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Andhra Pradesh High Court
Vinjanamapati Anantaramaiah - Appellant
Versus
M.Venkata Subba Rao - RESPONDENT
Decided On: 07-31-68
Madras Agriculturists Debt Relief Act, 1938 - Applicability - Territorial Limits - Interpretation of Section 2 - Conflict of Laws - Proper Law of Contract - Interest Rate - Scaling Down - Section 13 - Scope - Retrospective Effect - Constitutional Validity - Delegation of Legislative Power - Notification Fixing Interest Rate.
Fact of the Case:
A suit was filed in Hyderabad by an indorsee for collection of a promissory note executed in Narasaraopet, Andhra Pradesh. The defendant, an agriculturist residing in Narasaraopet, claimed relief under Section 13 of the Madras Agriculturists Debt Relief Act, 1938 (Act IV of 1938), which provides for scaling down of interest rates on debts incurred by agriculturists. The lower court held that the provisions of the Act were not applicable to the Telangana area of Andhra Pradesh and decreed the suit as prayed for.
Finding of the Court:
The court held that the provisions of the Madras Agriculturists Debt Relief Act, 1938 are applicable to the Telangana area of Andhra Pradesh. The court interpreted Section 2 of the Act, which defines the territorial extent of the Act, in light of the principles governing the law of contracts and conflict of laws. The court held that the proper law of the contract in this case was the law of Andhra Pradesh, where the promissory note was executed, and that the parties intended to be governed by the laws prevailing in that territory. The court also held that the plaintiff, being a mere indorsee for collection, could not claim to be in a better position than his transferor and was subject to the same disabilities, including the defendant's right to relief under Section 13 of the Act.
Issues: 1. Whether the provisions of the Madras Agriculturists Debt Relief Act, 1938 are applicable to the Telangana area of Andhra Pradesh? 2. Whether the plaintiff, being an indorsee for collection, can claim to be in a better position than his transferor and avoid the defendant's right to relief under Section 13 of the Act? 3. Whether the defendant is entitled to claim relief under Section 13 of the Act, including scaling down of interest from the date of the origin of the debt?
Ratio Decidendi: 1. The court interpreted Section 2 of the Madras Agriculturists Debt Relief Act, 1938, which defines the territorial extent of the Act, in light of the principles governing the law of contracts and conflict of laws. The court held that the proper law of the contract in this case was the law of Andhra Pradesh, where the promissory note was executed, and that the parties intended to be governed by the laws prevailing in that territory. 2. The court held that the plaintiff, being a mere indorsee for collection, could not claim to be in a better position than his transferor and was subject to the same disabilities, including the defendant's right to relief under Section 13 of the Act. The court reasoned that the indorsement of transfer made by the payee in favor of the plaintiff was unilateral and not done with the consent or knowledge of the debtor, and hence it could not be presumed that the debtor agreed to abide by the laws of the place where the indorsee resides. 3. The court held that the defendant was entitled to claim relief under Section 13 of the Act, including scaling down of interest from the date of the origin of the debt. The court relied on a Full Bench decision of the Andhra Pradesh High Court, which held that for the purpose of scaling down a debt under Section 13, the debt should be traced back to its origin irrespective of whether it is renewed or included in a fresh document.
Final Decision: The court allowed the civil revision petition and dismissed the suit with costs throughout.
( 1 ) THE revision is filed under Section 12 of the Hyderabad Small causes Courts Act, by a defendant against a decree passed in a small cause suit, S. C. S. 303/65 on the file of the Chief Judge, City Small causes Court, Hyderabad.
( 2 ) THE defendant, who is a permanent resident of Narasaraopet, guntur District, executed a promissory note on 26-10-1949 for a sum of Rs. 1,000/- borrowed from the plaintiff s transferor, who is also a permanent resident of Narasaraopet with a stipulation to pay simple interest at 9% per annum After same payments were made, the promissory note was finally renewed by the execution of a fresh promissory note on 25-3-1951 by the defendant in favour of the original payee. Thereafter, the payee under the promissory note transferred the said promissory note merely for collection on 10-1-1965 at Hyderabad in favour of the plaintiff who is residing at hyderabad. Hence the plaintiff filed the above suit to recover the amount due under the Promissory note but claimed subsequent interest, that is, from the date of suit at 51/2% The defendant contested the suit claiming relief under section 13 of the Madras (Andhra) agriculturists Debt Relief Act (IV of 1938) (hereinafter referred to as the Act), The plaintiff amended his plaint with the leave of the court stating that the Act does not apply to Hyderabad area and that the defendant, is not therefore entitled to any relief under the act. The Court below held that the provisions of the Act are not applicable to the telangana area and accordingly decreed the suit as prayed for. Against the said dacree, the defendant filed the above revision the main point for consideration in this Revision is whether the defendant is entitled to claim relief under Madras Act IV of 1938. Sri Y. G. Krishna Murthy, the learned Counsel for the petitioner contended that as the debt was incurred at a place where the said Act. is applicable and as the parties are also residents of narasaraopet. the defendant is entitled to claim the benefit of the act, though the suit is filed at Hyderabad. On the other hand, Sri p. M, Gopal Ran the learned counsel for the plaintiff sought to support the judgement of the lower Court by raising various interest, ing questions of law In support of his contention that the provisions of the Act cannot be enforced beyond the territorial limits of the erstwhile composite Madras State, corresponding to the andhra area of the Andhra Pradesh reliance is placed by the plaintiff on section 2 of the Act which reads as follows : section 2: "it extends to the whole of the State of Madras","agriculturist" is defined in the Act as "a person who has a saleable interest in any agricultural land in the State of Madras (Andhra)--------------" "debt" is defined in the Act as "a liability due from an agriculturist----"section 13 under which relief is claimed is as follow? :13. "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 61/4 % per annum simple interest, that is to say, one pie per rupee per mensem simple interest, or one anna per rupee per annum simple interest : provided that the State Government may, by notification in the Official Gazettee, alter and fix any other rate of interest from time to time". By a subsequent notification, the Government fixed the rate of interest as 51/2% per cent per annum.
( 3 ) AS regards the territorial application of the Act, reliance is placed by the Plaintiff s learned counsel on a ruling in Ramamurti V. Kulamani (1) in which an application for scaling down a decree debt filed under Section 19 of the Act was rejected on the ground that the mortgaged property which was the subject matter of the decree retrained within the province of Madras after the formation of the orissa Province and that the Court in the Orissa province cannot entertain the application to a
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