1. This reference by a Bench has come before us because of a conflict between two decisions of the Madras High Court with regard to the construction of Section 19(2) read with Section 16 of the Madras Agriculturists Relief (Amendment) Act (Act XXIII of 1948).
2. Certain properties belonged to two persons Yegniah and Hanumantha Rao. Yegniah held a 1/3 share and Hanumantha Rao held 2/3 share in the said properties. These properties were mortgaged with the Chapalamadugu Rangiah who brought a suit on the basis of the mortgage being O. S. No. 39/31 on the file of the Sub Judge, Baptala. A preliminary decree was passed in 1936 for Rs. 43200/- as against (1) Suddapalli Ramamurty; (2) Suddapalli Satyanarayana, (3) Suddapalli Subbarao, (4) Suddapalli Ram-aiah, (5) Suddapalli Venkatramaniah.
3. The defendants 3 to 5 filed appeals against the above decree, and the decree-holder also preferred an appeal. The decree was modified by the High Court and the High Court awarded a sum of Rs. 30931-6-8 by its judgment dated 28-10-1940. The High Court directed payment by the defendants by 27-4-1941.
4. When the matter was pending in the High Court, Act IV of 1938 was passed. The fourth defendant in the suit filed an application in the High Court under Section 19 of the said Act for scaling down the mortgage decree. This application was forwarded to the Sub-Court by the High Court. The matter came before the trial Court, after remand by the High Court, for purpose of disposing of the application for scaling down the decree debt, I. A. No. 970 of 1940 filed in the High Court having been transferred to the Sub-Court.
In the Sub-Court another application I. A. No. 1102 of 1942 was filed by the original defendants 3, 2, 3, 5 and 6 to transpose them as petitioners. This petition was dismissed in so far as defendant No. 1 was concerned and the petition of the others was granted. The result was that in the petition I. A. No. 970 nf 1949 the petitioner were defendent No. 4 and Defendant Nos. 2, 3 and 5. On 17-12-1942 the Court passed an order scaling down the decree, but the decree in so far as the 1st defendant was concerned was not scaled down, i.e., his 1/3 share.
5. After these proceedings were over the 4th defendant obtained an assignment in his favour of the 1/3 interest in the hypothecs held by the 1st defendant under Ex. A-1. He applied for the scaling down of the debt urging that on account of the purchase of the 1st defendant's share he was entitled to get the decree scaled down. The application was opposed. The Sub Judge rejected the application on the following grounds: firstly that the petitioner was claiming through the 1st defendant. The order passed by the Sub Court in I. A. No. 1102 of 1942 had become final.
Secondly the 1st defendant who had an opportunity to raise the plea when the matter was pending in appeal in the High Court after Act IV of 1938 had come into force, failed to raise the plea and therefore he was precluded by the principles of res judicata from raising the same now and that that bar applied to his assignee, the petitioner. The judgment-debtors applied for full satisfaction being recorded on depositing the amount as per the scaled down decree and the 1st defendant and defendant No. 4 also applied. Their contentions were negatived.
6. Act XXIII of 194S came into force. The lower court held that the provisions of amending Act XXIII of 1948 could not be availed of by the 1st defendant or his assignee the petitioner, and relying upon the decision of the Madras High Court in Narayana Chettiar v. Annamalai Chettiar, : AIR1953Mad914 dismissed the petitions. The assignee judgment-debtor has now filed the present appeal. The matter came up before a Bench and has been referred to the Full Bench, in view of the divergent opinions expressed in : AIR1953Mad914 (supra) and Lingappa Chettiar v. Chennasami Naidu, 1955-1 Mad LJ 1.
7. It may be useful to refer to some of the cases wherein the question now under consideration came up for decision. The first case in point is the Full Bench case of Venkataratnam v. Seshamma, : AIR1952Mad591 to which one of us (Chief Justice) was a party. This arose out of a suit on a mortgage executed by three persons. The property was purchased by one of the mortgagors, the 2nd defendant, who was the wife of the 1st defendant, admittedly tor the benefit of the family, subject to the prior mortgage and with an obligation, that from out of the sale proceeds, other debts due to the plaintiff apart from the mortgage debt would be discharged.
The suit was instituted on 15-10-1939 by which time Madras Act IV of 1938 had come into force. The third defendant applied to have the decree debt scaled down. The trial Court allowed the scaling down along with the others and reduced the amount to the extent of the amount of the principal alone. The plaintiff preferred an appeal to the High Court. The High Court held that the third defendant was not entitled to the scaling down to the same extent for the reason that she became a debtor for the first time only, when she joined in the execution of the mortgage in 1926.
They also held that her plea that she was a surely and her liability, being co-extensive with that of the principal debtor and as such entitled to the scaling down as the others, could not be sustained. Thereafter a final decree was passed and decree-holder applied to bring the mortgaged properties to sale. The execution proceedings were going on when the Madras Agriculturists' Relief Act was amended by Act XXIII of 1948 on 25-1-1949. Present Explanations (1) and (2) to Section 8 of the Act were added Section 16 also was introduced.
The third defendant applied to the executing Court to have the decree debt scaled down. The Court rejected the application holding that the preliminary decree that came to be passed finally was one passed by the High Court and the party should therefore move the High Court in this regard, the trial court having no jurisdiction in the matter. An appeal was then taken to the High Court by the legal representatives of the third defendant and a separate application also was filed in the High Court for scaling down the debt.
It was contended in support of the application that notwithstanding the rejection of the application for scaling down on a prior occasion which order had become final, yet by reason of Sub-section (iii) of Section 16 of Act XXIII of 1948, the appellant-petitioner could claim the benefits of the provisions relating to scaling down.
8. The Full Bench declared that even in the case of decrees which had become final, relief could be granted to the judgment-debtor under the new Act, so long as the decree had not been executed or fully satisfied before the commencement of the Act. The test laid down was that where the decree was still executable, relief with regard to scaling down could be granted, although the decree had become final.
9. In 1953 a Bench of the Madras High Court consisting of Subba Rao J. (as he then was) and Somasundaram J., had to consider the question in the case of : AIR1953Mad914 .
10. Briefly the facts of that case were that a money decree passed by the trial Court was modified by the High Court on appeal and thus became final. Thereafter the defendants filed an application in the Subordinate Judge's Court for scaling down the decree. That application was dismissed. Subsequently be filed an application in the High Court for scaling down the decree. This application was opposed on the ground that such an application was not liked at the time, when the appeal was disposed of by the High Court and therefore the petitioner was precluded from raising the plea.
11. The learned Judges while considering the scope of Clauses (ii) and (iii) of Section 16 of Act XXIII of 1948, observed that in the case before them the final decree was passed on 9-3-1951. Therefore the position was that no decree had been passed at the time when the Act came into force i.e., 25-1-1949. Under those circumstances the case definitely came under Clause (ii) of the Act. Clause (ii) reads as under:
'all suits and proceedings instituted before the commencement of this Act in which no decree or order has been passed or in which the decree or order passed has not become final before such commencement.'
Holding so the learned Judges remarked that the petitioner could and should have raised the plea when the appeal was argued in the High Court, and inasmuch as no attempt was made to ask relief under the Agriculturists' Relief Act, the party was precluded by the principles of res judicata from raising the plea at any subsequent stage. They based it on the principle of 'might' and 'ought' embodied in Section 11 of the C. P. C.
In this connection they referred to the Full Bench case of Sriramareddi v. Sriramareddi, ILR (1942) Mad 346: (AIR 1941 Mad 929) wherein Leach C. J., observed that in an appeal before the High Court all questions arising in the appeal other than the question of scaling down could be decided,and the decree be left open awaiting a report and after enquiry by the trial court with regard to the application lor scaling down of the debt. The learn-ed Chief Justice made it clear that such a course could he adopted provided the application for scaling down was made before the judgment was delivered by the High Court, otherwise not. Subba Rao and Somasundaram JJ., were inclined to follow this dictum of the Chief Justice, and they observed that the non-filing of an application when the matter was pending before the High Court which was going to pass the final decree was a bar to any application being made at any later stage.
12. While matters stood thus, in a Letters Patent Appeal which came before Govinda Menon and Mack JJ., the question of the applicability of Section 19(2) of the Act had to be considered in Shankara Pattar v. Ramanatha Ayyar, 1954-2 Mad LJ 155. The learned Judges emphasised the position that under Clause (iii) of Section 36 of Act XXIII of 1948, where a decree in a suit has not been executed or satisfied in full before the commencement of the Act a judgment-debtor could invoke the provisions of the Act relating to scaling down.
13. The same learned Judges Govinda Menon and Mack JJ., in 1955-1 Mad LJ 1 expressly dissented from the view taken by Subba Rao and Somasundaram JJ., in : AIR1953Mad914 already referred to.
14. A final decree in a mortgage suit was passed by the trial court in terms of the judgment of the High Court in the appeal against the preliminary decree. Subsequently the assignee of certain items of the hypotheca who was the 7th defendant in the suit filed an application for scaling down the debt. The application was opposed by the transferee decree-holder. This application was rejected by the trial court. The matter came up in appeal before the High Court.
15. It may be mentioned that this defendant did not choose to take steps to invoke the provisions of Madras Act IV of 1938 either when the case was before the trial court or during the course of the appeal. The first objection raised was that the application ought to have been made to the High Court which modified the decree finally. The trial Court overruled this objection; nevertheless it held that Section 16 Clause (iii) of the Act had no application to the case and dismissed the application.
16. When the matter came up in appeal, the learned Judges accepted the view that Clause (iii) of Section 16 of the Act enabled a judgment-debtor to apply to get the decree debt scaled down, if it was still payable despite the fact that the decree had become final by the judgment of the appellate court. They disagreed with the view expressed by Subba Rao J. (as he then was) and Somasundaram J., that non-filing of an application for scaling down at the time of the appeal debarred a party on principles of res judicata, from filing an application subsequently.
17. A reading of the relevant provisions of the Act is necessary to determine the exact position of the law after the amendment of Act IV of 1938 brought about by Act XXIII of 1948. We shall herein extract the particular amendment with which we are concerned in this case. While Section 19(1) of the Act stood as detailed hereunder:
'Where before the commencement of this Act, a court has passed a decree for the repayment of a debt, if shall, on the application of any judgment-debtor who is an agriculturist or in respect of a Hindu joint family debt, on the application of any member of the family whether or not he is the judgment-debt or or on the application of the decreeholder, apply the provisions of this Act to such decree and shall, notwithstanding anything contained in the Code of Civil Procedure, 1908, amend the decree accordingly or enter satisfaction, as the case may be:
Provided that all payments made or amounts recovered whether before or after the commencement of this Act, in respect of any such decree shall first be applied in payment of all costs as originally decreed to the creditor.'
Section 19(2) was added which is to the following effect:
'(2) The provisions of Sub-section (1) shall also apply to cases where, after the commencement of this Act, a Court has passed a decree for the repayment of a debt payable at such commencement.'
18. By virtue of Section 19(2) the provisions of Section 19(1) were made applicable to cases where after the passing of the Act, a decree has been passed by a Court in respect of a debt which was payable at the commencement of the Act.
19. A further amendment was brought about by Section 16 of Act XXIII of 1948. This section is the most important section which has given rise to divergent views expressed in judicial decisions, it reads as under;
'16. The amendments made by this Act shall apply to the following suits and proceedings, namely:
i. all suits and proceedings instituted after the commencement of this Act;
ii. all suits and proceedings instituted before the commencement of this Act, in which no decree or order has been passed or in which the decree or order passed has not become final, before such commencement;
iii. all suits and proceedings in which the decree or order passed has not been executed or satisfied in full before the commencement of this Act:
Provided that no creditor shall be required to refund any sum which has been paid to or realised by him, before the commencement of this Act'.
A careful reading of Clause (iii) supra would make it abundantly clear that the amendments brought about by Act XXIII of 1948 would apply to those classes of cases also wherein the decree passed has not been executed completely or satisfied in full before the commencement of the Act. This clause envisages the position of there being a subsisting decree unsatisfied, and therefore executable. This clause is independent of Clause (ii) which deals with cases, where no decree had become final at the commencement of the Act. Under Clause (iii) a decree may have become final at the commencement of the Act, but so long as the decree remains unsatisfied the provisions of the Act could be invoked. In effect, a wide retrospective operation has been given to the amendment. The statement of objects and reasons would make this position abundantly clear.
'In a large number of cases, owing to ignorance and several other causes, the plea that the Act applied to the debts was not taken by debtors before the decree was passed and consequently, they did not get the benefit of the provisions of Section 19. This clause accordingly makes specific provision for the scaling down of decrees passed after the commencement of the Act in respect of debts payable at such commencement'.
The essential condition necessary for making an application to get the benefit of scaling down the debt is that the decree should have remained unsatisfied at the commencement of Act XXIII of 1948. Under those circumstances, the Jaw gives a right to a judgment-debtor against whom a decreeis subsisting, to invoke the provisions of the Act and get relief thereunder. No question of res judicata can arise if he did not make an application for scaling down at an earlier stage, for the principles of res judicata would come in only where he ought to have applied earlier and did not.
This is a specific right conferred under the new Statute. He would get the benefit, so long as the decree remains unsatisfied. To take la contrary view would amount to rendering the effect of the provisions of Clause (iii) of Section 16 nugatory. The words 'the decree or order passed has not been executed or satisfied in full, before the commencement or this Act have to be given their proper meaning. This clause and Clause (ii) deal with different situations altogether. We are of the opinion that Clause (iii) of Section 16 of the Act is of the widest amplitude, purporting to confer a right on all judgment-debtors against whom decrees are still executable not having been satisfied. That alone could be the import of Clause (iii) is manifest from the object of the Legislature in bringing about the amendment in 1948 by Act XXIII. The very object bf this legislation is to relieve an agriculturist of lieavy indebtedness. We are in agreement with the view expressed in 1955-1 Mad LJ 1.
20. We find that the delay in hearing of this appeal has worked to the advantage of the appellant. Our view has been further strengthened by the latest pronouncement of the Supreme Court in Narayanan Chettiar v. Annamalai Chettiar, : AIR1959SC275 which was a direct appeal against the decision of Subba Rao J., (as he then was) and Somasundaram J. in AIR 1953 Mad 91, already referred to. Their Lordships of the Supreme Court allowed the appeal and set aside the judgment of the Madras High Court.
They observed that where a statute in express terms gives a particular right to a party he cannot be deprived of that right. The principles of res judicata would have no operation whatsoever. In view of the judgment of the Supreme Court, we hold that the fact that the 1st defendant did not file a petition in the High Court when the appeals were pending there, would not disentitle the appellant-petitioner (the assignee) from claiming the relief under the Act as the decree is still unsatisfied. It is a right given by a statute.
21. The learned Subordinate Judge has disallowed the application of the assignee-judgment-debtor mainly on the ground that the 1st defendant did not get the decree scaled down by the lime the order was passed by the trial court declaring the liability of the 1st defendant, and that order having become final, operated as res judicata and relied upon the decision of the Madras High Court which has since been set aside. The fact that the 1st defendant did not apply previously for scaling down would not stand in his way of getting the relief as admittedly the decree remained unsatisfied at the time of the passing of the Act. If there was no bar so tar as defendant No. 1 was concerned, no bar could operate as against defendant No. 4.
22. The appeal is allowed and the order of the lower court is set aside. The case is remanded to the lower court to apply the relevant provisions of Act IV of 1938 as amended by Act XXIII of 1948, and scale down the decree debt in conformity with those provisions, Costs will abide the result.