KUNHALAVI Vs. GOVINDAN BHATTATHIRIPAD

JUDGEMENT

(1.) In this second appeal by the defendant, the only question to be decided is whether he is entitled to the benefits of the Debt Relief Act 17/1977. Liability which is under a hypothecation bond is admitted. The total amount due as balance on the date of suit was only a little more than Rs. 2, 000/-. It is undoubtedly a debt within the meaning of the Act. The only other question for consideration is whether the appellant is a debtor within the definition of the Act. The conditions necessary to come within that definition are that the debt excluding interest and his annual income also should not exceed Rs. 3, 000/-. Debt is below the limit. Annual income is from 2 acres 80 cents of paramba and 2 acres 70 cents of paddy field owned by the appellant. The commissioner, who submitted Ext. C1 report, assessed the income from the paddy field at Rs. 3, 000/- and found the net income to be Rs. 1,800/- after deducting Rs. 1,200/- towards expenses. Income from the paramba was assessed at Rs. 592/-. Total income was thus fixed at Rs. 2, 392/- per year. Both the courts below followed V. Ramaswami Naidu and another v. Commissioner of Income Tax ( AIR 1959 Mad. 126 ) and said that in the absence of statutory definitions of income, the words total income should take its ordinary dictionary meaning which covers that which comes in as the periodical produce of one's work, business, lands or investments and as such the annual or periodical receipts accruing to the person. Total income' was, therefore, treated as gross income. Benefit of the Act was, therefore, refused on the ground that his total annual income is Rs. 3, 592/- without deducting expenses.

(2.) As observed by M.P. Menon, J. in Kunhiraman v. Kunhambu ( 1980 KLT 297 ), the fixation of qualification with reference to the annual income of a person, as also the extent of his total indebtedness, makes it clear that the class of persons the legislature wants to protect is that class whose annual income and whose capacity to incur debts are within low limits. The legislature did not want to protect persons with larger income whose capacity to incur and discharge debts are higher. But the line drawn for that purpose is arbitrary and insufficient. It is not fool proof or fair and effective. A man who advanced all what he had including the sale proceeds of his sole property will have to forgo the same even in favour of a person who has immense wealth if the amount is Rs. 3,000/- or below and the annual income of the borrower is also below that limit. Property owned by the debtor may not be yielding but its value may be high. He may be able to discharge the debt by selling a portion of it but he need not repay because of the income limit. That is what happened in this case. The respondent is having 5 1/2 acres of land and the debt is charged also. It is only common knowledge that a portion of the property is sufficient to wipe off the debt. It is for the legislature to rectify this anomaly.

(3.) But as the law now stands, I do not think that the decrees of the courts below could be sustained in spite of my feeling that it is inequitable to concede the benefit of the debt relief legislation to the appellant who is evidently having assets more than sufficient to pay off the charged debt. But a hard case cannot make bad law. There is no case for the respondent that the appellant is having any income other than that shown in the report of the commissioner. No such evidence is also there. The report is not objected or disproved. The gross income and net income of the appellant will have, therefore, to be accepted as Rs. 3,592/- and Rs. 2392/- respectively. The only question is which of the two is to be taken as the total annual income.