BAYYANA VEERARAGHAVA RAO Vs. DEBT CONCILIATION BOARD

JUDGEMENT

(1.) I am in entire agreement with the judgment which my learned brother is about to deliver. If administered in accordance with its spirit the Debt Conciliation Act should, in spite of its defects, prove beneficial, but my experience, gained from the hearing of petitions for the quashing of orders of Debt Conciliation Boards, convinces me that the Act has not been administered by some Boards in the way it ought to be administered. I have noticed a tendency to use the powers conferred by Sec. 10(2) of the Act arbitrarily and at times there has been flagrant misuse of the section. When a debtor applies to the Board for settlement of his debts, he has to embody in his application detailed information. One requirement is that he shall state the amount and particulars of all claims against him, together with the names and residences of his creditors so far as they are known to him or can by the exercise of reasonable care and diligence be ascertained by him. The particulars required are set out in Section 6. Section 10(1) says that if, after examining the debtor, it is in the opinion of the Board desirable to effect a settlement between him and his creditors, a notice shall be issued calling upon every creditor to submit a statement of the debts owed to him by the debtor. Sub- section (2) of that section states that, subject to the provisions of Sub-section (3), every debt of which a statement is not submitted to the Board in compliance with the provisions of Sub-section (1) shall be deemed for all purposes and all occasions to have been duly discharged. Sub-section (3) gives the Board power to recall such an order under certain circumstances.

(2.) Recalcitrant creditors are not deserving of sympathy, but it is difficult to see why a Debt Conciliation Board should be given the power to cancel a debt which the debtor himself admits to be due simply because the creditor has not filed a statement confirming the particulars set out in the debtor's application. I can well understand that when a creditor fails to file a statement under Section 10(1) he should be precluded from disputing; the debtor's figures, but there can be no justification for depriving him of what the debtor has acknowledged to be due to him. But assuming that there is justification for Sub-section (2) the power of cancellation conferred by it has been used without the slightest justification. For instance, some Boards have passed orders cancelling debts for failure to comply with the provisions of Section 11, but whatever happens to be the nature of the failure to comply with Section 11 the Board has no power to act under Section 10 (2). The cause for the maladministration of the Act in some cases may be that the members of the tribunals concerned have not the time to devote to the proper investigation of claims. The arbitrary nature of some of the orders which I have seen would suggest this. But if the legislative authority enacts a statute of this nature, it should make certain that there is proper machinery for working it. If there is not the proper machinery grave injustice is bound to follow.

(3.) The present case is an example of gross maladministration of the Act. The disregard of the principles of elementary justice which has taken place here is to be gathered from the details which my learned brother gives. From beginning to end there has been no attempt made to investigate the grave charges of fraud which have been brought against the debtor in the course of the proceedings. It would be difficult to imagine a more regrettable disregard of duty on the part of a tribunal possessing wide statutory powers than we have here, and there is no other course open to the Court but to quash the orders of the Board with costs against all the respondents; advocates fee Rs. 200. Somayya, J.