A. Sankara Aiyar vs Yagappan Servai

Patanjali Sastri, J.—This is a petition to revise the order of the Court of the Subordinate Judge of Dindigul dated 5th September, 1938,

whereby it entered satisfaction of the decree in S.C.S. No. 40 of 1937 on application by the judgment-debtor, respondent before us u/s 19 of the

Madras Agriculturists'' Relief Act.

The respondent executed a mortgage for Rs. 800 in favour of the petitioner on 16th September, 1929, and for interest due on the mortgage, he

gave on 23rd January, 1937, a promissory note for Rs. 595-7-0 the sum being endorsed on the mortgage bond as received for interest. The

decree which is sought to be scaled down was obtained on this promissory note. The respondent applied in the Court below alleging that he was

an agriculturist and that by virtue of the combined operation of Sections 8 and 9 of the Act, the decree must be deemed to have been satisfied. The

application was allowed and full satisfaction of the decree was accordingly recorded. There was no dispute that the respondent was an agriculturist

within the meaning of the Act.

Learned Counsel for the petitioner contended that the promissory note on which the decree was passed represented a distinct debt consisting of

the principal sum Rs. 595-7-0 and the interest accruing thereon, and as this debt alone was the subject matter of the proceeding for scaling down,

the only relief the respondent could obtain was the scaling down of the interest payable on this debt. We are unable to accept this contention. It is

true that, the debt having been incurred in 1937, it has to be scaled down in the manner mentioned in Section 9 of the Act. But in view of the

proviso to Sub-section (1) of that section the promissory note which was admittedly taken for interest due on the mortgage bond of 1929 must be

taken to be a renewal of the previous liability to pay such interest and therefore dealt with u/s 8. This section clearly provides that all interest

outstanding on the 1st October, 1937, shall be deemed to be discharged, and we are unable to discover in the terms of the section any justification

for the view that it is only the interest payable in respect of the debt which is made the subject-matter of the proceeding before the Court that can

be scaled down and not the debt where such debt itself consists only of interest due on another debt. It is obvious that to apply the section in the

manner suggested for the petitioner would render its provisions practically nugatory. For, a creditor could defeat the object of, the section by the

simple expedient of suing for the interest alone in the first instance and then suing for the principal, as in the case of most debts there is usually a

distinct covenant to pay interest. Similarly, the provisions of Sections 9 and 13 dealing with other classes of loans could also be evaded by

adopting the same device. We have therefore no hesitation in rejecting the contention which would thus have the effect of largely defeating the vital

provisions of the Act. These sections clearly enact that interest due on the various classes of debts for which they respectively make provisions

should be dealt with in the manner mentioned therein, and it is the duty of the Court whenever a claim is made for interest on debts falling under

one or other of these classes to scale down the claim in accordance with these provisions whether or not the debt in respect of which such claim is

made is the subject-matter of the proceeding; that is to say, for example, where a claim is made for interest on a debt incurred before the 1st of

October, 1932, the Court should apply Sub-section (1) of Section 8 and disallow the claim, although the creditor might not have put the debt itself

in suit.

It was then argued that the execution of a promissory note for interest due on another debt amounted to a payment of interest on the debt and a

fresh advance of the sum as principal under the note. It is however difficult to see how it can have that effect, at any rate in the absence of any

special bargain between the parties of which there is no evidence in this case. In rejecting a similar contention advanced in support of assessment to

Income Tax of interest for which a promissory note had been taken from the debtor, their Lordships of the Privy Council observed in

Commissioner of Income Tax, Bihar and Orissa v. Maharajadhiraj of Dharbhanga (1933) 64 M.L.J. 612 : L.R. 60 IndAp 146 : ILR 12 Pat. 318

A debtor who gives his creditor a promissory note for the sura he owes can in no sense be said to pay his creditor; he merely gives him a

document or voucher of debt possessing certain legal attributes.

It follows that the promissory note and the decree based thereon must be deemed to be discharged as interest outstanding on the mortgage debt

on the 1st October, 1937. This is also the view taken by Abdur Rahman, J., in C.R.P. No. 769 of 1940.

The revision petition fails and is dismissed with costs.