1. The appellant is the petitioner in the lower Court in an application under Section 19-A of the Madras Agriculturists' Relief Act for the scaling down of a mortgage debt. The main point involved in this appeal is whether the decision of the Supreme Court in Ramaswami Ayangar v. Kailasa Thevar : 2SCR292 , enunciated a general principle which is applicable to facts like those of the instant case, or whether that decision is distinguishable both with reference to its facts, and upon the ground that it related to a mortgage decree, and not to a mortgage debt.
2. The facts necessary for an appreciation of the argument now presented are as follows : A certain Nataraja Iyer and Venkatarama Ayyar were brothers, of whom Venkatarama Ayyar had four sons and a daughter, Ammalu Ammal, the petitioner in the lower Court and the present appellant. Of these four sons of Venkatarama Ayyar, three are now alive, and one of them Samalam Ayyar was given away in adoption to Nataraja Iyer. These persons were living as members of an undivided Hindu family. They owned properties in three villages, and it is to be noted that in one of those villages (Sorianendal) the present appellant possessed an interest in certain specific properties through her husband, one Krishnaswami Iyer, who is dead. On 23rd August, 1930, Venkatarama Ayyar for himself and as guardian of his then minor sons including the present third respondent in the Court below, Samalam Ayyar (1st respondent in the Court below), the second respondent and the appellant joined in the execution of a usufructuary mortgage in favour of the father of respondents 4 and 5 below for a sum of Rs. 92,800 as evidenced by Exhibit A-1. The constitutent elements of the debt evidenced by this transaction were as follows (1) a sum of Rs. 57,570 being the balance of principal and interest under a simple mortgage deed, dated 27th March, 1922, for Rs. 26,000 (Exhibit A-13) executed by Nataraja Iyer, the adoptive father of Samalam Ayyar (1st respondent) and Venkatarama Ayyar. (2) Rs. 1,992 being the balance due on a promissory note, dated 9th February, 1923 (Exhibit B-48) executed by both Nataraja Iyer and Venkatarama Ayyar. (3) A sum of Rs. 8,000 left with the mortgagee for discharge of a decree debt. (4) A sum of Rs. 23,738 similarly left with the mortgagee for payment of mortgages described in Schedule C and (5) Rs. 1,500 received in cash.
3. It has now been found by the learned Subordinate Judge, and this finding is not in dispute before us, that the document Exhibit A-I has been executed by four persons, of whom the appellant alone is an agriculturist entitled to the benefits of Madras Act IV of 1938. The other three executants were non-agriculturists, who are not so entitled. The learned Subordinate Judge has held, following the decision in Ramaswami Ayyangar v. Kailasa Thevar : 2SCR292 , that though that decision related to a mortgage decree and the present application is one by co-mortgagors under Section 19 (A) for the scaling down of a mortgage debt, nevertheless the same principle applied, and that the appellant would be entitled, upon payment of the sum scaled down in her favour alone, to redeem her share of interest in the mortgage. She was not entitled, upon payment of the scaled down amount, to redeem the entire mortgage, treating it as an intergral debt.
4. It is not necessary, for our present purpose, to refer to prior decisions of this Court such as Subramaniam Chettiar v. Rarnachandra Reddiar (1946) 2 M.L.J. 429, in support of a view that where the amount scaled down regarding the agriculturist judgment-debtor or debtor is paid by him, the mortgage is totally redeemed, notwithstanding the fact that there may be non-agriculturist judgment-debtors having a larger liability. For it is indisputable that the earlier view of the law has been superseded by the decision of the Supreme Court in Ramaswami Ayyangar v. Kailasa Thevar : 2SCR292 . It may be necessary to refer very briefly to the facts of that case, and to set forth certain pasages from that decision, in order to show that, though those facts related to a mortgage decree and not to a debt, the case did enunciate a general principle, which is applicable to all instances where certain of the debtors or judgment-debtors are non-agriculturists not entitled to the benefits of the Act. The facts of that case were that in the mortgage suit, the decree was not scaled down as against the first defendant, and his application for relief under the Act was expressly rejected. The first defendant contended that the mortgage debt was one and indivisible, and that he would still be entitled to avail himself of the benefit of the scaling down of the decree in favour of the other defendants (defendants 2 to 7), though he was held liable for the entire amount of the mortgage debt. He advanced this claim, after depositing an amount which was equal to the difference between the amount of the scaled down debt against the other defendants, and the payments actually made by those defendants. The Supreme Court observed (page 563):
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;.... 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 a specified class of debtors, viz., those who are agriculturists as defined in the Act. To this extent it trenches upon the general law.... 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.
5. The principle of this decision was followed and affirmed in the Full Bench decision of this Court in Venkalavadhanulu v. Ramayya I.L.R. (1954) Mad. 158, and in delivering the opinion of the Full Bench, Subba Rao, J., observed:
Subsequent to the reference to the Full Bench, the Supreme Court had to deal with the same question... it may be mentioned that the Supreme Court reversed the judgment of this Court which was the occasion for referring the question to a Full Bench.
6. There can thus be no doubt that the decision of the Supreme Court in Ramaswami Ayyangar v. Kailsa Thevar2, affirmed a general principle which has been reiterated in the Full Bench decision of this Court in Venkatavadhanulu v. Ramayya I.L.R. (1954) Mad. 158. There can be no point of distinction, merely arising from the fact that the present is a case of a mortage debt, and not of a debt which has ripened into a decree.
7. In Valliammai Achi v. Ramachandra Ayyar : (1959)2MLJ178 , a similar attempt was made to argue that the principle in Ramaswami Ayangar v. Kailasa Thevar : 2SCR292 , should be limited to certain facts, or to certain class of cases, and ought not to be accepted as a general principle. The argument was raised with regard to a case where the property was entirely owned by an agriculturist judgment-debtor, and the non-agriculturist judgment-debtor was a puisne mortgagee against whom the original mortgagee could not have proceeded personally, or brought a suit for redemption. In the judgment of Panchapekesa Ayyar, J., this argument is repelled, and the principle of the Supreme Court decision in Ramaswami Ayangar v. Kailasa Thevar : 2SCR292 , followed. We have hence no doubt that the principle equally applies to the facts before us, and that the learned Subordinate Judge was right in holding that the appellant could not redeem the entire mortgage by paying the scaled down amount, but that, owing to the fact that the three other executants were non-agriculturists, she could redeem only her share or interest.
8. The other ground urged before us is that, in any event, the lower Court ought to have proceeded into the prior transactions which are constituent elements of the suit debt under Exhibt A-I, in particular Exhibits A-13 and B-48 already referred to, and giving relief to the appellant under Explanation III to Section 8 of the Act. The learned Judge in the Court below rejected this argument upon the simple ground that Exhibit A-13 and B-48 were executed by non-agriculturists, and hence that those debts did not fall within the category of ' debts ' as defined in Madras Act IV of 1938. Consequently, he came to the conclusion that the petitioner was not entitled to go behind the amount due under Exhibit A-I, and he proceeded to scale down this amount under Section 19-A of the Madras Agriculturists' Relief Act. The procedure adopted by the learned Subordinate Judge is, in essence, correct, and he has correctly determined the liability, but the reason is fallacious; it is not the true ground why Explanation III to Section 8 does not apply to the present facts. Obviously, we are not concerned with the question whether Exhibits A-13 and B-48 were executed by non-agriculturists or otherwise. So long as those liabilities were taken over by the petitioner (appellant), and she was an agriculturist on the relevant dates to which the Sections of the Act apply, she would be entitled to have the debts scaled down. The history of these debts, and the fact that the original debtors were non-agriculturists, would not be relevant.
9. But it is very clear that Section 8 and Explanation III thereto do not apply to the facts of the present case. For this is a case of a usufructuary mortgage, in which no special provision has been made for interest on the principal amount secured, in addition to the provision of enjoyment of usufruct instead of interest. Section 10 2) of the Act specifies that:
Nothing contained in Sections 8 and 9 shall affect--(i) any mortgage of the description referred to in Sub-section (1) of Section 9-A except to the extent provided for in that section.
10. Under Sub-section (3)(ii) of Section 9-A, Section 8, Section 9, Section 12 or Section 13, as the case may be, is made applicable only where,
any interest on the principal amount secured by the mortgage or any portion thereof has been stipulated for, in addition to the usufruct from the property.
The effect of these provsions, therefore, is that in a case of a usufructuary mortgage of the kind evidenced by Exhibit A-I, the further scaling down under Explanation III to Section 8 cannot be resorted to. Hence, the actual liability as ascertained by the lower Court is correct, and must be confirmed.
11. It only remains to add that the appellant is entitled, upon payment of the scaled' down amount, to redeem her interest in the hypotheca, which is an interest limited to certain portions in Item No. 170 among the properties. This clarification is necessary, as the petitioner (appellant) joined in the execution of the mortgage with reference to this specific interest, and not to some undivided share in the properties as the representative of her deceased husband. We are now told that certain other co-mortgagors have now redemeed portions of the hpotheca through certain sales. But it is unnecessary to go into this matter for the purpose of the present appeal.
12. The apeal accordingly fails, and is dismissed with costs.