In the case of a debt incurred after the Act came into force, a payment made expressly towards interest at the contract rate can be reopened and re-appropriated towards the interest payable under the provisions of S. 13 of the Act.

Order of Reference to Full Bench

SUBBA RAO, C.J. :- This appeal raises two questions and both are covered by the decisions of two Division Benches, one of the Andhra High Court and the other of the Madras High Court.

2. The relevant facts may be briefly stated. Defendants 1 and 2 executed a promissory note dated 7-12-1946 for a sum of Rs. 6400/- in favour of late Sait Anjarmal repayable with interest at Rs. 1-14-0 per cent. per mensem. Plaintiffs 1 to 3 are the sons of Anjarimal and the 4th plaintiff is his widow. The 3rd defendant is the undivided son of the 1st defendant and the 4th defendant is the widow of the brother of late Anjarimal. The defendants borrowed various sums from Anjarimal between 16-1-1946 and 11-11-1946 together making up a sum of Rs. 6100/-. Adding to that amount the interest that accrued due till 7-12-1946, the suit promissory note was executed for Rs. 6400/-. Subsequently on 14-2-47, the 1st defendant paid to the plaintiffs two amounts of Rs. 2800/- and Rs. 300/- and they were duly endorsed on the promissory note, Rs. 2800/- being appropriated towards principal and Rs. 300/- towards interest. The endorsement was signed by the 1st defendant. One of the contentions raised before the learned Subordinate Judge was that the debt was liable to be scaled down under the provisions of the Madras Agriculturists Relief Act (hereinafter referred to as the Act). The other contentions raised by the defendants and the findings of the learned Judge on the said contentions need not be stated as nothing turns upon them in the appeal. The learned Judge held that the defendants are agriculturists and that, therefore, they are entitled to the benefits of the Act. For the purpose of the application of the provisions of the Act, he reopened the suit transaction and the appropriations made. The principal originally advanced i.e., Rs. 6100/-was taken as the principal and the sum of Rs. 300/-appropriated towards interest payable under the suit promissory note according to the contract rate was re-appropriated towards interest calculated on the original principal as per the rate fixed under S. 13 of the Act. Learned Counsel for the appellants contends that the learned Judge was wrong on both the points.

3. A Division Bench of this Court, of which one of us was a member, in Pundarikakshudu v. Venkata Krishna Sastri, LPA No. 52 of 1956 : (AIR 1957 Andhra Pra 204) (A), held that, under section 13 of the Act, a debt incurred after the commencement of the Act cannot be traced back to its origin and that the relief to which the debtor will be entitled to is only a concession in the rate of interest prescribed thereunder. We are bound by that judgment and it follows that, for the purpose of scaling down the debt, the sum of Rs. 6400/-should be taken as the principal.

4. The second question raised is covered by the decision of a Division Bench of the Madras High Court in Ramalakshmi v. Gopalkrishna Rao, 1944-2 Mad LJ 285 : (AIR 1945 Mad 12) (B). There, towards a promissory note dated 11th April, 1938, carrying interest at 12-3/8 per cent. there was a series of payments of interest expressly appropriated by endorsements with the result that all the interest was paid at the contract rate up to 11th August 1941. In a suit on the note for the principal together with interest at the contract rate from 10th August 1941, the debtor claimed relief under S. 13 of the Act and the lower court scaled down the debt by the process of calculating the total amount of principal and interest at the statutory rate of 6¼ per cent and deducting therefrom the payments made. The learned Judge held that the payments having been made and appropriated towards interest at the contract rate under a mistake of law cannot be got back and re-appropriated towards the principal so as to make the whole of the accrued interest amenable to the process contemplated under Section 13 of the Act. This, being a decision of a Division Bench of the Madras High Court delivere