Rajamannar, C.J.†-There can be no doubt that there are two decisions of two Division Benches of this Court taking different views on the main question which arises in this appeal. The two decisions are Ramalakshmi v. Gopalakrishna Rao1, and Srinivasa Rao v. Abdul Rahim Sahib2. The learned Judges, in the latter case, were inclined to the view that the decision in the earlier case was considerably shaken by certain observations in a subsequent Privy Council case. Even if that be so, the proper course would be to refer the question for decision by a Full Bench, and this is referred accordingly.

The Appeal then came on for hearing in pursuance of the above order of reference before the Full Bench (Rajamannar C.J., Ramachandra Iyer and Ganapatia Pillai, JJ.)

The Judgment of the Court was delivered by

Ramachandra Iyer, J.‡-This appeal which is directed against the decree in O.S. No. 154 of 1951 on the file of the Sub-Court, Tirunelveli, raises a question under section 13 of the Madras Agriculturists Relief Act (IV of 1938). The defendants in the suit which was laid for recovery of Rs. 20,000 are the appellants. On 2nd December, 1943, they as borrowers began certain monetary dealings with the plaintiffs. On that day a sum of Rs. 7,000 was advanced to the former, who agreed to repay the same with interest at 10½ per cent. per annum. That transaction and those that followed were entered in Exhibit A-1 styled as a pass book, in some respect similar to a banker’s pass book. The terms of the initial advance were entered in the book in the form of a promissory note for the amount lent, and the signature of the defendants Were taken on proper revenue stamps. Subsequent advances and payments were entered in the book and at the end of each year of account (the end of the month of Adi according to the tamil calendar) interest at the contract rate was debited against the borrower. There were periodical settlements of accounts though not at regular intervals, at which the amount due to the creditor was ascertained, and an acknowledgment as to the correctness of the amount and a promise to pay it with future interest then stipulated, were recorded in Exhibit A-1, the defendants signing the same in token of their assent. The fresh agreements entered into on each settlement of account were in the form of promissory notes and stamped as such. The last of such settlements was on 17th August, 1951, wherein the defendants agreed to pay the plaintiff or his order the sum of Rs. 19,513-13-3 with interest thereon at 12 per cent That formed the basis of the suit which was field about 3 months thereafter. The defendants claimed that they were agriculturists entitled to the benefit of the Madras Act IV of 1938 (which will hereafter be referred to as the Act), that the settlements of accounts would not bind them and should be reopened and that they would not be liable to pay anything more than the principal amount actually advanced less payments, together with interest at 5½ per cent. per annum. The learned Subordinate Judge held that the defendants were entitled to the benefits of the Act but were bound by the various settlements of accounts. On that finding he passed a decree against the defendants for the sum claimed with interest thereon at 12 per cent. from the date of plaint. In the present appeal the defendants contest the propriety of the judgment and decree of the lower Court.

On the evidence on record it cannot be disputed that the defendants would be entitled to the benefits of the Act. The contract between the parties from the beginning stipulates interest at rates higher than what could be recovered under the Act and at every settlement of account such interest has been added to the outstanding principal, amounting in effect to compound interest. The transactions between the parties commmenced after the Act came into force. The case urged on behalf of the defendants is that though the suit debt was the result of a settlement of account on 17th August

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