1. This Civil Revision Petition raises the question of the way in which Section 8 of Madras Act IV of 1938, should be interpreted in a case in which there have been payments made and appropriated after the 1st October, 1937 and before the Act came into force. The essential facts are that there was a debt anterior to the 1st October, 1932, which resulted in a decree dated the 30th September, 1936. The decree was for a sum of Rs. 1,761-8-0 with interest at 6 per cent, and for costs amounting to Rs. 437-6-3 with interest thereon. After the decree had been passed there were three payments: (1) Rs. 500 on 25th January, 1938; (2) Rs. 200 on 23rd February, 1938; and (3) Rs. 300 on 2nd March, 1938. It is found by the Court below that these payments were all appropriated towards costs and interest. The question is whether these appropriations are liable to be undone with reference to Ssii-8 and 19 of the Act.
2. The petitioner contends that the plain way of working out the provisions of the Act in a case of this kind is as follows. Firstly, you appropriate payments under Section 19 to costs as originally decreed, that is to say excluding interest on costs Then you look to the state of affairs as on 1st October, 1937, and you cancel so much of the debt as represents interest payable on that date, disregarding the fact that some of that interest is embodied in the decree for a fixed sum. Next you take the principal and work out the interest at the rate of the decree, six per cent., which is less than the maximum prescribed in Section 12 and appropriate the payments as on the date on which they were made, firstly, to the amount due for costs already mentioned; secondly, to the amount due for interest after 1st October, 1937. Any balance will be credited towards the principal. This interpretation of the Act gives full force to the provisions of the first clause of Section 8. It is, however, contended for the respondent that the interpretation ignores the provisions of Section 7 and the fourth clause of Section 8 The argument is that under Section 7 all that can be scaled down is the debt payable at the commencement of the Act and therefore to the extent to which there have been appropriations before the commencement of the Act there is no debt payable and the process contemplated in the first clause of Section 8 cannot be applied. It seems to us that this is placing upon Section 7 an interpretation which is inconsistent with the provisions of Section 8 and the proviso to Section 19. The proviso to Section 19 quite clearly contemplates a re-appropriation and re-adjustment in respect of payments actually made either before or after the commencement of the Act. That is to say the debt to be scaled down is not the debt less payments made before the Act, but the debt having regard to the payments made before the Act which have to be readjusted in accordance with its provisions. Similarly the first clause of Section 8 does not say interest outstanding on the 1st October, 1937, less any amounts appropriated thereto before the commencement of the Act. The section seems to contemplate the cancellation of all the interest as it stood on the 1st October, 1937, without regard to the subsequent appropriations.
3. A further contention is that the fourth clause of Section 8 protects the creditor from re-appropriation of any amount appropriated already. This seems to us to be an interpretation which is not in accordance with the plain meaning of this clause. The fourth clause appears to us to contemplate cases in which the literal application of the scaling down provisions would result in an obligation by the creditor to pay back in cash to his debtor something which the latter has voluntarily paid towards the debt. This, according to the clause, need not be done. If the debtor has paid something over and above that which would be due from him after the application of the Act the creditor keeps the excess. There is nothing in this clause which to our mind justifies the interpretation of it as giving sanctity to appropriations made after 1st October, 1937 and before 22nd March, 1938. In our view therefore the debt has to be scaled down in the manner for which the petitioner here contends that is to say by cancelling the interest payable on the 1st October, 1937, adjusting the payments made firstly to costs as decreed; secondly to the amount outstanding towards interest as on the dates of payments after cancelling the interest outstanding on the 1st October, 1937; and thirdly adjusting any balance towards the principal debt.
4. The revision petition is therefore allowed and the application is remitted to the trial Court which will dispose of the, matter in the light of this judgment. The respondent will pay the petitioner's costs.