Case: R.B. Chaudhary Raghuraj Singh Vs. Murari Lal &amp; Ors

he there on the date of the suit and the suit must be with respect to a secured debt. The date, therefore, on which the Court has to see whether the debt in the suit before it is a secured debt or not is the date on which the suit is filed. The High Court seems to be in error when it held that- under the definition of secured debt" only such debts as are secured by a mortgage come in and not debts which are secured by a charge. It seems to have overlooked that part of the definition of the word "mortgage" which lays down that a mortgage will include a charge as defined in S. 100 of the Transfer of Property Act. Therefore, even though a debt may be secured by a charge it will be a secured debt for the purpose of S. 3 provided the charge was there before the date of the suit. We have referred to S. 3 in some details because we are of opinion that the interpretation to be put on S. 3 will have a direct bearing on the interpretation of the words of S. 4 where also the material words are the same as in S. 3.7. Section 4 provides for reduction of debts after passing of decrees, and sub-s. (1) thereof reads thus:"(1) Notwithstanding anything in the Code of Civil Procedure. 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."Then come provisions as to the reduction of debt: but we are not concerned with the details thereof.8. The question that has been posed before us is the meaning of the words "a decree..... relating to a secured debt". The comparable words in S. 3 are "a suit...relating to a secured debt". As we have already said, so far as S. 3 is concerned, it is the date on which the suit is filed which has to be seen to determine whether the suit relates to a secured debt as defined in the Act. It has been urged on behalf of the appellant that S. 4 applies undoubtedly to a case where the debt was a secured debt at the time the suit was filed. But it is further urged that in an application under S. 4, the Court may also take into account the fact: that though the debt may not have been a secured debt on the date the suit was filed in which the decree was passed, the decree having created a Charge the debt becomes secured and the decree relates to a secured debt, the relevant date in such a case being the date on which the application under S. 4 has been made to the Court. It is said that the words "a decree .....relating to secured debt" means a decree which has secured a debt whether the debt was secured before the suit was filed or not.9. We are of opinion that this meaning cannot be given to the words "a decree.... relating to a secured debt." We have already Indicated that the comparable words in S.3 are the same and there the words "a suit.........relating to secured debt" clearly mean a suit which is based on a debt which was secured before the suit was filed. On the same reasoning when S. 4 speaks of "a decree..... relating to a secured debt" it means a decree passed in a suit which was based on a secured debt as on the date of the suit. The legislature could not have intended by using these words in S. 4 that the fact that the decree created a charge should result in converting what was an unsecured debt into a secured debt for the purpose of S. 4 it seems to us that if one were to ask in a case of this kind whether the decree related to a secured debt or not, the answer would clearly be that the decree does not relate to a secured debt but to an unsecured debt based on a promissory note. It is true that the decree itself created a charge but that is very different from saying that the decree relates to a secured debt. We have no doubt that if the legislature intended that a decree which relates to an unsecured debt but which itself creates a charge for any reason would also be covered by S. 4, it would have used different and appropriate words to convey that idea. Thus to our mind, as the words "suit relating to a secured debt" mean split relating to a debt which was secured on the date the suit was filed, a decree relating to secured debt must also mean the same thing, i.e., decree in respect of a debt which was secured when the suit in which the decree was passed was filed. The mere fact that the decree created a charge for certain reasons, as in this case, under the U. P. Agriculturists Relief Act, is no reason for holding that the decree relates to a secured debt. Whether the debt was secured or otherwise is a matter which in our opinion has to be tested both for S. 4 as well as for S. 3 on the date the suit is filed. If on that date the debt was secured, the suit would be relating to a secured debt and so would be the decree which might later be passed in that suit. But if on the date of the suit the debt was not secured it cannot be said that the decree related to a secured debt simply because the decree created a charge for some reason or other. We are, therefore, of opinion that the High Court was right in the view it took that this case was not covered by S. 4 of the Act.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]5. It will be seen from these definitions that a decree in a suit based on any debt is a decree to which the Act applies and such decrees can be of two kinds, namely, (i) those based on a secured debt, and (ii) those based on an unsecured debt. A secured debt is a debt secured by mortgage and includes a debt secured by a charge under S. l00 of the Transfer of Propertyfollow provisions as to the manner in which the debt would be reduced, but we are not concerned with the details thereof. Section 3, therefore, applies to a case where a decree relating to a secured debt had not been passed before the Act came into force. In such a case the Court passing the decree has to reduce the amount in the manner provided in that section. It is, however, clear that before the Court can act under S. 3, it has to come to the conclusion that the debt in question is a secured debt, i. e., a debt secured by a mortgage or a charge under S. l00 of the Transfer of Property Act. The mortgage or the charge must he there on the date of the suit and the suit must be with respect to a secured debt. The date, therefore, on which the Court has to see whether the debt in the suit before it is a secured debt or not is the date on which the suit is filed. The High Court seems to be in error when it held that- under the definition of secured debt" only such debts as are secured by a mortgage come in and not debts which are secured by a charge. It seems to have overlooked that part of the definition of the word "mortgage" which lays down that a mortgage will include a charge as defined in S. 100 of the Transfer of Property Act. Therefore, even though a debt may be secured by a charge it will be a secured debt for the purpose of S. 3 provided the charge was there before the date of the suit. We have referred to S. 3 in some details because we are of opinion that the interpretation to be put on S. 3 will have a direct bearing on the interpretation of the words of S. 4 where also the material words are the same as in S.we have already said, so far as S. 3 is concerned, it is the date on which the suit is filed which has to be seen to determine whether the suit relates to a secured debt as defined in the Act.We are of opinion that this meaning cannot be given to the words "a decree.... relating to a secured debt." We have already Indicated that the comparable words in S.3 are the same and there the words "a suit.........relating to secured debt" clearly mean a suit which is based on a debt which was secured before the suit was filed. On the same reasoning when S. 4 speaks of "a decree..... relating to a secured debt" it means a decree passed in a suit which was based on a secured debt as on the date of the suit. The legislature could not have intended by using these words in S. 4 that the fact that the decree created a charge should result in converting what was an unsecured debt into a secured debt for the purpose of S. 4 it seems to us that if one were to ask in a case of this kind whether the decree related to a secured debt or not, the answer would clearly be that the decree does not relate to a secured debt but to an unsecured debt based on a promissory note. It is true that the decree itself created a charge but that is very different from saying that the decree relates to a secured debt. We have no doubt that if the legislature intended that a decree which relates to an unsecured debt but which itself creates a charge for any reason would also be covered by S. 4, it would have used different and appropriate words to convey that idea. Thus to our mind, as the words "suit relating to a secured debt" mean split relating to a debt which was secured on the date the suit was filed, a decree relating to secured debt must also mean the same thing, i.e., decree in respect of a debt which was secured when the suit in which the decree was passed was filed. The mere fact that the decree created a charge for certain reasons, as in this case, under the U. P. Agriculturists Relief Act, is no reason for holding that the decree relates to a secured debt. Whether the debt was secured or otherwise is a matter which in our opinion has to be tested both for S. 4 as well as for S. 3 on the date the suit is filed. If on that date the debt was secured, the suit would be relating to a secured debt and so would be the decree which might later be passed in that suit. But if on the date of the suit the debt was not secured it cannot be said that the decree related to a secured debt simply because the decree created a charge for some reason or other. We are, therefore, of opinion that the High Court was right in the view it took that this case was not covered by S. 4 of thecomparable words in S. 3 are "a suit...relating to a secured debt". Aswe have already said, so far as S. 3 is concerned, it is the date on which the suit is filed which has to be seen to determine whether the suit relates to a secured debt as defined in the Act.