Incurring of debts after enactment of the Act.

The correctness of the decision in Sreenivasa Rao v. Abdul Rahim Sahib1, is the question that is raised in these two appeals. We shall briefly set out the facts leading thereto.

S A. No. 1048 of 1957 arises out of a suit on a mortgage executed on 26th October, 1949. The principal sum was Rs. 2,000 and the contract rate of interest 18 per cent. A sum of Rs. 900 had been paid by the mortgagors towards interest up to 1st April, 1952. It has been duly appropriated. In the suit, the mortgagors contended that the payment of Rs. 900 should be credited towards the principal. Relying on Ramalakshmi v. Gopalakrishna Rao2, the trial Court rejected this contention ; but in appeal, the learned Subordinate Judge held that Sreenivasa Rao v. Abdul Rahim Sahib1, applied to the facts of the case. He accordingly re-opened the appropriation already made. By the time the matter came up in second appeal before Somasundaram, J., the decision in S. M. Taraganar v. Sankarapandia Mudaliar3, had been rendered by a Full Bench of this Court. The learned Judge was inclined to take the view that the Full Bench decision in effect overruled the decision in Sreenivasa Rao v. Abdul Rahim Sahib1, and directed the papers to be placed before the Honourable the Chief Justice for reference to a Full Bench.

L.P.A. No 55 of 1959 arises out of an application O.P. No. 77 of 1955 under section 19-A of the Madras Agriculturists Debt Relief Act. That dealt with a mortgage executed on 24th May, 1947, carrying interest at 12 per cent per annum. The petitioners mortgagors claimed relief under the Act and contended that though they had paid certain amounts towards interest, these appropriations should now be re-opened and that the payments made by them should be applied towards the principal and interest thereon calculated at 6¼ per cent until 28th July, 1947 and at 5½ per cent thereafter. The learned Subordinate Judge accepted this contention in view of the decision in Sreenivasa Rao v. Abdul Rahim Sahib 1 . This decision was the subject-matter of an appeal A.A.O. No. 2 of 1957 before Ganapatia Pillai, J. The learned Judge interpreted S. M. Taraganar v. Sankarapandia Mudaliar3 , to mean that this mode of reappropriation would not be applicable to a case governed by section 13 of Act IV of 1938. Though the learned Judge does not in specific terms say so, he appears to have held that the Full Bench decision in S.M. Taraganar v. Sankarapandia Mudaliar3overruled the decision in Sreenivasa Rao v. Abdul Rahim Sahib1. The appeal was accordingly allowed. In the Letters Patent Appeal the Bench before whom it came up for hearing made an order that the papers should be placed before the honourable the Chief Justice for disposal of the appeal by the Full Bench in order that the correctness of the decision in Sreenivasa Rao v. Abdul Rahim Sahib1, may be finally settled.

It will be noticed from what has been stated above that the debts in the above two cases came into existence after the commencement of Act IV of 1938. It is common ground that the scaling down of such debts is dealt with by section 13 of the Act, and the question that accordingly arises is as to the correct mode of scaling down to be adopted in such cases. In the light of the decision in Sreenivasa Rao v. Abdul Rahim Sahib1, the question that pointedly arises is whether in the case of a debt incurred after the commencement of the Act, it is open to the Court to re-open the appropriations made towards the interest, such appropriations having been made with the consent of the debtor, and to award interest only at the rates specified in section 13 of the Act from the date of the commencement of the debt. We may state at the outset that besides the line of cases rendered by the Madras High Court dealing with this point, there are a few recent decisions of the Andhra Pradesh High Court which have followed the principle laid down in Sreenivasa Rao v. Abdul Rahim Sahib1. Not only is there a conflict between a decision