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TMI Blog1963 (3) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... terest. 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 6,568 Kanals of land to Guranditta Ram and others. Out of the consideration for this sale a sum of ₹ 26,500/- was left with the transferee the same being directed to be paid in discharge of the mortgage. The sale to Guranditta Ram was subject to a pre-emption claim and the pre-emptor exercised his rights to obtain that relief. Narain Singh - father of Partap Singh, the 1st respondent - was the pre-emptor and in a suit filed by him he obtained on February 16, 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 mortgagees still continuing to retain the actual possession of the land. The sum of ₹ 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. (2.) While things were in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory 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 was 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. (4.) Before we set out the grounds which have been urged before us in support of the appeal it is perhaps 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 alia, for making provision for adjustment and settlement of debts due by displaced persons. 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 in S. 2(9) is defined in S. 2(6) thus : 2(6). 'debt' means any pecuniary liability, whether p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 lands of which he was in possession in West 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 : 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 Augu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Lachhman Singh v. Natha Singh, ILR (1941) Lah 71 : (AIR 1940 Lah 401) (FB) and the other of the Bombay High Court in Manubhai Mahijibhai Patel v. Trikamlal Laxmidas, ILR (1958) Bom 1429 : AIR 1960 Bom 247). ILR 1941 Lah 71: (AIR 1940 Lah 401 (FB)) turned on the meaning of the expression 'debt' in the Punjab Relief of Indebtedness Act (Act VII of 1934) and it was held that the amount secured by a pure usufructuary mortgage which 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 the essence of the concept of 'debt' consisted in the personal liability of the obligor which the obligee was entitled to enforce by action. This decision, even apart from the terms of S. 16 of the Act which in terms includes an usufructuary mortgage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... move 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 application by the creditor. The reliefs which a creditor might obtain in case of his election to retain the security are set out in sub-ss. (3) 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 : 4. Notwithstanding anything contained in this section, 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 lands of which he was in possession in West 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 :- 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mortgage in favour of the appellant would squarely fall within the definition 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(4) of the Act. In this connection we might refer to the decision of this Court in 1960-3 SCR 570 : (AIR 1960 SC 1030) where it was ruled that a mortgage-debt was within the definition of the word 'debt' in S. 2(6) of the Act. No 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' in S. 2(6) has to be understood not in isolation but with reference to other provisions of the Act and particularly S. 16. We are therefore clearly of the opinion that every usufructuary mortgage, whatever its nature, is within the definition of 'debt' under 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 personally against the deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mortgaged land now belonging to the petitioner (Pratap Singh) and respondent No. 5 (Sham Singh) has been assessed as equivalent to 359 standard acres 14 3/4 units (329 standard acres 13 3/4 units of the petitioner plus 22 standard acres 61/2 units of the respondent No. 5) and in lieu thereof the mortgagors have been given in all 51 standard acres 9 units (37.4 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 1 and 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 ₹ 51,700/- when reduced to this proportion comes approximately to ₹ 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. 16(4) 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 the lands left by him in Pakistan. Value learned Counsel says, means market value. It is urged that value of neither of the lands was computed on that basis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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