B.A. Kuppusamy Ayyar vs T.K. Subbraman and 4 others

Abdul Hadi, J.—This appeal is by the plaintiff against the judgment and decree in O.S. No. 926 of 1978 on the file of sub court, Madurai. The suit is on a mortgage executed by defendants 1 to 4 for a sum of Rs. 10,000 with interest at 18 per cent per annum. The 5th defendant purchased the mortgaged property in a court auction sale in 1974. Defendants 1 to 4 submitted to a decree to an extent of Rs. 15,000. The judgment of the trial court states that defendants 1 to 4 and the plaintiff made a joint endorsement to the effect that as against defendants 1 to 4 the suit might be decreed for a total sum of Rs. 15,000 with proportionate costs and subsequent interest. The learned counsel for the appellant initially submitted that there was no joint endorsement by the plaintiff. No doubt, the endorsement made by the plaintiff is not traceable from the papers relating to the case before me. But, I find from the notes paper of the trial judge that on 10-4-1980 such a joint endorsement was made by the plaintiff and defendants 1 to 4 and the trial of the suit was posted to 11-4-1980 as against the 5th defendant. If really there was no joint endorsement by the plaintiff, he would have taken necessary steps before the trial court after seeing the court diary mentioning about the joint endorsement. Such a step was not taken at all and so I have to proceed only on the footing that a joint endorsement was so made.

So far as the 5th defendant is concerned, the court below has held that the 5th defendant was a debtor under the Tamil Nadu Debt Relief Act (XL of 1979 (hereinafter referred to as ''the Act'') on the ground that it was only a private limited company and so would come under the definition of the term "debtor" under the Act. On this ground the court below held that even with reference to the 5th defendant, the mortgage debt has to be scaled down under the Act and that hence the 5th defendant also would not be liable to pay more than 1� times the principal amount. So a preliminary mortgage decree was passed as against all the defendants and in respect of the suit property for a sum of Rs. 15,000 together with interest and proportionate costs. Aggrieved by the said decree, the plaintiff has preferred this appeal contending that the 5th defendant is not a debtor under the above said Act and therefore, a decree as prayed for should be granted as against the 5th defendant.

I also find that S. 3(3) of the Act defines the term "debtor" as follows:-

"debtor'' means any person from whom any debt is due;

S. 3(7) of the Act defines the term "person" as follows:-

"Person" means an individual and includes an undivided Hindu family, a marumakkathayam or aliyasantana tarwad or tavazhi; but does not include a body corporate, a charitable or religious institution or an incorporated company or association or any firm as defined in the Indian Partnership Act, 1932 (Central Act IX of 1932)

Therefore, it is clear that a body corporate as the 5th defendant, whether a public limited company or a private limited company, would not be a person under the said Act and hence not a debtor under the Act.

Then, the next question is whether the 5th defendant is liable for entirety of the mortgage debt as contended by the plaintiff-appellant. The 5th defendant has purchased the mortgaged properties subject to the encumbrance. The mortgagee-plaintiff has consented to restrict the liability of defendants 1 to 4 to Rs. 15,000. The learned counsel for the appellant contended that such consent was given only because defendants 1 to 4 were debtors under the said Act and would be liable only to the extent of Rs. 15,000. At any rate since the 5th defendant has purchased the equity of redemption and is not a debtor under the Act, there could be no bar to the entire mortgage liability being fastened on the property mortgaged and making the 5th defendant thus liable to the entire mortgage liability through the mortgaged property. Anyway since nobody appeared for the 5th defendant. I requested Mr. T.R. Rajaram to assist the court as Amicus Curiae in this regard. Accordingly, he went through the papers relating to this appeal and brought to my notice the decision reported in Dhanalakshmi Ammal v. Krishnammal 1988-2 L.W. 504. which has followed an earlier bench decision reporte 96 L.W. 73d in Abraham v. State of Tamil Nadu . In Dhanalakshmi Ammal v. Krishnammal 1988-2 L.W. 504. referred to above it was held that the benefit of scaling down of the debt under the Act was not available to the purchaser of the mortgaged property from the mortgagor subject to mortgage. Therefore, I find that the 5th defendant is not entitled to claim the benefits of the Act.

In the result, the appeal is allowed. The judgment and decree of the trial court are modified and a preliminary mortgage decree for the entire suit claim with subsequent interest and cost throughout is passed against the 5th defendant in respect of the mortgaged property and as against defendants 1 to 4, personally for a sum of Rs. 15,000 together with subsequent interest and proportionate costs. Time for payment 3 months. I also record my appreciation for the assistance rendered by the Amicus Curiae Mr. T.R. Rajaram.