Decided on November 10,1954

Gowkanapalle Thippa Reddy Appellant
Balarani Reddigari Soma Reddi and Ors. Respondents


Umamaheswaram, J. - (1.) THIS is an appeal under Section 25 (a) of the Madras Act IV of 1938 as against the order of the District Judge of Cuddappah in O. P. . R. SOMA RBPDI (Umamaheswaram J.) A. I. R. No. 32 of 1949 allowing the application. The short point that arises for consideration is, as to the scope and effect of Explanation (1) to Section 8 as amended by Madras Act XXIII of 1948. The clause relied on by the Advocate for the Respondent is in the following terms: unless he has expressly stated in writing that such payment shall, be in reduction of interest. The District Judge held, that, as the payments were not expressly stated, in writing, to be in reduction of interest, they must be appropriated towards the principal. In the view taken by him, he held that the entire debt should be deemed to have been discharged. The decree -holder has preferred the above appeal.
(2.) SINCE the filing of the appeal, a Full Bench of the Madras High Court in Suryanarayana v. Venkataramana Rao, : ILR (1953) Mad 295: (AIR 1953 Mad 458) (A), had to consider this question. The learned Judges held that, by the Explanation the Legislature did not alter the law as laid down by Wadsworth and Patanjali Sastri JJ" in Venkayamma v. Rarnakotayya, ( : 1941 1 Mad LJ 479: AIR 1941 Mad 479) (B), and Vemireddy Ranga -reddi v. Venkatareddi, : 1942 2 Mad LJ 592: (AIR 1943 Mad 5) (C). At page 302 (of ILR Mad): (at P. 401 of AIR Mad), they observed as follows: in other words, for the Explanation to apply there must be on the one hand arrears of interest outstanding and payable, and on the other, payments open and unappropriated and the Explanation provides how in that contingency the payments are, to be appropriated. Where there has been in, fact a settlement of accounts and a fresh document executed by the debtor, that must necessarily' have the effect of discharging the interest an the one hand and of. appropriating the other. Such a transaction would, therefore, seem to be outside the Explanation. Lower down, they stated: But as already mentioned, the Explanation contemplates a stage when there are open payments remaining to be appropriated and appropriations being made in the process of scaling down the debt in accordance with the provisions of the Act. But where the' payments do not exist, as payments on 1st October 1937, but had become merged in a settlement entered into prior thereto, the Explanation would be inapplicable.
(3.) THE learned Advocate for the Respondent sought to distinguish the Pull Bench decision on the ground that the present case is only one of renewal and not a settlement of accounts. On principle, there is no distinction between the two classes of cases. A renewal may involve a settlement of accounts. The intermediate payments made will have to be deducted and the actual amount due ascertained.;

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