Naunihal Kishan And Others vs R. S. Ch. Pratap Singh And Another

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 594 of 1960

Decision Date: 13 March 1963

Coram: N. Rajagopala Ayyangar, S.K. Das, A.K. Sarkar, M. Hidayatullah

In this matter the Supreme Court of India rendered its judgment on 13 March 1963. The case was recorded as Naunihal Kishan and Others versus R. S. Ch. Pratap Singh and Another. The opinion was authored by Justice N. Rajagopala Ayyangar, who sat with Justices S. K. Das, A. K. Sarkar, M. Hidayatullah and M. Hidayatullah. The citation for the decision appeared in the 1964 All India Reporter at page 1379 and in the Supreme Court Reports (Second Series) at volume 293. The dispute concerned the Displaced Persons (Debts Adjustment) Act of 1951, particularly sections 2(6), 2(9), 4, 5, 16 and 29, and involved questions relating to usufructuary mortgages, the status of the mortgagor as a debtor, the scaling down of mortgage debt, the proper jurisdiction for such adjustment, and the method of computing the value of the lands involved.

Both the appellants and the respondents originally resided in the part of Punjab that after partition became part of Pakistan. In the year 1933 the second respondent executed a usufructuary mortgage on a certain parcel of land in favor of the fathers of appellants numbered one through four, thereby securing a principal sum of thirty‑nine thousand rupees. The mortgage deed also stipulated the payment of interest and fixed a ten‑year term, stating that only after the expiration of that period could the mortgagee institute legal proceedings to recover the mortgage money. Four years subsequent to the execution of the deed, the mortgagor transferred a substantial portion of the mortgaged property to a purchaser named Guranditta Ram. As part of the purchase price, an amount of twenty‑six thousand five hundred rupees was retained by the transferee for the purpose of discharging the existing mortgage. That amount, however, was never delivered to the mortgagee, and consequently the entire mortgage liability of thirty‑nine thousand rupees remained outstanding.

Following the partition of India in 1947, both the mortgagor and the mortgagee migrated to the territory of India and became classified as displaced persons. The mortgagor, as a displaced person, received an allotment of agricultural land in India that was calculated on the basis of his original holdings in Pakistan. The appellants, acting as the mortgagees, were consequently placed in possession of this allotted land. The respondents subsequently filed an application under section 5 of the Displaced Persons (Debts Adjustment) Act, 1951, seeking to have the mortgage debt adjusted in accordance with the provisions of section 16 of the same Act. The appellants raised several objections to the application; those objections were overruled and the debt was reduced pursuant to the statutory scheme.

The respondents then appealed the decision to the Punjab High Court, where a single judge dismissed the appeal. Thereafter the appellants pursued a Letters Patent Appeal, which was dismissed at the preliminary stage, and a certificate of fitness for appeal was not granted. The present appeal reached the Supreme Court by way of special leave. The first issue raised before the Court was whether the first respondent qualified as a “debtor” within the meaning of section 2(6) of the Act, given the contention that no contractual relationship of debtor and creditor existed between the respondent and the displaced creditor, namely the appellants. The second issue centered on whether the scaling down and adjustment of a mortgage liability could be effected only through a suit for redemption instituted by the creditor, thereby rendering a debtor’s application under section 5 jurisdictionally incompetent. The final argument advanced was that, according to the proviso to section 16(4), any reduction of the debt had to be proportionate to the comparative value of the lands allotted to the creditor in India and the lands left by him in Pakistan, with the appellants asserting that “value” should be interpreted as market value.

In the appeal the petitioners raised three principal contentions. First they argued that the respondent could not be described as a debtor within the meaning of section 2(6) of the Displaced Persons (Debts Adjustment) Act, 1951 because there was no contractual debtor‑creditor relationship between the respondent and the displaced creditor, that is, the appellants. Second they contended that a liability arising from a mortgage could be reduced and adjusted under the Act only by a suit for redemption filed by the creditor, and that it was improper for a debtor to approach the tribunal for reduction of the debt by filing an application under section 5. Third they submitted that, according to the proviso to section 16(4) of the Act, any reduction of the debt must be proportionate to the ratio of the value of the lands allotted to the creditor in India to the value of the lands left by him in Pakistan, and that the term “value” used by the appellants referred to market value. The Court held that, in view of the language of section 16(4), the fact that the security was a usufructuary mortgage and that the debtor retained the right of redemption were sufficient to bring the beneficial provisions of that section into operation. Moreover, even apart from the specific language of section 16(4), the liability under the mortgage in favour of the appellant fell within the definition of “debtor” under section 2(6). The Court further observed that a usufructuary mortgage, irrespective of its nature, is encompassed within the definition of “debt” under section 16, and that it is irrelevant whether the creditor is entitled to sue the debtor personally for the mortgage amount. The judgment cited several authorities, including Lachhman Singh v. Natha Singh and Ors., (1 L.R. 1941 Lah. 71), Manubhai Mahijibhai Patel v. Trikamlal Laxmidas, (I.L.R. 1958 Bom. 1429), Lahori Lal v. Kasturi Lal (1956) 58 P.L.R. 331, and Rajkumari Kaushalya Devi v. Bawa Pritam Singh, [1960] 3 S.C.R. 570, in support of the view that the mortgage amount constitutes a “debt” for purposes of section 5. Section 5(1) of the Act authorises a debtor to make an application to the tribunal for adjustment of his debts. The Court noted that the amount due on or secured by a mortgage is a “debt” within the meaning of section 5, and therefore an application for adjustment could be filed. Because the mortgage represents a secured debt as contemplated by section 16(4), the applicants were entitled to obtain an adjustment as specified in the proviso to that section.

The relevant rehabilitation rules direct the authorities to consider the income yield of both the Indian lands allotted and the lands left in Pakistan, so that the “value” of the Pakistani land is reflected when determining the “standard acres”. The nature of the Pakistani land was taken into account, and numerical factors were prescribed to ascertain the equivalent acreage in India. Consequently, when the proviso to section 16(1) refers to “value”, it must be understood as the value determined by the procedure laid down in the applicable rules. The judgment forms part of civil appellate jurisdiction, being Civil Appeal No 594 of 1960, filed by special leave from the judgment and order dated 6 March 1958 of the Punjab High Court in Letters Patent.

Appeal No 6 of 1958 was presented before the Court. Counsel K L Gosain, C L Sareen and R L Kohli appeared on behalf of the appellants, while counsel Roop Chand and Navnit Lal represented respondent No 1 and counsel Naunit Lal represented respondent No 2. The judgment was delivered on 13 March 1963 by Justice Ayyangar. The Court first set out the material facts necessary to understand the issues raised in the special leave appeal against the judgment of the Punjab High Court. On 6 March 1933 the mortgagor, Sham Singh (identified as respondent No 2), executed a registered deed of usufructuary mortgage over land measuring 7 530 Kanals and 19 Marlas located in the village of Mohanpur, in the Multan District, which at that time lay within the territory that later became Pakistan. The mortgage benefitted the father of the first three appellants and the father of the fourth appellant, Topan Das. The mortgage secured a principal sum of Rs 30,000. The deed stipulated that the income generated from the mortgaged property, while in the possession of the mortgagees, would be treated as interest on Rs 10,000 of the principal, and that the remaining principal of Rs 20,000 would bear annual interest of Rs 1,650. The mortgage also specified a term of ten years, after which the mortgagee could sue for recovery of the mortgage money.

Approximately four years after the mortgage was executed, the mortgagor, Sham Singh, sold a large portion of the mortgaged land—about 6 568 Kanals—to Guranditta Ram and other purchasers. From the consideration received, a sum of Rs 26,500 was retained by the buyer with the express direction that it be applied to discharge the mortgage. The sale was subject to a right of pre‑emption, and the pre‑emptor, Narain Singh (the father of Partap Singh, identified as respondent 1), exercised that right. In a suit filed by Narain Singh, a decree for sale in his favour was obtained on 16 February 1940, allowing him to take symbolic possession of the land; however, the mortgagees continued to retain actual possession. The Rs 26,500 held by the vendee was never forwarded to the mortgagees, leaving the full mortgage amount unpaid. Subsequently, the Partition of 1947 occurred, and both the mortgagor and the mortgagees migrated to India, becoming displaced persons. As displaced persons, the original mortgagor, Sham Singh, and the pre‑emptor‑vendee were allotted agricultural land in India in accordance with the Displaced Persons (Compensation and Rehabilitation) Rules, based on their original holdings in Pakistan. In June and July of 1950, the appellants, being the mortgagees, were placed in possession of the lands allotted to both Sham Singh and the legal representative of the deceased pre‑emptor, Pratap Singh, pursuant to those rules.

In this matter, Pratap Singh, who acted as the legal representative of the deceased pre‑emptor identified as respondent No 1, had been placed in possession of a total of fifty‑one standard acres together with nine additional units of land. Of this holding, thirty‑seven point four standard acres were characterised as the property of the pre‑emptor‑vendee, namely respondent No 1, while fourteen point five standard acres were allotted to Sham Singh, who was the original mortgagor and identified as respondent No 2. The Union Legislature subsequently enacted, in November 1951, the Displaced Persons (Debts Adjustment) Act, 1951, designated as Act LXX of 1951, which was intended to establish provisions for the adjustment and settlement of debts owed by displaced persons. Under Section 5 of that Act, a displaced debtor was empowered to file an application for debt adjustment before a Tribunal, the Tribunal being defined as a civil court vested with jurisdiction under the Act for the purpose of adjusting the applicant’s debts. Section 16 of the Act set out the procedure by which debts secured on immovable property owned by displaced debtors could be reduced, settled and adjusted. Both Sham Singh and Pratap Singh lodged separate applications pursuant to Section 5, each seeking to avail themselves of the settlement and adjustment mechanisms provided in Section 16. Because both applications concerned the same mortgage debt, the authorities consolidated them and directed that they be heard together by the Senior Sub‑judge of Karnal, who acted as the Tribunal designated under the Act. The mortgagee‑appellants raised a number of objections to the applications; however, those objections were overruled and the mortgage debt was accordingly scaled down in accordance with Section 16 and other applicable statutory provisions, the specifics of which would be addressed later. An appeal against that decision was filed in the High Court of Punjab, where it was dismissed by the learned single judge. A further appeal, pursued under the Letters Patent before a bench of the High Court, was dismissed at the preliminary stage and a certificate of fitness was refused. Consequently, the appellants applied to this Court for special leave, which was granted, and the appeal now stands before this Court. Before setting out the grounds advanced in support of the appeal, it was deemed appropriate to extract the relevant portions of the Act that govern its construction. As previously noted, the Act was enacted, among other purposes, to provide for the adjustment and settlement of debts owed by displaced persons. Section 2(9) defines a “displaced debtor” as a displaced person from whom a debt is due or is being claimed. It is uncontested that both the appellant and the respondents qualify as displaced persons under that definition. Moreover, Section 2(6) supplies the definition of “debt,” describing it as any pecuniary liability, whether presently payable, payable in the future, or arising under a decree, order of a civil or revenue court, or otherwise, whether the amount is ascertained or yet to be ascertained.

The Act defines the term “debt” to include any pecuniary liability that is payable at the present time or that may become payable in the future, as well as any liability that arises under a decree or order of a civil or revenue court or by any other means, irrespective of whether the amount of the liability has already been ascertained or is yet to be ascertained. Section 5 is the opening provision of Chapter II, which is headed “Debt Adjustment Proceedings.” Section 5(1) provides that, at any time within one year after the date on which the Act comes into force in any local area, a displaced debtor may file an application for the adjustment of his debts before the Tribunal that has jurisdiction over the local area in which the debtor actually and voluntarily resides, carries on business, or personally works for gain. Sub‑section (2) and sub‑section (3) of the same section set out the contents that the application referred to in sub‑section (1) must contain; however, those detailed requirements are not required for the present discussion.

The next provision that is relevant to the matters before the Court is Section 16. Section 16(1) states that where a debt incurred by a displaced person is secured by a mortgage, charge or lien over immovable property belonging to him in West Pakistan, the Tribunal, for the purposes of any proceeding under the Act, may require the creditor to choose either to retain the security or to be treated as an unsecured creditor. Section 16(2) adds that if the creditor elects to retain the security, he may apply to the Tribunal, which has jurisdiction in this regard as provided in Section 10, for a declaration of the amount that is due under his debt. Section 16(3) explains that where the creditor elects to retain his security and the displaced debtor receives any compensation in respect of the secured property referred to in sub‑section (1), the creditor shall be entitled to a first charge on that compensation. If the compensation is paid in cash, the creditor’s first charge shall correspond to that portion of the total debt which is proportionate to the amount of cash compensation paid in relation to the value of the verified claim relating to the property, and the debt shall be deemed to have been reduced by that proportion. If the compensation is by way of exchange of property, the creditor shall be entitled to a first charge on the property situated in India that is received by exchange, and the creditor’s first charge shall correspond to that portion of the total debt which is proportionate to the value of the exchanged property in relation to the value of the verified claim, again resulting in a deemed reduction of the debt by the same proportion. Section 16(4) then provides that, notwithstanding anything else in this section, where a debt is secured by a mortgage of agricultural lands belonging to a displaced person in West Pakistan and the mortgage was with possession, the mortgagee shall, if he has been allotted lands in India in lieu of the lands of which he was in possession in West Pakistan, be entitled to continue in possession of the allotted lands until the debt is satisfied from the usufruct of those lands or is redeemed by the debtor, subject to a proportional adjustment of the debt as described in the provision.

The provision states that if a mortgagee possessed lands in West Pakistan and has been allotted lands in India in substitution, the mortgagee may remain in possession of the allotted lands until the debt is satisfied either from the usufruct of those lands or is redeemed by the debtor. In either situation, the amount of the debt is limited to that portion which, in relation to the total debt, corresponds proportionally to the value of the lands allotted to the creditor in India compared with the value of the lands left behind by the creditor in West Pakistan; accordingly, the debt is treated as having been reduced by that proportion.

Clause (5) provides that where a creditor chooses to be treated as an unsecured creditor with respect to a particular debt, the provisions of the Act shall apply to that debt accordingly.

Section 29(1) of the Act declares that, beginning on the fifteenth day of August 1947, no interest shall accrue or be deemed to have accrued on any debt owed by a displaced person, and no Tribunal shall permit the award of future interest in any decree or order it passes. However, an exception is made in two circumstances. First, where the debt is secured by a pledge of shares, stocks, Government securities, or securities of a local authority, the Tribunal may allow interest for the period from the fifteenth day of August 1947 until the commencement date of this Act, at a rate that is either mutually agreed between the parties or at the rate at which any dividend or interest has actually been paid or is payable on the pledged security, whichever is lower. Second, in any other case, the Tribunal may, if it deems it just and proper after considering the debtor’s paying capacity as defined in section 32, allow interest for the same period at a simple rate not exceeding four per cent per annum.

The Court then turned to the arguments presented by counsel for the appellant. The first argument asserted that Pratap Singh, who acted as the representative of the purchaser of the equity of redemption, could not be classified as a “debtor” within the meaning of section 2(6) of the Act because there was no contractual relationship between him and the displaced creditor, namely the appellants. Counsel explained that section 2(6) defines the term “debt,” and the expression “debt” is used in section 2(9) as well as in section 5(1), the provisions under which the present application was filed. The definition, according to counsel, requires a pecuniary liability on the part of the “debtor” that is enforceable by a creditor. Consequently, counsel argued, a mortgagor who holds a purely usufructuary mortgage, without any personal covenant to repay the loan, cannot be regarded as a debtor, and the amount secured by such a mortgage cannot be considered a “debt” under the statutory definition. Counsel further contended that the position of a purchaser of the equity of redemption is analogous, emphasizing that the mere ability of the mortgagee to sue for repayment of the mortgage money and to sell the mortgaged property in enforcement does not create a personal liability for the purchaser to discharge the obligation from assets other than the mortgaged property. This argument formed the basis of the appellant’s contention that the statutory provisions should not apply to Pratap Singh.

In this case, counsel for the appellant argued that the position of a purchaser of the equity of redemption with respect to the mortgagee was essentially the same as that of a mortgagor. He further contended that even when a purchaser of the equity of redemption allowed the mortgagee to sue for recovery of the mortgage money and to enforce that right by selling the mortgaged property, such circumstances did not transform the purchaser into a debtor. According to counsel, the defining feature of a debtor‑creditor relationship was the existence of a personal liability that required the debtor to discharge the obligation out of property that was not subject to the mortgage.

To support this line of argument, counsel referred the Court to two earlier decisions. The first was a Lahore High Court case, Lachhman Singh v. Natha Singh (1), and the second was a Bombay High Court case, Manubhai Mahijibhai Patel v. Trikamlal Lakshmidas (2). Both decisions examined the meaning of the term “debt” under the Punjab Relief of Indebtedness Act, Act VII of 1934. The courts in those cases held that an amount secured by a pure usufructuary mortgage, which did not impose a personal liability on the obligor to pay and did not give the obligee the right to recover the amount through the coercive machinery of law, could not be described as a “debt”. The courts emphasized that the essence of a debt lay in the personal liability of the obligor that the obligee could enforce by legal action.

Counsel pointed out that, notwithstanding the definition of “debt” in section 16 of the Act— which expressly includes a usufructuary mortgage within the category of “a debt” for the purposes of that legislation— the present mortgage dated 1933 contained a covenant by the mortgagor to repay the debt after ten years. Consequently, the mortgagee was entitled to institute a suit for recovery of the debt, to realize the debt from the sale of the mortgaged property, and to obtain a personal decree under Order XXXIV, rule 6 against the mortgagor, Sham Singh. Counsel acknowledged, however, that the mortgagee might not be entitled to a personal decree against the purchaser of the equity of redemption.

The other cited decision from the Bombay High Court concerned the interpretation of the Bombay Agricultural Debtors’ Relief Act. The headnote of that decision stated that where there was no agreement rendering the mortgorgor personally liable to the mortgagee, a purchaser of the equity of redemption could not invoke section 4 of that Act to adjust the mortgage debt, because such a mortgage debt was not “his debt” within the meaning of section 4. This citation demonstrated that the Bombay decision was based entirely on the specific statutory definitions before the court and did not establish any general rule of universal application.

Counsel also mentioned a decision of the High Court of Punjab in Lahori Lal, indicating a contrasting view that the definition of “debt” under section 2(6) of the Act was not confined solely to personal liabilities.

The Court referred to the decision in Kasturi Lal, wherein the Bench held that a debt defined in section 2(6) of the Act under consideration was not confined solely to personal liabilities. The Court observed that the Act does not leave the meaning of the term “debt” uncertain when such debt is secured by a mortgage, including an usufructuary mortgage; rather, the specific provisions in the statute remove any argument that these obligations could be narrowed to a limited category of “debts.” The Court then turned to section 16 of the Act, which provides for the adjustment of debts that are secured by a mortgage over immovable property. Because the property serving as security for the mortgagee is situated in West Pakistan, sub‑section (1) of section 16 becomes applicable, giving the creditor the option either to retain the security or to be treated as an unsecured creditor, as noted in the precedent reported at (1) 1956 58 P.L.R. 331. It was unanimously accepted that the appellant wished to retain the security, thereby invoking sub‑section (2), which authorises the creditor to approach the Tribunal for a declaration of the amount due in respect of the mortgage. In the present matter, the debtor himself filed an application under section 5, so no separate application by the creditor was required. The Court explained that the remedies available to a creditor who elects to retain the security are enumerated in sub‑sections (3) and (4); sub‑section (3) applies to simple mortgages, while sub‑section (4) deals with usufructuary mortgages, that is, mortgages with possession. The Court read the text of sub‑section (4), which states: “Notwithstanding anything contained in this section, where a debt is secured by mortgage of agricultural lands belonging to a displaced person in West Pakistan and the mortgage was with possession, the mortgagee shall, if he has been allotted lands in India in lieu of the lands of which he was in possession in West Pakistan, be entitled to continue in possession of the lands so allotted until the debt is satisfied from the usufruct of the lands or is redeemed by the debtor: Provided that in either case the amount of the debt shall be only that amount as bears to the total debt the same proportion as the value of the lands allotted to the creditor in India bears to the value of the lands left behind by him in West Pakistan and to that extent the debt shall be deemed to have been reduced.” The parties did not dispute that the debt owed to the appellant was secured by a mortgage on agricultural lands belonging to a displaced person from West Pakistan, nor that the mortgage in favour of the appellant was with possession. The Court noted that this situation arose by virtue of provisions similar to the opening words of sub‑section (4) contained in the applicable rules.

The Court observed that, according to the executive orders that had been in force in 1950, the appellant had been placed in possession of 37.4 standard acres belonging to Pratap Singh and 14.5 standard acres belonging to Sham Singh. Consequently, the Court found it difficult to accept the appellant’s contention that sub‑section (4) of section 16 did not apply to the present facts. The Court explained that the expression “and the mortgage is with possession” was deliberately broad and was intended to cover both usufructuary mortgages that contain a personal covenant obliging the mortgagor to repay the debt and the so‑called “pure” usufructuary mortgages that contain no such personal covenant. Because of this broad wording, the Court held that there was no basis for an argument that relied on other statutes interpreting the word “debt” to require a personal liability on the part of the debtor. In light of the wording of section 16(4), the Court said that a security created by a usufructuary mortgage together with the debtor’s right to redeem was enough to bring the beneficial provisions of that section into play. The Court added that, as previously noted, two points rendered the reliance on the definition of “debt” in section 2(6) irrelevant to Sham Singh’s case, since the mortgage already contained a personal covenant; and, with respect to Pratap Singh, the argument was of limited force because the personal covenant gave the mortgagee a right to enforce the mortgage and recover the proceeds from the sale of the mortgaged land. Accordingly, even apart from section 16(4), the liability arising from the appellant’s mortgage fell squarely within the definition of “debt” in section 2(6). The Court further stated that the specific provision of section 16(4) concerning all usufructuary mortgages removed any remaining controversy on the issue. Referring to the earlier decision of the Court in Rajkumari Kaushalya Devi v. Bawa Pritam Singh (1), the Court noted that that case had held a mortgage‑debt to be within the meaning of “debt” in section 2(6) of the Act. Although that precedent did not address the distinction between situations where a creditor could sue the debtor personally and those involving a pure usufructuary mortgage, the Court found the decision useful in showing that the phrase “pecuniary liability” in section 2(6) must be read in conjunction with other provisions of the Act, especially section 16. On that basis, the Court concluded that every usufructuary mortgage, regardless of its specific character, was encompassed by the definition of “debt” under the Act for the purpose of applying the scaling‑down mechanism provided in section 16.

The Court observed that Section 16 made it irrelevant whether the creditor possessed a personal right to sue the debtor for the mortgage amount, because the provision applied irrespective of that personal right. The next argument presented by counsel was deemed to have less substance than the one previously addressed. Counsel asserted that a mortgage liability could be reduced and adjusted under the Act only through a creditor‑filed suit for redemption, and that a debtor lacked competence to approach the Tribunal for such reduction by filing an application under Section 5. The Court found this submission unconvincing and not worthy of serious consideration. It noted that Section 5(1) of the Act expressly permits a “debtor” to make an application to the Tribunal for adjustment of his debts. In view of the earlier finding that the amount secured by the mortgage fell within the definition of “debt” under Section 5, an application could be filed to settle that debt, which was a secured debt falling within the description provided in the main part of Section 16(4). Consequently, the applicants were entitled to obtain an adjustment as specified in the proviso to that section. Although the appellants had repeatedly insisted on the locus standi of the respondent‑debtors to file the application at every stage of the proceedings, the Court concluded that the argument lacked merit and must be rejected on the plain terms of Section 5 read together with Section 16. The Court then turned to the third and final objection raised by counsel, which centred on the wording of the proviso to Section 16(4). The Court extracted the relevant language: “Provided that in either case the amount of the debt shall be only that amount as bears to the total debt the same proportion as the value of the lands allotted to the creditor in India bears to the value of the lands left behind him in the West Pakistan and to that extent the debt shall be deemed to have been reduced.” Counsel pointed out that the scaling down applied in the present case was based on a total mortgage‑debt calculated at Rs 51,700, which incorporated interest as allowed by the applicable statutory provisions and took into account Section 29, as previously extracted. The correctness of this calculated figure was not contested. Counsel’s dispute concerned the subsequent portion of the Tribunal’s order, which had been affirmed by the appellate Court. The order stated that the total mortgaged land now belonging to the petitioner, Pratap Singh, and respondent No. 5, Sham Singh, had been assessed as equivalent to 359 standard acres, 14 ¾ units (comprising 329 standard acres, 13 ¾ units belonging to the petitioner and 22 standard acres, 6 ½ units belonging to respondent No. 5). The Court noted that this assessment formed the basis for the proportional reduction of the debt under the proviso, a point that had been the subject of counsel’s criticism.

In the order of the Tribunal, the mortgagors were allotted a total of fifty‑one standard acres and nine units of land; of this, thirty‑seven point four standard acres were allotted to the petitioners and fourteen point five standard acres to respondent number five. Under section sixteen, subsection four of the Act, the amount of debt payable to respondents one through four was reduced in the same proportion as the land was allotted to the mortgagors. Accordingly, the original mortgage debt of fifty‑one thousand seven hundred rupees, when reduced in that proportion, amounted to approximately seven thousand four hundred and twenty rupees. Counsel for the petitioners objected to this reduction, contending that the proviso to section sixteen, subsection four required the debt to be reduced in a proportion that reflected the market value of the lands allotted in India compared with the market value of the lands left behind in Pakistan. Counsel argued that the Tribunal had considered only the ratio of the two land extents, that is, the standard acres remaining in Pakistan versus the standard acres allotted in India, and had not computed any market values for either parcel.

The Court rejected this contention, observing that the argument overlooked the procedure prescribed by the relevant rules and instructions for computing the standard acres left by a displaced person in Pakistan. Those rules direct the authorities to take into account the income yield of the two sets of lands; consequently, the “value” of the land left behind is captured in the determination of the standard acres. Although the actual market price that a willing purchaser would pay for the land in Pakistan was not ascertained—indeed, such a determination was impracticable—the rules provide an adequate method of valuation by reflecting income‑yield considerations. The nature of the land left behind, whether canal‑irrigated, well‑irrigated, dry, or merely rain‑fed, was taken into account, and numerical factors prescribed in the rules were applied to derive an equivalent area in India. After this computation, the seven thousand five hundred thirty‑one kanals and a fraction of land belonging to the respondents were equated to three hundred fifty‑nine standard acres and a fraction. Thus, the three hundred fifty‑nine standard acres represented the value of the land left behind, given the circumstances set out. Accordingly, there was no deviation from the method prescribed in the proviso to section sixteen, subsection four when the debt, as calculated under section twenty‑nine of the Act and other statutory provisions, was scaled down by multiplying it by fifty‑one divided by three hundred fifty‑nine, that is, by one‑seventh. The Court further stated that the term “value” in the proviso was intended to be understood as the value determined by the procedure laid down in the relevant rules for computing the equivalents of property left behind in Pakistan and the allotment of evacuee property in India. We are further of

The Court considered the argument that the term “value” appearing in the proviso to section sixteen paragraph one was intended to denote the amount established by the prescribed procedure for fixing value under the relevant rules. Those rules, according to the argument, dealt with the computation of equivalents of property left behind by displaced persons in Pakistan and with the subsequent allocation of evacuee property to those persons in India. The Court examined whether this interpretation of the word “value” was supported by the legislative intent and found that the submission did not rest on any substantive material or authority. Consequently, the Court concluded that the point raised by the appellant lacked any substantial merit and could not be accepted as a basis for relief. The Court further observed that no other issues were raised before it, and the points mentioned above constituted the sole arguments advanced by the parties. In view of the lack of merit in the argument and the absence of any additional contentions, the Court determined that the appeal could not succeed under the law. Accordingly, the Court ordered that the appeal be dismissed, directed that the costs of the proceedings be awarded against the appellant, and affirmed the dismissal. The judgment therefore concluded the matter, leaving the lower court’s decision undisturbed and imposing the cost liability on the appellant.