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Panga Narasayya Vs. Gopavaram Gopal Reddi - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberA.A.A.O. No. 13 of 1949
Judge
Reported inAIR1952Mad394; (1951)IIMLJ609
ActsDebt Law; Madras Debt Conciliation Act, 1936 - Sections 18 and 18(2); Madras Agriculturists' Relief Act, 1938 - Sections 9
AppellantPanga Narasayya
RespondentGopavaram Gopal Reddi
Appellant AdvocateP.R. Ramachandra Rao, Adv.
Respondent AdvocateV.V. Ramadurai, Adv.
DispositionAppeal dismissed
Excerpt:
- .....section 14 of the act, if creditors to whom more than fifty per cent of the total amount of the debtors' debts is owing come to an amicable settlement with the debtor, such settlement shall forthwith be reduced to writing in the form of an agreement recording the amounts payable to such creditors and the manner in which the assets from which and the times at which they are to be paid and such an agreement if considered equitable by the board shall be read out and explained to the parties concerned and shall be signed or otherwise authenticated by the board and the parties, who have agreed to the amicable settlement. if no amicable settlement was made within 14 months from the date of the application under section 4 the board shall dismiss the application. section 13 provides for the.....
Judgment:

Subba Rao, J.

1. The appellant, who is a debtor, filed an application under Section 19 (A) of the Madras Agriculturists Relief Act for a declaration of the amount due under the mortgage deed dated 29th July 1936. The appellant executed a mortgage deed dated 29th July 1936 in favour of the respondent for a sum of Rs 1500/-carrying interest at 12 per cent per annum. His case is that he had paid towards that mortgage a sum of Rs. 450 on 7th May 1939. He filed a petition before the Debt Conciliation Board, Rajampet, offering to pay the mortgage amount as scaled down under the provisions of the Act. The respondent did not agree for a settlement and therefore the Board gave him a certificate under Section 18(1) of the Madras Debt Conciliation Act, According to the appellant, under the mortgage only a sum of Rs. 829-14-0 was due to the respondent. The respondent denied that the petitioner was an agriculturist and also the allegation that the mortgage was not supported by consideration to the extent of Rs. 550 and that he paid a sum of Rs. 450 to the respondent. The learned District Munsif held on the evidence that the petitioner was an agriculturist and that the mortgage deed was not supported by consideration to the extent of Rs. 550. He scaled down the decree and gave him a declaration that a sura of Rs. 972 was payable by him to the respondent. The creditor filed an appeal to the District Court of Cuddappah. The District Judge held that the mortgage deed was supported by consideration to the full extent of Rs. 1500. He found that the petitioner paid only a sum of Rs. 500. As regards the amount, he also held that it was paid towards interest and gave a direction that the creditor was entitled to adjustment of the aforesaid amount first towards interest at the rate agreed between the parties and only the balance, if any, towards the principal. The appeal was allowed with costs. The debtor preferred the above second appeal.

2. The learned counsel for the appellant contended that the creditor is not entitled to claim a larger amount than that in regard to which the certificate was issued by the Debt Conciiiation Board. He contends that the order of the Debt Conciliation Board would preclude! a creditor from claiming a higher amount on principles of res judicata. A perusal of the various sections of the Madras Debt Conciliation Act (Act XI of 1936) indicates that it was not the intention of the legislature to give any such binding force to the certificates.

3. Under Section 4 of the Act, a debtor may make an application for the settlement of his debts to the Board. The Board is authorised under Section 10(1) of the Act to call upon every creditor of the debtor to submit a statement of debts owed to such creditor by the debtor if in the opinion of the Board it is desirable to attempt to effect a settlement between him and his creditors. Certain penalties have been provided in case of a default made by the creditor in submitting the statement so required. Section 12 prescribes the procedure to decide disputes between the debtor and the creditor. Under Section 14 of the Act, if creditors to whom more than fifty per cent of the total amount of the debtors' debts is owing come to an amicable settlement with the debtor, such settlement shall forthwith be reduced to writing in the form of an agreement recording the amounts payable to such creditors and the manner in which the assets from which and the times at which they are to be paid and such an agreement if considered equitable by the Board shall be read out and explained to the parties concerned and shall be signed or otherwise authenticated by the Board and the parties, who have agreed to the amicable settlement. If no amicable settlement was made within 14 months from the date of the application under Section 4 the Board shall dismiss the application. Section 13 provides for the Board issuing a certificate in case the creditors do not come to any adjustment. Under Section 18 (2) in case any such certificate is issued, a creditor who files a suit thereafter will not be entitled to costs and will only be entitled to recover interest at the rate of 6 per cent only after the date of such certificate. Section 19 prohibits any civil Court entertaining a suit in respect of any matter pending before a Board or the validity of any procedure or the legality of any agreement made under this Act or for the recovery of any debt recorded as wholly or partly payable under an agreement registered under Sub-section 2, of Section 14 from any person who, as a debtor, was party to such agreement. There is no provision in the Act giving a certificate issued thereunder the sanctity of a final adjudication between the parties nor is there any provision excluding the jurisdiction of the civil Courts deciding the factum and the extent of the debt in regard to which such a certificate is issued. It appears to me that the object of the Madras Debt Conciliation Act is to provide an opportunity to the creditors to come to an agreement with debtors. It also empowers the Board to issue a certificate if the creditor refuses to agree when a reasonable offer is made by a debtor. The only consequence of such a certificate is that in a suit filed by a creditor, he will not be entitled to recover either the costs or interest after the date of the issue of the certificate at a rate higher than C per cent. There is neither express exclusion of the Civil Court's jurisdiction nor any such prohibition by necessary implication. In the circumstances I cannot agree with the learned advocate's argument that the certificate issued under the Act precludes the creditor from proving the debt.

4. It is then argued by the learned counsel for the appellant that by reason of Section 18 of the Madras Debt Conciliation Act, a creditor would not be entitled to costs or to interest higher than 6 per cent. But Section 18 in terms applies to a suit filed by a creditor. The present appeal arises out of on application, for declaration of the amount due by the appellant to the respondent. Obviously that section has no application.

5. The next point raised by the learned counsel for the appellant is that the learned Judge was wrong in holding that the sum of Rs. 500 paid by the debtor was expressly towards interest. The learned Judge on a consideration of Ex. D. 5 and all the circumstances hold that such an amount was paid towards interest. As a question of fact, it will be binding upon me. It is argued then that the learned Judge was wrong in holding that a sum of Rs. 500 should be paid towards interest at the rate agreed between the parties. This direction seems to be contrary to the express provisions of Section 9 of the Madras Agriculturists Relief Act. Under that section interest should be calculated at the rate of 5 per cent and credit shall be given for all sums paid towards interest. The said amount will be credited accordingly. With this slight modification, the appeal is dismissed with costs. No leave.


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