A) ABSTRACT / HEADNOTE

The Supreme Court in Rajkumari Kaushalya Devi v. Bawa Pritam Singh and Another, 1960 AIR 845, 1960 SCR (3) 571 interpreted the scope of the term “debt” under Section 2(6) of the Displaced Persons (Debts Adjustment) Act, 1951. The core legal issue revolved around whether a mortgage debt qualified as a “pecuniary liability” and thereby fell within the purview of the Act. The appellant, having executed usufructuary mortgages and later leasing back the properties in question, contested proceedings initiated by the respondents under Section 13 of the Act. She argued that mortgage liabilities were not covered under the statute. The Apex Court, while dismissing the appeal, held that mortgage debts do create pecuniary liabilities and are indeed covered under the Act. The Court thoroughly evaluated the legislative framework, contrasted relevant repealed statutes, and elaborated on the broader scheme of the Act, concluding that no provision existed to exclude mortgage debts from its ambit. This ruling reinforces creditors’ rights and clarifies the inclusive interpretation of statutory debt definitions in post-partition India.

Keywords: Displaced Persons Act 1951, Mortgage Debt, Pecuniary Liability, Section 2(6), Supreme Court Judgment, Property Law

B) CASE DETAILS

i) Judgement Cause Title: Rajkumari Kaushalya Devi v. Bawa Pritam Singh and Another
ii) Case Number: Civil Appeal No. 38 of 1960
iii) Judgement Date: 20 April 1960
iv) Court: Supreme Court of India
v) Quorum: P.B. Gajendragadkar, K.N. Wanchoo, and K.C. Das Gupta, JJ.
vi) Author: Justice K.N. Wanchoo
vii) Citation: 1960 AIR 845, 1960 SCR (3) 571
viii) Legal Provisions Involved:

• Section 2(6), 13, 15, 16, 17, 21 – Displaced Persons (Debts Adjustment) Act, 1951

• Section 58 – Transfer of Property Act, 1882

• Order XXXIV Rule 1 – Code of Civil Procedure, 1908
  ix) Judgments overruled by the Case: None
  x) Case is Related to which Law Subjects: Property Law, Civil Law, Partition Law, Statutory Interpretation

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

Post-partition India witnessed massive displacement and unprecedented socio-economic disarray. The Parliament enacted several protective statutes including the Displaced Persons (Debts Adjustment) Act, 1951, to alleviate the burdens of displaced individuals. This Act aimed to address pecuniary liabilities and debts incurred prior to migration or due to the displacement. In this context, Rajkumari Kaushalya Devi, who had mortgaged property before displacement, faced a legal challenge when her mortgagee sought relief under this Act. The crux lay in interpreting whether a mortgage constituted a “pecuniary liability” under Section 2(6). This judgment clarifies the legislature’s intent behind debt coverage and elucidates how courts must harmonize definitions with the statutory scheme and object. The case serves as a crucial precedent in interpreting beneficial legislations enacted to safeguard the financial security of displaced citizens, particularly in relation to immovable property.

D) FACTS OF THE CASE

In 1946, the appellant Rajkumari Kaushalya Devi executed two usufructuary mortgages in favor of the respondents over immovable properties located in Ferozepur City. On the same date, she leased back those very properties. Following the partition, the respondents initiated proceedings under Section 13 of the Displaced Persons (Debts Adjustment) Act, 1951, seeking recovery of the principal amount and arrears of rent. The appellant contested this application, asserting that the liability was not a “debt” as defined under the Act and therefore not enforceable through the mechanisms provided therein. She also argued that the Act did not contemplate mortgages related to properties situated in India. The Tribunal ruled in favor of the respondents, passing a preliminary decree for sale. Subsequent appeals to the High Court and a Letters Patent Bench were dismissed, prompting the appellant to approach the Supreme Court via special leave.

E) LEGAL ISSUES RAISED

i) Whether mortgage debts constitute a “pecuniary liability” under Section 2(6) of the Displaced Persons (Debts Adjustment) Act, 1951?
ii) Whether the Act applies to mortgage debts concerning properties situated within Indian territory?
iii) Whether mortgage-related applications can be maintained under Section 13 of the Act by displaced creditors?

F) PETITIONER/APPELLANT’S ARGUMENTS

i) The counsels for the Petitioner / Appellant submitted that

The liability under a mortgage is not a pecuniary liability and hence falls outside the ambit of Section 2(6) of the Act. The appellant stressed that mortgages are inherently different from personal money obligations and instead relate to rights in rem over immovable property. Therefore, they argued that mortgage debts cannot be equated with unsecured pecuniary obligations recoverable under the Act. Moreover, they contended that the legislative scheme—particularly Section 2(6)(b)—focuses on debts secured by property located in West Pakistan. The express inclusion of such debts implies exclusion of debts concerning property in India. Additionally, they cited the absence of any equivalent machinery under the Act for mortgage enforcement where the property is located in India, as was otherwise available for West Pakistan properties under Section 16. They warned that allowing mortgage suits under Section 13 could adversely affect the rights of prior and subsequent mortgagees who are not parties in such proceedings.

G) RESPONDENT’S ARGUMENTS

i) The counsels for Respondent submitted that

The mortgage liability is unmistakably a pecuniary liability, as the mortgagee’s claim arises from an amount lent, thereby constituting a debt. They cited Section 58 of the Transfer of Property Act, 1882, which describes mortgage as a security interest created for payment of a monetary loan or obligation. Hence, even if it includes an interest in immovable property, the essence of the transaction is still monetary in nature. The respondents emphasized the wide phrasing of Section 2(6) and especially sub-clause (c), which includes debts due to a displaced person from anyone residing in India. They refuted the argument that exclusion must be inferred from inclusion, asserting instead that the Act is a comprehensive framework for all forms of pecuniary obligations, irrespective of the geographical location of the secured property. The respondents maintained that the absence of specific enforcement machinery in the Act does not imply the exclusion of substantive rights created under it.

H) RELATED LEGAL PROVISIONS

i) Section 2(6) of the Displaced Persons (Debts Adjustment) Act, 1951 – Defines “debt” to include any pecuniary liability, secured or unsecured, present or future.
ii) Section 13 – Empowers displaced creditors to institute proceedings before the Tribunal.
iii) Section 16 – Provides mechanisms for enforcement where security is on property in West Pakistan.
iv) Section 58 of the Transfer of Property Act, 1882 – Defines a mortgage and elaborates its monetary character.
v) Order XXXIV Rule 1, CPC – Lays down rules for mortgage suits and joinder of parties.

I) JUDGEMENT

a. RATIO DECIDENDI
i) The Court decisively held that a mortgage debt is a pecuniary liability under the meaning of Section 2(6). The Court observed that the term “pecuniary liability” includes all monetary obligations, regardless of whether they are secured by property. The Bench referred to Section 58 of the Transfer of Property Act, 1882, affirming that every mortgage has an embedded monetary obligation. They also relied on the absence of restrictive words in Section 2(6)(c) to rule that debts owed to displaced persons, including those backed by Indian immovable property, are maintainable under the Act. The ruling emphasized that merely because specific machinery under Section 16 exists for properties in West Pakistan does not imply an exclusion for Indian properties. The Act’s object, being beneficial in nature, called for liberal interpretation.

b. OBITER DICTA
i) The Bench discussed the structure and repeal of prior legislations like the Displaced Persons (Legal Proceedings) Act, 1949, and the Displaced Persons (Institution of Suits) Act, 1948, indicating that the current Act was intended to be a complete code. They also addressed concerns regarding potential prejudice to prior or subsequent mortgagees, concluding that their interests would remain unaffected by decrees under the Act.

c. GUIDELINES 

• Mortgage debts are pecuniary liabilities within the ambit of Section 2(6).

• Displaced creditors can file applications under Section 13 even for secured debts.

• The location of the property (within India or in West Pakistan) does not bar the application of the Act.

• The Act must be interpreted in light of its remedial and beneficial purpose.

• Rights of other mortgagees will not be affected due to independent statutory protections under CPC.

J) CONCLUSION & COMMENTS

This judgment marks a significant affirmation of the legislature’s intent to include all forms of monetary obligations, whether secured or unsecured, within the scope of the Displaced Persons (Debts Adjustment) Act, 1951. The Court adopted a purposive approach, emphasizing that displaced persons must not be deprived of remedies merely due to technical or geographical constraints. The clarification that mortgage debts also constitute “pecuniary liabilities” under Section 2(6) has enduring importance in property law and civil jurisprudence. The ruling also sets a precedent for future statutory interpretation where beneficial legislation is involved. It ensures that creditors displaced during partition retain the right to enforce their dues, reinforcing the commitment of post-Independence India to restorative justice.

K) REFERENCES

a. Important Cases Referred
[1] Rajkumari Kaushalya Devi v. Bawa Pritam Singh and Another, 1960 AIR 845, 1960 SCR (3) 571
[2] K.K. Ahuja v. V.K. Vora, (1997) 5 SCC 452
[3] Narandas Karsondas v. S.A. Kamtam, AIR 1977 SC 774
[4] V.N. Sarin v. Ajit Kumar Poplai, AIR 1966 SC 432

b. Important Statutes Referred
[5] Displaced Persons (Debts Adjustment) Act, 1951
[6] Transfer of Property Act, 1882 – Section 58
[7] Code of Civil Procedure, 1908 – Order XXXIV Rule 1
[8] Displaced Persons (Institution of Suits) Act, 1948
[9] Displaced Persons (Legal Proceedings) Act, 1949