Usufructuary mortgage debts can be adjusted under the displaced persons scheme, including valuation-based scaling down through standard-acre equivalence.

A usufructuary mortgage, including one without a personal remedy against the transferee of the equity of redemption, was treated as a debt within the Act because Section 16 specifically covered mortgages on immovable property and extended relief to mortgages with possession. The debtor could therefore seek adjustment by application under Section 5, since the statutory remedy was not confined to redemption proceedings. The proviso to Section 16(4) also permitted scaling down on a valuation basis, and the standard-acre method was accepted where it reflected the relative value of the lands allotted in India and left behind in Pakistan. The mortgage debt was thus validly adjusted under the special statutory scheme.

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Issues: (i) whether a debt secured by an usufructuary mortgage, including one where the mortgagee has no personal remedy against the transferee of the equity of redemption, falls within the definition of debt under the Act and is liable to adjustment under Section 16; (ii) whether the debtor could invoke the Tribunal's jurisdiction under Section 5 for adjustment of such mortgage debt; and (iii) whether the scaling down of the debt under the proviso to Section 16(4) was correctly made by reference to the proportion between the lands allotted in India and the lands left behind in Pakistan.

Issue (i): whether a debt secured by an usufructuary mortgage, including one where the mortgagee has no personal remedy against the transferee of the equity of redemption, falls within the definition of debt under the Act and is liable to adjustment under Section 16.

Analysis: The statutory scheme treated debts secured by mortgage as a distinct class for adjustment. Section 16 specifically dealt with mortgages on immovable property, and sub-section (4) expressly applied to mortgages with possession. The breadth of the definition of debt in Section 2(6) had to be read with this special provision. The existence or absence of a personal covenant did not control the operation of the section, because the Act itself extended relief to usufructuary mortgages and to debts redeemable from the mortgaged property. The mortgage in question also contained a covenant to repay, which reinforced its character as a debt within the Act.

Conclusion: The mortgage liability was a debt within the Act and was capable of being scaled down under Section 16.

Issue (ii): whether the debtor could invoke the Tribunal's jurisdiction under Section 5 for adjustment of such mortgage debt.

Analysis: Section 5 enabled a displaced debtor to apply for adjustment of his debts, and the mortgage liability being a debt within the Act, the applicants were entitled to seek relief through that procedure. The argument that adjustment was available only in a redemption suit could not stand against the plain language of Sections 5 and 16 read together. The statutory remedy was not confined to a creditor-initiated proceeding.

Conclusion: The debtor's application under Section 5 was competent.

Issue (iii): whether the scaling down of the debt under the proviso to Section 16(4) was correctly made by reference to the proportion between the lands allotted in India and the lands left behind in Pakistan.

Analysis: The proviso required reduction of the debt in the same proportion as the value of the lands allotted in India bore to the value of the lands left behind. The standard-acre method used by the rehabilitation authorities reflected the relative value of the lands by taking into account the quality and income-yield of the property, and therefore supplied the statutory equivalent of value. The computation was thus not a mere acreage comparison divorced from valuation, but a valuation-based adjustment consistent with the scheme of the Act and the relevant rules.

Conclusion: The scaling down was correctly made and the method adopted was in accordance with the proviso to Section 16(4).

Final Conclusion: The mortgage debt was validly adjusted under the special statutory scheme for displaced persons, and no ground was made out to disturb the concurrent findings below.

Ratio Decidendi: Under the Displaced Persons (Debts Adjustment) Act, a usufructuary mortgage is a debt capable of statutory adjustment, the debtor may seek such relief by application, and valuation-based reduction under Section 16(4) may be worked out through the standard-acre equivalent where it reflects the relative value of the lands.

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