SALT NAINAMUL Vs. BALABHADRA SUBBARAO

JUDGEMENT

(1.) THIS appeal raises two questions and both are covered by the decisions of two Division Benches, one of the Andhra High Court and the other of the Madras High Court.

(2.) THE relevant facts may be briefly stated. Defendants 1 and 2 executed a promissory note dated 7 -12 -1946 for a sum of Rs. 6400/ - in favour of late Sait. Anjarmal repayable with interest at Rs. 1 -14 -0 per cent, per mensem, Plaintiffs 1 to 3 are the sons of Anjarimal and the 4th Plaintiff is his widow. The 3rd Defendant is the undivided son of the 1st Defendant and the 4th Defendant is the widow of the brother of late Anjarimal. The Defendants borrowed various sums from Anjarimal between 16 -1 -1946 and 11 -11 -1946 together making up a sum of Rs. 6100/ -. Adding to that amount the interest that accrued due till 7 -12 -1946, the suit promissory note was executed for Rs. 6400/ -. Subsequently on 14 -2 -47, the 1st Defendant paid to the Plaintiffs two amounts of Rs. 2800/ - and Rs. 300/ - and they were duly endorsed on the promissory note, Rs. 2800/ - being appropriated towards principal and Rs. 300/ - towards interest. The endorsement was signed by the 1st Defendant. One of the contentions raised before the learned Subordinate Judge was that the debt was liable to be scaled down under the provisions of the Madras Agriculturists' Relief Act (hereinafter referred to as the Act). The other contentions raised by the Defendants and the findings of the learned Judge on the said contentions need not be stated as nothing turns upon them in the appeal. The learned Judge held that the Defendants are agriculturists and that, therefore, they are entitled to the benefits of the Act. For the purpose of the application of the provisions of the Act be reopened the suit transaction and the appropriations made. The principal originally advanced i.e., Rs. 6100/ -was taken as the principal and the sum of Rs. 300/ -appropriated towards interest Payable under the suit promissory note according to the contract rate was re -appropriated towards interest calculated on the original principal as per the rate fixed under Section 13 of the Act Learned Counsel for the Appellants contends that the learned Judge was wrong on both the point.

(3.) THE second question raised is covered by the decision of a Division Bench of the Madras High Court in Ramalakshroi v. GopalkrishnaRao, : 1944 -2 Mad LJ 285 :AIR 1945 Mad. 12) (B). There, towards a promissory note dated 11th April, 1933. carrying interest at 12 -3/8 per cent, there was a series of payments of interest expressly appropriated by endorsements with the result, that all the interest was paid at the contract rate up to 11th August 1941. In a suit on the note for the principal together with interest at the contract rats from 10th August 1941, the debtor connived relief under Section 13 of the Act and the lower Court seeled down the debt by the process of calculating the total amount of principal and interest at the statutory rate of 6 1/4 per cent and decucting there from the payments made. The learned Judge held that the payments having been made and appropriated towards interest at the contract rate under a mistake of law cannot be got back and reappropriated towards the principal so as to make the whole of the accrued interest amenable to the process contemplated under Section 13 of the Act. This, being a decision of a Division Bench of the Madras High Court delivered before 5 -7 -1954, is binding on us. But, the learned Counsel for the Respondents contends that this decision is no longer good law in view of the Pull Bench decision in Veerraju v. Balakoteswara Rao, : 1951 -1 Mad LJ 42 :AIR 1951 Mad 67) (C), of which one of us was a member. The question raised in that Pull Bench decision was whether a creditor was not entitled to retain payments made after 1 -10 -1937 towards interest in excess of the interest payable under the provisions of the Act without adjusting them towards the principal. The Full Bench held that appropriation made towards interest after 1 -10 -1937 could be reopened and the balance readjusted towards the principal and that there was no distinction in principle between a debt to which the provisions of Section 8 applied and that governed by the provisions of Section 9. But, before the full Bench, no question was raised as regards the interpretation of Section 13 and, therefore, i hid; decision cannot be considered to have expressly or impliedly overruled the aforesaid Bench decision. But, at the same time, it cannot be argued that the same principle will apply to a case under Section 13 and that the interest payable at the contract rate could be reopened and re -appropriated under the terms of that section. Govindrajachari J. had occasion to consider the scope of the decision in 1944 2 MLJ 285 ; : AIR 1945 Mad 12) (B). The learned Judge came to the conclusion that where an unilateral appropriation was made by the creditor towards interest payable at the contract rate, the court can, under Section 13 of the Act, reopen it and expropriated it towards interest calculated at the reduced rate. But the learned Judge distinguished the decision of the Division Bench on the ground 'that the debtor by signing -the endorsement waived his right under Section 13. This question arises very often and it is necessary that there should be an authoritative decision of a Full Bench. We, therefore, refer the following question to the Full Bench, namely.