STATE BANK OF TRAVANCORE versus MOHAMMED MOHAMMED KHAN

Citation: [1982] 1 S.C.R. 338 · Decided: 21-08-1981 · Supreme Court of India · Bench: Y.V. CHANDRACHUD · Disposal: Dismissed

Cited by 2 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

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338 
STATE BANK OF TRAV ANCORE 
v. 
MOHAMMED MOHAMMED KHAN 
August 21, 1981 
[Y.V. CHANDRACHUD, C.J., A.P. SEN AND 
V. BALAKRISHNA ERADI, JJ.] 
Kera/a Agricutturaists' Debt Relief Act (Act 11) 1970-Whether a debt owed 
by an agriculturist falls within the purview of section 2(4). 
The respondent had an overdraft account with the Erattupetta Branch of 
the Kottayam Orient Bank Ltd. at the foot of which he owed a sun1 of over 
Rs. 3000/· to the Bank. The said Bank which was a 'Banking Company' as 
defined in the Banking Regulation Act, 1949, was amalgamated with the appel-
lant Bank with effect from .Tune 17, 1961. The appellant Bank filed a suit (O,S, 
28 of 1963) in the Sub·Court, Meenachil, against the respondent for recovery of 
the amount due from [him in the Overdraft Account with the Kottayam Orient 
Bank, the right to recover which had come to be vested in the appellant as a 
result of the scheme of amalgamation. The suit was decreed in favour of the 
appellant but when it took out execution proceedings in the Sub-Court, Kotta-
yam, the respondent filed an application under section 8 of the Kerala Agricultu-
rists' Debt Relief Act claiming that being an agriculturist within the meaning of 
that Act, he was entitled to the benefit of its provisions including those relating 
to the scaling down of debts. The learned Subordinate Judge dismissed the 
application holding : (i) that the respondent was not entitled to the benefit of 
the provisions regarding scaling down of the debt because the debt, having 
been once owed by him to the Kottayam Orient Bank Ltd. which was a Banking 
Company as defined in the Banking Regulation Act, 1949, was outside the pur-
view of section 5 of the Act which provided for the scaling down of debts owed 
by agriculturists; and (ii) that he was only entitled to the benefit of t:te proviso to 
section 2(4) (1) of the Act under which the amount could be repaid in eight half-
yearly instalments. 
The Revision Application preferred by the respondent was referred to the 
Full Bench of the High Court. It was contended on behalf of the appellant 
Bank that the debt owed to it by the respondent was excluded from the 
operation of the Act by reason of section 2 (4) (a) (ii) and section 2 (4) (I) of 
the Act. By its judgment dated. February 1, 1978 the High Court rejected that 
contention, allowed the Revision Application and held that the respondent was 
entitled to all the relevant benefits of the Act, including the benefit of scaling 
down of the debt and hence the appeal by special leave. 
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STATE BANK OF TRAVANCORE V. M.M. KHAN 
339 
Dismissing_the appeal, the Court 
HELD: I : I. The appellant Bank will not be entitled to the benefit of 
the exclusion contained in section 2 (4) (a) (ii) of the Kerala Agriculturists' Debt 
Relief Act, 1970 in view of clause (B) of the proviso to the section and the respon-
dent's claim to the benefits of the Act wilt remain unaffected by that provi-
sion. [345H, 346 A] 
1 : 2. The respondent is admittedly an agriculturist and he owes a sum of 
money to the appellant Bank under a decree passed in its favour by the Sub. 
Court, Meenachil, in 0. S. No. 28 of 1963. The liability which the respondent 
owes to the appellant Bank is, therefore a "debt" within the meaning of section 
2 (4) of the Act. [344 F-G] 
However, since the appellant Bar.k, namely, the State Bank of Travancore, 
is a subsidiary bank within the meaning of section 2 (k) of the State Bank of 
India (Subsidiary Banks) Act, 1959 and also as contemplated by sub·clause (ii) of 
clause (a) of section 2(4) of the Act, the decretal amount payable by the respon-
dent to the appellant Bank will not be a debt within the meaning of section 2(4) 
of the Act. [345 C-D] 
1 : 3. By reason of clause (B) of the proviso to section 2 (4) (a) (ii) of the 
Act, which proviso is in the nature of an exception to the exceptions contained 
in the said section the amount payable to a subsidiary bank 1s not to be regar-
ded as a debt whhin the meaning of the Act, only if the right of the subsidiary 
bank to recover the the amount did not arise by reason of any transfer effected 
by operation of law subsequent to July l, 1957. Here, the notification con-
taining the scheme of amalgamation was published on May 16. 1961. Thus, 
the right of the appellant Bank, though is a subsidiary Bank, to recover the 
amount from the respondent arose by reason of a transfer effected by operati

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