1. These two appeals arise out of a suit on a mortgage, Ex. A, dated the 28th September, 1930. The first defendant on behalf of himself and his minor sons, the second and third defendants, mortgaged a large portion of his property to his son-in-law, the plaintiff, for a nominal consideration of Rs. 1,25,000 of which it is common ground, a major portion was not paid. The lower Court has found that the mortgage was supported by consideration to the extent of Rs. 55,287-8-0 which is the amount claimed by the plaintiff. In 1932, as a result of a petition filed by another creditor in April 1931, the first defendant was adjudged an insolvent. The execution of the suit mortgage, Ex. A, was one of the acts of insolvency alleged. The learned District Judge found that Ex. A was not a fraudulent transaction, but holding that another act of insolvency had been committed he adjudged the first defendant an insolvent. This decision was confirmed in appeal by the High Court which did not go into the question of the character of the present suit transaction. The suit on the mortgage was filed on the 29th September, 1937. On the 19th April, 1937, the Official Receiver, the fourth defendant, held an auction of the first defendant's properties including the hypotheca. The successful bidder was the sixth defendant, but the actual execution of the sale deed in his favour was not effected until the 20th January, 1939 and it was registered on the 10th May, 1939.
2. The sixth defendant is the appellant in A.S. No. 192 of 1941 and he seeks to challenge the lower Court's finding that the mortgage was a bonafide transaction supported by consideration to the extent of Rs. 55,287-8-0. We do not propose to go in detail into the question of consideration, for we are in full agreement with the finding of the learned Subordinate Judge. It seems to us quite clear that although the plaintiff is the son-in-law of the first defendant, he was only persuaded to enter into this transaction by the intervention of two pleaders interested in the family, one of whom was a creditor of the estate, and that the whole object of the transaction was to enable the first defendant to pay off his creditors. It appears moreover that the cash consideration was devoted to the discharge of the more pressing creditors and that in all probability the full consideration of the mortgage would have been advanced and utilised for the same purpose, had it not been for the economic disasters which afflicted the whole country shortly after the date of the mortgage. The result of the depression was that the plaintiff found it difficult to collect his own dues and the creditors who had not been paid became nervous and precipitated matters by filing the insolvency petition. Having regard to the elaborate documentary evidence supporting the previous debts which are included in the suit mortgage and the absence of any indication that this evidence is not true, we agree with the lower Court in finding that the suit mortage was a valid transaction supported by consideration to the extent of Rs. 55,287-8-0. This disposes of A.S. No. 192 of 1941 which is dismissed with costs of first Respondent.
3. A.S. No. 56 of 1941 is the plaintiff's appeal which is concerned solely with the relief allowed to the sixth defendant by the lower Court under the Madras Agriculturists' Relief Act. The arguments of the appellant are, firstly, that the sixth defendant is not a debtor entitled to relief under the Act so far as the suit mortgage is concerned seeing that he acquired no interest in the hypotheca of the mortgage until the 20th January, 1939 : secondly, that the sixth defendant is not an 'agriculturist' under that Act in that in July, 1935 he purchased three villages forming part of an estate in respect of which villages peishkush amounting to Rs. 738 and Jodi amounting to Rs. 203 is payable so as to being into operation proviso (D) to Section 3(ii) of the Agriculturists' Relief Act; and thirdly, that the scaling down of the debt has been carried too far, even assuming that the sixth defendant is entitled to relief. We are of opinion that the appellant should succeed on all these three contentions.
4. In order that the debtors may be entitled to releif under Sections 8 and 9 of Act IV of 1938, there must be a 'debt' at the commencement of the Act, that is to say, the 22nd March, 1938. At the commencement of the Act the sixth defendant owned no interest in the hypotheca. All that he had was a contract for the sale thereof in respect of which he had made a payment and was at that time disputing his liability to pay full stamp duty on the sale deed to be executed. Having regard to the terms of Section 54 of the Transfer of Property Act it cannot be said that he owned any interest in the suit land so as to make him liable to discharge the debt thereon. Vide Perianna v. Sellappa : AIR1939Mad186 . It is also clear that the sixth defendant was not an agriculturist. It is admitted that he purchased the three villages in respect of which peishkush and jodi are payable, in Court auction on the 22nd July, 1935. At the time when the lower Court's judgment was pronounced the sale was under attack, but it has since been confirmed and it is now undeniable that the sixth defendant is the titular owner of those villages. The lower Court accepted his contention that he was a benamidar for the fifth defendant in the purchase of these villages; but even so it seems to us undeniable that the titular owner of an estate is, under the definition in Section 3(5) of the Madras Estates Land Act, a landholder, being a person entitled to collect the rent. The matter has been the subject of a previous decision by us. Narayanasami Reddy v. Veerasami Reddy : AIR1941Mad244 . See also Rangaswami Reddi v. Gopalakrishna Reddi : AIR1941Mad200 . The question of the extent of the relief which could be granted to the sixth defendant if he were entitled to relief only becomes material if the case goes further. But it seems to us that the lower Court is clearly wrong in allowing the sixth defendant to claim relief with respect to the original principal of the antecedent promissory notes for which he was under no liability whatever. The relief to which he should properly have been entitled on the assumption of the lower Court was a scaling down of the debt to the principal sum actually advanced under the mortgage with interest at 61/4 per cent, from 1st October, 1937. The matter is covered by our decision in Nachiappa Chettiar v. Marappa Goundan : (1942)1MLJ329 . The result therefore so far as the sixth defendant is concerned is that the plaintiff is entitled to a decree against him for Rs. 55,287-8-0 with interest at 71/2 per cent, compound up to the date of redemption and costs in both Courts and subsequent interest at 6 per cent, interest will be calculated from 28th September, 1930, on Rs. 52,287-8-0, and from 5th November, 1930 on Rs. 3,000.
5. The question of the liability of the second and the third defendants under this decree forms the subject of a memorandum of cross objections filed in forma pauperis.
6. The contention of the second and third defendants is that the sale by the Official Receiver of the estate of their father, the first defendant, to the sixth defendant does not convey to him the title of the two sons, defendants 2 and 3. This contention is based on the full Bench decision in Ramasastrulu v. Balakrishna Rao : AIR1942Mad682 , which has been extended to cases of sales of the sons' interest by the father by the decision of a division bench in Virupaksha Reddi v. Siva Reddi : AIR1943Mad652 which we have followed in Suryanarayanamurthy v. Vesraju : (1945)1MLJ292 . It follows from these decisions that after the sale by the Official Receiver, defendants 2 and 3 remained the owners of their shares in the hypotheca. They are therefore entitled to redeem the mortgage.
7. They do not claim any relief under Madras Act IV of 1938. It has been urged by the sixth defendant that the Court should, without any claim on their behalf, find that they are entitled to relief as agriculturists, so that the relief which is given to them as mortgagors may enure to the benefit of the sixth defendant who is not an agriculturist. We have no doubt, held that when the mortgagors are given relief under Madras Act (IV of 1938) and the burden upon the property is thereby lightened, the fortuitous benefit of that relief will be enjoyed by a subsequent purchaser, though the latter is not himself entitled to claim the benefits of the Act. This fortuitous benefit, however, cannot be claimed as of right by the purchaser who is not an agriculturist. It is the accidental result of a claim successfully advanced by the mortgagors. In the present case, the mortgagers have not claimed such a benefit nor have they adduced any evidence to show that they art agriculturists. We therefore cannot accede to the request of the sixth defendant that the right of the mortgagors to relief should be investigated merely with the object of giving an accidental relief to the non-agriculturist purchaser. The memorandum of objections is therefore allowed with costs as against the sixth defendant and the decree will be amended so as to provide for the redemption of the mortgage by defendants 2 and 3 on payment of the amount of Rs. 55,287-8-0 with interest at 71/2 per cent. compound calculated as indicated in the judgment on the main appeal up to the date of redemption.
8. Time for redemption--six months.
9. The sixth defendant will pay the Court-fee due to the Government on the memorandum of cross-objections.