1. This is an appeal by the judgment-debtors, defendants 1 and 2 in O.S. No. 500 of 1930 on the Original Side of this High Court against a udgment of Kunhi Raman, J., rejecting their application to scale down the decree debt against them. They sought to apply the provisions of Section 8(1) of the Madras Agriculturists' Relief Act, 1938, which says in effect that all interest on a decree debt outstanding on the 1st October, 1937, shall be deemed to be discharged on that date, when a debt is being scaled down under the provisions of the Act.
2. The decree in question was passed on the 10th April, 1931, and by consent a sum of Rs. 36,300 together with Rs. 600 for costs was agreed to be due. The judgment-debtors in the years which followed endeavoured to pay off some of their liabilities and paid on one occasion Rs. 15,000, which payment was certified and in respect of which part satisfaction was duly recorded. Later on Rs. 10,000 was paid, and again, the same formalities were complied with. Eventually, execution was taken out by the decree-holder, and realised Rs. 954-14-0 for which also part satisfaction was recorded on 23rd February, 1935. Then, on the nth September, 1937, a further payment of Rs. 5,400 was made, but under circumstances to which the only guide available is a receipt given by the decree-holder. It was not a certified payment, nor was any part satisfaction recorded. In the receipt, so far as it is relevant, the decree-holder acknowledges payment of ' Rs. 5,400 only, being part payment in respect of decree debt in C.S. No. 500 of 1930... and I agree to exonerate the 3rd defendant... alone from his liability in respect of the said decree.'
3. It is conceded that on that date there was still a sum of some Rs. 15,000 due by the present appellants.
4. In the application before the learned Judge, the appellants argued that under the provisions of Section 8(1) of the Act in scaling down the debt, regard should be had to this sum of Rs. 5,400 and that it should be considered as an open payment which being unappropriated by the creditor before 1st October, 1937, must be credited towards the principal sum owing and not to interest.
5. Learned Counsel for the appellants appeared to start on what might be termed an auspicious note, because he said that in later execution petitions the decree-holder in asking for relief had not only shown no appropriation made by him in respect of this sum but had ignored it entirely, as though it had never been paid. It was said that no credit whatever had been given for this payment. Had this been true, it would certainly have appeared that it was indeed an unappropriated payment which should be credited towards principal and not towards interest. On examination, however, of this point, it clearly emerged that there was no evidence whatever in support of it and that there is no justification for considering the contention further.
6. Then, learned Counsel relied on the words of the receipt, namely, ' being part payment in respect of decree debt in.... ' He urged that his case was com-pletely covered by Narayana Holla v. Balarama Hande : AIR1944Mad93 where in dealing with a preliminary decree in a mortgage suit and on the facts of that particular case where certain release deeds had been executed reciting that money had been paid to the decree-holder ' out of the amount due under the said decree,' it was held that they were payments which should be treated as such payments, remaining available in reduction of the principal after cancellation of interest as on the 1st October, 1937. There, it was held that as the payments had not been recorded by way of satisfaction and as there was no act either on the part of the debtor or on the part of the creditor indicating how the sums paid should be adjusted towards the decree.
All that can be said with any certainty is that these payments were made for the specific porpose of reducing the decree. We do not consider that the reference in the release deed to ' the balance after deducting the previous payments ' can be taken to establish an actual adjustment of the previous payments in reduction of the decree amount, so as to throw the burden upon the debtor of showing an appropriation in the manner most favourable to himself.'
7. Counsel was frank enough to admit that this was the only case of the many under the Madras Agriculturists' Relief Act upon which he could place any great reliance.
8. It is to be observed that the learned Judges there were dealing with a preliminary mortgage decree where the principal sum and the interest due under the mortgage had become merged in the sum ordered in the preliminary decree to be deposited in Court in the requisite time. There are many considerations which apply to mortgage decrees which do not apply to money decrees. The judgment-debtor in a mortgage suit has many, what may be called, indulgences given to him which are not given to an ordinary judgment-debtor. Nothing in the shape of execution, for example, can be taken without leave of Court and except in certain contingencies.
9. In a money decree, as in the present case, there is a decree for money and interest, but there is also another part of the decree which decrees that what may be called new interest will become payable if the amount due is not paid. It is that interest which falls to be considered in this case as on 11th September, 1937 when the payment in question was made. Kunhi Raman, J., considered the case above mentioned and also two others, Ramaswami Aiyar v. Ramayya Sastrigal : (1941)1MLJ295 and Sreenivasachariar v. Bysani Krishnayya : AIR1941Mad697 and came to the conclusion that as the latter concerned money decrees and that the debtor as in this case failed to show that he had made any appropriation when paying money, the inference was that the creditor had appropriated the payment primarily towards interest. The learned Judge said that he preferred the two latter cases to the first one, and I agree with him. A further case on exactly the same lines which precedes the two last-menmentioned is Venkiteswara Aiyar v. Ramaswami Aiyar : (1941)1MLJ9 . The learned Judges were same in each case. Each case related to matters arising under the Act IV and all substantially to the same effect, the facts of course being somewhat different. In my view, the learned Judge was correct in his conclusions on the facts before him, and nothing that has been said on behalf of the appellants would lead me to dis-agree in any way from his reasoning. I would dismiss the appeal with costs.
Frederick William Gentle, C.J.
10. I agree, and desire to add only a few words. The principle of law which always has been observed and recognised is that when a payment is made in respect of principal and interest, there is an inference that the payment is ordinarily first allocated towards interest and thereafter any balance in respect of principal. That was recognised in two decisions under the Madras Agriculturists' Relief Act, 1938, in Ramaswami Aiyar v. Ramayya Sastrigal1 and in Venkiteswara Aiyar v. Ramaswami Aiyar3. In my view the recognised and acknow-ledged principle regarding the utilisation of a payment which is made in respect of principal and interest has in no way been interfered with by any provision in the Madras Agriculturists' Relief Act, 1938.