1. The petitioner herein seeks a writ of certiorari from this Court to have the order dated 2-3-1981 of the third respondent affirming the order dated 20-9-1980 of the second respondent, quashed.
2. The first respondent herein and his younger brother took a loan of Rs. 1,000/- from the petitioner on execution of a mortgage of their lands in S. No. 368 and S. No. 367/2 in Thimmapuram village. The first respondent filed an application under the Tamil Nadu Debt Relief Act, 1976 hereinafter referred to as the 1976 Act, before the second respondent for relief in respect of the mortgage. The second respondent has, by his order dated 20-9-1980, held that the first respondent owns only a half share in the lands mortgaged which consist of 0.50 cents wet in S. No. 368 and 0. 16 cents dry in S. No. 367/2 of Thimmapuram village, and that therefore, he is a small farmer owning lands within the limit prescribed by the 1976 Act. He therefore ordered, 'that the loan obtained by him is discharged and the mortgaged land is released to him'. The mortgagee-creditor filed an appeal before the appellate authority, the third respondent herein, contending that the first respondent is getting an annual income of Rs. 9,000/-, that he is also a money lender lending money on promissory notes to various persons in the village and that therefore he is not entitled to the benefits of the 1976 Act. The third respondent, however, by his order dated 2-3-1981, held that the first respondent was in possession of lands within the limit prescribed by the 1976 Act, that he was entitled to the benefits of the said Act and that therefore there was no reason to interfere with the order of the second respondent.
3. Aggrieved against the order of the third respondent, confirming the order of the second respondent, the petitioner has come before this Court raising substantially two grounds viz., (1) that the annual income of the first respondent in more than Rs. 9,000/- and therefore he cannot be treated as a small farmer; and (2) that in any event the order of the second respondent declaring that the entire loan obtained by the first respondent and his brother is discharged and releasing the entire mortgaged property in favour of the debtor cannot be sustained in law.
4. As regards the first contention, it is not in dispute that the first respondent owns lands within the limit prescribed by the 1976 Act and that therefore he comes within the definition of a 'small farmer'. Though the petitioner has asserted that the first respondent is getting an annual income of more than Rs. 9,000/- and therefore he cannot be treated as a small farmer, no evidence, has been adduced before the authorities below as to the exact annual income which the first respondent is getting. As a matter of fact, the petitioner herein was ex parte before the Tahsildar, though notice of enquiry was duly served on him. No acceptable evidence has been produced by the petitioner to show that the first respondent is getting an annual income of Rs. 9,000/- In the absence of evidence showing that the first respondent is getting an annual income of Rs. 9,000/- as alleged by hi, it is not possible for this Court to interfere with the finding given by the second respondent and confirmed by the third respondent. Admittedly, the first respondent is owing along with his brother an extent of 50 cents, wet in S. No. 368 and 16 cents, dry in S. No. 367/2 of Thinnapuram village. The first respondent has not been shown to have any land apart from the said two bits of land. Having regard to the fact that the first respondent has not been shown to own lands in excess of the limit prescribed by the 1976 Act, it should be taken that he is rightly declared as a small farmer by the authorities below and as such entitled to the benefits of the 1976 Act. Once the first respondent is entitled to the benefits of the 1976 Act, then the debt due by him should be taken to have been discharged as per S. 4 (a) of the said Act, which says that every debt advanced or incurred before the commencement of the said Act and payable by the debtor to the creditor shall be deemed to be wholly discharged. The first contention of the petitioner should therefore be rejected.
5. The second contention, as already stated, is that in any event the order of the second respondent which stands confirmed by the order of the third respondent is illegal in so far as it directs the discharge of the entire mortgage debt and releases the entire mortgaged property to the first respondent, who is only one of the two mortgagors. In this case admittedly the mortgage for a sum of Rs. 1,000/- has been executed both by the first respondent and by his brother Chinna Pillai and therefore the debt is payable by both of them. Chinna Pillai has not claimed any benefit under the 1976 Act, on the basis that he is a small farmer or otherwise. Nor any claim has been made by the first respondent that the debt was borrowed on behalf of the joint family and therefore the entire debt is due by him as representing the joint family. Hence it has to be taken that the mortgage debt is payable jointly and severally by both the executants, that is, the first respondent and his brother Chinna Pillai. The question is, whether the entire mortgage debt can be taken to have been wiped out and the entire mortgage property released to one of the mortgagors, as has been done by the second respondent, merely from the fact that one of the two mortgagors is a debtor coming within the scope of the 1976 Act.
6. The learned counsel for the petititoner contends that the entire debt cannot stand wiped out unless both the mortgagors are debtors as defined in the 197 6 Act and that the liability under the mortgage is one and entire and that therefore even if the first respondent one of the mortgagors is entitled to the benefits of the 1976 Act, it is open to the mortgagee to realise the entire sum due under the mortgage from the share of the mortgage properties belonging to the first respondent's brother Chinna Pillai, who has not claimed benefits under the 1976 Act. The learned counsel for the petitoner also points out that the 1976 Act nowhere provides for the splitting up of the debt or of the mortgage security and that therefore it is always open to the mortgagee to realise the entire mortgage amount from the other mortgagor who is not declared to be a debtor under the provisions of the 1976 Act. The learned counsel refers to the proviso to Section 4 (b) of the 1976 Act as supporting his contention.
7. There appears to be considerable force in the submission made by the learned counsel for the petitioner in this regard. It is well established that if a mortgage debt has been incurred by two or more persons, the mortgage debt is one and indivisible and the liability of the mortgagors is joint and several. It is not open to the mortgagors borrowers to split up the mortgage debt and require the mortgagee to proceed against a specified portion of the mortgage security for realising a portion of the debt. But an exemption to the general rule may be provided by the stature, as has been done in Sec. 14 of the Tamil Nadu Agriculturists Relief Act, 1938 (Tamil Nadu Act IV of 1938), hereinafter referred to as the 1938 Act, wherein splitting up a debt as well as splitting up of a mortgage security is contemplated. But there is no similar provision in the 1976 Act. Section 14 of the 1938 Act is as follows :-
'14. Notwithstanding anything contained in S. 3 (ii) and subject to the provisions of Ss. 5 and 6 where in a Hindu family whether divided or undivided, some of the members liable in respect of a family debt are non agriculturists while others are agriculturists, the creditor shall, notwithstanding any law to the contrary be entitled to proceed-
(a) against the non-agricullturist member or members and his or their share of the family property to the extent only of his or their proportionate share of the debt; and
(b) against the agriculturist member or members and his or their share of the family property to the extent only of his or their proportionate share of the debt which shall be scaled down in accordance with the provisions of the Act.'
The relevant provision in the 1976 Act is S. 4 (b), which is as follows:-
'4, Notwithstanding anything contained in the Tamil Nadu Agriculturists Relief Act, 1938, the Tamil Nadu Pawn Brokers Act, 1943, the Tamil Nadu Moneylenders Act, 1957, the Tamil Nadu Debt Relief Act, 1972, the Tamil Nadu Indebted Agriculturists (Temporary Relief) Act, 1976, the Tamil Nadu Indebted Persons (Temporary Relief) Act, 1976, or in any other law for the time being in force or in any contract or instrument having force by virtue of any such law and save as otherwise expressly provided in this Act, with effect on and from the commencement of this Act-
.............................................(b) no civil court shall entertain any suit or any proceedings against the debtor and any other person, nothing in this section shall apply to the maintainability of such suit or proceeding in so far for the recovery of any amount of such debt (including interest if any);
Provided that where any suit or other proceeding is instituted jointly against the debtor and any other person nothing in this section shall apply to the maintainability of such suit or proceeding in so far as it relates to such other person.'
8. Thus, it is seen that S. 14 of the 1938 Act clearly contemplates, separation of the share of an agriculturist both in respect of debt as also the mortgaged land. But there is no such provision in the 1976 Act. Section 14 of the 1938 Act specifically provided that notwithstanding any law to the contrary the creditor shall be entitled to proceed against non-agriculturists and their share of the property to the extent of their share of the debt.
9. Even with reference to such a provision, the Supreme Court in V. Ramaswami Aiyangar v. T. N. V. Kailash Thevar, : 2SCR292 , while construing its scope, has expressed the view that the creditor is entitled to enforce the entire mortgage against the non-agriculturist in respect of his share of the property mortgaged. This is perhaps on the basis that S. 14 of 1938 Act cannot take away the right of the creditor which is available under the general law, so far as the non-agriculturist debtor is concerned. The facts of the case before the Supreme Court are as follows:- A suit was brought on a mortgage. There was a preliminary decree under which a sum of Rs. 1.08,098 was directed to be paid by defendants 1 and 3 to 7, in defaults of which the plaintiffs were declared entitled to apply for a final decree for sale of the mortgaged properties. There were two appeals against the preliminary decree - one by the defendants 3 to 7 and the other by the plaintiffs against the dismissal of the suit as against the second defendant. During the pendency of these appeals, the 1938 Act came into force and the defendants 2 to 7 filed applications before the High Court claiming relief under the said Act for the scaling down of the debt in accordance with the provisions of the said Act. On the question as to whether defendants 2 to 7 were agriculturists, and, if so, to what extent the decree debt should be scaled down, the High Court called for a finding from the District Court and on receipt of the finding it held that defendants 2 to 7 were entitled to have the debt scaled down and the amount due by defendants 2 to 7 was found to be Rs. 49,255. The first defendant who did not take part in the suit or other proceedings earlier, deposited certain amount as payable by him and prayed for recording full satisfaction of the mortgagee decree contending that the mortgage debt was one and indivisible and even though different amounts were mentioned as payable by two groups of defendants in the decree, the decree-holders were bound under the terms of the decree to release the entire mortgaged properties even on payment of the amount directed to be paid by the defendants 2 to 7 and that, even though he has not been declared as an agriculturist, he is entitled to claim the benefit of scaling down in favour of defendants 2 to 7. It is under these circumstances, the Court was called upon to decide whether the mortgagee decree as against the non-agriculturist for the entire mortgage amount, after deducting the amounts paid as payable by the agriculturists debtors. This Court held (att p. 191) :-
'It is no doubt somewhat odd that when a person is declared liable to pay a larger amount he should on payment or tender of a smaller amount get his property exonerated from liability but this is inherent in and arises out of the proposition established by the decisions already dealt with, namely, that by the application of the principle of unity and indivisibility of a mortgage decree a non-agriculturist can indirectly get relief which he cannot directly get.'
10. When the matter was taken to the Supreme Court, the Supreme Court did not agree with the view of this Court and it observed (at p. 192) :-
'Thus in case of a mortgage debt, when the loan has been advance to more than one person, if one of the debtors happens to be an agriculturist, while others are not, the agriculturist debtor would certainly be entitled to have his debt scaled down under the provisions of the Act in spite of the provision of general law which prevents a mortgagor from denying the liability of the interest which he owns in the mortgaged property to satisfy the entire mortgage debt. There is, therefore, nothing wrong in law, in scaling down a mortgage decree in favour of one of the judgment-debtors, while as regards others the decree is kept intact.'
Thus, even when S. 7 and S. 11 of the 1938 Act contemplated the splitting up of a debt and the mortgage security for the purpose of giving relief to an agriculturist, the Supreme Court has taken the view that so far as the mortgagee decree as against non-agriculturist debtors are concerned, it should be taken to be in act. The reasoning of the Supreme Court is contained in the following para (para 10) :-
'The general law undoubtedly is that a mortgage decree is one and indivisible and exceptions to this rule are admitted in special circumstances where the integrity of the mortgage has been disrupted at the instance of the mortgagee himself; e. g., when there is severance of the interests of the mortgagors, with the consent of the mortgagee, or a portion of the equity of the redemption is vested in the latter. It is to be noted, however, that the Madras Agriculturists Relief Act is a special statute which aims at giving relief not to debtors in general but only to a specified class of debtors, viz., those who are agriculturists as defined in the Act. To this extent it trenches upon the general law and S. 7 of the Act expressly provides that --
`Notwithstanding any law, custom, contract or decree of Court to the contrary, all debts payable by an agriculturist at the commencement of this Act shall be sealed down in accordance with the provisions of this chapter'.'
11. According to the Supreme Court, Section 14 of the 1938 Act which provides for separation of a debt incurred by a Hindu family some members of which are agriculturists while others are not, affords a clear indication that the splitting up of a debt in such circumstances, is quity in accordance with the scheme of the said Act.
12. The Supreme Court has also referred to, with approval, a decision of a Division Bench of this Court in C. S. Ramier v. B. N. Srinivasiah, : AIR1941Mad204 . In that case, this Court indicated the from of the decree where one debtor is an agriculturist and the other a non-agriculturist. It was held therein that the right of an agriculturist judgment-debtor to scale down a decree should not be allowed to endure for the benefit of non- agriculturist judgment-debtor and that wherever one of the mortgagors is an agriculturist, his interests will not be liable to be sold or foreclosed and except to that limited extent, the mortgage decree will stand intact and that in the event of the agriculturist debtor failing to pay the debt as scaled down his interests also will be brought to sale.
13. Section 14 of the 1938 Act also came up for consideration before this Court Chettiar, Jaganatha Aiyangar v. Suppiah Chettiar : (1940)2MLJ187 , and Horwill, J. held that where there are two non-agriculturist and five agriculturist members in a joint Hindu family, the non-agriculturists are liable for 2/7th of the unscaled debt while the agriculturists are liable for 5/7th of the scaled down debts, and that it is not necessary that the property should be split up into individual shares and each share made liable only for its own share of the family debt. It is also further held that as per the wording of clauses (a) and (b) of Section 14 of the 1938 Act, the debtors share in the family property is liable for the proportionate share of their debt, but that does not mean that the family property has to be split up into individual shares and each individual share is liable for its own share of the family debt.
14. In B. Tumuluru Sitaramayya v. Tumuluru Sreramiah : (1940)2MLJ1064 Wadsworth, J. while interpreting S. 14. (b) of the 1938 Act, held that where the suit is against an agriculturist and a non-agriculturist defendant, the Court which scales down the debt at the instance of the agriculturist debtor cannot direct him to pay the full amount of the decree as scaled down and that under S. 14 (b) of the 1938 Act, his liability extends only to his proportionate share of the decree scaled down in his favour.
15. Thus even in a case falling under Section 14 of the 193 Act, which provides for the splitting up of the debt as well mortgage security, the Supreme Court held that the liability of a non-agriculturist mortgagor is not affected. The said reasoning applies to the facts of the present case as well. In fact, Sec. 4 (b) of the 1976 Act does not contemplate the splitting up of the debt as well as the mortgage security as is provided in S. 14 of the fact that his co-mortgagor is a person entitled to the benefits of the 1976 Act and contend that he is liable to pay only his share of the debt and that his pay only his share of the property alone should be proceeded against in respect of such share of the debt. The proviso to S. 4 (b) of the 1976 Act says that where any suit or other proceeding is instituted jointly against the debtor and any other person, nothing in that section shall apply to the maintainability of such suit or proceeding in so far as it relates to such other person. That S. 4 (b) of the 1976 Act specifically enables a creditor to maintain a suit as against persons who can maintain a suit as against persons who cannot claim the benefit under the said Act. This section does not affect the right of a creditor to proceed against the other persons for realisation of the entire debt if the liability for the debt is joint and several. There cannot be any dispute that the liability in respect of a mortgage executed by two or more mortgages is joint and several and full amount can be realised from one or the other of the mortgagors, though the mortgager is bound to implead all the mortgagors as parties to the suit.
16. In view of the fact that the petitioner, as a creditor, has a right to realise the full mortgage debt from any one of the mortgagors under the general law, as the liability is one and entire, and the provisions of the 1976 Act are intended to benefit only the debtors as defended in that Act, the brother of the first respondent, who is the mortgagor, cannot be head of say that his liability is only to pay his share of the mortgage money out of his share of the mortgaged properties, taking advantage of the wiping out of his debt due by the first respondent applying the provisions of the 1976 Act. Under the general law, the liability of the brother of the first respondent is to pay the full amount of the mortgage, as the liability under the mortgage is one and the liability under the mortgage is entire and payable by the mortgagors jointly and severally. The fact that under the provisions of the 1976 Act, the first respondent cannot be proceeded against for the amount due to him will not affect the right of the creditor-petitioner to realise the full amount due under the mortgage as against the other mortgagor, namely, the brother of the first respondent, which right he has got under the general law. In this view of the matter, we are of the opinion that the order of the Tahsildar declaring that the entire, loan is discharged and directing the entire mortgage property to be released to the first respondent cannot be sustained in law.
17. Hence the order of the second respondent as well as the order of the appellate authority, the third respondent, confirming the order of the second respondent is set aside and the writ petition is allowed. The second respondent is directed to pass an order restricting the relief to the extent of the first respondent's share in the debt as well as in the land. There will be no order as to costs.
18. Petition allowed.