Holding

Section 6 of the Himachal Pradesh Debt Reduction Act, 1976 confers a fresh, overriding right on debtors to institute a suit for redemption or accounts at any time after the Act’s commencement, so the 1981 suit was not barred by limitation.

Summary

The appellants, successors to a landowner who mortgaged his property in 1946, sought restitution under the Himachal Pradesh Debt Reduction Act, 1976. After a collector dismissed their 1979 application as time‑barred, they filed a suit for possession of the mortgaged land in 1981 under sections 4 and 5 of the Act. The trial court held the suit was filed within time but dismissed it on a technical ground; the first appellate court reversed that finding and decreed in favour of the appellants. The High Court, however, set aside the lower courts’ decisions, holding the suit was barred by the Limitation Act because more than 30 years had elapsed since the mortgage. The Supreme Court allowed the appeal, interpreting section 6 of the Himachal Pradesh Debt Reduction Act to give debtors a fresh cause of action "at any time" after the Act’s commencement, thereby overruling the limitation defence and confirming the lower appellate court’s decree.

Issues considered

The suit filed under the Himachal Pradesh Debt Reduction Act, 1976 is barred by the Limitation Act, 1963.
Whether the Act provides a fresh cause of action to a debtor to recover mortgaged property irrespective of the lapse of time.
The meaning of the expression "at any time" in section 6 of the Himachal Pradesh Debt Reduction Act.
Whether the suit is for redemption of mortgage or for recovery of possession.

Legislation cited

Subjects

debt reductionmortgagelimitationHimachal Pradeshredemption of mortgagepossessionstatutory interpretationfresh cause of action

Judgment

·KANSHI RAM AND ANR. A
v.
LACHHMAN(DEAD) THROUGH LRS. AND ORS.

JULY 9, 2001

(D.P. MOHAPATRA AND BRJJESH KUMAR, JJ.] B

Himachal Pradesh Debt Reduction Act, 1976 (Act 31 of 1976)

Ss. 4,5 and. 6-Suit for redemption of mortgage-Initiation of-
Uinitation -Applicability of-Property mortgaged in the year 1946-Suit C
for restoration of possession filed in the year 1981-Trial Court and First
Appellate Court holding that the suit was filed within time-On appeal, High
Court dismissing the sujt as barred by limitation-Validity of-Held, under
the provisions of the Act, suit for redemption of mortgage can be filed "at any
time after the commencement of the Act"-Expression "at any time" indicates D
legislative intention of providing a fresh opportunity to the debtor for
obtaining relief under the Act-Thus, High Court erred in dismissing the suit
as barred by limitation-limitation Act, 1963.

Ss. 5 and 9-Relief to debtors-Provision granting-Scope of-Held,
has got overriding effect over any law, agreement, contract or decree contrary E
to the provisions of the Act.

Words & Phrases

"at any time"-Meaning of in the context of S.6 of the Himachal
Pradesh Debt Reduction Act, 1976. F
Father of the appellants mortgaged the suit property in favour of father
of the respondents in the year 1946. Appellants successors to the suit land,
filed an application for restitution which was dismissed by Collector as barred
by limitation. Aggrieved, appellants, in the year 1981, filed a suit for
possession of mortgaged property under Ss.4 and 5 of the Himachal Pradesh G
Debt Reduction Act, 1976 (Act 31of1976). Trial Court, while rejecting the
contention of respondents that the suit was barred by limitation, dismissed it
on the ground that it was not maintainable after being dismissed by the
Collector. On appeal, the First Appellate Court decreed the suit by reversing
the findings of non-maintainability of the suit and confirmed the finding that H
803
804 SUPREME COURT REPORTS (2001) 3 S.C.R.

A the suit was filed within time. However, on second appeal, High Court reversed
. f
·, the concurrent findings.of the courts below on the question of limitation and
dismissed the suit. Hence the present appeal. ""-

Allowing the appeal, the C?.urt

HELD: 1.1. Himachal Pradesh Debt Reduction ~ct,-1976 provides a fresh
B
cause of action to the debtor/mortgagor to recover the mortgaged property.
Thus, High Court was not justified in dismissing the suit filed by the appellants
Mr
/nder Ss.4 and 5 of the Act as barred by limitation.1808-H; 809-F; 805-B)

1.~. The object of the Act and the scheme underlying it was to grant
C relief to debtors and enable them to get back properties mortgaged by tf!em
·with p'ossession for a loan. The use of the expression "at any time' for making
an ~pplication or filing a suit is indicative of the legislative intent that the
Act provides a fresh opportunity to the debtor for getting relief under the
Act. The legislature has taken care to make the relevant provisions of the
Act granting relief to debtors by giving overriding effect over any law,
D agreement, contract or decree contrary to the provisions of the Act.
1808-G-H; 809-A]
1.3. The High Court erred in reversing the concurrent finding of the
courts below on the errpneous assumption that the suit was one for redemption
of the mortgage simpliciter. The reason given by the High Court in support
E of the finding that the suit was barred by limitation is that more than 30 years
had elapsed since the date of the property mortgaged. The provisions in section
27 of the Limitation Act has been considered in support of the finding which
is fallacious. It defeats the object and the purpose of the statute enacted by
the legislature specially to give relief to debtors in the State. The first
F · appeUate Coifrlrtghtly held that the suit was one for recovery of possession
from the mortgagee who was in unauthorized possession of the mortgaged
property after the mortgage loan was satisfied. The cause of action for filing
such a suit under the Act arose when the enactment was enforced in 1979.
Thus, viewed from that angle the suit was filed in time and the trial Court
and the first appellate Court rightly recorded the findings to tha_t effect.
G 1809-E, B-C-D)
'··
CIVIL APPELLATE.JURISDICTION: Civil Appeal No. 2451of1997.

From the Juggmentiand Order dated 27.11.96 of the Himachal Pradesh
High Court in R.S-.A. No. 329 of 1989.

'H H.K. Puri for the Appellant.
KANSHI RAM v. LACHl~MAN LMOHAPATRA, .1.J 805

Ashok Kumar Chhabra for Ms. Madhu Moolchandani for the A
Respondents.

The Judgment of the Court was delivered by

D.P. MOHAPA TRA, J. The question that arises for detennination in this
appeal is whether the High Court is right in dismissing the suit filed by the B
appellants as barred by limitation. The trial court and the first appellate comt
had answered the question in favour of the plaintiffs holding that the suit was
filed within time. The answer to the question depends on whether the suit is
one for redemption of the mortgage or is one for recovery of possession of
the property which had been mortgaged by predecessor of the plaintiffs with
the father of the defendants. Another question which arises in th.~s. co.nnecti01'I C
is whether the Himachal Pradesh Debt Reduction Act, 1976 (Act 31 of 1976)
provides a fresh cause of action to the debtor/mortgager to recover ·the
mortgaged property.

One Punnu father of the appellants mortgaged with possession the suit D
.property with father of the respondents on 26 Magh 2003 (BK) corresponding
to February 19, 1946 for a consideration of Rs. 830. The appellants ~ho
succeeded to the suit lfnd after death of their father made an application on
2.4.1979 to the Collector, Ghumarwin, under section 4 of the H.P. Restitution
of Mortgaged Lands Act, 1976. It was dismissed by the Collector on 1.12.1980
as barred by time. The plaintiffs thereafter filed the suit for possession of the E
land in dispute under sections 4 and 5 of the H.P. Debt Reduction Act, 1976
(for short 'the Act'). The defendants contested the suit, on grounds, inter
alia, of limitation. lhe trial court though answered the issue of limitation in
favour of the plaintiffs dismissed the suit on the ground of maintainability in
view of the dismissal of their application by the Collector. The first appellate F
court reversed the finding of non-maintainability of the suit; confirmed the
finding of the trial court that the suit was filed within time and decreed the
suit. The High Comt in second appeal reversed the concurrent findings of the
courts below on the question of limitation and dismissed the suit on that
score. Hence this appeal.
G
For determination of the question formulated ·earlier it is necessary to
note some relevant provisions of the Act. The Act as its name shows was
enacted to provide for the reduction of debt in the State of Himachal Pradesh.

In section 2 (ix) of the Act the expression "loan" is defined as advance
in cash or kind and includes any transaction which in substance amounts to H
806 SUPREME COURT REPORTS (2001] 3 S.C.R.

A such advance but does not include an advance by the Central or State
Government or by a local authority authorised by the State Government to
make advances, by a co-operative society or by a bai:ik or by the Life
Insurance Corporation of India or a loan taken or used for the purposes of
trade.
I
B In section 2(xi) "principal" means the amount originally advanced.

In section 2(xiii) "suit to which this Act applies " means any suit or
proceeding relating to a loan.

In section 2 (xiv) "d.ebtor" is defined to mean a person who receives a
C loan as defined under the Act.

Chapter Ill in which sections. 5 to 9 are included deals with "Suit and
Decrees". The sections in the chapter contain non-obstante clauses giving
the provisions therein overriding effect over any law for the time being in
force or decree or contract or agreement to the contrary.
D
Section 6 provides that notwithstanding the tenns of any contract
regarding the date or dates on which a debt shall become due; a suit to which
this Act applies .for the redemption of a mortgage or for accounts may be
instituted by a debtor .at any time after the commencement of this Act.
(emphasis supplied).,
E
In section 7 which starts with a non-obstante clause provision is made
for application of the provisions of the Act for amendment of a decree for
reduction of the amount due according to the provisions of the Act.

Section 8 which mandates the Court to determine the principal and take
F into account all sums paid by or on behalf of the ~ebtor and in the case of
a mortgage with possession, the net profits realised by the mortgagee reads·
as follows :

"8. (I) in a suit to which this Act applies or in an application made
in a suit to which this Act applies or in amending a decree under the
G provisions of section (7) the Court shall, notwithstanding, anything
to the contrary in any law decree or contract or in any agreement
purporting to close past transactions, determine the principal and take
into account all sums paid by or on behalf of the debtor and in the
case of a mortgage with possession, the net profits realised by the
H mortgagee or which .with the exercise of ordinary diligence might have
KANSHI RAM v. LACHHMAN [MOH/\P/\TRA . .I.) 807

been realised by him and shall determine the amount, if any, due by A
the debtor in accordance with the provisions of sub-sections (2) and
(3).

Provided that for the purpose of determining the principal, the court
shall treat as principal any accumulated interest which has been
converted into princip.al at any statement, of account or any contract B
in the course of transaction made before the first day of January, 1917
but shall treat as interest any accumulated interest which has been
converted as aforesaid at any such statement, settlement or contract
made on or after the date.

(2) The amount due by the debtor shall not exceed the amount that C
could have been due if the rate of interest had been, in the case
of a secured loan, 6 per cent per annum simple interest, and in
the case of unsecured loan, 12 per cent per annum simple interest.

(3) The total amount due by the debtor as interest and principal .
shall not in any case exceed- D
(a) in respect of a loan advanced before the commencement
of this Act, twice the amount of the principal less any
amount already received by the creditor in excess of the
amount due under sub-section (2);

(b) in respect of a loan advanced after the commencem~nt of E
this Act, twice the amount of principal less any amount
already received by the creditor.

(4) Nothing in this section shall entitle the debtor to a refund of any
sum already paid by him."
F
In Section 9 it is laid down that notwithstanding anything contained in
section 34 of the Code of Civil Procedure, 1908 the court shall not order future
interest on the aggregate sum adjudged in a decree to which this Act applies
or any decree amended under the provisions of this Act, at a rate exceeding
three per cent per annum simple interest.
G
Section 11, one of the provisions in dealing with "Execution of Decrees"
reads as follows :

)'
'.' 11. (I) Notwithstanding anything contained in this Act or in any
other enactment for the time being in force, a final decree for
foreclosure shall not be passed in respect of the agricultural land H
-y
\

808 SUPREME COURT REPORTS (2001] 3 S.C.R.

A of a debtor in a suit to which this Act applies. Not shall such land
be sold or otherwise transferred in execution of a decree to which
this Act applies.

a
· Provided that the court may execute decree to which this Act
applies by granting to the decree holder a self liquidating US\lfructuary
B mortgage of such land for a period as the Collector may decide under
sub-section (4) subject to the provisions of sections 16 and 17.

Provided also that when a mortgage has 'been granted under the
provisions of this section, the sanie land shall not be m011gaged in
execution of any other decree to which this Act applies against the
c same debtor or his heir or successor if the term of the mortgage
together with the term or terms of the previous mortgage or mortgages
exceed twenty years.

'• (2) The form, terms and conditions of a mortgage granted under the
first proviso to sub-section (I) and the amount to be paid by the
D debtor at any time for the redemption of such mortgage shall be
such as may be prescribed.

(3) Notwithstanding anything contained i·n the Code of Civil
Procedure or any other law for the time being in force, whenever
a civil court order that the land be attached and aiien.ated
E temporarily in the execution of a decree for the payment of
money, the proceedings of such attachment and alienation shall
be transferred to the Collector.
(emphasis supplied)

According to section 22 in Chapter V titled 'miscellaneous' a debtor
F may sue for an account of loan and in such sutt the Court shall allow only
· such interest as may be permissible under the Act. It shall after taking
necessary accounts declare the account which is still payable by the plaintiff
to the defendant and shall on the application of the defendant, if the money
is payable, pass a decree in favour of the defendant.
G The object of the Act and the scheme underlying it as obtained from
the provisions made therein is to grant relief to debtors and enable them to
get back properties mortgaged by them with possession for a loan. The use
of expression "at any time" for making an applica1tion or filing a suit is
indicative of the legislative intent that the Act provides a fresh opportunity
.H to the debtor for getting relief under the Act. The legislature has taken care
KANSHI RAM v. LACHHMAN fMOHAPATRA, J.] 809

to make the relevant provisions of the Act granting relief to debtors by giving A
overriding effect over any law, agreement, contract or decree contrary to the
provisions of the Act. It was not disputed before us during hearing of the
case that the plaintiffs filed the suit under provisions of the Act for restoration
of the possession of the mortgaged property. Undisputedly there is no decree
for foreclosure in favour of the creditor/mortgagee.
B
In the backdrop of the above the question of limitation is to be
considered. The reason given by the High Court in support of the finding that
the suit was barred by limitation is that more than 30 years had elapsed since
the date of the mortgage (February, 1946) when the suit was filed in 1981.
Therefore the mortgagor had lost his right to redeem the property mortgaged. C
The provisions in section 27 of the Limitation Act have been considered in
support of the finding. This reasoning appears to us to be fallacious. It
defeats the object and the purpose of the statute enacted by 'the legislature
specially to give relief to debtors in the State. The first appellate Court had
given cogent reasons in support of its finding in favour of the appellants. The
Court held and in our view, rightly that the suit was one for recovery of D
possession from the mortgagee who was in unauthorised possession of the
mortgaged property after the mortgage loan was satisfied. The cause of action
for filing such a suit under the Act arose when the enactment was enforced
in 1979. Viewed from that angle the suit was filed in time and the trial court
and the first appellate Court rightly recorded the findings to that effect. The E
High Court erred in reversing the concurrent finding of the courts below on
the erroneous assumption that the suit was one for redemption of the mortgage
simpliciter. It is relevant to note here that the present suit is not one filed
under section 60 or 62 of the Transfer of Property Act. It is a suit filed for
relief on the basis of the H imachal Pradesh Debt Reduction Act, 1976.
F
On the discussions made in the foregoing paragraphs and for the
reasons stated therein the appeal is allowed with costs, the judgment of the
High Court is set aside and the judgment of the lower appellate court is
confirmed. Hearing fee is assessed at Rs. I 0,000.

S.V.K. Appeal allowed. G