BHURA BHADOO RAGHUBANSI Vs. SADDULAL GENDLAL PARWAR

JUDGEMENT

(1.) DEFENDANTS 1 and 2 appeal. The suit is on a foreclosure mortgage and the plaintiff is an assignee of the mortgagees' rights he having purchased at a court-auction. The facts are as follows. On 12th Feburary 1925 the defendants, or their, predecessors, mortgaged the plaint properties to Nawalsingh and Gokulsingh whom we will call the original mortgagees. The plaintiff obtained a decree against these two persons and in execution purchased their mortgagee rights at a court auction on 24th November, 1934. In between, however, namely on 19th May 1934, the defendants went before a Debt Conciliation Board and named the original mortgagees as their creditors in respect of this debt. They were noticed and did hot put in their statement of claim within the time specified and so the debt was extinguished on 27th July 1934 under Section 8(2), Debt Concilation Act. It is true they put in a statement a couple of months later but the Board refused to accept it at that stage and held that the debt was extinguished under the section on 27th July 1984.

(2.) THE plaintiff purchased at the auction nearly four months, later and on 27th March 1985, he appeared before the Board and presented a statement in which we gather he claimed the right to participate in the conciliation proceedings. This claim was however rejected by the Board it holding that at the date of his purchase there was no debt in being as it had been extinguished before the purchase. So far there is no difficulty. On these facts, of course, the plaintiff would be out of Court, but a complication arises because the plaintiff attached the debt in suit on 15th February 1934, that is to say, before the debt conciliation proceedings commenced. The attachment was under Order 21, Rule 46, Civil P.C., and the contention of the plaintiff is that after that neither the defendants nor the original mortgagees had any right to conciliate. All rights to the debt thereafter resided in the plaintiff and aside from paying the mortgage money to him the defendants' only other right was to deposit the sum in Court under Order 21, Rule 46(3). Therefore the Board had no jurisdiction to deal with this debt in his absence, and consequently, he not having been noticed. Section 8(2), Debt Conciliation Act, was not attracted.

(3.) AS to Order 21, Rule 46(1)(i), that does not provide any penalty for non-observance of its conditions. All it says is that in the case of a debt the creditor shall be prohibited from recovering the debt, and the debtor from making payment, without an order from the Court. But neither money, nor the equivalent of money has passed hands here. The creditor has not received nor has the debtor paid. The statute has intervened and extinguished the debt before that could be done. It is clear that this rule in the Code does not vest the attaching creditor with any right, title or interest in the debt except the negative right of seeing that it is not paid, (except into Court), without an order of the Court. That prohibits others from receiving payment to the attaching creditor's detriment but does not invest the attaching creditor with any right to deal with it. Consequently, until the plaintiff purchased at the auction and thus got title he could not have been noticed by the Debt Conciliation Board, nor could he have appeared and offered to conciliate the original mortgagees' claim. He had no locus standi at that stage. As regards the position of the original mortgagee after the attachment, all he is prohibited from doing is receiving payment of the debt. He is not prevented from settling with his debtor, nor the debtor with him. Both Section 64 and Order 21, Rule 46 are limited, so far as debts are concerned, to their payment and not to their settlement. Therefore, the debtor and the creditor could have effected a conciliation before the Board though nothing could have been paid under the agreement except into Court, or with the sanction of the Court. It was argued that the Debt Conciliation Board only had jurisdiction over debts which fall within the definition of "debt" in Section 2(e) and that after the attachment the debt on the mortgage was no longer a liability owing to the original mortgagee. That however is a hopeless contention. The debt continues to be owing to the original creditors even after attachment though it cannot be paid except under the conditions specified.