1981 (8) TMI 233 - SC - Indian Laws

Supreme Court affirms agriculturist's entitlement to debt relief under Kerala law

STATE BANK OF TRAVANCORE Versus. MOHAMMED MOHAMMED KHAN

The Supreme Court affirmed the High Court's decision that the respondent, an agriculturist, was entitled to the benefits of the Kerala Agriculturists' ... - Issues Involved:1. Applicability of the Kerala Agriculturists' Debt Relief Act, 1970 to the debt owed by the respondent to the appellant bank.2. Interpretation of the term 'debt' u/s 2(4) of the Act.3. Exclusion of certain debts from the definition of 'debt' u/s 2(4)(a)(ii) and 2(4)(1) of the Act.Summary:1. Applicability of the Kerala Agriculturists' Debt Relief Act, 1970:The primary issue was whether the debt owed by the respondent, an agriculturist, to the appellant bank fell within the purview of the Kerala Agriculturists' Debt Relief Act, 1970. The respondent had an overdraft account with Kottayam Orient Bank Ltd., which was amalgamated with the appellant bank. The appellant filed a suit for recovery, which was decreed. The respondent sought amendment of the decree u/s 8 of the Act, claiming benefits as an agriculturist. The Subordinate Judge dismissed the application, but the High Court allowed the respondent's revision application, holding that he was entitled to the benefits of the Act, including scaling down of the debt.2. Interpretation of the term 'debt' u/s 2(4) of the Act:Section 2(4) defines 'debt' as any liability in cash or kind due from an agriculturist before the commencement of the Act, but excludes certain liabilities. The respondent's liability to the appellant bank was considered a 'debt' within this definition. However, the court had to determine if the debt was excluded from the definition due to the specific exclusions provided in the Act.3. Exclusion of certain debts from the definition of 'debt' u/s 2(4)(a)(ii) and 2(4)(1) of the Act:- Section 2(4)(a)(ii): This section excludes sums payable to a subsidiary bank unless the right to recover arose by a transfer effected by operation of law after July 1, 1957. The appellant bank, being a subsidiary bank, acquired the right to recover the debt through an amalgamation scheme effective after July 1, 1957. Therefore, the exclusion did not apply, and the respondent's claim to the benefits of the Act remained unaffected.- Section 2(4)(1): This section excludes debts exceeding Rs. 3000 borrowed under a single transaction and due before the commencement of the Act to any banking company. The court interpreted that for this exclusion to apply, the debt must have been incurred from a banking company before the commencement of the Act and must be due to a banking company at the commencement of the Act. The appellant bank was not a banking company as defined in the Banking Regulation Act, 1949, and thus, the exclusion did not apply.Conclusion:The Supreme Court affirmed the High Court's view that the exclusion provided for in clause (1) of section 2(4) of the Act could be availed of only if the debt was due to a banking company at the time of the commencement of the Act. Since the appellant bank was not a banking company, the respondent was entitled to the benefits of the Act. The appeal was dismissed, and the appellant was ordered to pay the costs of the respondent throughout.