Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1964 Supreme(SC) 207

SUPREME COURT OF INDIA
RAGHUBAR DAYAL, J.R. MUDHOLKAR AND S.M. SIKRI, JJ.
Gamini Krishnayya and others, Appellants
Versus
Guraza Seshachalam and others, Respondents.
Civil Appeal No. 618 of 1961.
Advocates appeared
Mr. K. Bhimasankaram, Senior Advocate (M/s. C. M. Rao and K. R. Sharma, Advocate with him), for Appellants; M/s. A. V. V. Nair and P. Ram Reddy, Advocates, for Respondents Nos. 2 and 4.

Advocates:
A.V.Velayudhan Nair, C.Mohan Rao, K.Bhimasankaran, K.R.SHARMA, P.RAM REDDY

A debt incurred after the commencement of the Madras Agriculturists Relief Act, 1938, but in renewal of a debt incurred prior to the commencement of the Act, is entitled to the benefit of S. 9 of the Act.

Headnote:
Madras Agriculturists Relief Act, 1938 - S. 9 - Applicability - Debt incurred after the commencement of the Act - Whether can be scaled down under S. 9 - Held, yes - If the original indebtedness commenced before the coming into force of the Act either S. 8 or S. 9 will apply.
Fact of the Case:

The plaintiff, an agriculturist, executed a promissory note in 1938 in renewal of a debt incurred in 1934. The defendants, who were the original creditors, deposited a sum of money in court in a partition suit, claiming that it was the amount due to them on the promissory note, after scaling down the interest as permitted by S. 9(1) of the Madras Agriculturists Relief Act, 1938 (the Act). The plaintiff withdrew the amount but later instituted a suit claiming a further sum, contending that the amount deposited by the defendants was incorrect. The trial court upheld the defendants' contention that the debt was entitled to the benefit of S. 9 of the Act, but the High Court reversed this decision and restored the decree passed by the trial court.
Finding of the Court:

The Supreme Court held that the High Court was correct in holding that the debt was entitled to the benefit of S. 9 of the Act. The Court held that the relevant provision of the Act with reference to which a debt like the one evidenced by the promissory note in suit can be scaled down would be S. 9 and not S. 13 as held by the High Court. The Court further held that the execution of the promissory note itself brought into existence a debt and since the promissory note was executed on September 14, 1938, the debt evidenced by it must be regarded as having been incurred after the commencement of the Act and consequently Section 13 alone will have to be borne in mind for the purpose of calculating interest.
Issues: Whether a debtor who has executed a promissory note after the coming into force of the Madras Agriculturists Relief Act, 1938, in renewal of a debt incurred prior to the commencement of the Act is entitled to claim the benefit of S. 9 of the Act.
Ratio Decidendi: The Court held that the relevant provision of the Act with reference to which a debt like the one evidenced by the promissory note in suit can be scaled down would be S. 9 and not S. 13 as held by the High Court. The Court further held that the execution of the promissory note itself brought into existence a debt and since the promissory note was executed on September 14, 1938, the debt evidenced by it must be regarded as having been incurred after the commencement of the Act and consequently Section 13 alone will have to be borne in mind for the purpose of calculating interest.
Final Decision: Appeal dismissed.

Judgment

MUDHOLKAR, J.:

The question that falls for decision in this appeal by special leave from the judgment of the High Court of Andhra Pradesh is whether a debtor who has executed a promissory note after the coming into force of the Madras Agriculturists Relief Act, 1938, ( Mad Act IV of 1938) Hereinafter referred to as the Act), in renewal of a debt incurred prior to the commencement of the Act is entitled to claim the benefit of S. 9 of the Act. The trial court upheld the debtor s contention but in appeal the Subordinate Judge rejected and decreed the appellants suit in full. The High Court held that the interpretation placed on the relevant provisions of the Act by the Subordinate Judge was erroneous, allowed the appeal and restored the decree passed by the trial court.

2. Certain facts have to be stated in order to appreciate the contentions of the parties. The plaintiffs who are the appellants before us and the fourth defendant constituted a Hindu joint family of which the first plaintiff was the manager till the year 1944 when the fourth defendant separated from the rest and the remaining members continued to remain joint. On September 14, 1938 the first defendant as manager of the joint family consisting of himself, the second and the third defendant s executed a promissory note in favour of the first plaintiff as manager of the joint family consisting of the plaintiffs and the fourth defendant for a sum of Rs. 9,620-2-9 and agreed to pay interest at the rate of 9 and 3 / 8 per cent per annum. This amount was found due to the family of the plaintiffs and defendant No. 4 on foot of dealings between that family and the family of defendants 1 to 3 which commenced in the year 1934.

3. In original suit No. 84 of 1949 brought by the fourth defendant against the plaintiffs for partition of the family property the first defendent deposited a sum of Rs. 13,576-0-0 on March 17, 1951 alleging that that was the amount due to the family of the plaintiffs and defendant No. 4 from the family of defendants 1 to 3 on foot of the promissory note of September 14, 1938. In arriving at this amount the defendants 1 to 3 took into account the provisions of the Act and scaled down the interest as permitted by S. 9(1) of the Act. The plaintiffs disputed the correctness of the calculation whereupon the defendants 1 to 3 withdrew their application but all the same the plaintiffs withdrew the amount eventually. The plaintiffs thereafter instituted the suit out of which this appeal arises in which they claimed Rs. 3,858-13-3 and costs on the basis of the calculations made by them and set out in the memo accompanying the plaint.

4. The defendants 1 to 3 denied the plaintiffs claim and stated that the amount deposited by them in the partition suit having been withdrawn by the plaintiffs nothing more is due to them from these defendants on the foot of the promissory note dated September 14, 1938.

5. The trial court, as already stated, substantially upheld the contention of the defendants 1 to 3 and passed a decree for Rs. 92-2-2 in favour of the plaintiffs and the fourth defendant and dismissed the suit with respect to the rest of the amount. This decree which was set aside High appellate court has been restored by the High Court.

6. On behalf of the plaintiffs who are the appellants before us it is strenuously contended by Mr. Bhimasankaram that the relevant provision of the Act with reference to which a debt like the one evidenced by the promissory note in suit can be scaled down would be S. 13 and not S. 9 as held by the High Court. The relevant portion of S. 13 reads thus :

"In any proceeding for recovery of a debt, the court shall scale down all interest due on any debt incurred by an agriculturist after the commencement of this Act, so as not to exceed a sum calculated at 6 1/4 per cent per annum simple interest, that is to say, one pei per rupee per mensem simple interest, or one anna per rupee per annum simple interest :

Provided that the State

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1964 Supreme(SC) 207

A debt incurred after the commencement of the Madras Agriculturists Relief Act, 1938, but in renewal of a debt incurred prior to the commencement of the Act, is entitled to the benefit of S. 9 of the Act.

Cases Referred (2)