Case: Balkishandas &amp; 12 Others Vs. State Bank Of Hyderabad And Anr

on or before that date from a debtor or in respect of which any proceedings were pending in a court or before the Board would be the subject-matter of settlement by the Board". In view of this legal position, on behalf of the appellant it is urged that the mortgage executed by the appellants did not create any new debt but merely secured the payment of prior debts which was the balance due to the Bank on the 3 accounts as on the date of the mortgage which debts were pending debts within the meaning of S. 25 (1). On this basis, it is contended that as no application was made under S. 11 in respect of the prior debts, the debts became extinguished and accordingly the mortgage deed lacked consideration to make it enforceable. Apart from the fact that both the courts on the evidence and on an interpretation of the mortgage deed, held that the mortgage transaction was in respect of a fresh loan advanced to the appellants under that deed, no plea that the debt was not supported by consideration or that the earlier debts had been extinguished was either raised before the trial court or before the appellate court. The learned Advocate, however, referred us to prayer in para 9 of the written statement in which a plea was taken that the suit is not maintainable and that "the plaintiff ought to have submitted its claim before the Debts Settlement Board". This plea is general in character and does not indicate that the suit is liable to be dismissed as the mortgage is unsupported by consideration. There was also neither an issue in the trial court nor has any ground been taken in the Memo of Appeal though as many as 75 grounds were urged against the judgment of the trial court. We cannot, therefore, permit the appellant to raise any contention based on the mortgage being unenforceable for want of consideration for the first time in this court. 5. A perusal of the terms of the mortgage deed clearly justifies the conclusions that the loan of Rupees 5,00,000/- was a fresh debt created by the mortgage deed. There is unimpeachable evidence to show, and this has been accepted by both the courts that all the three prior debts were paid from out of Rs.5,00,000/- cash credit loan granted to the appellants under the mortgage deed and the 13 bills of exchange, the time for payment of which had not fallen due and some of which were executed by parties other than the appellants, were endorsed in favour of the appellants and returned to them as a conseqeunce of the discharge of the debts due on the three prior accounts. 6. The mortgage deed states that the properties detailed in schedule annexed thereto were being mortgaged without possession as better security for the repayment of the sum of Rs.5,00,000/- under the deed together with interest accruing in future and all other sums thereby secured. Clause I of the deed states that the mortgagor shall repay the said sum of Rs.5,00,000/- and all other sums secured thereunder within a period of 5 years from the date, in the manner and subject to the conditions detailed thereafter, that the mortgagors shall pay interest on the said sum of Rs.5,00,000 or such other sum that may remain due from them to the mortgagees from time to time at the rate of six per cent per annum till the whole amount is fully repaid; that the mortgagors shall pay the interest accruing due every three months without default; that the principal sum of not less than Rupees 1,00,000/- was to be paid per year by the end of each year following; and that the payments towards the principal shall not be less than Rupees 5,000/- at a time per month and the balance to make up Rupees 1,00,000/- per annum payable shall be paid before the expiry of each year following. There are other terms to which it is not necessary to refer except the last one by which it is agreed that "if the mortgagors commit breach of any of the conditions and convenants and the mortgage money becomes payable either by reason of default or any other cause whatsoever and the mortgagors fail to pay the amount due on demand, the mortgagee will be entitled to sue and bring to sale the said properties hereby mortgaged and if the sale proceeds are not sufficient to satisfy the mortgage decree the mortgagors will pay the said balance personaly and from their other properties both movable and immovable". From the terms of this mortgage it is evident that the debt of Rupees 5,00,000/- is a fresh debt created by and secured thereunder with interest that may become due from the date of the mortgage and that there is, therefore, no question of the mortgage deed having been executed as a settlement of prior debts so as to attract the provisions of Sections 11 and 25 of the Act. In this view, the Civil Court had jurisdiction and the decree granted by the trial Court and confirmed by the appellate Court does not suffer from any infirmity. The appellants have asked for a direction to allow them to pay the decretal amount by instalments but we do not think that there is any justification for granting this prayer. The respondent, however, is prepared to give them time for payment provided half the amount is paid within a certain period and the balance thereof thereafter so that the entire decretal amount is payable within a year from the date of this judgment. We accordingly direct the appellants to pay within four months from the date of the judgment half the decretal amount with interest due thereon and the balance thereof together with further interest within 8 months thereafter. If half the decretal amount is not paid within four months as directed, the first respondent will be free to execute the entire decree.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]4. In this appeal on the reasoning of the Court in Mukundchands case (1964) 6 SCR 903   = (AIR 1964 SC 1633  ) the provisions of sec. 3 exempting Scheduled Banks from the application of the provisions of the Act equally offend Article 14 as was section 2 (e) of the Rajasthan Act which was analogous so that the 1st respondents debts to a Jagirdar are liable to be challenged under any of the provisions of the Act like those of any other creditor to whom section 3 was not made applicable. Before dealing with the contentions raised before us, it is necessary to state that as a consequence of the abolition of Jagirs by the Hyderabad Abolition of Jagirs Regulation). 1358 Fasli (1949 A. D.) and the Hyderabad Jagirs (Communication Regulation) 1359 F. (1950 A. D.) passed on 25-1-1950, the resources of the Jagirdars were greatly affected and as a consequence the creditors of those Jagirdars were also faced with a difficult situation which affected their prospects of recovering the loans. It, therefore, became necessary to enact legislation to provide for this contingency. It was in this background that the Act was passed which incorporated the provisions analogous to the Bombay Agricultural Debtors Relief Act 1947. Under the scheme of the Act a Debt Settlement Board was created and the creditors who had claims against the erstwhile Jagirdars were required under section 11 of make application within the notified date, which as we have earlier stated, was 30-6-53, for settlement of their debts. This court had in another case between the same parties-Jt. Family of Mukund Das Raja Bhagwan Dass and Sons v. State Bank of Hyderabad, (1971) 2 SCR 136   = (AIR 1971 SC 449  ) to which one of us was a party (Hegde J.), considered the scope and ambit of the Act and it is, therefore unnecessary for us again to traverse the same ground. In that case a similar question as that which falls for determination in this case was considered, namely, what are the conditions for the applicability of section 25 of the Act which provide for transfer of pending suits, appeals, applications and proceedings to the Board and deprive the civil courts of jurisdiction in respect of debts which were the subject-matter of these proceedings. In that case the decision of the Full Bench of the Andhra Pradesh High Court to which reference has been made earlier, was also considered and its conclusion that the expression pending in sec. 25 relates to proceedings which were pending on the notified date and could not take in any proceedings which came to be instituted after such date was approved. After examining the scheme and the several relevant provisions of the Act it was held that the suit or proceedings must be pending on the notified date and could not take in any proceedings which came to be instituted after such date, and that they must be in respect of a debt with regard to which a Jagirdar or a creditor could make an application to the Board on or before the notified date.Thus, only those debts which were due on or before the notified date from a debtor or in respect of which any proceedings were pending in any Court or before the Board could be the subject-matter of the settlement by the Board.In that case the suit was filed by the respondent Bank on July 1956 against the appellant for the recovery of Rs. 40,000/- on account of cash credit account opened by the appellants with the respondent. The suit was decreed and in 1959 the Bank filed an execution petition for executing the decree. It was urged that the execution petition should be transferred to the Jagirdars Debt Settlement Board under section 25 of the Act. While negativing this contention, Grover J. observed at page 142:"In our judgment the High Court came to the correct conclusion that the expression pending in S. 25 (1) must relate to proceedings which were pending on the notified date and could not take in any proceedings which came to be instituted after such date. The other condition for the applicability of S. 25 was that the suit or other proceedings must be in respect of a debt with regard to which a Jagirdar or the creditor could make an application to the Board on or before the date which the Government had notified for settlement of debts due by the Jagirdar. A close examination of S. 22 puts the matter beyond controversy. If no application had been made under S. 11 within the period specified therein or for recording a settlement made under S. 15 every debt due by the debtor was to stand extinguished. In a case of the present kind a debt would have stood extinguished if no application had been made under S. 11 within the specified period. Thus the material date would be the one notified by the Government under S. 11 and only those debts which were due on or before that date from a debtor or in respect of which any proceedings were pending in a court or before the Board would be the subject-matter of settlement by the Board"In view of this legal position, on behalf of the appellant it is urged that the mortgage executed by the appellants did not create any new debt but merely secured the payment of prior debts which was the balance due to the Bank on the 3 accounts as on the date of the mortgage which debts were pending debts within the meaning of S. 25 (1). On this basis, it is contended that as no application was made under S. 11 in respect of the prior debts, the debts became extinguished and accordingly the mortgage deed lacked consideration to make it enforceable. Apart from the fact that both the courts on the evidence and on an interpretation of the mortgage deed, held that the mortgage transaction was in respect of a fresh loan advanced to the appellants under that deed, no plea that the debt was not supported by consideration or that the earlier debts had been extinguished was either raised before the trial court or before the appellate court. The learned Advocate, however, referred us to prayer in para 9 of the written statement in which a plea was taken that the suit is not maintainable and that "the plaintiff ought to have submitted its claim before the Debts Settlement Board". This plea is general in character and does not indicate that the suit is liable to be dismissed as the mortgage is unsupported by consideration. There was also neither an issue in the trial court nor has any ground been taken in the Memo of Appeal though as many as 75 grounds were urged against the judgment of the trial court. We cannot, therefore, permit the appellant to raise any contention based on the mortgage being unenforceable for want of consideration for the first time in this court5. A perusal of the terms of the mortgage deed clearly justifies the conclusions that the loan of Rupees 5,00,000/- was a fresh debt created by the mortgage deed. There is unimpeachable evidence to show, and this has been accepted by both the courts that all the three prior debts were paid from out of Rs.5,00,000/- cash credit loan granted to the appellants under the mortgage deed and the 13 bills of exchange, the time for payment of which had not fallen due and some of which were executed by parties other than the appellants, were endorsed in favour of the appellants and returned to them as a conseqeunce of the discharge of the debts due on the three prior accounts6. The mortgage deed states that the properties detailed in schedule annexed thereto were being mortgaged without possession as better security for the repayment of the sum of Rs.5,00,000/- under the deed together with interest accruing in future and all other sums thereby secured. Clause I of the deed states that the mortgagor shall repay the said sum of Rs.5,00,000/- and all other sums secured thereunder within a period of 5 years from the date, in the manner and subject to the conditions detailed thereafter, that the mortgagors shall pay interest on the said sum of Rs.5,00,000 or such other sum that may remain due from them to the mortgagees from time to time at the rate of six per cent per annum till the whole amount is fully repaid; that the mortgagors shall pay the interest accruing due every three months without default; that the principal sum of not less than Rupees 1,00,000/- was to be paid per year by the end of each year following; and that the payments towards the principal shall not be less than Rupees 5,000/- at a time per month and the balance to make up Rupees 1,00,000/- per annum payable shall be paid before the expiry of each year following. There are other terms to which it is not necessary to refer except the last one by which it is agreed that "if the mortgagors commit breach of any of the conditions and convenants and the mortgage money becomes payable either by reason of default or any other cause whatsoever and the mortgagors fail to pay the amount due on demand, the mortgagee will be entitled to sue and bring to sale the said properties hereby mortgaged and if the sale proceeds are not sufficient to satisfy the mortgage decree the mortgagors will pay the said balance personaly and from their other properties both movable and immovable". From the terms of this mortgage it is evident that the debt of Rupees 5,00,000/- is a fresh debt created by and secured thereunder with interest that may become due from the date of the mortgage and that there is, therefore, no question of the mortgage deed having been executed as a settlement of prior debts so as to attract the provisions of Sections 11 and 25 of the Act. In this view, the Civil Court had jurisdiction and the decree granted by the trial Court and confirmed by the appellate Court does not suffer from any infirmity. The appellants have asked for a direction to allow them to pay the decretal amount by instalments but we do not think that there is any justification for granting this prayer. The respondent, however, is prepared to give them time for payment provided half the amount is paid within a certain period and the balance thereof thereafter so that the entire decretal amount is payable within a year from the date of this judgment. We accordingly direct the appellants to pay within four months from the date of the judgment half the decretal amount with interest due thereon and the balance thereof together with further interest within 8 months thereafter. If half the decretal amount is not paid within four months as directed, the first respondent will be free to execute the entire decree.