E.H. Ginwalla vs State of Bombay and Others

Ciiagla, C.J.—The petitioner is the ijardar and mortgagee in possession of the estate of Bhankoda situated in Viramgam taluka and which is a Talukdari Estate. In march 1950 the State of Bombay assumed the management of this estate u/s 44, Bombay Tenancy and Agricultural Lands Act. Respondent 3 was appointed the manager of the estate u/s 45, and u/s 49the manager published a notice in the Official Gazette calling upon all persons having claims against the estate under management to notify the same in writing to him as manager within two months from the date of the publication of the notice. Pursuant to this, claimants against the estate presented their claims with the necessary particulars, and among them was also the petitioner.

Under Section 52the manager held an inquiry in respect of the merits of every claim received by him and he prepared a schedule as required by Section 54& also a scheme of liquidation as required by that section, and submitted the schedule and the scheme to the Collector.

The Collector did not sanction the scheme u/s 5G, but after consulting the Government referred the matter back to respondent 4, who had in the meanwhile been appointed manager, for rein-vestigation of the claims submitted to the manager against the estate including the claim of the petitioner, and the petitioner has now come before us contending that once his claim had been determined by respondent 3 it was not competent to the Government or the Collector to refer the matter back to the manager for reinvestigation. In-other words, the petitioner''s contention is that the determination of his claim by respondent 3 was final, that it was binding upon the Collector, and neither the Collector nor the Government had any power under the Bombay Tenancy and Argicultural Lands Act to direct the newly appointed manager to reinvestigate the petitioner''s claim.

In order to test the validity of the petitioner''s contention, one must look at the scheme of the Act. The power to assume management of a landholder''s estate is conferred upon Government u/s 44of the Act, and Section 45provides that when a notification is issued u/s 44the estate shall vest in the State Government and the management of the estate shall commence from the date on which the notification is published and the State Government shall appoint a manager to be in charge of such estate. Section 46provides for the effect of declaration of management. Section 47defines the powers of the manager. Section 48is not necessary to consider in the present context, and Section 49as already mentioned makes it obligatory upon the manager to publish a notice in the Official Gazette calling for claims against the estate.

Section 50provides for the particulars that have got to be specified in the claim made against the estate, and Section 51penalizes any person who does not make the claim within the time specified in the notice by making the claim barred. Then we come to Section 52and that gives the power to the manager, after inquiring into the history and merits of every claim, to determine the amount of the debts and liabilities justly due to the several claimants, and it is under this section that respondent 3 has determined the amount of the debt due by the estate to the petitioner. Section 53confers upon the manager the power to fix the priority in which debts and liabilities are to be discharged In case all the debts and liabilities cannot be paid at once.

Then Section 54provides for the scheme of liquidation and the duties cast upon the manager to prepare a schedule of debts and liabilities which he has finally to determine, and a scheme which is called the liquidation scheme showing the mode in which it is proposed to pay and discharge these debts and liabilities. The duty cast upon the manager to prepare a schedule and a scheme only arises after the ''debts and liabilities are finally determined. Therefore, Section 54emphasises the point of time at which the manager has to prepare and submit a schedule and a scheme.

It is to be noted that the manager has to prepare both a schedule and a scheme and he has to submit both the schedule and the scheme to the Collector, and the power of the Collector to sanction the scheme arises u/s 56, and it is only when the Collector has sanctioned the scheme that certain important consequences follow, and one of the most important consequences as far as a creditor of the estate is concerned is that his debt is extinguished and he is only entitled to receive what is provided under the liquidation scheme as finally awarded to him.

Mr. Purshottam''s contention on behalf of the petitioner is that the manager has judicially to determine the amount of debts and liabilities due to the several claimants. He emphasises the fact that Section 52uses the expression "determine" and Section 54uses the expression "finally determined by the manager", and Mr. Purshottam says that there can be no doubt that the Legislature constituted the manager as a judicial or quasi-judicial tribunal to determine the debts and liabilities due by ''the estate to the various claimants. Mr. Purshottam says that no appeal or revision is provided in the statute from the decision of the manager.

It is pointed out that the section dealing with appeals, which is Section 74, provides for appeals against the orders of the Mamlatdar, but in Section 74there is no provision for an appeal against the order or decision of the manager u/s 52. It is also pointed out that although wide powers of control are given to the State Government u/s 86, the control is confined to acts of Mamlatdars and Collectors '' and no control is given to the State-Government over the orders of the manager u/s 52. It is further pointed out that u/s 58the power of the Collector is to sanction or not to sanction the liquidation scheme. Section 56advisedly, according to Mr. Purshottam, does not confer power upon the Collector to sanction or not to sanction the schedule of debts and liabilities as determined by the Mamlatdar.

Mr. Purshottam says that obviously the intention of the Legislature was to make the manager the final arbiter with regard to the determination of debts and liabilities and to confer upon the Collector only the power to sanction or not to sanction the liquidation scheme. Undoubtedly there is considerable force in the contentions advanced by Mr. Purshottam and we must frankly confess that the language used by the Legislature in the sections to which reference has been made is by no means a, very happy language, because the language does lend support to what has been urged by Mr. Purshottam. But when we look at the scheme of all the sections, in our opinion there is no doubt left that the power of the Collector is not confined merely to sanctioning the liquidation scheme but it extends to refusing to accept the debts and liabilities as settled by the manager.

Now, in the first place, if Mr. Purshottam''s contention were sound, it is difficult to understand why u/s 54the manager is required not only to submit the liquidation scheme but also tp submit the schedule of debts and liabilities. If the intention of the Legislature was that the decision of the manager with regard to the settling of debts and liabilities was to be final and that the Collector should have no control over that determination or decision, it was unnecessary to provide: that the manager has to submit the schedule of debts and liabilities. It would have been sufficient if it had been provided that the manager should submit the scheme to which should be appended the schedule of debts and liabilities determined by the manager. The very use of the expression, "submit" clearly connotes that the Collector is the supervising authority and that any decision arrived at by the manager on the question of settling of debts and liabilities is subject to the ultimate sanction of the Collector.

Therefore, the scheme of these sections is that in all matters dealing with liquidation the Collector is the final authority, and before a liquidation can be accepted as final his sanction is required. The other aspect of the matter to which attention might be drawn is that it is not proper to divorce the schedule of debts and liabilities from the liquidation scheme. In our opinion, the liquidation scheme which the Collector has to sanction u/s 56is a scheme which must be looked upon as a whole. The settlement of debts and liabilities is a very important part of the liquidation scheme & it is impossible to contemplate the Collector sanctioning the liquidation scheme without applying his mind to the debts and liabilities which have been determined by the manager.

According to Mr. Purshottam, the Collector''s hands are tied as far as the determination of debts and liabilities are concerned, but he has power; and authority to vary the liquidation scheme prepared by the manager. When the Collector lias got to consider the mode in which the debts are to be discharged, it is difficult to understand how he can approve of that mode without considering what the debts are and what the total amount is. Therefore, the liquidation scheme referred to in Section 56is not merely the mode of paying and discharging the debts and liabilities determined by the manager, but the scheme is the scheme as a whole which includes both the schedule of debts and liabilities and the mode of discharging the same, and in our opinion the power given to the Collector u/s 56is sufficiently wide to include control over the action of the manager not only in respect of settling the mode in which debts and liabilities should be discharged, but also in respect of the actual determination of the debts and liabilities.

Mr. Purshottam then points out that if we were to give this interpretation to Section 56, it may result in there being no finality whatsoever in the determination of debts and liabilities, and Mr. Purshottam ''says that it would be open to the Collector or ultimately to the State Government to send the matter back to the manager as often as the Collector or the State Government may think proper, and Mr. Purshottam says that this interpretation may lead to not only inconvenience but also to injustice as far as claimants are concerned.

Now, when we are called upon to construe a statute, we must always assume that the power conferred upon various authorities under the statute will be used properly and not in an arbitrary or capricious manner. We see no reason to apprehend that the Collector would perversely refuse to accept the settlement of the debts and liabilities in respect of which the power is solely conferred upon the manager and who is made the final authority in the sense that he has to determine the debts and liabilities subject to the control and sanction of the Collector.

The statute does not make the Collector the authority to settle the debts and liabilities and therefore ordinarily the Collector and ultimately the State Government would accept the decision of the manager without interfering with it, unless in a particular case the Collector or the State Government comes to the conclusion that the determination by the manager requires fo be reconsidered, and in this particular case the Collector in his affidavit has pointed out that when the Collector considered the debts and liabilities settled by respondent 3, he came to the conclusion that the claim of the petitioner hart not been properly determined, and therefore after consulting the Government he decided that the claim of the petitioner should be reconsidered and reinvestigated by respondent 4.

6-7. The result, therefore, is that the petition fails and must be dismissed with costs.

Liberty to Messrs. Little and Co. to withdraw the record lying in this Court.

Petition dismissed.