The Khudabadi Bhaibund Co-Operative Credit Bank Ltd. v. N.S Verma

Patel, J.:— These five revisional applications raise a common question of law and relate to the interpretation of the provisions of the Displaced Persons (Compensation and Rehabilitation) Act, 1954. It will be enough to state the facts of one case for the purpose of deciding the points at issue; in the other cases, names of the parties, the amounts due from the parties and the dates of the awards differ.

2. I will take Civil Revision Application No. 1408 of 1957. The petitioner-bank is a displaced bank and is recognized as such under s. 43 of the Displaced Persons (Debts Adjustment) Act, 1951. Since it is a co-operative society, it is governed by the Co-operative Societies Act, 1925. Opponents Nos. 2 and 3 were indebted to the petitioner-bank, who proceeded under the Co-operative Societies Act and obtained an award against them for a sum of Rs. 6,898-14-0. As large number of people migrated from one country to the other because of the division of India, Government had to make provision for displaced persons. Therefore, the Displaced Persons (Claims) Act, 1950, being Act No. XLIV of 1950, was passed on May 18, 1950, under which claims of displaced persons were verified. Under the Act, powers were given to certain officers to verify the claims made by those persons in respect of property left by displaced persons in Pakistan. In accordance with these rules, the claim of the opponents was verified at Rs. 34,000 by the duly constituted authority. It appears that under a scheme framed by the Government, some payments were made to some persons in settlement of their claims. After obtaining an award under the Co-operative Societies Act, the petitioner got a certificate from the Registrar which had the effect of making the award a decree for the purpose of execution. The petitioner thereafter filed an execution proceeding in the City Civil Court on December 18, 1953, and got a garnishee notice served on opponent No. 1 as the Regional Settlement Commissioner, requiring him to hold the amount payable to opponents Nos. 2 and 3 until further orders of the Court. This amount appears to be the amount determined as the amount of compensation payable do opponents Nos. 2 and 3 in respect of their verified claim of Rs. 34,000.

3. On January 4, 1956, on behalf of opponent No. 1 appearance was filed but no objection was taken to the garnishee notice. On January 12, 1956, a notice was taken out under r. 175 of the City Civil Court Rules that moneys attached by the garnishee notice be brought to the Court. In reply, one Bhalchandra made an affidavit that interim compensation of Rs. 6,227 had been paid to the respondent. As no date of payment was given, the petitioner took out a Chamber Summons for discovery and inspection. Mr. Rane says that the amount was paid on March 6, 1955. The learned Judge dismissed the notice and the Chamber Summons holding that the amount due to opponents Nos. 2 and 3 was part of the compensation pool and, therefore, could not be attached and brought into Court. It is against this order that the present revisional application is brought to this Court. The other applications are also directed against similar orders. It is argued on behalf of the petitioner that the amount recoverable as compensation is a debt or property and what is sought to be attached is not any property in the compensation pool but the debt due to opponents Nos. 2 and 3 or their properties. On the other hand, it is contended by the learned Assistant Government Pleader that the amount that was to be paid to opponents Nos. 2 and 3 was still a part of the pool until the amount was actually tendered to them and, therefore, attachment could not be made. It is also now contended that the amount was in the nature of an ex-gracia payment at least in 1952 and, therefore, the original notice was bad.

4. It is necessary to refer to a few sections of the Displaced Persons (Compensation and Rehabilitation) Act, 1954, in order to decide the dispute between the parties. Before I refer to the relevant sections of the Act, it is necessary to observe that as a result of partition of India, large number of persons migrated from the Pakistan territory and similarly large number of persons left India. In order to deal with the properties of evacuees, the Government enacted Act XXI of 1950 called the Administration, of Evacuee Property Act. Under the scheme of the Act, Custodians were appointed and properties of evacuees vested by operation of law in such Custodians. They were given large powers of realising these properties and all claims against evacuees and their properties were required to be settled by authorities constituted under the said Act. In order to achieve the object of that Act, s. 17 made a specific provision that except as otherwise expressly provided in the Act, no evacuee property which had vested or was deemed to have vested in the Custodian would be liable to be proceeded against in any manner whatsoever in execution of any decree or order of any Court or other authority, and any attachment or injunction or order for the appointment of a receiver in respect of any such property would case to have effect on the commencement of the Act and was to be deemed to be void.

5. After having enacted this provision, for rehabilitation of a large number of displaced persons, which became a very acute problem, the Displaced Persons (Claims) Act, 1950, was also passed amongst other Acts. Under this Act such persons were required to submit their claims in respect of properties left in Pakistan and duly constituted authority had to verify these claims and certify the result. Government also issued notifications from time to time directing payments in certain proportions to the verified claims to be made to certain class of displaced persons. Ultimately Act XLIV of 1954 was passed to make the relief more generally available according to the principles settled in the Act. The earlier sections provide for constitution of various authorities under the Act. The relevant section is s. 7. It provides that:

“On receipt of an application for payment of compensation…the Settlement Commissioner shall make an inquiry in such manner as may be prescribed and having due regard to the prescribed scales of compensation, the nature of the verified claim and other circumstances of the case, shall ascertain the amount of compensation to which the applicant is entitled”.

6. Sub-section (2) of s. 7 is not relevant for the purposes of the present petitions. Section 8 then goes on to provide that a displaced person shall be paid out of the compensation pool the amount of net compensation determined under sub-s. (3) of s. 7 as being payable to him. It then provides that the Settlement Commissioner or any other officer or authority authorised by the Chief Settlement Commissioner in this behalf may make such payment in any one of the modes there provided. The modes provided are (1) payment in cash, (2) payment in Government bonds; (3) by sale to displaced person of any property from the compensation pool and setting off the purchase money against the compensation payable to him; (4) by any other mode of transfer to the displaced person of any property from the compensation pool and setting off the valuation of the property against the compensation payable to him; (5) by transfer of shares or debentures in any company or corporation; (6) in such other form as may be prescribed. Reading ss. 7 and 8, it is clear that once the amount of net compensation payable to the displaced person is determined, the Government is bound to make the payment in accordance with the provisions of s. 8. How it will discharge the payment is no doubt within the discretion of the officer concerned, but the amount must be paid and there cannot be any evasion of the payment. It is, therefore, clear that the Legislature intended that once the amount payable was determined, it became a debt payable to the displaced person. Ordinarily a debt is payable in money and not in kind. The Legislature made an exception to this ordinary rule and provided that it could be discharged in one or more of the several modes provided in s. 8. Nonetheless, in view of the obligatory nature of the duty to make the payment, it must be regarded as a debt.

7. It is argued by the learned Assistant Government Pleader that since the law does not provide that a suit could be filed in respect of this amount, it cannot be regarded as a debt. For this purpose, s. 36 of the Act is relied upon. I doubt very much if s. 36 must have the meaning contended for it. It no doubt prohibits the civil Court from entertaining any suit or proceeding in respect of any matter which the Central Government or any officer or authority appointed under this Act is empowered by or under this Act to determine, and it also provides that no injunction can be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under that Act. Enactments ousting the jurisdiction of civil Court must be strictly interpreted. The jurisdiction of the civil Court would be excluded only to the extent clearly indicated. It is no doubt true that the Court cannot compel the officer to make payment in a particular mode according to its dictates. Nonetheless it would seem that the Court can direct payment to be made. How the payment is to be made will be a matter for the authorities to determine. For this limited relief I do not see why a suit cannot lie. Even apart from that, where a duty is placed on the officer concerned; that duty can always be enforced under the Constitution. Merely because a remedy by suit is very limited or even the remedy of enforcement of payment is limited, the claim cannot cease to be a debt. On the whole it appears to me that s. 8 clearly creates a debt in favour of the displaced person.

8. Even otherwise it is clear that the claim is saleable property. Section 60 of the Civil Procedure Code provides that all kinds of property of a judgment, debtor is liable to attachment and sale. The exception created by cls. (e), (f), (g), (h), (k) and (l) would show that within the ambit of the section are included all intangible properties and all claims due from the Government. Explanation I would show that even future salary of a Government servant is liable to attachment. There can be no doubt, therefore, that the claim of the judgment-debtor in this case is property which is capable of attachment and sale. In this case it being very similar to a debt the process of execution regarding debts must apply.

9. It is argued that s. 15 prohibits any process in execution of any decree or any order or any other process to issue against any part of the compensation pool. To me it appears that s. 15 is merely complementary to the provisions of s. 17 of the Administration of Evacuee Property Act (XXXI of 1950) and it is intended to carry into effect the provisions of the present Act. As long as the property remained with the Custodian of the Evacuee Property, it could not be proceeded against, by any process in execution of a decree or order. Under s. 14 all such properties form part of the compensation pool. In order that the compensation pool should be available for the purpose of distribution to displaced persons, it must necessarily be provided that no process could lie against any part of that property and that is what s. 15 purports to do; it only means that no process can be levied against any property which is a pail of the compensation pool vesting in the Central Government for enforcement of any claim against that property.

10. In the present case what is sought for is not any process against any such property but only against the debt which is owed by the Government to the displaced persons. If one refers to the provisions of O. XXI, particularly r. 46, they show that what is attached is not any part of the property of the debtor of the judgment-debtor but only the property of the judgment-debtor in the debt. No attachment is sought on, any portion of the fund, or any immovable property, or any movable property forming part of the pool. The order issued to the officer is not to discharge the debt to the displaced persons until further orders of the Court. It is a misnomer, therefore, to say that what is sought to be done is the attachment of any part of the compensation pool.

11. Mr. Rane relies on the cases of Tirath Ram v. Mehar Chand Jagan Nath . [1958] A.I.R Punj. 436., Sundar Das v. Secy. of State . [1938] A.I.R Lah. 533. and Spence v. Coleman . [1901] 2 K.B 199.. In the last mentioned case the liquidator had paid to the Companies Liquidation Account at the Bank of England the unclaimed amount due to a share-holder of the company by name Coleman. Spence, a creditor of Coleman, sought to proceed against the Inspector-General in Companies Liquidation as if he was a debtor of Coleman. The question, therefore, was whether the amount paid by the liquidator was a debt due to Coleman. Section 15(5) of the Act enabled the person entitled, to recover the amount in a particular manner. Until an order was made by the Board of Trade, there was no liability of any one to pay the amount. Collins L.J observed at page 205:

“…As between him and the judgment debtor there is only an obligation on his part, if and when he is ordered by the Board of Trade so to do, to hand over the money to the person to whom the Board of Trade directs him to hand it. That being so, it is clear, I think, that there was no debt due to the judgment debtor. In my opinion, sub-ss. 3 and 5 taken together negative the notion of a debt.”

12. It seems, if an order for payment had been made by the Board of Trade in favour of Coleman, the decision may have been different. This case does not afford and analogy for deciding the present case. In Sundar Das v. Secy. of State it was was held that compensation money awarded under the Land Acquisition Act is not liable to attachment at the instance of the creditors of the persons whose lands have been acquired until the amount is tendered to them under s. 31 of the Land Acquisition Act. It was further held that the money in the hands of the Collector is money belonging to the Government until the tender is made and no relationship of creditor and debtor can be said to have been established between the Collector on the one side and the owners of the lands on the other. In the first place, it is not possible to ascertain from the statement of facts in this case as to whether possession was taken by the Collector in the acquisition proceedings. If possession is taken, then having regard to s. 48 of the Land Acquisition Act, it would be difficult to hold that the amount payable to the claimant would not be a debt in view of ss. 31 and 34. In any case, there is nothing to show in the present case that it was within the discretion of the Government to pay the amount determined under s. 7 of the Act or not. In Tirath Ram v. Mehar Chand Jagan Nath the Court purported to follow the two cases discussed by me. With respect, for the reasons stated above, I find it difficult to agree with the ratio of the case. The contention made before me by Mr. Rane that what is sought to be attached is part of the compensation pool, therefore, cannot be accepted.

13. It is then urged by Mr. Rane that in any event at least when the first order of attachment was served on December 18, 1953, the amount that was payable to the claimant was an ex gracia payment and, therefore, it did not create a debt. As stated earlier, the Displaced Persons (Claims) Act, 1950, enabled the Government to enquire into and settle the claims of displaced persons. Thereafter notifications were issued by the Ministry of Rehabilitation under which amounts became payable in certain proportions. In none of the Notifications was it said that the amounts were being paid to the displaced persons merely as a matter of grace. By these notifications the amount became payable in a fixed proportion of the verified claim. In the absence of anything in any of the notifications to suggest that the amount was paid ex gracia, it is not possible to hold it to be so. There is, therefore, no substance in this contention either.

14. It is clear that in view of the fact that the interim payment was made after the prohibitory orders were issued it must be disregarded. In this view of the matter, the orders made by the learned trial Judge must be set aside in all these revisional applications. The notices are made absolute. The officer concerned in answer to the notice of the Court may either deposit the amount due to the claimants, if it is already, directed to be paid in cash, or place before the Court materials to show that it is directed to be paid in any other manner either by delivery of shares or movable property or immovable property. If the debt is sought to be discharged in any way other than by payment in cash, the discharge will be made according to the orders of the Court. Order to be complied with within one month from to-day. The Government will pay the costs of the petitioner in each of these revisional applications, and those in the lower Court.

15. The stay applications do not now survive.

16. It is, therefore, not necessary to make any orders on these applications. The Government will pay the costs of these applications.

17. Order accordingly.