Case: Naunihal Kishan And Others Vs. R. S. Ch. Pratap Singh And Another

1. The facts necessary to appreciate the points involved in this appeal by special leave against the Judgment of the High Court of Punjab are briefly these. By a registered deed of mortgage dated March 6, 1933 Sham Singh who is respondent No. 2 before us effected an usufructuary mortgage of land measuring 7530 Kanal and 19 Marlas situate in village Mohanpur in the District of Multan (now in Pakistan) to the father of appellants 1 to 3 and to Topan Das - the father of the 4th appellant. The sum secured by the mortgage was Rs. 30,000/-. The stipulation in the mortgage was that the income derived from the properties transferred to the possession of the mortgagees was to be treated as interest on Rs. 10,000/- out of the principal sum and that the balance of Rs. 20,000/- was to carry a sum of Rs. 1,650/- per annum as interest. 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 Rs. 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 Rs. 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 this state, the country was partitioned in 1947 and both the mortgagor as well as the mortgagees moved into India and they were "displaced persons". The owners of the property, viz., the original mortgagor - respondent No. 2 Sham Singh and the pre-emptor-vendee were, as displaced persons, allotted agricultural land in India on the basis of their original holdings in Pakistan in pursuance of the relevant rules under the Displaced Persons (Compensation and Rehabilitation) Rules. The appellants as the mortgagees entitled to possession of the lands were, in June - July 1950, under these rules put in possession of the properties allotted to both Sham Singh - the original mortgagor - as well as of Pratap Singh - the legal representative of the deceased pre-emptor (respondent No. 1). The total extent of land of which the respondent had been put in possession was 51 standard acres and 9 units of land made up of 37.4 standard acres as being the property belonging to the pre-emptor-vendee (respondent No.1) and 14.5 standard acres by virtue of the property allottable to Sham Singh - the original mortgagor (respondent No. 2).3. The Union Legislature enacted in November 1951 the Displaced Persons (Debts Adjustment) Act, 1951 (Act LXX of 1951) which we shall hereafter refer to as the Act, being an Act to make provisions for the adjustment and settlement of debts due by displaced persons. Section 5 of the Act enabled an application to be made by a "displaced debtor" for the adjustment of his debts to a Tribunal - which was defined as meaning "a civil court having authority to exercise jurisdiction under the Act" for the adjustment of the debts due by the applicant. Section 16 made provision for the manner in which debts secured on immovable property due by displaced debtors were to be reduced, settled and adjusted. Sham Singh as well as Pratap Singh made separate applications under S. 5 of the Act seeking to obtain the benefit of the settlement and adjustment provision contained in its S. 16. The two applications were in view of their having reference to the same mortgage debt, consolidated and were heard together by the Senior Sub-Judge, Kernal who was the relevant Tribunal under the Act. Several objections were raised by the mortgagee - appellants to these applications but they were overruled and the mortgage debt was scaled down under S. 16 and other relevant statutory 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.

Court's reasoning:
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 but that the Tribunal took into account merely the proportion between the two extents or areas i. e., the standard acres left in Pakistan compared to the standard acres allotted in India in lieu thereof. This contention that the procedure adopted does not accord with the requirements of the proviso has been rejected by all the Courts and, in our opinion, correctly.The fallacy in the argument of learned Counsel consists in ignoring the fact that in computing the standard acres left by a displaced person in Pakistan the rehabilitation authorities are, under the relevant rules and instructions, directed to take into account the income yield of the two sets of lands and thus the "value" of the land left behind is reflected in ascertaining the "standard acres". Thus though market value in the sense of what a willing purchaser would pay for the land left behind was not ascertained - it was obviously not practicable to ascertain it - the rules etc. made sufficient provision for such a valuation to be reflected in the computation of the area to be allotted instead. The nature of the land left behind - whether it was canal-irrigated, well-irrigated, or dry or merely rain-fed - was taken into account and numerical factors were prescribed based on these criteria for ascertaining the equivalent of those lands in India. It was after such a computation was made that the 7531 Kanals and odd of land which belonged to the respondents was equated to 359 and odd standard acres. If therefore 359 standard acres were the equivalent in value of the land left behind, regard being had to the circumstances we have indicated, there cannot be any complaint that there has been a departure from the method of adjustment specified in the proviso to S. 16(4) when the debt as ascertained and computed in accordance with S. 29 of the Act and other relevant statutory provisions was scaled down under S. 16(4) by multiplaying it by 51/359, or 1/7th. We are further of the opinion that when the provision in proviso to S. 16(1) spoke of "value" it must have had in contemplation the value as determined by the procedure for fixing the same under the relevant rules for the computation of equivalents of property of displaced persons left behind in Pakistan and the allotment of evacuee property to them in India. There is no substance, therefore, in this point either. These were the only points urged before us.