K. Jagannatham Chetty vs V. Parthasarathy Iyengar (dead) and Others

Krishnaswami Nayudu, J.—This application is for scaling down the mortgage decree debt in C. Section No. 42 of 1933, and the applicants

are some of the judgment debtors. Preliminary decree in the above suit was passed on 31-7-1934, and the final decree was passed on 12-2-

1935. There was a balance of Rs. 6,759-5-0 claimed under the decree. The mortgage property was brought to sale and the proclamation was

settled on 25-4-1950. The sale has been stayed by my order in view of this application. The judgment-debtors took out application No. 1147 of

1938 u/s 19 of Act 4 of 1938 and an order was made on 4-9-1939 scaling down the debt. An appeal was preferred, O. S. A. No. 57 of 1940 by

one of the judgment-debtors against the order scaling down the debt and on 28-2-1941, the appellate Court found on scaling down the debt that a

sum of Rs. 3,391-3-0 was due on 1-10-1937 and further ordered the judgment-debtors to pay interest thereon at 6 per cent per annum from 1-

10-1937 with proportionate costs of the parties. The amount now under the proclamation of sale represents the said sum of Rs. 3,391-8-0 with

interest and costs of further proceedings.

Objection is raised to this application on the-ground that the decree debt having once been scaled down by virtue of an order of this Court in O.

S. A. No. 57 of 1940, there can be no further application for scaling down. The applicants contend that by reason of the amending Act (Act 23 of

1848) they have become entitled to apply and if the amended provisions as to the method and principles are applied for the sealing down, there

will be nothing due under the decree and the whole amount at it stood on 1-10-1937, would stand wiped out. Learned counsel for the applicants

relics on Section 16, Clauses (ii) and (iii) of the amending Act (Act 23 of 1948) and states that he is entitled to maintain this application and if this

application is held, to be maintainable, by virtue of the application of the provisions of Explanation 1 which hare been newly incorporated in the

amending Act, the amounts paid towards the decree must be appropriated towards the principal and if so appropriated there will be nothing due,

since under Clause (i) of Section 8, all interest due up to 1-10-1937 must be deemed to have been discharged.

The first point for consideration is whether the present suit out of which this application is taken out comes under that class of suits mentioned in

Section 16 of the amending Act 23 of 1948. Clause (ii) of Section 16 states that the amendments made by this Act shall apply to all suits and

proceedings instituted before the commencement of this Act, in which no decree or order has been passed or in which the decree or order passed

has not become final, before such commencement. This clause is relied upon and it is submitted that even though, the decree in C. S. No. 42 of

1933 has become final before the commencement of this Act, still the execution proceedings are pending and as such they have not become final

and that therefore the applicants are entitled to maintain this application for scaling down. I am unable to agree with the learned counsel that

execution proceedings are contemplated in the word ""proceedings"" in Clause (ii) The proceedings in Section 16 must relate to proceedings

instituted for repayment of a debt and not to execution proceedings which are for enforcement of a decree or order. That by ""proceedings

execution proceedings are not intended is also clear if'''' reference is made to Clause (3) when execution of a decree or order arising out of a suit

or proceeding is separately contemplated. In any event, the present execution proceedings commenced after the commencement of the Act, that

being an application of 1949.

Learned counsel for the applicants contends that in any event the applicants will come under the ambit of Clause (iii) of Section 16. Clause (iii)

says that the amendments made by this Act shall apply to all suite and proceedings in which the decree or order passed has not been executed or

satisfied in full before the commencement of this Act (Amendment Act 23 of 1948). If it refers to a suit instituted before the commencement of the

Act and the decree has not been satisfied before the commencement of the Act, namely, before January 1, 1949 the date of the coming into force

of Act 23 of 1948, then the applicants will be entitled to apply and get the benefit of the extended provisions of Section 8. Learned counsel for the

respondent has drawn my attention to a Bench decision of this Court in -- ''C. M. A. Nos. 316 and 391 of 1947 (A)'' in which the scope of

Section 16 of the amending Act was considered. Their Lordships in the course of the judgment state as follows:

Section 16 deals with three categories of proceedings. Clause (i) deals with suits and proceedings after the commencement of the Act. Clause (ii)

with suits and proceedings instituted before the Act but the decree or order had not become final, and Clause (iii) with suits and proceedings

instituted before the Act but the decree or order was not fully satisfied. This clear-cut classification indicates that clauses (ii) and (iii) are distinct

and mutually exclusive and are not intended to overlap. If the argument of Mr. Ramachandra Rao be accepted, Clause (ii) of Section 16 would

become unnecessary as all possible cases coming under Clause (ii) would equally be covered by Clause (iii). On the other hand, the contention on

behalf of the decree-holder would give effect to all the provisions of the Act, at the same time avoiding conflict between the various clauses of the

section. If under Clause (ii) suits and proceedings wherein decrees or orders have become final are excluded from the operation of the Act, it

would be unreasonable to hold that under Clause (iii) they are brought in On the other hand, it would be giving full effect to Clause (iii) and

avoiding conflict between the provisions if it was confined to suits and proceedings in which the decree or order had not become final. In other

words the section, gives retrospective operation in regard to suits and proceedings before the Act in which the decrees or orders had not become

final and also had not been fully satisfied. If the decree or order has become final Clause (iii) has no application, as Clause (ii) saves such decree or

order. We therefore hold that u/s 16 the retrospective operation of the Act is only confined to suits and proceedings before the Act in which

decree; or orders have not become final and also not fully satisfied

In view of this Bench decision the applicants are out of Court, since it is a case where the decree had become final before the commencement of

the Amending Act though not fully executed. What the learned Judges say is that the section gives retrospective operation only in regard to suits

and proceedings before the Act in which the decrees or orders had not become final and also had not been fully satisfied.

In -- Ramaswami Pillai Vs. Sankara Mudaliar and Others, which is another decision of the same Bench, the scope of Section 16 of the amending

Act was considered; but not fully as had been considered in the judgment which has been referred to. In that case there was a prior mortgage

decree in 1934 to which the second mortgagee was added as a party defendant. A decree was passed in favour of the mortgagee plaintiff and the

amount that was due to the second mortgagee was declared under that decree at the sum of Rs, 6,933-6-0. But by reason of sale proceeding after

payment to the mortgagee decree holder a sum of Rs. 3,417-18-8 alone was available for payment to the second mortgagee defendant. The

second mortgagee, after appropriating the said amount which was paid out of the balance of the sale proceeds in pursuance of the mortgage

decree, crediting a portion of it towards interest and a portion to the principal, and for the balance of the sum due under his mortgage as declared

in the earlier mortgage suit, he Instituted a fresh suit in 1944 long after the decree in the earlier mortgage suit was executed and properties sold. By

the time the matter came up on appeal the amending Act (Act 23 of 1948) had been passed and the question arose there on behalf of the

judgment-debtors whether, u/s 16 of the Act, it would be open to them to to re-open the payment of money and the appropriation of the same

made in the earlier suit. In the course of the judgment the learned Judges state as follows:

Mr. Bashyam Iyengar''s argument was that in so far as the payment of Rs. 3,477-13-8 was concerned it was paid in execution of the decree in O.

Section No. 50 of 1934 (earlier suit) and that the decree was satisfied and therefore it could not be re-opened. Some of the relevant facts may

usefully be recapitulated.....There is an underlying, fallacy in the argument of Mr. Bhashyam Iyengar. For the purpose of Section 16 the suit we are

concerned with is the suit wherein we are asked to apply the provisions of the Madras Agriculturists relief Act and therefore Clause (2) of Section

16 directly applies. The only question with regard to those proceedings is whether the pendency or the closure of the proceedings in O. S. No. 50

of 1934 has any bearing on the application of Section 16. The only question with regard to those proceedings is whether the payment of money

and the appropriation of the amount by the creditor can be reopened under the Madras Agriculturists'' Belief Act or whether this Court is

precluded from doing so by virtue of some principle other than that contained in the provision''s of the Madras Agriculturists Relief Act. We

cannot, see any principle which compels us to hold that the appropriation made in O. S. No. 50 of 1934 cannot be re-opened in this suit, if

Explanation (I) applied; nor Mr. Bashyam is able to suggest one.

While stating that what they were called upon to consider was the scaling down of the decree, the learned Judges at the end of the judgment

observe as follows:

Assuming that Bhashyam''s argument is sound, even then, it would not advance his case any further. As we have already stated, the decree was

for a sum of Rs. 6,933-6-0 (decree in the earlier suit) but what was paid towards the decree was only Rs. 3,477-13-8 and therefore there was a

large amount still due to the decree-holder. Clause (3) of the Act would apply to all suits and proceedings in which the decree or order passed has

not been executed or satisfied, in full before the commencement of the Act. As the decree has not been satisfied in full, the Act applied.

The learned Judges were apparently referring to the decree in the earlier suit O. S. No. 50 of 1934 when they made these observations, holding

Impliedly that Clause (3) of the Act related not only to suits which had become final but also to all suits instituted prior to the commencement of the

Act, but so long as the decrees had not been executed or satisfied, in full. By virtue of their observations in the last paragraph, the learned Judges

were of opinion that Clause (3) of the Act has an extended scope which covers all such suits. There is 3, conflict of the conclusions arrived at in --

Ramaswami Pillai Vs. Sankara Mudaliar and Others, '' with the subsequent Judgment in -- ''C. M. A. Nos. 316 and 391 of 1947 (Mad) (A)''. But

as already pointed out the latter Judgment is a considered Judgment on the scope and extent of Section 16.

It is, however, contended by Mr. Aravamuda Ayyangar that the position as taken In -- Ramaswami Pillai Vs. Sankara Mudaliar and Others, '' is

the correct one in view of the language of Clause (iii) of Section 16. There was no re''ason, it is urged and there is force in the argument for the

enactment of a separate sub-clause, sub-clause (iii) if it were intended that what was contemplated in Sub-clause (iii) had already been covered by

Sub-clause (ii). There is equally force in the observations of the learned Judges in --''C. M. A. Nos. 316 and 391 of 1947 (Mad) (A)'' that:

Clause (ii) of Section 16 would become unnecessary as all possible cases coming under Clause (ii) would equally be covered by Clause (iii)."" It is

enough to state that Clause (iii) as it is worded doss not prima facie exclude the class of cases referred to by the learned counsel for the applicants

namely, all suits and proceedings in which decrees or orders are passed instituted before the commencement of the Act or in which the decrees or

orders passed have not been satisfied in full before the commencement of the Act. In view of the Bench decision, I do not propose to give any

opinion on. the construction of the Act, but I proceed to consider the application on the assumption that it comes under either Clause (ii) or Clause

(iii) of Section 16.

An agriculturist debtor is entitled, u/s 19(1) of the Act, to make an application to apply the provisions of the Act to any decree passed before

the commencement of the Act (Act 4 of 1938) and ask that the decree may be amended consequent on the application of the provisions of this

Act. Such an application had been made by the applicants in application No. 1147 of 1938 and the order had become final, by virtue of the final

order in O. S. A. No. 57 of 1940. A sum of Rs. 9,000/-was paid prior to the date of the application No. 1147 of 1938 towards the decree, and

the question that called for decision in that appeal was in what manner the said amount was to be appropriated. The learned Judges held that in

respect of Rs. 8,500/- Rs. 5,000/- was to be appropriated toward the principal and Rs. 3,500 towards the interest. But there was the question of

appropriation towards costs and it was observed that it was equitable that the amount appropriated towards principal and the amount

appropriated towards interest should contribute rateably in making up the amount required for reappropriation towards costs. There has therefore

been a conclusive finding as to how the appropriation ought to be made in respect of payments already made, namely Rs. 9,000/- before the date

of the application, i.e., the application for scaling down was heard and applying the provisions of Act 4 of 1938, the debt was scaled down and the

decree was directed to be amended with the findings thereon.

Learned counsel for the applicants relies on Explanation I to Section 8 and wants the same to be applied to the present application. The

question is whether, after an application u/s 19 of the Act had been taken, heard and decided finally, it would be open to the applicants to file a

similar application subsequently, taking advantage of certain amendments in the method of scaling down which have been introduced by the later

amending Act. It may be pointed out that neither Section 16 of the amending Act nor Explanation I to Section 8 of Act 4 of 1938 gives in express

terms retrospective operation to matter; which have been decided prior to the date of the amendment. It is a well established principle which is

stated succinctly in Broom''s Legal Maxims: (1) that no statute shall be construed so as to have retrospective operation, unless its language is such

as plainly to require that construction and this involves the subordinate rule that a statute is not to be construed so as to have a greater retrospective

operation than its language render; it necessary.

I do not think the language of either Section 16 or Explanation I to Section 8 compel me to construe that these provisions have a retrospective

effect. In the absence of a retrospective effect, would it be necessary, or even proper, to apply this provision so as to re-open and unsettle matters

which have been finally concluded by judgment of the court? The following passage from the judgment of Lord Robson in -- ''Lemm v. Mitchell,

(1912) A G 400 (C) may be quoted: ""In the absence of appeal the judgment was a final determination of the rights of the parties and the ordinary

principle that a man is not to be vexed twice for the same alleged cause of action applies unless it be excluded by the Legislature in explicit and

unmistakable terms ......This language is only an expansion in rather emphatic terms, of the statement of principle affirmed by Tindal C. J. and is

subject to the same qualification or exception as he expressed, namely, that it must not be taken to deprive persons of vested rights acquired by

them in actions duly determined under the repealed law. It would require language much more explicit than that which is to be found in the

Ordinance of 1908 to Justify a Court of law in holding that a legislative body intended not merely to alter the law; but to alter it so as to deprive a

litigant of ft judgment rightly given and still subsisting.

These observations have been cited with approval in -- ''Lakshman Krishnaji v. Balkrishna Rangnath'', 36 Bom 617 (D) where the legal

proceeding on a mortgage bond was rejected as the mortgage bond was held to be invalid & not enforceable, because it was attested by only one

witness and not by two AS required by Section 59, Transfer of Property Act. That plaintiff, thereupon, brought a suit in the year 1905 for a

declaration that his mortgage bond was valid and operative according to law and therefore enforceable. The suit came up in second appeal to the

High Court which finally decided that the plaintiff''s mortgage was void and therefore Inoperative u/s 59, Transfer of Property Act. In the

meanwhile, the Government of Bombay issued a notification exempting certain Districts including the Poona District in which the mortgaged

property was situate, from the operation of Section 59, Transfer of Property Act. The notification was given a retrospective effect from 1-1-1893.

On the strength of the said notification, the plaintiff applied to the High Court for review of judgment and his application being rejected he, in the

year 1910, instituted the suit to enforce his mortgage and both the lower Courts haying rejected the claim on the ground of res judicata, the plaintiff

preferred a second appeal. It was held in that case

that the decree passed by the High Court in 1908 still subsisted and was not affected by the Government notification although the notification had

retrospective effect. The notification could not abrogate rights which had been judicially declared and had been merged in the decree.

Chandavarkar, Acting C. J. in the course of his judgment observes at page 621 as follows:

But the Government Notification cannot have a higher operation than a legislative enactment, which repeals a previous law either partially or

wholy, the principle Js that it cannot affect vested rights acquired under decrees. That principle, enunciated by Tindal C. J. in -- ''Kay v.

Goodwin'', (1830) 6 Bing 576 (E), has been followed recently by the Privy Council in -- (1912) AC 400 (C)

Citing Tindal C. J. with approval, their Lordships of the Judicial Committee of the Privy Council say in -- (1912) AC 400 (C)'', that explicit

language on the part of the legislature is necessary to warrant a Court

in holding that a legislative body intended not merely to alter the law, but to alter it so as to deprive a litigant of a judgment rightly given and still

subsisting.

As to the scope of retrospective operation of the statute certain observations of the Privy Council in -- AIR 1927 242 (Privy Council) , may

usefully be extracted:

The principle which their Lordships must apply in dealing with this matter has been authoritatively enunciated by the Board in -- ''Colonial Sugar

Refining Co. v. Irving'', (1905) AC 369 (G), where it is in effect laid down that, while provisions of a statute dealing merely with matters of

procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them, provisions which touch a

right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment.

Their Lordships can have no doubt that provisions which, if applied retrospectively, would deprive of their existing finality orders which, when the

statute came into force were final, are provisions which touch existing rights.

Here the order in O. S. A. No. 57 of 1940 having become final, the present applicants want to deprive the finality of that order and, in the words

of their Lordships of the Privy Council such interference would touch the existing rights which had accrued to the respondent by virtue of the

judgment of the appellate Court.

It is however stated by Mr. Aravamuda Ayyangar relying on Section 7 of the Act that effect may be given to the words ""Notwithstanding any

law, custom, contract or decree of Court to the contrary"", and ""decree of Court to the contrary""--would include the decree or order of the

appellate Court in O. S. A. No. 57 of 1940. But so far as Section.? is concerned, the decree that is referred to in Section 7 is a decree passed

prior to ''he commencement of the Act as regards payment of money due by any debtor to a creditor and it does not relate to any order passed

after the commencement of the Act. Even if a preliminary mortgage decree had been passed prior to the commencement of the Act and has not

become final, it has been held that the final decree cannot come within the scope of a decree in Section 7 as a final decree has nothing to do

excepting to direct the sale of property and taking of accounts. But the language of Section 7 is clear and it has been held by decision of this Court

that the decree in Section 7 refers to decrees passed prior to the commencement of the Act for repayment of a debt. Section 19 of the Act a it

stood, only enabled the applicants judgment debtors to apply for scaling down of a debt in respect of a decree passed before the commencement

of the Act. That was the reason why Clause (2) to Section 19 has been enacted by virtue of the amendment Act, XXIII of 1948, whereby the

provisions of Sub-section (1) are also held to apply to cases where, after the commencement of this Act a Court has passed a decree for

repayment of a debt payable at such commencement. The decree that was referred to either in Section 7 or in Section 19 was not a decree or

order passed as a result of invocation of the provisions, of this Act, or as a result of an application made u/s 19 to decrees of Courts passed either

before the commencement of the Act or after the commencement of the Act.

Here what is final is an order passed by this Court on an application made u/s 19 and not a decree passed by any Court either before or after the

commencement of the Act relating to the repayment of a debt. There is nothing express or implied in the language of either Section 16 of the

amending Act or in Explanation (1) to Section 8 of the Act to warrant or justify any number of applications being made u/s 19. I therefore consider

that it is not open to the applicants, by virtue of the order in O. S. A. No. 57 of 1940, to file another application, they having already exercised

their right in filing an application and having the decree scaled down.

It is further argued on behalf of the respondent that either Section 16 or Explanation I to Section 8 does not confer any new right, that the right,

if any, is conferred u/s 19 and that right having already been exercised, no new rights are conferred the only right conferred now is u/s 19 (2) which

however, does not apply to the present case, and that in any event, the application is unsustainable. I agree with Mr. Ramaswami Ayyangar

learned counsel for respondent, that Explanation (1) to Section 8 does not confer any new right. Explanation (I) only states that instead of leaving

the question of appropriation to be worked out in accordance with the principles of general law, a particular mode of appropriation should be

made whereby every payment made by a debtor shall be credited towards the principal unless he has expressly stated in writing that such payment

shall be in reduction of interest. There is specific mode of appropriation that is provided, for and directed to be followed under Explanation (I). It

does not confer any new right. If there was a right to be exercised for the first time after the amending Act of XXIII of 1948, certainly it would be

open to such an applicant to invoke the provisions of Explanation (I) and apply the same towards appropriation and not leave the matter to be

decided by the general law as it was a case prior to the amendment. Excepting a sum of Rs. 425/- which has been paid after 1-10-1937 and

adjustments of some small amounts which, however, would go towards the costs which have accrued since that date there is nothing which could

be appropriated. The sum of Rs. 9,000/- paid had been directed to be appropriated and by reason of the direction, the decree having been

amended, it is not open to the applicants to re-open the question of adjustment and appropriation.

In the result, the application is dismissed with costs. Advocates fee is fixed at Rs. 100/-.