NAGPUR HIGH COURT

                                             Ramkrishna Ashanna

                                                         Vs

                                               Board of Revenue

                           Misc. Petn. No. 131 of 1953. decided on 30.9.1953

                                           (Sinha, C.J. and Bhutt, J.)

                                            07.04.1953. 30.09.1953

                                                  JUDGMENT

Sinha, C.J

1. This application under Article 226 of the Constitution, is directed against the order of the
Claims Officer, Warora, respondent No. 2, and that of the Board of Revenue, respondent No. 1,
confirming the order of the Claims Officer in appeal, by which they held that the debt due to the
petitioner by respondent No. 3 is a secured debt within the meaning of the M.P. Abolition of
Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 (No. 1 of 1951).

2. The petitioner held a simple money decree against respondent No. 3, in execution of which he
attached certain properties belonging to respondent No. 3. During the pendency of the execution
proceedings, respondent No. 3 applied under section 11, C.P. and Berar Money Lenders Act,
1939, for payment of the decretal amount in installments. Parties ultimately compromised the
claim and an application was filed, which was signed by both of them, for recording the terms of
compromise. It was agreed that the decree would be payable in installments, for the due payment
of which two of the properties attached would be subject to a charge. However, in the order
recording the terms of compromise, it was stated that the said two properties would remain under
attachment. The circumstances under which the charge was not mentioned in the order may be
gathered from the order-sheet which is reproduced below :

        " '26-2-1944' : Applicant with Mr. Hastak and Mr. Kakde, N.A. with Mr. Chendke.
        Commission back duly executed. Parties however (have) come to terms and apply jointly
        to record the terms of settlement. Parties admit and agree to those terms.
        Order delivered. Witnesses are all discharged. Applicant's property except what is agreed
        to be charged today will be released from attachment. N.A. agrees that he would be
        content with continuance of attachment over the property agreed to be charged."
3. After the M.P. Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950
(No. 1 of 1951), came into force, respondent No. 3 made an application under section 19(1) of
the Act for settlement of the debt. The petitioner raised an objection that the debt was not a
secured debt and was not, therefore, subject to the Act. This objection was, however, overruled
by the Claims Officer whose order was upheld in appeal, by the Board of Revenue. These are the
orders that are impugned in these proceedings.

4. As we read the provisions of the M.P. Abolition of Proprietary Rights (Estates, Mahals,
Alienated Lands) Act, 1950 (No. 1 of 1951), hereinafter called the Act, we are clearly of the
opinion that the Claims Officer is not entitled under the Act to determine whether or not the debt
is a secured debt within the meaning of Section 17(a). The fact that the Act defines a secured
debt does not mean that the Claims Officer is empowered to determine the secured character of
the debt. This matter will have to be determined with reference to other provisions of the Act.

5. Section 18 of the Act deals with the appointment of Claims Officers and provides that the
purpose of their appointment is to determine "the 'amount' of secured debts or claims owed by
proprietors divested of proprietary rights under this Act". (Underlining (here into ' ') is ours). This
Section does not, therefore, in terms contemplate that they are empowered to determine the
character of the debt where it is in question. Subjection (1) of section 19 gives power to the
debtor to make an application for determination of the secured debts or claims. Sub-Section (2)
thereof likewise empowers the creditor to make a similar application. It will mostly be in the case
of a debtor's application that the creditor may be interested in denying the secured character of
the debt so as to take it out of the operation of section 24 and subsequent Sections of the Act
where under a secured debt or claim is liable to be scaled down.. Before this stage is reached, he
is entitled to raise a preliminary objection to the proceedings, under section 21(2), on the ground
that the debtor is not wholly or mainly an agriculturist. If, after enquiry, this objection prevails,
then no further provisions of the Act will apply to the secured debts or claims against the debtor.
Sub-Section (5) of section 21 provides :

        "If no objection is made under Sub-Section (2) or if an objection is made and decided, the
        jurisdiction, of the Claims Officer to proceed in accordance with the provisions of this
        Chapter shall not be questioned in any Civil Court."

This sub-Section only authorizes the Claims Officer to proceed as provided in the Act, which
does not mean that he is empowered to decide all questions relating to the secured debts or
claims. It is only the jurisdiction to proceed further in accordance with the provisions of the Act,
that is guaranteed to him at this stage, and it is this limited jurisdiction that cannot be questioned
in any Civil Court. What is the extent of his power is provided in the following Sections.

6. We are not concerned in these proceedings with section 22 or section 24 or subsequent
Sections of the Act. The objection that was raised by the petitioner in regard to the character of
the debt is not related to any specific provision of the Act. Nevertheless, it was an objection that
he was entitled to raise in order to safeguard his rights.The only provision in the Act, under
which the Claims Officer can make an enquiry at this stage, it is Section 23 which is reproduced
below :

        "23(1). On the date fixed for the hearing of the case, or on any subsequent day to which
        the hearing may be adjourned, the Claims Officer shall require proof of the validity and
        subsisting character of the secured debt or claim.
        (2) Where the debtor objects to the claim preferred by any creditor on the ground that the
        debt not incurred or that it is not binding on the debtor, the Claims Officer shall not
        determine the amount due on any sue claim and nothing contained in Sections 24 to 27
        shall apply to any such claim."
        'The enquiry that is contemplated is only under section 23(1), for if an objection is raised
        to the creditor's application by the debtor that the debt was either not incurred or is not
        otherwise binding on him, the Claims Officer cannot proceed further under the Act. This
        enquiry under Sub-Section (1) of section 23 is directed to the following two points and no
        others, viz.,
        (1) validity of the secured debt or claim, and
        (2) subsisting character of the secured debt or claim.

This postulates that the enquiry does not cover the question whether the debt or claim is at all
secured. It is only when its character as a secured debt or claim is not in dispute that the Claims
Officer may require proof regarding the two points d mentioned above. This is in keeping with
the provisions of section 18 of the Act, which defines the purpose for which the Claims Officers
are appointed.

7. It was contended on behalf of the debtor, respondent No. 3, that as in this case the
charge was already created by the parties either orally before they presented the application to the
Court to record the terms of compromise, or by embodying it in the said application, the
objection raised by the petitioner could not relate to the existence of the secured debt but to its
validity or subsisting character, due either to want of registration of the application or the order
passed thereon, or due to the failure of the Court to record the charge in the order. What exactly,
however, was the character of the objection is not a matter of interpretation or conjecture and
must be referable to the objection itself. On a reading of the petitioner's written statement, dated
19th May 1951, it appears that he clearly denied the existence of the debt as a secured debt for
the reason that although the parties prayed that the proprietary shares should be kept under
charge but the Court did not accept the prayer of the parties and merely directed the previous
attachment of the shares to continue as before". He accordingly prayed :

        "As the non-applicant's debt does not constitute a 'secured debt' under section 17(a), the
        present application does not lie."

It is, therefore, clear that it was the character of the debt as a secured debt that was denied by the
petitioner in the proceedings before the Claims Officer; therefore, the enquiry under section 23(1)
of the Act could not be directed on that point, however apparent the question might be
considered to be.

8. In the view that we have taken it is not necessary to consider the question that was posed. In -
'Queen v. Commrs. for Special Purposes of the Income Tax1', which in terms of the instant case
may be stated thus, viz., whether the statute does or does not entrust to the Claims Officer
himself the jurisdiction to determine whether or not the preliminary state of facts essential to give
him jurisdiction to act under the statute exists. This question may arise in the matter provided in
Section 21(2) of the Act. So far as Section 23 is concerned, the Claims Officer's enquiry is
limited to the two questions expressly mentioned in it, which do not cover the question as to
whether a charge was shall created either at law or by act of the party. Where this question is
raised, the Claims Officer should obviously keep the proceedings pending until the debtor gets
the decided in a competent Civil Court.

9. The impugned orders of the Claims Officer and the Board of Revenue are accordingly
quashed, and it is directed that further proceedings be stayed until respondent No. 3 obtains a
declaration from a competent Civil Court that the debt was a secured debt within the meaning of
Section 17(a), M.P. Abolition of Proprietary Bights (Estates, Mahals, Alienated Lands) Act, 1950
(No. 1 of 1951). Parties shall suffer their own costs. The petitioner is entitled to refund of the
outstanding amount of the security.
Petition allowed.
Cases Referred.

1(1888) 21 Q B D 313