D M THIPPESWAMY Vs. STATE OF MYSORE

JUDGEMENT

(1.) These petitions under Art. 226 of the Constitution have been filed by the creditors against the State of Mysore, challenging the vires of the Mysore Agricultural Debtors Relief Act, 1966 and some of the individual sections of the Act on various grounds.

(2.) Before adverting to the grounds of attack, it is necessary to ascertain the 'pith and substance' of the Act. Prior to the enactment of this Act, different enactments providing for relief of indebtedness of Agriculturists were in vogue. As they differed both in the quantum and method of relief to be granted to agriculturists under each of the Acts, the impugned enactment came to be passed in order to 'consolidate and amend the law for the relief of agricultural debtors in the State of Mysore'. The Bill was first published in June 1962 and was referred to the Select Committee. It was finally passed in 1966, received the assent of the President on the eleventh day of November 1966 and was brought into' force on the 1st day of April 1969 by virtue of the Notification issued by the State Government under Section 1(3) of the Act.

(3.) The pattern and the provisions of the Act are almost identical with those of the Bombay Agricultural Debtors Relief Act, 1947. Any debtor (as defined in Sec. 2 of the Act) or his creditor may make an application within three months from the commencement of the Act to the Court of the Munsiff or the Civil Judge having ordinary jurisdiction in the area where the debtor ordinarily resides, according as the total amount of the debts due from the debtor on the date of the application as specified thereunder does not exceed the pecuniary jurisdiction of such Court. On receipt of the application, the Court has to issue notice to the debtor or the creditors, as the case may be, and also published a general notice requiring the debtor and the creditors to submit their statements in the prescribed form within one month from the date of service. All applications against a debtor have to be consolidated and heard together. Two issues-whether the debtor is a 'debtor' under the Act and whether his total debts exceed rupees Twenty thousand-are required to be decided as preliminary issues. All suits, appeals, applications and proceedings pending in any Court involving the aforesaid questions have to be transferred to the Court having jurisdiction under the Act. On the Court finding the two issues in the affirmative, it has to examine the debtor, the creditor or the creditors, and take accounts of all the transactions, calculating interest at the rates specified in Sec. 21. The Court has also to issue notices to the Deputy Commissioner, the local authority, the Co-operative Sdciety and the Schedule Bank etc., to file statements showing their debts dyr from the particular debtor and indicating their willingness, if any as regards the extent of remission they are prepared to give to' the debtor. Thereafter, the value of the property and the other assets of the debtor has to be ascertained in the prescribed manner and the paying capacity of the debtor shall be deemed to be sixty per cent of the value of all his property. The unsecured debts have to be scaled down prorata to the paying capacity of the debtor while the secured debts have to be similarly scaled down if the total amount of such debts is more than sixty per cent of the value of the secured property belonging to the debtor. An award will then be drawn up in the prescribed form, fixing priority in respect of the debts due to Government, Local Authority and the loans taken by the debtor, if any, for seasonal finances under Sec. 61 of the Act Where the amount of debts of the debtor scaled down under the Act exceed half the value of his immovable property, the Courts have to intimate the creditors the amount of debts due from the debtor as also the value of his immovable property and call upon them to intimate in writing whether they agree to the further scaling down of the said debts so as to reduce them to a sum not exceeding half the said-value of the immovable property of the debtor. If the maority of the creditors ot ?ths in value of all the creditors agree to the further scaling down of the debts, the Court shall' direct the debtor to pay the amotint of such debts so agreed upon within a period of one month from the date of the order. If the debtor fails to pay the amount of such debts within the period of one month from the date of the order or the extended period, the Court has to prepare a scheme embodying the terms of the award evidencing adjustment of the debts and forward the scheme to the Primary Land Development Bank or the Mysore Central Co-operative Land Development Bank, as the case may be, for acceptance of the scheme. If the said Bank does not agree to accept the scheme, the Court has to make an award directing the said Bank to pav the creditors in cash the debt as finally scaled down and charge all the debts on the immovable properties of the debtor, such charges shall be deemed to be a mortgage executed in favour of such Bank. The Bank shall then be entitled to recover the said amount from the debtor in such instalments as may be fixed by the Court. There are also provisions for re-opening of the awards and their execution. No alienation of his property can be made by the debtor before discharging all his debts unless it be with the previous Sanction of the Court. Appeals are provided for against the different orders mentioned in Sec. 43 of the Act. The awards have to be registered under Chapter III. Chapter IV contains provisions for insolvency proceedings against a debtor. The State Government is given power to authorise in any local area any person to advance loans for financing of crops or seasonal financing of debtors who' are parties to any proceeding under the Act or in respect of whose debts an adjustment has been made thereunder. The Act repeals the Madras Agriculturists Relief Act 1938, the Bombay Agricultural Debtors Relief Act 1947 and the Hyderabad Agricultural Debtors Relief Act 1956, besides repealing the Debt Conciliation Acts in force in the Mysore area, the Madras area and the Coorg area.