JANKIPRASAD NANDLAL KALAL Vs. BALMUKUND RAMNATH MARWADI

JUDGEMENT

(1.) THIS is a defendant's application for revision arising out of a suit to recover money lent. The debt is evidenced by a ruzu for Rs. 300 dated 23rd September 1935 and carrying interest at Re. 1-6-0 per cent, per month, though the plaintiff has claimed simple interest only at 10 per cent, per annum. The defendant admitted the debt but contended that there had been proceedings before a Debt Conciliation Board which resulted in the execution of an agreement under Section 12, Debt Conciliation Act and the issue of a certificate under Section 15(1) of the Act against the present plaintiff. The defendant therefore argued that under Section 15(2) of the Act he was not liable for costs or a portion of the interest claimed and that under Section 15(3) any decree in this suit could not be executed until all amounts recorded as payable under the agreement had been paid.

(2.) IN his application to the Board the defendants mentioned two creditors: the present plaintiff to whom Rs. 3500 odd was due and Yeshwant to whom Rs. 477 was due. Yeshwant agreed to accept Rs. 450 payable in ten annual instalments of Rs. 45 until realization but the plaintiff refused to accept what the Board considered was a fair offer. An agreement between the defendant and Yeshwant was executed. Now Section 12(1) of the Act provides that if the creditors to whom not less than 40 per cent, of the total amount of the debtor's debts are owing come to an amicable settlement with the debtor, such settlement shall forthwith be reduced to writing in the form of an agreement. It is apparent on the face of the record and is conceded that the debt due to Yeshwant represented far less than 40 per cent, of the total debts; it was in fact about 10 per cent. The Small Cause Court held that it was open to the Civil Court to en-quire whether the Debt Conciliation Board had jurisdiction to make such an agreement and, if such enquiry is permissible, then obviously the agreement must be held to be invalid. Mr. Mudholkar for the applicant has contended that Section 16(b), Debt Conciliation Act, bars any such enquiry and that no Civil Court can entertain an application to execute a decree the execution of which is suspended under Sub-section (3) of Section 15. The facts are somewhat similar to those in Sadasheo Rao v. Roopchand (1939) 26 AIR Nag 136 where it was found that the Debt Conciliation Board had miscalculated the amount due on a mortgage and that if this amount had been properly calculated then the creditors agreeing to a settlement would not represent 40 per cent, of the debts. This Court held that the Civil Courts have the right to determine whether the special tribunal constituted to oust the jurisdiction of the Courts is acting within the ambit of its powers or not and that that means that the Civil Courts must decide whether the facts necessary to constitute the 40 per cent, rule mentioned in Section 12(1) are present or not. In Janba v. Mannoo (1939) 26 AIR Nag 312 Gruer J. stated that these remarks are difficult to reconcile with the statement in Shivdin v. Ramratan (1937) 24 AIR Nag 259: If the Board had jurisdiction to attempt to effect a settlement, then the Civil Courts would not have jurisdiction to inquire whether that jurisdiction was properly exercised, and the legality or validity of any orders passed in the exercise of the Board's jurisdiction could not be questioned in any Civil Courts on any ground except perhaps fraud.

(3.) THE Small Cause Court therefore was correct, in my opinion, in holding that Section 15(2) of the Act applied and not Section 15(3), but it failed to carry this view in effect; the Court allowed costs and interest in full. From the date of the certificate interest will be allowed at 6 per cent, per annum only and this means that the interest will be reduced by Rs. 15-8-0. The costs must also be disallowed. The result is that there will be a decree in the plaintiff's favour for Rs. 373-6-6 without costs. Costs in this Court will be borne as incurred.