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1942 Supreme(Mad) 297
IN THE HIGH COURT OF MADRAS
Patanjali Sastri, J.
Pazhaniappa Mudaliar and Ors.
Versus
Narayana Aiyar and Ors.
Decided On : 26.08.1942
The principle that the interest accrued each year was to be treated as discharged under the Madras Agriculturists Relief Act, 1938.
Headnote:
Agriculturists - Madras Agriculturists Relief Act, 1938 - Section 8(1), Section 10(2)(iii)
Fact of the Case:
The respondents, who were bankers, brought a suit for recovery of the balance due to them from the appellants. The appellants contended that they were entitled to the benefits of the Madras Agriculturists Relief Act, 1938, and that the interest accrued should be deemed discharged.
Finding of the Court:
The court held that the interest accrued each year was to be treated as discharged under Section 8(1) of the Act, and the interest debited prior to 1st October, 1932, was deemed to have been paid. The court also modified the decree of the lower court based on the above findings.
Issues: Interpretation of the Madras Agriculturists Relief Act, 1938, specifically Section 8(1) and Section 10(2)(iii)
Ratio Decidendi: The court applied the principle that the interest accrued each year was to be treated as discharged under the Act, and the provisions of the Explanation to Section 8 did not override this result.
Final Decision: The interest debited prior to 1st October, 1932, was deemed to have been paid, and the interest found debited subsequently was to be scaled down under Section 9 of the Act. The decree of the lower court was modified accordingly.
Patanjali Sastri, J.
1. This appeal arises out of a suit brought by the respondents 1 to 3 (hereinafter referred to as the respondents) who were carrying on business as bankers, for recovery of the balance due to them on account of dealings had with the appellants. The dealings are said to have commenced in or about 1903 and though there were payments by the appellants from time to time, it would appear that their account was largely overdrawn during most of the period. The main contention of the appellants in the Court below--and their sole contention before us--was that they were "agriculturists" within the meaning of the Madras Agriculturists Relief Act, 1938, and as such were entitled to the benefits thereof, and that if the debt due to the respondents was scaled down in accordance with the provisions of that Act, practically nothing would be found payable in respect of the debt. It is not disputed that the appellants are agriculturists as that term is defined in the Act, but their contention that all the accrued interest should be deemed to be discharged, and that the payments made from time to time should be applied in reduction of the principal sums advanced by the respondents was rejected by the lower Court which accordingly passed a decree for a sum of Rs, 23,219-2-0 with interest at 6 1/4 per cent. from 1st October, 1937, till date of plaint, with further interest at 6 per cent. with proportionate costs.
2. In order to appreciate the contentions raised in the appeal it is necessary to describe briefly the course of dealings followed by the parties. The extracts from the books produced by the respondents, all of which relate to the period subsequent to 1924, show that the account opened in the name of the appellants firm is a running account in three columns in which were entered the advances made to the firm, the payments received from them and the balance at credit or debit, as the case may be, resulting from each transaction. Each year interest was calculated at the rate of .12 per cent. per annum on the appellants overdraft and after deducting counter interest at the same rate on the payments made by the appellants, the amount of the interest was entered on the debit side of the account and a balance was then struck, such balance bearing interest at the same rate during the next year. Before the account was thus balanced, a vaddi chitta or memo. showing the calculation of interest was sent to the appellants for their verification and their acknowledgment as to its correctness was obtained. That is to say, at the end of each years operations, the account was settled by the parties and the resulting balance was treated as the principal carrying interest during the next year.
3. The latest of these settlements relating to the year ending 30th June, 1934, appears from the entries in the books to have taken place on 15th July of that year when a sum of Rs. 3,141-8-3 was debited as interest due up to the 30th June, and a balance was struck showing a sum of Rs. 25,177-2-8 as due from the appellants as for that date. After the account was thus balanced there were no advances, but only two payments of Rs. 2,000 and Rs. 1,750 on 15th July, 1934 and 20th June, 1935, respectively, after which the dealings ceased altogether, and the respondents have brought the suit, after a preliminary demand for payment, for recovery of the said balance of Rs. 25,177-2-8 with further interest up to date of plaint after giving credit for the two payments aforesaid.
4. Now, the question arises whether the interest accruing each year and dealt with in the accounts in the manner indicated above comes within the mischief of Section 8 (1) of the Act which provides,
All interest outstanding on the 1st October, 1037, in favour of any creditor of an agriculturist whether the same be payable under law, custom or contract or under a decree of Court and whether the debt or other obligation has ripened into a decree or not, shall be deemed to be disch
