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Lakshmi Achi and ors. Vs. T.V.V. Kailasa thevar and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtSupreme Court of India
Decided On
Judge
Reported in[1964]2SCR259
ActsMadras Agriculturists Relief Act, 1938 - Sections 16 and 19(2); Madras Agriculturists Relief (Amendment) Act, 1948; Code of Civil Procedure (CPC), 1908 - Order 21, Rule 2
AppellantLakshmi Achi and ors.
RespondentT.V.V. Kailasa thevar and ors.
Cases ReferredNarayanan Chettiar v. Annamalai Chettiar
Excerpt:
.....decree; 1 and that right cannot be defeated on the principle of resjudicata. 16 this court said :clause (iii), it seems clear to us, applies tosuits and proceedings in which the decree or order passed had become final, buthad not been executed or satisfied in full before january 25, 1949 :this meansthat though a final decree or order for repayment of the debt had been passedbefore january 25, 1949, yet an agriculturist debtor can claim relief under theact provided the decree has not been executed or satisfied in full before the aforesaiddate. 16 clearly applies because thefinal decree which was passed on september 25, 1943 had not been satisfied infull before the commencement of the amending act, 1948, that is, before january25, 1949. therefore, by reason of clause (iii) s......thecommencement of the principal act or after its commencement. it is indeed truethat the district judge passed a preliminary decree on may 15, 1937 and a finaldecree on january 28, 1938. these decrees, however, were superseded by thepreliminary decree which the high court passed on march 25, 1942. as this courtpointed out in ramaswami ayyangar's case (supra), a preliminary decree wasdrawn up in accordance with the judgment of the high court by which the amountdue from defendants 2 to 7 was scaled down while so far as defendant no. 1 wasconcerned, the decree of the trial judge was affirmed subject to a slightmodification regarding the rate of interest. the decree passed on march 25,1942 was a preliminary decree in as much as it directed that in default of thepayment of the amounts.....
Judgment:

S.K. Das, J.

1. This is an appeal by special leave from the judgment and order of theMadras High Court dated December 2, 1955 by which the said Court set aside theorder of the learned District Judge of East Tanjore dated August 30, 1950passed on an application made by the 1st respondent herein, under s. 19 of theMadras Agriculturists Relief Act (Act IV of 1938), hereinafter called theprincipal Act, as amended by the Madras Agriculturists Relief (Amendment) Actof 1948 (Act XXIII of 1948). By the said order the learned District Judgedismissed the application as unsustainable in law. The High Court set asidethat order on the ground that the respondent's application for the scaling downof the decree passed against him should not have been dismissed in limine andthe learned District Judge should have gone into the question whether therespondent was an agriculturist entitled to the benefit of the principal Act asamended in 1948.

2. The material facts are not very much in controversy, but this is one ofthose cases in which a long history must be stated for the appreciation of avery short point involved in the case. The short point involved is, whether theapplication made by the 1st respondent herein to the District Judge of EastTanjore in O.S. No. 30 of 1934 on December 6, 1950 was unsustainable in law.

3. We may now state the long history. The appellants before us are therepresentatives of the original plaintiffs who as mortgagees instituted a suit(being O.S. No. 30 of 1934) in the court of the District Judge, East Tanjorefor the enforcement of a mortgage against respondent No. 1, who was defendantNo. 1 in the suit, and six other persons. The mortgage bond upon which the suitwas brought was executed by defendant No. 1 for himself and his minor undividedbrother, defendant No. 2, and also as authorised agent on behalf of defendants3 to 7, who were interested in a joint family business. The suit was contestedby all the defendants, except defendant No. 1 against whom it proceeded exparte. A preliminary decree was passed on May 15, 1937 by which a sum of Rs.1,08,098/- was directed to be paid by defendant No. 1 and defendants 3 to 7, indefault of which the plaintiffs were declared entitled to apply for a finaldecree for sale of the mortgaged property and the suit was dismissed as againstdefendant No. 2 Against this decree, two appeals were taken to the Madras HighCourt, one by defendants 3 to 7 (being Appeal No. 48 of 1938) who contendedthat the mortgage was not binding on them or on their shares in the jointfamily property; and the other by the plaintiffs (being Appeal No. 248 of1938), who challenged the propriety of the judgment of the trial Judge in sofar as it dismissed their claim against defendant No. 2. During the pendency ofthese appeals the principal Act came into force and applications were made bydefendants 2 to 7 to the High Court praying that in the event of a decree beingpassed against them, the decretal debt might be scaled down in accordance withthe provisions of the principal Act. Defendant No. 1 who did not appeal at anystage of the proceedings did not make any such application. The High Courtforwarded these applications to the lower court for enquiry and asked for afinding on the question whether the applicants were agriculturists and if so,to what extent the decretal dues should be scaled down. The District Judge madethe necessary enquiry and submitted a finding that the applicants wereagriculturists and that the debt, if scaled down would amount to Rs. 49,255/-with interest thereon at six percent per annum from October 1, 1937 exclusiveof costs. On receipt of this finding the appeals were set down for finalhearing and by their judgment dated March 25, 1942 the learned Judges of theMadras High Court accepted the finding of the court below and held thatdefendants 2 to 7 were entitled to have the debt scaled down, but as noapplication had been made on behalf of defendant No. 1 he was held entitled tono relief under the principal Act. A decree was drawn up in accordance withthis judgment. The amount due by defendants 2 to 7 was stated to be Rs.49,255/- with interest thereon at six per cent per annum, while so for asdefendant No. 1 was concerned the decree of the trial Judge was affirmedsubject to a slight modification regarding the rate of interest. Defendant No.1 thereupon filed an application in the court of the District Judge, EastTanjore, claiming relief under the principal Act alleging that he too was anagriculturist and hence entitled to the benefits of the Act. This applicationwas dismissed on February 25, 1943 on the ground that as a decree had alreadybeen passed by the High Court definitely negativing his claim to any reliefunder the principal Act, such application was not entertainable by the lower court.The next step taken by defendant No. 1 was to file an application in the HighCourt itself praying for setting aside the ex parte decree which excluded himfrom the benefits of the principal Act. This application was rejected by theHigh Court on December 13, 1943. As no payment was made in accordance with thepreliminary decree passed by the High Court, a final decree in terms of thesame was passed by the District Judge on September 25, 1943. Proceedings forexecution of this final decree were started on August 16, 1944 when anexecution petition was filed in the court of the District Judge, East Tanjore.Some of the mortgaged properties were sold and purchased by the decree-holdersfor a total sum of Rs. 12,005/- and part satisfaction of the decree was enteredfor that amount. In the course of these proceedings certain terms of settlementwere offered by the judgment-debtors. The estate of the decree-holders was thenin the hands of the receivers, and it appears that the receivers agreed, withthe sanction of the court to receive Rs. 24,000/- only from or on behalf ofdefendant No. 2 and release him and his share of the mortgaged property fromthe decretal charge. Likewise the receivers agreed to receive Rs. 48,000/- fromdefendants 3 to 7 and to release them and their properties from the decretaldebt. With regard to defendant No. 1 also the receivers agreed to accept Rs.37,500/- and it was agreed that if one Yacob Nadar paid the amount on behalf ofdefendant No. 1 on consideration of the decree against defendant No. 1 beingassigned to him, the receivers would accept the same. No such payment washowever made on behalf of defendant No. 1. But a sum of Rs. 24,000/- was paidon behalf of defendant No. 2 and his properties were exonerated from the decree.Defendants 3 to 7 also paid a sum of Rs. 48,000/- and odd in two instalments indischarge of their decretal debt. The three amounts paid by defendants 2 to 7totalled Rs. 72,610-12-0. On March 6, 1947 defendant No. 1 deposited in court asum of Rs. 3215/- and put in a petition under s. 47 and Order XXI r. 2 C.P.C.praying that the amount deposited by him together with the payments alreadymade by defendants 2 to 7 completely wiped off the amount due under the decreeas scaled down by the High Court in favour of defendants 2 to 7; defendant No.1 prayed that as the decree was one and indivisible, full satisfaction of thedecree should be recorded exonerating the mortgaged property and also defendantNo. 1 himself from any further liability in respect of the decretal debt. Theposition taken up by defendant No. 1 in substance was that the mortgage debtwas one and indivisible and even though different amounts were mentioned aspayable by two groups of defendants in the decree, the decree-holders werebound under the terms of the decree to release the entire mortgaged propertyeven on payment of the amount directed to be paid by defendants 2 to 7. Thiscontention of defendant No. 1 was negatived by the District Judge, but wasaccepted by the High Court on appeal which allowed the application of defendantNo. 1 and directed that the court below should enter full satisfaction of themortgage decree. The decree-holders then came up to this court in appeal (C.A.No. 32/1950) and the judgment of this court is reported in V. RamaswamiAyyangar and others v. T. N. V. Kailasa Thavar : [1951]2SCR292 . This courtheld that though the general law undoubtedly is that a mortgaged decree is oneand indivisible, exceptions to the rule are admitted in special circumstances wherethe integrity of the mortgage has been disrupted at the instance of themortgagee himself. This court further held that there was nothing wrong in lawin scaling down a mortgage decree in favour of one of the judgment-debtorswhile as regards the others the decree way kept intact; the principal Act was aspecial statute which aimed at giving relief not to debtors in general but onlyto a specified class of debtors, namely, those who are agriculturists asdefined by the Act and to this extent it trenched upon the general law. Theresult of the decision of this court was that the decree stood unscaled asagainst the 1st defendant. When the appeal in the Supreme Court was pending,the amending Act of 1948 was enacted and it came into force on January 25, 1949.We shall presently read the provisions of this amending Act. On the strength ofthese provisions defendant No. 1 made an application again to scale down thedecretal debt. This was application No. 79 of 1950. It was this applicationwhich the learned District Judge held to be unsustainable in law. On appeal,the High Court held that the application was sustainable and an enquiry shouldbe made whether defendant No. 1 is an agriculturist within the meaning of theprincipal Act. The present appeal is directed against this order of the HighCourt.

4. Now before we proceed to consider the questions which arise in thisappeal it is necessary to set out the relevant provisions of the principal Actand the amending Act of 1948 of which defendant No. 1 (respondent No. 1 herein)claims the benefit. We must first read s. 19 of the principal Act. That sectionis in these terms :

'19. (1) Where before thecommencement of this Act, a court has passed a decree for the repayment of adebt, it shall, on the application of any judgment-debtor who is anagriculturist or in respect of a Hindu joint family debt, on the application ofany member of the family whether or not he is the judgment-debtor or on theapplication of the decree holder, apply the provisions of this Act to suchdecree and shall, notwithstanding anything contained in the Code of CivilProcedure, 1908, amend the decree accordingly or enter satisfaction, as thecase may be :

Provided that all payments madeor amounts recovered, whether before or after the commencement of this Act, inrespect of any such decree shall first be applied in payment of all costs asoriginally decreed to the creditor.

(2) The provisions of sub-section(1) shall also apply to cases where, after the commencement of this Act, a Courthas passed a decree for the repayment of a debt payable at suchcommencement.'

5. It is worthy of note that s. 19 as it originally stood in the principalAct was re-numbered as sub-s. (1) of s. 19 and sub-s. (2) was added by s. 10 ofthe amending Act of 1948. We may also set out here s. 16 amending Act of 1948.That section is in these terms :

'16. The amendments made bythis Act shall apply to the following suits and proceedings namely :-

(i) all suits and proceedingsinstituted after the commencement of this Act;

(ii) all suits and proceedingsinstituted before the commencement of this Act, in which no decree or order hasbeen passed, or in which the decree or order passed has not become final,before, such commencement;

(iii) all suits and proceedingsin which the decree or order passed has not been executed or satisfied in fullbefore the commencement of this Act :

Provided that no creditor shallbe required to refund any sum which has been paid to or realised by him, beforethe commencement of this Act.'

6. Respondent No. 1 claimed that he was entitled to the benefit of sub-s.(2) of s. 19 read with clause (iii) of s. 16 of the amending Act of 1948. Thelearned District Judge negatived this claim on the following three grounds :

(i) He held that in O.S. No.30/1934 the preliminary decree was originally passed on May 15, 1937 and thefinal decree on January 28, 1938 and both these dates were anterior to thecoming into force of the principal Act. The principal Act, it may be statedhere, came into force on March 22, 1938. Therefore sub-s. (2) of s. 19 did notapply to the present case.

(ii) Secondly, he held thatsub-s. (2) of s. 19 applied to those cases only where there was a debt payableon the date of the commencement of the principal Act; in the present case,however, there was no debt payable on the date of the commencement of theprincipal Act, the debt having ripened into a decree; therefore sub-s. (2) ofs. 19 was not applicable.

(iii) Thirdly, he held that theclaim of defendent No. 1 to have the decree against him scaled down having beendecided against him by the District Judge in I.A. No. 104 of 1942 on February25, 1943 and the same claim having been negatived by the High Court insubsequent proceedings, it was not open to defendant No. 1 to make a freshclaim under sub-s (1) of s. 19 because though sub-s. (1) of s. 19 used theexpression 'notwithstanding anything contained in the Code of CivilProcedure', that expression related to the provision of the Code in thematter of amendment of decrees and entering of satisfaction of decree but didnot include the principle of res judicata, a principle which is more generaland comprehensive in character than what is laid down in s. 11 of the Code.

7. The High Court apparently proceeded on the footing that the present casewas one in which a decree had been passed after the commencement of theprincipal Act and therefore sub-s. (2) of s. 19, added by the amending Act of1948, applied. The High Court said that no serious attempt was made before iton behalf of the decree-holders to support the view of the learned DistrictJudge that the debt in the present case was not a debt within the meaning ofthe principal Act because it had ripened into a decree prior to thecommencement of the principal Act. The High Court then referred to s. 16 of theamending Act and held that defendant No. 1 was entitled to the benefit ofsub-s. (2) of s. 19 read with clause (iii) of s. 16 of the amending Act, 1948and the circumstance that the claim of defendant No. 1 to the benefits of theprincipal Act prior to its amendment in 1948 had been negatived by the DistrictJudge and the High Court did not deprive him of the new right which theamending Act had given him provided he was able to prove that he was anagriculturist within the meaning of the Principal Act.

8. Learned counsel on behalf of the appellants has argued before us that theview expressed by the High Court is not correct. He has contended that thepresent case does not come under sub-s. (2) of s. 19 because this was a case inwhich a decree was passed for the repayment of a debt before the commencementof the principal Act, namely, before March 22, 1938. He has pointed out that sofar as defendant No. 1 is concerned, a preliminary decree was passed againsthim on May 15, 1937 and a final decree on January 28, 1938. He has alsoreferred us to the decree passed in the High Court on March 25, 1942. In clause(6) of that decree it was stated that so for as defendant No. 1 was concernedthe direction made by the learned District Judge in the decree passed on May15, 1937 would stand confirmed. Therefore, the argument before us is that theonly provision of which defendant No. 1 was entitled to claim benefit is s. 19as it stood before its amendment in 1948 which applied to cases where a decreewas passed before the commencement of the principal Act and in as much as theclaim of defendant No. 1 under that provision had been negatived both by theDistrict judge and the High Court on previous applications made by defendantNo. 1, it was not open to him to make fresh claim under the same provision.Learned counsel has also submitted that the provisions of the amending Act,1948 have no application in the present case and therefore no new right has beengiven to defendant No. 1.

9. The crucial point for decision in connection with the arguments statedabove is whether the decree in the present case is a decree passed before thecommencement of the principal Act or after its commencement. It is indeed truethat the District Judge passed a preliminary decree on May 15, 1937 and a finaldecree on January 28, 1938. These decrees, however, were superseded by thepreliminary decree which the High Court passed on March 25, 1942. As this courtpointed out in Ramaswami Ayyangar's case (supra), a preliminary decree wasdrawn up in accordance with the judgment of the High Court by which the amountdue from defendants 2 to 7 was scaled down while so far as defendant No. 1 wasconcerned, the decree of the trial Judge was affirmed subject to a slightmodification regarding the rate of interest. The decree passed on March 25,1942 was a preliminary decree in as much as it directed that in default of thepayment of the amounts directed to be paid by the decree, the mortgagedproperties would be sold. When no payments were made as directed by thepreliminary decree of the High Court a final decree in terms of the same waspassed by the District Judge himself on September 25, 1943. This was the decreewhich was put in execution. It is well settled that where an appeal has beenpreferred against a preliminary decree the time for applying for final decreeruns from the date of appellate decree; see Jowad Hussain v. Gendan SinghA.I.R. 1926 P.C. 93.. In that decision the Privy Council quoted with approvalthe following observations of Banerjee, J. made in Gajadhar Singh v. KishanJiwan Lal I.L.R. (1917) All. 641.

'It seems to me that this rule - the ruleregulating application for final decree in mortgage actions - contemplates thepassing of only one final decree in a suit for sale upon a mortgage. Theessential condition to the making of a final decree is the existence of apreliminary decree which has become conclusive between the parties. When anappeal has been preferred, it is the decree of the appellate Court which is thefinal decree in the cause.'

10. The principle that the appellate order is the operative order after theappeal is disposed of, which is the basis of the rule that the decree of thelower court merges in the decree of the appellate court, has been approved bythis court in The Collector of Customs, Calcutta v. The East India CommercialCo. Ltd., : [1963]2SCR563 . We are therefore of the view that theoperative decree in the present case was the preliminary decree made by theHigh Court on March 25, 1942 which was made final on September 25, 1943. Thatbeing the position, the present is a case to which sub-s. (2) of s. 19 isattracted as also the provisions of s. 16 of the amending Act of 1948. Sub-s.(2) of s. 19 read with clause (iii) of s. 16 entitles defendant No. 1(respondent No. 1 herein) to claim the benefit of the principal Act, eventhough his earlier applications prior to the amending Act of 1948 wererejected. Sub-s. (2) of s. 19 read with s. 16 creates a new right in favour ofrespondent No. 1 and that right cannot be defeated on the principle of resjudicata. The true scope and effect of s. 16 was considered by this court inNarayanan Chettiar v. Annamalai Chettiar [1959] Supp. 1 S.C.R. 237..Referring to clause (iii) of s. 16 this court said :

'Clause (iii), it seems clear to us, applies tosuits and proceedings in which the decree or order passed had become final, buthad not been executed or satisfied in full before January 25, 1949 : this meansthat though a final decree or order for repayment of the debt had been passedbefore January 25, 1949, yet an agriculturist debtor can claim relief under theAct provided the decree has not been executed or satisfied in full before the aforesaiddate. It should be remembered in this connection that the word 'debt' in theAct has a very comprehensive connotation. It means any liability in cash orkind, whether secured or unsecured, due from an agriculturist, whether payableunder a decree or order of a civil or revenue court or otherwise etc. It is,therefore, clear that the word 'debt' includes a decretal debt.'

11. In the case before us clause (iii) of s. 16 clearly applies because thefinal decree which was passed on September 25, 1943 had not been satisfied infull before the commencement of the amending Act, 1948, that is, before January25, 1949. Therefore, by reason of clause (iii) s. 16 of the amending Act of1948 respondent No. 1 was entitled to the benefit of sub-s. (2) of s. 19, andhe cannot be deprived of that benefit because prior to the new right given tohim by the amending Act of 1948 his applications for getting relief under theprinciple Act had been rejected.

12. We have, therefore, come to the conclusion that the view expressed bythe High Court is the correct view and respondent No. 1 is entitled to thebenefit of sub-s. (2) of s. 19 read with clause (iii) of s. 16 of the amendingAct of 1948, provided he establishes that he is an agriculturist within themeaning of the principal Act. The appeal therefore fails and is dismissed withcosts.

13. Appeal dismissed.


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