Today is our topic of discussion The Legislative Protection to Peasantry .
The Legislative Protection to Peasantry
One of the distinguished features of the Government of India Act, 1935, was the extension of franchise right. Previous to this Act, a few selected groups were given voting right. However, under the Government of India Act, 1935, the voting right was extended to those whose residence was within the constituency, “coupled with the payment of a small amount in land revenue, rent of local rates in rural areas, and of mmicipal rates in urban areas.
All payers of income tax, and all retired, pensioned or discharged officers or men of the regular forces were also enfranchised.” This was virtually a universal suffrage which had Important effects upon the contemporary politics. For the first time the greater part of the peasantry were enfranchised who “posed a challenge to the landed gentry since the political existence of the latter depended on the vote of the peasantry.
The interests of the peasantry were at the same time diametrically opposite to those of Landed gentry.” With the extension of the suffrage to peasantry a new dimension was added to the Bengal political scene.
Legislative members who depended on their support, felt an urge to advocate the cause of the peasantry with a view to catching hold of many of their votes.
The Muslim leadership in the Bengal Legislative Council, who represented landed interests, and had still then continued to derive support from the Government, helped the agriculturists at last by piece-al Iegislation. The Nikhil Bangs Proja Sanity under the leadership of A.K.Fazlul Ik and Sir Abdur Rahim extended their support to Goverment Legislative plan which had benefited the peasantry of Bengal.
The Biki Barga Proja Sanity was mainly a muslin organisation, but there were some Hindu councilors like J.L.Banerjee, Naresh Sen Gupta and Atul Gupta who were remarkably vocal in supporting the peasants’ cause. It has earlier be explained that the economic depression had resulted in the break-up of the traditional economic structure of rural Bengal.
The magnitude of the problem was so great that peasants were unable to pay ranta and many rich peasants, taking the advantage of the situation, even tried to withhold payment of tent on the ground of “inability”.
In addition to this no-rent mentality, the anti-moneylendern agitation and Kishan movement formed a new threat against landlords and moneylenders. To counter the situation, the Government of Bengal constituted the Bengal Board of Economic Inquiry Committee to suggest ways and means for mitigating the grievances of the peasantry.
The Board of Economic Inquiry studied the problem of rural indebtedness and its souteness during the depression from various dimensions. The Board found that the money-landers were prepared to sacrifice the greater part of their accrued interest provided they were given mufficient assurances of repayment of the capital.
The Board was inclined to believe that the debt conciliation scheme would be of advantage to the creditors, because they had failed to collect any interest or capital during the years of depression.
According to the Board of icononi.c Requiry “Soo of them might have woed their debtors in the civil courts, but owing to absence of purchasers at a reasonable price execution pro coedings dragged on indefinitely, and if the land was sold it was difficult to get possession or to find other cultivators to take settle- ent”. Hinwever, the Board of Boronic Enquiry finally recomended the Bergal Belief of Indebtedness Bill on the lines of the Central Provinces Act and the Punjab BILL. The main provisions of the proposed Bill were au follows:
(a) “A Debt Adjustment Board will be constituted in as many centres as Goverment flods possible to receive applications both from debtors and creditore of agricultural class.
(b) “It can dianias any application warily; if not it can call for detailed statements from both debtors and creditors and fix a date for hearing both parties within one month; the amount of debts not stated by the creditors will be treated as the amount admitted by the debtor. The Board can extend the time for application if it sees good reason, but it is not bound to do so.
(c) “The Board, if the creditors and debtors to the extent of 60 per cent. of the debts agree to conciliation, can settin all the debts of that debitor and the award counts as a decree of a civil court.
(d) “The Board, if it thinks either debtor or creditor has made a roanable offer, can make an mard for all the debts provided the mount marded is not less than the principal of the debt, otherwise it dismisses the application.
(e) “If after an award any instalment becomes overdue, it can be recovered by certificate procedure.
(f) “Debts incurred after the award cannot be sued for till all the certified debts have been realised.
(g) “Where the Board judges a tenant to be insolvent, it can re- duce the debt to the amount he can pay, say 75 per cent. of the value of his land or assets, and fix instalments for its payment.
(h) “If the instalments are not paid puntually, the Board can sell up all the property except the homestead itself. It will pay creditors proportionately from proceeds and release the insol- vent from any further liability.
(i)”The civil court will have no jurisdiction while proceedings are pending before the Board and cannot interfere with their awards. All the lands which are the security for the awarded debt will be attached as under section 64, Civil Procedure Code.
(k) “The Board will notify the landlords of the debtor’s land and
Execution of rent decrees will be postponed for six months. “The awards will be transferable and they can be taken over for collection by any approved credit society”.
However, on the basis of the recommendation of the board of Economic Enquiry, the Bengal rural Indebtedness Bill was introduced by Khwaja Nizimidin in the Bengal Legislative Council in July, 1935.
After = prolonged debate the Bill was referred to a Select Committee consist ing of 26 ambers. In October, 1935, the Select Committee sat togather, discussed the Bill and submitted a report. The Select Committee revised Home minor legal details of the Bill. It considered the Bill to be an energency measure rather than a permanent machinary for the liquidation of debts.
The Committee recast the definition of agriculturist dentose by including “a raiyat, der-ralyat, or person who cultivates land by him- self or by members of his family or by hired labourers or by adhiars, bargadars, or that”. It is worthy to note that eleven members of the Select Committee gave their note of dessent to several clauses of the Bill. The arguments offered by then were enormous. Sone of their important argients were the following
(i) The legislation aimed at ameliorating the distress of the in- debted peasantry by scaling down their debts, but without giving then any financial assistance for lequidation. To this Narendra Tu Basu macked: “to provide for compulsion and not ta provide any funds would in my opinion be tantamount of wh ing the whole system of agrarian and rural credit and to head straight of an economic revolution”.
(ii) The Bill would create an extra-ordinary mechinary for debt conciliation, without any qualified persomel or experienced judicial officer.
(iii) The Bill is partial to the debtors and harsh on the creditors.
(iv) The Debt Settlement Board would be composed of villagers and members of union Boards with no provision of the inclusion of Lawyers. The composition of 1.5. Boards with such class of people may lead to entire disorganisation, because they are “very often amenable to the influence of village factions and other undesirable influences”.
The Bengal Rural Indebtedness Bill as submitted by the Select Committee was discussed in Bengal Legislative Council in November, 1935 with a changed title the Bengal Agricultural Debtors Bill’. The Bill opened up a serious debate and discussion and Kaja Narimuddin, the nover of the Bill, had faced vehement opposition in carrying out the B111.10 thread-bare discussions of every clause of the Bill took place, sometimes resulting in votes among the mebers of the legislative Council.
However, on 23 December, 1935, it was finally passed by the legislative Council and it received the assent of the Goverme General of Bengal and became law on 6 April, 1936. The salient features of the Bengal Agricultural Debtors Act (Bengal Act VII of 1936) were the following:
1. The Bengal Agricultural Debtors Act was a protective legisla tion against the crushing birden of the agriculturists of Bengal which sought to give relief to the agriculturists by way of scaling down their outstanding debts. (Preamble of the B.A.D. Act)
2. The Act prescribed to establish some sort of tribals composed of local people with sore legal procedure. These local boards were suggested to use their best endeavours to induce both the debtors and creditors to arrive at an anicable settlement of their debts. (Section 2 clausel and 2 of the B.A.D. Act).
3. In order to widen the scope of acceptability of the offers to the creditors, the Act suggested to provide some cash money to the creditors during settlement.
4.The Debt Settlement Boards were empowered to stay suits and proceedings in Civil and Reverse courts in respect of any debt included in an application filed before the B.S. Boards. The D.5. Boards were also empowered to bar the execution of certain decrees and certificates. (Sections 12-34 of the B.A.D. Act.)
5.The B.A.D. Act also authorised the D.5. Boards to declare an agriculturist to be insolvent if the Board found that his debit cannot be reduced to an amount payable within 20 years. (Section 22, clause 1-6 of the B.A.D. Act.)
6.The Act also provided condition for the payment of instalments, and in case of falling the award within the specific time. Such amount were to be recoverable under the Public Demands Recovery Act. (Section 25, clause 1-3 and section 25, clause 1-6 of the B.A.D. Act.)
7. The B.A.D. Act excluded the legal practitioner to represent any party or any proceedings before the 0.5. Board. [Editorial Note, Calcutta Law Journal, Vol. 63, P. 71 mes.]
This Act tried to look after the interests of both the parties- debtors and creditors.
The Board of Economic Enquiry had already sla borated how this Act would benefit the creditors as well. The Board thus argued the money-lenders as a whole had failed to collect any interest, much less any part of the capital of their outstanding loans, during the last three years.
Some of them might have sued their debtors in the civil courts, tat swing to the absence of purchasers at a reasonable price execution proceedings dragged on indefinitely, and if the land was sold it was difficult to get possession or find other cultivators to Lahmettit. If the number of cases in which the creditors sold up their debtors was say 5 per cent.
only and in 95 per cent. of cases the debtors paid nothing and retained in posse ssion of their land without any penalty, the consequence in course of time would be that the present Indebtedness of the vast majority of agricultural population would be wiped out by limitation and the nahajans would lose their capital.”
The creditors in general were not slow to coalise the reality of this sutiation and thus they conceded to mich a conciliation project with only hope of quick recovery of some of their capital.
Incidentally it may be painted out here that the state Inter- vention for securing relief of the agriculturists from indebtedness was not quite unique for Bengal. This had been found in Deccan in the late 19th Century. In India, two different methods of scaling down the debts of the agriculturists had been pursued eg, voluntary and compulsory.
The voluntary method had been adopted in Bengal, Assam, Central Provinces and Nadeas. The difference between Bengal and other provinces of India in regard to debt liquidation schen was that where In some provinces the intervention of state power was based on the policy of compulsory reduction, in Bengal debts were to be conciliated at Inant with the tacit consent of the creditor.”
The Government of legal was convinced that the mahsigns formed the main source of credit to the agriculturists and until and unless any other alternative credit agency could be organised, the majam should not normally be disturbed. The voluntary conciliation of rural debts received strong support from the bureaucracy. As P.G. Hitter racks: “Many creditors are so situated that they would be willing to take the principal only.
If the collector selects cases where con- sistently with the value of security the creditor is most considerate about giving up a portion of his claim, then debt can be redeemed on a voluntary basis at a minimum amount of advance”, 15
The Bengal Agricultural Debtors Act had these broad and distinct aspects, ie., organisation, adsinisteation and business procedure.
The Act as designed by the Select Committon and amended by the legislative council provided with a machinery for conciliating rural debts. So pro- visions had been made in the Act for setting up Debt Settlement Boards of different types as local circumstances demanded.
The first type of D.5. Boards, which resembled the spirit of the Chandpur voluntary Debt Conciliation Board, were known as Ordinary Boards. The second type of 0.5. Boards, kn as Special Boards, were powered to compulsion in settling debts if the creditors unreasonably refuse to anicable settlement. The Special 0.5.
Boards enjoyed certain special powers which the ordinary Boards were not allowed to exercise. Besides this, there was another Special Debt Settlement Hoard for Central Banks.” The main object underlying the establishment of such special board for central banks was to expedite the settlement of co-operative debits and to relieve the Central Banks of the inconvenience experienced by them in attending too many Ordinary Debt Settlement boards scattered over a large area.
The Debt Settlement and consisted of local men of Influence who had knowledge about local condition and who could persuade the creditor and debtor to settle their debts amicably. It umally con- sisted of five members, all nominated by the collector of whom two represented the debtor and two the creditor.
Generally presidents and monbers of Union Boards and persons of good social standing were selec tod as members. It was expected that these marbers would be able, on an enquiry into the relevant matters as also by exerting their personal Influence, not only to being relief to the indebted agriculturists but also to give immense relief to the creditors.
The idea behind this orga nisation was to “mupplant for the time being traditional policy of laisses-faire by inculcating on all concerned the spirit of ‘live and let live’ in the society and the basic principle of working of these boards is that of a village panchayet of bygone days. The board is thus on the one hand a tribunal of justice sanctioned by law and on the other a village panchayet backed by tradition”.
The mechanius provided by the B.A.0. Act for dealing with special cases was known as Special Debt Settlement Board. In mich Boards, Bub-Deputy Collectors, Munsiffs, lumpectors or Auditors of Co- operative credit societies acted as the daima. These Special D.5.
Boards functioned under the immediate supervision of Special Officer, Telit Gamciliation and Circle officers who were responsible to their respective authorities for efficient administration. Above all, the mubdivisional officer exercised a general supervision over then, where the District Collector was the Chief Controlling head.
The Special Boarda unually dealt with the cases referred to it by the Ordinary Bounds. All these boards had definite rules and procedure regarding sitting serangments, quorum, appointment of members.” Canes could be filed both before the ordinary or the Special Boards, but when a proceeding before an Ordinary Board reached such a stage where it could not disposed of the case without exercising special powers, the Ordinary board inediately submitted the case to Special Board with all its records and recommendations.
The Organisation of 1.5. Boards had often provoked debate, critician and protest throughout the whole working of the Act. It was always demanded that the members of the Conciliation boards would be en who were capable, upright, of the highest integrity, sculously honest and above all suspicion. B. Ranchandes Rau, a contemporary writer of Indian Economics expressed his anxiety about the composition of D.5.
Bands of East Bengal. He remarked: “Any Lucarpetency on the part of these Boards would fan the commmal flame for most of the roots of East Bengal are Mohameda and their creditors are Hindus. The tendency to select thion Boards mabers also has to be deprecated” 20 Later, the original principles for appointing members of D.S.
Boards were changed and new ideas were accepted. This new trend can be attri- buted to the first phase of communal politics of India. There had been frequent question both in the legislative Assembly and Legislative Council regarding the coal ratio of the members of B.5. Boards and all other departments of the Goverment of Bengal.
This trend be- came prominent probably after the Commal Award made by Ramsay Mac- donald. However, Hulin representation in the D.5. Boards was obviously emarkable, for a large mater of debtors came from the Muslim community. Besides mulin representation there was a strong dad for scheduled cante representation in the 0.5.
Boards. It was brought to the notice of the Government that the scheduled caste representation in 1.5.oards was little in places where they formed a substantial portion of the population. However, the appointment of members of the D.5. Boards received political and practical consideration of the Goverment of Bongal.
The old criteria for appointing members of D.5. Boards failed to achieve the purpose of the Act and new criteria had to be adopted later. To make the Board most effective in its operation the following new criteria were adupted by the Council of Ministers in its meeting held on 2 September, 1943.7 22
1.A scheduled caste sober should, whenever available, be in cluded in D.S. Boards and the fact that he is of the scheduled caste should be noted against his nane; if this not possible, the conson should be noted.
2. All born of the legislature within whose constituency a D.S. Board is situated should be consulted by local officers before selecting personnel. It should be intimated that if within 10 days of the receipt of the comication, no sugges tion are received from them, it will be pruned that they have no muation to offer.
3. When recommendations are received for more than one member of the legislature, preference should be given to the recommenda tions of members supporting the Goverment.
4. Preference should ordinarily be given to person who ace supporters of the Goverment, and persons who are actively opposed to the Government should not be appointed.
5. Neutral persons not opposed to the policy of Government, but who take active interest in local affairs may also be appointed.
6. Where recommendations from mebers of the legislature are not accepted by local officers, reasons for not accepting thes should be stated for the information of Government.
The following, alternatives were male for settlement of debts
(i) Settlement by mutual agreement
(ii) Compulsory settlement of 60% of the debts if agrement of both the parties can not be procured;
(iii) Compulsory settlement of debts covered by possessory mortgage;
(iv) Certification of a debt under certain condition;
(v) Settlement of a debtor’s liability by declaring him an Insolvent.
Application for settlement of debts could be submitted to the Board both by the debtor or my of his creditor by depositing twelve amas court-fee for each case. If the debtor filed with application, the creditor would have to submit his statement and vice-versa.
The debtor’s application to D.5. Board was expected to have detailed in- formation regarding “the names of his co-sharers if any in the debt, the names of all his creditors, their claims and also the amount the debtor claims and also the amount the debtor admits as his liability, the history of each debt, particulars of all his properties movable de immovable with the lien, charge or mortgage on each, particulars of lands nub-let to tenants by him,
details of his suplementary in- come LE any, debts that might be owing to the debtor himself by others, particulars of suits or proceedings in the civil court relating to any of his debts and the debtor has to certify that he has supplied all informations surectly and that he mentioned all his debts which include outstanding arrears of cents too”, 23 The B.A.0. Act also pro- vided rules for the creditors to supply similar information regarding the debtor and his debts. After receiving an application filed by the debtor the D.S.
Board would scrutinise the application and issue notice to all his creditors, co-debtors, sureties and landlords and a general mtice would be given for the public. The general notice was intended to attract public attention to the proceedings of the Board. Similar procedure would be maintained in case of application filed by the creditors. However, before the final consideration of an application the Board was to determine the following points:
(a) that the debtor is an agriculturist debtor;
(b) that the ordinary D.5. Board has the jurisdiction to deal with this case. Because the B.A.D. Act provides the rules that the ordinary B.5. Board has the jurisdiction for settle- nent of debts to the maximum amount of 5000 rupees;
(c) that the debt stated in the application in a debt within the meaning of the B.A.D. Act.
As regards the first point the debitur must be an agriculturist debtor which means that the debtor was a ryot or an under-ryot or one who maintains his family mainly from agricultural sources.
As regarde the definition of ‘debt it was said that the “debt includes all lia bilities of a debtor in cash or in kind, secured or unsecured, whether payable at present or at a future date and whether payable under a decrent or order of a Civil Court or otherwise, of course, certain liabilities were kept out from the purview of the B.A.1. Act. Ang these liabilities rent and any aunt recoverable as a public demand were noteworthy.
If the debtor failed to respond to an application filed by the creditor, the D.5. Board had no other alternative than the dismiss the creditor’s application. The after-effect of such dismissal was alarm- ing for the debtor, because noch dismissal mounted to disqualification of the debtor for good to seek redereas to the D.S. Board.
0.On the other hand, the creditor in such cases could deal with the debtor in the Civil Court under the general civil law. But when a creditor falled to re- pond to an application filed by the debtor, the D.S.
Board had to accept the Hability of the debtor to creditor as stated by debtor. If the debtor did not admitted any liability due to any creditor, the Board had the jurisdiction of an e-parte detemination which would prevent the creditor to go to Civil Court further in that case.
The next stage was the determination of legal Hability of the debtor.
At this stage the D.5. Board had to take into consideration the total income and expenditure of the debtor and to find out surplus incon on which the mard would be based. In ascertaining the total income of the debtor the Board had to calculate the total annual gross income from land, livestock, service, wages of camal labour, business or in- vestent and other miscellaneous sources.
In calculating the total ex penditure of the debtor the loand had to take into consideration the size of debtor’s family, aber of earning nimber, children getting education, girls to be married.
The rent payable to landlords, cost of cultivation, harvesting, maintenance of family, and livestock and other reasonable items were be included in the calculation of total expenditure of the debtor. The estimation of surplus Income was very important for the settlement of debts, because it helped the 1.5. Sand to determine the amount and Igth of award upto the paying capacity of the debtne.
Without proper estimation of the surplus incone of the debtor “the Board fails to lepress on the creditors the actual paying capacity of the dabtors and reasonableness of the offer proposed, which the creditors in the circumstances ought to accept”, 25 If no surplus incoe was avail- able, the debtor became an insolvent and insolvency procedure would beapplied in that case. However, the final stage was the settlement of debt. The 0.5. Board takes debt case into cognizence
(i) se the debtor and all his creditors agroep
(ii) when some of the creditors agree
(iii) when the creditors do not agree.
In the first place when the debtor and all his creditors agreed to a settlement the D.S. Board had to see that the terms of settlement as arrived at by the Board did not clash with the paying capacity of the debtor as determined. In the second category of cases where some of the creditor declined to agree, the Ordinary Debt Settlement Boards bein powerless. It could only transfer the application to Special Debt Settle sent and with all its recommendations. In this case the Special 0.5.
Board could exercise special powers under section 19(1)(b) If the cre- ditor who ove not less than 40 per cent. of the total debt had agreed to an amicable settlement. At this stage the Special Debt Settlement Board could fix the same term for other creditors of the romaining 60 per cent. of the total debt. But the principal debt could not be reduced unless and until the creditors who owe 60 per cent. of the total debt agreed to an amicable settlement.
In case of the third contingency when wone of the creditors agreed, or the mount of debt owing to the creditors agreeable to an amicable settlement becomes less than 40 per cent. of the total debt, the Ordinary Debt Settlement Boards had no power to dispose of the cases. Such cases, an the rule provided, would be transferred to the Special 0.5.
Boards which could inson certi- ficate procedurn by exercising section 21 of the B… Act. It also provide ce stringent provisions regarding the consequence of a certi- ficate on the creditors. The effects of such certificateregarding the debt determined by the Board were two-fold:
(a) This certificate would disqualify the creditor to demand the cost of the suit and interest in excess of 6 per cent. simple interest on the debt determined by the D.5. Board. The end- ment of the B.A.D. Act in 1939 disallowed the interest also.
(b) No Civil Court would allow the creditor to file a muit for the recovery of such debts and “no decree for the recovery of mach debt shall be executed until all amount payable under an mard in respect of other debts of the debtor have been paid, or until the expiry of such period not exceeding ten years as may be speci fied in the certificate, whichever is later, or, if the ward ceases to subsist under mab-section(5) of section 29, until the award has so ceased to suboint27.
It seems that a mild pressure was exercised on the creditors by inuing a certificate where creditors decline to accept the fair offer nade by the debtors. The penalty imposed by such certificate on the creditors was sufficiently harsh to make the creditors to think of the consequences before they refused.
The Bengal Agricultural Debtors Act included arrears of renta upto the date of determination of debts by Debt Settlement board subject to a maber of circumscriptive provisions.
(i) It excluded the rent due by largadari tenancies. The rule pro- vided that all debtors should join in the settlement in case of joint debts for arrear rent. The anendent of the Act in 1939 provided that the D.5.
Board might settle rent-debts even If any one of the joint-tenant applied to the Board. But in that case the debtor-spplicant should pay the entire mount determined and settled by the D.5. Board. The landlord coaliti Institute a wait in the Civil Court for arrears of rent only when the tenants failed to repay the debt within the specified
(ii) According to the section 23 of the B.A.D. Act no D.5. Board was unpowered to reduce the principal of my rent-delit. The fact was that rent should be paid in full and a landlord could being his lands to sale for non-payment of rent. But the land- lord was required to give three months’ notice to the D.5.Board during which a secured creditar night pay the arrears and prevent the sale and thereby could recover the land from the debtor.
Explaining the situation K.G. Sivaswany cemarks: “The fact of existence of huge acesars under cent is itself an index of the period of depression and need for settl ing them as other debts.
Scaling down of rent arrears, after determining it by taking an account of the payments made to a Landlord whether for rent or for debts due to him on the basis of the fall in prices will be nothing unfair, as rent is a payment for the use of land on the basis of the value of the produce raised from it”,
To provide easy methods for conciliating joint and ancestral debts, provision is laid down by the Act that it is not necessary that all the debtors of juist and ancestral debta should be agriculturists. The D.5.
Board was pounced to compose joint debts even though all the debtors did not apply. Sub-section 9(2) of the B.A.D. Act provides that “such an order of the Board shall not be questioned in any Civil Court… Provided that an order of the Board under this sub-section shall not affect the liability of any other person who is jointly liable with the debtor for the debt, but in no case shall the creditor to whom the debt is due be entitled to realize more than his dues from the persons jointly table”
Most of the debts of the agriculturists of legal were covered by unifructuary mortgages for short period in lieu of interest, while the principal coining unpaid. In usufructuary mortgages a condition was very often attached that the mortgage land would pass on to the creditor if the debt was not repaid within the specified time.
In the endent of the Bengal Tenancy Act of 1928, the occupancy ralyats were given right to execute usufructuary mortgages only for a period of 15 years in order to prevent land from passing to sortgages for inde- finite periods.
But the 9.5. Boards had nothing to do against mortgage debt without the consent of the creditors which were seidon obtained. The Bengal Tancy Amendment Bill of 1938 declared all usufructuary noctages made for period over 15 years void and made provision for Its retrospective effect since 1928.
Undoubtedly this provision of the Bill helped the agriculturist debtors to get back their lands in posse tion irrespective of the amount of debt owed to them by the mortgagors.
At the same time, this restriction of the period of usufructuary sort- gages had prevented the over-borrowing by the agriculturists and conse quently their landlessness, but the retrospective revision of the term of mortgage was not entirely beneficial to the agriculturists, rather it restricted the creditworthiness of the agriculturists.
Likewise, the mendment of the Bengal Agricultural Debtors Act of 1940 powered the 8.5. Bound to consider usufructuary mortgages according to the rates of interest prescribed by the Bengal Money-Lenders Act of 1933 and eject the mortgage if the creditor was in possession of the land for more than 15 years, 30
The Debtors Act virtually implemted the recommendations of the Royal Commission on Agriculture in India regarding rural insolvency. When the debt of a debtor went beyond his repaying capacity within 20 years, the D.S. Board might declare hin Insolvent. But in no circu stances the debtor needed to apply for declaring him insolvent. Insol- vency canes can be dealt within two-ways, ither the 1.5.
Board could reduce the debt of an insolvent debtor upto his repaying capacity within 20 years whatever the volime of his debt might be or the board could direct to sell all the properties of the insolvent debtors with a view to disbursing much sale proceeds for repayment of his debts among his creditors. In case of reduction of debts of the Insolvent debtor the D.5. Board had to specify the amount and instalments payable to each creditar. Sub-section 22(4) of the B.A.D.
Act provides that “the sun to be paid in each year shall be fixed by the Board at an ant which, in its estination, is likely, in a year of normal harvest, to leave to the insolvent as provision towards his maintenance one-half of the sur- plus which ramios from the value of the produce of his land after pay- ing to the landlord the current cent doe for such land”, ut in case of sale of an Insolvent’s property, the D.5.
Board had to set aside one-third of his landed property as provision for his maintenance ex- clusive of the land occupied by his dwelling house. However, such in- solvexy provisions of the B.A.D. Act were not easily applicable, be cause no Board had been authorized to exercise these provisions without prior sauction from the authority.
The Instalments of the debts determined and settled by the D.S. board were based on the surplus income of the debtor. but if the debtor defaulted in payment of instalment, the amount was recoverable under the Bengal Public Demands Recovery Act of 1913.
In such case the cre- ditor had to apply to the Certificate Officer within specified period after which his demand would lose legal validity. The Certificate Officer could grant time to debtor for repayment of Instalments and even postpon the payment of Instalment of debt. If the Certificate Officer found it isponible to recover the aunt desanded by the creditor he might declare the debtor as insolvent and thereafter insolvency provision would be applied to bin.
If the debtor was not declared insolvent and if the Certificate Officer certified that the amount of instalments were irre- coverable, the creditor might now institute case is a Civil Court for the recovery of the amount due within three years from the date of the certificate.
As the debtors Act provided the mechinary for conciliation of debts, there were soon provisions for inducing the creditors to come to settlement. The object of the Act would be defeated had not been the 0.5. Board povered to stay suits and proceedings of Civil Courts.
It was provided by the Act that the hoard was to give notice to Civil Courts in respect of such debts applied for settlement relating to which suits and proceedings were pending in the courts. On the other hand the Civil Courts could stay such suits and proceedings until the applica tion for settlement of debts were dismissed or an award was made thereon by the board.
Again, there were provisions that no fresh mists or appli- cations or proceedings were to be accepted by any Civil or Revenue Courts In respect of debts which were under the consideration of D.S. Boards. Thus the Civil or Revenue Courts were empired to take opinion from D.5. Boards before taking up the cases for consideration.
Debts due to co-operative societies were difficult to conciliate. The B.A.D.Act provided that the co-operative debts could be settled with the previous approval of the Registrar of co-operative society in writing. The underlying idea of this provision was based on the consideration that the depositors should not suffer by any scaling down of debts.
The B… Act provided facilities of both revision and appeal. The D.S. Board could review its um order for settlement of debt either on the application of any party or of its own motion. The facilities for revision were provided only in Bengal share Boards were composed of non-official chairman and nonbers. But the provisions of the Indian Evidence Act of 1972 and the Code of Civil Procedure of 1908 were not applicable to any of the proceedings of the D.S. Board if not otherwise provided in the B.A.D. Act.
Generally appeals against determination of debt or an and lay with the Special Appellate Officer who is usually asentor Hanif and other appeals were to be decided by the Ordinary Appellate Officer who was always a sub-divisional officer. Application for appeal were to be submitted within 30 days of the order and in any appeal the decision of the Appellate Officer was final.
The Act affected three classes of people in geral e.g., the Landlord, moneylender and agricultural debtor. The Act also provided the following safe-guards for the affected classes:
1.In my circumstances no Board could reduce the principal of any debt due in respect of arenars of rent excepting where the landlord was agreeable to the proposed reduction.
2. Default in the case of arrears of rent payable under the med would then be recoverable through certificate procedure (Section- 28). The arrear rest remains a first charge in all amount o realized under the aunt.
3. Even wham a debtor was declared insolvent, realization of arrears of rent would not be affected thereby (Sub-section 22(4).
4.The B.A.D. Act was not applicable unless current rent of the debtor was paid in advance; even if the debtor’s land was sold for the realization of arrears of cent, the only substantial security under the award for the duen of the other creditors would be gone.
5. Honey-lenders Interest were to be kept unimpaired. It was officially reported: “Their apprehensions that there will be a indiscriminate scaling down or cancellation of debts are groundless.
Goverment do not contemplate the free use of in- nalvery sections at any time, and at the out set they will not be used at all. The intention is, in the first instance, to aim at settling as many canes as possible by anicable agro- ments between the debtors and creditues.nly as a last resort will be the power of compulsory be brought into operation”.
6. Were affable settlement of debts failed, mild compulsion would be applied to bring the settlement. The case would then be transferred to Special Debt Settlement Board who would apply compulsory provision for the settlaunt of debts.
7. The Act aimed at facilitating the recovery of the creditors’ duen by instalments and in case of default in payment of instal ment, the Act allowed the creditor to recover the amount under the provisions of the legal Public Demands Recovery Act.
The Bengal Agricultural tettors Act was basically an act of croise and nid-course venture of the politicians. Their aim was to give some relief to the debtors without much hurting the creditors.
The result was that the Act was criticised by both the creditor and debtor lobbies. As the Act did not allow the lawyers to be associated In any process of debt conciliation, so their reaction against the B was obvimas.
The criticism offered by a contemporary writer of econo- mic problem is mainly based on sceneic theory. The writer, Sacha Sen, criticised the policy of debt conciliation as the ground that it lacked the supply side of credit. He feared that this policy in turn might block all the avenues of borrowing.
Sachin Sen remarks: “this arrangement can only be arrived at on the hypothesis that cultivators who should get their debts adjusted by the boards would require no loans in future; they could meet all demands on the produce value of their lands. That is a hypothesis which can not be said to recognise the realities of the situation”.
Some exponents of Indian economics content that the scaling dows of debts was not merely a legal question, moreover, the supply and demand side of contit nee no closely linked up with this economic problem that its unscrplous dealing, may have severe harmful results.
K.G. Sivasuany, Hober of the Servants of India Society and expounder of the legal aspects of debt legislations, criticised the Bill for lacking sufficient strength to protect the agriculturists from their growing indebtedness. Later he criticises the price theory un which the legislation was based. K.G. Stvanary rourked “ALL these methods suffer from one main defect that they want to reduce the debt on the basis of a fall in prices.
The reduction of the amount of debt in the ratio of prices raises the question as to why other properties also such as rents, houses, landa, noney in banks, wage etc, should not equally be reduced on the same principle”, 36 Finally he argued that the fall in prices would have been a proper justification had the legislation been undertaken at the outset of depression.
Official critician against the B.A.D. Act was based on the ethods and data of the Board of Economic Enquiry on whose recomenda- tions the legislation had been undertation. The Act was acted on the basin of the result of soon rendon enquiries conducted by the hound of comic Expiry through local officer without no special technical knowledge regarding the paying capacity of the agriculturists.
The sta tistics and information gathered in respect of 6339 families in 16 districts of Bengal showed a deficit of income over expenditure of Es. 22 indicates that the agriculturists of Bengal were either incurring more debts or spending their previous savings and were thus unable to make any savings for the repayment of their debts.
Subsequent enquiries in 7 districts out of 16 shoved sone surplus. From these information the Board of Economic Equity concluded that much importance could not be placed on the figures of income and expenditure, but one important fact covealed by the enquiries that in all cases the figures of debt were found to be considerably less than one your’s Income in 1929. From the average figure of debt as against income, the findings of the Board of Ecomonte foquiry wat loadequate.
In answer to the quation raised by the Goverment of Bengal about the debt repaying capacity of the agricul turists the board simply remarked that “all the families whose capital debt does not exceed twice the incone of 1933 can repay their debt after the conciliation or adjustment by equated payments spread over a period of 10 to 15 years”
while proposing an enquiry into the economic con- dition of the agriculturists and agricultural labourers of Bengal in 1940, Khan Bahadur M. Hossain, a member of the Legislative Assembly, rightly commented on the defective bypothesis of the Board of Economic Enquiry that “the Board evidently entirely lost sight of the fact that agriculturist with uneconomic holdings could not repay their debts at all.
An agricultural family of 5 members with 2 acres of land having an average income of Rs. 80 or so only, could not possibly repay a debt of Rs. 100 (which is less than two years Income) as it could not possibly spare a pice for repayment of debt,
ita incone not being suffi- cient for barn living”, However, for a successful implementation of the objectives of Debt Settlement Boards, it was essential to ascertain what percent. of agricultural debtors had really any surplus income after maintaining their families and also what per cent. of debt they ustained which was less than 2 years income.
The above criticisms forced the government to bring necessary endents to the Act. Furthermore, the implementing agencies found many loopholes from their practical experience. Therefore, being in- fluenced by pressure lobbies and operational experience, the Government of hungal tried to make several important endrents to the B… Act. The mendent of the Act in 1937 sought to strengthen the activities of the D.5.
Boards in dealing with the cases where creditors did not agree to accept an offer considered to be fair by the Board. Earlier 1.5. boards could execute their own decision on 60 per cent. creditors, if 40 per cent. creditors would accept the offer made by the 1.5.Board.
The amendment supplants the condition by including sub-section 19(1) which stipulated that “When the creditors and debtors do not agree to an amicable settlement or either of them do appear in spite of notice, the Board of its own intination shall adjudicate such mount as payable to each not agreeing or absentee creditor as it considers tale, in so doing interest shall in no case be allowed at more then 12 per cent.
Another aspect of this aendent was related to the repayment of debts. On failure of payment of instalments of mard fixed by the D.5. Board, the usual procedure was to issue certificate by which the creditor could go to the court for the recovery of amounts which often caused hardship for the agriculturist debtors and involuntary sales of their properties.
To avoid such difficulty it was devised by the amendment of the Act in 1937 that “Instead of merely noting in the mart, the amount payable to each creditor on sach instalment, the board shall by order transfer of Lands of the debtor to the creditors in usufructuary mortgage for fixed period for clearence of all debts the entire land reverting to the debtors free from all debts after 20 years or lesser period”, 40 In 1937,
Mihamad Jonab Ali Majumdar, a Musber of the Bengal Legislative Animbly from dundur East-Mhamadan constituency, moved an asend- ent of the B.A.D. Act to give it retrospective effect from 1930.
His main argent was that during the depression the landed properties of many agriculturist debtors were sold and purchased at the sale of many decree-holders in execution of their decross in Civil Courts for a very mall mount in consideration of the real value of those properties.
The clever decree-holder vint a step further. Knowing fully well the incapacity of the judgement-debtor to pay the money, most of the cre- ditors took the delivery of symbolical possession of the landed proper- ties including the homestead of many debtors through the Civil Courts.
But the concerned lands were practically under the direct possesion of the debtors. This led to debate over the question whether this case would cone within the purview of the D.5. Board. In regard to these cases the decisions of the High Court were not uninous. “While one set of decisions held the debt to be existing upto the time when the sale took place, another class held the debt to be existing until the sale was confixed”,”Finally, the Bill was lost in notion.
However, in under to secure a more rapid disposal of cases filed before the D.5. Boards, to forestall non-agriculturists from being treated as debtor and to invest the D.5. Boards with power to deal with cases involving usufructuary mortgages the B.A.D.
Act was again needed in 1940. To important factors influenced the course of andunt. First- Iy, during the enactment of the Act apprehensions were around among the creditors and landlords by discussion of the terms of debt settlement which had provoked them to take quick action towards obtaining deceves from the Civil Courts. Consequently a large number of debtors lost their holdings through sales in execution of decren before they were able to have recourse to any D.5.
Board for relief; and in a manber of cases Civil Courts held and confirmed sales in execution of decrees in spite of the issue of a notice under section-34 of the B.A.). Act. This ul timately led to a civil suit in the High Court which in its decision had excluded the usufructuary mortgage from the purview of the Act. However, as the sole object of the creditors was to continue the statu as long as possible, the 1.5. Board found it impossible to settle down debts secured by usufructuary mortgages.
To avoid such hassed on the way to quick disposal of cases pending before the D.5. Boards, a new section was added to the Bengal Agricultural Debts (endent) Bill of 1940 that empowered the D.5. Boards to estimate profits accrued up-to-date from the unfruct and to settle the case by ordering the creditor to restore the mortgaged land to the debtor either then se at se future date according to the amount still outstanding at the time of the award.
The great depression resulted in hardship, poverty and tension anong the rural population. This was manifested in a long series of peasant unrest. The situation, however, demanded immediate steps for the solution of the problem.
As a remedy for the large volume of in- debtedness the Central Banking Enquiry Committee recommended the policy of debt conciliation on voluntary basis. Meamhile the Government of India Act of 1935 extended the franchise right even to the agriculturists which added a new dimension to Bengal politics.
The causes of peasants grievances were given priority by the political parties. However, accord- ing to the recommendation of the Board of Economic Enquiry the Bengal Relief of Indebtedness Bill was prepared on the line of the Central Provinces and Punjab Debt Conciliation Act. After prolonged debate in the legislative Council, the Bill was referred to a Select Committee for its opinion.
The Select Committee revised some minor details of the Bill and again it passed through Bengal Legislative Council as Bengal Agricultural Debtors Act in 1935. However, the legislation aimed at ameliorating the destress of the indebted peasantry by scaling down their debts and restoring the agriculturists to pre-depression status. The B.A.D. Act prescribed establishment of D.S. Boards in every union composed of local people with some legal procedure.
The representatives of both the creditors and debtors were accomodated in the D.S. Boards with a mal chairman at the top. There were two types of 1.5.Boards e.g., Ordinary and Special. The Special B.S. Boards enjoyed certain special powers which the ordinary Board were not allowed to exercise. The local situation and operation of the D.5.Boards created a complex ciramstance which necessitated repeated amendments of the B.A..Act.
It is well known that most of he debts of the agriculturists were covered by usufructunty mortgage. The D.5. Boards could not pro- gress significantly as in most cases the creditors were in possession of land of the cultivating raiyats by virtue of usufructuary mortgage.
In 1938, the Bengal Tenancy Act was amended which declared all mortgages before or after 1928 as void. The amendment also laid a rule that land would come back to the owner after 15 years as most of the principal of his debt as well as interest cleared off.
To replace the D.S. Boards, a new machinary was provided by the amendment of the Bengal Money-Lenders Act in 1940. In order to give further relief to borrowers by lowering the interest rates and also to make better provisions for regulating money-Lending the amendment provided an alternative machinery for dealing with credit of the rural population.
It was also provided that the rest of the work of B.A.D. Act would be performed by the Bengal Money-Lenders Act. However, with a view to formulating future credit policy the Co-operative Societies Act was also amended in 1940. The amendment pro- vided a more simple, elestic and democratic consitution for the co-opera- tive societies.
The new credit law also provided a strict provision for checking abuses in the co-operative societies and to facilitate develop- ment of all classes of co-operative societies on really right lines. Another aspect of the legislative protection to peasantry was the pro- mulgation of the Bengal Alienation of Agricultural Land Ordinance of 1943.
The ordinance provided rules for the restoration of holdings alienated during the famine of 1943. Among these legislative measures ained at protecting the agriculturists, the B.A.D. Act had a large scale of operational side as D.5. Boards were set up in every Union of Bengal to scale down the debts of the agriculturists. The operation of the D.S. Boards will be discussed in the next chapter.
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