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Judgment
N.S. Ramasmami, J.—The only question in this civil miscellaneous second appeal is whether decree debt, which arose under a chit
transaction, is a debt as defined u/s 2(2) of the Tamil Nadu Act XXXVIII of 1972. The judgment-debtor filed an application u/s 16 of the said Act
for stay of the execution proceedings. The Courts below, holding that the decree amount is not a debt as defined in the above said provision,
dismissed the petition. The Courts below relied upon a decision of Suryamurthy J., in Aruriagiri Chit Fund v. Mohammed Hanafi 89 L.W. 687 for
coming to the above conclusion. That was a case under Act XV of 1976 and Act XVI of 1976. The definition of the word debt in Act. XV of
1976 is not similar to that in Act XXXVIII of 1972. But the debt in Act XVI of 1976 is almost similar to the definition contained in Act XXXVIII
of 1972.
The definition in Act XXXVIII of 1972 is as follows:
2(2) ""debt"" means any liability in cash or kind, whether secured or unsecured, due from a debtor whether payable under a decree or order of a
civil or revenue Court or otherwise but does not include rent as defined in Clause (9).
In Act XVI of 1976 also the definition is mere or less the same.
Suryamurthy J., referred to a Bench decision of this Court reported in P.N. Raghavan Pattar and Others Vs. S. Arumugham by his mother and
guardian Singarammal and Another, , and held that the liability arising out of a chit transaction is not a debt as defined in Acts XV and XVI for
1976, The Bench decision referred to by the learned Judge only holds that a chit fund transaction is different from loan transaction and that it is not
a case of borrowing. Even this view of the said Bench has been dissented to by another Bench of this Court in Sri Visalam Chit Funds v. Srinivasa
Mudaliar 88 L.W. 415, 418. Even otherwise, as I said, in the earlier Bench decision, the question was whether under a chit transaction there was
borrowing or not.
As far as the definition of the word debt in Act XXXVIII of 1972 (which is similar to the definition in Act XVI of 1976), one is concerned
whether there is a liability in cash or kind or not. If there is a liability, whether it is due to borrowing or otherwise, it would be a debt as defined in
Section 2(2) of Act XXXVIII of 9/2 unless the liability is rent as defined in Clause (9) thereof. The learned Judge has not considered whether
under a chit transaction where the successful bidder executed a promissory note for due payment of the future installments whether there is not a
liability as contemplated in the definition. The Bench decision relied on by the learned Judge does not say anywhere that in a chit transaction there
is no liability as contemplated u/s 2(2) of Act XXXVIII of 1972 or any corresponding provision. Further, as already seen, the later Bench decision
reported in Sri Visalam Chit Funds v. Srinivasa Mudaliar 88 L.W. 415, 418 has disapproved the view of the earlier Bench even regarding the
point that there is no borrowing in a chit transaction.
The clear language of the definition of the word debt in Section 2(2) of Act XXXVIII of 1972 cannot be overlooked. It is needless to stress that
if there is any liability in cash or kind due from a debtor whether it is payable under a decree or otherwise, it is a debt unless the liability is rent as
defined in Clause (9) thereof. In the present case, the decree is on an equitable mortgage and I fail to see how it can be said that it is not a debt as
per the above definition, merely because the liability arose on he being the successful bidder in the auction of a chit and he executed the document
regarding future instalments due by him.
The first appellate Court has wrongly assumed that the Tamil Nadu Debt Relief Laws (Amendment) Act, 1976 (Act XLVI of 1976) has
amended Section 2(2) of Act XXXVIII of 1972 also. The said amending Act amended the definition of the word debt contained in Act XV of
1976 and that in Act XVI of 1976. By such amendment, any liability incurred or arising under any chit, the bye-laws of which have been registered
under the Tamil Nadu Chit Funds Act, 1961, came to be specifically excluded from the definition of the word debt. But as I said, such exclusion
has not been made regarding the definition contained in Section 2(2) of Act KXXVIII of 1972. In the present ease, one is concerned only with
Act XXXVIII of 1972 and not either with Act XV of 1976 or Act XVI of 1976.
There is no escaping the position that the decree that was sought to be executed by the Respondents is a debt as defined in Section 2(2) of Act
XXXVIII of 1972. That meant the executing Court ought to bate granted stay of execution as per the provisions of Section 16 of the said Act.
This civil miscellaneous second appeal is allowed and stay granted u/s 16 of Act XXXVIII of 1972. I direct the parties to bear the Respective
costs in these proceedings in both the Courts.