STATE OF GUJARAT versus VORA SAIYEDBHAI KADARBHAI AND ORS.

Citation: [1995] 2 S.C.R. 470 · Decided: 02-03-1995 · Supreme Court of India · Bench: N. VENKATACHALA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
STATE OF GUJARAT 
v. 
VORA SAIYEDBHAI KADARBHAI AND ORS. 
MARCH 2, 1995 
B 
[N. VENKATACHALA AND S.C. SEN, JJ.) 
Gujarat Rural Debtors Relief Act, 1976: Constitutionai validity of. 
Section 14(2)--Expression 'Or an order reducing his debt is made'-
C Held not violative of Articles 19(1)(!) and (g). 
D 
E 
Constitution of India, 1950: Article 19(1)(f) and (g)--Fundamental 
Rights-Restrictions ott-Reasonableness of Restrictions-Factors to be taken 
into account-Debt Relief Act-Provision enabling debtors to get back proper-
ty given as security to creditors-Held not unreasonable restrictions. 
With a view to protecting weaker sections of the society against · 
exploitation by non-institutional creditors, the State of Gujarat enacted 
the Gujarat Rural Debtors Relief Act, 1976. Section 14(2) of the Act 
provides that where a certificate of discharge of any debt is granted to a 
debtor or an order reducing his debt is made under section 8, every 
property pledged or mortgaged by such debtor as a security of such debt 
shall stand released in favour of such debtor and the creditor shall 
forthwith return such property to the debtor. The Constitutional validity 
of the Act was challenged by some creditors before the High Court of 
Gujarat which upheld the same except that the expression 'or an order 
F reducing his debt is made' used in sub-section (2) of Section 14 was ultra 
vires Articles 19(1) (f) and 19(1) (g) of the Constitution. In striking down 
the said expression the High Court held that (i) if the Legislature has 
thought fit that at least in some cases a part of the debt should be repaid · 
by the debtor to his creditor, that part at least much remain'!iecured until 
it is repaid. To deprive a small money-lender of his cover of protection 
G after telling him that he is entitled to recover some amount form his 
debtor, is, no reasonable restriction within the meaning of Article 19(1) (f) 
and Article 19(1)(g) of the Constitution; and (ii) it is more reasonable to 
think that the security given by a debtor to his creditor should remain 
intact in the hand of bis creditor until the debtor pays up bis scaled down 
~ 
debt. To hold otherwise is to render the adjudicated debt of the creditor 
470 
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STATE OF GUJ. v. V.S. KADARBHAI 
471 
insecure and to expose him, for all intents and purposes, to the danger of A 
losing it over a period of time during which it has been made repayable in 
instalments. Against the decision of the High Court, State of Gujarat 
preferred appeals in this Court. 
Allowing the appeals and setting aside the impugned judgment, this 
Court 
HELD : 1. The High Court was wholly wrong in its view that the 
provision in sub-section (2) of Section 14 of the Act to the extent it made 
B 
th~ creditors who were entitled to get the scaled down debts from certain 
debtors would have the effect of depriving the creditors of security for the C 
debt, was an unreasonable restriction under Articles 19(1) (0 and 19(1) (g) 
of the Constitution. [480-H] 
2. The reason given by the High Court for the striking down the 
expression "or an order reducing his debt is made" in sub-section (2) of 
Section 14 of the Act, as unconstitutional, as that necessary to help the D 
creditors to realise the scaled down debts of debtors from their properties 
retained as security, has made this Court think that the High Court has 
not only overlooked the fact that the Legislation, the constitutional validity 
of which was questioned before it was intended to help the debtors from 
the strangle hold of the creditors and not to help the creditors in keeping E 
the debtors under their stranglehold, but also has totally ignored the 
guidance given to courts by this Court in the approach to be made for 
meeting the challenge to constitutionality of such legislation intended for 
the benefit of debtors. [477-F-G] 
Fatehchand Himmatlal v. State of Maharashtra, [1977) 2 SCC 670 and F 
Pathumma and Ors. v. State of Kerala and Ors., [1978) 2 SCC 1, relied on. 
Vora Saiyedbhai Kadarbhai v. Saiyed lntajam Bussen Sedumia and 
Ors., AIR (1981) Guj. 154, partly overruled. 
3. The Legislature of Gujarat which had a human problem of saying G 
the poverty stricken debtors from the clutches of non-institutional 
creditors, relieving them of their debts to the extent found necessary and 
getting return of their properties from the creditors given as security for 
their debts to eke out their livelihood it was very much jus

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