1. By an order of the Hon'ble the Chief Justice dated 5-2-1988 the matter was referred to the Division Bench. It reads as follows:
"Prima facie there appears to be conflict between the two judgments in (1) ILR 1984 (2) Karnataka 914; and (2) Unreported decision in CRP 3750/1981 decided on 16-2-1984 : (AIR 1986 Kant 211). Admitted. Referred to be decided by a Division Bench. "

2. In Economic Chit Funds Private Limited v. P. S. Krishnoji Rao, C. R. P. 3750/1981 D/-16-2-1984 : AIR 1986 Kant 211. Nesargi, J. (as he then was) had an occasion to consider as to whether the Chit transactions is a transaction of creditor and debtor and whether the decretal amount does not amount to 'debt' within the meaning of the word 'debt' as defined in S. 2(5) of the Karnataka Debt Relief Act, 1980 ('Act' for short). The learned Judge, relying on the decision of the Full Bench of Kerala High Court in P. K. Achuthan v. State Bank of Travancore, AIR 1975 Kerala 47 has held that chit fund transaction is also a debt and brings about the relationship of a creditor and debtor and as such the person who takes advance from the fund was a debtor within the meaning of the Act.

3. In Shivakumar v. M/s. Sudarshan Trading Co. and Another, ILR 1984 (2) Karnataka 914. Kulkarni, J. (as he then was) following the ratio of the decision of our High Court in 1972 (2) Kar LJ 476 and 1980 (1) Kar LJ 345 held: that in the case of chit fund transaction at the time when the amount is given, it would not be an advance of a debt and as such a transaction which did not assume the character of debt at all, when it took place cannot become a debt subsequently. The learned Judge, held that use of the word "advanced" in S. 4 of the Act, makes it clear that in order that the act is attracted it must be a debt at the time when the amount was advanced and that (if) it is not so, then it cannot be considered to be a debt at all. Therefore, the learned Judge held that in substance the result of a chit fund transaction will not partake the character of debt within the meaning of the Karnataka Debt Relief Act, 1976. In this decision there is no reference to earlier decision of the learned Judge in Krishnoji Rao's case referred to above. Perhaps, it was not brought to the notice of the learned Judge, who rendered the later decision. However, it is found that in these two judgments there is conflict of opinion. Hence the matter is referred to the Division Bench.

4. Before we proceed to consider the question of law viz., whether the chit fund transaction which resulted in a civil court decree is a 'debt' within the meaning of the Act, it is necessary to set out briefly the relevant facts.

5. The petitioner is the judgment - debtor and the respondent M/s. Sudarshan Trading Co., is the decree - holder. The decree - holder is a company registered under the Companies Act. Execution Case No. 50 of 1977 filed by the respondent decree - holder against the petitioner and two other judgment - debtors was for enforcement of a decree passed in O. S. 357 of 1977 against the judgment - debtors viz., petitioners. They filed an objection and resisted the execution petition contending that the Karnataka Debt Relief Act, applied to their case, they being 'debtors' within the meaning of the Act and therefore their liability stood discharged and consequently, the other judgment - debtors were also absolved of the liability. The executing court held an enquiry and by its order dated 3-11-1978 closed the execution petition holding that the Karnataka Debt Relief Act, applied to the case and the judgment - debtor was absolved from the liability by the force of the provisions of the Act.

6. The said order was questioned by the respondent decree - holder in C. R. P. 531 of 1979 before this court and this court by its order dated 3-9-1984 made on the same date, relying on the decision in the case of Shivakumar set aside the order of the executing court holding that the Karnataka Debt Relief Act, 1976, does not appl