1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

(iii)

GOVERNMENT  OF  MAHARASHTRA

LAW  AND  JUDICIARY  DEPARTMENT

MAHARASHTRA ACT No. III OF 1976

THE  MAHARASHTRA  DEBT  RELIEF
ACT,  1975

(As  modified  upto  the  10th  September  2012)

*

PRINTED IN INDIA BY THE MANAGER, GOVERNMENT CENTERAL PRESS,
MUMBAI AND PUBLISHED BY THE DIRECTOR, GOVERNMENT PRINTING
STATIONARY AND PUBLICATIONS, MAHARASHTRA STATE, MUMBAI 400 004

2012

[Price—Rs.  16.00]

1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

(i)

THE MAHARASHTRA DEBT RELIEF ACT, 1975

PREAMBLE.

SECTIONS.

CONTENTS

CHAPTER I
PRELIMINARY

1. Short  title,  extent,  and  commencement.

2. Definitions.

CHAPTER II
REVIVAL OF DEBTS

3. Revival of all discharged debts under Ordinance VII of 1975.

CHAPTER III

LIQUIDATION OF CERTAIN DEBTS

4. Discharge  of  certain  debts  and  consequences  thereof.

5. Prohibition against disposal of pledged property, etc. and penalty.

6. Power  of  certain  officers  to  enforce  delivery  of  possession  of

property  to  debtor.

7. Creditor  may  dispute  debtor's  claim.

8. Power  of  entry  and  search.

9. Creditor required to pay value of pledged property in certain cases.

10. Power  of  Authorised  Officer  to  impose  fine  for  frivolous  or

vexatious applications.

11. Bar of jurisdiction

12. Suits  involving  issues  required  to  be  decided  under  this  Act.

13. Agreement  for  labour  in  lieu  of  debt  to  become  void.

CHAPTER IV

MORATORIUM ON DEBTS OF WORKERS

14. Moratorium  on  debts  of  workers  in  certain  cases.

14A. Temporary duration  of Chapters  IV and  V.

CHAPTER V
MORATORIUM ON EXECUTION OF DECREES AGAINST SMALL FARMERS.

15. Stay  of  proceedings  in  case  of  certain  decrees.

16. Release  of  persons  in  detention  in  civil  prison.

17. Relief against default in payment of instalments.

18. Computation  of  time  for  execution.

19. Payment  of  certain  decrees.

20. Transfer  by  small  farmer  to  be  voidable.

21. Restriction  on  amount  of  claim  and  interest  in  certain  cases.
H  765—1

(ii)

Maharashtra  Debt Relief  Act,  1975

[1976  :  Mah.  III

SECTIONS.

CHAPTER V-A
ADJUSTMENT OF DEBTS OF CERTAIN FARMERS AND WORKERS

22. Commencement  of  Chapter  V-A.
23. Definitions.
24. Application for adjustment of debts.
25. Every creditor and debtor to file true and correct statement before

Court.

26. Assignee from non-debtor not entitled to benefit of this chapter.
27. Application  for  recording  settlement.
28. Service of notice on debtor and creditor to submit statement of debts.
29. Debts  in  respect  of  which  no  application  for  adjustment  or

settlement  is  made  to  be  extinguished.

30. Duties  of  debtors  and  creditors.
31. Preliminary  issues.
32. Examination  of  creditor  and  debtor.
33. Mode  of  taking  accounts.
34. In  certain  cases  rent  may  be  charged  in  lieu  of  profits.
35. Power  of  Court  to  declare  certain  transfers  to  be  in  the  nature

of  mortgage.

36. Provisions  of  section  35  not  to  apply  to  certain  transfers  and

transferees.

37. Court's  duty  to  determine  particulars,  value  etc.  of  property.
38. Fraudulent  alienations  or  encumbrances  void.
39. Paying capacity  of debtor.
40. Debts  payable  by  debtor  to  be  scaled  down.
41. Award.
42. Ex-parte  proceeding, if  any  party  does not  appear.
43. Award  to  be  registered.
44. Execution of award.
45. Postponement of payment of instalment in case of remissions, etc.
46. No  alienation  by  debtor  before  discharge  of  debts  valid.
47. Court  may  order  sale  of  debtor's  property  in  liquidation  of  his

debts.

48. Legal practitioners excluded  from appearance.
49. Appeals.
50. Power  of  District  Judge  to  refer  for  disposal  certain  appeals  to
Assistant  Judge  or  Civil  Judge  empowered  to  hear  appeals.

'

51. Court  fees.
52. Notice  how  served.
53. Provisions  of  Civil  Procedure  Code  to  apply  to  proceedings.
54. Bar  of  civil  suits  or  proceedings.
55. Period  of  proceedings  before  courts  under  this  chapter  to  be

excluded.

56. Alienation  of  standing  crop,  etc.,  before  repayment  of  loan

prohibited.

57. Power  to  make  rules.
58. Further  exemptions.
59. Debts adjusted under any other laws not to be further adjusted

under this Chapter.

CHAPTER VI
EXEMPTIONS AND REPEALS

60. Exemptions.
61. Repeal of Mah. Ord VII of 1975 and savings.

1986 : Mah. III ]
1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

1

Mah.
Ord.
VII of
1975.

MAHARASHTRA ACT NO. III OF 1976.1
[THE MAHARASHTRA DEBT RELIEF ACT, 1975.]

[3rd January 1976]

Amended by Mah. 40 of 1977.

”
”
”

”
”
”

18  of  1979  (15-8-1979)#
2  of  l984*  (21-8-1983)#**
1  of  1988  (21-8-1987)  #  @

An Act to provide for relief from indebtedness to certain farmers, rural

artisans, rural labourers and workers.
WHEREAS, both Houses of the State Legislature were not in session;
AND  WHEREAS  the  Governor  of  Maharashtra  was  satisfied  that
circumstances existed which rendered it necessary for him to take immediate
action to provide for relief from indebtedness to certain farmers, rural artisans,
rural labourers and workers in the State of Maharashtra; and for that purpose
promulgated  the  Maharashtra  Debt  Relief  Ordinance,  1975,  on  22nd  day  of
August  1975;

AND WHEREAS, it is now considered that relief from indebtedness should
be restricted to liabilities arising out of loans only and debts of workers who hold
immovable property the market value of which does not exceed twenty thousand
rupees should stand liquidated, and the debts of workers who hold such property
the market value of which exceeds twenty thousand rupees but does not exceed
forty thousand rupees should receive moratorium for a temporay period;

AND WHEREAS it is expedient to replace the said Ordinance by an Act of
the State Legislature after carrying out therein the amendments as hereinafter
provided  for  securing  the  above  purposes  and  other  purposes  hereinafter
appearing;

2[AND WHEREAS it is also expedient to provide for adjustment of debts of
certain farmers, rural artisans, rural labourers and workers and to provide for
matters connected therewith;]

1 For Statement of Objects and Reasons, see Maharashtra Government Gazette, 1975, Part V, p. 816.
# This  indicates  the  date  of  commencement  of  Act.
* Maharashtra Ordinance XX of 1983 was repealed by Mah. 2 of 1984.

** Section  3  of  Mah.  2  of  1984  reads  as  under  :—

“3. (1)  It  is  hereby  decleared  that  Chapters  IV  and  V  of  the  principal  Act,  which  were  to
expire after the 21st August 1983, having been retrospectively extended by this Act from that
date  upto  and  inclusive  of  the  21st  August  1985,  with  power  to  the  State  Government  to
extend  their  duration  further  for  a  period,  not  exceeding  two  years,  by  notification  in  the
Official  Gazette,  shall  not  be  deemed  to  have  expired  at  any  time,  and  all  their  provisions  as
amended  by  this  Act  shall  be  deemed  to  be  valid,  effective  and  continuously  in  force.

(2) It  is  hereby  further  declared  that  anything  done,  including  any  proceedings  taken  or
any  recovery  made,  by  any  person  during  the  period  from  the  22nd  August  1983  to  the  date
immediately preceding the date of publication of this Act in the Official Gazette (both inclusive),
which is inconsistent with the provisions of Chapters IV and V of the principal Act as amended
by  this  Act,  shall  be  deemed  to  be  null  and  void,  and  anything  done  during  the  said  period
which is consistent with the said provisions shall be deemed to be valid, effective and continuously
in  force.”

@ Section  3  of  Mah.  1  of  1988  reads  as  under  :—

“3.  (1)  It  is  hereby  declared  that  Chapters  IV  and  V  of  the  principal  Act,  which  were  to
expire  on  21st  August  1987,  having  been  retrospectively  extended  by  this  Act  from  that  date
upto  and  inclusive  of  the  21st  August  1989,  with  power  to  the  State  Government  to  extend
their  duration  further  for  a  period,  not  exceeding  two  years,  by  notification  in  the Official
Gazette, shall not be deemed to have expired at any time, and all their provisions as amended
by  this  Act  shall  be  deemed  to  be  valid,  effective  and  continuously  in  force.

(2)  It  is  hereby  further declared  that  anything  done,  including  any  proceedings  taken  or  any
recovery made, by any person during the period from the 22nd August 1987 to the date immediately
preceding  the  date  of  publication  of  this  Act  in  the Official  Gazette  (both  inclusive),  which  is
inconsistent with the provisions of Chapters IV and V of the principal Act as amended by this Act,
shall be deemed to be null and void, and anything done during the said period which is consistent
with  the  said  provisions  shall  be  deemed  to  be  valid,  effective  and  continuously  in  force.''

2 This  paragraph  was  inserted  by  Mah,  18  of  1979,  s.  2.

H  765—1a

Consequences
of
retrospective
amendment.

Consequences
of
retrospective
amendment.

2

Maharashtra Debt Relief Act, 1975

[1976 : Mah. III

It is hereby enacted in the Twenty-sixth Year of the Republic of India as

follows:—

Short title,
extent 2[and
commence-
ment].

Definitions.

It extends to the whole of the State of Maharashtra.
It shall be deemed to have come into force on the 22nd day of the August

CHAPTER  I
PRELIMINARY
1.   (1) This Act may be called the Maharashtra Debt Relief Act, 1975.
(2)
(3)
1975.
1*
2.   In this Act unless the context requires otherwise,—
(a) “ agriculturist ” means a person who cultivates land personally;
(b) “ appointed day ” means the 22nd day of August 1975 ;
(c) “ civil court ” includes a Court of Small Causes ;
(d)  “ corporation  area ”  means  an  area  within  the  jurisdiction  of  any
municipal corporation constituted or established under any law for the time
being in force ;

*

*

*

*

*

(e) "debt" means any liability in cash or kind, outstanding on the appointed
day, being a liability arising out of a loan (with interest if the loan is taken by
a worker,  and with  or without interest,  in any  other case),  whether secured
or unscecured, due from a debtor whether payable under a decree or order of
any court or otherwise;

(f)  "  debtor"  means  a  marginal  farmer,  rural  artisans,  or  rural  labourer
whose  total  income  from  all  sources  did  not  exceed  two  thousand  and  four
hundred rupees during the year immediately before the 1st day of August 1975
and a worker whose total income from all sources did not exceed, if living in an
urban area six thousand rupees during the year immediately before the said
date, and if living elsewhere four thousand and eight hundred rupees during
that year ;

(g) "to hold land" with its grammatical variations and cognate expressions,
means  to  be  lawfully  in  actual  possession  of  land  as  owner  or  as  tenant
(including a Government lessee), and the expression " holding "shall be construed
accordingly;

(h) " marginal farmer " means an agriculturist who holds land measuring not
more than one hectare of unirrigated land and includes an agriculturist who
cultivates  as  a  tenant  of  share  cropper  land  measuring  not  more  than  one
hectare of unirrigated land;

(i) " member of a family" means a father, mother, spouse, brother, unmarried
dependent sister, divorced and dependent sister, son, son's wife, or unmarried
daughter, divorced and dependent daughter, son's son, son's unmarried daughter,
son's divorced and dependent daughter, and includes any relation residing with
and actually dependent for his maintenance on the debetor;

(j)  "rural  area"  means  an  area  for  the  time  being  within  the  jurisdiction
of a Zilla Parishad established under, the Maharashtra Zilla Parishads and
Panchayat  Samitis  Act,  1961,  and  includes  any  'B'  Class  or  'C'  Class
municipal area as classified under the Maharashtra Municipalities Act, 1965,
but does not include the area within the limits of the cantonments of Pune, of
Kirkee and Kamptee as defined under the Cantonment Act, 1924 ;

(k) "rural artisan "means a person who principally earns his livelihood in a
rural area by practising any craft either by his own labour or with the help of
labour of the members of his family but does not include an artisan who resides
in an urban area ;

1 Sub-section  (4)  was  deleted,  by  Mah.  18  of  1979,  s.  3  (a).
2 These  words  were  substituted  for  the  words  "  commencement  and  duration  " ibid.,  s.  3  (b).

Mah.
V of
1962.
Mah.
XL  of
1965.
2  of
1924.

1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

3

(l) " rural labourer " means a person who—

(i) does not hold any land in a rural area,

(ii) may or may not have any homestead therein, and
 earns his livelihood principally by manual labour,
(iii)

but does not include any such labourer residing in an urban area and a rural

artisan;

(m) “ small farmer” means an agriculturist who holds land measuring more
than one hectare of unirrigated land but less than two hectares of such land and
who cultivates personally such land and includes an agriculturist who cultivates
as  a  tenant  or  a  share  cropper  land  measuring  more  than  one  hectare  of
unirrigated land but not more than two hectares of such land.

Explanation I.—A person belonging to a Scheduled Caste, Scheduled Tribe,
Nomadic Tribe or Vimukta Jatis shall be deemed to be small farmer irrespective
of the extent of unirrigated land held and cultivated by him as aforesaid;

Explanation II. —" Nomadic Tribes " and " Vimukta Jatis " means Nomadic
Tribes and Vimukta Jatis determined as such by the State Government from
time  to  time ;

(n) “ urban area ” means a corporation area or an area within the limits of
any municipal council constituted under any law for the time being in force in
the State, and includes the area within the limits of the cantonments of Poona,
Kirkee and Kamptee as defined under the Cantonments Act, 1924, but does not
include any “ B ” Class, or “ C ” Class municipal area as classified under the
Maharashtra Municipalities Act, 1965 ;

(o) " worker" means a person who earns his livelihood through any profession,
calling or trade and also a person who is working in any factory (including a badli
worker therein);

Explanation.—In this clause—

2  of
1924.
Mah
XL  of
1965.

63  of
1948.

(1)  the  expression  "  factory  "  has  the  meaning  assigned  to  it  in  the
Factories Act, 1948, with this modification that the limitation on the number
of workers working therein shall be dispensed with ;

(2) the expression " badli worker " means a worker who is provided with
a badli card and who is employed in a factory in place of another worker who
is temporarily absent and  whose name is borne on the  muster-roll of the
factory ;

(3) for the avoidance of doubt, it is hereby declared that the expression
" profession, calling or trade " shall include and shall be deemed always to
have  included  "employment",  and  that  expression  shall  be  construed
accordingly ;
(p) words and expressions used in this Act but not defined therein shall have
the meanings, respectively assigned to them in the Maharashtra Agricultural
Lands (Ceiling on Holdings) Act, 1961.

CHAPTER  II
REVIVAL OF DEBTS

3.   Notwithstanding anything contained in the Maharashtra Debt Relief
Ordinance, 1975, all debts of a debtor which stood discharged on the appointed
day under the provisions of that Ordinance shall, on the commencement of this
Act,  stand revived;  and accordingly,  the provisions  of the  said Ordinance  as
amended by this Act as herein provided shall operate in relation to all such
revived debts, as if those provisions were always amended and in operation on
the appointed day.

Revival of
all
discharged
debts  under
Ordinance,
VII  of  1975.

Mah.
XXVI
of
1961

Mah.
Ord.
VII of
1975.

4

Maharashtra Debt Relief Act, 1975

[1976 : Mah. III

Discharge of
certain  debts
and
consequences
thereof.

Prohibition
against
disposal  of
pledged
property  etc.,
and  penalty.

CHAPTER  III
LIQUIDATION OF CERTAIN DEBTS

4.   Notwithstanding anything contained in any other law for the time being
in force or in any contract or other instrument having force by virtue of any such
law and save as otherwise expressly provided in this Act, every debt of a worker
whose immovable property, if any, does not exceed twenty thousand rupees in
market value and every debt of any other debtor, outstanding on the appointed
day, including the amount of interest, if any, payble by a debtor shall be deemed
to be wholly discharged; and the consequences as hereinafter set forth shall,
with effect from the appointed day, ensue, namely :—

(a) no such debt due from a debtor on the appointed day shall be recoverable
from him or from or against any moveable or immovable property belonging to
him, nor shall any such property be liable to be attached and sold or proceeded
against in any manner in the execution of any decree or order relating to such
debt against him ;

(b) no Civil Court shall entertain any suit or proceeding against such debtor

for the recovery of any amount of such debt, including interest, if any :

Provided that, where a suit or proceeding is instituted jointly against such
debtor  or  any  other  person,  nothing  in  this  clause  shall  apply  to  the
maintainability  of  a  suit  or  proceeding  in  so  far  as  it  relates  to  such  other
person;

(c) all  suits  and  proceedings  (including  appeals,  revisions,  attachment  or
execution proceedings) pending on the appointed day for the recovery of any such
debt against such  debtor shall abate:

Provided that nothing in this clause shall apply to the sale of-

(i) any movable property, held and concluded before the appointed day ;
(ii) any immovable property, confirmed before such day ;

(d)

every debtor undergoing detention in a civil prison in execution of any
decree for money passed against him by a Civil Court in respect of any such debt
shall be released;

(e) every property pledged or mortgaged by such debtor shall stand released
in favour of such debtor, and the creditor shall be bound to return the same to
the debtor forthwith on the debtor making  an application in writing in that
behalf; and the creditor shall pass a receipt to the debtor of having received the
application. If the creditor refuses to pass a receipt, then the debtor may get
the application endorsed to that effect under the signature and date of any of
the officers referred to in section 6 or by any person authorised by them in this
behalf.

Explanation 1.—Nothing  in  this  section  shall  be  construed  to  entitle  any
such debtor to the refund of any part of a debt already repaid by him or recovery
from him before the appointed day.

Explanation 2.—For the purposes of this section, the expresion " debt of a
worker " includes a debt arising out of loans taken from more than one creditor.
5.   (1) No creditor shall after the appointed day, damage, destroy or tamper
with any property pledged or mortgaged with him or any document connected
therewith or part with or otherwise deal with the same except as provided in
this  Act

(2) Any person who contravenes the provisions of sub-section (1) shall, on
conviction, be punished with imprisonment for a term which may extend to three
years and with fine which may extend to one thousand rupees :

Provided that, in the absence of special and adequate reasons to the contrary
to be mentioned in the judgement of the Court, such imprisonment shall not be
less than six months, and fine shall not be less than two hundred rupees.

5

Power  of
certain
officers to
enforce
delivery  of
possession  of
property to
debtor.

Creditor may
disput
debetor’s
claim.

1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

6. Where a creditor fails to return the property to the debtor forthwith as
required  by  clause  (e)  of  section  4,  and  the  debtor  is  opposed  or  impeded  in
taking possession of the property, then the debtor may, subject to the provisions
of  section  7,  request  the  Commissioner  of  Police,  where  there  is  one,  and
elsewhere the District Magistrate or the Superintendent of Police, to enforce
delivery of possession of such property, the Commissioner of Police, the District
Magistrate or, as the case may be, the Superintendent of Police, shall take or
cause to be taken such steps or use or cause to be used such force as may be
reasonably necessary for securing the delivery of possession of the property to
the debtor.

Explanation.—For the purposes of this section—

(a) the Commissioner of Police includes an officer not below the rank of

an Inspector duly authorised by him;

(b)  the  District  Magistrate  includes  an  officer  not  below  the  rank  of  a

Tahsildar duly authorised by him ; and

(c) the Superintendent of Police includes an officer not below the rank of

a Sub-Inspector duly authorised by him.
7.

(1) If, in the course of implementing the provisions of section 4, a creditor
raises a question that the person who claims to be his debtor is not a marginal
farmer, a rural artisan, a rural labourer or, as the case may be, a worker, or
disputes the eligibility of the debtor for relief under this Act on any other ground
including the valuation of the immovable property, if any, of a worker, then the
creditor shall make an application in writing to an officer not below the rank
of an additional Tahasildar (or any officer in any department who in the opinion
of the District Magistrate is of equivalent rank) duly appointed by an order in
writing by the District Magistrate in this behalf (hereinafter referred to as " the
Authorised Officer ").

(2) The application shall state the facts of the case in brief, and the point raised
for the decision of the Authorised Officer; and shall be made within seven days from
the date of receipt of the application by the creditor under clause (e) of section 4,
or from the date of endorsement made on the application under that clause.

(3) No application under this section shall be entertained by the Authorised
Officer unless the creditor either deposits the pledged property or any document
evidencing such pledge or both or the value of such property. If the property for
any reason is not available with the creditor, in which case he shall make an
affidavit stating the reasons for which the property is not available.

(4) In all proceedings under this section, the Authorised Officer shall follow
the procedure provided for summary inquiries under the Maharashtra Land
 Revenue Code, 1966.

(5) For the purposes of this section, a person claiming to be a debtor shall
unless the  contrary is proved,  be  presumed by  the  Authorised Officer to  be a
debtor if he produces a certificate from any Special Executive Magistrate, talathi,
police patil, sarpanch of a village panchayat, or any person specified by the State
Government in an order from time to time made in this behalf that he is a debtor
as described in such certificate. The certificate shall be issued in such form as the
State Government may from time to time determine. The authority issuing the
certificate may not hear the creditor before issuing such certificate.

(6)  The  Authorised  Officer  shall  have  power  to  determine  all  questions  in
relation to, or connected with, the question or dispute raised by the creditor in his
application, and accordingly, he may determine the extent, or as the case may be,
the  value  of  the  property,  give  directions  for  the  safe  custody  of  the  pledged
property and may pass such orders as may be necessary in the circumstances of
each case for enforcing and implementing the provisions of this Act. It shall be
lawful for the Authorised Officer to take the assistance of the services of an expert
for determining the value of any immovable property; and the provisions of sub-
section (3) of section 9 for payment of honorarium shall apply to such payment.

Mah.
XLI  of
1966.

6

Maharashtra Debt Relief Act, 1975

[1976 : Mah. III

(7) Except  as  otherwise  provided  in  this  section,  no  question  shall  be
decided by the Authorised Officer under this section unless an opportunity has
been given to the creditor and the debtor to be heard.

(8)

The Authorised Officer shall decide the question as provided in this
section and his decision shall be final and conclusive and shall not be called in
question in any Civil Court. If the property or its value is in the possession of
the Authorised Officer and the decision is in favour of the debtor, it shall be
delivered to the debtor forthwith; and he shall make an endorsement on the
order that the property or value has been delivered to the debtor.

 8. (1) For enforcing the provisions of this Chapter, any officer referred to in
section 6 may enter and  search any place without any warrant where such
officer has reason to believe that the property of any debtor or any document
evidencing transactions relating to a loan given to any debtor is kept or concealed;
and may seize such property or documents and detain the same in his custody
for such period as he may think fit. If the property is not delivered to the debtor,
it shall be returned to the creditor from whose custody it was seized.

Power  of
entry  and
search.

(2) Except as provided in sub-section (2), the other provisions of the Code of
Criminal  Procedure,  1973,  shall,  so  far  as  may  be  applicable,  apply  to  such
search  or  seizure  as  they  apply  to  any  search  or  seizure  made  under  the
provisions of the said Code.

II of
1974.

Creditor
required  to
pay  value  of
pledged
property
in certain
cases.

9. (1) If the possession of the property pledged by a debtor cannot for any
reason (including lack of identity thereof) be delivered to him, then the creditor
shall pay to the debtor the value of such property. The value of the property shall
be the market value thereof, and identity of the property shall be determined
after due inquiry made in that behalf. If the creditor fails to pay the value, it
may be recoverable from him as an arrear of land revenue ; and on recovery of
the value, it shall be delivered to the debtor by whom such property was pledged.

(2) If there is difference of opinion between the creditor and the debtor on
the  question  of  value  of  the  property  or  its  identity,  the  question  shall  be
referred to the Authorised Officer for decision, and his decision on the question
shall be final.

(3) The value of the property may be determined with the assistance of the
services of an expert appointed in that behalf. The expert may be paid such
honorarium as  the State Government  or any officer not  below the rank  of a
Tahsildar  appointed  by  it  may  by  an  order  in  writing  from  time  to  time  in
relation to any area or areas determine.

10. Where an application presented to an Authorised Officer under section
7 is dismissed, and the Authorised Officer is satisfied that the application is
frivolous or vexatious, the Authorised Officer may by an order in  writing impose
on the creditor a fine of an amount which may extend to one hundred rupees.
If the creditor fails to pay the fine within thrity days from the date of receipt
of the order, it may be recovered from him as an arrear of land revenue.

11.

(1) No Civil Court shall have jurisdiction to settle, decide or deal with
any question which is by or under this Chapter required to be settled, decided
or dealt with by the Authorised Officer.

(2) No order of the State Government or of any officer or authority made

under this Chapter shall be questioned in any Court.

Power  of
Authorised
Officer to
impose  fine
for frivolous
vexations
applications.

Bar of
jurisdiction.

1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

12.

(1) If a suit instituted in any civil court involves any issues which are
required to be settled, decided or dealt with, by the Authorised Officer under
this  Act, the civil court shall stay the suit and refer such issues to the Authorised
Officer for determination.

(2) On receipt of such reference from the civil court, the Authorised Officer
shall deal with and decide such issues in accordance with the provisions of
this Chapter, and shall communicate his decision to the civil court, and such
court shall thereupon dispose of the suit in accordance with the procedure
applicable thereto.

7

Suits involv-
ing  issues
required  to
be  decided
under  this
Act.

13. Any custom or tradition or any agreement (whether made before or after
the appointed day), whereunder or by virtue of which a debtor or any member
of his family is required to work as labourer or otherwise for the creditor shall
be void and of no effect and shall never be enforceble in any civil court.

Agreement
for labour in
lieu  of  debt
to  become
void

CHAPTER  IV
MORATORIUM ON DEBTS OF WORKERS

14.

(1) Notwithstanding anything contained in any other law for the time
 being in force or in any contract or other instrument having force by virtue of
any such law, no debt of a worker who holds immovable property the market
value of which exceeds twenty thousand rupees but does not exceed forty thousand
rupees together with interest, if any, outstanding on the appointed day, shall
stand  discharged  or  shall  be  deemed  ever  to  have  stood  discharged  on  the
appointed day; and except as herein before provided, all such debts shall stand
revived as provided by section 3 and shall continue to exist until they are wholly
discharged ; but the payment or recovery of any such debts shall, subject to the
provisions of this section, nevertheless stand stayed 1[during the period this
Chapter remains in force ;] and it shall not be lawful for any creditor to recover
any  such  debt  or  any  part  thereof  or  any  interest  remaining  unpaid  on  the
appointed day during such period, and the provisions of Chapter V shall apply
to the execution of decrees in relation to such debt against any such workers as
they apply to the execution of decrees against small farmers.

(2) The amount of debt of a worker to be recovered 2[after the expiry of this
Chapter] shall not exceed the amount of the principal by more than one hundred
and fifty per cent of such amount.

(3) No interest shall accrue on any amount of the debt of a worker during the

period this Chapter is in operation.

Explanation.—For the purposes of this section, the expression " debt of a
worker " includes a debt arising out of loans taken from more than one creditor.

3[14A. Without prejudice to the operation of the other provisions of this Act,
this Chapter and Chapter V shall remain in force for the period commencing
on the 22nd August 1975 and 4[ending on, and inclusive of, the 21st August
1989] and for such further period thereafter, not exceeding two years as the
State Government may, from time to time, by notification in the Official Gazette,
specify and shall then expire. Section 7 of the Bombay General Clauses Act,
1904,  shall apply upon the expiry of these Chapters as if they had been repealed
by a Maharashtra Act.]

1 These  words were  substituted  for the  words  " during  the  period  this Act  remains  in force"  by

Mah.  18  of  1979,  s.  4  (a).

2. These  words  were  substituted  for  the  words  "  after  expiry  of  this  Act,", ibid.,  s.  4  (b),
3. Section  14A  was  inserted, ibid.,  s.  5.
4. These  words,  figures  and  letters  were  substituted  for  the  words,  figures  and  letters  "  ending

on,  and  inclusive  of,  the  21st  August  1985  "  by  Mah.  1  of  1988.,  s.  2.

Moratorium
on  debts  of
workers in
certain  cases.

Temporary
duration  of
Chapters  IV
and  V.

Bom
I of
1904.

H  765—2

8

Maharashtra Debt Relief Act, 1975

[1976 : Mah. III

Stay  of
proceedings
in  case  of
certain
decrees.

CHAPTER  V
MOROTORIUM ON EXECUTION OF DECREES AGAINST SMALL FARMERS

15.

(1) All proceedings in execution of any decree for money, or proceeding
for making final, any preliminary decree for foreclosure or sale, or proceedings
in execution of any final decree for sale, passed by a civil court on the basis of
a liability in relation to a debt incurred before the appointed day, in which the
judgement-debtor or defendant, as the case may be, is on the appointed day, a
small farmer, shall be stayed against such judgement-debtor of defendant, on
an application  made  by  him  in  this  behalf 1[during  the  period  this  Chapter
remains in force.]

(2) All  attachments  of  growing  crops,  agricultural  produce,  livestock  and
other moveable property of a perishable nature made in execution of decrees for
money the execution of which has been stayed under sub-section (1) and existing
on the date on which the stay order is passed shall be withdrawn.

(3) Any  judgement-debtor  or  defendant  who  is  a  small  farmer  may,
notwithstanding that no proceedings of the nature referred to in sub-section (i)
are pending against him, make an application for stay under that sub-section.
(4) Every stay order passed by a court under this section shall relate back
to the date of the application for stay filed by the judgement-debtor or defendant,
as the case may be, and the proceedings shall for all purposes of this Act be
deemed to have been stayed with effect from such date.

Release  of
persons
detention  in
civil prison.

16.   (1) On the appointed day, every small farmer undergoing detention in
a civil prison in execution of any decree for money passed by a civil court in
respect of his debt shall be released.

Relief  against
default  in
payment  of
instalments.

(2) No small farmer shall in any case be liable to arrest or detention in civil
prison in execution of any such decree as is referred to in sub-section (1) 2[during
the period this Chapter remains in force.]

17.    (1) Where a decree for payment of a decretal amount by instalments
contains  a  provision  that  in  default  of  one  or  more  instalments,  the  whole
amount  shall  become  due  at  once,  then,  notwithstanding  anything  in  such
provision, non-payment of any instalment falling due during the period in which
the proceedings in execution remain stayed 3[under this Chapter,] shall not be
deemed to be a default for the purposes of such provision.

(2) If the judgement-debtor pays the instalments so falling within a period
of twelve months 4[after the expiry of this Chapter,] then such instalment shall
be deemed to have been paid on the due date.

Computation
of time for
execution.

18.

In computing the period of twelve years prescribed by the Limitation
Act, 1963, the period during which proceedings are stayed 5[under this Chapter]
shall be excluded.

36  of
1963.

Payment  of
certain
decrees.

19.    Nothing contained in this Chapter shall—
(a) apply to a decree for money arising out of claims relating to trusts or for
maintenance or for profits in favour of a co-tenant or co-owner, or for mesne
profits  or  for  damages  for  tort,  or  for  contribution  between  co-tenants  of
agricultural lands ; or

1 These words were substituted for the words " during the period this Act remains in force " by

Mah.  18  of  1979,  s.  6.

2 These words were substituted for the words " during the period this Act remains in force. ibid., s. 7.

3 These  words  were  substituted  for  the  words  "  under  this  Act,", ibid.,  s.  8(a).

4 These  words  were  substituted  for  the  words  "  after  the  expiry  of  this  Act,", ibid.,  s.  8(b).

5 These  words  were  substituted  for  the  words  "  under  this  Act,", ibid.,  s  9.

1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

9

(b) apply  to  a  mortgage  decree  against  property  in  the  hands  of  a
subsequent  transferee  who  has  taken  the  transfer  in  order  to  satisfy  the
mortgage subject to the mortgage on the basis of which such decree has been
obtained ; or

(c) apply  to  the  decisions  or  orders  or  awards  given  or  made  by  the
Registrar,  persons  appointed  to  assist  the  Registrar,  nominees  or  boards  of
nominees  appointed  by  the  Registrar,  Liquidators,  Maharashtra  State
Co-operative Tribunal, Co-operative Courts, Co-operative Appellate Court or
other authorities under the Maharashtra Co-operative Societies Act, 1960, or
the rules made thereunder.

Mah.
XXIV
of
1961.

20. Every  transfer  of  property  made  by  a  small  farmer  against  whom
proceedings in execution have been stayed 1[under this Chapter] shall be  voidable
at the option of the creditor whose claim against such small farmers is defeated
or delayed.
21.

(1) On the expiry of this Chapter, no claim arising out of any proceedings
which  are  stayed  under  sub-section  (1)  of  section  15  or  out  of  any  decree
described  in  sub-section  (1)  of  that  section  in  respect  of  which  no  execution
proceedings have been taken shall exceed the amount of the principal by more
than one hundred fifty per cent of such amount.

(2) No interest shall accrue on any amount included in any claim referred

to in sub-section (1) during the period this Chapter is in operation.

Transfer  by
small  farmer
to  be
voidable.

Restriction
on  amount  of
claim  and
interest in
certain
cases.

2[CHAPTER  V-A
ADJUSTMENT OF DEBTS OF CERTAIN FARMERS AND WORKERS

22. The  provisions  of  this  Chapter  shall  come  into  force  on  the  date  of
commencement  of  the  Maharashtra  Debt  Relief  (Amendment)  Act,  1979
(hereinafter in this Chapter referred to as “ the date of commencement of this
Chapter ”) and shall have effect notwithstanding anything inconsistent therewith
contained in Chapters IV and V.

  Mah.
XVIII
of
1979.

In this Chapter, unless the context requires otherwise,—

23.
(a) " award " means an award made under sub-section (4) of section 27 or

under section 41 or 42 or as confirmed or modified by the Court in appeal;

Commence-
ment  of
Chapter
V-A.

Definitions.

(b) " Court " means—

IX of
1887.

(i) in Greater Bombay, the Court of Small Causes, Bombay,
(ii) in any area for which a Court of Small Causes is established under

the Provincial Small Cause Courts Act, 1887, such Court, and

(iii)  elsewhere,  the  Court  of  the  Civil  Judge  (Junior  Division)  having
jurisdiction in the area in which the debtor ordinarily resides or, if there is
no such Civil Court, the Court of the Civil Judge (Senior Division) having
ordinary jurisdiction;
(c) “ debt ” means any liability, in cash or kind, outstanding on the date of
commencement  of  this  Chapter  being  a  liability  arising  out  of  a  loan
(with interest if the loan is taken by a worker, and with or without interest,
in any other case), whether secured or unsecured, due from a debtor, whether
payable under a decree or order of any Court or otherwise ;

(d) “ debtor ”  means—

(i) a marginal farmer, small farmer, rural artisan or rural labourer as
defined in  section 2,  who owes any  debt and whose  total income  from all
sources exceeded two thousand and four hundred rupees, but did not exceed
six  thousand  rupees  during  the  year  immediately  preceding  the  date  of
commencement of this Chapter ;

1 These  words  were  substituted  for  the  words  “ under  this  Act ”  by  Mah.  18  of  1979,  s.  10.
2 Chapter  V-A  was  inserted, ibid.,  s.  11.

H  765—2a

10

Maharashtra Debt Relief Act, 1975

[1976 : Mah. III

(ii) a worker as defined in section 2, who owes any debt, and—

(A) whose total income from all sources exceeded, if living in an urban
area, six thousand rupees, but did not exceed eight thousand rupees, during
the year immediately preceding the date of commencement of this Chapter,
or exceeded, if living elsewhere, four thousand and eight hundred rupees, but
did not exceed seven thousand rupees, during that year ; or

(B) who holds immovable property the market value of which, on the date
of commencement of this Chapter, exceeds twenty thousand rupees, but does
not exceed forty thousand rupees ;
(iii) an  agriculturist,  who  owes  any  debt  and  who,  on  the  date  of
commencement of this Chapter, holds more than two hectares of unirrigated
land, but less than four hectares of such land, and cultivates such land personally;
or an agriculturist who owes any debt and who is, on the date of commencement
of this Chapter, cultivating as a tenant or a share cropper any land measuring
more than two hectares of unirrigated land, but less than four hectares of such
land, in both cases the land being situated in any drought-prone area; or

(iv) any other person, the payment of recovery of whose debts has been stayed
under  section  14  or  against  whom  any  proceedings  have  been  stayed  under
section 15 ;

(e)  “drought-prone  area”    means  any  area  or  areas,  which  the  State
Government, having regard to the distress caused therein by serious drought,
flood or other natural calamities, may, from time to time, by notification in
the Official Gazette, declare to be drought-prone areas, for the purpose of this
Chapter;

(f) “financing of crops”  means advancing of loans for the cultivation of
crops during the ploughing season or later, for ploughing, sowing, harrowing,
weeding, harvesting, purchase of seeds manure or bullocks or for such other
purposes and payable during such periods (not exceeding five years from the
date on which the loan is advanced) as may be prescribed ;

(g) “ prescribed ” means prescribed by rules made under this Chapter ;
(h)  “ resource  society ”  shall  have  the  meaning  assigned  to  it  in  the

Maharashtra  Co-operative Societies  Act,  1960 ;

(i) “ seasonal finance”  means advancing of loans for preparation of  lands
for  irrigation,  for  constructing  field  channels  or  bunds  to  save  land
from  erosion,  for  the  removal  of  silt  or  for  such  other  purposes  and
payable during such period as may be prescribed ;

(j)  words  and  expressions  used  in  this  Chapter,  but  not  defined  in
this  Chapter,  shall  have  the  meanings,  respectively,  assigned  to  them
in  the  other  Chapters  of  this  Act,  or  the  Code  of  Civil  Procedure,  1908,
as the case may be.
24.   (1) Any debtor or his creditor may, within a period of six months from
the date of commencement of this Chapter, make an application to the Court
for adjustment of the debts of the debtor.

(2) Every  application  under  this  section  shall  be  made  in  writing  in  the
prescribed form, and shall be signed, verified and presented, in the prescribed
manner, and shall contain such particulars and be accompanied by copies of
such documents as may be prescribed.

(3) Notwithstanding anything contained in sections 58 and 60, an application
under this section  shall also contain the  particulars of all debts  specified in
those sections due by the debtor.

Mah.
XXIV
of
1961.

V of
1908.

Application
for
adjustment
of  debts.

1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

11

(4) An application made under this section shall not be withdrawn without

the leave of the Court.

(5) Where  two  or  more  applications  are  made  under  this  section  by  or
against  the  same  debtor,  all  such  applications  shall  be  consolidated.  Where
such applications are presented by or against joint debtors, all such applications
shall be heard together.

25. (1) Notwithstanding the fact that no application had been made under

section 24,—

(a) every creditor, on being required to do so by notice in writing by any of
his debtors, shall, within two months from the date of receipt of such notice,
file before the Court a true and correct statement of all his claims under any
decree or otherwise against such debtor, and shall at the same time send a copy
thereof to such debtor, and

(b) every debtor, on being required to do so by notice in writing by any of his
creditors, shall, within two months from the date of receipt of such notice, file
before the Court a true and correct statement,—

(i) of all the debts owned by such debtor under any decree or otherwise to

such creditor or creditors ;

(ii) declaring whether he holds any land used for agricultural purposes,
and if so, the exact area and situation of the land so held, together with its
market  value  as  certified  in  a  corporation  area  by  an  engineer  of  the
corporation authorised by it in this behalf and elsewhere by the Tahsildar
having jurisdiction over the area where such land is situated, and whether
he  has  been  cultivating  the  land  personally  within  the  meaning  of  the
relevant tenancy law ;

(iii)  of  his  total  income  from  agriculture,  and  from  sources  other  than
agriculture, in the year immediately preceding the date of the notice, the
agricultural and non-agricultural income and the different sources of non-
agricultural income being shown separately ;

(iv) of his other immovable property, if any, together with its market value
as certified in a corporation area by an engineer of the corporation authorised
by it in this behalf and elsewhere by the Tahsildar having jurisdiction over
the area where such property is situated.
The debtor  shall at the same time send a copy of such statement to such

creditor.

(2) Notwithstanding anything contained in sub section (1), the Court may,
for sufficient cause, extend, from time to time, the period (but not exceeding six
months in the aggregate) within which the creditor or the debtor, as the case
may be, may file the statement under this section.

(3) Every creditor or debtor giving a notice under sub-section (1) shall at the

same time send a copy thereof to the Court.

(4) In  awarding  the costs  of  any  proceeding  in  respect of  any  application
made under section 24, the Court may, on being satisfied that the statement
required to be filed under sub-section (1) was, without sufficient cause, not filed
within  the  time  specified  therein,  or  within  the  period  extended  under  sub-
section (2), or incorrectly filed, direct the party in default to bear the whole or
any portion of such costs.

26.   No application shall lie under section 24 for adjustment of any debt
due  from a debtor to whom such debt has been transferred or assigned, after
the  date  of  commencement  of  this  Chapter,  by  any  person  who  is  not
himself a debtor.

Every
creditor and
debtor  to  file
true  and
correct
statement
before Court.

Assignee
from non-
debtor not
entitled  to
benefit  of
this  Chapter.

12

Maharashtra Debt Relief Act, 1975

[1976 : Mah. III

Aplication for
recording
settlement.

27. (1) If any debtor and all or any of his creditors arrive at a settlement in
respect of any debt due by the debtor to the creditor or creditors, the debtor or
any creditor may, within thirty days from the date of such settlement, make an
application to the Court for recording such settlement.

(2) Every  such  application  shall  be  in  the  prescribed  form  and  shall  be

signed and verified and presented in the prescribed manner.

(3) On receipt of such application, the Court shall, after giving notice in the
prescribed manner to the creditor or creditors or the debtor, as the case may be,
and after making such inquiry as it thinks fit, if it is satisfied that the settlement
arrived at is bona fide and voluntary, and is not made with intent to defeat or
delay any of the creditors of the debtor, and is in the interest of the debtor, record
such settlement and certify the same. Every such settlement so recorded and
certified  shall  be  binding  upon  the  parties  thereto,  and  shall  not,  save  as
otherwise hereinafter provided, be re-opened.

(4) After  the  Court  has  recorded  and  certified  a  settlement  under  sub-
section (3), the Court shall call upon the debtor to make a declaration whether
there  are  any  other  debts  due  by  the  debtor  which  are  not  included  in  the
settlement. If the debtor makes a declaration that there are no such debts the
Court shall make an inquiry and ascertain that there are no debts other than
those included in the settlement, and then make an award in terms of such
settlement.

(5) If the Court, on making an inquiry under sub-section (4), is satisfied that
there are other debts due from the debtor which are not included in the settlement,
the Court shall treat the application made under sub-section (1) as an application
for adjustment of debts under section 24.

28. On receipt of an application made under section 24, the Court shall,—
(a) give notice to the debtor (unless the debtor is himself an applicant) and
to every creditor (other than the creditor who is himself an applicant) whose
name and address are given in the application, and

(b) publish a general notice,

requiring  the debtor  and  all creditors  to  submit  a statement  of  debts in  the
prescribed form, within one month from the date of the service of the notice or
the publication of the general notice, whichever is later :

Provided that, if the Court is satisfied that the debtor or any creditor is for
good  and  sufficient  cause  unable  to  comply  with  the  notice  within  the  time
specified therein, it may extend the period for the submission of the statement.
29. Every debt due from a debtor in respect of which no application has been
made under section 24, before the date specified in that section, or in respect
of which no application for recording a  settlement is made under section 27
within the period specified in that section, or in respect of which an application
made to the Court is withdrawn under sub-section (3) of section 24 and no fresh
application is made under that section, and every debt due from such debtor in
respect of which a statement is not submitted to the Court by the creditor in
compliance with the provisions of section 28, shall be extinguished.

30.  (1) Every  debtor  by  or  against  whom  an  application  is  made  under
section  24  or  who  is  a  party  to  an  application  made  under  section  27,  shall
produce all books of accounts and shall give such inventories of his property and
such lists of his creditors and debtors and of the debts due from and to, him,
submit to such examination in respect of his property or the property of his
creditors, attend at such time before the Court, and generally do all such things
as may be required by the Court, or as may be prescribed.

Service of
notice on
debtor  and
creditor to
submit
statement  of
debt.

Debts  in
respect of
which no
application  for
adjustment  or
settlement  is
made  to  be
extinguished.

Duties  of
debtors  and
creditors.

1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

13

(2) It shall be the duty of every creditor to produce such books of accounts to
submit to such examination and to supply such information in respect of the
debt due to him by the debtor and the securities held by him, as may be required
by the Court, or as may be prescribed.

31.

(1) On  the  date  fixed  for  the  hearing  of  an  application  made  under
section 24, the Court shall decide the following points as preliminary issues,
that is to say :—

Preliminary
issues.

(a) whether the person for the adjustment of whose debts the application
has been made is a debtor within the meaning of clause (d) of section 23 ;
(b) whether the creditor or creditors are holding a valid decree against

such debtor ;

(c) whether  the  creditor  or  creditors  have  any  other  debts  against  the
debtor on the basis of valid documents and accounts maintained by him or
them in the regular course of business.

(2) If the Court finds that such person is not a debtor or that the creditor or
creditors  are  not  holding  a  valid  decree  or  have  no  other  debts  against  the
debtor, the Court shall dismiss the application forthwith.

(3) If the Court finds the person making an application under section 24, or
the person against whom an application is made under that section, to be a
debtor,  the  Court shall  proceed  to  take accounts  and  reduce  the debt  in  the
manner hereinafter provided.

32.

In an application for adjustment of debts, if the amount of the creditor's
claim  is  disputed,  the  Court  shall,  when  taking  accounts,  examine  both  the
creditor  and  the  debtor  as  witnesses,  unless  for  reasons  to  be  recorded,  the
Court deems it unnecessary so to do.

Examination
of creditor
and  debtor.

Mode of
taking
accounts.

33. Notwithstanding  any  decree  against  the  debtor  or  any  agreement
between  the  parties  or  the  persons,  if  any,  through  whom  they  claim,  as  to
allowing  compound  interest  or  setting  off  the  profits  of  mortgaged  property
without an account in lieu of interest, or otherwise determining the manner of
taking the account, and notwithstanding any statement or settlement of account,
or any contract purporting to close previous dealings and create a new obligation,
the Court shall inquire into the history and merits of the case and take account
between  the  parties  from  the  commencement  of  the  transactions  subsisting
between the parties and the persons, if any, through whom they claim, out of
which  the  claim  has  arisen  and  determine  the  amount  due  to  each  of  the
creditors at the date of the application made under section 24, according to the
following rules, namely :—

(a) Separate accounts of principal and interest shall be taken.
(b) In the account of principal, there shall be debited to the debtor only
such money as may, from time to time, have been actually received by him,
or on his account, from the creditor, and the price of goods, if any, sold to him
by the creditor.

(c) In the accounts of principal and interest, there shall be debited the
amounts, if any, respectively due for principal (including costs) and interest
under any decree or order passed by a competent Court in respect of any
debts :
Provided that, if such decree or order does not specify the amount of principal
and interest separately or does not contain any material for determining the
same, two-thirds and one-third of the amount awarded by such decree or order
shall, for the purposes of this clause, be deemed to be the amount awarded on
account of principal (including costs) and interest, respectively.

14

Maharashtra Debt Relief Act, 1975

[1976 : Mah. III

(d) In the accounts of interest, there shall be debited to the debtor simple
interest on the balance of principal for the time being outstanding at the rate
agreed upon between the parties, or at the rate allowed under any decree or
order passed between the parties, or at a rate not exceeding six per cent. per
annum, whichever is the lowest.

(e) Credit  shall  be  given  for  all  sums  paid  by  the  debtor  first  towards
outstanding  interest  and  the  balance,  if  any,  shall  be  credited  towards
repayment  of  the  principal.  The  principal  and  interest  outstanding  thus
calculated shall  be considered as  net outstanding debts  as on the  date of
application for the purpose of scaling down as hereinafter provided. In no
case the total repayments made shall exceed twice the principal.
34. Where any mortgaged property is in the possession of the mortgagee or
his tenants other than the mortgagor, and the Court is unable to determine
what profits have actually been received, it may fix a fair rent for such property
and charge to the mortgagee such rent as profits for the purposes of section 33 :
Provided that, if it be prove that in any year there was any suspension or
remission of rent or land revenue of such land under any law relating to land
revenue for the time being in force, an abatement of the whole or part of such
amount may be allowed for that year.

In certain
cases  rent
may  be
charged in
lieu of
profits.

Power  of
Court to
declare
certain
transfers  to
be  in  the
nature  of
mortgage.

35. Notwithstanding anything to the contrary contained in any law, custom
or contract,whenever it is alleged during the course of the hearing of an application
made under section 24 that any transfer of land, by a person whose debts are
being adjusted under this Chapter or any other person through whom he inherited
it,  was  a  transfer  in  the  nature  of  a  mortgage,  the  Court  shall  declare  the
transfer  to  be  a  mortgage,  if  the  Court  is  satisfied  that  the  circumstances
connected with that transfer showed it to be in the nature of a mortgage.

Provisions of
section  35
not
to  apply  to
certain
transfers  and
transferees.

Court's  duty
to  determine
particulars,
value,  etc.  of
property.

36. Nothing in section 35 shall apply to,—

(a) any transfer which has been finally adjudged to be a transfer other
than  a  mortgage  by  a  decree  of  a  Court,  tribunal  or  other  authority  of
competent jurisdiction; and

(b) any bona-fide transferee for value without notice of the real nature of
such transfer his representative, where such transferee or representative
holds under a registered deed executed before the date of commencement of
this  Chapter.
37. After taking accounts under section 33, the Court shall in the manner

hereinafter provided determine,—

(a) the particulars of the property belonging to the debtor ;
(b) the value of the said property;
(c) the particulars of any encumbrances on the said property ;
(d) in the case of a debtor who is a marginal farmer, small farmer or other
agriculturist,  the  average  annual  gross  value  of  the  agricultural  produce
during the five years immediately preceding the date of application, in the
prescribed manner ;

(e) in the case of a debtor, who is a worker, rural artisan or rural labourer,
the average gross annual income during the five years immediately preceding
the date of application, in the prescribed manner ;

(f) the paying capacity of the debtor.

Fraudulent
alienations  or
encumbrances
void.

38.

(1) If in the course of the hearing of an application made under section
24, the Court finds that the debtor has made an alienation of property or created
any encumbrance thereon with intent to defeat or delay any of his creditors the
Court shall, by notice, summon the debtor and the person in whose favour the
alienation is made or encumbrance is created, to appear before it on a day to
be specified in the notice.

1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

15

(2) On the day specified in the notice or such other day to which the hearing
may be adjourned, the Court shall hear the parties and record evidence as may
be  produced.  If  the  Court  is  satisfied  that  the  alienation  was  made  or  the
encumbrance was created with intent to defeat or delay any of the creditors of
the debtor, the Court shall declare the alienation or encumbrance to be void.

(3) Nothing in this section shall impair the rights of an alienee or the holder

of an encumbrance in good faith and for valuable consideration.

39. The paying capacity of a debtor shall, for the purposes of this Chapter,
in the case of a marginal or small farmer or other agriculturist be deemed to
be 20 per cent.of the average annual gross value of his agricultural produce for
the five years immediately preceding the date of application, and in the case
of a worker, rural artisan or rural labourer 20 per cent. of his average gross
annual income during such period.

Paying
capacity  of
debtor.

40. Notwithstanding anything to the contrary contained in any law, custom,
contract, award or decree of a Court, or other competent authority, the amounts
found due under section 33 from a debtor shall be scaled down in the manner
hereinafter provided—

Debts payable
by  debtor  to
be  scaled
down.

(i) in  the  case  of  a  debtor  who  is  a  marginal  or  small  farmer  or  other
agriculturist, or rural artisan or rural labourer, the total amount of debt,
whether  secured  or  unsecured,  found  due  after  taking  accounts,  shall  be
scaled down to 10 per cent. of such debt ;

(ii) in case of a debtor who is a worker, the total amount of debt, whether
secured or unsecured, found due after taking accounts, shall be scaled down
to 50 per cent. of such debt ;

(iii) notwithstanding anything contained in clauses (i) and (ii) the debts
to be scaled down shall not exceed the amount which a debtor would be able
to repay within a period of seven years based on his repaying capacity worked
out in the manner provided in section 39.

41.

(1) After determining the amount of the debts due to the creditors in
accordance with the provisions of section 40, the Court shall make an award.

Award.

(2) After the Court passes an award in terms of the amounts so scaled down,
the scaled down amount specified in the award shall be the amount due by the
debtor in respect of his debts, and any amount remaining due in excess of such
amount shall stand extinguished.

(3) The award shall be in the prescribed form and shall be drawn up subject

to the following provision :—

(a) the amount of the secured debts scaled down shall be charged on the

properties on which they may have been secured ;

(b) in fixing the priority in which debts shall be paid, the following order

shall be followed, namely :—

(i) debts due to Government, which are charged on the immovable property
belonging  to  the  debtor  or  which  are  recoverable  as  the  current  year’s  land
revenue;

(ii) debts  due  to  local  authorities,  which  are  charged  on  the  immovable
property belonging to the debtor or which are recoverable as the current year’s
dues ;

(iii) loans  given  by  resource  societies,  secured  debts  due  to  co-operative
societies, not being resources societies, and debts due to any of the institutions
referred to in clause (c) of section 60 ;

(G.C.P.)  H  765—3  (3345—9-2012)

16

Maharashtra Debt Relief Act, 1975

[1976 : Mah. III

(iv) secured debts in order of priority;
(v) unsecured debts :
Provided that, in the case of unsecured debts they shall be paid pro rata ;
(c) in  the  case  of  a  debtor  who  is  a  marginal  or  small  farmer  or  other
agriculturist,  the  total  annual  instalments  in  which  the  debts  shall  be  paid
shall  not  exceed  seven,  and  in  the  case  of  a  debtor  who  is  a  worker,  rural
artisan  or  rural  labourer,  the  total  monthly  instalments  shall  not  exceed
eighty-four :

Provided that, in fixing the amount of instalments in which the debts shall
be paid, the Court shall ascertain the net annual income of the debtor, and the
annual instalments or twelve monthly instalments during any year payable by
the debtor shall not exceed his net annual income.

Explanation.—For the purpose of this clause, the “ net annual income ” of the

debtor means the balance of his annual income after deducting—

(i)  such  sum  as  may  be  considered  necessary  for  the  payment  of  the
liability, if any, imposed on the debtor under a decree or order for maintenance
passed by a competent Court,

(ii) such sum as may be considered necessary for the maintenance of the
debtor  and  his  dependents,  that  is  to  say,  his  spouse  and  his  children,
whether married or unmarried, his parents, sisters and daughters-in-law, if
such  persons  (other  then  the  spouse)  are  dependent  on  him  for  their
maintenance, and

(iii) the sum required by the debtor to pay the assessment and taxes in
respect of the current year to Government and to the local authorities and
to pay off loans borrowed for the purpose of the financing of crops or seasonal
finance under any law ;
(d) the Court may pass an order for the delivery of possession of any property

notwithstanding any law or contract to the contrary ;

(e) the rate of interest shall not exceed six per cent. per annum or such less
rate  as  may  be  notified  by  the  State  Government  or  the  rate  agreed  upon
between the parties when the debt was originally incurred or the rate allowed
by the decree in respect of such debt, whichever is the lowest.

Ex-parte
proceeding, if
any  party
does
not  appear.

42.

(1) Notwithstanding that the person, for the adjustment of whose debts
an application has been made under section 24 or any of his creditors does not
appear on the date fixed for the hearing of the application or on any date to which
the  hearing  may  be  adjourned,  the  Court  shall  proceed ex-parte  to  hear  the
application, decide the preliminary issues and, if necessary, make the award,
on the evidence available.

(2) When an  application made  under section  24 is  heard and  disposed of
ex-parte under  sub-section (1),  the decision  on the  preliminary  issues or  the
award shall not, except for sufficient reasons, be re-opened merely on the ground
that any of the parties thereto did not appear at the hearing.

Award  to  be
registered,
etc.

43.   (1) Every award made under this Chapter, if it is in respect of debts
charged  on  the  properties  of  the  debtor,  shall  ,  on  payment  of  the  court-fee
payable under section 51, be registered in the manner hereinafter provided.

(2) The court-fee on the award shall be paid by the party ordered by the Court

to bear the costs :

Provided that, any creditor who is not ordered to bear the costs may pay such
court-fee. Such creditor shall be entitled to recover the amount of court-fee paid
by  him from  the debtor,  with the  first instalment  payable to  him under  the
award.

1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

17

(3) In all registration offices, a book called “ Register of Debt Adjustment
Awards ”, and an Index relating thereto, shall be kept. The book and index shall
be kept in such form and shall contain such particulars as the State Government
may by general or special order, specify.

(4) Where an award is required to be registered under this section, it shall
be the duty of the Court making the award to send to the Sub-Registrar of the
sub-district in which the property which is the subject-matter of the award or
any part of such property is situated, or if there is no Sub-Registrar for the area,
to the Registrar of the district in which the property or its part is situate, a
certified copy of the award, after the court-fee has been paid thereon in accordance
with the provisions of section 51, together with a memorandum containing such
particulars as the State Government may prescribe.

(5) If a party files an appeal against an award under section 49 and if such
award has been registered under this section, it shall be the duty of the Court
in which the appeal is filed to send to the Sub-Registrar or the Registrar, as
the case may be, to whom a certified copy of the award has been sent under
sub-section (4), a notice regarding the institution of the appeal.

(6) After the expiry of the period provided for an appeal against an award,
if no appeal is filed, or if an appeal is filed after the disposal of the said appeal
the Sub-Registrar or the Registrar, as the case may be, shall register the award
in the Register of Debt Adjustment Awards and shall also enter particulars in
the Index kept under sub-section (3).

(7) Any person acquiring any property or any part of, or any share or interest
in, the property of debtor, for the adjustment of whose debts an award has been
made and registered, shall be deemed to have notice of the award as from the
date of its registration under this section.

XVI of
1908.

(8) Except as herein provided, the provisions of the Registration Act, 1908,

shall, mutatis mutandis, apply to the registration of awards.

44.

(1) If the debtor makes a default in the payment of any instalments
due  under the award to any creditor, such creditor may apply in the prescribed
form to the Court for execution of the award.

Execution of
the  award.

(2) If the Court, on receipt of such application, is satisfied that the debtor
has made a default in the payment of the instalment, the Court shall transfer
the  award  for  execution  to  the  Collector;  and  thereupon,  the  Collector  shall
recover the amount of the instalment from the debtor as arrears of land revenue.

(3) If the Court has passed an order for the delivery of possession of any
property under clause (d) of sub-section (3) of section 41, such order shall, on
such application, be executed by the Court as if it were a decree passed by it.

Mah.
XLI  of
1966.

45. Whenever from any cause the payment of the land revenue payable to
the State Government is suspended or remitted, partly or wholly, under the
Maharashtra Land Revenue Code, 1966, if the debtor is a marginal or small
farmer or other agriculturist, the payment of the whole of the instalment due
for that year and the full amount of the instalment due for each subsequent year
under the award made in his case shall be postponed for one year.

46. Notwithstanding  anything  to  the  contrary  contained  in  any  law  or
contract, but subject to the provisions of sections 47 and 56, no alienation of any
property belonging to a debtor, made by him before all his debts are discharged,
shall be valid except with the previous sanction of the Court, if the debtor is a
party to any proceedings under this Chapter, or to an award registered under
this  Chapter.

Postponement
of  payment
of  instalment
in  case  of
remissions,
etc.

No alienation
by  debtor
before discharge
of debts valid.

H  765—3a

18

Court  may
order  sale  of
debtor's
property in
liquidation  of
his  debt.

Legal
practitioners
excluded
from
appearance.

Maharashtra Debt Relief Act, 1975

[1976 : Mah. III

47.

If the Court, or the Court hearing an appeal against the award, is at
any  time  satisfied  that  it  is  in  the  interest  of  a  debtor  that  any  part  of  his
property should be sold in liquidation of his debt or part thereof, such Court may
permit the debtor to sell such part of the property for such purpose within a
specified period. If the debtor fails so to sell it, such Court may order an officer
of the Court to sell the same. The property ordered to be sold under this section
shall be sold by such officer in the prescribed manner.

48. Except in proceedings under sections 35, 38 and 44, no legal practitioner
shall be entitled to appear on behalf of any party in any proceeding before the
Court or the Court in appeal under this Chapter :

Provided that, the Court, or the Court in appeal, in the interest of justice for
reasons to be recorded in writing, may allow the parties to be represented at
their own cost by a legal practitioner :

Provided further that, no fees shall be allowed as part of the costs for the

appearance of any legal practitioner in any proceeding under this Chapter :

Provided also that, if any officer of Government is appointed or declared by
a competent Court or is authorised, under any law for the time being in force,
as a  guardian, administrator or  manager of the property  of a person  who is
under a legal disability or is incompetent or unable to manage or to act, such
officer shall be entitled to appear through a representative authorised by him
in  writing in  this behalf  in any  proceeding  before the  Court or  the Court  in
appeal. Such representative may also submit any application, and otherwise
act on behalf of the officer in any such proceedings.

Appeals.

49. Notwithstanding anything contained in any other law,—

(1) an appeal shall lie—

(i) from every order made under sub-section (3) or (4) of section 27 ;

(ii) from every decision or order given or made under section 31;

(iii) from every declaration or order made under section 35 ;

(iv) from every declaration or order made under section 38 ;

(v) from every award made under section 41;

(vi) from every decision or order given or made under section 42, subject

to the provisions of that section ;

(2) an appeal from the Court shall lie—

(a) in Greater Bombay, from any order, decision, declaration or award
made  or given  by the  Court of  Small  Causes, Bombay,  to a  Bench of  two
Judges of the said Court, which shall not include the Judge who made or gave
such order, decision, declaration or award ;

(b) elsewhere,  from  any  order,  decision, declaration  or  award  made  or
given  by  the  Judge  of  the  Court  of  Small  Causes  established  under  the
Provincial Small Cause Courts Act, 1887 or by the Court of any Civil Judge,
to the District Court;

IX of
1887.

(3) every appeal under clause (1) shall be made within sixty days from the
date of order, decision, declaration or award, as the case may be, provided that,
in computing the period of limitation prescribed by this clause, the provisions
contained in sections 4, 5 and 12 of the Limitation Act, 1963, shall, as far as
may be, apply ;

(4) no  second  appeal  shall  lie  against  any  order,  decision,  declaration  or

XXX-
VI of
1963.

award of the Court under this Chapter.

1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

19

Power  of
District  Judge
to refer for
disposal
certain  appeals
to  Assistant
Judge
empowered  to
hear  appeals.

Court-fees .

50.   A District Judge may refer for disposal any appeal filed under section
49 to an Assistant Judge or a Civil Judge invested with power to hear appeals
under section 27 of the Bombay Civil Courts Act, 1869.

Bom.
XXX-
VI of
1959.

51.   (1) Notwithstanding anything contained in the Bombay Court-fees Act,
1959, the court-fees payable in respect of proceeding under this Chapter shall
be at the following rates :—

(i) on an application under sub-section (1) section 24 or section 27 or on

an award under sub-section (4) of section 27-Re. 1 ;

(ii) on an award other than an award specified in clause (i)- Re. 1 for every
hundred rupees, or part thereof, of the amount of the award, subject to a
maximum of Rs. 50 ;

(iii) on an appeal against an order of the Court under sub-section (3) or
(4) of section 27 or against any decision or order given or made under section
31-Rs.  2 ;

(iv) on an appeal other than an appeal specified in clause (iii)— Re. 1 for
every hundred rupees, or part thereof, of the amount involved, subject to a
maximum of Rs. 50.

(2) Notwithstanding anything to the contary contained in any law, the court-
fee payable in respect of proceedings under this Chapter shall be a first charge
on the property of the party ordered to pay the costs and shall be recoverable
in such manner as may be prescribed.

V of
1908.

V of
1908.

52. Any notice required to be served under this Chapter shall be served in
the manner provided in the Code of Civil Procedure, 1908; and when rules are
made in that behalf, in such manner as may be prescribed.

Notice how
served.

53. Save as otherwise expressly provided in this Chapter, the provisions of
the  Code  of  Civil  Procedure,  1908,  shall  apply  to  all  proceedings  under  this
Chapter :

Provided that, the Court may, in a proper case and on such terms as may
appear to it to be just, exercise its powers to add or strike out parties under rule
10 of Order I in the First Schedule to the said Code in any proceeding pending
before it under section 24 or 35 notwithstanding the fact that in the former case
such addition, or striking out of parties is to be made after the date specified
in section 24 has elapsed.

Provisions of
Civil
Procedure
Code  to
apply  to
proceedings.

54. Except  as  otherwise  provided  by  this  Chapter  and  notwithstanding
anything contained in any other law, no Civil Court shall entertain or proceed
with any suit or proceeding in respect of–

Bar of civil
suits  or
proceedings.

(a) any matter pending before the Court under this Chapter ;
(b) the validity of any procedure or the legality of any award, declaration,

decision or order of the Court under this Chapter ; and

(c) the recovery of any debt made payable under such award.

55.

In computing the period of limitation for the institution of any suit or
proceeding in respect of any debt due from any person who is held not to be a
debtor by the Court or the Court in appeal or an application relating to which
has been dismissed by the Court or the Court in appeal, the period during which
the  proceedings in  respect of  such debt  were prosecuted  under this  Chapter
before the Court or the Court in appeal shall be excluded.

Period  of
proceeding
before courts
under  this
Chapter  to
be  excluded.

20

Alienation of
standing
crop, etc.
before
repayment  of
loan
prohibited.

Maharashtra Debt Relief Act, 1975

[1976 : Mah. III

56.

(1) No person, who is or was a party to any proceedings or award under
this  Chapter  and  who  is  indebted  to  a  resource  society  or  any  institution
referred to in clause (c) of section 60, on account of any loan advanced to him
for  the  financing  of  crops  or  seasonal  finance,  shall  hypothecate  or  sell  the
standing crops or the produce of his land, without the previous permission of
the  society or,  as the  case may  be,  the institution,  until such  loan has  been
repaid in full.

(2) Any person who hypothecates or sells the standing crops or the produce
of his land in contravention of sub-section (i), shall, on conviction, be punished
with imprisonment for a term which may extend to six months or with fine which
may extend to five hundred rupees.

(3) No criminal court shall take cognizance of any offence under this section,
except on a complaint in writing of the court before which the proceedings were
held, or which made the award.

Power  to
make  rules.

57.

(1) The power to make all rules under this Chapter shall be exercisable

by the state Government by notification in the Official Gazette.

(2) Without prejudice to any power to make rules contained elsewhere in this
Chapter, the State Government may make rules consistent with this Chapter
generally to carry out the purposes of this Chapter.

(3) All rules made under this Chapter shall be subject to the condition of

previous publication.

(4) Every rule made under this Chapter shall be laid as soon as may be after
it is made before each House of the State Legislature while it is in session for
a total period of thrity days, which may be comprised in one session or in two
successive sessions, and if, before the expiry of the session immediately following,
both Houses agree in making any modification in the rule or both Houses agree
that the rule should not be made, and notify such decision in the Official Gazette,
the rule shall from the date of publication of such notification have effect only
in such modified from or be of no effect, as the case may be; so however that any
such modification or annulment shall be without prejudice to the validity of
anything previously done or omitted to be done under that rule.

Further
exemptions.

58. Without  prejudice  to  the  provisions  of  section  60,  nothing  in  this

Chapter shall affect the debts and liabilities of any debtor due to,—

(a) any other Corporation (including a company) owned or controlled by

the  State ;

(b) a co-operative society registered or deemed to be registered under the

Maharashtra  Co-operative Societies  Act,  1960.

Debts  adjusted
under any  other
laws  not  to  be
further  adjusted
under  this
Chapter.

59.   Where the debts of any person are adjusted or scaled down under the
Maharashtra  (Vidarbha  Region)  Agricultural  Debtors  Relief  Act,  1969,
Hyderabad Agricultural Debtors' Relief Act, 1956, or any other law for the time
being in force, such person shall not be entitled to any further adjustment or
scaling down of those debts under this Chapter.

Mah.
XXIV
of
1961.

Mah.
XXII
of
1969.

Hyd.
XVI of
1956.

1976 : Mah. III ]

Maharashtra Debt Relief Act, 1975

21

CHAPTER  VI

EXEMPTIONS AND REPEALS

1[60.] Without prejudice to the provisions of section 19, nothing in this Act
shall affect the debts and other liabilities of any debtor or small farmer falling
under any of the following matters, namely :—

Exemptions.

(a) debts due to any Government ;

(b) debts due to any local authority including amount due by way of tax,

10  of
1949.

23  of
1955.

38  of
1959.

5  of
1970.

10  of
1963.

Bom.
XXIX
of
1950.

Mah.
Ord.
VII of
1975.

cess or fee ;

(c) debts due to —

(i) (a) a banking company as defined in the Banking Regulation Act,

1949 ;

(b) the  State  Bank  of  India  consituted  under  the  State  Bank  of

India Act,  1955;

(c) a  subsidiary  bank  as  defined  in  the  State  Bank  of  India

(Subsidiary  Banks) Act,  1959  ;

(d) a  corresponding  new  bank  constituted  under  the  Banking

Companies (Acquisition and Transfer of Undertakings) Act, 1970 ;

(e)  the  Agricultural  Refinance  Corporation  constituted  under  the

Agricultural Refinance Corporation Act, 1963 ; and

(ii)  any  other  banking,  financial  or  any  institution  which  the  State
Government may, by notification in the Official Gazette, specify in this behalf;

(d) any sum recoverable by way of arrear of land revenue ;

(e) any advance of loan given to a debtor by his employer for any specific
purpose, such as, for festival, medical treatment, meeting any educational,
marriage or funeral expenses and the like ;

(f) any sum due in favour of public trust registered under the Bombay

Public Trusts Act, 1950 ;

(g) any claim arising out of contract or transaction not connected with

money lending.

1[61.] (1) The Maharashtra Debt Relief Ordinance, 1975, is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken (including
any appointment made or any order or notification issued) under the Ordinance
so repealed shall, unless inconsistent with the provisions of this Act, be deemed
to  have  been  done,  taken,  made  or  issued,  as  the  case  may  be,  under  the
corresponding provisions of this Act.

Repeal  of
Mah.  Ord.  VII
of  1975  and
savings.

1 Sections  22  and  23  were  re-numbered  as  sections  60  and  61  respectively,  by  Mah.  18  of

1979 s.  12.

PRINTED AT THE GOVERNMENT CENTRAL PRESS, MUMBAI

(iv)

Maharashtra  Debt Relief  Act,  1975

[1976  :  Mah.  III

Maharashtra Government Publication
can be obtained from—

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GOVERNMENT PRINTING, STATIONERY AND PUBLICATION
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