N.S. Vasudeva Iyer vs Ramakrishna Iyer and Others

P.V. Rajamannar, C.J.—The only question in these two appeals against the judgment of Panchapakesa Ayyar, J., by which he disposed of

three appeals, A.S. Nos. 567, 734 and 735 of 1952, is how far the debts sued upon should be scaled down in accordance with the Kerala

Agriculturists Debt Relief Act, 1958, which came into force during the pendency of the above appeals. The Act received the assent of the

President on 5th July, 1958 and was published in the Kerala Gazette on 14th July, 1958. u/s 1(3) of the Act ""it shall come into force at once"" and

extend to the whole of the State of Kerala. These appeals arise out of two suits filed in the Court of the Subordinate Judge of South Malabar at

Palghat for recovery of sums due under two mortgages. A.S. Nos. 567 and 734 of 1952 were from the decree and judgment in O.S. No. 46 of

1944 and A.S. No. 735 of 1952 was from O.S. No. 16 of 1945. L.P. Appeals No. 95 and 79 of 1956 relate to the above two suits respectively.

In O.S. No. 46 of 1944, it may be mentioned, that the plaintiff for himself claimed only Rs. 3,000 as the principal debt; but filed the suit also on

behalf of defendants 4, 5, 6 and 7 to whom in the aggregate a sum of Rs. 3,000 was due as the principal debt. As the plaintiff had paid the Court-

fees on the entire amount due, that is, not only for himself but also to defendants 4 to 7, he was awarded as part of the costs the entire Court-fee

paid by him on the total amount claimed.

It is common ground that the Kerala Agriculturists Debt Relief Act, 1958, applies to the two debts which are the subject-matter of the two

appeals. The material provisions of the Act are Sections 4, 5 and 6. They run thus:

Section 4. - Payment of Debt in Instalments. - (1) Subject to the provisions of Sub-section (3), notwithstanding anything contained in any law or

contract or in any decree or order of Court, any debt may be discharged in the manner specified in Sub-section (2).

(2) If any debt is repaid in seventeen equal half-yearly instalments together with interest, secured due on the principal debt outstanding at the

commencement of this Act till the date of payment of each instalment at the rate of 5 per cent, per annum, or the contract rate whichever is less, tile

first instalment being payable before the expiry of a period of six months from the date of commencement of this Act and the remaining instalments

being payable on or before the date of expiry of a period of six months from the last day on which the previous instalment was due, the whole debt

shall be deemed to be discharged.

(3) The provisions of this Section shall not apply to mortgages to which Section 11 applies except as provided in Sub-section (6) of that section.

Section 5. Calculation of Interest in the case of debt. - For determining the amount of a-debt for the purposes of payment under this Act,

notwithstanding anything contained in any law or contract or in any decree, or order of Court to the contrary, not more than one half of the

principal shall be deemed payable towards interest which accrued due till the commencement of this Act.

Section 6. - Application of Payment towards debt u/s 4 and Limit of Time for Execution of Decree. - (1) When any amount has been paid or

recovered towards any debt referred to in Section 4, the Court shall apply it in the order of costs due under the decree (where the debt was

ripened into a decree), then, interest as recalculated u/s 4 and next towards principal. (2) The provisions of Section 4 shall, for purposes of

execution, be deemed to be a subsequent order of Court within the meaning of the Clause (b) of Sub-section (i) of Section 48 of the Code of Civil

Procedure, 1908.

It will be observed that the scheme of scaling down under this Act is substantially different from the scheme found in the Madras Agriculturists

Relief Act. The above provisions relate to debts other than debts due under usufructuary mortgages mentioned in Section 11 of the Act. On an

analysis of the above three provisions, the following principles emerge:

(1) Whatever be the interest which had accrued due on the principal amount as per the contract rate, not more than one half of the principal shall

be deemed payable towards interest with accrued due till the commencement of the Act.

(2) From the commencement of the Act interest shall be calculated at the rate of 5 per cent, per annum or the contract rate, whichever is less.

(3) The debt, which means according to the definition total liability comprising principal, interest, and in the case of decrees, also costs, is

repayable in 17 equal half-yearly instalments and on payment accordingly the whole debt shall be deemed to be discharged.

(4) An amount paid or recovered towards any debt referred to in Section 4 shall be applied in the following order : towards costs, if the debt is

due under a decree and costs have been awarded, then interest as recalculated u/s 4, and lastly, towards the principal.

The point in controversy before us was whether the rate of 5 per cent, would apply to any period before the commencement of the Act, if so,

whether any amount paid or recovered before the commencement of the Act should be appropriated towards the debt thus scaled down. We must

confess that the language is not so clear as one would wish in an enactment like this. But on a consideration of the relevant provisions of Sections

4, 5 and 6, we are of the opinion that the rate of 5 per cent, applies only in the calculation of interest on the principal debt outstanding at the

commencement of the Act. So far as the interest accrued due before the commencement of the Act, the only provision is that in no event will more

than one half of the principal be deemed payable towards such interest. Of course, if according to the contract rate, the amount of interest which

has accrued due before the commencement of the Act is less than half the principal, then such interest would be payable. This appears to be the

general scheme of scaling down under Sections 4 and 5. These Sections do not contemplate re-opening and reappropriation in respect of the

period before the commencement of the Act. Our construction is based entirely on the language of the sections as obviously no authority could be

available as regards the interpretation of these sections.

Applying these principles, it would follow that in these cases the creditor will be entitled to the principal debt outstanding at the commencement

of the Act and an amount not more than one half of the principal towards interest till the date of the commencement of the Act. Thereafter the

creditor will be entitled to interest at the rate of 5 per cent, on the principal debt outstanding at the commencement of the Act. There will be a

scaling down of the debts in accordance with these principles.

There remains the question of costs. Before Mr. Panchapakesa Ayyar, J., Mr. C.S. Swaminathan, learned Counsel for the creditors,

represented that the plaintiffs were quite content to have costs calculated on the amounts due to the respective plaintiffs on the date of the Plaint,

that is, the amount due as scaled down. We are also of the view that this would be the just and equitable order to be passed as regards costs. The

plaintiffs will be entitled to their costs, calculated on the amount to which they would be entitled as per our directions above. There is however one

detail which needs mention here. We have already pointed out that in O.S. No. 46 of 1944 the plaintiff paid Court-fee not only on the amount due

to him individually but also on amounts due to defendants 4 to 7. Hence he was awarded the entire Court-fee. There was no appeal by defendants

4 to 7. The logical result of this would be that the order in favour of the plaintiff for recovery of costs including the Court-fee so far as these

defendants are concerned, will remain untouched. As the plaintiff claimed in his own right the principal sum of Rs. 3,000 that is one half of the total

principal of Rs. 6,000, we think that the justice of the case will be met by giving a decree to the plaintiff for half the Court-fee payable in respect of

the claim of defendants 4 to 7, and proportionate Court-fee in respect of his own claim as directed above, that is, proportionately on the amount

decreed to them.

The decrees passed by Panchapakesa Ayyar, J., in the two suits will be modified in accordance with our above judgment. The appellant will

pay to the respondent Rs. 100 as Advocate''s fee in each of the two appeals. As regards the other costs there will be no order.