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Varadarajam Pillai, Minor by Guardian Malayaperumal Pillai Vs. Krishnamurthi Pillai - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1941Mad321; (1940)2MLJ664
AppellantVaradarajam Pillai, Minor by Guardian Malayaperumal Pillai
RespondentKrishnamurthi Pillai
Cases ReferredKotayya v. Venkata Punnayya
Excerpt:
- - 10,000 executed by the petitioner in favour of the respondent's father on 1st september, 1926. the respondent applied for execution of the decree by attachment and sale of the mortgaged properties but the application was resisted by the petitioner on the ground that by virtue of order 34, rule 14, civil procedure code, the mortgaged property could not be brought to sale as the claim was one arising under the mortgage and the decree-holder must be deemed to be the mortgagee himself as the respondent obtained the decree as well as the promissory note on which it was based as a mere benamidar for his father for interest due on the mortgage......code in interpreting the term ' creditor' or ' the same creditor' in relation to a promissory note or a decree debt. in the case before stodart, j., a mortgage was originally taken by an uncle in his own name in respect of moneys belonging to his minor nephew and it was renewed in favour of the nephew after the latter attained majority. the learned judge thought that it was 'not unreasonable' to hold that the renewal was, in those circumstances, in favour of 'the same creditor'. this decision favours an extended interpretation of the term 'creditor' as including a person beneficially entitled to the amount lent, which is not warranted by the definition in section 3(v) of the act. as we had occasion to point out in kotayya v. venkata punnayya : air1940mad910 , the act is designedly.....
Judgment:

Patanjali Sastri, J.

1. This Civil Revision Petition arises out of an application by the petitioner under Section 19 of the Madras Agriculturists Relief Act to amend the decree in O.S. No. 775 of 1932 on the file of the lower Court by scaling it down in accordance with the provisions of that Act. The decree was passed on a promissory note for Rs. 2,350 executed in favour of the respondent on 12th April, 1932. The sum represented the interest due on an earlier mortgage for Rs. 10,000 executed by the petitioner in favour of the respondent's father on 1st September, 1926. The respondent applied for execution of the decree by attachment and sale of the mortgaged properties but the application was resisted by the petitioner on the ground that by virtue of Order 34, Rule 14, Civil Procedure Code, the mortgaged property could not be brought to sale as the claim was one arising under the mortgage and the decree-holder must be deemed to be the mortgagee himself as the respondent obtained the decree as well as the promissory note on which it was based as a mere benamidar for his father for interest due on the mortgage. This dispute was carried to this Court in CM. Section A. No. 59 of 1938 and was decided by King, J., in favour of the respondent in the decision reported in Varadarajam Pillai v. Krishnamurthi Pillai : AIR1939Mad436 , where the learned Judge observed:

It has been strenuously urged that both the mortgagee and the decree-holder are in essence the joint family consisting of the father and the son, and that therefore the mortgagee and the decree-holder are identical, and then t is argued that the son can be described as the mortgagee as he has some interest in the mortgage or that the father can be described as the decree-holder because it is found as a fact that the promissory note was really taken benami for him. It seems to me impossible to accept any of these propositions.

2. A Letters Patent Appeal (No. 100 of 1938) was preferred against this decision and it was dismissed on the ground that the decree based on the promissory note could not be regarded as having been obtained on a claim arising under the mortgage, the learned Judges expressing no opinion on the point decided by King, J. On these facts, the Court below held that it was not open to the petitioner herein to contend that the creditor under the promissory note or under the decree was not the respondent whose name appears as the payee on the note and the decree-holder on the decree, and that therefore the promissory note could not be regarded as a renewal in favour of the same creditor of the earlier liability to pay interest on the mortgage-debt. It accordingly amended the decree by awarding the interest only from 1st October, 1937, at the rate of six per cent. per annum.

3. Learned Counsel for petitioner contended before us that neither the provisions of the Negotiable Instruments Act nor those of the Civil Procedure Code which precluded a debtor from showing that a person other than the one whose name appeared as payee or decree-holder was the real creditor were applicable to proceedings for scaling down debts under the Madras Agriculturists Relief Act, that a person beneficially entitled to a debt was also a 'creditor' within the meaning of the latter Act and that there was nothing in its provisions to bar an enquiry as to who is the real creditor. The respondent on the other hand attempted to support the decision of the Court below on an alternative ground also, namely, that even if the creditor under the promissory note and the mortgage were to be regarded as the same person, the promissory note should be treated as a distinct debt in respect of which the sum of Rs. 2,350 should be regarded as the principal, and as the application to scale down related only to this debt, the interest alone payable under the note could be scaled down under Section 8 of the Act. We may state at once that this point is covered by our judgment in C. R. P. No. 1729 of 1938 and must be rejected for the reasons there indicated.

4. Turning to the petitioner's contention, we are of opinion that it is untenable. The debt in question having been incurred before the 1st October, 1932, it has to be scaled down in accordance with Section 8 of the Act. Under Sub-section (1) of that section, all interest outstanding on the 1st October, 1937, 'in favour of any creditor' of an agriculturist, has to be wiped out. This applies, of course, to the interest payable under the promissory note. But the petitioner also claims to be relieved from liability in respect of the sum of Rs. 2,350 for Which the promissory note was given. It was said that the promissory note was but a renewal of the original liability to pay interest of the mortgage and the explanation to Section 8 applied. But was it a renewal ' in favour of the same creditor?' Creditor' is not defined in the Act except as including 'his heirs, legal representatives and assigns.' It has to be noted that it does not include persons beneficially entitled to the sum lent. 'Creditor' in the ordinary sense of the term signifies a person to whom money is due. The creditor under the mortgage is the respondent's father or the joint family of which he was the manager. But the creditor in respect of the promissory note, having regard to Sections 8 and 78 of the Negotiable Instruments Act, is and can be only the respondent. The family or its manager could not sue to recover the amount due on the note even assuming that the respondent took it on behalf of the family (see Subba Narayana Vathiyar v. Ramaswami Aiyar : (1906)16MLJ508 ) and therefore could not be regarded as the creditor though, as between the family and the respondent, it may be beneficially entitled to the amount. This position has become still more emphasised by a decree having been passed in favour of the respondent. Under the provisions of the Civil Procedure Code, it is only the decree-holder or other persons specifically empowered in that behalf (for example under Order 21, Rule 16 and Rule 53) that can recover the decree amount by execution but not others although they may be beneficially interested in the amount. It is therefore difficult to see how the creditor under the mortgage and the promissory note can be said to be the same person.

5. Petitioner's learned Counsel placed reliance on the decision of Pandrang Row, J., in Anandam v. Mutkukumaraswami Mudali : AIR1940Mad52 and of Stodart, J., in C.R. P. No. 963 of 1939 which no doubt lend support to his contention, but with all respect we are unable to agree with them. In the former case, the learned Judge laid stress on the words 'in a suit thereon' in Sections 120 and 121 of the Negotiable Instruments Act and held that the special rule of exclusion or estoppel laid down therein operates only in suits on the negotiable instrument and should not be extended to applications by debtors to obtain relief under Act IV of 1938. In the first place, it is difficult to see what bearing Sections 120 and 121 have on the point under consideration. They enact a rule of estoppel against denying the original validity of the instrument in the one case and the capacity of the payee to endorse in the other, and do pot relate to the question who. is entitled to sue on the instrument and can thus be regarded as the creditor under it. The important and relevant provisions are those of Sections 8 and 78 of that Act. The learned Judge does not explain why these provisions or the decision in Subba Narayana Vathiyar v. Ramaswami Aiyar : (1906)16MLJ508 should be ignored in determining who is a 'creditor' in an enquiry under the Agriculturists Relief Act. He observes:

The object of the new Act was to give relief to agriculturist debtors and it did not matter for the purpose of granting that relief whether the original debt was incurred under a negotiable instrument or otherwise.

6. This is true, but is no justification, in our view, for ignoring the provisions of the Negotiable Instruments Act or those of the Civil Procedure Code in interpreting the term ' creditor' or ' the same creditor' in relation to a promissory note or a decree debt. In the case before Stodart, J., a mortgage was originally taken by an uncle in his own name in respect of moneys belonging to his minor nephew and it was renewed in favour of the nephew after the latter attained majority. The learned Judge thought that it was 'not unreasonable' to hold that the renewal was, in those circumstances, in favour of 'the same creditor'. This decision favours an extended interpretation of the term 'creditor' as including a person beneficially entitled to the amount lent, which is not warranted by the definition in Section 3(v) of the Act. As we had occasion to point out in Kotayya v. Venkata Punnayya : AIR1940Mad910 , the Act is designedly expropriatory in its effect and the scope of its. provisions ought not be extended under the guise of what is sometimes called a benevolent construction.

7. The revision petition is dismissed with costs.


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