Case: State of Kerala Vs. M. T. Devassia and Another

This appeal brought on a certificate of fitness granted by the Kerala High Court arises out of a proceeding under the Kerala Agriculturists Debt Relief Act, 1970. The first respondent had an overdraft account with the Catholic Bank of India Ltd. since 1954. An order for the winding up of the bank was made some time in May, 1957. On a claim being filed by the official liquidator against the first respondent, the High Court of Kerala on January 8, 1963, made an order asking the first respondent to pay a sum of Rs. 5, 130.10 with future interest at the rate of 6 per cent. per annum on the principal amount of Rs. 4, 663.39. This order was presumably made under section 45D(4) of the Banking Regulation Act, 1949 (hereinafter referred to as " the Central Act "). On May 1, 1970, Rs. 5, 130.10 was recovered from the first respondent leaving a balance of Rs. 2, 375.80 carrying interest at 6 per cent. per annum still to be realized. Some time in July, 1970, the Kerala Agriculturists Debt Relief Act, 1970 (hereinafter referred to as " the Kerala Act ") came into force. A few days after the Kerala Act came into operation, the first respondent applied to the High Court under sections 4 and 5 of that Act praying for a declaration that " he has discharged the debt due to the Catholic Bank of India Ltd. and that no more amount is due from him as per accounts ". The application ultimately came up for hearing before a Division Bench of the High Court which held that the Central Act must exclusively govern the determination of the question of the amount due from the applicant and that he could not claim any benefit under the Kerala Act. Appellant, State of Kerala, disputes the correctness of the view taken by the High Court.

Court's reasoning:
We do not find anything to disagree with the proposition that the manner of payment of the debt and the determination of the amount of debt are two distinct matters and, without anything more, there is no question of conflict between them. The other provisions of the Kerala Act which the High Court found inconsistent with the Central Act are not material for the purpose of this case. As the High Court does not hold that section 4 of the Kerala Act is anything more than a provision for the payment of debt in instalments, it should have allowed the first respondent to repay the debt in the manner permitted by that section and was in error in not doing so, even if some other sections of the kerala Act were inconsistent with the Central Act. It has not been found that sections 4 and 5 are so placed in the scheme of the Act that they cannot be availed of without in some way giving effect to the offending sections of the Act.