Citation Codes

Equivalent Citations

citation codes

Case Number

Ex. A. No. 8/1967 in C.O No. 7 of 1957

Attorney(S)

For the petitioner:— Sh. K.K Raizada, Advocate.
For the respondent:— Sh. G.S Vohra, Advocate.

Judges

S.K. Kapur

Acts

SECTION 9 DISPLACED PERSONS COMPENSATION AND REHABILITATION ACT 1954
SECTION 8 DISPLACED PERSONS COMPENSATION AND REHABILITATION ACT 1954
SECTION 31 LAND ACQUISITION ACT
SECTION 48 LAND ACQUISITION ACT
ORDER 38 RULE 5 CIVIL PROCEDURE CODE
sub-section (3) of section 7
Rehabilitation) Act, 1954.
LAND ACQUISITION ACT

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Smart Summary

Judgment Summary — S.K. Kapur, J.

Factual and Procedural Background

This is an application for execution brought by the Official Liquidator of Peoples Insurance Company Limited (in liquidation) claiming a decree of Rs. 31,400 against the estate of the late S. Sardul Singh Caveeshar (represented by his son Major K.S. Caveeshar). The claim is founded on an order dated 30 August 1965 of the Punjab High Court in Letters Patent Appeal No. 114 of 1962 which settled S. Sardul Singh Caveeshar on the list of contributories and fixed Rs. 31,400 as payable by him.

The company had earlier applied for attachment before judgment under Order 38, rule 5, Civil Procedure Code (Petition L.M. No. 66 of 1957) and an order was made attaching compensation payable to S. Sardul Singh Caveeshar under the Displaced Persons (Compensation and Rehabilitation) Act, 1954. On 16 August 1967 a direction was given to the Chief Settlement Commissioner to remit the amount falling due under the attached claim to the Court. The parties framed pleadings and ten issues; the learned counsel for Major K.S. Caveeshar confined argument to Issue No. 1, which asked whether the Official Liquidator could proceed against claims verified in the name of Sardul Singh Caveeshar.

A Settlement Officer (Radha Krishan, DHW 1) testified as to the amount verified in favour of the deceased (total verified claim Rs. 5,63,596; net payable after adjustments Rs. 82,844) and stated that because of the death, payment would be to the estate but the Department would have to bring the legal representatives on record under section 9 of the Displaced Persons Act and verify any prior commitments before making payment. The Department stated it had no objection to attachment but would verify the net amount due after meeting any prior commitments.

Legal Issues Presented

Can the Official Liquidator proceed against the claims which have been verified in the name of Shri Sardul Singh Caveeshar?

Arguments of the Parties

Major K.S. Caveeshar (represented by Mr. Vohra) — Principal contentions

The compensation payable to a displaced person under the Displaced Persons (Compensation and Rehabilitation) Act, 1954, is not a property capable of attachment.
Sections 8, 14 and 15 of the Act show the compensation pool and the mode of payment are within the statutory scheme and section 15 exempts property forming part of the compensation pool from processes of courts; until the mode of payment is determined the Government is not a debtor and the claimant is not a creditor.
Relied upon Tirath Ram Lal Chand v. M/s. Mehar Chand Jagan Nath (K.L. Gosain, J.), and the decisions in Sunder Das v. Secretary of State and Spence v. Coleman to support the "no debt/no attachment" position.

Official Liquidator / Decree-holder (represented by Mr. Raizada) — Principal contentions

Once the amount of net compensation payable to a displaced person is determined, the Government is bound to make the payment under section 8; consequently the right to receive compensation becomes a debt and thus property capable of attachment.
Relied on Shri Thakar Dass v. The Chief Settlement Commissioner, K.B. Co-operative Credit Bank v. S. Verma (Patel, J.) and Harnam Singh v. D.K. Puri, which hold that determined compensation constitutes a creditor's right or debt and may vest in receivers or Official Receivers by operation of law.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Tirath Ram Lal Chand v. M/s. Mehar Chand Jagan Nath (K.L. Gosain, J.)	The Government cannot be deemed to have become a debtor and claimants cannot be creditors as to any particular sum until the Government tenders cash; money in the compensation pool remains part of the pool and is exempt from attachment under section 15.	The court noted this decision was relied upon by the defendant's counsel but rejected the general proposition for the Displaced Persons Act; the court found the decision distinguishable on statutory grounds and held there is a debt due under section 8 of the Displaced Persons Act once compensation is determined.
Sunder Das v. Secretary of State (Lahore High Court)	Under the Land Acquisition Act, compensation money could not be attached by a creditor until tender under section 31; money in the hands of the Collector belonged to the Government until tender.	The court treated this decision as inapposite: it arose under a different statutory code (Land Acquisition Act) and its rationale did not translate to the Displaced Persons Act; the court distinguished it on those grounds.
Spence v. Coleman	Construction of the relevant provisions led to the conclusion that there was no debt due to the judgment-debtor in that context.	The court regarded Spence as distinguishable on the statutory facts and accepted the view expressed by Patel, J. in the Bombay decision that Spence was not applicable to the Displaced Persons Act; the court thus did not treat Spence as controlling.
Shri Thakar Dass v. The Chief Settlement Commissioner, New Delhi and others (Mahajan, J.)	After determination of the amount of compensation there is no option left to the Department but to pay; the right to receive compensation is property akin to a creditor's right.	The court cited this decision approvingly as authority for the proposition that determined compensation constitutes a right to payment (property) and can vest in a receiver.
K.B. Co-operative Credit Bank v. S. Verma (Patel, J.)	Once the amount of net compensation is determined, the Government is bound to make payment under section 8; despite the modes of payment being discretionary, the obligation to pay converts the determined amount into a debt.	The court expressly accepted the reasoning of Patel, J. and relied on it to conclude that the determined compensation under the Displaced Persons Act is a debt and thus property capable of attachment.
Harnam Singh v. D.K. Puri (Division Bench, Punjab High Court)	The Division Bench dissented from the view of Gosain, J. and approved the view that determined compensation is a debt and vests accordingly; it approved the view of Mahajan, J. and the Bombay decision.	The court cited this decision as supportive of the position that once compensation is determined it constitutes property capable of being proceeded against by creditors; the decision reinforced the court's conclusion.

Court's Reasoning and Analysis

The court proceeded by focusing on Issue No.1 — whether the Official Liquidator could proceed against the claims verified in the name of the deceased contributory. The factual matrix established by the Settlement Officer was that a claim had been verified in favour of the deceased, a net amount remained payable to his estate (subject to verification of prior commitments and bringing legal representatives on record under section 9), and the Department had no objection to attachment pending verification.

The legal dispute turned on statutory construction of the Displaced Persons (Compensation and Rehabilitation) Act, 1954, especially sections 7(3), 8, 14 and 15. Counsel for the estate argued that section 15 exempts the compensation pool from court processes and, until the mode of payment is determined, the Government is not a debtor and the claimant not a creditor — relying on prior decisions to support a "no debt/no attachment" position.

The decree-holder's counsel countered that once the amount of compensation is determined the Government is bound to pay under section 8, making the right to receive compensation a debt (and therefore property) which can be attached or vested in a receiver. The court surveyed the conflicting authorities: it identified Gosain, J.'s decision (Tirath Ram Lal Chand) as adopting the "no debt until tender" approach, founded in part on Sunder Das (a Land Acquisition Act decision), and Spence v. Coleman.

The court analyzed these authorities and the statutory scheme and concluded that the Land Acquisition Act precedents were not analogous: the Land Acquisition Act is a distinct code which, in some circumstances, treats the Collector's possession and tender differently — matters not reflected in the Displaced Persons Act. The court emphasized the "determining factor" is whether a debt is due to the person whose property is sought to be attached.

Applying the statute, the court held that section 8 makes the amount of compensation determined under section 7(3) a debt payable to the displaced person. The fact that the statute permits discretion as to the form or mode of payment does not negate the obligatory nature of the duty to make the payment once the amount is determined. The court accepted the reasoning of Patel, J. in K.B. Co-operative Credit Bank v. S. Verma and the view of Mahajan, J. in Thakar Dass that the right to receive determined compensation is a creditor's right (property).

Having concluded that the compensation payable to the deceased's estate was property capable of attachment, the court turned to the mode of realization. Because the statute leaves the mode of payment to the authorities, the court appointed the Official Liquidator as Receiver to realise the payment from the authorities under the Displaced Persons Act "in the same manner as it would have been paid to S. Sardul Singh Caveeshar." The Receiver (Official Liquidator) was not to receive any extra remuneration for this function.

Holding and Implications

Holding: The execution application is allowed.

Consequences and immediate effects:

The court held that the compensation determined to be payable to the late S. Sardul Singh Caveeshar's estate is property capable of attachment and constitutes a debt once determined under the Displaced Persons (Compensation and Rehabilitation) Act, 1954.
The Official Liquidator is appointed as Receiver to realise the payment from the authorities under the Displaced Persons Act to the extent due to the company, and will perform this work without any additional remuneration.
The execution application was allowed with no order as to costs.

The opinion does not purport to create a novel legal principle beyond applying and preferring the line of authority that treats determined compensation under the Displaced Persons Act as a debt capable of attachment; the decision's immediate effect is confined to the parties and the execution/realisation mechanism ordered by the court.

A.N.K. — Application allowed.

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The Official Liquidator, Peoples Insurance Company Ltd., (In Liquidation) Petitioner v. Shri Mangal Singh Etc.

S.K Kapur, J.:— This is an application for execution filed by the Official Liquidator, Peoples Insurance Company limited (in liquidation) and the decree-holder claims a sum of Rs. 31,400/- against the estate of late S. Sardul Singh Caveeshar, now represented by his son Major K.S Caveeshar, on the basis of the order dated 30th August, 1965, passed by the Punjab High Court in Letters Patent Appeal No. 114 of 1962, whereby S. Sardul Singh Caveeshar was settled on the list of contributories of Peoples Insurance Company Limited (in liquidation) (hereinafter referred to as ‘the company’) and a sum of Rs. 31,400/- determined as payable by the contributory. The company made an application for attachment before judgment under Order 38, rule 5, Civil Procedure Code (Petition L.M No. 66 of 1957) on or about 14th May, 1967, and an order was made attaching the compensation payable to S. Sardul Singh Caveeshar under the Displaced Persons (Compensation and Rehabilitation) Act, 1954. On 16th August, 1967, Jagjit Singh, J., while issuing notice on the execution petition to Major K.S Caveeshar, ordered that “the Chief Settlement Commissioner, New Delhi, be requested to remit the amount to the Court which has fallen due under the attached claim”. Various objections were taken on behalf of Major K.S Caveeshar to the execution application and on pleadings of the parties as many as ten issues were framed. It is necessary only to refer to issue No. 1 as the learned counsel for Major K.S Caveeshar confined his arguments only to that and did not touch any other issue. The said first issue reads—

“Can the Official Liquidator proceed against the claims, which have been verified in the name of Shri Sardul Singh Caveeshar ?”

The position as to the claim has been disclosed by Shri Radha Krishan (DHW 1), a Settlement Officer since 25th August, 1962. He said that the total claim verified in favour of late S. Sardul Singh Caveeshar was Rs. 5,63,596/-; that after adjusting the payment already made, a sum of Rs. 82,844/- was payable to S. Sardul Singh Caveeshar; that because of the death of S. Sardul Singh Caveeshar the amount was payable to his estate “but in view of the directions of this Court we have taken no steps for making payment to anyone. We will have to bring the legal representatives of the deceased on record under section 9 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954, before making the payment. There is now no other impediment in making the payment except (1) bringing the legal representatives under section 9 on record; and (2) verifying whether or not late Sh. Sardul Singh Caveeshar made any other commitment with respect to his claim by way of association before the receipt of the order of attachment from this Court”; and that the Department had no objection to the attachment “but we have to verify the net amount due to Shri Sardul Singh Caveeshar's estate after meeting the commitments, if any, made by him before the receipt of the attachment order”.

The only point raised by Mr. Vohra, the learned counsel for Major K.S Caveeshar, was that the compensation payable to a displaced person, not being a property, could not be attached. Section 8 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954, deals with the form and manner of payment of compensation. This section provides that “a displaced person shall be paid out of the compensation pool the amount of net compensation determined under sub-section (3) of section 7 as being payable to him and subject to any rules that may be made under this Act, 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 following forms or partly in one and partly in any other form, namely………” The section then sets out the various forms in which the payment may be made, such as, in cash or in Government bonds or by sale to the displaced person of any property from the compensation pool and setting off the purchase money against the compensation payable to him. Section 14 provides for the constitution of a compensation pool and also about what the compensation pool shall consist of. Section 15 exempts the property in compensation pool from processes of Courts and provides—

“No property which forms part of the compensation pool and which is vested in the Central Government under the provisions of this Act shall be liabe to be proceeded against for any claim in any manner whatsoever in execution of any decree or order or by other process of any Court or other authority.”

Mr. Vohra argued that the effect of these provisions was to render the compensation payable to a displaced person immune from any attachment. He said that till the mode of payment had been determined under section 8, there was no debt due to a displaced person that could be attached. Reliance was placed by Mr. Vohra on Tirath Ram Lal Chand v. M/s. Mehar Chand Jagan Nath(1), in which K.L Gosain, J. decided—

“It cannot, therefore, be said at this stage whether the Government will pay any amount at all in cash nor can it be said as to what form the compensation will ultimately take. At the moment, therefore, the Government cannot be deemed to have become the debtor qua any particular sum payable by it nor can the claimants be deemed to be creditors qua the said amount. Till the Government make a tender of any cash amount the money lying in the compensation pool remains part of that pool and is in my opinion exempt from attachment under the provisions of section 15 of the aforesaid Act.”

Gosain, J. relied on Sunder Das v. Secretary of State, and Spence v. Coleman-(3). Mr. Vohra also depended on these two decisions.

Mr. Raizada, the learned counsel for the decree-holder, on the other hand, referred to Shri Thakar Dass v. The Chief Settlement Commissioner, New Delhi and others, (4); K.B Co-operative Credit Bank v. S. Verma(5); and Harnam Singh v. D.K Puri (6). In Thakar Dass's case, the judgment of Gosain, J. does not appear to have been placed before Mahajan, J. Mahajan, J. decided that after the determination of the amount of compensation there is no option left to the Department but to pay the same. The manner of payment has no doubt been left to the discretion of the authority concerned but it cannot be withheld and, therefore, “the right to receive compensation is certainly property as creditor's right to recover a debt is property”. The compensation due was consequently held to vest in the Official Receiver by operation of law. In Harnam Singh's case a Division Bench of the Punjab High Court dissented from the view taken by Gosain, J. and approved that of the Bombay High Court in K.B Co-operative Credit Bank's case. The view of Mahajan, J. was also approved. In K.B Co-operative Credit Bank's case, Patel J. held :—

“Reading sections 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 section 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 section 8. Nonetheless, in view of the obligatory nature of the duty to make the payment, it must be regarded as a debt.”

Now it remains to consider the decisions relied upon by Mr. Vohra. In Sunder Das's case, the Lahore High Court decided that the compensation money awarded under the Land Acquisition Act could not be attached by a creditor until the amount was tendered under section 31 of the Land Acquisition Act because money in the hands of the Collector belonged to the Government until the tender was made. As observed by Patel, J. in K.B Co-operative Credit Bank's case, it is not possible to ascertain from the statement of facts as to whether possession had been taken by the Collector in the acquisition proceedings. Under section 48 of the Land Acquisition Act it is open to the Government, except in the case provided for in section 36, to withdraw from the acquisition of any land of which possession has not been taken. In any case, even if section 31 be susceptible to the construction placed by the Lahore High Court, it bears no analogy to the provisions of the Act under consideration. The determining factor always is whether there is a debt due to the person whose property is sought to be attached. The ratio of the Lahore High Court decision also is the same, which appears from the following observation :—

“The Land Acquisition Act is a complete Code in itself, and until the tender is made, the person whose land has been acquired, does not become a creditor or the Collector a debtor.”

That position does not obtain under the Displaced Persons (Compensation and Rehabilitation) Act. The amount of compensation determined, and which has been determined in this case, becomes, by virtue of section 8, a debt due to the displaced person. The fact that a discretion is left with the authority concerned to pay it in one or other of the modes prescribed cannot affect the position and it remains property notwithstanding the discretion as to the mode of payment. The case of Spence v. Coleman is also distinguishable on the same ground. There also the Court decided on the construction of the relevant provisions of law that there was no debt due to the judgment-debtor. Patel, J. in the Bombay case has distinguished Spence's case and I am in respectful agreement with the same. In my opinion, therefore, there is no force in Mr. Vohra's contention and the compensation payable to the estate of late S. Sardul Singh Caveeshar is a property capable of attachment.

That leaves the question of mode of realisation. The discretion as to the mode of payment vests in the authorities concerned. I would, therefore, appoint the Official Liquidator as Receiver to realise the payment, to the extent due to the company, from the authorities under the Displaced Persons (Compensation and Rehabilitation) Act in the same manner as it would have been paid to S. Sardul Singh Caveeshar. The Receiver being the Official Liquidator will not be entitled to any extra remuneration for this work.

The execution application is, therefore, allowed but with no order as to costs.

A.N.K Application allowed.

The Official Liquida... v. Shri Mangal Singh Etc.