Arunachalam Pillai vs Seetharam Naidu and Others

Patanjali Sastri, J.—The question raised in this appeal is whether a mortgagee who sues to enforce his mortgage is entitled to a decree for

the whole amount due under the mortgage against a non-agriculturist Court auction purchaser of the equity of redemption when the agriculturist

mortgagor claims to have the debt scaled down under the provisions of the Madras Agriculturists'' Relief Act. The appellant brought the suit out of

which this appeal arises in August, 1937, for recovery of Rs. 8,500 by the sale of the mortgaged properties on foot of a mortgage executed by the

managers of the joint family of respondents 1 to 8 (hereinafter referred to as the mortgagors) for Rs. 5,000 on 29th October, 1931. Respondents

9 to 11 are subsequent encumbrancers in respect of one of the properties comprised in the mortgage, and respondent 12 is the purchaser of all the

properties subject to the mortgage in execution of a decree for money obtained by a third party against the mortgagors. While the suit was

pending, the Madras Agriculturists'' Relief Act came into force on 22nd March, 1938, and the mortgagors were allowed to file an additional

written statement on 4th August, 1938, raising the plea that they were agriculturists as defined by the said Act and that the debt was liable to be

scaled down in accordance with the provisions thereof. The appellant filed on 12th August, 1938, a reply statement , whereby he relinquished his

personal remedy against the mortgagors, confining the relief sought in the suit to a decree for sale of the properties in the hands of respondent 12.

There is no dispute that all the respondents except respondent 12 are agriculturists within the meaning of the Act and that the amount due as scaled

down u/s 8 is Rs. 3,050. The learned Subordinate Judge of Madura who tried the suit overruled the contention of the appellant that the debt

should not be scaled down under the Act so far as the twelfth respondent was concerned and passed a preliminary decree for sale for the sum of

Rs. 3,050 with interest thereon from 1st October, 1937, against all the respondents.

It is argued for the appellant that inasmuch as all the mortgaged properties are now in the hands of the twelfth respondent who is not an

agriculturist and a decree is sought only against such properties, the Act has no application and a decree for sale for the full amount due under the

mortgage ought to be passed against the twelfth respondent. In support of this contention, reliance is placed by learned counsel upon the decision

reported in C.S. Ramier Vs. B.N. Srinivasiah, , where it was accepted as a general proposition that the right of an agriculturist judgment-debtor to

scale down a decree should not be allowed to enure for the benefit of a non-agriculturist judgment-debtor. That was a case where the mortgagor

was not an agriculturist and the puisne mortgagee who claimed the benefit of the Act was an agriculturist and it was held, in view of an earlier

decision, that the pusine mortgagee must be regarded as a debtor within the meaning of the Act and, being an agriculturist, was entitled to have the

debt scaled down so far as his interest in the hypotheca was concerned, notwithstanding that it was payable in full by the non-agriculturist

mortgagor. It is undoubtedly true that agriculturist debtors alone are entitled to the relief provided in the Act which does not contemplate any

scaling down of debts due by others, but it does not follow that a non-agriculturist debtor can in no circumstances be benefited by the scaling down

of a debt under the provisions of the Act. The properties now held by the twelfth respondent are liable only as security for the debt due by the

mortgagors, and if as a result of the Act there is a statutory discharge or reduction of the debt, the properties cannot, it seems to us, be proceeded

against for anything more than the scaled down amount of the debt. S. 8 of the Act so far as it is material here says:

Debts incurred before the 1st October, 1932, shall be scaled down in the manner mentioned hereunder, namely

All interest outstanding on the 1st October, 1937, in favour of any creditor of an agriculturist whether the same be payable under law, custom or

contract or under a decree of the Court and whether the debt or other obligation has ripened into a decree or not, shall be deemed to be

discharged, and only the principal or such portion thereof as may be outstanding shall be deemed to be the amount repayable by the agriculturist on

that date.

It cannot be denied that the appellant was on the material date, namely, the 1st October, 1937, a creditor of the mortgagors who are

agriculturists in respect of a debt incurred before the 1st October, 1932, and the plain consequence of this provision is that all interest outstanding

on that date is wiped out and the principal amount then outstanding is repayable. The appellant whose only right as a simple mortgagee is, in the

event of his (mortgagor''s) failing to pay according to his contract to cause the mortgaged property to be sold and the proceeds of sale to be

applied, so far as may be necessary, in payment of the mortgage money'' (see Section 58(b) of the Transfer of Property Act), cannot claim to

proceed against the properties in the hands of the 12th respondent for anything in excess of what is repayable under the mortgage. When the 12th

respondent purchased the properties in court-auction, he took them subject to the burden of the appellant''s mortgage and if the burden is by

reason of the provisions of Section 8 referred to above reduced without payment, the purchase proves to that extent an advantageous one, and

there is nothing in the Act to deprive him of the fruits of his lucky purchase, even though he is not an agriculturist. He gets the benefit of the scaling

down not because the provisions of the Act apply to him for obviously they do not, but because such benefit is a necessary incident of his purchase

under the general law and the Act does not deprive him of it. The appellant laid stress on his relinquishment of the claim for a personal decree

against the mortgagors and urged that it had the effect of converting the mortgage into a ''debt'' payable solely by the 12th respondent as that

expression has been understood in Perianna Goundan Vs. Sellappa Goundan and Others, . It is, however, difficult to see how the appellant''s

relinquishment of his right to a personal decree against the mortgagors after the Act had come into force and the mortgagors had in fact applied for

relief under it, can affect the position which arises under the Act with reference to a date long prior to such relinquishment. It is unnecessary to

consider what the consequence would be if the appellant had agreed to exonerate the mortgagors from all personal liability before the Act came

into force.

The appellant''s learned counsel pointed out that according to the decisions in C.S. Ramier Vs. B.N. Srinivasiah, and Perianna Goundan Vs.

Sellappa Goundan and Others, a purchaser of property subject to a mortgage is entitled to the benefit of the Act if he is an agriculturist though the

mortgagor is not, and submitted that it would be anomalous to hold that he gets the same benefit when he is not an agriculturist and the mortgagor

is. We fail to see the anomaly. The Act entitles him to such benefit in the one case while, as already observed, it is the consequence of his purchase

under the general law in the other.

The appeal is dismissed with costs of respondent 12.