Karipineni Rajayya and Others vs Vallurupalli Ramachandra Rao and Others

Mack, J.—I am in complete agreement with my learned brother that the definition of an agriculturist in the proviso to Explanation (1) to

Section 3 of the Usurious Loans Act, 1918, is quite different from that of an agriculturist as defined in Section 3(2) of, Act IV of 1938. The

definition of ""agriculturist"" in Act IV of 1938 is an extremely wide one having no relation whatsoever to ""agriculture"" as such, which is defined in

any dictionary as cultivation of the soil. ""It includes a large category of persons, who have a saleable interest in agricultural or horticultural land --

no matter where they live or whether they are absentee landlords or not--subject to important provisions, one of which is that a person shall not be

deemed to be an agriculturist, if within two years prior to 1st October 1937 he has been assessed to property or house tax in a Municipality,

having an aggregate rental value of more than Rs. 600.

The appeal, as it appears to me, in this case must succeed on a very short ground. u/s 7 of Act IV of 1938"" all debts ''payable by an

agriculturist'', at the commencement of this Act, shall be scaled down in accordance with the provisions of this chapter"". The debt sought to be

scaled down in the present case is a mortgage on urban property and also some agricultural lands executed by the father of the present first

defendant one Venkataratnam, who died in 1940. Therefore at the time of the commencement of the Act the present debt can only be scaled

down, if it was then payable by an agriculturist.

It is common ground that Venkataratnam himself was not an agriculturist as denned by Section 3 (2), and that his name appeared in the property

tax register of the Gudivada Union, which in 1937 evolved into a municipality. The position put forward now is that his son is an agriculturist,

because he himself was not mentioned by name in the property tax registers. As it appears to me, it is quite immaterial for the purpose of scaling

down, the criterion being u/s 7 of the Act, whether at the commencement of the Act the debt was payable by an agriculturist. If the contention of

the defendants is accepted, it would be open to an agriculturist who is bequeathed a valuable urban house by a person who is not an agriculturist

under the Act, subject to a mortgage, to apply for that mortgage debt being scaled down on the ground that he in Ms personal capacity was an

agriculturist. This is far from being the case, as the words ""provided that a person shall not be deemed to be an ''agriculturist'' u/s 3(2)(b) must, it

appears to me, be read with the words ""payable by an agriculturist at the commencement of this Act"". The simple criterion in this case is, therefore,

was the debt payable by an agriculturist at the commencement of the Act? It the answer is in the affirmative, the debt can be scaled down. If the

answer is in the negative, it cannot. My learned brother has covered the case law on the subject placed before us but for reasons given by me in

what appears to me a simple case, there can only be one decision according to the Act itself.

Krishnaswami Nayudu, J.

An interesting question as to the application of the Madras Agriculturists Relief Act (Act IV of 1938) arises in this appeal. The plaintiffs are the

appellants. They instituted a suit for recovery of a sum of Rs. 17,508-9-7, being the balance of principal and interest due on a mortgage bond

dated 17-2-1933 executed by the first defendant and his father since deceased for Rs. 11,000 payable with compound interest at nine per cent

per annum with yearly rests.

The father of the first defendant died in February 1940. Defendants 2 and 3 are the minor sons of the first defendant. The defendants contended

that they are entitled to the benefits of the Madras Agriculturists Relief Act (Act IV of 1938), and further that they are entitled to relief by way of

reduction of interest under the Usurious Loans Act, 1918.

It will be convenient to dispose of the claim to relief under the Usurious Loans Act, 1918, before dealing with the question arising out of the

defence raised under the Madras Agriculturists Relief Act. Relief is claimed by the defendants relying on the proviso to Section 3 of the Usurious

Loans Act, 1918. The defendants claim to be agriculturists and hence entitled to relief under the Usurious Loans Act, 1918. They ask the court to

hold that the interest in this case of 9 per cent per annum compound interest is excessive.

Explanation (1) to proviso to Section 3 of the Usurious Loans Act says, that, if the interest is excessive, the court shall presume that the transaction

was substantially unfair. Proviso to clause (b) of Sub-section (2) has been amended by Madras Act VIII of 1937 which says that ""provided that in

the case of loans to agriculturists, if compound interest is charged the court shall presume that the Interest is excessive"". In this case the appellants

contend that the defendants are not agriculturists, but businessmen carrying on business in money lending and in running two rice mills in partnership

with others. As the learned District Judge observed, the fact, that they own two rice mills, would not be sufficient to hold that they are not

agriculturists, especially in view of the fact that, they own agricultural lands and look after their cultivation. We see no reason to disagree with the

finding of the learned District Judge that they are agriculturists, and they being agriculturists we consider that the rate of interest is excessive, and

they are entitled to relief under the Usurious Loans Act, 1918, and compound interest cannot be claimed from them, as we also consider that the

compound interest in this transaction is in any event excessive. The plaintiff will therefore be entitled to simple interest at 9 per cent per annum

throughout.

The fact, that the defendants are held to be agriculturists for the purpose of relief under the Usurious Loans Act, 1918 does not entitle them to be

treated as agriculturists under the Madras Agriculturists Relief Act (Act IV of 1938), since to come within the scope of Act IV of 1938, a person

claiming relief must show himself to bean agriculturist as denned u/s 3 of Act IV of 1938. A person may be an agriculturist and claim relief under

the Usurious Loans Act, 1918, if he shows that he owns agricultural land & cultivates the same by himself or his servants, or through tenants. But

that would not be sufficient to bring him within the scope of definition of ""agriculturist"" u/s 3 of Act IV of 1938.

We may now proceed to consider whether the finding of the learned District Judge that the defendants are agriculturists and are entitled to relief

under Act IV of 1938 can be sustained. It is common ground that the first defendant and his father were members of a joint undivided. Hindu

family, and the defendants are now members of the said joint undivided Hindu family possessed of joint family properties, which consisted of a

number of houses in Gudivada, and more than 190 acres of agricultural lands. The evidence of D. w. 2, a clerk, who was looking after the affairs

of the joint family during the lifetime of the father and after his death working under the first defendant, says that the family of the defendants during

the lifetime of then father, had 190 acres and after his death the first defendant disposed of 160 acres and acquired 830 acres.

Gudivada was a union till 1937 and afterwards it became a Municipality. The family owned 23 houses situate in Gudiwada, cut of which 21 houses

were registered in the name of the first defendant''s father Venkataratnam in the property registers of the Union and the Municipality for the years

1934 to 1938, and two houses alone stood in the name of the first defendant. After Venkataratnam''s death, the house properties continued to be

in the possession of the first defendant, and he was paying the taxes due in respect of those properties. Ex. A. 1, a certificate issued by the

Municipality of Gudivada at the instance of the plaintiff on 3rd March 1948 is to the effect that Venkataratnam, that is the father of the first

defendant, and Ramachandra Rao, the first defendant, have been assessed to property or house-tax within the two years immediately preceding

1st October 1937, and that the aggregate annual value of such buildings in respect of which they were taxed was Rs. 2465-1-0, Rs. 2465-1-0 and

Rs. 5268-14-7 for the years 1935-36, 1936-37 and 1937-33 respectively.

In Exs. A. 3, A. 4 and A. 5, which are extracts from the property register the name of Venkataratnam appears under the column relating to the

ownership of the property in respect of all the items excepting in regard to one item in Ex. A. 3, the name of the first defendant is mentioned. But

the first defendant''s ownership is in respect of a property which is of the capital annual value of Rs. 1800 which has been found by the learned

District Judge, as not sufficient to yield an annual rent of Rs. 600. There is no doubt that during the relevant period, that is for the four half years

preceding 1st October 1937, in the Municipal registers the name of the first defendant''s father alone appears as the owner in respect of the

properties of the annual rental value exceeding Rs. 600. To bring himself within the definition of ""Agriculturist"" as defined u/s 3, it is not enough for

the defendant to show that he merely has a saleable interest, in agricultural land not being situated within the Municipality or Cantonment, but he

has further to establish that he does not come under any of the provisos to that section, one of such provisos being proviso (C), which says that a

person shall not be deemed to be an ""agriculturist"" if he has in all the four half years immediately preceding the 1st October 1937, been assessed to

property or house tax in respect of buildings or lands other than agricultural lands, under the Madras District Municipalities Act, 1920, etc. .. ..

provided that the aggregate annual rental value of such buildings and lands, whether let out or in the occupation of the owner is not less than Rs.

600.

The learned District Judge on the basis of the extract from the Municipal registers, where the name of the first defendant did not appear as the

owner of the properties of the nature mentioned in the proviso to Section 3, his father''s name only having appeared, following the decision in --

Sannaya alias Narayana Holla Vs. Balarama Hande and Others, , held that, even though the father, if alive, could not be an agriculturist and would

come within the mischief of proviso (C) to Section 3, the first defendant was in any event, an agriculturist, as he was not assessed to property tax

by reason of his name not appearing in the property registers during the relevant period. It is unfortunate that a later Pull Bench decision of this

court in -- G. Srinivasa Ayyar and Others Vs. T.S. Swaminatha Odayar and Another, , was not brought to the notice of the learned District Judge,

though it was decided prior to the date of the judgment of the lower court. It is held by the Full Bench in G. Srinivasa Ayyar and Others Vs. T.S.

Swaminatha Odayar and Another, ''.

In order to find out whether a person has been ''assessed'' to property or house tax within the meaning of proviso (C) to Section 3(ii) of the

Madras Agriculturists Relief Act, the deciding factor is not the insertion of his name in the municipal assessment register as the owner of the

property. A case will come within the proviso if these factors arc present : (i) Ownership of property within the Municipality, which has an annual

rental value of not less than Rs. 600/-; (ii) the property should have been assessed to house or property tax for two years immediately preceding

1st October 1937; and (iii) the municipality should have demanded or recovered the tax from, the owner or otherwise treated him as liable to pay

the tax.

It is therefore necessary to see whether in the present case the ownership of the property during the four half years prior to the 1st October 1937

vested in the first defendant.

The first defendant and his father being members of a joint Hindu family and there being no dispute that the houses situate in the municipality are

joint family properties, in which, the first defendant had also an interest, it follows that the first defendant was the owner of those properties during

the relevant period prior to 1st October 1937, even though the father''s name alone appeared in the municipal register, presumably he being the

father and the eldest managing member of the family. ''Reliance is placed on the evidence of D. w. 1, the clerk of the Municipality, who says that

the properties were joint family properties and was in the name of the first defendant''s father late Venkataratnam. It is not necessary to rely on the

evidence of this witness to hold that the properties were joint family properties, as there has been no dispute about it, and we are also satisfied that

these house properties were joint family properties and the first defendant is also entitled to the same as a member of the joint family.

No doubt Venkataratnam is not described as the manager of a joint family in the Municipal registers, and we consider that in view of the decision

of the Full Bench in G. Srinivasa Ayyar and Others Vs. T.S. Swaminatha Odayar and Another, '', the description of the person in the books is

immaterial. What is required to be established is as to who is the owner of the property. It is significant that the suit mortgage comprises not only

the lands, but also the house properties, and the mortgage was executed both by the father and the first defendant representing themselves to be

entitled to the properties mortgaged, and the recital in the mortgage deed is sufficient to hold that the first defendant is an owner of the house

properties mortgaged, which are situate in the Gudivada Municipality and yield an aggregate rental value exceeding Rs. 600. We have, therefore,

no hesitation in holding, following the ruling of the Full Bench in G. Srinivasa Ayyar and Others Vs. T.S. Swaminatha Odayar and Another, '', that

the defendants are not agriculturists, but they come within the mischief of proviso (C) to s. 3 of the Madras Agriculturists Relief Act.

The learned counsel for the respondents refers to the decision in -- Muthiah Chettiar Vs. N.M. Rayalu Ayyar, Nagaswami Ayyar and Co. and

Others, '', relied upon by the learned District Judge, and contends that that decision is still good law not being overruled by the Full Bench decision.

The learned Judges who decided -- Muthiah Chettiar Vs. N.M. Rayalu Ayyar, Nagaswami Ayyar and Co. and Others, '', are the very same

Judges, Wadsworth J. and Patanjali Sastri J. as he then was, who referred to the Full Bench fee question as to whether the decision in --

Swaminatha Odayar Vs. Srinivasa Aiyar and Others, , was correct, and in the referring judgment the learned Judges before stating the case for the

decision of the Pull Bench referred to the cases which deal with the question at issue, and in the cases mentioned in the referring judgment, the

decision in -- Muthiah Chettiar Vs. N.M. Rayalu Ayyar, Nagaswami Ayyar and Co. and Others, '', is one, and the decision in an unreported case

-- ''A. S. No. 35 of 1941 (Mad) (D)'', is another, reliance on which was placed by the learned Judges in deciding -- Muthiah Chettiar Vs. N.M.

Rayalu Ayyar, Nagaswami Ayyar and Co. and Others, ''.

In -- Muthiah Chettiar Vs. N.M. Rayalu Ayyar, Nagaswami Ayyar and Co. and Others, '', Wadsworth J. and Patanjali gastri J. as he then was,

held a view which is contrary to the opinion of the Pull Bench. The learned Judges could have doubted the correctness of the view which they have

expressed in -- Muthiah Chettiar Vs. N.M. Rayalu Ayyar, Nagaswami Ayyar and Co. and Others, '', only after their attention was drawn to the

decision report ed in -- Swaminatha Odayar Vs. Srinivasa Aiyar and Others, .

In -- Muthiah Chettiar Vs. N.M. Rayalu Ayyar, Nagaswami Ayyar and Co. and Others, , with reference to a claim made by some members of a

joint Hindu family to have the debt scaled down under the Madras Agriculturists Relief Act, the question arose as to whether the assessment to

property tax could be a bar under the proviso (C) to Section 3 of the Madras Agriculturists Belief Act to their being classed as agriculturists, and in

that case the buildings comprised in the mortgage deed were assessed by the Municipality during the relevant period on a total rental value

exceeding Rs. 600, and they stood in the name of one Valrawan Chettiar, who was the eldest member, though not described in the books as the

eldest member, or the family manager. With reference to the contention that, as the properties stood in the name of Vairavan Chettiar, he alone

should be deemed to have been assessed and not the family, the learned Judges observed at page 555 as follows :

We think this contention is correct and must prevail. It is true that the properties have been found to be joint family properties and that Vairavan

Chetti has been found to be ''de facto'' manager. But it does not follow that the family itself must be deemed to have been assessed by the

Municipality in such circumstances in the absence of anything to show that the manager was assessed as such. It was pointed out in - Rajoo alias

Doraisami Goundar and Others Vs. Palaniyappa Chettiar and Others, , that in applying proviso (a) to Section 3(ii) the distinction between the

assessment of a person in his individual capacity and the assessment of that person as manager of a joint family must be borne in mind. The same

principle has been applied in applying proviso (C) in -- ''A. S. No. 35 of 1941 (Mad) (D)'', where it was held that, in the absence of any evidence

to indicate that the father, whose name alone appeared, in the assessment registers, was being assessed as the manager of the family, the

municipality must be deemed to have assessed him as an individual and not the family of which he was the manager.

Though the decision in -- Muthiah Chettiar Vs. N.M. Rayalu Ayyar, Nagaswami Ayyar and Co. and Others, '', has not been expressly

overruled by the Pull Bench, there can be no doubt that the learned Judges of the Pull Bench must have examined that decision, as it was one of

the decisions mentioned in the referring judgment, and the reasoning of that decision has however been considerably shakened by the decision of

the Pull Bench. We have therefore no doubt that after the Full Bench decision in -- G. Srinivasa Ayyar and Others Vs. T.S. Swaminatha Odayar

and Another, '', the decision in -- Muthiah Chettiar Vs. N.M. Rayalu Ayyar, Nagaswami Ayyar and Co. and Others, '', can no longer be held to

be good law and it must be held that it has been impliedly overruled by the Full Bench ruling.

Before leaving the Full Bench decision, it appears to us, whether, for a case to come within the proviso (C) to Section 3 of the Madras

Agriculturists Relief Act, it would be necessary to satisfy all the three conditions mentioned by the learned Judges of the Full Bench. It is no doubt

necessary to establish the two conditions, viz. (i) Ownership of property within the municipality, which has an annual rental value of not less than

Rs. 600, and (ii) the property should have been assessed to house or property tax for two years immediately preceding 1st October 1937. But it is

very doubtful, and in our opinion not necessary, that the third condition, viz., the Municipality should have demanded or recovered the tax from the

owner or otherwise treated him as liable to pay the tax, should also be fulfilled, we do not consider that under the language of Proviso (C) to

Section 3, the third condition is necessary to be fulfilled. What all the proviso lays down is that a person, who wishes to bring himself within the

definition of ""agriculturist"" has not been assessed to property or house tax of the aggregate annual rental value of Rs. 600. Further, the proviso

does not require that it muse be shown that the Municipality should have demanded or recovered the tax from the owner or otherwise treated him

as liable to pay the tax. It is sufficient, if he is shown as the owner of the and if the Property assessed.

The learned Judges of the Full Bench have referred to the meaning of the word ""assess"" as understood in the decision reported in --'' Mrs.

Swarnam Iswariah Vs. K.M.S.R.M. Kannappa Chetty, . There the word ""assess"" was held to mean ""to fix the amount of the tax"" or ""to determine

the amount and impose the tax upon an individual"" or merely ""to impose a tax upon an individual"" or ""to estimate officially the value for purposes of

taxation."" It cannot be said therefore the meaning of the word ""assess"" can be extended to include that there should have been also a demand by

the Municipality or that the Municipality must have recovered the tax. Thus we consider that the third condition referred to in the judgment of the

Full Bench, with respect to the learned Judges of the Full Bench, appears to us totally unnecessary to be established before the conditions of

proviso (C) to Section 3 could be satisfied.

Learned Counsel for the respondents referred to Section 5 of the Act and urged that unless an undivided Hindu family is assessed to tax

specified in the proviso (C) a person, who is a member of the family, can be an agriculturist under the definition of ""agriculturist"" in the Act, and that

in the present case Venkataratnam has been mentioned as an individual and not as a manager of an undivided Hindu family. The enactment of

Section 5 only, in our view, emphasises the principle of the decision of the Pull Bench, viz., that one has to look not to the form but to the

substance or what is required under the proviso. If an undivided Hindu family which owns properties is assessed to tax under proviso (C), a

person who is a member of the family cannot be an agriculturist, i.e., notwithstanding his being only an individual, by the fact of his being a member

of the family he becomes a owner of the property and if the family property is assessed under proviso (C), he should also be considered to be a

person contemplated under the proviso. Being an owner of the property, which is assessed to property tax in terms of proviso (C), it would be

sufficient to hold that he is not an agriculturist, even though his name might not appear in the Municipal register and the municipal register might

show the name of any other person. In our view, therefore, a case will come within the proviso (C) to Section 3 of the Madras Agriculturists Relief

Act, if these two factors namely, (1) ownership of property within the Municipality, which has an annual rental value of not less than Rs. 600; and

(2) the property, should have been assessed to house or property tax for two years immediately preceding 1st October 1937, are present

irrespective of whether as to whose name appears in the property registers.

In that view, we consider that the finding of the learned District Judge cannot be upheld. The defendants are not agriculturists within the meaning of

Act VI of 193S, and they are not entitled to the benefits of the Act. The appeal is allowed. There will be a mortgage decree for the amounts due

under the mortgage after appropriating all the amounts paid towards principal with simple interest at 9 per cent per annum from the date of plaint to

the date of payment. Time for redemption sis months from this date. Plaintiff will have their proportionate costs here and in the courts below.