( 1 ) THE sole question for consideration is whether a prized subscriber of a chit can be said to be a debtor within the meaning of the Andhra Pradesh agricultural Indebtedness (Relief) Act, 1977 (Act 7 of 1977, for short the act, and entitled to the benefits of the said Act.

( 2 ) THE plaintiff is the Nandyal Chit Fund (Private) Limited. The defendant is the member subscriber for the plaintiff s chit NCFC series. The amount of the chit was Rs. 10,000/ -. Every member of the chit had to contribute Rs. 200/- per month and the period of the chit was for a period of 50 months. At the 14th draw of the chit held on 26-6-1975, the defendant participated in the auction and prized the chit for a sum of Rs. 4,000/ -. By the date of the auction, the defendant paid a sum of Rs. 3,000/- including the dividends due to him and the balance of Rs. 7,000/- has to be paid in instalments before specified dates. For the balance amount, the defendant executed a registered security bond creating a charge on the properties mentioned in the security bond. He also executed a promissory note in favour of the plaintiff agreeing to repay the same with interest at 12% per annum. The defendant received the prized amount of Rs. 6,000/- on 26-7-1975. He paid the amount upto 31st instalment and defaulted thereafter. After deducting the payments made, a sum of Rs. 3,000/- representing the instalments amount from 36th to 50th instalments was due from him. As the defendant failed to pay the same, the plaintiff instituted the suit.

( 3 ) THE defendant raised a contention that he was a small farmer and as such entitled to the benefit of Act 7 of 1977 and the debt must be deemed to have been wiped out.

( 4 ) THE trial Court on a consideration of the material on record, found that the defendant is not a small farmer and passed a preliminary decree granting two month s time for redemption

( 5 ) THE matter was carried in appeal. By order dated 10-11-1981, the learned Subordinate Judge reversed the finding of the trial Court and found that the defendant was a small farmer. The Appellate Court also found that the suit claim was liable to be dismissed for want of notice under section 25 (1) of the Andhra Pradesh Chit Funds Act, 1971. Aggrieved thereby, the plaintiff filed the above Second Appeal.

( 6 ) THE learned Counsel for the appellant contended that even if the defendant is a small farmer, he is not entitled to the protection of the Act, as there is no relationship of creditor and debtor between the Chit Fund company and the subscriber and the suit claim does not amount to a debt within the meaning" of the Act.

( 7 ) THE matter came up for hearing before our learned brother p. A. Choudary, J. The learned Counsel for the appellant relied upon a decision of the Single Judge of this Court in Margadarsi Chit Fund vs. J. Krishna murthy (1) in support of his contention that there is no debt within the meaning of the Act and the relationship between the Chit Fund Company or the Foreman and the subscriber is not that of a debtor and creditor. Choudary, J had doubted the correctness of this view and referred the case to a division Bench and that is how the matter is before us.

( 8 ) THE Andhra Pradesh Agricultural Indebtedness (Reliet) Act, 1977, though published in the Gazette on 30-4-1977, came into effect retrospectively from 30-12-1976. This is an Act to provide relief from indebtedness to agricultural labourers, rural artisans and small farmers in the State of andhra Pradesh to give effect to the policy of the State towards securing the principles specified in Article 46 of the Constitution of India.

( 9 ) SECTION 4 of the Act deals with discharge of debts and relief to debtors. It says that every debt including interest, if contracted by an agricultural labourer, a rural artisan, or a small farmer and outstanding on the date when the Act came into force shall be deemed to be wholly discharged notwithstanding anything contained in any other law for the ti