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Anumolu Tirupatirayolu (Died) and ors. Vs. Kaluri Venkata Subba Rao and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Case NumberA.A.O. No. 474 of 1946
Judge
Reported inAIR1950Mad287
ActsMadras Agriculturists Relief Act, 1938; ; Madras Agriculturists' Relief (Amendment) Act, 1948 - Sections 8; Debt Law
AppellantAnumolu Tirupatirayolu (Died) and ors.
RespondentKaluri Venkata Subba Rao and ors.
Appellant AdvocateV. Rangachari, Adv.
Respondent AdvocateM.S. Ramachandra Rao, Adv.
DispositionAppeal allowed
Cases Referred and Venkateswarlu v. Venkataraju
Excerpt:
.....relief act, 1938, section 8 of madras agriculturists' relief (amendment) act, 1948 and debt law - old debt split up into two new instruments - dispute regarding date of new debt for purpose of decree - as per old act in case of splitting up continuity of debt would be lost - amendment brought into legislature to allow continuity of debt in case of splitting up - amendment not applicable retrospectively - present debt created before amendment - continuity of present debt lost - date of debt was date of splitting up of debt. - - this requirement cannot be regarded as satisfied when the debt is divided among the heirs of the creditor and the debtor executes a separate instrument for a part of the debt in favour of each of such heirs. venkataraju air1941mad628 ,are no longer..........s. no. 120 of 1931 against the order of the principal subordinate judge of guntur scaling down the decree debt in a manner which the appellant considers to be unduly favourable to the judgment-debtor. 2. the point in dispute between the parties is a simple one. a promissory note was executed in renewal of two earlier promissory notes, exs. p-1 and p -2, in which a further sum of rs. 6000/- was advanced, making a total of rs. 15000/- due by defendants l and 2 and one p. prakasa rao. on 12th march 1931 an arrangement was entered into between the creditor and the debtors whereby prakasa rao undertook half the liability under the note, which amount-ed to rs. 9700/-, and for that amount he executed a mortgage bond in favour of the creditor. the defendants executed the suit promissory note for.....
Judgment:

Horwill, J.

1. This is an appeal by the decree-holder in O. S. No. 120 of 1931 against the order of the Principal Subordinate Judge of Guntur scaling down the decree debt in a manner which the appellant considers to be unduly favourable to the judgment-debtor.

2. The point in dispute between the parties is a simple one. A promissory note was executed in renewal of two earlier promissory notes, Exs. P-1 and P -2, in which a further sum of Rs. 6000/- was advanced, making a total of Rs. 15000/- due by defendants l and 2 and one P. Prakasa Rao. On 12th March 1931 an arrangement was entered into between the creditor and the debtors whereby Prakasa Rao undertook half the liability under the note, which amount-ed to Rs. 9700/-, and for that amount he executed a mortgage bond in favour of the creditor. The defendants executed the suit promissory note for the Other Rs. 9700/-. The question arising in this appeal is whether we must regard the splitting up of the old debt on 12th Match 1931 as a creation of two new debts, in which case 12th March 1931 will be the earliest date to which the judgment-debtors would be entitled to go back to reopen the decree debt, or we must regard the two new debts as continuations of the old one. A third alternative suggested was that the Rs. 9700/- paid by Prakasa Rao should be regarded as a partial discharge of the debt then existing. In the two last cases, the judgment-debtors would be entitled to go back to 10th May 1925, the date of execution of EX. P- 1, the original promissory note.

3. We consider that this question is settled by authority. In Ramasubbier v. Rama Aiyar : AIR1941Mad356 , there was a division in the family of this creditors and the debt divided between the two members of the family in unequal shares, the debtors executing fresh promissory notes in favour of the two members of the family. Patanjali Sastri J. in the judgment delivered by him on behalf of the Bench stated :

'. . . . it seems to us that the explanation to Section 8 re-quires that the debt must continue in substance to be the same though the amount and the parties under the various documents given as vouchers for it need not be strictly identical. This requirement cannot be regarded as satisfied when the debt is divided among the heirs of the creditor and the debtor executes a separate instrument for a part of the debt in favour of each of such heirs. We are, therefore, of opinion that the promissory notes executed by the debtors separately ... cannot be said to represent a renewal of the original debt or its inclusion in fresh documents within the meaning of the explanation ...'

This decision was followed by the same Bench in Venkateswarlu v. Venkataraju : AIR1941Mad628 and has been the recognised law relating to this type of transaction. These two cases were sought to be distinguished from the present case by the circumstance that there the debt was divided between two creditors, whereas here the debt was divided between two debtors. We are unable to see how that difference affects the reasoning of the learned Judges in the passage quoted above.

4. Since these judgments were delivered, Madras x, IV [4] of 1938 has been amended; and it is argued that the new Expl. (iii) to Section 8 has effected such a change that Ramasubbier v. Rama Aiyar : AIR1941Mad356 and Venkateswarlu v. Venkataraju : AIR1941Mad628 , are no longer good law. Explanation (iii) now reads:

'Where a debt has been renewed or included in a fresh document executed before or after the commencement of this Act, whether by the same or a different debtor and whether in favour of the same or a different creditor, the principal originally advanced together with such sums, if any, as have been subsequently advanced as principal shall alone be treated as the principal sum repayable under this section.'

The purport of the amendment is thus to make a debt a continuous one, notwithstanding a change in the creditor or debtor. It does not purport to affect the law with regard to a splitting up of a debt. It is a well-recognised canon of interpretation of amendments intended to bring about desirable changes in the law or to overcome interpretations put on the law by Courts, that the law existing before the amendment was made must be considered to continue to be good law, except in so far as the amendment makes it clear on the face of it that a change in the law as it stood before the amendment was intended. If the Legislature had intended by Expl. (iii) to bring about a change in the law relating to the continuity of a debt after it had been split up, one would have expected the Legislature to have introduced expressions in the amendment which clearly brought about that result. It is true that the word 'document' includes documents, 'creditor' creditors, and 'debtor' debtors in this explanation; but the point made by the learned Judges in Ramasubbier v Rama Aiyar : AIR1941Mad356 , as will be seen from the passage cited above, was that the debt could not be said to be renewed within the meaning of the Act when it was split up in that way. Although the Legislature has now made it clear that the debt shall not be considered to lose its continuity by virtue of a change of creditor or debtor; yet the word 'renewed' is retained. We are unable, therefore, to say that new Expl. (III) in any way affects the law laid down in the above cases. When a debt is split up, the continuity of the debt is lost.

5. It was argued in support of the decision arrived at by the lower Court, that the transaction entered into by Prakasa Rao should be regarded as a repayment of a half of the debt and a re-investment by the creditor of the sumin a mortgage. It seems clear to us that the transaction cannot be regarded in that light. It was intended to separate the joint liability of three debtors into liabilities by defendants 1 and 2 on the one hand for half of the decree amount and by Prakasa Rao for the other half.

6. It has finally been argued that since the Official Receiver was not given notice of the application in the lower Court, the application to scale down should now be remanded in order to give the Official Receiver an opportunity of raising fresh points and canvassing the findings already arrived at. Although notice to the Official Receiver in an application to scale down by an insolvent is desirable, because it will give the Official Receiver an opportunity of seeing that the application is properly prosecuted; yet it has been more than once laid down that it is not legally necessary that he should be impleaded or even given notice of the application. It has been stated from the Bar that the judgment-debtor was directed by the Official Receiver to file this application. That seems not improbable, as the application could be filed only by the insolvent himself; for he is an agriculturist, whereas the Official Receiver is not. No injustice seems to have resulted from a want of notice to the Official Receiver, because a counsel was engaged on behalf of the insolvent and various points taken and argued before the lower Court in the same way, as far as we can see, that the Official Receiver himself would have prosecuted the application had he been made a party.

7. If the transaction of 12th March 1931 resulted in the creation of new debts, then the calculation memo filed by the decree-holder in the Court below, except with regard to a slight modification in the rate of interest, has to be accepted as correct. All interest from 12th March 1931 to 1st October 1937 would have to be wiped out. The decree-holder would be entitled to the principal of Rs. 9700/-, together with interest at 6 per cent, per annum from 1st October 1987 till date of payment, and the decree costs. The appellant is entitled to his-costs in this Court and in the Court below, to be paid out of the insolventsestate.


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