A. Venkatarama Ayyar and Another vs A.R. Srinivasa Sastrigal

Patanjali Sastri, J.—This appeal arises out of an application made in the Court of the Subordinate Judge of Kumbakonam under the rules

made under the Madras Agriculturists'' Relief Act for a declaration that a sum of Rs. 3,914-11-0 only is due from the applicant, respondent herein,

under a mortgage executed by him in favour of the appellant''s father for Rs. 10,000 in 1931. The Court below scaled down the debt to a sum of

Rs. 5,814-11-2, and the creditors have brought this appeal.

Mr. Seshagiri Sastri, earned Counsel for the respondent, has raised a preliminary objection that an appeal from the order of the lower Court lay

u/s 13 of the Madras Civil Courts Act to the District Court in the first instance, and that the appeal preferred directly to this Court is not

maintainable. Section 13, so far as it is material here, runs as follows:

Appeals from the decrees and orders of Subordinate Judges and District Munsiffs shall, when such appeals are allowed by law he to the District

Court except when the amount or value of the subject-matter of the suit exceeds Rs. 5,000 in which case the appeal shall lie to the High Court.

It is argued that under this provision all appeals from decrees or orders of Subordinate Judges lie to the District Court unless the case falls within

the exception, and as the exception covers only suits and not applications it is not applicable here. We are unable to agree with this contention.

Rule 9 of the rules already referred to provides that,

The order of the Court declaring the amount of the debt under Rule 7, shall be subject to appeal and second appeal as if it were a decree in an

original suit.

The rule obviously postulates the fiction of a decree in an original suit for the purpose of determining the existence and the scope of a right to

appeal, and the question is whether it was not intended that the same fiction should be resorted to for determining the forum of appeal. We are of

opinion that the words ""as if it were a decree in an original suit"" are wide enough to attract all the procedure relating to appeals, including the

provisions governing the appellate jurisdiction of Courts, which are essentially a matter of procedure. In other words, in applying Section 13 of the

Madras Civil Courts Act to appeals allowed by Rule 9, the application made under these rules should be deemed to be a suit and the Court in

which the appeal is to be filed should be determined according to the valuation of the subject-matter. This view commends itself to us all the more

readily as it avoids the rather serious anomaly of shutting out all first appeals from this Court however heavy the stake involved. We do not think

that our decision in Venkataratnam, In Re: Bendapudi Venkataratnam and Others, to which Mr. Seshagiri Sastri has called our attention is really

against this view. All that was held in that case was that the last ten words of Rule 9 did not have the effect of making appeals preferred under that

rule taxable as appeals from declaratory decrees under Article 17-A of the Court-Fees Act. It was pointed out that though the words in question

may be apt enough to attract the whole procedure relating to appeals, they were not sufficiently explicit to make the provisions of a fiscal statute

such as the Court Fees Act applicable to appeals preferred under Rule 9 as if such appeals were appeals from decrees in declaratory suits. As it

has not been seriously disputed that the value of the subject-matter of the proceeding, being the value of the reduction claimed by the debtor

(compare Ryrappan Nambiar v. Chathu Kutti Nambiar (1923) 46 M.L.J. 377 exceeds Rs. 5,000 the appeal is competent and we overrule the

preliminary objection accordingly.

Turning to the merits, the first point argued relates to the appropriation of a sum of Rs. 2,868-4-0 which was admittedly paid towards the debt.

The appellant''s case was that the respondent made no payment towards the debt and allowed interest to accumulate for over a period of six

years, that the appellants were therefore anxious to recover a part at least of the interest in arrears, that with this object in view they arranged with

one Thangathammal to advance to the respondent on a mortgage the sum referred to above in order to enable the latter to pay it over to the

appellants, and that accordingly they got the respondent to execute the mortgage Ex. XII on the 1st September, 1937, in favour of Thangathammal

who had already sent the amount to the appellants for adjustment towards the debt due to them in accordance with the arrangement referred to

above. Ex. XII recites:

In respect of the entire balance of interest on the interest, due up to date towards the hypothecation deed executed on 30th July, 1931, in favour of

Sayanapuram Ayyaswami Ayyar, since deceased, by A.R. Srinivasa Sastrigal of us for Rs. 10,000 (ten thousand) is Rs. 1,517-14-0, amount paid

for a portion of interest due is Rs. 1350-6-0. The total amount as per the two items mentioned above is Rs. 2,868-4-0. Since we have directed

you to pay the said ""amount of Rupees Two thousand eight hundred and sixty-eight, annas four to A. Venkatarama Ayyar, eldest son of the said

Ayyaswami Ayyar, and the managing member, and to make the endorsement of payment, we have received Rs. 2,868-4-0. Since we have also

given direction for adjustment of Rs. 631-12-0 being the balance of principal and interest due up to date under a promissory note for Rs. 600

executed on 12th December, 1933, in your favour by A.R. Srinivasa Sastrigal of us in the amount due under this deed, the amount we have

received thereby is Rs. 631-12-0. Thus, as per items two as stated above, a total amount of Rupees Three thousand five hundred has been

received by us.

It will be seen that, besides the sum of Rs. 2,868-4-0 advanced in cash, the mortgage covers a debt due by the debtor to Thangathammal

herself on a promissory note for Rs. 600 dated 12th December, 1933 (Ex. XV). Now, the respondent does not dispute these transactions. Taking

advantage however of the endorsements of payments on Exs. XII and XV which are dated respectively 7th October, 1937, and 6th October,

1937, he contends that Rs. 2,868-4-0 was actually paid by Thangathammal to the appellants only on 7th October, 1937, and that, therefore,

according to the decisions of this Court holding that payments made and appropriated towards interest after 1st October, 1937, are liable to be

readjusted towards the principal by virtue of the provisions of the Madras Agriculturists'' Relief Act, all interest outstanding on 1st October, 1937,

being wiped out under that Act, the said sum of Rs. 2,868-4-0 should go in reduction of the principal due under the mortgage Ex. I. It appears the

endorsement on the mortgage (Ex. I-a) originally recited that the sum of Rs. 2,868-4-0 was paid "" on that day that is, on 7th October, 1937, and

that this was scored out and words corresponding that ""on the first day of September,"" were interlined. The endorsement as well as the

interlineation is in the handwriting of Thangathammal who made the payment on behalf of the respondent debtor but she has not been examined. A

receipt Ex. XVII was also produced bearing date 1st September, 1937, and reciting inter alia, that Thangathammal remitted a sum of Rs. 2,894 by

a bank draft on 14th August, 1937, and that out of it Rs. 2868-4-0 was appropriated towards interest due on the mortgage debt now in question

in accordance with the directions contained in the mortgage deed, Ex. XII, executed in favour of Thangathammal. The respondent attacked the

genuineness of the altered endorsement and the receipt referred to above, suggesting that both must have been brought into existence after the

Madras Agriculturists'' Relief Act was passed in March, 1938, so as to evade the provisions of that Act. The Court below has accepted this

suggestion and found that the alteration as well as the receipt was a subsequent fabrication. The appellants did not seriously contest this conclusion

and we agree with it. The Court below has also found that certain other documents, Exs. XIII, XIII-a, XIV and XlV-a which, if true, would prove

the appellant''s case to the hilt, are similar fabrications though as it seems to us, on somewhat slender grounds, but we are not prepared to differ

from this view. The question, however, is whether even when stripped of these false trappings, the lineaments of truth are not sufficiently discernible

in the appellant''s case. It may be mentioned here that Mr. Seshagiri Sastri did not dispute the proposition that if Thangathammal was shown to

have sent the amount to the appellant before 1st September, 1937, the execution of the mortgage Ex. XII by the respondent in her favour on that

date, with the specific directions to her to pay the amount to the appellants towards the interest due on the debt now in question, would

automatically operate as a payment by her to the appellants made on behalf of the respondent specifically towards interest, and that the

appropriation of such payment would be outside the mischief of Act IV of 1938.

As observed already, the appellant''s case was that they received from Thangathammal by a bank draft on 13th August, 1937, a sum of Rs.

2,894 out of which Rs. 2868-4-0 was appropriated by him in terms of the directions contained in her mortgage, Ex. XII. On the other hand, the

respondent took his stand on the recital in the original endorsement Ex. I-a dated 7th October, 1937, that the sum of Rs. 2,868-4-0 was paid "" on

that date and suggested that the earlier remittance by bank draft had nothing to do with the payment towards the debt in question. It may be stated

at once that there is no evidence, apart from the endorsement, on the mortgage, Ex. I, that any sum was paid by Thangathammal to the appellants

on 7th October, 1937, or, for that matter, at any time after the execution of her mortgage, Ex. XII on 1st September, 1937, and before 7th

October, 1937. The appellants, however, strongly relied on the post card Ex. XXIV written by the son of Thangathammal to the second appellant

on 18th July, I937,as showing that the appellants had already proposed that Thangathammal should lend money to the respondent so as to enable

him to pay off a portion of the interest due under the mortgage Ex. I and that the proposal was under discussion. It must be admitted that the terms

of the letter taken by themselves are not clear as to what transaction the parties were discussing, The writer (that is Thanga-thammal''s son) says:

At present for immediate payment I can give Rs. 3,300 or Rs. 3,400. Even in this, I can give only the balance after deducting Rs. 600. So please

reply regarding all particulars without fail. If you want me to send the money immediately I shall obtain a crossed draft from the Indo-Commercial

Bank and send it to you.

The writer was examined as R.W. 2 and he explains that the first appellant told him in June, 1937, in Kumbakonam and Alankudi about the

investment of Rs. 3,500 with the respondent on a mortgage, and that Rs. 600 mentioned in the letter refers to the amount of his mother''s

promissory note. This promissory note is filed as Ex. XV and its discharge is part of the consideration for the mortgage Ex. XII, the balance of Rs.

3,868-4-0 being the amount directed to be paid to the appellants. In the light of these facts and the explanation given by R.W. 2, the statement in

Ex. XXIV as to deducting Rs. 600 and paying only the balance out of Rs. 3,300 or 3,400 which the writer proposes to give assumes great

significance. It shows with reasonable clearness that the passage extracted above refers to the proposed investment with the respondent and the

adjustment of the promissory note debt due by the latter out of the advarice to be made, and that the crossed draft from the Indo-Commercial

Bank was to be sent for that purpose. It was, however, suggested for the respondent that the tone of the letter rather showed that the writer was

answering a demand from the appellants of monies due to them from Thangathammal, but there is no foundation for this suggestion, as neither

R.W. 1 the first appellant, nor R.W. 2, the son of Thangathammal and the writer of the letter, was asked about Thangathammal and her son owing

money to the appellant and, in any case, the reference to the proposed deduction of Rs. 600, while it fits in exactly with the appellant''s version,

would otherwise stand unexplained. It is worthy of note that no suggestion of Thangathammal''s indebtedness to the appellants appears to have

been made in the Court below as the learned Judge too understood the post card Ex. XXIV as referring generally to investment of money available

and to be available. The learned Judge further observed that the concluding portion of the letter, that is, the passage extracted above, suggested

that an investment with the respondent though of as Rs. 600 was to be deducted out of the amount to be advanced. Having come so near what

appears to us to be the truth, the learned Judge however proceeded to speculate as to how Thangathammal''s son would have acted in case

Thangathammal had agreed to advance the loan to the respondent, and influenced apparently by the appellants'' conduct in fabricating false

evidence, came to the conclusion that the payment of Rs. 2,868-4-0 must have been made after 1st October, 1937. We are unable to agree with

this conclusion. No doubt the appellants'' conduct in attempting to bolster up their case by concocting evidence and their failure to produce their

accounts was hardly such as to inspire confidence in their case. We are, however, satisfied on the whole, having regard to documentary evidence

the genuineness of which has not been impugned and to the probabilities of the case, that the only payment made by Thangathammal as

consideration for the mortgage, Ex. XII came out of the bank draft sent on 13th August, 1937 and that there was no other payment, the original

endorsement on Ex. I having been roughly made as strict accuracy as to the date of payment was then immaterial. As the money was thus in the

hands of the appellants when the said mortgage (Ex. XII) was executed by the respondent on 1st September, 1937, it must be deemed to have

been appropriated to interest due under the appellant''s mortgage, Ex. I, on the said date in view of the specific directions contained in Ex. XII. It

follows that such appropriation cannot be. reopened under the Madras Agriculturists'' Relief Act.

The next contention urged on behalf of the appellants was that in scaling down the debt in question, it should not have been traced back to the

promissory notes executed by the respondent''s elder brother as the manager of the family as there was a partition in the family at which the

liabilities under the promissory notes fell to the share of the respondent who executed the mortgage, Ex. I, in discharge of such liability. This point is

concluded in the appellant''s favour by the decision in Karuppanna Goundan Vs. Marutha Pillai, and therefore, the principal sum of Rs. 10,000

mentioned in Ex. I should be taken as the principal for purposes of scaling down the debt.

In the result, the appeal is allowed and the appellants will be declared entitled to the sum of Rs. 10,000 with interest thereon at 6 1/4 per cent

per annum from 1st October, 1037, up to 30th January, 10,40, on which date Rs. 3,014-11-0 was paid by the respondent.The balance will carry

interest at the same rate from that date till realisation. The appellants will have the costs of the appeal. In the Court below each party will bear its

own costs.