Rs. 19 was set off against the rent and the balance of Rs. 8p was to carry interest of Rs. 1‑4‑ p. m. and the second one of Rs. 1‑8. It was further stipulated that the mortgagee could recover the amount of principal and interest by sale of the property. The present suit out of which this Letters Patent Appeal has arisen, was instituted on 30th August 1944 for the recovery of Rs. 278. It was pleaded that on the application of the mortgagor to the Debt Conciliation Board, the mortgage debt was discharged and the suit could, therefore, not lie. It was also pleaded that the Civil Court had no jurisdiction in the matter.
It appears that Muhammad Hussain mortgagor moved the Debt Conciliation Board under the provisions of the Punjab Relief of Indebtedness Act of 1934 for the conciliation and settle ment of debts. The mortgages in favour of the plaintiff were also mentioned, though no details as to the debt or interest were given. Notice was duly issued by the Board and the plaintiff was served. She appeared on 3rd of January 1942, the date fixed. The Board published the notice calling upon each of the creditors to submit a statement of debts owed to him by the debtor, which was to be done within two months. The case was adjourned to 4th of March 1942. On that date, the plaintiff appellant failed to appear. It was ordered that as Mst. Bibi Rani creditor (plaintiff) had not attended and had not filed the requisite statement of her debts or the documents in support thereof, the debt due to her was deemed to have been discharged for all purposes and for all occa sions. On the following day i. e. 5th of March 1942, Mst. Bibi Rani presented an application purporting to be under section 23 of the Act, to the effect, that she believed 6th of March 1942, as the date fixed in the case. She, however, came to know from Ram Sarn Das, that the hearing was really fixed for 4th of March 1942 and on account of her absence, her debt had been discharged. It was submitted that the absence was not intentional but was due to an honest mistake. It was also mentioned, that a statement of debt had been prepared, which was intended to be put in, on the 6th of March 1942. It ended with the prayer that the petitioner being a woman was unavoidably absent and that the order against her, be set aside and the proceedings in the case be continued. The Board continued with the petition till 6th of July 1943 and fixed 14th of August 1943 as the next date. Before this the Board itself was abolished by the Government and no successive Board was appointed. No decision could, therefore, be given on the peti tion made on the 5th of March 1942.
On the abolition of the Board, the plaintiff instituted a regular suit for the recovery of her mortgage debt as mentioned above, to which objection was taken by the defendant. The trial Court dismissed the suit on the grounds that the debt was discharged by the Board in exercise of the powers conferred upon it, that the Civil Court could not go into the question of the discharge of the debt by the Board and that the review application under section 23 could not be entertained by it. This decision was affirmed on appeal by the Senior Sub‑Judge, Gujrat, and on second appeal to this Court by a learned Single Judge. The plaintiff has now come up in Letters Patent Appeal.
It was contended by the learned counsel for the appellant that in the absence of the Board, the Civil Court could determine the question of the sufficiency or otherwise of the cause of the absence of the plaintiff on 4th of March 1942 and referred to subsection (4) of section 13. This is as follows :‑
" If any creditor proves to the satisfaction of the Board, or, if no Board is vested with jurisdiction by the Provincial Govern ment, to the satisfaction of a Civil Court that the notice was not served on him and that he had no knowledge of its publication or that he was unavoidably absent at any of the hearings fixed by the Board, the Board or the Court as the case may be, may revive that debt".
Under section 8 of the Act, the Provincial Government may establish a Debt Conciliation Board for the purpose of amicable settlement between the debtors and their creditors and define the local limits of the area within which the Board shall have jurisdic tion. Under subsection (4) of section 8, it is provided that on the dissolution of the Board or the cessation of its existence or otherwise, the Provincial Government may establish another Board within the same local limits, in which the former Bard had jurisdiction and may declare this Board to be the successor in office of the first Board and may confer upon it power to dispose of such applications under section 13 (2) and section 23 as the Provincial Government may direct. No other Board was established in this case. Section 9 authorizes a debtor or a creditor to apply to the Board appointed for the area in which the debtor resides or holds any land to effect a settlement between the debtor and his creditors. Under section 12, on the receipt of an application under section 9, the Board shall pass an order fixing the date and place for the hearing of the application. According to sub section (2) notice of the order under subsection (1) shall be sent to creditors by registered post, acknowledgment due and where the debtor is not the applicant, notice of the order under subsec tion (1) shall be sent to him in a similar manner.
Section 13 deals with the proceedings before the Board and it will be desirable to reproduce it here.
"13 (1) On the date fixed, .the Board shall publish, in such manner as may be prescribed, a notice, calling upon every creditor of the debtor to submit a statement of debts owed to such creditor by the debtor. Such statement shall be sub mitted to the Board in writing within two months from the date of publication of the notice:
Provided that, if the Board is satisfied that any creditor was, for good and sufficient cause, unable to comply with such direction or to produce the documents required under sub section (1) of section 14 within the timefixed, it may extend the period for the submission of his statement of the debts owed to him or for production of such documents.
(2) Every debt owed to a single creditor of which no such statement has been submitted to the Board in compliance with the provisions of subsection (1) shall be deemed to be duly discharged for all purposes and all occasions against such creditor ; and every debt owned to two or more creditors jointly, of which such a statement or statements signed by all such creditors or their recognised agents has or have not been so submitted, shall be deemed to be so discharged against such creditors as have failed to submit the said statement or statements, but only to the extent of their .respective shares in the said debt:‑
Provided that no such debts shall be deemed to be discharged against any creditors whose names have not been included in the application made under section 9.
(3). If the creditor or any of the joint creditors fails without Sufficient cause to be present in person or by his recognised agent or legal practitioner in accordance with the provisions of section 24 at any of the hearings fixed by the Board, or fails to produce full particulars and documents as required under subsection (1) of section 14, the debt due to him or to the joint creditors, as the case may be, shall be deemed for all purposes and all occasions to have been fully discharged".
The manner in which the notice referred to in subsection (1) of section 13 is to be published, is defined in the Punjab Debt Conciliation Rules, 1935 published on 23rd April 1935. Rule 13 lays down that the notice shall be in form II attached to these rules and shall be published as follows :‑
(a) It shall be read out and explained in open session by the Chairman of the Board to all creditors who are present, and a memorandum shall be made that this has been done. The names of the creditors present shall also be recorded.
(b) A copy of the notice shall be affixed in some conspicuous part of the place where the Board is sitting.
(c) A copy of the notice ‑shall be sent by registered post (acknowledgment due) to those creditors who have been named by the applicant or debtor and are not present before the
A perusal of the above rules would clearly show that the publication, is to be made
(1) by reading out the notice in open session and
(2) by affixation of a copy of the notice in some conspicuous part of the place wh6ke the Board is sitting. The order of 3rd January 1942 Exhibit D. 1 clearly complies with condition No. 1 and the notice was read out in the open session and the names of the creditors present, recorded. As to conditions No. 2‑ mentioned above, it was directed "a copy of the notice for public informa tion be affixed outside the Court room ". The record does not indicate, whether any such notice, was affixed and if so, on what date. This is of importance because the period of two months, within which, the statement of debts and the documents were to be filed, was to run from the publication of the notice.
The notice under section 13 (1) was given on 3rd January 1942. Two months have to be reckoned from that date onward. The date on which the order was made i.e., 3rd January, shall have to be excluded. The." month " has been defined under the General Clauses Act, as a month reckoned according to the British calendar. The remaining 28 days of January would not, by themselves constitute one month. The succeeding month of February consisting of 28 days could be called a month, but up to what date, the second month shall be taken to have completed If the month be taken to mean as 30 days, then two months would consist of 60 days and the sixtieth day would fall on the 4th of March 1942. If the statement of debts or the relevant documents were not filed till the rising of the Board on the 4th of March 1942, it could be said that the creditor had not complied with the order of the Board within the prescribed period. This would proceed on the assumption that the notice as required by the rules referred to above, was published on the 3rd of January, of which, as stated above, there is no proof. It is not, therefore, known, when did the period of two months fixed by the Board end. It is difficult, under the circumstances, to hold that the creditor had incurred the penalty of his debt being discharged only on account of his failure to file the relevant documents about his debt. The penalty ensued because the creditor was absent on the date of the hearing and an absent person could not be expected to file the statement required of him by law under Sub section (1) of section 13.
This would take us to the consideration of subsection (4) of section 13. There are three distinct grounds on the proof of which, the creditor may ask the Board to revive his debt. These are (1) that the notice was not served on him, (2) that he had no knowledge of its publication and (3) that he was unavoidably absent at the hearing fixed, by the Board. Grounds Nos. 1 and 2 have no relevancy in the present case, as the notice was served upon the creditor and she had knowledge of the publication. It is only ground No. 3 which is material for the purposes of this case. This was, if the Board had been in existence, to be determined by the Board itself. Where the Board has ceased to exist and the question of " unavoidable absence " still remains undecided, the Legislature has made a provision under subsection (4) by empowering a Civil Court to decide it.
Whenever on a plea taken by the debtor, the question of the discharge of the debt on account of the failure of the creditor to produce his documents or to put an appearance at the date fixed, is raised, in the course of the suit brought‑ by the creditor for recovery of debt, which at one tine came up for conciliation before the Debt Conciliation Board, 'the ‑Civil Court must go into the matter and out whether the Board had dealt with it, in exercise of the exclusive powers given 'to 'it under the Act. The Civil Court could not refuse to entertain this question, as has been done in this case. Only recently, a similar question was disposed of, in the course of the suit Sat Pal v. Abdul Hayi decided by the East Punjab High Court reported as A. 1. R. 1949 E. P. page 1 F. B. The learned judges observed:‑
The Board has no jurisdiction to decide that the, debt has been discharged by reason of a certain default committed by the creditor. The discharge of a debt is the automatic result of the statutory provisions of section 13 (2) and (3,), and no order of the Debt Conciliation Board is required declaring the debt to be discharged. The order of the Board discharging the debt under section 13 (3) therefore would be ultra vines.
Nowhere in the Ac. there is a provision authorizing the Board to pronounce upon the question whether in a certain case the debt has been discharged or not. On general principles of law the only pro tribunal to adjudicate on this matter would be the tribunal before whom this question is raised. In other words, it would be the executing Court in a case where a decree has been passed already and the execution of it is sought after the Board has dealt with the matter and has exhausted its jurisdiction, but where this stage has not been reached then it would be the Civil Court when the matter is taken there by the creditor in a regular suit. The creditor, as a matter of course when he seeks execution of decree or institutes a suit will ignore the opinion of the Board on the ground that it is ultra wires. The matter can only be pleaded by the debtor in the nature of a plea in bar, on the basis of certain defaults committed by the creditor before the Debt Conciliation Board which result in the automatic discharge of the debt. Once the plea is raised, the Civil Court is bound to adjudicate on it, and, in adjudicating on this plea, it will have to consider and to decide whether circumstances have been proved which produce the result contemplated by the provisions of section 13, namely, the discharge of the debt. On this view of the case the Civil Court is bound to take evidence of both the parties and to give its decision on the question of the sufficiency of the cause far the creditor's alleged defaults. In the case of absence, at any hearing, of the creditor the Court has to find whether the absence was for an unavoidable reason or whether there was sufficient cause for the creditor not to appear before the Board on that date ; in the case of a notice it has to find whether the notice was served on the creditor or not while in the case of an alleged failure in filing a statement of account it has to be found whether the notice was served on the creditor and he failed to put in a statement of account within two months. The Court has also to find in some cases whether the documents filed under section 14 (1), were the proper docu ments and whether any omission to file some of them resulted in discharge of the debt. Once the Court finds that a default has happened then the legal consequences laid down in the statute would automatically follow, but if the Court finds that the default has not taken place then the plea taken up by the debtor will have to be repelled:
Cases can be visualised when proceedings under section 13 (.4) for revival of debt may not be put into motion by the creditor. He may treat the debt as still subsisting and file suit in Civil Court. The question of discharge may be agitated there, upon the plea, of the debtor based upon section 13 (3). The matter is, however, different if a creditor invokes the jurisdiction of the Board conferred on it under subsection (4) of section 13 and the Board gives its decision on the question of the sufficiency of the cause or on the question whether the creditor was prevented‑for some unavoidable reason from appearing at the hearing fixed by the Board. In other cases also when the Board decides that there was no sufficient cause for the creditor in not filing a statement of account or for producing all the documents that he was required to produce the matter has to be viewed from a different angle of vision. If a decision is given on these points by the Board on an application presented under subsection (4) of section. 13, then to that extent the Civil Court is bound to accept it and cannot go behind it. The Board or in the alternative the Civil Court has been constituted as an exclusive tribunal for determination of questions that arise under subsection (4) of section 13, Punjab Relief of Indebtedness Act, and once that exclusive tribunal has given findings on those questions those findings operate as res judicata and bar a subsequent trial of those matters.
To sum up: (i) The Civil Court can enquire into the question whether a creditor has failed to be present at a hearing before a Debt Conciliation Board for sufficient cause as con. templated by section 13 (3).
(ii) Creditor is entitled to show that he was absent for sufficient cause and that, therefore, his debt was not dis charged.
(iii) Jurisdiction of the Civil Court is affected by the fact that the creditor has made an application to the Board for revival of his debt under subsection (4) of section 13. If a finding has been given on the question of sufficiency of cause by the Board in an enquiry under that subsection that finding is conclusive and the Civil Court cannot go behind it."
The above Full Bench judgment has made the position quite clear and we respectfully agree with it. The Civil Court has failed to do its duty. The appeal is accepted with costs and the case is remitted to the trial Court for decision in accordance with law.
A.H Appeal accepted.
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