Holding

The Special Tahsildar retains jurisdiction to decide the debtor's eligibility for relief under the Tamil Nadu Debt Relief Act, 1980 even after a civil suit is filed, and the suit should be stayed pending that decision.

Summary

The appellant, a debtor, mortgaged land and later applied to the Special Tahsildar under the Tamil Nadu Debt Relief Act, 1980 for relief. The creditor, having been assigned the mortgage, opposed the application and filed a civil suit for recovery of the mortgage amount. The Special Tahsildar, after inquiry, granted relief, but the creditor appealed and the High Court held that the Tahsildar lost jurisdiction once the civil suit was filed, relying on K.V.S.P. Subramanian v. R.D.O. The Supreme Court overruled that view, holding that the Special Tahsildar retains jurisdiction to determine eligibility under the Act even after a civil suit is instituted; the suit should be stayed pending the Tahsildar's decision and dismissed only if the debtor is found entitled to relief. The Court emphasized a purposive interpretation of Section 4 to avoid defeating the statute’s intent. Consequently, the appeal was allowed and the High Court judgment set aside.

Issues considered

The filing of a civil suit by the creditor defeats the jurisdiction of the Special Tahsildar under the Tamil Nadu Debt Relief Act, 1980.
Whether a proceeding before the Tahsildar must be dismissed without adjudication upon the institution of a civil suit.
Interpretation of Section 4 of the Tamil Nadu Debt Relief Act regarding abatement of suits.
The correctness of the High Court's reliance on K.V.S.P. Subramanian Chettiar v. R.D.O.

Subjects

Tamil Nadu Debt Relief Actrelief from indebtednessjurisdiction of Special Tahsildarcivil suit staystatutory interpretationmortgagecreditor-debtor

Judgment

A P. NIRATHILINGAM
v.
ANNAYA NADAR AND ORS.

OCTOBER 31, 2001
(
B [D.P. MOHAPATRA AND K.G. BALAKRISHNAN, JJ.]

Tamil Nadu Debt Relief Act, I980-Sections 4 and 5-Relief from
indebtness-Jurisdiction of-Special Tahsildar-Institution of Civil Suit for
realisation of the mortgage amount by creditor on the proceedings initiated
c on application for grant of relief from indebtness filed by the debtor-Effect
of-Held, Special Tahsildar to determine the question relating to the grant of
relief from indebtness to the debtor to the exclusion of Civil Court-Such
proceedings pending before the Tahsildar or the Appellate Authority cannot
be dismissed without adjudication.
D
Interpretation of Statutes:

Interpretation which defeats the intent and purpose of a statute-Such
interpretation, to be avoided.
E
Appellant-debtor mortgaged his land in favour of one 'R' which was
subsequently assigned in favour of Respondent No. 1 for consideration.
The Appellant filed an application before the Special Tahsildar (Debt
Relief) seeking relief under the provisions of Tamil Nadu Debt Relief Act
1980 on pecuniary considerations. Creditor Respondent No. 1 opposed the
F application during its pendency and also filed a civil suiL On inquiry, the
Special Tahsildar concluded that the Appellant was entitled to the relief.
Respondent No. 1 filed an appeal before the Revenue Divisional Officer
which was dismissed. Respondent No. 1 then filed a writ petition before the
High Court. Single Judge held that on filing of the civil suit, the Special
G Tahsildar who was the competent authority under the Act ceased to have
jurisdiction in the matter and the decision of the civil court would be { . ...
binding on the parties. Division Bench confirmed the same. Hence the
present appeal.

H Allowing the appeal, the Court
608
P. NIRATHILINGAM v. ANNAYA NADAR 609
. HELD :. 1. The Special Tahsildar could have passed the order grant- A
ing relief to the Appellant-debtor long after institution of the Civil suit by
Respondent No. 1 and during the pendency of the said suit before the
competent civil court. [611"B]
K. V.S.P. Subramanian Chettfor v. R.D.O. Arantangi PudukottaiDistfict,
[1982] mMLJ 37?, overruled. B
2. The legislative scheme of the Tamil Nadu Debt Relief Act 1980 ~s
not to allow interference by any Court with determination of the question
by the Tahsildar of the Applicant-debtor's eligibility to receive benefit
under the Act, and his order is made final subject to appeal under Section
8. The jurisdiction vests in the statutory authorities to determine such a c
question to the exclusion of the Court so that a debtor who is entitled to the
benefits under the Act.is able to enjoy such benefit without the hassle of a
protracted litigation in a civil court or revenue court. The view taken by
the High Court that if a civil suit for realisation of the amount or any other
relief based on the debt in question has been filed or on the filing of such a D
suit the Tahsildar would lose his jurisdiction to deal with the matter is
accepted, it will defeat the very purpose of granting relief to a certain class
of indebted persons in the State for which the legislature enacted the
statute and it would be easy for a creditor to prevent the debtor from
getting.benefits granted tinder the ~ct by filing civil suit relating to the
debt. [616-H; 617-A-B] E

3. When a suit is. filed by the creditor against the debtor before the
debtor made the application to the Tahsildar seeking relief ~oder the Act
the proper and reasonable course to be followed is to stay the proceeding in
the suit till the Tahsildar/appellate authority disposes of the proceeding under
the statute. If it is held in th~t proceeding that the debtor is not entitled to
F
the benefit under the Act then the civil suit may be proceeded with if on the/
other hand, it is held that the debtor is entitled to the benefits provided in
the Act then the suit has to be dismissed under Section 4. Thus, in ~o case it
can be held that by filing a civil suit for realisation of the mortgage amount
the proceeding pending before the Tahsildar or the appellate authority is to G
be dismissed· without adjudication. [(i17-G-H; 618-A-B]

.cIVIL APPELLATE JURISDICTION ~ Civil Appeal No. 6468 of 1998.

From the Judgment and Order dated 1.4.97 <;>f the Madras High Court
in W.A. No. 971 of 1996. H
610 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A ·S. Ganesh (A.C.), Revathy Raghavan and Ms. Sw.eta darg for the appear-
ing parties.

The Judgment of the Court was delivered by
{
D.P.' MOHAPATRA, J. The effect of institution of a civil suit by the
B creditor on 'the proce~ing initiated on the application filed by the debtor under
the TatJlil Nadu Debt Relief Act, 1980 (Act XIII of 1980) (for short 'the Act')
is the question that falls for deteqnination in this. case.
'
. A learned single Judge of the High Court of/Madras held that on filing
c of the civil suit the Special Tahsildar who was tile coo;ipetent aut~nty under
the Act ceased to have jurisdictiort 'in the ~atter and the decision of the civil ·
court. would be binding on the parties. The judgment was confirmed by the
Division Bench. Therefore, the debtor has filed this appeal assailing the judg-
. ment in Writ Appeal No. 971196 confirming the judgment of. the learned single
Judge in Writ Petition No. 3409/1983.
D
The shot resume of the.fa6ts r~levant for appreciating the case may be
stated thus :

The appellant herein mortgaged his land measuring about 3.07 acres for
E a sum of Rs. 10,000 in favour of one Ramummal wife of Madasami Raja on
- 28.2.1965. The said mortgage was assigned in favour of the respondent No. 1
for consideration ori. 12.6.1974. The appellant filed the application dated
11.9.1980 before the Special Tahsildar (Debt ReFet), Sivakasi, seeking relief
under the provisions of the Act on the ground that 'the annual household income
during 1979 ·was Rs. 3600 and the immovable prpperties owned by him were
F worth Rs. 22,840. The assignee-creditor, respondeht no.l herein, opposed the
application. When the application was pending before the Special Tahsildar the
assignee creditor filed O.S. No. 123/81 on 25.4.1981 in the Sub-Court,
Ramanathapuram, which was re-numbered as O.S. No. 150/81 on the file of
Sub-Court, Srivilliputhur.
G
The Speci!ll Tahsildar, on inquiry came to the conclusion that the annual
· household income of the appellant's family during 1979 did not exceed Rs.
4,800 and the value of the immovable properties did not exceed Rs. 25,000,
and therefore, the appellant was entitled to the relief provided under the Act.
H The appeal filed by the respondent No. 1 (assignee~creditor) before the Rev-
P. NIRATHILINGAM v. ANNAYA NADAR [MOHAPATRA, J.] 611
enue Divisional Officer, Sivakasi, against the said order was dismissed on the A
ground of limitation.

Aggrieved by the said order the respondent No .. 1 filed Writ Petition No.
"\ 3409/83 in which the learned single Judge relying on the judgment of .the
Division Bench in K. V.S.P. Subramanian Chettiar v. R.D.O., Ara?tangi,
Pudukottai Dis(rict, (1982) II MLJ 375, held that the Special Tahsildar could
B
not have passed the order granting relief to the appellant on 8.1.1982 long after
institution of the civil suit by the respondent no. 1 and during the pendency of
the said suit before the competent civil court. On the said finding the writ
petition was allowed and the order of the Special Tahsildar as cpnfirmed by
the appellate authority was set aside. The learned single Judge left it to the c
parties to vindicate their claims before the civil court in the pending civil suit.
The operative portion of the judgment of the learned single Judge runs as
follows :

"In this view, the impugned orders are quashed, However, liberty is
D
reserved to the third respondent to seek adjudication before the civil
court where the suit is pending on the question "as to whether he is
entitled to the benefits of the Act. Ifthe court comes to the conclusion
that the third respondent herein is entitled to the benefits of the Act
then the court has to dispose of the suit in accordance with section 4
of the Act. The writ petition is allowed. No costs." E

.. On appeal, filed by the appellant, the Division Bench of the High Court
relying on the decision in K. V.S.P. Subramanian case (supra) confirmed the
judgment of the learned single Judge. The Division Bench made the following
observations on the point : F
"The fact remains that the suit was pending on the date when the
second respondent passed the order granting relief which had the
consequence of nullifying the civil suit filed and pending before the
competent civil court. The learned Judges of the Division Bench did
) not base their conclusions on the ground that the suit had been filed G
earlier in point of time, the real test or criteria being the pending of the
suit dehors the date of its filing as on the date of consideration by the
competent authority. When the case is one of the total lack of jurisdic-
tion, the fact that the creditor participated in the proceedings or he kept
quiet without objecting to the jurisdiction had no significance, since H
612 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R. ·
A it is a. well settled principle of law· that the jurisdiction cannot be
conferred on authorities by mere consent of parties, where it is totally
.wanting and the statutory authorities.could not daini.to havejurisdie-
. 'tion to function under an Act; merely because the parties before them
,.._
agreed to p~ticipate in the proceedings. Fo.r the· same r~ason, we ar~ {

B qf the view that the reliance pla~ed·on Section 7 of the:Act and the
pnality given to th~ orders p~ssed under the Act subject to the o;ders
pass~d on appeal, will not be of any hell' to the. appellant where it is
a case of absolute and total want of jurisdiction on the original author~
ity. The ~rder passed by.,the authority which .suffered total want of
jurisdiction 'fOUld be a riullity and there is no question of attaching any
c finality to such an order. For all the reasons sta~ed above, we see no
merit in the above appeal. The appeal, therefore, fails and shall stand
disinissed.".

On. the facts and circl.lmsta!lces dis.sum~d above the point formulated
D earlier ~ises for determination. ·
' .
. We have heard Mrs.' Revathy Raghavan, learned counsel appeared for
the appeliant N~ne appear~d fo~ the
respondents despite service of notice .
Since the question involved in the case is ~f .considerable importance deteqni-
nation of which depends Oil 'interpretation of the relevant provisions of:the
E
Act, we requested Mr. S. Ganesh, Senior Advocate' to act as amicus curaie, for
assisting the CoQrt which he· readily accepted.

Before proceeding to consider the corre.ctness or otherwise of the judg~
mentsrendered by the High Court it will be convenient to notice some relevant·
F provisions of the Act.

In the Preamble
':
of the Act it is stated
.
:

"An Act to provide for the relief of ~ertaih indebte.d persons in the 'State·
of Tamil Nadu. .
·G ,.
Whereas it is expedient to provide relief to certain indebted per-
sons in the State of Tamil Na?u from the usurious praetices·of pawn-
brokers, money-lenders and othernon-instilutional sources of credit
and to give relief from the debts due to such pawnbrokers, money-
lenders, and other non-institutional sources of credit."
P. NIRATHILINGAM v. ANNAYA NADAR [MOHAPATRA, J.] 613
Section 3 of the Act contains definitions of different expressions used in .A
the Act. They are as under :

3(a) "annual household income" means. the aggregate of the gross
annual income from all sources of all the members of. a family during
the year ending on the 31st December, 1979.
B
3(b) "creditor" means a person from or in respect of whom the debtor
has borrowed or incurred a debt and includes the heir of such person.

3(c) "debt" means nay liability in cash or in kind whether secured or
unsecured and whether decreed or not, but does not include arrears of C
taxes due to the Central Government or a State Government or a local
authority.

3(d) "debtor''. means any person from whom any debt is due and whose
annual household income does not exceed four thousand and eight
hundred rupees. · D

The proviso .enumerates the class c:if persons who shall not be deemed
t.o be·debtor. The proviso is not relevant for the purpose of the present case.

3(g) "person" means an individual or a family.
E
3(i) "transferee of the creditor" means any person (including an insti-
tution referred to in clause (h) of section 12) to whom :-

(i) the creditor h.as pledged the movable property pledged to him, by
the debtor and includes any su.bsequent transferee to whom such p
transferee has pledged such movable property and also includes
. any person in possession of the property pledged or :

(ii) the creditor has transferred or otherwise assigned his interest in
the property mortgaged by the debtor and includes any subse-
. quent transferee to whom such transferee has transferred or ,G
! otherwise assigned his interest in the property mortgaged and
also includes any person in possession of the proper!y mort-
gaged.

Section 4 of. the Act contains the provision regarding relief from indebt- H
614 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A edness."In reads as follows :

4. Relief from indebtedness : (1) Notwithstanding anything con-
tained in the Tamil Nadu Agriculturists Relief Act, 1938 (Tamil
Nadu Act 1 of 1938), the Tamil Nadu Pawnbrokers Act, 1943
(Tamil Nadu ActXXIII of 1943) theTamil Nadu Money-Lenders 't ~
'B
Act, 1957 (Tamil Nadu ActXXIVof 1957) the Tamil Nadu Debt
Relief Act, 197~ (Tamil Nadu Act XXXVIII of 1972), the Tamil
Nadu Debt Relief Act, 1976 (President's ActXXXI of 1976), the
Tamil Nadu Debt Relief Act, 1979 (Tamil Nadu Act XL of 1979)
or in any other law for the time being in force or in any contract
c c ·· or instrument having force by virtue of any such law and save
as otherwise expressly provided in this Act, and in particular sub-
section (2) with effect on and from the commencement of this
Act.

D (a) every debt advanced or incurred before the first day of January,
1980 (including interest, if any) and payable by the debtor to the
creditor shall be deemed to be wholly discharged;

(b) no Civil Court shall entertain any suit or other proceeding against
the debtor for the recovery of any amount of such debt (including
E
interest, if any);

Provided that where any suit or other proceeding is instituted
jointly against the debtor and any other persons, nothing in this ·'"I
section shall apply to the maintainability, of such suit or proceed-
F ing in so far as it relates to such other person;
•
(c) all suits and other proceeding (including appeals, revisions, attach-
men ts or execution proceedings) pending at the commencement of this
·Act against any debtor for the recovery of any such debt (including
interest, if any) shall abate;
G
{
Provided that nothing in this clause shall apply to the sale, in
respect of any such debt of -

(i) any movable property held and concluded before the commence-
H ment of this Act
J.>. NIRATHILINGAM v. ANNAYA NADAR [MQHAPATRA, J.]· 615
(ii) any immovable property confirmed before such commen~ement. A
(d) every debtor under going detention in a c_ivil prison in f!Xecution
of any decree for money passed against Him a Ci vi~ Court in respect
of any such debt (inctuding interest, if any) shall be released;

(e) every movable property pledged by .a debtor shall stand released B
in favour of such debtor and the creditor shall be bound to return the
same, to the debtor forthwith;

(f) every mortgage executed by the debtor iti favour of the creditor
shall stand redeemed and the mortgaged property shall be released in C
favour of such debtor.
• ' v '

Explanation : Nothing in tltj.s section shall be construed a!!_ entitling any ·
debtor for refuri°d ofany part o(,;iny debt repaid or interest paid aiready
by him or re~overed from him before the commeni;:ement of this Act.
D
(2) Nothing contained in this Act shall apply to any debtor. who is
entitled to the benefits of the Tamil Nadu Debt Relief Act, 1976
0

(President;s Act XXXI Of 1976) ollly in so far as any debt to which
' .l ,

the Act applies, is concerned." ··
E
Section 5 makes provision for the debtors to make application for the
return of the movable property pledged by them. In sub-section (l)(a) it is laid
down that every debtor referred to in clause (e) 'of sub-section (1) of section
,,.
4 shall make an application in such form and containing such particulars as may
be prescribed to the Tahsildar having jurisdiction over the area ·where his
creditor has his ordinary place of business for. an order for the return of the
F
movable property pledged by the debtor.·

In sub-section (2) of the said section power has been vested in the
Tahsildar to pass an order after giving a reasonable opportunity to the creditor
concerned and the debtor to make their representations for return of the immov~ G
· able property pledged by the debtor if he is satisfied that the debtor is entitled
to relief under section 4 and to pass art order dismissing· the application if he
is. satisfied that the debtor is not entitled to such relief.

Under sub-section (3) it is laid down that where the Tahsildar has passed H
616 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
. A · an order 'under sub-section (2) disinissing the application ·the creditor may
subject to the provisions of sub-section (3) of section 8, dispose of in accord-
ance with. the provisions of the Tai:nil .
. Nadu Pawnbrokers Act, 1943 (Tai:nil
Nadu Act XXII~ of 1943) or any other law for the time being in force relating
to the sale of pledged articles, the movable prop~rty for the return. of which the
B said application was 11).ade.

In clause (d) of sub-section (3) it is provided that where any debtor
referred to in clause (e) of sub-section (1) of section 4, has not made any
applic~tion in accordance with the provisions of and within the time specified
in sub-section (1), then, such debtor shall not be entitled to reliefunderthis Act.
c
The Act, as noticed earlier, is intended for giving relief to a certain class
of indebted persons in the State. For that purpose procedure. has been laid down
in the Act for filing ~f application and for dealing· with the same. The Tahsildar
is vested with the power to decide whether the applicant-debtor is entitled to
D relief under the Act and if he is satisfied that the applicant-debtor is entitled
to such relief, he is to pass an order releasing the mortgaged property and
granting a certificate of redemption in the prescribed form. The said certificate
is to be taken· as admissible evidence of such redemption in. any proceeding
before any Court or other authority. If, on the other had, the Tahsildar finds
E that the applicant-debtor is not entitled to the relief under the Act he is to pass
an order dismissing the application. Finality is attached to the order of the
Tahsildar subject to the appeal. under Section 8 of the Act. Further, the. order
passed by the Tahsildar is not to be questioned in any Court. A sii:nilar pro-
vision is made that the order of the appel~ate authority shall be final and shall
not be questioned in any Court. ·

From the provisions of the Act the legislative scheme is clear that the
scheme is not to allow interference by any Court with deterinination of the
question of eligibility to receive benefit u.nder.the Act by the applicant-debtor
by the Tahsildar and his ~rder is made ·~nal subject to !ffi ·appeal under section
G 8. The legislative intent is to vest the jurisdiction to deterinine the question
relating to eligibility for the benefits under the Act in the statutory authorities,
to the exclusion of the Court so that a debtor. who is entitled to the benefits
under the. Act is able to enjoy such benefit without a hassle of a protracted
litigation in a civil court or reven.ue court. The view taken by the High Court
· H that if a civil suit for realisation of the amount or any other relief based on the.
P. NIRATHILINGAM v. ANNAYANADAR [MOHAPATRA,J.] 617

debt in question has been filed or on the filing of _such a suit the Tahsildar would A
lose his jurisdiction to deal with the matter if accepted will defeat ~he very·
purpose for which the legislature enacted the statute, that is, to grant relief to
a certain class of debtors. If the view t~ken by the High Court is accepted then
it would be easy for a creditor to prevent the debtor froin getting benefits
'-" granted under the Act by filing civil suit relating to the debt. On the other hand B
a
in sectioq 4(b) declaration is made that any Civil Court which entertain any
suit or other proceeding against the debtor for re~overy of ariy amount of such
debt (including interest, if any); all .. suits and other proceedings (including
appeals, revisions, attachments or execution proceedings) pending at the com-
mencement of this Act against any_ debtor for the recovery of any such debt, · . C
(including interest, if any) shall abate.

The principle is well settled_ that an interpretation of the statutory pro-
vision which defeats the intent and purpose for which the statute was enacted
should be avoided. The decision of the Madras High Court in K. V.S.P.
Subramanian case (supra), holding that since the creditor had already filed D
suits for recovery of the mortgage amount and the suits were pending the
debtor, who is the defendant in those suits, has to seek adjudication before the
Civil Court on the question as to whether he is entitled to the benefit and if the
Court comes to the conclusion that he is entitled to the benefit of the Act then
the Court has to dispose of the suit in accordance. with section 4 of the Act, E
in our view, does not lay down the law correctly. Accepting this view will
render the provision regarding abatement of the suit redundant.

We are consCiou.s of the position that the view taken by the Division
Bench of the Madras High Court in K. V.S.P. Subramanian case (supra) has held
the field for a good length of time. But as discussed earlier, the decision runs
F
co11nter to the very intent an·d purpose for which the enactment was made. In
such a situation the decision needs to be corrected 'a:nd this has to be done
despite the lapse of time.

The further question that arises for consideration is what is the appro- G
,. ~ priate course to be followed iri. a suit which was filed by the creditor against
the debtor before the debtor made the application to the Tahsildar seeking relief
under the Act; should it be dismissed immediately on filing or should it be
suspended/stayed till the Tahsildar disposes of the application filed by the
debtor. It is our view that in such a case the proper and reasonable course to H
618 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A be followed is to stay ·the proceeding in the suit till the Tahsildar/appellate
authority disposes .of the proceeding under the statute. If it is held in that
proceeding that the debtor is not entitled to the benefit under the Act then the
civil suit may be proceeded with, if on the other hand it is held that the debtor
is entitled to the benefits provided in the Act then the suit has to be dismissed
B under section 4. In no case can it be held that by filing a civil suit for realisation V
of the mortgage amount the proceeding pending before the Tahsildar or the
appellate authority is to be dismissed without adjudication.

· On the discussions in the forgoing paragraphs the inescapable· conclusion
is that the judgment of the learned single judge as confirmed by the Division
C Bench is unsustainable. Accorqingly, the appeal is allowed. The Judgment
under challenge is set aside. Hearing fee is assessed at Rs. 10,000.

We are beholden to Shri S. Ganesh, Senior Advocate for the assistance
rendered to us in the ·case.

D N.J. Appeal allowed.

\

-