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Case Number

D.B Civil Misc. Case No. 10 of 1959

Attorney(S)

M/s. Hasti Mal and Sumer Chand, for Mukanchand Decree-Holder;
Ram Rakh Chacha, for Rao Raja Inder Singh, Judgment-debtor;
G.C Kasliwal, Advocate General & Kan Singh, Dy. Govt. Advocate, for State

Judges

Mr. Jagat Narain
Mr. K.L. Bapna

Acts

section 4 of the Rajasthan Jagirdars' Debt Reduction Act, 1956 (hereinafter called the impugned Act)
sec. 3 of the Hyderabad Jagirdars Debts Settlement Act, 1952,
Resumption of Jagirs Act. Under sec. 2(e) of the impugned Act
Hyderabad Jagirdars Debts Settlement Act, 1952,
Rajasthan Jagirdars' Debt Reduction Act, 1956
Hyderabad Jagirdars Debts Settlement Act.
sec. 82 of the Transfer of Property Act
sec. 7(1)(a) and (b). Order 34 Rule 6 C.P.C
Rajasthan Jagir Resumption Act, 1952.

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Smart Summary

Summary of the Opinion (Jagat Narayan, J.)

Factual and Procedural Background

This execution case was withdrawn from the District Judge's court under Article 228 of the Constitution by order dated 7 May 1958 (Civil Miscellaneous Writ Petition No. 169/57) because the decree-holder sought to challenge the constitutionality of the Rajasthan Jagirdars' Debt Reduction Act, 1956 (the "impugned Act").

Mukanchand obtained a decree against Rao Raja Inder Singh on 18 February 1954 for Rs. 1,14,581/14/6 based on three mortgage deeds dated 26.2.48 (Rs. 25,000), 16.5.48 (Rs. 40,000) and 25.10.48 (Rs. 15,000). The loans were secured on two jagir villages and certain non-jagir immovable property. The non-jagir property was sold in execution for Rs. 33,750 and those sale proceeds were paid to the decree-holder in partial satisfaction of the decree.

On 14 December 1956 the decree-holder applied for attachment of amounts payable to the judgment-debtor by way of compensation and rehabilitation grant under the Rajasthan Jagir Resumption Act, 1952. The judgment-debtor filed applications on 29 and 31 July 1957 seeking (1) reduction of the decretal debt under section 4 of the Rajasthan Jagirdars' Debt Reduction Act, 1956, and (2) a declaration that only half of the compensation and rehabilitation grant was attachable under section 7 of that Act. Thereafter the decree-holder filed the writ petition under Art. 228 to withdraw the execution to challenge the impugned Act's constitutionality.

Legal Issues Presented

Whether the eﬀective cut-off date of 1 January 1949 (in the definition of "debt") is arbitrary or bears a rational nexus to the legislative purpose, or whether it results in unconstitutional discrimination in violation of Article 14 of the Constitution.
Whether the exceptions in the definition of "debt" (exempting debts due to Central/State Government, local authorities, scheduled banks, co-operative societies, waqfs/trusts for charitable/religious purposes, and debts advanced on behalf of a person by the Court of Wards) are discriminatory and violate Article 14.
Whether Sections 3 to 8 of the impugned Act, particularly the measures that (a) apportion secured debt between jagir and non-jagir property and reduce the debt chargeable on jagir land, (b) limit the extent to which compensation and rehabilitation grants may be attached under section 7(1), and (c) prohibit recovery from non-jagir property under section 7(2), contravene the fundamental right under Article 19(1)(f) (right to acquire, hold and dispose of property) and whether any of these provisions are saved by Article 19(5).
Whether payments made by the Additional Jagir Commissioner from jagir income after service of an order of attachment were proper, and what consequences follow from such payments.

Arguments of the Parties

Decree-holder's / Appellant's Arguments

Challenged the 1 January 1949 cut-off date as arbitrary and lacking rational nexus with the Act's object; argued it produces unjustified discrimination between creditors who lent before that date and those who lent after it.
Contended that parts of the impugned Act (Secs. 3–8 and particular restrictions on attachment) were in conflict with fundamental rights under Article 19(1)(f).

Judgment-debtor / Respondent (as reflected in pleadings)

Filed applications seeking reduction of decretal debt under section 4 of the impugned Act and contended that only specified portions (e.g., half) of compensation and rehabilitation grant were attachable under section 7 of the Act.

Advocate General's Arguments (in support of the exemptions)

Relied on precedent from the Hyderabad High Court upholding a similar exemption in the Hyderabad Jagirdars Debts Settlement Act, 1952, and the decision in J.R. Kimtee v. Kishendas to justify exemptions in favour of public demands and other enumerated classes of creditors.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
J.R. Kimtee v. Kishendas (Hyderabad High Court decision, cited)	The exclusion of certain classes of debts (public demands) from the operation of a jagirdars' debt-relief statute can be substantially justified because public demands do not stand in the same position as ordinary demands.	The Court accepted that the Hyderabad judgment's reasoning could justify exemption of public demands but rejected its extension to justify exemptions in favour of scheduled banks, co-operative societies and other non-public creditors. The Court held that the Hyderabad reasoning cannot validate these non-public exemptions and therefore declared those exemptions in the impugned Act void.

Court's Reasoning and Analysis

The Court examined each contested aspect of the impugned Act by asking whether the classification and restrictions had a rational nexus to the statutory object and whether any restriction on property rights amounted to an unreasonable invasion not saved by the Constitution.

On the 1 January 1949 cut-off date (Article 14 challenge):

The Court accepted the legislature's factual premise that by 1 January 1949 it was generally known that jagirs would be resumed, given the process of integration of Rajasthan States beginning in 1948 and political developments (inaugurations of United State of Rajasthan and the Second Rajasthan Union in March and April 1948, respectively), and Congress policy favouring rapid land reforms.
It observed that the Jagir Resumption Act itself (sec. 26-A) treated transfers made on or after that date with special scrutiny, reinforcing the legislative view that 1.1.1949 was an appropriate date for distinguishing debts incurred before and after knowledge of resumption.
On this basis, the Court held the distinction between debts contracted before and after 1.1.1949 to possess the requisite rational nexus to the Act's object (saving jagirdars from ruin) and therefore not violative of Article 14.

On the exemptions in the definition of "debt" (Article 14 challenge):

The Court found no satisfactory reason in the impugned Act for treating the six enumerated classes of creditors differently from ordinary creditors.
It analysed the Hyderabad precedent relied on by the Advocate General and concluded that while that precedent's reasoning might justify exemption of public demands (government revenue), it did not justify exemptions in favour of other categories (scheduled banks, co-operative societies, trusts, Court of Wards advances, etc.).
Consequently, the Court held that the enumerated exemptions are discriminatory and contravene Article 14. However, it found these exempting clauses to be severable from the remainder of the Act and therefore declared that portion of the definition void (and severed it from the Act).

On Sections 3–8 and Article 19(1)(f) challenge:

The Court treated the apportionment and reduction of secured debt (including application of principles analogous to sec. 82 of the Transfer of Property Act and apportionment of one-fifth on jagir land) as reasonable restrictions aimed at protecting jagirdars from economic ruin due to resumption. Those measures were held to be permissible and saved by Article 19(5) as reasonable in the public interest.
Section 7(1) (prescribing graduated percentages of attachment of compensation/rehabilitation grants per Schedule II) and Section 8 (conversion ratio for unsecured debt satisfaction) were also considered reasonable restrictions in the public interest.
However, Section 7(2), which provided that the balance of the reduced decretal amount would not be recoverable even from the non-jagir property of the judgment-debtor, was viewed as an excessive invasion of creditors' property rights. The Court found no sufficient justification for exempting non-jagir property from attachment where, under ordinary law and Order 34 Rule 6 CPC, a decree-holder would be entitled to a personal decree for any balance remaining after sale of mortgaged property.
Given that an unsecured creditor could execute against non-jagir property notwithstanding the Act, the Court found it unfair to prevent a secured creditor from recovering the balance from non-jagir assets where the law otherwise would allow it. Accordingly, Section 7(2) was held void as violating Article 19(1)(f).

On the Additional Jagir Commissioner's payments after attachment:

The Court noted that after service of the order of attachment (attaching compensation and rehabilitation grant to the extent of Rs. 99,965.22), the Additional Jagir Commissioner nevertheless made payments to the Jagirdar and to maintenance recipients out of jagir income.
The Court stated there is no provision of law exempting any part of the compensation and rehabilitation grant from attachment; the amount of maintenance must be determined on the basis of the grant remaining after attachment.
Therefore, the Additional Jagir Commissioner had no excuse for making payments after service of the order of attachment; the District Judge was directed to require him to recall the amounts so paid and to show cause why action should not be taken against him for disobedience of the attachment order.

Procedural disposition: After adjudicating the constitutional questions, the Court returned the execution case to the District Judge, Jodhpur under Article 228(b) with directions to proceed in conformity with this judgment.

Holding and Implications

Holding:

The Court upheld the validity of the distinction between debts contracted before and after 1 January 1949; that classification has a rational nexus to the Act's object and does not violate Article 14.
The exemptions in the definition of "debt" in favour of the Central/State Government, local authorities, scheduled banks, co-operative societies, waqfs/trusts for charitable/religious purposes, and advances by the Court of Wards are discriminatory and void under Article 14; those clauses are severed from the Act.
Sections effecting apportioned reduction of secured debt and the attachment limits in section 7(1) and section 8 are valid as reasonable restrictions in the public interest (saved by Article 19(5)), but section 7(2) is void under Article 19(1)(f) because it excessively prohibits recovery from non-jagir property.
The case is returned to the District Judge for further proceedings in conformity with this judgment.

Implications / Direct consequences:

The offending exempting clauses in the definition of "debt" have been declared void and severed; creditors in the enumerated categories lost the statutory immunity those clauses had purported to provide.
Section 7(2)'s prohibition on recovery from non-jagir property is struck down; decree-holders may seek recovery from non-jagir assets to the extent permitted by ordinary law and procedural rules (subject to the remaining valid provisions of the Act).
The District Judge, Jodhpur, is to proceed afresh in the execution proceedings in accordance with this judgment.
The Additional Jagir Commissioner must recall improper payments made after service of attachment and show cause for disobedience; the District Judge should consider appropriate action.
The decree-holder is entitled to recover costs incurred before the High Court from the judgment-debtor.

No broader precedent was set beyond the adjudication of the specific constitutional challenges raised; the Court severed specific invalid provisions and preserved the remainder of the Act.

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Mukan Chand v. Rao Raja Inder Singh

Jagat Narayan, J.:— This execution case has been withdrawn from the court of the District Judge under Art. 228 of the Constitution under order dated May 7, 1958 of this Court in Civil Miscellaneous Writ Petition No. 169/57. Notice was issued to the State also as the constitutionality of the Rajasthan Jagirdars' Debt Reduction Act, 1956 has been challenged in this case.

2. The facts are briefly these. Mukanchand obtained a decree against Rao Raja Inder Singh for Rs. 1,14.581/14/6 on 18th February 1954 on the facts of 3 mortgage-deeds dated 26.2.48 for Rs. 25,000/-, dated 16.5.48 for Rs. 40,000/- and dated 25.10.48 for Rs. 15,000/- respectively. The loans were taken on the security of two jagirs villages and certain other non-jagir immovable property. The latter property was sold in Page: 467execution for Rs. 33,750/- and the sale proceeds were paid to the decree-holder in partial satisfaction of the decree.

3. On 14th December 1956 the decree-holder applied for attachment of the amount payable to the judgment-debtor by way of compensation and rehabilitation grant in connection with the resumption of his jagir under the Rajasthan Jagir Resumption Act, 1952. The judgment-debtor filed two applications on 29th July 1957 and 31st July 1957 in which it was prayed (1) that the decretal debt should be reduced in accordance with section 4 of the Rajasthan Jagirdars' Debt Reduction Act, 1956 (hereinafter called the impugned Act) and (2) that only half of the compensation and rehabilitation grant payable to him was liable to attachment under sec. 7 of the aforesaid Act and the remaining amount was unattachable.

4. The decree-holder then filed Civil Miscellaneous Writ Petition No. 169/57 under Art. 228 of the Constitution praying that the execution case be withdrawn to this Court as he wanted, to challenge the constitutionality of the impugned Act.

5. According to the preamble the impugned Act was enacted for scaling down the debts of Jagirdars whose jagir lands bad been resumed under the Resumption of Jagirs Act. Under sec. 2(e) of the impugned Act ‘debt’ has been defined as follows:

‘Debt’ means an advance in cash or in kind and includes any transaction which is in substance a debt but does not include an advance as aforesaid made on or after the first day of January 1949 or a debt due to:—

(i) the Central Government or Government of any State;

(ii) a local authority;

(iii) a scheduled bank;

(iv) a co-operative society; and

(v) a waqf, trust or endowment for a charitable or religious purpose only; or

(vi) a person, where the debt was advanced on his behalf by the Court of Wards.

6. It was argued on behalf of the decree-holder that the date 1.1.1949 is arbitrary, has no rational nexus with the object to be achieved by the enactment and has resulted in unjustified discrimination between the creditors who advanced loans to jagirdars before that date and those who advanced loans to them after that date. Creditors who advanced loans to Jagirdars before 1.1.1949 have been subjected to disability by the provisions of this Act. We are satisfied that this contention has no force.

7. The laws of various covenanting States of Rajasthan afforded protected to Jagirdars in respect of the attachment and sale of jagir lands. The result was that many of them used to borrow money freely. These jagirs were resumed and they became entitled to compensation which is attachable in execution of decrees. In order to save much indebted Jagirdars from being ruined the impugned Act was enacted in order to protect them against debts which they had incurred when they did not know that their Jagirs would be resumed. It was not necessary to grant any protection to them against debts which they incurred after they came to know that their jagirs were likely to be resumed. 1st January 1949 is the date by which in the opinion of the legislature it was generally known that jagirs would be resumed by the State. The process of integration of States in Rajasthan had started in the year 1948. The United State of Rajasthan was inaugurated on 25th March 1948. The Second Rajasthan Union was Inaugurated on 18th April 1948. The Congress Party was in power both in the Centre and in the States and it was the declared policy of the Indian National Congress that land reforms should be effected speedily by eliminating the intermediaries. In these circumstances it was proper on the part of the legislature to assume that by 1.1.1949 most Jagirdars were conscious of the fact that their jagirs were likely to be resumed in the near future. It may be mentioned here that under sec. 26-A of the Jagir Resumption Act transfers made by the Jagirdars on or after this very date were not recognised unless the Jagir Commissioner was satisfied that they were not made in anticipation of the resumption of jagir laws.

8. We are of the opinion that the distinction made in the Act between debts contracted before 1.1.1949 and those contracted after that date has a rational nexus with the object intended to be achieved by the Act. That object is to save the Jagirdars as a class from being ruined economically as a result, of the resumption of their Jagirs. From the point of view of the creditors the above distinction has certainly led to anomalies inasmuch as creditors who thought that they were making a safe investment have been hit adversely but those who had reason to apprehend that the security on the basis of which they were advancing a loan might disappear altogether have not been affected at all by the provisions of the Act. Such anomalies however cannot be avoided in an enactment of this nature.

9. Next the exceptions contained in the definition of debt in favour of certain specified classes of persons have been attacked as being discriminatory. We are unable to see why any discrimination should be made in favour of these six classes of creditors.

10. Debt as defined in the Act means an advance in case or in kind. It cannot therefore include any revenue claim of the State outstanding against the Jagirdar. The debt in favour of Central Government or State Government or local authority which is exempted from the operation of the Act is therefore a debt advanced in case or in kind. There is no reason to treat these authorities differently from ordinary citizens when they carry on non-governmental activities in competition with them. The cases of scheduled banks, co-operative societies, trusts and Courts of Wards are even on a lower footing than the cases of these authorities

11. The only argument which the learned Advocate General advanced in support of these exemptions was that a similar provision contained in the Hyderabad Jagirdars Debts Settlement Act, 1952, was upheld as valid by the Hyderabad High Court in, J.R Kimtee v. Kishendas (1). The relevant provision contained in sec. 3 of the Hyderabad Jagirdars Debts Settlement Act, 1952, runs as follows:

Save as otherwise expressly provided, nothing in this Act shall affect the debts and liabilities of a debtor falling under the following heads named:—

(i) any revenue or tax payable to Government or any other sum due to it by way of loan or otherwise,

(ii) any tax payable to a local authority or any other sum due to it by way of loan or otherwise,

(iii) any sum due to a cooperative society,

(iv) any sum due under decree or order for maintenance passed by a competent Court, and

(v) any sum due to a scheduled bank.

The only reason given in the judgment in support of the above exceptions is in the following words:—

Exclusion of certain class of debts under sec. 3 of the impugned Act alio is not without substantial justification for public demands do not stand in the same position as ordinary demands.

The above reasoning can only save public demands. It will be noticed that such demands are also included in the definition of debts under the Hyderabad Jagirdars Debts Settlement Act. No reason has been given to justify the exemption of other debts in favour of the Government or debts due to co-operative societies; scheduled banks, etc.

12. We are accordingly of the opinion that the exemptions contained in the definition of ‘debt’ are discriminatory and are hit by Art. 14 of the Constitution. These exemptions are however severable from the remaining provisions of the Act. We accordingly hold that the following portion out of the definition of debt contained in the impugned Act is void:—

or a debt due to:—

(i) the Central Government or Government of any State;

(ii) a local authority;

(iii) a scheduled bank;

(iv) a co-operative society; and

(v) a waqf, trust or endowment for a charitable or religious purpose only; or

(iv) a person, where the debt was advanced on his behalf by the Court of Wards.

13. Next the provisions of Secs. 3 to 8 were attacked as being in contravention of the fundamental rights conferred under Art. 19(1)(f) of the Constitution.

14. Secs. 3, 4 and 6 provide for a distribution of the secured debt on the jagir-land mortgaged and on the other property mortgaged in accordance with the principles contained in sec. 82 of the Transfer of Property Act as if they had been properties belonging to two distinct persons and for the debt apportioned on jagir land by one-fifth. Sec. 7 provides that the reduced amount so arrived at shall only be recoverable from the compensation and rehabilitation grant payable in respect of the jagir land of the judgment debtor to the extent indicated in Schedule II namely where the total compensation does not exceed rupees 1 lac only half of it is attachable in execution of the decree, where it exceed, rupees 1 lac, but does not exceed rupees 2 lacs, 55 per cent is attachable, where it exceeds rupees 2 lacs but does not exceeds rupees 4 lacs, 65 per cent is attachable, and where it exceeds rupees 4 lacs, 75 per cent is attachable. Sub-sec. (2) of Sec. 7 further provides that the balance of the reduced decretal amount will not be recoverable even from the non-jagir property of the judgment-debtor. Sec. 8 provides that where a decree for an unsecured debt is executed by attachment of the compensation and rehabilitation grant of the judgment-debtor, for every rupee of the latter satisfaction shall be entered for 1.2/3 rupees.

15. So far as the reduction of the secured debt apportioned on the jagir land by 1/3rd is concerned we consider that it is reasonable restriction imposed on the exercise of property rights by the creditors in public interest namely to save the jagirdars who constitute a section of the society from being ruined economically as a result of the resumption of jagirs, which is saved under Art. 19(5) of the Constitution. Similarly the provisions contained in sec. 7(1) and sec. 8 appear to be a reasonable restrictions imposed in public interest. But the provision contained in sec. 7(2) appears to us to be an excessive invasion on the rights of the creditors. It does not appear to us that there is sufficient reason to exempt the non-jagir property of the jagirdar judgment debtors from being attached in execution to recover the balance of the money remaining unpaid after executing the decree against the compensation and rehabilitation grant under sec. 7(1)(a) and (b). Order 34 Rule 6 C.P.C provides that where the net proceeds of the sale of the mortgaged property are insufficient to pay the amount due to the plaintiff the court may, if the balance is legally recoverable from the defendant otherwise than out of the property sold pass a decree for such balance. There seems to us to be on justification for not allowing the decree-holder to recover the balance from other property of the judgment-debtor in those cases in which he would otherwise be entitled to a personal decree under the ordinary law. A Jagirdar may have considerable non-jagir property which can be taken in execution by an unsecured creditor inspite of the impugned Act without any restriction. It appears to us wholly unfair to prevent a secured debtor from laying hands on this property in execution. We accordingly hold that sec. 7(2) of the impugned Act is void in view of Art. 19(1)(f) of the Constitution.

16. We return the case to the District Judge, Jodhpur under Art. 228(b) after determining the constitutionality of the provisions of the impugned Act. The District Judge shall now proceed to dispose of the case in conformity with our judgment.

17. The decree-holder has drawn our attention to the fact that the Additional Jagir Commissioner made some payments to the Jagirdar and to persons entitled to maintenance allowance out of the income of the Jagir even after the service of the order of attachment attaching compensation and rehabilitation grant to the extent of Rs. 99,965,22. Learned counsel for the respondents were unable to point out any provision of law exempting any part of the compensation and rehabilitation grant from attachment and sale in execution of the decree of a civil court. The amount of maintenance can only be determined on the basis of the compensation and rehabilitation grant remaining available to the Jagirdar after attachment. It is for the executing court to determine what portion of the compensation and rehabilitation grant can be so attached and not for the Additional Jagir Commissioner. The Additional Jagir Commissioner had no excuse for making any payments after the order of attachment had been served on him. The District Judge should direct him to recall the amount so paid by him either to the Jagirdar on the maintenance holders immediately. He should also ask the Additional Jagir Commissioner to show cause why action should not be taken against him for disobedience of the order of attachment which was duly served on him.

18. The decree-holder will be entitled to recover costs incurred by him in proceedings before this Court from the judgment-debtor.

Mukan Chand v. Rao Raja Inder Singh

Summary of the Opinion (Jagat Narayan, J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Decree-holder's / Appellant's Arguments

Judgment-debtor / Respondent (as reflected in pleadings)

Advocate General's Arguments (in support of the exemptions)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Mukan Chand v. Rao Raja Inder Singh

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