FINANCE

AGRICULTURAL DEBTORS RELIEF ACT.

Agriculturists always resented the exploitative practices followed by money-lenders and their resentment found a violent expression as far back as 1875 in what came to be known as the Deccan Riots. It was these riots which led to the passing of the Deccan Agriculturists Relief Act of 1879. This Act which was intended to reduce the aggregate indebtedness of the farmers and restrict the transfer of land from cultivators to money-lenders was subsequently repealed and replaced by the Bombay Agricultural Debtors' Relief Act (XXVIII) of 1939. The scheme of this Act envisaged a compulsory scaling down of debts and subsequent arrangements for the repayment of the adjusted amounts in manageable instalments.

Under the Deccan Agriculturists' Relief Act, 1879, the term "Agriculturist" meant not only genuine agriculturists of the cultivating class but also pseudo-agriculturists who merely owned land but did not cultivate it by themselves. As against this, the term " debtor " as defined in the Bombay Agricultural Debtors' Relief Act was more definite. Under this Act, the term "debtor" meant an indebted person who is a holder of land and who is cultivating land personally. Further the income of the debtor from sources other than agriculture should not exceed 33 per cent. of his total annual income or Rs. 500 whichever is greater. Income from land got cultivated by tenants is regarded as non-agricultural income under the Act.

The Act was amended in 1945 and again in 1947 with a view to consolidating the law for the relief of agricultural debtors and for remedying certain other defects which the working of the Act had brought to light. The Debt Adjustment Boards were dissolved and the administration of the Act was entrusted to civil courts. Subsequent minor amendments were made in 1948 and 1950.

Individual debts exceeding Rs. 15,000 were kept outside the purview of this Act. According to the provisions of clause (iv) of sub-section (2) of section 32, the rate of interest in case of awards should not exceed six per cent., per annum or such less rate as may be notified in that behalf 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 debts, whichever is the lowest. Government fixed (in 1948-49) four per cent. per annum as the rate of interest for purposes of awards made under section 32(2) of the Act. In case of awards passed in favour of Land Mortgage Banks under section 33, the Banks are entitled to recover the amount due to them from the debtor together with interest at such rate as the State Government may notify. Six per cent. per annum was the rate fixed by Government for the purposes of awards made under section 33(3). However, this was raised to 7¼ per cent. in 1953-54 by a Government Notification, dated 12th October, 1953. The Act, together with the amendments, was made applicable to Kolhapur district with effect from 1st May, 1949, after its integration with the then Bombay State.

The number of applications received by the civil courts till 30th June, 1950, was 66,944. Of these, 694 applications were later withdrawn-26 by the debtors and 668 by the creditors. Only six applications could be disposed of during the first year. The speed was, however, increased in the years that followed as indicated in the table given below:-

TABLE No. 3.

STATEMENT SHOWING THE RESULTS ACHIEVED BY THE VARIOUS CIVIL COURTS IN THE KOLHAPUR DISTRICT DURING THE PERIOD FROM 1ST MAY 1949 TO 30TH JUNE 1955 IN REGARD TO BOMBAY AGRICULTURAL DEBTORS' RELIEF ACT, 1947. [Explanations to some of the headings in the above table:

continued

Preliminary Issues.-These are whether the person is a debtor within the meaning of the Act, and whether the amount of debt involved is less than Rs. 15,000.

Awards taken by Land Mortgage Banks.-In case the adjusted debt of a debtor exceeds half the value of his immovable property and his creditors agree to scale it down further and the debtor fails to pay the debts even then, the court will send a scheme to a local land mortgage bank embodying the terms of the award for its acceptance and payment to the creditors. The bank is entitled to recover the amount specified in the award from the adjusted debtor in such instalments as the court may fix.]

The table given above shows that the total number of applications disposed of, by various civil courts since 1st May, 1949, to 30th June, 1956, was 82,189 and the total amount involved in these applications was Rs. 5,71,10,937. During the same period debts were reduced by Rs. 77,44,446.

Effects of debt relief and money-lending legislation on the credit machinery.

Debt relief and money-lending legislation was viewed with alarm by private money-lenders. They took a gloomy view of their risks and hesitated in providing loan facilities to agriculturists. As a result some agriculturists found it difficult to secure credit facilities. Particularly affected were those debtors whose cases were either pending before the courts or adjusted by the awards of the courts according to the provisions of the Act. The very process of adjustment involved so many restrictions on the alienability of their property that no lending agencies were favourably disposed towards them. Meanwhile, they had to raise crops, and before that raise money for the crops. [Vide " All India Rural Credit Survey Committee Report, Volume II, 1954, page 124."]

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