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Karnam Ramamma Vs. Podapati Penchalu Naidu - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAndhra Pradesh High Court
Decided On
Case NumberA.A.A.O. No. 51 of 1955
Judge
Reported inAIR1959AP615
ActsDebt Law; Madras Agriculturists Relief Act, 1938 - Sections 8; Madras Agriculturists Relief (Amendment) Act, 1948
AppellantKarnam Ramamma
RespondentPodapati Penchalu Naidu
Appellant AdvocateO. Chinnappa Reddy, Adv.
Respondent AdvocateK.B. Krishnamurty, Adv.
DispositionAppeal dismissed
Excerpt:
.....from court by a mortgagee and endorsed on the mortgage to the effect that that sum was paid towards the said mortgage, would fall within the purview of the explanation. if that be so, it appears to me that the words 'his agent duly authorised in that behalf in section 20 of the limitation act are satisfied by the act of the judge of the court which authorises the payment......could be regarded as a payment made by a debtor. it is significant that 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 as in the cases which will be referred to presently. in such a situation, can a payment which is not made by the debtor himself or by a court or some other agency, even assuming that they purport to do so on behalf of the debtor, be treated as a payment made by him, in our opinion, the explanation insists on payments by the debtor himself. the act of the one cannot be regarded as the act of another even if it is with the implied authority of another. it could only be said that one of them does act as the agent of the other. there is no scope for importing the idea of.....
Judgment:

P. Chandra Reddy, C.J.

1. The question to he answered by the Full Bench is whether Explanation I to Section 8 of the Madras Agriculturists' Relief Act, introduced by the Madras Agriculturists' Relief (Amendment) Act, 1948 (Madras Act XXIII of 1948) covers receipt of money from Court towards a debt.

2. The point involved in this appeal relates to the method of appropriation, namely, whether a creditor could appropriate two sums of Rs. 1000/- and Rs. 925/- towards interest or whether they should go in reduction of the principal. The monies were received by him in the following circumstances.

3. The creditor in this case filed a suit on the foot of a promissory note and obtained a decree. Thereafter, he took out execution by attaching the properties of the judgment-debtor. Two sums of Rs. 1000/- and Rs. 925/- were deposited to the credit of another suit between the same parties. They were attached by the decree-holder in execution of the decree in question and were paid over to him by the District Court on 19-10-1948 and 14-7-1950. The decree-holder recorded part satisfaction of his decree by appropriating the amounts first towards interest and the balance towards the principal.

4. In the petition filed by the judgment-debtor to have the debt scaled down, the controversy arose whether the creditor was entitled to appropriate the amounts first towards interest and the balance only towards the principal. The Subordinate Judge held that, under Explanation I to SECTION 8, they should first be appropriated towards interest. In appeals against that decision, A.S. Nos. 201 and 236 of 1953, the District Judge held that, in View of the decision of the Madras High Court in Ramaswami Pillai v. Sankara Mudaliar, : AIR1951Mad635 , the Explanation would not govern the payments and the right of the creditor to make the appropriation towards interest was unaffected. The aggrieved debtor has brought this appeal. When this appeal came has for hearing before Seshachalapathi J., he referred the matter to the Bench as he felt that there were some observations in Suryanarayana v. Venkataramana Rao, : AIR1953Mad458 (FB), which seemed to press against the view taken in : AIR1951Mad635 (Supra). As the correctness of : AIR1951Mad635 (Supra) was challenged before the Division Bench, the appeal was referred for the decision of the Full Bench.

5. It is urged by Sri Chinnappa Reddy in support of this appeal that : AIR1953Mad458 (Supra) has rendered the principle of : AIR1951Mad635 (Supra) unsound. It is also said that the latter ruling of the Madras High Court is opposed to Govindaswami Pillai v. Dasai Goundan ILR 44 Mad 971: (AIR 1921 Mad 704).

6. The answer to be given mainly depends upon the interpretation of Explanation I to Section 8 of the Madras Agriculturists' Relief Act added by Madras Act XXIII of 1948. Explanation I:--

'In determining the amount repayable by a debtor under this section, every payment made by him shall be created towards the principal, unless he has expressly stated in writing that such payment shall be in reduction of interest.'

7. The crucial question for decision is whether monies realised from court towards a debt could be regarded as a payment made by a debtor. It is significant that 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 as in the cases which will be referred to presently. In such a situation, can a payment which is not made by the debtor himself or by a Court or some other agency, even assuming that they purport to do so on behalf of the debtor, be treated as a payment made by him,

In our opinion, the explanation insists on payments by the debtor himself. The act of the one cannot be regarded as the act of another even if it is with the implied authority of another. It could only be said that one of them does act as the agent 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 constituted agent'. There is no warrant for incorporating these words into it.

A legislation of this kind which is expropriatory in nature, has to be strictly construed. We feel that the legislature has advisedly confined it to payments made by a debtor for the reason that he has to exercise volition whether such payment should go in reduction of interest or principal and that anyone on his behalf should not be authorised to give such a direction as it would affect the interests of the debtor.

8. In this connection the wording of Explanaion III may be noticed:--

'Whether a debt has been renewed or included in a fresh document executed before or after the commencement of this Act, whether by the same debtor or by his heirs, legal representatives or assignees or by any other person acting on his behalf, or in his interest and whether in favour of the same creditor or of any other person acting on his behalf or in his interest, the principal originally advanced together with such sums, if any. as have been subsequently advanced as principal shall alone be treated as the principal sum repayable under this section.'

This Explanation uses the words 'any other person acting on his behalf or in his interest' etc., therebyindicating that when the Legislature wanted to include acts of agent as binding upon the debtor, specific language Has been employed. To some extent, this furnishes a clue to the interpretation of the first Explanation.

9. We will now turn to : AIR1951Mad635 . One of the points that fell to be decided there was whether a payment received from court by a mortgagee and endorsed on the mortgage to the effect that that sum was paid towards the said mortgage, would fall within the purview of the Explanation. Subba Rao J. (as he then was), and Somasundaram J., decided that such a payment would not be deemed to be one made by a debtor within the meaning of the Explanation as the latter could not have contemplated payment of money by a Court. The learned Judges referred to ILR 44 Mad 971: (AIR 1921 Mad 704) adverted to already and distinguished it on the ground that the cited case was based on the words of Sections 19 and 20 of the Limitation Act.

10. We will now consider whether the authority of : AIR1951Mad635 has in any way been shaken by : AIR1953Mad458 (FB). The passage, which is called in aid in the judgment of the Full Bench and which is said to contain a rule inconsistent with the Bench ruling, is this:

'The substance of that Explanation is that payments made by a debtor could be appropriated towards interest only if he had stated expressly in writing that they should be so appropriated. The object of the amendment was to take away the right of the creditor to appropriate payment towards interest unilaterally, as he would be entitled to under Section 60 of the Contract Act, to nullify the effect of the decision in Duraiswamy Mudaliar v. Md. Amiruddin, 1948-1 Mad LJ 441: (AIR 1948 Mad 434).'

11. It is argued that this makes it clear that in whatever manner and by whomsoever a payment is made, Explanation I will come into operation, that intendment of the Section being to destroy the right of the creditor under general law to appropriate such payments towards interest. We do not think we can give weight to this contention. It is to be remembered that the Full Bench was dealing with the effect of 1948-1 Mad LJ 441: (AIR 1948 Mad 434) (Supra), in which Chief Justice Gentle who spoke for the court stated:

'The principle of law which always has been observed and recognised is that when a payment is made in respect of principal and interest, there is an inference that the payment is Ordinarily first allocated towards interest and thereafter any balance in respect of principal. This was recognised in the decision under the Madras Agriculturists' Relief Act, 1938, in Ramaswami Ayyar v. Ramayya Sastrigal, 1941-1 Mad LJ 295: (AIR 1941 Mad 571) and in Venkiteswara Iyer v. Ramaswami Iyer, 1941-1 Mad LJ 9: (AIR 1941 Mad 403). In my view, the recognised and acknowledged principle regarding the utilisation of a payment which is made in respect of principal and interest has in no way been interfered with by any provision in the Madras Agriculturists' Relief Act, 1938.'

12. It is pointed out by the Full Bench that this statement of law was opposed to a long course of authorities, which had held that, unless there was specific appropriation, the payment should be held to be open and consequently should be appropriated towards the principal as, by operation of Section 8(1), there would be no interest outstanding. It was also said by the Full Bench that in the two decisions relied on in the judgment in 1948-1 Mad LJ 441: (AIR 1948 Mad 434) (Supra), the appropriation was in fact made before the Act came into force.

It was evidently to nullify the effect of 1948-1 Mad LJ 441: (AIR 1948 Mad 434) (supra) and to give recognition to a long course of judicial decisions rendered previously that the legislature intervened and added the Explanation. : AIR1953Mad458 (FB) was not concerned with the question as to what constitutes payment by a debtor. The doctrine embodied in that passage would govern only a case of payment made by a debtor. If a particular payment does not constitute payment by a debtor, the principle stated there would be inapplicable. : AIR1953Mad458 (FB) does not touch the) point in controversy here and has not in any way affected the soundness of : AIR1951Mad635 .

13. We do not also think that the latter case is in any way in conflict with ILR 44 Mad 971: (AIR 1921 Mad 704). The Government, which acquired a plot of land and which was subject to a mortgage, deposited compensation payable in respect thereof towards the credit of the suit on the foot of a mortgage. This was paid out to the decree-holder on an application made by him. When the payment was made, the Judge signed the paper 'showing that the payment was made in his presence and through Court. In an execution petition filed by the decree-holder, the question arose whether that payment would save limitation.

It was held that it protected the decree-holder since it should be regarded as part payment of the principal of the decree-debt and as it was paid by the Court which was duly authorised, it should be considered to he made by a duly authorised agent of the judgment-debtor as the fact of payment appeared in the handwriting of the Judge within the meaning of Section 20 of the Limitation Act. It should be remembered that Section 20 enables a duly constituted agent of the debtor to make a part payment to save limitation. Both Sections 19 and 20 of the Limitation Act expressly mention agents of the debtor as competent either to make an acknowledgment or to make a part payment. That being the case, the following dictum of Coutts-Trotter J., does not avail the appellant.

'.....if a debtor's assets are so placed eitherby his own act or by operation of law, that if some one other than he alone can release them for the purpose of making payments due from him, then the act of that other in operating upon the debtor's assets must be treated as the act of the debtor him-self, the volition of the debtor in such a case being neither requisite nor relevant.'

Whatever might have been the force of the contention if the remarks stood by themselves, there will he none if we take into account the following sentences:

'If that be so, it appears to me that the words 'his agent duly authorised in that behalf in Section 20 of the Limitation Act are satisfied by the act of the Judge of the Court which authorises the payment.'

It is plain that the learned Judge had in mind only payment by a court as the duly authorised agent of the debtor within the meaning of Section 20.

14. In construing that passage, we cannot ignore that Chinnery v. Evans, 1864-11 HLC 115, which was the basis of the statement of law made by the learned Judge, dealt with the question whether payment of interest on a mortgage by the receiver of a mortgaged estate appointed under a particular provision of law, was within the meaning of the expression 'payment by an agent of the party liable' and answered it in the affirmative. Taking these circumstances into consideration, we are inclined to think that the cited passage does not warrant the construction put upon it by counsel for appellant. That cannot furnish a basis for interpreting 'monies realised from Court towards a debt' as amounting to payment by the debtor. If a Court holds the monies of a judgment-debtor and pays them out to the decree-holder, the Court is deemed to be acting as the agent so as to save limitation.

We may mention here that most of the cases, to which our attention was drawn, relate to the interpretation of Section 19 or Section 20 of the Limitation Act, which specifically authorise duly constituted agents to do acts which the principal himself could do. It would not, therefore, be fruitful to refer to them. Some of them are cases of payments made by Official Receivers. There is an essential difference between the language of Sections 19 and 20 of the Limitation Act on the one band and Explanation I on the other. Consequently rulings bearing on Sections 19 and 20 of the Limitation Act do not afford any guidance in this inquiry.

15. 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 made by a debtor. To such cases. Explanation I is inapplicable. It follows that : AIR1951Mad635 was correctly decided and does not require reconsideration and the judgment of the lower appellate Court based on it cannot be successfully impugned.

16. In the result, the civil miscellaneous secondappeal is dismissed with costs.


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