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Muthuswami Odayar Vs. Savarimuthu Odayar - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberLetter Patent Appeal Nos. 55 and 84 of 1961
Judge
Reported inAIR1963Mad249; (1963)IMLJ171
ActsDebt Law; Madras Agriculturists' Relief Act, 1938 - Sections 9A, 9A(9) and 13
AppellantMuthuswami Odayar
RespondentSavarimuthu Odayar
Appellant AdvocateT.S. Kuppuswami Iyer, Adv. in LPA No. 56 of '61 and ;K.S. Desikan and ;K. Raman, Advs. in LPA No. 84 of '61
Respondent AdvocateS. Thyagaraja Iyer, Adv. in LPA No. 56 of '61 and ;K.S. Naidu, Adv. in LPA No. 84 of '61
Cases ReferredNainamal v. Subbarao
Excerpt:
property - payment on redemption - debt law and sections 9a and 13 of madras agriculturists' relief act, 1938 - whether by extending statutory fiction there could be re appropriation of payment which had been made as rent - what had been paid all along by mortgagor under lease granted by mortgagee was only rent - fiction enacted in sub-section 9 (a) (1) will not apply to it - mortgagee entitled to repayment of principal amount due as condition of redemption - question answered in negative in favour of mortgagee. - - abdul gafur, air1962mad1 .but in view of the arguments addressed to us, it will be useful to refer briefly to the facts of that decision as well as the twp later full bench decisions. not even a failure of consideration in regard to the new loan. while considering a.....ramachandra iyer, c. j. 1. these appeals have raised a question of some difficulty on the interpretation of sub-section (9) (a) (i) of section 9-a of the madras agriculturists relief act (hereinafter to be referred to as the act) and the importance of it has necessitated this reference to a full bench. the point for decision can be formulated thus: 'where in the case of a usufructuary mortgage (to which the scaling down provisions of section 9-a of the act would apply) created after the enactment came into torce, there has been a lease back by the mortgagee of the mortgaged properties to the mortgagor, the payments of rent made by the latter to the former can be regarded as payments made for interest and be re-appropriated towards the principal after providing for interest at the rate.....
Judgment:

Ramachandra Iyer, C. J.

1. These appeals have raised a question of some difficulty on the interpretation of Sub-section (9) (a) (i) of Section 9-A of the Madras Agriculturists Relief Act (hereinafter to be referred to as the Act) and the importance of it has necessitated this reference to a Full Bench. The point for decision can be formulated thus:

'Where in the case of a usufructuary mortgage (to which the scaling down provisions of Section 9-A of the Act would apply) created after the enactment came into torce, there has been a lease back by the mortgagee of the mortgaged properties to the mortgagor, the payments of rent made by the latter to the former can be regarded as payments made for interest and be re-appropriated towards the principal after providing for interest at the rate prescribed by Section 13.'

The two appeals concern different parties and have nothing in common except the determination of the question aforesaid. We shall first refer briefly to the facts that have led up to the two appeals.

2. L.P.A. No. 56 of 1961: is an appeal under Clause 15 Letters Patent from the judgment of Jagadisan J. where the respondent, an agriculturist, created on 7th May 1945 a usufructuary mortgage in favour of the appellant to secure a loan of Rs. 1000. The appellant, the mortgagee, leased back the property to the respondent stipulating an annual rent of 40 kalams of paddy. The paddy appears to have been almost regularly paid and only an insignificant part thereof was in arrears at the time; when the respondent instituted the suit for redemption. In the suit, out of which this appeal arises, the respondent claimed that the rents paid by him should be commuted on terms of money and after appropriating that part thereof representing 5 1/2 per cent interest on the loan advanced, the balance should be credited to the principal and that if that were done, there would be nothing due on the mortgage. Both the lower Courts accepted the respondent's contention and after declaring that nothing wasdue to be paid under the mortgage, directed redemption. This view has been affirmed by the learned Judge.

3. L. P. A. No. 84 of 1961: relates to the judgment of Venkatadri J. on almost similar facts mere the respondents borrowed on 10th May 1944 from the appellant's father a sum of Rs. 1850 after executing a usufructuary mortgage of certain properties. There was a lease back to the mortgagor of the same properties at an annual rent of 72 kalams. Rents were paid tor some years but there was default in respect of two years. The mortgagee's son filed a suit to recover the lease amount in S.C.S. No, 26 of 1956 on the file of the Subordinate Court, Kumbakonam, and obtained a decree for Rs. 694-2-0 being arrears of rent and Rs. 180-10-0 by way of costs. The mortgagors then instituted the suit for redemption praying for a declaration that the mortgage bond and the decree in Small Cause Suit had become discharged by reason of interest having been paid in excess of what was prescribed by Section 13 of the Act. The trial Court accepted their case in the main, and held that a sum of Rs. 476-15-0 alone was due under the mortgage. On appeal by the mortgagee the learned Subordinate Judge recalculated the amount due under the mortgage, document and found that a sum of Rs. 809-6-0 would be due. The mortgagee did not appeal from that judgment but the mortgagors did. Venkatadri J. held that the method of calculation adopted by the lower appellate Court was not correct and that the debt had to be scaled down in the light of the directions given by him. The decree of the lower appellate Court was set aside and the appeal remanded for reconsideration.

4. Both Jagadisan J. and Venkatadri J. in their respective appeals have, in upholding the claim of the mortgagors, held that the payments of rent made by the mortgagors should be regarded as payments of interest and so far as such interest was in excess of the ceiling rate fixed in Section 13, they should have been deemed to be paid by mistake of law and that the debtors were entitled to have the excess repayments, re-appropriated towards principal. In coming to this conclusion, the learned Judges followed the decision of a Bench of this Court in Srinivasa Rao v. Abdul Rahim Sahib : AIR1953Mad917 . That decision has now been expressly overruled by a Full Bench of this Court in Chenammal v. Abdul Gafur, : AIR1962Mad1 . But in view of the arguments addressed to us, it will be useful to refer briefly to the facts of that decision as well as the twp later Full Bench decisions.

5. In : AIR1956Mad618 , the defendant, who was an agriculturist, was indebted to the plaintiff under a promissory note which stipulated interest at 12 per cent per annum. That was much above the rate prescribed by Section 13 of the Act. Payments were made expressly towards interest at that rate. But when the matter came up before the Courts for the recovery of the amount due under the promissory note, the debtor claimed that the interest paid by him should be reappropriated to the principal allowing the creditor interest, on the loan at 5 1/2 percent per annum. The learned Judges allowed this to be done substantially for two reasons: (1) that the debtor was entitled to relief under Section 72 of the Contract Act as the payment of excess interest was made under a mistaken belief that in law the plaintiff was entitled to a higher rate of interest; (2) that the expression 'interest due' in Section 13 could only be interpreted as 'interest legally due' and as the interest paid over and above the maximum amount prescribed by Section 13 could not be regardedas legally due, the debtor was entitled to have the excess amount appropriated towards the principal.

6. A question under Section 13 of the Act arose on ditterent facts before a Full Bench of this Court in S.M. Tharaganar v. Sankara Pandia Mudaliar : (1958)2MLJ568 . That was a case of a debt incurred by an agriculturist after the Act came into force and was therefore governed by Section 13. But interest was stipulated in excess of the rate mentioned under that section. There were series of settlements of accounts and renewals of the original liability by including in the new document the unpaid interest at the stipulated rate. The suit which was laid on the last of such settlement of accounts was contested by the debtors on the ground that the entire account should be reopened and that they should not be made liable to pay interest in excess of 5i per cent per annum, the rate fixed by the statute. The Full Bench held that there was nothing in the Act to prohibit parties from entering into a contract stipulating a rate of interest higher than that allowed by the Act, and that when a creditor with the assent of his debtor added to the principal the interest accrued in terms of the contract, and the debtor entered into a fresh contract treating the consolidated amount as principal for the fresh loan, there was nothing illegal; not even a failure of consideration in regard to the new loan.

There was no occasion in that case to consider the correctness or otherwise of the decision in : AIR1956Mad618 . But there can be little doubt that the inevitable corollary of the principle accepted in that case would run counter to the reason which found acceptance with the learned Judges in the earlier case. If a contract of loan, was entered into after the Act came into force, under which the debtor agrees to pay higner rate of interest such contract not being unlawful any payment under it could not obviously be recovered back under Section 72 of the Indian Contract Act. The distinction between a case where a payment unrelated to an antecedent contract Is made under a mistake of law and a case where such payment is made under a contract which was induced by a mistake of law has been pointed out by the Privy Council in Shiba Prasad Singh v. Srish Chandra 1949 2 MLJ 657 : 76 Ind App 244: AIR 1949 PC 29. Lord Reid in the course of the judgment observed at page 662: (of Mad LJ): (at p. 302 of AIR):

'If a mistake of law has led to the formation of a contract, Section 21 enacts that that contract is not for that reason voidable. If money is paid under that contract, it cannot be said that that money was paid under mistake of law; it was paid because it was due under a valid contract, and if it had not been paid payment could have been enforced. Payment 'by mistake' in Section 72 must refer to a payment which was not legally due and which could not have been enforced; the 'mistake' is in thinking that the money paid was due when in fact it was not due. There is nothing inconsistent in enacting on the one hand that if parties enter into a contract under a mistake in law that contract must stand and is enforceable, but on the other hand, that if one party acting under mistake of law pays to another party money which is not due by contract or otherwise, that money must be repaid.'

But these observations in their application to a case arising under the Act have got to be read with a qualification. If interest in excess of the statutory rate is stipulated under a contract, such excess interest cannot be recovered the simple reason being that the Act specifically makes such excess interest irrecoverable.

7. The correctness of the decision in : AIR1956Mad618 directly arose for consideration in : AIR1952Mad1 ). The learned Judges held that Section 13 did not render the payment of or even a contract to pay interest on a debt at a rate higher than that prescribed in the section, illegal and there is automatic discharge of interest stipulated at a higher rate; there being no provision in the Act to make the contract to pay such excess interest either illegal or effect an automatic discharge of the same, the payment made by the debtor, under the contract, would not entitle the debtor to reopen the transaction and obtain a recalculation of the interest and re-appropriation of the payment on the basis of the section. The result of these foregoing decisions is, that although Section 13 provides a ceiling rate of interest in regard to debts payable by agriculturists with respect to contracts of loans entered into after the Act came into force, the contract to pay higher rate of interest is not per se illegal and that payment of interest in accordance with such a contract cannot be deemed unlawful so as to entitle a debtor to reopen and adjust the excess amount towards principal.

8. Learned counsel for the appellants contends that as the decision in has been overruled, the view taken by the learned Judges in the appeals before us following that decision could no longer be sustained, and the mortgagees in the two cases should therefore be held entitled to recover the principal amount due to them. We are, however, unable to see how the principle underlying the two Full Bench decisions referred to above can be applied to the present case. In : AIR1959Mad96 , it has been held that an agriculturist debtor who voluntarily agrees to pay interest at a higher rate and does pay at such rate will not be entitled to be relieved against his own agreement and subsequent voluntary payment. This aspect of the matter has also been adverted to in the later Full Bench decision in : AIR1952Mad1 in the following words at page 225 (of Mad LJ): (at p. 3 of AIR):

'if, according to the full Bench decision referred to, the debtor cannot demand reopening of the transaction and recalculation of the interest on the earlier bond, it must necessarily follow that in a case where he has in tact paid the interest at the contract rate and discharged his obligations in respect of interest, he cannot equally nave the transaction reopened, and the amount paid as interest at the contract rate re-appropriated in a different manner'.

It will be seen that in both the cases cited above, there was voluntary and conscious act on the part of the debtor first in entering into an agreement for payment of the higher rate of interest and secondly in fulfilling his obligations under that agreement by paying at the higher rate of interest. In the cases before us, it cannot be said that the debtor paid the interest with the consciousness that he was paying an interest and that at a higher rate. What he stipulated to pay to the mortgagee was rent and when he paid such rent his consciousness was that he was paying rent and not interest. It is true that under Sub-section (9)(a)(i) of Section 9-A, the statute creates a fiction that the rent payable by the mortgagor in certain circumstances will have to be treated as interest due under a mortgage bond. But as we shall show presently, the fiction has been enacted for the limited purpose of ascertaining the amount du' at the time of redemption. Obviously such a fiction cannot be extended to in such a manner so as to make the debtor who pays the rent to the mortgagee qua rentas doing so with the consciousness that he was paying interest and that at the higher rate. In Balasubramania Thevar v. Nallamuthu Moopanar : (1960)2MLJ116 Anantanarayanan J. while considering a similar argument observed at page 120:

'We cannot assume that the consciousness with which these rents were paid by the mortgagor, shall be deemed to be the consciousness with which a debtor repays moneys, and that the jural relationship of lessee and lessor snail further be deemed to have been substituted by the different relationship of debtor and creditor and that in a context in which the debtor had the right to make specific appropriations towards interest, expressly and in writing, he failed to do so.'

The conscious payment of a rate higher than what the law obliges the debtor to pay, implies a choice in the debtor of paying either at the statutory rate of interest or at the higher contract rate. Such a choice does not exist in the case of a stipulation of rent under a lease created by the mortgagee in favour of the mortgagor. That except at the time for redemption it will not be open to the mortgagor to plead that the rent due by him is interest payable to the mortgagee has been held in Visalakshi Achi v. Mayalagu, 68 MLW 630. There the mortgagor who took a lease of the mortgaged properties from his mortgagee contested the claim for arrears of rent on the ground that it should be scaled down in accordance with the provisions of the Act. That defence was negatived. We are therefore of the opinion that the decision in : AIR1962Mad1 (FB) will not apply to the particular question we have got to decide in the present cases.

9. Before we take up the point set out for determination it will be useful to state broadly the relevant scaling down provisions under the Act in regard to a debt due by an agriculturist. The Act is intended to afford relief to indebted agriculturists providing for scaling down all debts due by them either by wiping out the outstanding interest or reducing the rate of interest agreed to be paid by an agriculturist on loan contracted by him. The Act classifies the debts into three categories: (1) those incurred prior to the 1st October 1932; (2) those incurred after the 1st October 1932 but before 22nd March 1938, the date of coming into force of the Act; (3) debts incurred subsequent to the date, namely, after the coming into force of the Act. In regard to debts prior to the 1st October 1932, all interest outstanding on 1st October 1932 is completely discharged (vide Section 8). Sub-section (2) to that section provides for the application of the rule of damdupet to such debts, that is where a debtor has paid twice the amount of the principal whether by way of principal or interest, the entire debt is deemed to be discharged the section contains other provisions for determining the amount repayable by a debtor coming under that section. In respect of the second category of debts, Sections 9 and 12 provide the machinery for scaling down. The rate of interest is reduced to five per cent, per annum simple interest and the amount paid, notwithstanding its appropriation at the contract rate is re-appropriated at this statutory rate of interest and the balance if any is adjusted towards principal (vide Veeraraju v. Balakotiswara Rao, : AIR1951Mad67 (FB). In respect of debts falling under the third category, that is, those debts incurred after the Act came into force, the rate of interest is fixed by Section 13 at 5 1/2 per cent, per annum and it will not be open to the creditor to recover anything more.

10. In its original form, the provision of the Act did not apply to agriculturists under which the mortgagee was entitled to remain in possession of the property. But by the amending Act XXIII of 1948, a new section--Section 9-A--was introduced, which made a special provision for scaling down of debts, covered by mortgages wmcn entitle the mortgagee to be in possession of the property. That section applies to a limited class of cases only, that is, to all such mortgages that are executed prior to the 30th September 1947 and which do not come under Sub-sections (10) and (11) thereto. The section deals principally with two matters, namely, the time for redemption and the amount payable on redemption. On the first aspect of the matter Sub-section (2) states that the mortgagor shall be entitled to redeem the whole of the property mortgaged notwithstanding the fact that the time specified to the mortgage deed has not arrived. As regards the amount payable on redemption, the section makes different provisions tor cases where the mortgagee is in possession of the property and one where the mortgagee has leased back the property to the mortgagor.

In regard to the former the section proceeds on a theory that where a mortgagee has been in possession and enjoyment of the property for a period of thirty years, he might have realised not merely the principal amount added but an equal amount by way of interest as well. Sub-section (5) therefore provides that the debt should be deemed to have been fully discharged after thirty years enjoyment. This is an application of the rule of damdupet. Sub-section (5) applies to all cases of mortgages with possession, where the entire property is in the possession of the mortgagee, and even to a case where the mortgagee has leased back the property to the mortgagor. Where the period of enjoyment by the mortgagee is short of thirty years, there is no proportionate abatement of the debt where the mortgagee had leased back the property to the mortgagor. It is otherwise whether the mortgagee himself is in possession of the property. Where the mortgagor continues in possession of the property, as for example, where instead of enjoying the property himself, the mortgagee leases it back to the mortgagor, Section 9-A, Sub-section (9) provides for the manner of scaling down. As we are concerned in this case only with Sub-section (9) (a) (i), we shall set out that provision hereunder:--

'Except in cases falling under Sub-section (5) (a), where the mortgaged property or, as the case may be, the portion thereof in the possession of the mortgagee has been leased back to the mortgagor by the mortgagee, the rent due to the mortgagee under the lease (after deducting from such rent any revenue, tax or cess paid or payable by the mortgagee in respect of the property) shall be deemed to be the interest on the mortgage-debt or the portion thereof attributable to the portion of the property aforesaid and the provisions of Section 8 or 9 read witn Section 12, or Section 13, as the case may be shall apply to the entire debt.'

11. Section 9-A also provides for intermediate cases where part of the properties are in the possession of the mortgagor or where in addition to the receipt of the rents the mortgagee stipulates for additional payment of rent or conversely where the mortgagee agrees to pay back a portion of the rent. It is unnecessary for the purpose of the present case to consider those cases. It has been held in more than one decision of this Court, that the provisions of Section 9-A can be invoked only at the time of the redemption. For calculating the amount due to the mortgagee at the time of redemption Sub-section (9) (a) (i) enablesa fiction namely that 'the rent due to the mortgagee under the lease. ......... shall be deemed to bethe interest on the mortgage debt' which is liable to be scaled down in accordance with the appropriate provisions of the Act for non-usufructuary mortgages.

12. Mr. T.S. Kuppuswami Aiyar, appearing for the appellant in the first of the two appeals, contends that the effect of the sub-section is to make rent equivalent to interest with the consequent result, that although the mortgage is an usufructuary one and there is a lease back to the mortgagor, the entire transaction should be regarded only as a simple mortgage as it were, under which there is a stipulation for interest at the rate fixed in the lease deed. Basing his argument on this assumption, the learned counsel contends that payments of rent in excess of the statutory rate at 5 1/2 per cent per annum should be considered as voluntary payments at the contract rate of interest and that such payments cannot Be reopened on the principle of the decision in : AIR1962Mad1 (FB). In support of his contention, learned counsel relies upon a recent decision of Kallasam J. in S.A. No. 258 of 1957 (Mad). In that case there was a payment of rent by the mortgagor who took possession under the mortgagee, and the contract rate worked out at higher than 5 1/2 per cent per annum. The learned judge held that the rent paid should be taken as interest for the mortgage and that even if such interest was higher than the statutory rate, the payment could not be reopened on the principle of the Full Bench decision.

With great respect to the learned Judge, we are or opinion that the rent which has already been paid cannot be regarded as interest for the purpose of sub-section (9) (a) (i). That sub-section enacts a fiction only in respect of rents due and not in respect of rents paid. It is a well settled principle of law that a legal fiction should be limited to the purpose for which it was created and should not be extended beyond its legitimate field. In Bengal immunity Co., Ltd. v. State of Bihar, (S) : [1955]2SCR603 Bhagwati J. observed at page 709 (para 107):

'The argument totally ignores the purpose and efficacy of a legal fiction. A legal fiction presupposes the correctness of the state of facts on which it is based and an the consequences which flow from that state of tacts have got to be worked out to their logical extent. But due regard must be had in this behalf to the purpose for which the legal fiction had been created. If the purpose of this legal fiction contained in the Explanation to Article 286 (1) (a) is solely for the purpose of Sub-clause (a) as expressly stated it would not be legitimate to travel beyond the scope of that purpose and read into the provision any other purpose howsoever attractive it may be.

The legal fiction which was created here was only for the purpose of determining whether a particular sale was an outside sale or one which could be deemed to have taken place inside the State and that was the only scope of the provision. It would be an illegitimate extension of the purpose of the legal fiction to say that it was also created for the purpose of converting inter-state character of the transaction into an intra-State one.......'

In : (1960)2MLJ116 to which I made reference earlier, Anantanarayanan J. has expressed, if I may say so, with respect in inimitable language thus,

'We may thus arrive at two different principles, in dealing with a statutory fiction as applying to certain facts. Firstly, the Court is entitled to and bound to ascertain, for what purposes the fiction was enacted, betweenwhat persons it should be operative, and how it should be given effect to. Secondly, in giving effect to a legal fiction, the corollaries of the assumed identity cannot be shirked; it is not merely proper, but even necessary, to assume the other facts also upon which the fiction can operate.'

But the learned Judge also cautioned against the extension of the legal fiction beyond the purpose for which it was enacted and I have earlier referred to a relevant passage from his judgment on that aspect of the matter. The decision itself furnishes an example of the limitation of the legal fiction. That was a case of a usufructuary mortgage which was created prior to the 1st October 1932. Under Section 9-A Sub-section (9) (a) (i) the debtor would be entitled to have the rent due scaled down under the provisions of Section a of the Act. The debtor claimed that all payments of rent made by him should be regarded as open payments and appropriated towards principal by virtue of Explanation 1 to Section 8. The learned Judge in the words which I have extracted earlier in the judgment rejected that contention. It is true as held in East End Dwelling Co. Ltd. v. Finbury Borough Council 1952 AC 109 that within the field to which legal fiction operates, all assumptions of facts and their inevitable corollaries have got to be taken as existing by virtue of the fiction. Lord Asquith states that principle in the following words at page 132,

'If, you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed must inevitably have flowed from or accompanied it.. ...The statute says that you must imagine a certain state of affairs, it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.'

But this principle cannot entitle one to extend the fiction beyond its field or prescribed operation. And that is, what the appellants seek to do in the present case. Sub-section (9) (a) (i) as we have said earlier, deems rent that is due as interest. That cannot mean that the rent that had been paid should also be deemed to be interest. We are therefore of the opinion that the rents which had been voluntarily paid already by the mortgagor could not be deemed to be interest, thereby attracting the principle recognised in : AIR1962Mad1 (FB).

13. But the appellants to the two appeals will, in our opinion, have to succeed on different grounds, under Sub-section (9) (a) (i) what is regarded as interest is only rent that is due under the lease. It has been contended on behalf of the respondents that the rent due under that section is the same thing as rent that has been stipulated under the lease deed. Support for this argument is sought from the decision of the Andhra Pradesh High court in Nainamal v. Subbarao, AIR 1957 AP 546, where it has been held that the words 'all interest due on any debit' in Section 13 qualified as they are by the word 'all would mean interest payable on the date and not merely Interest that remains still unpaid. This interpretation or Section 13 has not been accepted in : AIR1962Mad1 (FB). Srinivasan J. delivering the judgment of the Full Bench observed, at p. 228: (of Mad LJ): (at p. 5 of AIR):

'The word 'due' has undoubtedly a sense of something to be performed in the future as distinct from something which has happened in the past. In In re Moss., Ex parte Mallett, 1905 2 KB 307 the proper meaning of thisexpression came up for consideration, and Darling J. observed: 'The covenant of the appellant was to pay interest on the principal sum 'so long after the day fixed for payment as any principal money remains due under these presents'. It is clear, therefore, that if no principal money remains due, the appellant is under no liability to pay interest to Cooke, and the question therefore, is whether after the bankruptcy any principal money did in tact remain due. It is admitted that no action would lie against the bankrupt, but it is argued that the principal money nevertheless remains due even after he has obtained his discharge. Due from whom? It could only be due from the bankrupt, and ex hypothesi he has been discharged from all liability to pay the principal money. In my opinion, money can only be said to be due in a legal sense when it can be recovered in an action, and it is impossible to say that there can be anything due under this security when no money can be recovered by any legal process. If there is no principal money due, it follows that there is no interest payable. If therefore the meaning of the word 'due' is that it is something which can be recovered by legal process, that is obviously not the case here in relation to an amount of interest which has been paid and discharged by the debtor.'

14. It will also be noticed that the word 'all' in the phrase 'all interest due' in Section 13 which, in the opinion of the learned Chief Justice of the Andhra Pradesh implied an extended meaning to the word 'due' is absent in Sub-section (9) (a) (i) which only speaks of the rent due. That can only mean the rent that still remains unpaid. As we said earlier, the purpose of the fiction is to fix the amount for redemption and not to scale down the debt. Where there are arrears of rent due at the time of redemption the fiction will certainly operate and the debtor will be relieved except to the limit of 5 1/2 per cent per annum on the principal money secured. That was what was done in the decision reported in 68 MLW 630. There was a suit for arrears of rent. But pending appeal against the decree therein, the mortgagor had filed a suit for redemption. The redemption was ordered but the liability for the rent was left to be decided in the appeal against the decree for rent. The learned Judges held that while it was not open to the mortgagee to plead in a suit for rent that the rents as such should be limited to 5 1/2 per cent per annum, having regard to the circumstances of the case that a redemption decree had been passed and at the time of redemption, the rent was still remaining unpaid, it would be doing justice to the parties to ascertain the amount of rent due by applying the provisions of Sub-section (9) (a) (i). That was practically a case of working out rights on redemption. In our opinion, the word 'due' has to be given its plain meaning namely that which stilt remains unpaid. There is nothing in the statute to extend its meaning so as to include really what is not due namely that which has been paid already.

15. Mr. R. Viswanathan appearing for the respondents relying upon certain observations contained in : (1960)2MLJ116 has contended that the words 'rent due' will comprehend not merely the arrears of rent but also rents paid. In the case referred to above, the learned Judges observed,

'We may assume that rents or lease amounts paid constituted interest, and we may apply the provisions of Section 8 or 9 read with Section 12 or 13, as the case may be, to the facts.'

From this it is contended that the learned Judges have accepted that rents paid can be taken into account forapplying the rule of damdupet enacted in Sub-section (2) of Section 8 and for that purpose rents paid can be regarded as rents due under Section 9-A. That would mean that an extended meaning should be given to these words in Sub-section (9) (a) (i). As I have indicated earlier, the actual decision in this case was concerned with the question whether by extending the statutory fiction there could be a re-appropriation of the payment which had been made as rent. The learned Judges have negatived that contention. The question whether for the purpose of the application of Section 8(2) the rents paid by the mortgagor under a usufructuary mortgage, could be regarded as payments towards interest, did not arise before the learned Judges and it cannot therefore be held that the learned Judges have finally held whether rents paid should constitute interest under the sub-section. It follows that what had been paid all along by the mortgagor under the lease granted by the mortgagee was only rent and the fiction enacted in Sub-section (9) (a) (i) will not apply to it or deem it to be payment towards interest, so as to be available for scaling down under Section 13. The mortgagee will, there-fore, be entitled to the repayment of the principal amount due as a condition of redemption. The question which I formulated at the beginning will therefore have to be answered in the negative. The appeals will be adjourned by two weeks for enabling the counsel to file Memoranda showing the amounts due to the mortgagee under the respective mortgages. There will be no order as to costs.

Anantanarayanan, J.

16. I find myself in entire and respectful concurrence with the judgment of my Lord, the Chief Justice, and the conclusion, expressed by him, upon the point that arises for our determination in these appeals. Since I Was a party to : (1960)2MLJ116 I may be permitted to add that we were solely concerned in that case with the extent to which the statutory fiction enacted in Section 9-A, Sub-section (9) (a) (i) of the Act could or could not be properly extended, in the context of a case to which the provisions of Section 8 applied, so as to include within the scope of the fiction Explanation 1 to Section 8 as well, with the consequence that the payments were not only deemed to be towards interest, but were to be treated as open payments, appropriated towards the liquidation of the principal itself. This argument was negatived, after a discussion or the limits within which alone a legal fiction could operate, and the degree to which its necessary corollaries should either be assumed or otherwise. The proper construction of the words 'rent due' in Section 9-A Sub-section (9) (a) (i) did not arise ,for determination in that case. Even the applicability of the rule of damdupat enacted in Section 8 Sub-section (2) in the context of the operation of the legal fiction of Section 9-A Sub-section (9) (a) (i) was not specifically before us then, as my Lord has observed. It was tacitly assumed that the legal fiction was applicable to rents or lease amounts paid, since the distinction springing from the expression 'rent due' with emphasis upon the legal content of the expression 'due' was not then in focus.

(After the expression of the opinion of the Full Bencn,the appeals came on for hearing before Ramachandra IyerC. J. and Anantanarayanan J. and on 22-10-1962, theChief Justice for the Court delivered the Judgment by whichhe held that the mortgages in the appeals, though apparently in the form of usufructuary mortgages, were insubstance anomalous mortgages. His Lordship, therefore,passed preliminary decrees for sale in both the appeals.)


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