Govindan Nair, J.
1. The question for determination in this appeal relates to the applicability of the Cochin Agriculturists' Relief Act, (XVIII) of 1114, hereinafter referred to as the Cochin Act, and/or the applicability of the Travancore-Cochin Indebted Agriculturists Relief Act, 1956 (Act III of 1956), hereinafter referred to as the T. C. Act 1936, for fixing the amounts due from the appellants to the respondent. The main contention raised before the court below, and repeated before us, is that notwithstanding the provision in the overdraft agreement that appellants 1 and 2 (defendants 1 and 2) had' entered into with the respondent -- the plaintiff Bank -- that interest accrued due and outstanding at the end of each quarter must be added to the principal, all such amounts added to the principal must be treated only as interest in calculating the amounts due under Section 14 of the Cochin Act. It was therefore urged that by the payment of Rs. 20,500/- on 1-1-1954 the debt due to the respondent was not only discharged but a sum of Rs. 826-7-6 will be repayable to appellants 1 and 2 along with the further sum of Rs. 4,100/- that appellants 1 and 2 had deposited on 6-12-1954 with interest Irom the date of withdrawal by the respondent of the above amount. These contentions were negatived by the court below and it passed a decree against appellants 1 to 3 the 3rd appellant. 3rd defendant being a guarantor, and the plaint properties which were equitably morgaged as security for the debt, for the sum or Rs. 7,268-6-9 with future interes at 6 per cent from 11-9-1956. The court below also declared, the right of the appellants to discharge the debt under the T. C. Act 1956.
2. In view of the importance of the question involved, the Division Bench before which this appeal came up for hearing has referred the case for the decision of a Full Bench and the appeal has accordingly come up before us.
3. On behalf of the appellants, it is contended that the decree of the court belowunsustainable, that appellants 1 and 2 areculturists and that no amount will be founddue if a proper calculation is made in accordance with the provisions of the Cochin Actand/or the T. C. Act 1956. It is necessary atthis stage to refer to Ext. B series, Ext. B being the overdraft agreement, B(1) the promissory note and B(2) the letter of continuity executed by appellants 1 and 2 on the first ofAugust 1950. Paragraph 8 of Ext. B providesthat interest agreed upon, viz., at 71/2 per centwill during the period of account be calculatedquarterly on the last day of March, June, September and December every year and added tothe principal. Reference may also be madeto Ext. E, the extract of the current accountledger of the Bank of Cochin Ltd., the respondent here, from 24th May 1945 to 1st March1953.
It is seen from Ext. E that the interest outstanding due at the end of each quarter has been added to the principal and it is not disputed that the account has been correctly maintained in accordance with the agreement between the parties. The 'amount outstanding due to the respondent on the 31st of December 1952 as disclosed by Ext- E was Rs. 28,384-13-9. This is the amount claimed in the plaint as due on that day. The point urged, as we indicated earlier, is that notwithstanding the provision in Ext. B that the interest outstanding as the end of each quarter should be added to the principal carrying interest thereafter the provision must be ignored in calculating amounts due in accordance with the provisions or the Cochin Act and the T. C. Act, 1956. The argument is that interest added to the principal still retains its character as interest and an amounts so added to the principal must be treated only as interest,
4. The Cochin Act has not been specifically repealed either by the T. C. Act 1956, Or by the later enactment the Kerala Agriculturists Debt Relief Act, 1958.' The appellants have therefore taken up the stand that the Cochin Act is still in force. This is not disputed by the res-pondent. We therefore proceed in this case on the basis that the Cochin Act is still in rorce. We, however, express no opinion on the question as to whether the Cochin Act Is now in force' or not. It is not disputed that appellants 1 and 2 are agriculturists.
5. Reliance has been placed only on section 14 of the Cochin Act which reads as follows:
'14. In any proceeding for recovery of a debt, the court shall scale down all-interest due on any debt incurred by an agriculturist after the commencement of this Act, so as not to exceed a sum calculated at 9 per cent per annum simple interest, where the creditor is public company and at six per cent per annum simple interest in the case of other creditors,
Provided that Government may, by notification in the Cochin Government Gazette alter and fix any other rate of interest, from time to time.
Explanation: For the purposes of this section, the definition of 'agriculturist' in Section 3(ii) shall be read as if (i) in proviso (a) to that section, for the expression 'the two financial years ending on the last day of Karkadagam 1114,' the expression 'the two financial years ending on the last day of Karkadagam immediately preceding the date on which the debt is incurred' were substituted; and
(ii) in provisos (b) and (c) to that section for the expression 'the two years immediately preceding the 1st Chingam 1115 the expression 'the two yean immediately preceding the date on which the debt is incurred were substituted.'
Section 14 applies to debt incurred alter the commencement of the Cochin Act. The earlier sections 7 to 10 and 13 in Chapter XX ot the Cochin-Act, which relate to scaling down of debts and future rate of interest relate to debts incurred before the commencement of the Cochin Act and have no application. It is, however urged on the basis of Section 14 that the sum's added on to the principal must also be taken into account in determining the quantum of interest payable. It is further urged that the provision in Ext. B is nothing more than an agreement to pay compound interest and the same must be ignored in view of Section 14 and only simple interest calculated on the original sum lent. Reliance has been placed on a decision of the Andhra Pradesh High Court in Nainamul v. B. Subba Rao, (S) AIR 1957 Andh Pra 546 in support of this contention. The question decided therein was whether a payment made expressly towards interest at the contract rate can be reopened and re-appropriated towards interest payable under the provisions of Section 13 of the Madras Agriculturists' Relief Act (IV of 1938). It was held that such paymen's can be re-opened and re-appropriated. Section 13 of the Act considered in that case is similar to Section 14 of the Cochin Act. However, in that case, there was no agreement to add the interest outstanding at any time to the principal find the only question that was considered was whether definite payments made towards interest at the contract rate can be re-opened and re-appropriated. What is more impotant is that the Division Bench in that case in making the order of reference came to the definite conclusion that the amount of Rs. 6,400/- for which the promissory note dated 7-12-1946 was executed consisting of the sum of Rs. 6,100/- representing the various sums borrowed between 16-1-1946 and 11-11-1948 and the sum of Rs. 300, the interest that accrued due on those amounts upto 7-12-1946 should be taken as the principal amount for the purpose of scaling down the debt under the Act. This clearly shows that it there is a fresh agreement treating a certain sum as the principal that amount must be considered as the principal for the purpose of scaling down under the Act. This is against the contention urged or behalf of the appellants. In the case before us, no question of re-opening and re-appropriating the interest accrued due after 1-1-1951! arises since the interest claimed atter that date is only what can be claimed under Section 14 of the Cochin Act. The point decided by the Full Bench of the Andhra Pradesh High Court therefore does not arise for consideration in the case. Reference was also made to a decision of the Madras High Court in N. S. Srcenivasa R.o v. G. M. Ablul Rahim Sahib AIR 1956 Mat 618. The point that arose there also related to the Payment of interest at a rate different than that provided in Section 13 of the Madras Agriculturists' Relief Act. It was held that the payments made at a rate higher than that provided under section 13 of that Act were made 'under the mistaken belief that in law the plaintiff was entitled to the higher rate of interest' and should be appropriated in the manner contemplated under Section 13 of that Act. As we said earlier, that question does not arise before us for determination. A number of decisions if the Cochin High Court were also referred to, viz., the decision Lekshmi v. Kalyani, 35 Cochin 513, Narayana Pankker v. Narayani Amma, 35 Cochin 125 and Kumaren Ez-huthjisan v. Paramckavu Devaswom, 34 Cochin 147- In all these cases, the debt was one inquired before the Cochin Act came into force and all that was decided was that the payments made are open payments and that appropriation must be made in accordance with the provisions of the Act for scaling down of debts and calculating future interest in regard to debts that were subsisting at the commencement of the Cochin Act. We do not think that these decisions have any application and we are not called upon to decide about the correctness or otherwise of those decisions and we refrain from doing so. In none of those cases was there any agreement to treat interest accrued due up to certain dates as principal and to add the same to the principal. The only decision to which our attention has been drawn wherein there was an agreement similar to the one in the case before us is the one reported in Anthony v. Mala Catholic Union Bank Ltd., 35 Cochin 542. It was held there that the terms of the agreement only amounted to allowing the Bank - the plaintiff therein -- to charge compound Interest with a rest of three months period. The above conclusion has been reached on the basis of a decision of the erstwhile Cochin High Court reported in Narayana Marar v. Neelakanta Ayyar, 32 Cochin 578. The question that arose in the latter decision related to a debt that was subsisting at the commencement of the Cochin Act and it was held therein that any sum specifically paid towards interest during the period first Chingom 1107 up to first Chingom 1115 towards interest will go in discharge of interest payable and will be governed by the provisions of Section 9 of the Cochin Act. It was also held that the payments made were all open payments and an account has to be taken of what is due from one party to the other as at the date of the commencement or the Cochin Act. It appears to us that the above decision does not touch the question arising for determination here and does not support the conclusion reached in 35 Cochin 542. In the appeal before us, the point to be decided is whether the agreement to add arrears of interest to the principal should be ignored in applying the provisions of the Cochin Act, This has not been answered in 32 Cochin 578. With respect, We are unable to agree with the view taken in 35 Cochin 542 that such a provision in the agreement is only an agreement to cnarge compound interest. We think that the ettect of the agreement in the case before us is to wipe off all interest outstanding at the end of each quarter by means of further advances from the Bank of similar amounts which are debited to the account of the debtor. The interest that thus accumulated with principal at the end of each quarter becomes principal and never thereafter ceases to be dealt with as principal. We are fortified in this view by the desicion in Pazhaniappa Mudaliar v. Nayarana Ayyar AIR 1943 Mad 157. In that case, Their Lordships referred to the English case in inland Revenue Commissioners v. Holder, (1931) 2 KB 81 and quoted with approval the following passage from that case:
'I am therefore of opinion that having regard to the method in which, with the concurrence of the company, the account was kept by the bank, the company must he deemed to have paid each half year the accruing interest by means of an advance made for that purpose by the bank to the company.'
We respectfully follow the above decision- for a long number of years the Travancore High Court had taken the view that an agreement to add interest outstanding at given times to toe principal and to treat the whole amount as principal carrying interest thereafter is a valid agreement and it has later been held that for the purpose of section 11 of the Travancore Debt Relief Act (Acts II and III of 11116) the principal mentioned in Section 11 must be taken to be the amount treated as principal by agreement of parties. Reference may be made to the Full Bench decisions of the Travancore High Court reported in Eappen Eappen v. Goda-varma Kochugovindan, 10 Trav LJ 367 (FB); Kora M. Varghese v. Neelakanta Ayyar Subrah-monia Ayyar, 57 Tray LR 888 (FB): Joseph Mathew v. Harihara Ayyar Venkiteswara Ayyar, 57 Trav LR 895 (FB) and Kanakku Narayana Pillai Sankara Pillai v. Kochu Pillai Amma Kun-julekshmi Amma, 1943 Trav LR 324 (PB). We hold that the principal amount outstanding on 1-1-1953 in this case is the sum of Rs. 28,384-13-9.
6. Arguments have also been advanced based on Sections 5 and 4 of the T. C. Act, 1956 We extract below Section 4(1) and the explanation and Section 5 which were retird on.
'4(1). Notwithstanding any law or custom for the time being in force or any contract, or any decree or order of court to the contrary, any debt due by an agriculturist may be discharged by repayment of the principal amount of the debt outstanding in ten equal halt-yearly instalments together with such Interest as would be payable under the provisions of Section 5. The instalments shall be payable on or before the last day of February and August of each of the five years commencing on the commencement of this Act.
Explanation: In the case of a decree, the amount decreed shall be deemed to be the principal.
5. Provision for interest: (1) The interests outstanding at the commencement of this Act, on any debt shall be paid in ten equal halt-yearly instalments, each such instalment being payable along with the corresponding instalment of the principal amount specified in sub-section (1) of Section 4:
Provided that the amount of the interest payable by an agriculturist under sub-section (1) shall not exceed one-half of the principal amount outstanding at the commencement or this Act. (2) Notwithstanding anything contained in Sub-section (1), no creditor shall be required to refund any sum paid to him which is in excess of the amount calculated as dug under Sub-section (1), nor shall such excess amount be liable to be adjusted towards any future interest or the principal amount of the debt.
(3) The interest payable after the commencement of this Act shall be at the rate applicable to the debt under any law or custom for the time being in force or under any contract or under a decree or order of any Court, or at six per cent per annum simple interest, whichever is less, and the amount of interest accrued due on the principal amount outstanding till the date of payment of each of the instalments under Sub-section (1) of Section 4 shall be payable along with such instalment.'
It was contended that the debt mentioned in Section 4 of that Act must be split up into its component parts of the principal amount of the debt outstanding and interest as could be scaled down under the provisions of Section 5. Here again, the question for determination is what is the principal amount of the debt outstanding.. In the view we have taken, we have no hesitation in coming to the conclusion that the principal amount of the debt outstanding was the above sum of Rs. 28,384-13-9. Kmpha-sis was laid On the expression 'notwithstanding any contract' in Section 4 and it was argued that the contract to treat interest as principal should be ignored. We are unable to agree. The section only allows payment by instalments of the debt in manner provided in the section and 'notwithstanding any contract' in that section can only refer to the contract in relation, to the time and manner of repayment of the debt. Reference was also made to the long title of the T. C. Act, 1956 and the scheme or the Act and it was contended that the scope and object of the Act will warrant the construction sought to be placed on Section 4 of the T. C. Act, 1956 by the appellants. We do not think so. There is nothing in the Act, as far as we are able to see, which either expressly or by implication seeks to abrogate agreements entered into between the parties to treat interest accrued due up to certain dates as principal. In the view we have taken of Section 4, there can be no question of Section 5 of the T. C. Act, 1950 being attracted, the interest claimed in the suit, Rs. 567-7-3 being very much less than half the principal amount of Rs. 28,384-13-9.
7. We may, in passing, refer to the definition of the term 'principal' in the Kerala Agriculturist Debt Relief Act, 1958, wherein it is specifically provided that the 'principal' means the amount originally advanced together with sum, if any, as has been subsequently advanced, notwithstanding any stipulation to treat any interest as principal. There is no such definition of the term' 'principal' in the T. U. Act 1956, and no reliance has been placed on Act XXXI of 1958 by the appellants.
8. In the light of the above conclusions, to is clear that the Judgment and Decree of the court below do not call for any interference and that this appeal has to be dismissed. We do so and direct the parties, in the circumstances of the case, to bear their respective costs.