Skip to content


Kunjamma Karthiani Amma Vs. Lord Krishna Bank Ltd. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtKerala High Court
Decided On
Case NumberA.S. No. 462 of 1960 and C.R.P. No. 645 of 1964
Judge
Reported inAIR1966Ker276
ActsDebt Laws; Kerala Agriculturists Debt Relief Act, 1958 - Sections 2, 4(2) and 5; Code of Civil Procedure (CPC) , 1908 - Sections 100, 101 and 115
AppellantKunjamma Karthiani Amma
RespondentLord Krishna Bank Ltd.
Appellant Advocate K.N. Narayanan Nair, Adv. in A.S. No. 462 of 1960 and; N. Raghava Kurup, Adv. in C.R.P. No. 645 of 19
Respondent Advocate V. Rama Shenoi and; R. Raya Shenoi, Advs. in A.S. No. 462 of 1960 and;
DispositionAppeal dismissed
Cases ReferredState Bank of Travancore v. Shabudeen Musaliyar
Excerpt:
.....section 4 (2) - section 4 (2) prescribes amount of debt on which interest computed by reference to principal debt outstanding at the time of each payment and rate of interest by reference to section 5 (1) - in order to give effect to section 4 (3) section 4 (2) has to be written into it - to give effect to section 4 (2) rate of interest in section 5 (1) has to be written into section 4 (2) and to give effect to proviso of section 4 (3) as so expanded has to be written into it - amount of debt on which interest has to be calculated is the principle as stated in section 4 (2). - - each payment, as well as the rate of interest by reference to that as specified in section 5(1). it is no doubt true, that the provisions of section 5 are excluded by the proviso, but such exclusion itself..........it was contended, that each of the debts being in excess of rs. 1500 and having arisen out of a single transaction, is outside the purview of the act, except to the extent indicated by the proviso to section 2(c)(xi), under which not only the provisions of section 5 but also of section 4(2) in which the term 'principal' occurs, are excluded although the latter is referred to in section 4(3), and so the debts must be computed in terms of the provisions of the contract between the parties. the courts below having repelled the contentions of the appellant and the revision petitioner, they have come up before us.2. in each case, the transaction was an over-draft accommodation with the respective respondents. although the borrowings on certain occasions did not exceed rs. 1500, the total.....
Judgment:

Velu Pillai, J.

1. The appellant in A.S. 462 of 1960 is the second judgment-debtor and the revision petitioner in C.R.P. 645 of 1964 is the debtor-petitioner, in two separate proceedings under the Kerala Agriculturists Debt Relief Act, 1958, Act 31 of 1958, against their respective creditors, two banking companies, who are the respondents before us. The appeal and the Civil revision petition concern chiefly the application of Section 4(2) and (3) of the Act, to the debts due to the respondents. For the appellant and for the revision petitioner, it was contended, that the computation of these debts for payment under the Act must be in accordance with Section 4(2) and (3), read in the light of the definition of the term 'principal' in Section 2(h). For the respondents it was contended, that each of the debts being in excess of Rs. 1500 and having arisen out of a single transaction, is outside the purview of the Act, except to the extent indicated by the proviso to Section 2(c)(xi), under which not only the provisions of Section 5 but also of Section 4(2) in which the term 'principal' occurs, are excluded although the latter is referred to in Section 4(3), and so the debts must be computed in terms of the provisions of the contract between the parties. The courts below having repelled the contentions of the appellant and the revision petitioner, they have come up before us.

2. In each case, the transaction was an over-draft accommodation with the respective respondents. Although the borrowings on certain occasions did not exceed Rs. 1500, the total amount borrowed on the strength of the overdraft accommodation exceeded Rs. 1500/-in each case. That the borrowings were in each case not made all at once, but on different occasions is immaterial; it has been ruled in Oo-mmen v. Kottayam Orient Bank Ltd., 1.963 Ker LT 1150, which was followed in Chandy Cheri-van v. Travancore General Bank Ltd., 1965 Ker LT 737 that such borrowings on an overdraft agreement must be held to arise out of a single transaction. The above facts bring both cases squarely within the exclusion in Section 2(c) (xi) from the definition of 'debt.'

(3) Section 2(c)(xi) and the proviso to it are as follows:

'(xi) any debt exceeding one thousand five hundred rupees borrowed under a single transaction and due before the commencement of this Act to any banking company as defined in the Banking Companies Act, 1949:

Provided that in the case of any debt exceeding one thousand five hundred rupees borrowed under a single transaction and due before the commencement of this Act to any banking company as defined in the Banking Companies Act, 1949, any agriculturist debtor shall be entitled to repay such debt in eight equal half yearly instalments as provided in Sub-section (3) of Section 4, but the provisions of Section 5 shall not apply to such debt;'

The argument of learned counsel for the respondents was, that of the categories of debts due to a banking company, that which exceeds Rs. 1500/- borrowed under a single transaction is alone excluded by Section 2(c)(xi), all other categories of debts, viz., debts not exceeding Rs. 1500/ and debts exceeding Rs. 1500/- but not borrowed under a single transaction, are not excluded from the definition of the term 'debt', and that while the latter category of debts is amenable to the several provisions of the Act the former category of debts is amenable only to Section 4(8) to the exclusion of Section 5.

This implies, according to learned counsel, that a debt which exceeds Rs. 1500/- borrowed under a single transaction, has to be discharged in full according to the terms of the contract between the parties, and the entirety of the debt without any deduction is to be paid in eight equal half-yearly instalments as stated in the proviso itself.

4. Section 4(1), (2) and (3) may now be extracted:

'4. Payment of debt in instalments. (1) Subject to the provisions of Sub-section (5), notwithstanding anything contained in any law or contract or in any decree or order of court, any debt may be discharged in the manner specified in Sub-sections (2) and (3).

(2) If any debt is repaid in seventeen equal halt yearly instalments together with interest at the rate specified in Sub-section (1) of Section 5 each payment, the whole debt shall be deemed on the principal debt outstanding at the time of to be discharged.

Provided that in the case of debts due to a banking company as defined in the Banking Companies Act, 1949, the number of instalments in which the debt shall be repaid shall be twelve where the debt does not exceed one thousand and five hundred rupees and eight where it exceeds one thousand and five hundred rupees.

(3) The first instalment of any debt payable under Sub-section (2) shall be paid before the expiry of a period of six months from the date of the commencement of this Act and each of the remaining instalments shall be paid on or before the date of expiry of a period of six months from the last day on which the previous instalment was due.'

Sub-section (3) of Section 4 is not intelligible without reference to Sub-section (2) and is not to be read in isolation from it. The exclusion itself of a debt due to a banking company exceeding Rs. 1500/- and arising out of a single transaction in Section 2(c)(xi), is subject to the proviso to it. That proviso declares, that the instalments shall be as provided in Section 4(3). The provision in Section 4(3) relates, not only, as contended, to the points of time at which the several instalments, are due, but also to the amount of each instalment by reference to Section 4(2). Section 4(2) prescribes the amount of the debt on which interest is to be computed by reference to the principal debt outstanding at the time o: each payment, as well as the rate of interest by reference to that as specified in Section 5(1). It is no doubt true, that the provisions of Section 5 are excluded by the proviso, but such exclusion itself is subject to and has to be harmonised with the inclusion of Section 4(3). Section 5(1) does not provide the rate of interest merely; in relation to a debt due to a banking company, besides imposing a bar on re-appropriation by Clause (1) it also prescribes by Clause (ii) the maximum amount of interest which shall be payable till the commencement of the Act. The references to Section 5 in Section 4(2) is only to the rate of interest. The result is, that in order to give effect to Section 4(3). Section 4(2) has to be written into it, to give effect to Section 4(2) the rate of interest iu Section 5(1) has to be written into Section 4(2) and to give effect to the proviso Section 4(3) as so expanded has to be written into it. We see no escape for the respondents from this interpretation of the proviso. So interpreted, the amount of the debt on which interest has to be calculated is the principal as stated in Section 4(2), which is denned in Section 2(h) as follows:--

'(b) 'principal' means the amount originally advanced, together with such sum, if any, as has been subsequently advanced, notwithstanding any stipulation to treat any interest as principal.....'

Even if the contract between the parties had provided that interest accrued periodically shall e added to and shall form part of the principal and interest calculated, it stands superseded by the proviso read with Section 4(2) and (3). The contention that the proviso itself has virtually quantified the instalment without reference to Section 4(2) cannot prevail over the specific reference to Section 4(3).

5. In the above view, the proviso to Section 4(2) does not seem to be important. It speaks of 'debts due to a banking company' and provides that debts which do not exceed Rs. 1500 shall be repaid in twelve instalments and that those which exceed Rs. 1500 shall be repaid in eight instalments. Learned counsel for the respondents contended, consistently with their interpretation of Section 2(c)(xi) and the proviso, that the proviso to Section 4(2) has application only to debts other than those excluded by Section 2(c)(xi). The argument is no doubt logical and ingenious, but we do not think that it has any bearing on the over-riding consideration, that Section 4(3) has to be read with Section 4(2). If it is held that the proviso to Section 4(2) applies to all debts, even to those excluded by Section 2(c)(xi), the reference to the number of instalments as 'eight' might be partly redundant as regards debts of the excluded category, but ever, this does not affect our earlier reasoning.

6. It is useful to advert to Section 4 as it was before the date of the amending Act. There was a similar exclusion in the Act before the amendment in Section 2(c)(xi). The proviso to it was similar except that the reference in it was to Section 4(2). Section 4(2) then read as follows:--

'If any debt is repaid in seventeen equal half-yearly instalments together with interest, accrued due on the principal debt outstanding at the commencement of this Act till the date of payment of each instalment at the rate of 5 per cent per annum or the contract rate whichever is less, the first instalment being payable before the expiry of a period of six months from the date of commencement of this Act and the remaining instalments being payable on or before the date of expiry of a period of six months from the last day on which the previous instalment was due, the whole debt shall be deemed to be discharged'

The difference in point of structure of the Sections, apart from phraseology, is that before the amendment. Section 4 combined Section 4(2) and (8) as they now stand. According to the respondents, whereas before the amendment interest was payable at 5% and that too on the principal of the debt, after the amendment, debts exceeding Rs. 1500 borrowed under a single transaction alone have been singled out. We do not think, in the absence of clear language, that such a drastic change in the law was brought about by the amendment.

7. In the view we are taking, we derive considerable support from the decisions of two division benches of this court, on the same point, though on different reasoning. In 1965 Ker LT 737 this court applied Section 4(8) read with Section 4(2) to a debt due to a banking company which exceeded Rs. 1300 and which arose out of a single transaction. In the State Bank of Travancore v. Shabudeen Musaliyar, 1964 Ker LT 796 though it was not stated in the judgment that the debt fulfilled these terms, there is every indication in it that the debt was one within the purview of Section 2(c)(xi). These are authorities clearly against the contention of the respondents.

8. It follows that Sections 4(3) and 4(2) have to be applied to the debts in question. There can be no question of reappropriation for that is not provided for.

9. The appellant and the revision petitioner have also challenged the validity and the constitutionality of the special provisions in favour of banking companies as violative of Article 14 of the Constitution. The point has been taken for the first time and without adequate data. We consider that the point cannot be entertained at this stage without adequate information as to the basis or otherwise or the classification, on which such differential treatment is permitted. We do not propose to go into the question, but leave the point open. The appellant and the revision petitioner may raise it at any appropriate stage, on proper materials should they think fit to do so.

10. In the result, the orders of the two courts below are set aside and the cases are sent back to the courts of first instance concerned, for disposal in due course of law and in the light of what has been stated above. We make no order as to costs in the appeal and in the civil revision petition.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //