Holding

A certificate under Section 13(3) confers only the right to recover the entire debt as a lump‑sum and does not constitute a final decree for foreclosure or immediate possession of the mortgaged property.

Summary

The mortgagor defaulted on two consecutive instalments under the Central Provinces and Berar Relief of Indebtedness Act, 1939. The creditor obtained a certificate under Section 13(3) of the Act, which the creditor claimed operated as a final decree for foreclosure, allowing immediate possession of the mortgaged property. The debtors argued that the certificate only entitled the creditor to recover the debt in a lump‑sum, i.e., a final decree for sale, not for possession. The Supreme Court examined the language of Section 13(3) and its interaction with other provisions of the Act, holding that the certificate merely creates a "deemed decree" for recovery of the money due and does not confer a right to foreclose or take possession without following the procedure of Order 34 of the CPC. Consequently, the appeal seeking possession was dismissed.

Issues considered

What is the legal effect of a certificate issued under Section 13(3) of the Central Provinces and Berar Relief of Indebtedness Act, 1939?
Does the certificate amount to a final decree for foreclosure of the mortgaged property or only a final decree for recovery of the debt in a lump‑sum?
What procedural steps are required for a creditor to enforce the certificate?

Legislation cited

Code of Civil Procedure, 1908s. Order 34

Subjects

mortgageforeclosurecertificateSection 13(3)deemed decreeexecutionpossessioninstalment defaultCentral Provinces and Berar Relief of Indebtedness Act

Judgment

A BANSILAL AND ORS.
v.
. MOHAMMAD ISRAIL AND ORS.

OCTOBER 19, 2001

B [D.P. MOHAPATRA AND K.G. BALAKRISHNAN, JJ.]

Central Provinces and Berar Relief of lndeb(edness Act, 1939: Sections
12, 14, 15 and 27.

Section 13(3)-Expression "in the case o.fa mortgage, lien or charge as
c if a .final decree has been passed by a Court of civil jurisdiction"-Scope o.f-
Certificat~ issued under Section 13(3)-Nature and effect of-Held it confers
on the creditors only the right to recover the entire amount due in one lump-
sum as (fit were a.final decree.for recovery of money-It could not operate as
a final decree .for foreclosure.
D
The predecessor-in-interest of the respondents, mortgager-debtor,
committed two consecutive defaults in repayment of the mortgage dues.
The scheme for repayment of loan was fixed under the Central Provinces
and Berar Relief of Indebtedness Act, 1939. On an application filed by the
E creditor a certificate was issued by Deputy Commissioner under Section
13(3) of the Act and the same was confirmed by High Court. Thereafter,
the creditors filed an execution petition with the prayer for delivery of
possession of the mortgaged properties from th~ debtors oit t.he ground
that the certificate issued under Section 13(3) operates as a final decree for
foreclosure, and, therefore, they were entitled to possession of the mort-
F
gaged properties. The Judgment-debtors objected that possession of the
mortgaged properties should not be delivered to the creditors. They con-
tended that the final decree as referred to in section 13(3) of the Act should
be treated as a final decree for sale and not a final decree for foreclosure of
the mortgaged properties. Rejecting the objections of the judgment-debt-
G ors the executing court held that the certificate operated as final decree for
foreclosure and consequently directed issuance of the warrant of delivery
of possession. The said order passed by the Executing Court was con-
firmed by Appellate Court. Second appeal preferred by judgment-debtors
was allowed by High Court. The High Court held, inter alia, that the effect
H of the certificate unler Section 13(3) of the Act was that it gave to the
484
BANSILAL v. MOHAMMAD ISRAIL 485
creditors only the right to recover the entire amount due in one lump-sum A
as if it were a final decree for recovery of money and it could not operate
as a final decree for foreclosure. Consequently, the orders of the Trial
·Court and the Appellate Court were set aside and the warrant of delivery
of po~session was quashed.
B
In appeal to this Court the question for consideration is whether the
certificate issued under Section 13(3) amounts to a final decree for realisa-
tion of the mortgage dues by sale of the mortgaged property or it amounts
to final decree of foreclosure of the right of redemption of the mortgaged
properties.
c
Dismissing the appeal, the Court

HELD : 1. The provisions of the Central Province and Berar relief of
Indebtedness Act neither specifically nor by reasonable inference can be
said to lay down that in a case where conditions specified in Section 13(3) D
are complied with a decree for foreclosure of the mortgage shall be deemed
to have been passed and the creditor can straightaway, without taking any
other step file an execution petition for delivery of possession of the mort-
gaged property. In that view of the matter the High Court rightly inter-
preted the decree to be one for realisation of the entire amount due in E
lump-sum and rightly di~ected the executing court to proceed in the mat-
ter accordingly. [493-C]

2. On a fair reading of the provisions of the Act it is clear that the
statute has only attempted to help the agriculturists by making it easier for
them to pay the accumulated dues in instalments and has further safe- F
guarded their interest by providing for adjudication of the matters relat-
ing to recoverability or otherwise of the loan amount from the debtor.
Only in extreme cases in which the debtor has not merely defaulted in
payment of instalments fixed by the authority but outstanding amount is
found to be not recoverable as arrear of land revenue then in such a case G
the statute authorises the creditor to proceed for realisation of his dues as
if the final decree has been passed in h~s favour by a court of civil jurisdic-
tion. [492-G-H]

3. What the provisions of the Act, provide is that in a case where the . H
486 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A debtor fails to utilise the benefits given to him under the statute and it is
not possible to realise the amount from him according to the procedure
prescribed under the Act then the creditor is to realise his dues by pro-
ceeding on the basis that there is a "deemed decree" in his favour. In such
a case recourse has to be taken to the pr~wision of Order 34 of the CPC for
B execution of a final decree which is made clear in the last part of Section
13(3). [493-A-B]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 927 of 1991.

From the Judgment and Order dated 2.2.83 of the Bombay High Court,
C in S.A. No. 277 of 1971. \.

Gaurav Aggarwal and Uday Umesh Lalit for the Appellants.

A.K. Sanghi and Ravindra Bana for the Respondents.

D The Judgment of the Court was delivered by

D.P. MOHAPATRA, J. One Sheikh Ibrahim executed two mortgage
deeds on 30.4.1923 and 9.4.1924 in respect of 4.00 acres and 8.00 acres of
his land respectively in favour of Sunderbai wife of Latulal. On 11.4.1939
the said Sunderbai transferred her rights as a mortgagee to Sundersa Gulabsa
E
Jain. Sundersa Gulabsa Jain filed two Regular Civil Suits for recovery of
the mortgage dues and in the alternative for foreclosure of the right of
redemption. The mortgages were described as "Laban Gahan mortgages".
During the pendency of the suits the Central Provinces and Berar Relief of
Indebtedness Act, 1939 (C.P. Berar Act No. XIV of 1939) (for short "the Act")
F came into force and the suits were transferred to the Debt Relief Court estab-
lished under the said Act. On the application made by the defendant-mortgagor
a scheme for repayment of the loan was framed under the Act and the mortgage
dues were made payable by instalments falling due on 1st March every year
as per the order of the Debt Relief Court. The instalment which fell due on
G 1.3.1948. was not paid by the mortgagor. The next instalment was due on
1.3.1949. On account of a temporary legislation titled Central Provinces Berar
Relief of Agriculturist Debtors (Temporary measures) Act, 1949 (No. XXIV
of 1949) enforced under the provisions of the Act whereby the date of instal-
ment was postponed by one year from 1.3.1949 to 1.3.1950. The instalment
H which was due on 1.3.1950 was also not paid by the original mortgagor. Thus
BANSILAL v. MOHAMMAD ISRAIL [MOHAPATRA, J.] 487
he committed two consecutive defaults in payment of instalments. The credi- A
tor-plaintiff filed an application under section 13(3) of the Act on 31.8.1949
for a certificate as provided in the said section. Finally, the Deputy Commis-
sioner ordered issuance of the certificate under section 13(3) of the Act on
24.9.1962 which was confirmed by the High Court in Special Civil Application
No.716 of 1964 by order dated 4th April, 1966. In the meantime the debtor B
deposited the entire mortgage dues in the Court on 30.5.1964.

- : Thereafter, on 17.1.1967 the creditors filed an execution petition with the
prayer for delivery of possession of the mortgage properties from the debtors
on the ground that the certificate issued by .the Dy. Commissioner under section
13(3) of the Act operates as a final decree for foreclosure, and therefore, they
c
were entitled to possession of the mortgage properties. In the said proceeding
judgment-debtors filed an application under section 47 of the Code of Civil
Procedure read with section 151 of the Code contending inter alia, that
possession of the mortgaged property' should not be delivered to the creditors.
They contended that the final decree as referred to in section 13(3) of the Act D
should be treated as a final decree for sale and not a final decree for foreclosure
of the mortgaged property.

The Executing Court accepted the execution petition filed by the credi-
tors holding that the certificate operated as a final decree for foreclosure. E
Consequentially the objections filed by the debtors were rejected. The Court
directed issuance of the warrant of delivery of possession. The said order was
confirmed by the Extra Assistant Judge, Amravati in Civil Appeal No. 55 of
1969.

Feeling aggrieved by the said order, the judgment debtors preferred
F
second appeal No.277 of 1971 in the Bombay High Court which was decided
in their favour vide judgment dated 2.2.1983 in w~ich the learned single Judge
of the High Court held, inter alia, that the effect of the certificate under section
13(3) of the Act was that it gave to the creditors only the right to recover the
entire amount due in one lump-sum as if it were a final decree for recovery G
of money and it could not operate as a final decree for foreclosure. Conse-
quently, the second appeal was allowed, the orders of the trial court and the
appellate court were set aside and the warrant of delivery of possession was
quashed. The execution petition (original darkhast) was sent to the trial court
for disposal in accordance with the law. The said judgment is under challenge H
488 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A in this appeal filed by the successors of the original plaintiff (assignee mort_.
gagee creditor). The respondents in the appeal ar~ the successors of the original
defendant (IJ1ortgager debtor).

On analysis of the facts and the findings recorded by the trial court, the
appellate court and the High. Court tJ:ie ~uesti~n, tl)at.~es.. {or de~ermi~ation
B
is what is the nature and effect of the ceriifica.te issued under section 13(3) of
the Act. To put it differently, the question i~ whether ·the certificate amounts
to a final decree for realisation of the mortgage ;dues· by" sale of the mortgaged
property or it amounts to final decree of foreeiosure of the.right of redemption
of the mortgaged properties.
c
The learned counsel appearing. for the appellants reiterated the case of
the party that the certificate amounts to a final decree of.foreclosure of the
mortgaged properties and in execution of such. a decree the decree-holder was
entitled to. recover possession of the properties from the judgment- debtor.
D
Per contra learned counsel appearing on beh!tlf of the respondent con-
tended that the certificate was nothing more than a final decree for realisation
of the mortgage dues in a lump-sum by saie of tJ:i~ mortgaged properties.

Since the answer to the question formulateg earlier depends ·on the
E
interpretation of section 13(3) of the Act and its interaction with other relevant
provisions of the Act it will be helpful to quote sections 12 and 13 of the Act
in extenso :

12.Provisions governing payment of instalments -(1) Every instal-
F ment shall be payable on or before the date fixed by the order of the
Debt Relief Court, and this may, at the option of the debtor, be paid
either to the Deputy Commissioner or to such other Revenue Officer
as he may authorize in this behalf or to the creditor who shall pass a
receipt therefor in such form as may be prescribed.
G
(2) When the land revenue or rent, as the case may be, due by the
debtor is suspended or remitted, in whole or part, the instalment shall
be suspended and shall become payable one year after the last of the
remaining instalments. No i~terest shall be charged on such suspended
instalment.
ff.
BANSILAL v. MOHAMMAD ISRAIL [MOHAPATRA, J.] 489
13.Provisions when de.fault mµde in payment of instalments ( 1) If any A
instalment is not paid on or before the due date, the creditor may apply,
within eighteen months from the date of default, to the Deputy Com-
missioner within whose jurisdiction the debtor ordinarily resides or
ea,rns his livelihood or to such other Revenue Officer as may be
appointed in this be!ialf by the State Government, for the recovery of B
such instalment as an arrear of land revenue, and thereupon the Deputy
Commissioner or such other Revenue Officer shall recover such instal-
ment as an arrear of land revenue.

(2) If the instalment or part th~reof is irrecoverable, the-Deputy Com-
missioner or other Revenue Officer may certify accordingly.
c
· (3) If an instalment or part thereof is certified as irrecoverable under
sub-section (2) or if two consecutive instalments remain in arrears, the
. Deputy Commissioner, on the application ofthe creditor, shallpass an
order that the order of the Debt Relief Court fixing instalments shall D
cease to have effect, and the balance remaining due shall be recov-
erable as if a decree, and in the case of a mortgage, lien or charge as
if a final decree had been passed by a court of civil jurisdiction.

(3-A) Revisions oforder under sub-section ( 3 ). The State Government
E
may, at any time, for the purpose of satisfying itself as to the legality
or propriety of any order passed by, or as to the regularity of the
proceedings of, the Deputy Commissioner under sub-section (3) call
for and examine the record of any case pending before, or disposed
of by, the Deputy Commissioner and may pass such order in reference
thereto as it thinks fit: F

Provided that it shall not vary or reverse any order affecting any
question of right between private persons without having given to the
parties interested notice to appear and be heard in support of such
order. G

(4) If an instalment is recoverable as an arrear of land revenue, the
Deputy Commissioner or Revenue Officer appointed under sub-sec-
tion (1) shall, as far as may be, follow the procedure laid down in the
Central Provinces Land Revenue Act, 1917 ( 11 of 1917) or the Berar H
490 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A Land Revenue Code, 1928 as the case may be, for the recovery of
Government dues as arrears of land revenue."

(emphasis supplied)

The other provisions of the Act which may bi of assistance in interpret-
B
ing the aforementioned sections are sections 14,15 and 27. The said sections
are also quoted for the sake of convenience :

"14. Application of sums recovered under Section 13(1) When the
Deputy Commissioner or o~her Revenue Officer recovers any sums
c under sub-section (1) of Section 13, he shall, in the first instance, apply
the sum realized from the sale of any immovable property to the
amount payable on account of the debt which is secured by a mortgage
or lien on such property -in accordance with the scheme drawn up by
the Debt Relief Court, or if the sum is insufficient towards such ...
D repayment rateably. If there is any surplus, such surplus shall be
applied for rateable repayment of further instalments, if any, under the
scheme and the balance, if any, returned to the debtor.

15. Invalidity of trans.fer made by debtors in certain circumstances-
(l) No transfer of immovable property shall be valid if made by a
E
debtor, in respect of whose debts proceedings are pending under
Sections 5 or 6, unless made with the sanction of the Debt Relief
Court.

(2) Every transfer of immovable property made by a debtor in respect
F of whose debts a scheme has been prepared under sub-section (1) of
Section 11, shall be void unless made with the sanction of the Deputy
Commissioner within whose jurisdiction the debtor ordinarily resides
or earns his livelihood. The Deputy Commissioner shall not sanction
any transfer of such property unless he is satisfied that such transfer
G will not defeat the claims of any creditor the payment of whose claims
has been ordered by such scheme.

27. Readjustment of instalments fixed under Central Provinces and
Berar Debt Conciliarioii Act- (1) In any local area to which the State
Government may, by notification, apply this section, a debtor whose
H
BANSILAL v. MOHAMMAD ISRAIL [MOHAPATRA, J.] 491

debts did not exceed rupees twenty-five thousand at the time of A
making an application under the Central Provinces and Berar Debt
Conciliation Act, 1933 (hereinafter referred to as the said Act), and the
settlement of whose debts was effected under the said Act may,
notwithstanding anything contained in the said Act or in this Act,
apply to a Debt Relief Court to readjust the instalments fixed in the B
agreement registered under the said Act.

" (2) If on an application made under sub-section (1), the Debt Relief
Court is satisfied that the instalments are beyond the (paying) capacity
of the debtor, it may readjust the instalments so as to bring them wi~hin
his (paying) capacity but not so as to reduce the total amount payable
c
by him under the said agreement.

(3) The rights under the said agreement shall thereupon be extin-
guished and the instalments so readjusted shall be deemed to be
instalments fixed under this Act. D

(4) On an application being made under sub-section (1), the proceed-
ings; if any, pending before a Revenue Officer under Section 13 of
the Central Provinces and Berar Debt Conciliation Act, 1933 for the
recovery of an amount due in accordance with the terms of the agree-
E
ment to which the application relates shall, if so required by the Debt
Relief Court, be stayed. The proceedings shall be, resumed, if the
application is rejected.

(5) If an application made under sub-section (1) is rejected, the debtor
shall not be entitled to make another application to the Debt Relief F
Court."

The specific question for consideration relates to interpretation of sec-
tion 13(3). What do the expressions "in the case of a mortgage, lien or charge
as if a final decree had been passed by a court of ci vii jurisdiction" mean. Does G
it mean that a deemed decree for foreclosure of the mortgaged property comes
into existence automatically when the order of the Debt Relief Court ceases to
have effect and the creditor-mortgagee can straightaway proceed to any execu-
tion for recovery of possession of the mortgaged property or steps have to be
taken for sale of mortgaged property in accordance with the provisions in Order
H
492 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A 34 of the Civil Procedure Code. While deciding this question it has to be kept
in mind that in the mortgage deed it is stipulated that in case the mortgagor
does not pay the"fllortgage loan within the time stipulated then the property
shall stand foreclosed. A further question in this connection is what is the
effect of the Act on the mortgage transaction in the case. On perusal of the
B relevant provisions of the Act it is clear to us that the Act, which was intended
to make provision for relief of indebtedness of agriculturists, was in the nature
of a temporary statute initially for a period of three years. In the Act various
provisions have been made enabling the agriculturists to get relief from indebt-
edness by seeking intervention of the statutory authorities who are empowered
to draw a schedule of time by providing reasonable instalments and to further
c revise the schedule of payment in an appropriate case. In case of default in
payment of the debt by the debtor according to the schedules the creditor is
required to apply to the Revenue .Officer authorised by the State Government
for recovery of such instalment as arrear of land revenue and thereupon such
Revenue Officer shall recover such instalment as an arrear of land revenue.
D In sub-section (2) of the said section it is provided that if the instalment or
part thereof is irrecoverable the authorised officer may certify accordingly. In
sub-section (3) of the section the consequences which follow in a case in which
the authority has certified the instalment or part thereof as irrecoverable under
sub-section (2) or if two consecutive instalments remain in arrear then the Dy. •
E Commissioner on the application of the creditor shall pass an order that the
order of the Debt Relief Court fixing instalment shall cease to have effect and
the balance remaining shall be recoverable as if a decree, and in the case of
a mortgage, lien or charge as if a final decree has been made by a Court of Civil
jurisdiction.
F
On a fair reading of the provisions of the Ac~ referred to above, it is clear
that the statute has only attempted to help ;the'~g;:iculturists by making it easier
for them to pay the a~cumulated dues in instalments and has further safe-
guarded their interest by providing for adjudication of the matters relating to
recoverability or otherwise of the loan amount from the debtor. Only in
G extreme cases in which the debtor has not merely defaulted in payll].ent of
instalments fixed by the authority but outstanding amount is found to be not
recoverable as arrear of land revenue then in such a case the sta\ute authorises
the creditor to proceed for realisation of his dues as if the final decree has been
passed in his favour by a court of civil jurisdiction.
H
BANSILAL v. MOHAMMAD ISRAIL [MOHAPATRA, J.] 493

What the provisions of the Act, as we read them, provide is that in a case A
where the debtor fails to utilise the benefits given to him under the statute and
it is not possible to realise the amount ;"rom him according to the procedure
prescribed under the Act then the creditor is to realise his dues by proceeding
on the basis that there is a "deemed decree" in his favour. In such a case
recourse has to be taken to the provision of Order 34 of the CPC for execution B
of a final decree which is made clear in the last part of sectiOn 13(3). The
provisions of the Act neither specifically nor by reasonable inference can be
said to lay down that in a case where conditions specified in section 13(3) are
complied with a decree for foreclosure of the mortgage shall be deemed to have
been passed and the creditor can straightaway, without taking any other step
file an execution petition for delivery of possession of the mortgaged property.
c
In that view of the matter the High Court in this case rightly interpreted the
decree to be one for realisation of the entire ~mount due in lump-sum and
rightly directed the executing court to proceed in the matter accordingly.

Thus, there being no merit in the appeal, it is dismissed but in the D
circumstances of the case without any order for costs.

T.N.A. Appeal dismissed.