Appeal No 507 of 1961
Appeal from the judgment and order dated February 18 1959 of the Rajasthan High Court in Civil Misc
Case No 10 of 1959
section K Kapur and B R G K Achar for the appellant
The respondent did not appear
February 26 1964
The Judgment of the Court was delivered by SIKRI J
This is an appeal directed against the judgment of the Rajasthan High Court which granted a certificate under article 1331c
One Mukanchand respondent No 1 in this appeal hereinafter referred to as the decree holder obtained a mortgage decree on February 12 1954 for Rs 114581 14 6 with future interest at 6 per cent per annum against one Rao Raja Inder Singh hereinafter referred to as the judgment debtor
The mortgage money was advanced under three mortgages and the mortgaged properties consisted of 2 Jagirs and some non jagir immovable property
The latter property was sold in execution and Rs 33750 paid to the decree holder in partial satisfaction of the decree
On December 14 1956 the decree holder filed an execution petition in the Court of the District Judge Jodhpur for Rs 99965 3 6 praying for attachment of the amount of compensation and rehabili tation grant which would be paid to the judgment debtor on account of resumption of his jagir
This case was registered 906 as Execution Case No 1257
On July 29 1957 the judg ment debtor made an application before the District Judge Jodhpur to the effect that the decretal amount should be reduced in accordance with section 5 of the Rajasthan Jagirdars  Debt Reduction Act Rajasthan Act IX of 1957
On July 31 1957 the judgment debtor submitted another application claiming that only half of his total jagir compensation and rehabilitation grant money was liable to attachment under section 7 of the said Act
The decree holder in his reply to those petitions urged that the provisions relied on were ultra vires the Constitution of India being in contravention of articles 14 19 and 31 of the Constitution
On December 3 1957 the decree holder filed a petition under article 228 of the Constitution praying that the execution case No 12 of 1957 pending in the Court of the District Judge Jodhpur be withdrawn from that Court to the Rajasthan High Court
The High Court transferred the case to its file and thereafter issued notice to the State of Rajasthan as the constitutionality of the said Act had been challenged
By its judgment the High Court held that apart from the latter part of section 2e excluding certain debts hereinafter referred to as the impugned part and section 72 of the Act the rest of the Act was valid
The State applied for leave to appeal to the Supreme Court and so did the decree holder
On the certificates being granted two appeals were filed in this Court
The appeal of Mukhanchand Civil Appeal No 50861 was by order dated April 23 1962 of this Court held to have abated
Therefore we are not concerned with the validity of the other provisions of the Act
Although the validity of the other provisions is not now in question it is necessary to set out the relevant provisions of the Act because they have a bearing on the question of the validity of the impugned part of section 2 e and section 7 2 of the Act and these are reproduced below Preamble To provide for the scaling down of debts of jagirdars whose jagir lands have been resumed under the provisions of the Rajasthan Land Reforms and Resumption of Jagirs Act 1952  907 section 2e debt means an advance in cash or in kind and includes any transaction which is in substance a debt but does not include an advance as aforesaid made on or after the first day of January
1949 or a debt due to i the Central Government or Government of any State ii a local authority iii a scheduled bank iv a co operative society and v a waqf trust or endowment for a charitable or religious purpose only or vi a person where the debt was advanced on his behalf by the Court of Wards section 3
Reduction of secured debt at the time of passing of decree 1 Nothwithstanding anything in any law agreement or document in any suit to which this Act applies relating to a secured debt the court shall after the amount due has been ascertained but before passing a decree proceed as hereinafter stated
2a Where the mortgaged property consists exclusively of jagir lands and such lands have been resumed under the provisions of the Act the court shall first ascertain whether the mortgagor had the right under the jagir law in force at the time the mortgage deed was executed to mortgage the jagir lands or failing that whether specific permission for effecting the mortgage was obtained from the competent authority and whether the mortgage was validly subsisting on the date of resumption of the jagir lands
b if the mortgage was legally and properly made and was validly subsisting on the aforesaid date the court shall reduce the amount due in accordance with the formula given in Schedule 1 908 3 Where the mortgaged property consists partly of jagir lands as aforesaid and partly of property other than such lands the court shall after taking action in accordance with the provisions of subclause a of sub section 2 proceed to distribute
the amount due on the two properties separately in accordance with the principles contained in section 82 of the IV of 1882 as if they had been properties belonging separately to two persons with separate and distinct rights of ownership and after the amount due has been so distributed reduce the amount due on the jagir lands in accordance with the formula given in Schedule 1
section 4 Powers to reduce secured debt after passing of decree 1 Nothwithstanding anything in the Code of Civil Procedure 1908 V of 1908 or any other law the court which passed a decree to which this Act applies relating to a secured debt shall on the application either of the decree holder or judgment debtor proceed as hereinafter stated
2 Where the mortgaged property charged under the decree consists exclusively of jagir lands and such lands have been resumed under the provisions of the Act the court shall reduce the amount due in accordance with the formula given in Schedule 1
3 Where the mortgaged property charged under the decree consists partly of jagir lands and partly of property other than jagir lands the court shall determine the amount due on the first day of January 1949 and distribute the same on the two properties separately in accordance with the principles contained in section 82 of the IV of 1882 as if they had been properties belonging to two persons with separate and distinct rights of ownership and after the 909 amount due as respect the jagir lands has been so calculated
reduce it in accordance with the formula given in Schedule 1
section 6 Satisfaction of the decree after the amount due has been reduced under and in accordance with the provisions of section 4 the decree shall to the extent of the reduction so effected be deemed for all purposes and on all occasions to have been duly satisfied
section 72 Notwithstanding anything in any law the reduced amount found in the case of a mortgagor or judgment debtor as the case may be under section 3 or section 4 as respects mortgaged jagir lands shall not be legally recoverable otherwise than out of the compensation and rehabilitation grant payable to such mortgagor or judgment debtor in respect of such jagir lands
 We may mention that respondent No 1 has not entered appearance in this Court
The learned counsel for the State Mr section K Kapur has urged that the High Court erred in holding that these two provisions ie impugned part of section 2e and section 72 were void
Regarding the impugned part of section 2e he contended that the debts mentioned in sub cls
i to vi of section 2e have been placed on a different footing from debts due to other creditors because the bodies and the authorities mentioned therein serve a public purpose or a public cause
He urged that this provided a reasonable basis for differentiating between private creditors and creditors mentioned in cls
i to vi above
Regarding section 72 he urged that it imposed reasonable restrictions in the interest of general public on the creditors
Before examining the validity of the impugned provisions it is necessary to examine the scheme of the Act
As the preamble states in plain terms the object of the Act is to scale down debts of Jagirdars whose jagir lands have been resumed under the provisions of the Rajasthan Land Reforms and Resumption of Jagirs Act
Clause e of section 2 defines debt  to mean an advance in cash or in kind
The definition does not embrace dues of Government or a local authority 910 in respect of taxes land revenue etc
The definition then excludes from the purview of the Act debts due to Central Government and other authorities and bodies mentioned in the clause
We shall advert to them later when discussing the validity of this exclusion
Section 3 provides for reduction of secured debts in accordance with the formula given in Schedule 1 at the time of passing a decree and their apportionment where necessary between jagir and non jagir property
Section 4 provides for reduction of secured debts after a decree has been passed
Section 5 directs a court to pass a fresh decree after reduction of the secured debts
Section 6 provides that after reduction of the secured debt in accordance with the provisions of section 4 the decree shall to the extent of the reduction so effected be deemed for all purposes and on all occasions to have been duly satisfied
Clause 1 of section 7 provides for the execution of the decree against the compensation and rehabilitation grant payable in respect of the jagir lands of the judgment debtor
Clause 2 of section 7 which has been struck down by the High Court prohibits the recovery of the reduced amount with respect to jagir property from any property other than the compensation and rehabilitation grant payable to a jagirdar
The effect of this provision is that the other properties of the jagirdar existing or which he may acquire hereafter are immune from being proceeded against in execution or otherwise
We think that the High Court was right in holding that the impugned part of section 2e infringes article 14 of the Consti tution
It is now well settled that in order to pass the test of permissible classification two conditions must be fulfilled namely 1 that the classification must be founded on an intelligible differentiation which distinguishes persons or things that are to be put together from others left out of the group and 2 that the differentia must have a rational relationship to the object sought to be achieved by the statute in question
In our opinion condition No 2 above has clearly not been satisfied in this case
The object sought to be achieved by the impugned Act was to reduce the debts secured on jagir lands which had been resumed under the provisions of the Rajasthan Land Reforms and Resumption of 911 Jagirs Act
The Jagirdar s capacity to pay debts had been reduced by the resumption of his lands and the object of the Act was to ameliorate his condition
The fact that the debts are owed to a government or local authority or other bodies mentioned in the impugned part of section 2e has no rational relationship with the object sought to be achieved by the Act
Further no intelligible principle underlies the exempted categories of debts
The reason why a debt advanced on behalf of a person by the Court of Wards is clubbed with a debt due to a State or a scheduled bank and why a debt due to a non scheduled bank is not excluded from the purview of the Act is not discernible
In this connection Mr Kapur has relied on the decision of this Court in Manna Lal vs Collector of Jhalwar 1
This case is clearly distinguishable because there a law giving special facility for the recovery of dues to a bank owned by the Government was held not to offend article 14 of the Con stitution
It is clear that the government can be legitimately put in a separate category for the purpose of laying down the procedure for the recovery of its dues
Mr Kapur further relied on Nand Ram Chhotey Lal vs Kishore Raman Singh 2
The judgment of the High Court undoubtedly supports him but with respect we are unable to agree with the ratio of the case
The High Court was concerned with
the UP Zamindars Debt Reduction Act UP Act XV of 1953 which is substantially similar to the impugned Act The ratio of the High Court is It appears to us that the legislature had to make a distinction between debts due from the ex zamindars to private individuals and the debts due to scheduled banks or to Government or semi Government authorities
The obvious reason appears to be that the private money lenders were considered to be a bane to rural economy and perpetrating agricultural indebtedness
It was to save the cultivators from such unscrupulous moneylenders that such laws had to be enacted the last in series being the Zamindars Debt Reduction Act
 We consider there is no force in these observations
No such reason is apparent from the terms of the Act
Non scheduled banks 1  2 AIR 1962 All
912 and all other private creditors cannot be said to be a bane to rural economy
The third case relied on by Mr Kapur Jamnalal Ramlal Kimtee vs Kishendas and State of Hyderabad1 does not contain any discussion
The High Court supported the exclusion on the ground that exclusion of certain class of debts under section 3 of the impugned Act also is not without substantial justification for public demands do not stand in the same position as ordinary demands Apart from the fact that all the exempted categories are not public demands the High Court does not seem to have considered whether the differentia had any rational relationship sought to be achieved by the Act
In conclusion agreeing with the High Court we hold that no reasonable classification is disclosed for the purpose of sustaining the impugned part of section 2e
Now coming to the question of the validity of section 72 we consider that this sub section is valid as it imposes reasonable restrictions in the interest of general public on the rights of a secured creditor
A secured creditor when he advanced money on the security of jagir property primarily looked to that property for the realisation of his dues
Further this sub section has been designed with the object of rehabilitating a jagirdar whose jagir properties have been taken over by the State for a public purpose at a low valuation
If this provision was not made the jagirdar would find it difficult to start life afresh and look to other avocations for not only his existing non jagir property but his future income and acquired properties would be liable to attachment and sale for the purpose of satisfying the demands of such secured creditors
Accordingly we hold that section 72 imposes reasonable restrictions in the interest of general public
The appeal is accordingly partly accepted the decision of the High Court in regard to section 2e is confirmed and that in regard to section 72 is reversed
As the respondent was not represented and that appeal has only partly succeeded we order the parties to bear their own costs in this Court
Appeal partly allowed
1AIR 1955 Hyd 194


Summary:
Respondent No 1 obtained a mortgage decree for Rs 114581146 against one Rao Raja Inder Singh the judgment debtor
The mortgage money was advanced under three mortgages and the mortgaged properties consisted of Jagirs and some non Jagir immovable property
The latter property was sold in execution and Rs 33750 paid to the decree holder in partial satisfaction of the decree
Then the decree holder filed an execution petition in the Court of the District Judge for the balance amount ie Rs 9996536 praying for attachment of the amount of compensation and rehabilitation grant which would be paid to the judgment debtor on account of resumption of his Jagir
The judgmment debtor submitted two applications in which he claimed relief under sections 5 and 7 of the Rajasthan Jagirdars  Debt Reduction Act
The decree holder in his reply to those petitions urged that the provisions relied in were ultra vires the Constitution of India being in contravention of articles 14 19 and 31 of the Constitution
Thereafter the decree holder moved a petition under article 228 of the Constitution before the High Court praying that the execution case pending in the Court of the District Judge be withdrawn from that court to the High Court
The High Court transferred the case to its file
By its judgment the High Court could held that apart from the later part of section 2e excluding certain debts and section 7 2 of the Act the rest of the Act was valid
The High Court granted a certificate under article 1331c of the Constitution to the State of Rajasthan to file an appeal to this Court
Hence the appeal Held i That the impugned part of section 2e infringes article 14 of the Constitution for the reason that no reasonable classification is disclosed for the purpose of sustaining the impugned part of section 2e
It is now well settled that in order to pass the test of permissible classification two conditions must be fulfilled namely 1 that the classification must be founded on an intelligible differentiation which distinguishes persons or things that are to be put together from others left out of the group and 2 that the differential must have a rational relationship to the object sought to be achieved by the statute in question
The said condition No 2 above has clearly not been satisfied in this case
The object sought to be achieved by the impugned Act was to reduce the debts secured on the Jagir lands which had been resumed under the provisions of the Rajasthan Land Reforms and Resumption of Jagirs Act
The fact that the debts are owed to a Government or local authority or other bodies mentioned in the impugned part of section 2 e has no rational relationship with the object sought to be achieved by the Act
Further no intelligible principle underlies the exempted categories of debts
The reason why a debt advanced on behalf of a person by the Court of Wards is clubbed with a debt due to a State or a scheduled bank and why a debt due to a non scheduled bank is not excluded from the purview of the Act is not discernible
Manna Lal vs Collector of Jhalwar
  Nand Ram Chhotey Lai vs Kishore Raman Singh AIR 1962 All 521 and 905 Jamnalal Ramlal Kimtee vs Kishendas and State of Hyderabad AIR 1955 Hyd 194 distinguished
ii Section 72 is valid as it imposes reasonable restrictions in the interests of general public
on the rights of a secured creditor
This sub section has been designed with the object of rehabilitating a Jagirdar whose Jagir properties have been taken over by the State for a public purpose at a low valuation
If this provision was not made the Jagirdar would find it diffcult to start life afresh because his future income and acquired properties would be liable to attachment and sale for the purpose of satisfying the demands of such creditors