1. This matter has been brought before us as a civil miscellaneous appeal but owing to the doubt regarding the existence of a right of appeal against an order under Section 19 of Madras Act IV of 1938 we have treated the appeal as a revision petition.
2. The appellant was the decree-holder in a suit on a promissory note. There were five defendants. Defendants 1 and 2 were impleaded as promisors. Defendants 3 to 5 were implead-ed as liable under a letter of guarantee. The date of the promissory note was 4th January, 1931. The date of the letter of guarantee was 7th August, 1933. The suit ended in a compromise decree whereunder an amount of Rs. 5,000 and odd was agreed to be due for the debt including interest and costs. There were two applications before the lower Court, one by the first defendant and the other by the fifth defendant. There were no applications by defendants 2 to 4 nor was any evidence adduced that they were entitled to the benefits of the Act. The plaintiff asks us to hold that the defendants 2 to 4 are riot entitled to the benefit of the scaling down operation. As We read the order of the lower Court that order purports only to scale down the decree so far as the two applications are concerned. Had it expressly conferred any benefit on defendants 2 to 4 it would obviously have been necessary to implead those defendants in the appeal before that benefit Was taken away : but we do not find that any benefit was in fact conferred under this order upon those defendants who were not parties to the applications. Secondly the plaintiff contends that the fifth defendant became liable only on 7th August, 1933 and that his liability under the decree must therefore be scaled down under Section 9 of the Act and not under Section 8, though the principal debtor's liability has to be scaled down under Section 8. It is objected that the liability of the surety must be co-extensive with the liability of the principal debtor with reference to Section 128 of the Contract Act and that the order of the lower Court treating both the principal and surety in the same way is therefore correct. It seems to us that in applications under Section 19 of Madras Act IV of 1938 the Court is entitled only to proceed in accordance with the provisions of that Act. In accordance with the provisions of that Act the fifth defendant is entitled to have his liability scaled down with reference to Section 9 and not with reference to Section 8 of the Act. It may be that under the general law he will have a right to resist execution on the ground that the full amount due from the principal debtor has been paid. But that is a plea the adjudication on which cannot properly form part of proceedings under Section 19 of this special Act. We therefore leave it open to the fifth defendant in execution to raise any contention which may be available to him with reference to Section 128 of the Contract Act. We do not think it necessary to say anything on the further contention of the plaintiff that the decree on the compromise is to be the starting point in the scaling down operation. We have made it clear in our decision reported in Ramamurthi v. Sitaramayya : AIR1941Mad56 that a decree on a compromise is substantially the same as a decree on any other contract and that to the extent to which the compromise is a renewal of a pre-existing debt the decree has to be scaled down with reference to the original principal. It has not been shown before us that the decision of the lower Court treating this compromise as a renewal of the pre-existing liability under the promissory note is out of harmony with the principles just referred to.
3. It has been brought to our notice by the respondents that the lower Court has gone wrong in regard to its treatment of costs. The compromise did not separately allocate any portion of the payment towards the costs in the suit. In accordance with the decision in Syama Rao v. Hanumantha Rao : AIR1940Mad925 it is not proper for the Court to re-open the compromise, tax the costs and treat the payment of the sum so taxed as the amount first to be provided for with reference to the proviso to Section 19 of the Act. This proviso relates only to costs as originally decreed to the creditor. There is no decree for costs as such. Similarly it has been settled by a decision of this Bench (vide Venkatammal v. Ramaswami Aiyar : AIR1941Mad62 that the proviso applies only to costs as decreed and not to costs in execution. The lower Court is therefore wrong in directing payment to be made towards execution costs before the scaling down process was to start.
4. In the result therefore the appeal, treated as a revision petition, is allowed and the case is remitted to the trial Court for fresh disposal in the light of this judgment. The first defendant will be entitled to his costs as against the plaintiff. The plaintiff and the fifth defendant will bear their own costs. The appellant will pay the deficient court-fee.