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Soorneedi Sathiraju and ors. Vs. Batchu Venkata Rao, - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAndhra Pradesh High Court
Decided On
Case NumberLetters Patent Appeal No. 114 of 1953
Judge
Reported inAIR1966AP154
ActsDebt Law; Madras Agriculturists Relief Act, 1938 - Sections 8(2); Contract Act - Sections 60
AppellantSoorneedi Sathiraju and ors.
RespondentBatchu Venkata Rao,
Appellant AdvocateG. Balaparameswari Rao, Adv.
Respondent AdvocateD. Narsaraju and ;K.B. Krishna Murty, Advs.
DispositionAppeal dismissed
Excerpt:
.....to be payment to creditors by debtors within meaning of section 8 (2) - sale was not payment of mortgage debt but sale in execution of money decree - sheer coincidence that mortgagee happened to be auction purchaser - held, purchase by mortgagee reducing liability of mortgagor but cannot be construed as payment of debt under section 8 (2). - - 3000. a few years thereafter they borrowed some money on a promissory note dated 31-1-1933. they failed to redeem the debt. it is then urged that the mere fact that it was a voluntary sale, as in this case, should not make any difference and should produce a like effect as in the above cited authority. in fact the learned counsel for the respondent, sri narsaraju, referred us to various decisions wherein it was held that the payment by the..........section 82 of the transfer of properly act further lays down the rule of contribution to the mortgage debt. it provides that where property subject to a mortgage belongs to two or more persons having distinct and separate rights of ownership therein, the different shares in or parts of such property owned by such persons are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgage, and, for the purpose of determining the rate at which each such share or part shall contribute, the value thereof shall be deemed to be its value at the date of the mortgage after deduction ot the amount of any oilier mortgage or charge to which it may have been subject on the date. that being the rule, the mortgagors, even though they had lost all.....
Judgment:

Kumarayya, J.

1. This Letters Patent appeal arises out of I.A. No. 1610 of 1951 on the the of the Subordinate Judge's Court, Kakinada and raises a short point involving the interpretation of Section 8(2) of the Madras Agriculturists Belief Act (IV of 1938). The question is whether the reduction to a proportionate extent of the liability of the mortgagors by reason of the purchase with the leave of the court of a part of the hypotheca by the mortgagee in court auction in execution of a simple money decree shall be deemed to be payment to the creditor by the debtor within the meaning of Section 8(2} to be taken into account for invoking the principle underlying the said sub-section. Justice Krishnaswamy Naidu, by the impugned order, has answered this question in the negative. Hence this appeal.

2. To appreciate the point, a brief statement of facts may be expedient. The appellants and their father mortgaged three items of property under a mortgage dated 18-4-1924 in favour of the mortgagee-respondent for a sum of Rs. 3000. A few years thereafter they borrowed some money on a promissory note dated 31-1-1933. They failed to redeem the debt. The respondent laid his action. O. S. 458 of 1938 on the foot of the promissory note on the file of the District Munsif, Kakinada, got a decree, brought one of the three items of the hypotheca to sale in execution of the said decree and purchased it with the leave of the Court tor a sum of Rs. 1140/- subject to the mortgage liability in his favour. What he purchased, of course, was the lenity of redemption that being the entire interest that the mortgagors had in the mortgaged property. As a rule, in the case of a mortgage, the rights in the property become split up, some remain with the mortgagor while the others become vested in the mortgagee. The right which invariably remains with the mortgagor is the equity of redemption. The appellant-mortgagors as a result of the sale ceased to have any interest in that portion of the hypo-theca. The properly from then on belonged to the decree-holder subject to the mortgage liability in his own favour. He had, thus, two distinct capacities and the merger of the two would be legally complete if he paid the rateable value to himself. If the entire hypotheca was the subject matter of sale in his favour, there would have been no difficulty. Then the fact that he was mere purchaser of the equity of redemption would have been of little moment. But in this cast: whereas the burden of the debt was on the entire hypotheca, the mortgagee was the auction purchaser of only of a part of it. He was therefore entitled to proceed against the mortgagors for recovery of the debt, and the mortgagors in turn had a right to demand rateable contribution towards the payment of the debt. One significant fact to be noted at this stage is that though the general rule is that a person interested in a share only of the mortgaged property shall not be entitled to redeem his own share on payment of a proportionate part of the amount remaining due on the mortgage, an exception has been engrafted on this rule in Section 60 of the Transfer of Properly Act in relation to cases where the mortgagee or mortgagees as a whole have acquired a right in the whole or part of the mortgaged property. Section 82 of the Transfer of Properly Act further lays down the rule of contribution to the mortgage debt. It provides that where property subject to a mortgage belongs to two or more persons having distinct and separate rights of ownership therein, the different shares in or parts of such property owned by such persons are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgage, and, for the purpose of determining the rate at which each such share or part shall contribute, the value thereof shall be deemed to be its value at the date of the mortgage after deduction ot the amount of any oilier mortgage or charge to which it may have been subject on the date. That being the rule, the mortgagors, even though they had lost all their rights in the auctioned part of the hypotheca, still remained interested therein so far as the determination of the rateable contribution, having regard to the tolal debt due, was concerned. Tim mortgagors notwithstanding the expiry of stipulated period of redemption did not care to pay off the mortgage debt still due from them. The mortgagee brought an action, O.S. No. 39 of 1911, and obtained a decree. He filed E.P. No. 195 of 1946 in the Subordinate Judge's Court, Kakinada. The judgment-debtors pleaded complete discharge by reason of the purchase of the part of the hypotheca in the court auction. The learned Subordinate Judge did not accept the contention of complete discharge. He, however, determined the releable value and held that the decree-holder was bound to give credit to only a sum of Rs. 3367-0-0 being the proportionate. liability of item 1 of the mortgaged property. This order became final on account of the decision of the High Court in appeal. Then the judgment-debtors filed I.A. No. 1610 of 1961 under Sections 8 and 19 of the Madras Agriculturists Relief Act (IV of 1938) and pleaded that the debt was completely discharged. Admittedly they had paid a sum of Rs. 2984-15-0 in all. If the above sum of Rs. 3,367-3-0, be taken into account as it certainly goes towards partial discharge of the mortgage debt, the total payment would exceed Rs. 6000, which is double the amount of the principal sum. The Appellant Judgment-debtors on that basis invoking the aid of Clause (2) of Section 8 of the Madras Agriculturists Relief Act (IV of 1938) pleaded in vain total discharge of the debt. Controversy in this behalf alone is responsible for the present appeal. What we have to decide in this appeal is whether partial discharge by reason of purchase would be deemed to be a payment by the agriculturist debtor within the meaning of Section 8. Section 8, it may be noted, is a provision to scale down debts incurred prior to 1st of October 1932. The mortgage debt in question is of course of that category. How this sealing down should be effected is detailed in Sub-clauses (1) to (4). It admits of little doubt that provisions such as these which limit and interfere with the right ol creditors accrued under valid contracts entered into with the debtors or under the general law, e.g. Section 60 of the Indian Contract Act in relation to appropriation or payments made, must be construed strictly. While it is essential that full effect should be given to the intention of the Legislature it is also not permissible to travel beyond the clear language and obvious intendment of the provisions or stretch their scope by analogy.

3. As already noticed, the case of the appellant-mortgagor is that by reason of the partial discharge of the mortgage debt consequent on me auction purchase or a part of the hypotheca, the whole debt in the circumstances, must be deemed to have been fully discharged. This they contend on the strength of Section 8(2) at the Madras Agriculturists Relief Act, 1938. Section 8(2) roads thus:

'(2) Where an agriculturist has paid to any creditor twice the amount of the principal whether by way of principal or interest or both, such debt, including tne principal, shall be deemed to be wholly discharged.'

It is manifest that this provision contemplates total extinguishment of debt of an agriculturist debtor in case he pays to the creditor twice the amount of the principal sum whether by way of principal or interest or both. If the debtor is not an agriculturist or the payment is not made by him, there is little doubt the case would be beyond the purview of the provision. It is common ground that the debtors are agriculturists and have paid only a sum of Rs. 2,984-15-0 in all on their account. They did not claim to have paid a pie more. They look to the ascertained amount under Section 82 of the Transfer of Properly Act which the cerditor-mortgagee is bound to give credit on account of his auction purchase, as the further payments made by them. But neither in law, nor in fact that can be a payment by the debtors themselves, or even a payment on their behalf. The right, title and interest of the mortgagor-debtors on account of the unction purchase was extinguished in that part of the hypotheca and became vested in the mortgagee. Of course, the mortgage liability attached to the property passed on to the mortgagee along with the property. Since the purchaser is no other than me mortgagee himself, be can put an end to his liability by giving credit to the sum determined under Section 82 of the Transfer of Property Act. The liability attached to the property then being extinguished, he us the owner would have absolute and unqualified right, title and interest in the property. It is significant that after the purchase what he was concerned with was the liability attached to the property and not to the person of the mortgagor whose right, title and interest in the property had already ceased. Whatever steps he would take for discharging that liability, they would be all in his own right. If he makes payment to himself by giving credit to the rateable value, the payment will in fact or in law be held to be made by himself in his own right. Thus, where the payment, whether actual or not, is by a person other than the agriculturist debtor and in his own right and not in the right of the mortgagors and for protection of his own interest, it is impossible to hold that the payment is made by the mortgagors themselves. Agriculturist debtor, he is not either in fact or in law, nor the payment was made as such, for it was only to protect his own interest and in exercise of his exclusive right as purchaser and was made after the right of the mortgagors had been completely extinguished.

4. It is nevertheless urged by Sri Bala-parameswari Rao, learned counsel for the appellants, that since the payment was made towards the mortgage debt that payment must ensure for the benefit of the debtors for purposes of Section 8(2) and further, at any rate, the charge or liability being on the property, the debtors are entitled to rely on such payment for purposes of the said section. In support of his contention he refers us to the decision in Poovachettiar v. Maddan, AIR 1944 Mad .549. This authority renders little assistance to him. There the mortgagee purchased the properly with the express stipulation that the sale amount shall be appropriated towards the mortgage, The transfer thus was in pro tanto discharge of the debt. Whether the mortgagor got the sale amount first and then paid it to the mortgagee or instead asked him to appropriate the same that should make no difference in the result. So long as it was in fact a payment though by transfer of properly in partial discharge of the debt by the debtor himself, it was a payment within the meaning of Section 8(2). Reliance on the above authority is therefore, of no avail. It is then urged that the mere fact that it was a voluntary sale, as in this case, should not make any difference and should produce a like effect as in the above cited authority. But as pointed out above, whether voluntary or involuntary, the sale was not effected for payment of the mortgage debt.

It was a sale in execution of a money decree. It, was a sheer coincidence that the mortgagee happened to be the auction-purchaser. By reason of the sale, the rights oi: the mortgagors became extinguished in the property. The purchaser forthwith became the owner of the property. It was then his duty as an owner to discharge the obligation, if any, attached to the properly. Unlike the other persons interested in a share only in property, who could not redeem in part, the plaintiff as mortgagee purchaser has no such limitation. Under Section 60 of the Transfer of Property Act, it was open to him to pay to himself rateable amount due in proportion to the value of the property he got by purchase and discharge his liability in his own right. Section 8, as already noticed, is concerned with payment by agriculturist debtor rather than with the identity of the debt. It has relation to the person paying. It must be a payment made by him and not by any other who is interested in the property. In fact the learned counsel for the respondent, Sri Narsaraju, referred us to various decisions wherein it was held that the payment by the debtor contemplated by Section 8 is the actual payment by him and that any reduction of the debt by operation of a statute or the like will not be deemed to be such payment. The authorities relied on are, of course, not directly under Section 8(2) but they indeed deal with the expression 'payment made by the debtor' contained in the explanation to that section. The first case relied on is a Full Bench case of this Court in Ramamma v. Penchalu Naidu, : AIR1959AP615 (FB). There the learned Chief Justice, who spoke for the Court after referring to various authorities observed:-

'The explanation talks of payment by a debtor and does not include payments made on account of or on behalf of a debtor or by a duly constituted agent. The explanation insists on payments by the debtor himself. The act of one cannot be regarded as the act of another even if it is with the implied authority of the other.

There is no scope for importing the idea of agency into the explanation in the absence of the words 'payment made by him or on his behalf or by a duly authorised agent. There is no warrant for incorporating these words into it. The Legislature has advisedly confined the explanation to payments made by debtor for the reason that he has to exercise volition whether such payment should go in reduction of interest or principal and that any one, on his behalf should not be authorised to give such a direction as it would affect the interests of the debtor. Having regard to the tenor of the explanation and the words in which it is couched, there is no scope for interpreting the words ''monies paid by a Court to the credit of a suit' as payments by a debtor. To such cases explanation I to Section 8 is inapplicable.' The rule so enunciated was reiterated and followed in faggayyamma v. Lakshminarayana, (1960) 2 Audh W.R. 514. Justice Wadsworth in Jagannatha Aiyangar v. Senniveera Chettiar, (1941) 1 Mad LJ 197 :(AIR 1941 Mad 487) voiced the same opinion when he observed that the enjoyment of produce cannot be deemed to be payment by a debtor to a creditor falling under Section 8(1) and that what is contemplated by Section 8(2) was the payment by an agriculturist debtor. It follows from the above discussion that the learned Judge was right in holding in the instant case that the rateable value that was fixed under Section 82 of the Transfer of Property Act and which went towards partial discharge of the debt cannot be deemed to be a payment by the debtor within the meaning of Section 8(2). In that premises the plea of complete discharge is unsustainable in law.

5. The appeal therefore fails and it is dismissed with costs.


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