Jagannatha Aiyangar and Others vs Suppiah Chettiar

Horwill, J.—A decree was obtained against defendants 1 to 5 personally on a promissory note executed by them for a debt binding on the

family. Because it was binding on the family, the other two members, defendants 6 and 7, were made liable to the extent of their share of the family

property. Defendants 3 to 7 filed an application in the Court below for scaling down the debt. The debt was scaled down in accordance with

Section 8 of the Agriculturists'' Debt Relief Act (IV of 1938), and a question arose in view of the allegations that defendants 1 and 2 were not

entitled to the benefit of the Act (defendant 1 being said to be an insolvent and defendant 2 to have no further interest in the family property)

whether, u/s 14 of the Act, the creditor can proceed against each of the defendants only for his proportionate share of the debt. The lower Court

held that Section 14 did not apply to the case of a contractual debt. Defendants 3 to 5 appeal.

Section 14 affects:

A Hindu family...where some of the members liable in respect of a family debt are not agriculturists while others are agriculturists.

The case of the respondent, which has been accepted by the lower Court, is that this debt is not a family debt. It is argued that a debt can only

be said to be a family debt when the debtors are made liable only because they are members of a family; for example, if the manager of a family

contracts a debt legally binding on the family, it is a family debt as far as the other members of the family are concerned but not as far as the

manager is concerned. It is difficult to appreciate this distinction; for it appears to me that if a debt is a family debt, it must be a family debt with

regard to everybody. Moreover, I think, the wording of Clauses (a) and (b) of Section 14 indicates that this contention of the respondent cannot

be correct; because it makes liable not only the debtors'' shares of the family property but makes them liable personally for their proportionate

share of debt; and they cannot be liable personally unless the debt is a contractual one. So I cannot agree with the lower Court that Section 14 has

no application.

I do not, however, find any reason to suppose that because one or more members of a family are non-agriculturists, the family property has to

be split up into individual shares and that each individual share is liable only for its own share of the family debt. That is not how the section reads.

Using the words appropriate to the present case:

The creditor shall...be liable to proceed (a) against the non-agriculturist...members and...their share of the family property to the extent only

of...their proportionate share of the debt which shall be scaled down in accordance with the provisions of this Act and (b) against the

agriculturist...members and...their share of the family property, to the extent only of...their proportionate share of the debt.

That would mean that where, as in the present case, there are two non-agriculturists and five agriculturists, the non-agriculturists are liable for

2/7 of the unsealed debt while the agriculturists are liable for 5/7 of the scaled-down debt. That is what one would expect the legislature in justice

to have done in order to overcome the difficulty that arises in dealing with a Hindu family, some of whose members are agriculturists and some not.

In some Malabar families, for example, there is an enormous number of members and if a creditor could only proceed against the individual small

fractions of the family property or the individual share of that member, very great hardship indeed would be entailed; and I do not think the

Legislature intended by this section to throw that great burden on the creditor. Moreover, the word ''share'' would be incorrect if the petitioners''

contentions were correct. The correct word would be ''shares''. It therefore follows that if the Act does not apply to the first and second

defendants, defendants 3 to 7 would be liable for 5/7 of the scaled-down debt.

It is contended that Section 21 of the Act, which excludes certain insolvents from the scope of the Act, does not apply to this case; for there is

no evidence whether a dividend has been declared or not. It is also argued that there is no evidence to show that the second defendant has no

longer any interest in the family property. In the view taken by the lower Court, it was not necessary to consider these questions. They will have to

be considered in view of the above findings.

The petition is allowed and the interlocutory application remanded for disposal on the lines indicated above. The costs for this petition will be

provided for in the order to be made by the lower Court when disposing of the application.