Akella China Venkatavadhamulu and Others vs Muthangi Bachi Ramayya Garu and Others

The facts necessary for appreciating the contentions raised may be briefly narrated. To enforce a mortgage executed by the Akella family in

favour of Muthangi Butchi Ramiah, on 18th June 1917, he filed O. S. No. 21 of 1930 on the file of the Court of the Subordinate Judge of

Amalapuram. There was a preliminary decree against all the members of the joint family. On 12th April 1932 a final decree was passed.

Defendants 1, 2, 3 and the 13th defendant are brothers. Defendants 5 to 8 are the sons of the first defendant. Defendants 33 to 35 are the

grandsons of the first defendant being the sons of his son, the fourth defendant. Defendants 9 to 12 are the sons of the second defendant. The other

defendants are purchasers of some of the items of the property.

First defendant was adjudicated insolvent in 1926. In execution of the decree in E. P. No. 403 of 1941, the decree-schedule properties were sold

on 17th and 18th of July 1942, and were purchased by the plaintiffs, Muthangi Ayyanna and Karra Suryanarayana on behalf of the defendants 30

and 31. Defendants 2, 3, 5, 7, 8, 9, 10, 11, 12, 13, 14, 33, 34, & 35 filed E. A. No. 743 of 1942 for setting, aside the sale u/s 47 and Order 21

Rule 90 C. P. C. on various grounds. Defendants 2, 3, 5, 6, 13, 33, 34 and 35 filed E. A. No. 13 of 1946 for setting aside the sale under Order

34 Rule 5 C. P. C. by depositing the amount alleged to be due from them under the provisions of the Madras Agriculturists Relief Act. The learned

Subordinate Judge dismissed E. A. No. 743 of 1942 on the ground that the sale was not vitiated by any of the irregularities alleged. He also

dismissed E. A. No. 13 of 1946 on various grounds, the main ground being that the entire decree amount was not deposited. The above two

appeals were filed against the said orders.

Mr. Somasundaram, the learned counsel for the appellants, contended that as the appellants, who are some of the mortgagors, deposited the

amount payable by them under the Madras Agriculturists Relief Act, the entire mortgage decree is discharged on the principle that the mortgage is

one and indivisible. In support of his argument he relied upon the decision in -- ''Kailasa Thevar v. Ramaswami Iyengar'', AIR 1949 Mad 233 (A).

In that case there was a mortgage decree. The decree was scaled down except as against the first defendant. When he filed an application for

scaling down the decree, it was dismissed. The other defendants, against whom the decree was scaled down, paid certain amounts towards the

decree. Then the first defendant deposited an amount equal to the difference between the amount of the scaled down decree against the other

defendants and the payments made by them, and prayed that the deposit should be accepted and full satisfaction entered up and the entire hypo-

theca released from the mortgage.

The learned Judges held that the first defendant would be entitled to the relief asked for on the principle of the unity and the indivisibility of the

mortgage. Mr. Justice Govinda-rajachari, who delivered the judgment, consi-dered the earlier case Jaw on the subject and came to the aforesaid

conclusion. If this judgment represents the correct law on the subject, the appellants would certainly be entitled to succeed. But Mr. T. M.

Krishnaswami Aiyar, the learned counsel for the respondents, contended that the said judgment was not correct and that it required

reconsideration. His argu-ments may be concisely stated as follows: The Madras Agriculturists Relief Act was enacted to provide for the relief of

indebted agriculturists in the Province of Madras, and, for that object, scaled down the liability of the debtors who are agriculturists. It was not

intended to affect the rights of creditors against non-agriculturists.

Debt"" is defined in the Act as a liability due from an agriculturist, and it will be scaled down u/s 7 of the Agriculturists Relief Act notwithstanding

any law to the contrary. It is therefore necessary to construe the sections in such a way as to affect the right of the creditor, to proceed against his

non-agriculturist debtors. In so far as the Act provides for scaling down the debt of an agriculturist debtor to that extent the general law is modified.

In support of his contention he mainly relies upon -- ''Ramier v. Srinivasiah'', A. I. R. 1941 Mad 204 (B). There a mortgage was executed in 1916

by the deceased father-in-law of the first defendant who was not an agriculturist. The applicant, who claimed relief under the Act, was the second

defendant in the suit, who was the usufructuary mortgagee over the same properties under a deed dated 22nd May 1920. He was an agriculturist.

The third defendant, who had acquired the equity of redemption of certain items, was not an agriculturist. The puisne mortgage right of the

applicant was sub-mortgaged to another person who had deposited a certain amount to the credit of the decree. The Subordinate Judge held that

the applicant was not entitled to the benefits of the Madras Agriculturists Relief Act because the scaling down of the decree in his favour would

result in a benefit to the other defendants who were not agriculturists.

It would be seen from the aforesaid facts that the applicant, who was the puisne mortgagee was an agriculturist, whereas the mortgagor was not an

agriculturist. The learned Judges held that he was entitled to relief under the Madras Agriculturists Relief Act. The learned Judges observe at page

204 as follows:

It is argued by Mr. Ramaswami Aiyangar for the decree-holder that the right of on agriculturist judgment-debtor to scale down a decree should

not be allowed to enure for the benefit of a non-agriculturist judgment debtor, a proposition with which we are in agreement. But wo find it difficult

to accede to the further contention that the mortgage, being one and indivisible, it is wrong in theory and difficult in practice to scale down the

decree against the agriculturist judgment debtor, while leaving it unamended as against the non-agriculturist judgment debtors. The theoretical

argument is based on the absence from Section 19 of any words excluding the application of the general law governing mortgages. But Section 19

is only the machinery section. The substantive provisions are contained in Section 7 which says, ''Notwithstanding any law ..... or decree of court

to the contrary, all debts payable by an agriculturist at the commencement of this Act, shall be scaled down .....'' Having regard to our previous

decisions, we must hold that the applicant is a judgment debtor and that the decree debt is payable by him. It follows that this debt is to be scaled

down, notwithstanding the decree and notwithstanding the provisions of the general law which prevent the person who acquires a partial interest in

the hypotheca from denying the liability of his interest to satisfy the whole of the mortgage debt.

It will therefore be seen that the learned Judges held that Section 7 overrides the general law of mortgages. Subsequent to the judgment there are

other decisions arising out of different sets of facts.

All these cases have been considered by Mr. Justice Govindarajachari in AIR 1949 Mad 238 (A). Most of these cases dealt with the situation

where the mortgagor is an agriculturist but the purchaser of the equity of redemption is a non-agriculturist. But the learned Judges held that the

property in the hands of the non-agriculturist purchaser would be freed from the mortgage liability if the scaled down debt was paid by the

agriculturist mortgagor on the principle of ""lucky purchase."" The learned counsel for the respondent argued that in these decisions, it was so held as

the liability of the purchaser was only accessory.

But Mr. Justice Govindarajachari pointed out that it was strange that there had been no reported decision where some of the mortgagors got some

of the decree amount scaled down while other mortgagors did not succeed in doing sc. Indeed, the facts in AIR 1949 Mad 238 (A) disclose that

all the mortgagors were agriculturists, though one of them was not able to get the decree amended so far as he was concerned, owing to the

lateness of his application. The decision in C.S. Ramier Vs. B.N. Srinivasiah, and that reported in AIR 1949 Mad 238 (A) lay down two

conflicting views. In C.S. Ramier Vs. B.N. Srinivasiah, . the learned Judges accepted the principle that Section 7 of the Agriculturists Relief Act

overrides the general law of mortgages, whereas in AIR 1949 Mad 238 (A) the learned Judges invoke the general law of mortgages, namely, the

principle of unity and indivisibility of a mortgage in applying the provisions of the Madras Agriculturists Relief Act.

Though on facts they may be reconciled, on principle we think they speak in two different voices. As this question rises frequently, and as the effect

of our decision in one way or the other affects a large body of creditors or debtors, as the case may be, we think it is necessary to have an

authoritative decision of a Full Bench. We therefore refer the following question for decision by the Full Bench,

Whether if one of the mortgagors happens to be an agriculturist and the other a non-agriculturist, discharge of the debt scaled down by the

agriculturist mortgagor would extinguish the debt against the non-agriculturist mortgagor also.

The papers will be placed before the learned Chief Justice for constituting the Full Bench.

OPINION

Subba Rao, J.

Subsequent to the reference to the Full Bench, the Supreme Court had to deal with the same question. They held in -- V. Ramaswami Ayyangar

and Others Vs. T.N.V. Kailasa Thevar, as follows :

Here the judgment debtors are the mortgagors themselves and according to the plain provisions of the Agriculturists Relief Act, there could not be

any objections to a decree for reduced amount being passed against an agriculturist debtor, while the same relief is not given to his debtors who do

not fulfil that description.

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.

It follows that the question referred to the Full Bench should be answered in the negative.

The appeals will be posted before the Bench for arguments on other questions raised.