Gokaraju Venkataraju and Others vs Pannulapati Govindayya and Another

Wadsworth, J.—The appellants were the judgment-debtors in a suit on a promissory note decreed in 1931. They applied to scale down this

decree u/s 19 of Act 4 of 1938. The learned Subordinate Judge, on a basis which cannot now be defended, scaled down the debt only with

reference to the principal of the promissory note immediately preceding that which was sued on. It is clear from the evidence that the suit

promissory note has a long antecedent history. The accounts filed in the case show that it goes back historically to certain advances made to the

appellants during the minority of the decree-holders who were under the guardianship of their sister Rattamma. These advances were embodied in

promissory notes which have not been produced and are alleged to have been destroyed. In 1916 the account contains an entry to the effect that

the indebtedness of Rs. 1788-3-1 has been transferred-the word used being Avalti-to be paid by the debtor to Rattamma and that the debtor has

on this date executed a promissory note in her favour, the debt due to the minors being cancelled. In spite of this endorsement, the transactions

continued to be shown in the same account headed with the name of the debtor. On 26th November 1919 a fresh promissory note was executed

for an amount of Rs. 1850-15-7. It is alleged that this promissory note was in favour of the decree-holders themselves, they having be come

majors. Thereafter we have a succession of promissory notes with some fresh advances, all in the name of the decree-holders, culminating in the

suit note. The appellants wish to trace back the decree to the original indebtedness which preceded this transfer or Avalti of 1916, the argument

being that in 1916 the decree-holders were minors and their guardian had no power to consent on their behalf to any arrangement whereby she

should be substituted as the creditor for the original creditors and that she should therefore be regarded as having become the creditor under this

note merely as representative of the minors and that consequently when the decree-holders became majors and took a note in their own names

there is no change in creditor for the purpose of working out the renewals under the Explanation to Section 8 of Act 4 of 1938.

This is an argument which cannot succeed in view of our decision in Varadarajan v. Krishnamurth AIR 1941 Mad. 321. In that case we

expressly dissented from the view taken by Stodart J. on facts very similar to these now before us, though that transaction as put before the Court

started with a document in favour of the guardian representing a debt which really was owed to the minors'' estate. We have pointed out therein

that the term ""creditor"" as defined in Act 4 of 1938 does not include a person beneficially entitled to the amount lent. The present ease is one of a

decree on a promissory note which can be traced back through a series of renewals in favour of the same persons as far as the note of 1919. That

note discharges a note in favour of Rattamma, which note in favour of Rattamma was executed in discharge of still earlier notes in favour of

respondents who were minors. The intervention of Rattamma as the creditor breaks the series of renewals; Rattamma is not the same creditor as

the respondents and it follows that the debt can be traced only as far back as the note of 26th November 1919 executed in favour of the

respondents when they became majors. On this basis the appeal must be allowed to this extent that the decree will be modified so as to provide

(after appropriating a payment made after the decree) for the payment of Rs. 2924-11-7. This sum of Rs. 2924-11-7 will carry interest at six per

cent, from 1st October 1937. In appeal the parties will pay and receive costs proportionate to their failure and success.