Payidi Venkatasubbayya vs Ghadiyam Seshareddi

Subba Rao, C.J.—This Civil Miscellaneous Second Appeal has been referred to a Bench by Satyanarayana, Rao J.

The facts that gave rise to this appeal may he briefly stated. The Appellant''s father borrowed a sum of Rs. 100 from the fattier of the Respondent under a promissory note about 35 years ago. Subsequently, there were a number of renewals of the promissory note. On 11th May, 1929, a sum of Rs. 200 and on 1st October, 1932, a sum of Rs. 100 were paid towards the promissory notes. After the death of the Respondent''s father there was a partition in the family between the Respondent had his brother some time prior .to 1933 and the suit promissory note and Anr. promissory note fell to the share: of the Respondent.

After the partition, the Appellant, who is the son of the original executant, renewed the promissory note from time to time in favour of the Respondent. The suit promissory note Exhibit A-7 dated 26th March, 1937, was executed by the Appellant in favour of the Respondent. On the said promissory note, the Respondent filed a suit O S No. 142 of 1943 and obtained a decree therein. ''The Appellant filed I. A. No". 1347 of 1949 u/s 19 of the Madras Agriculturists'' Relief Act for sealing down the decree debt on the ground that he was entitled to trace back the debt to its origin and if so traced and the amounts paid by him were given credit towards the promissory note, no amount would be due from him.

The learned District Munsif accepted his! contention but the learned Subordinate Judge, on appeal, modified the order of the first Court, relying upon the decision of Hanumayya v. Nayu-damma, 64 Mad LW 836 He held that, in view of that decision, the debtor cannot trace back his debt beyond the promissory note executed by the Appellant in favour of the Respondent, i.e.. Exhibit A-6 dated 27th March, 1934. The Appellant preferred this appeal against the order of/the learned Subordinate Judge.

The question raised in this appeal is whether/Explanation III to S. 8 of the Madras Agriculturists'' Relief Act governs the facts of this sjpsrae.

Explanation III reads:

Where a debt has been renewed or included in a fresh document executed, before or after the commencement of this Act (whether by the same debtor or by his heirs, legal representatives or assigns or by any other person acting on his behalf or in his interest and whether in favour of the same creditor or of any other person acting on his behalf or in his interest) the principal originally advanced together with such sums, if any, as have been subsequently advanced as principal shall alone be treated. as the principal sum repayable under this section.

The question is whether the Respondent, to whose share the debt was allotted in the partition is the same creditor within the meaning of the Explanation. In Hanumayya v. Nayudamma. 64 Mad LW 836 one of us, as a Judge of the Madras High Court, held that neither Explanation IV nor Explanation III applied to similar facts in that case. But subsequently a Division Bench of this Court of which one of us was a member reconsidered the correctness of that decision and pointed out that in that case the question namely, whether the assignee of a creditor would be a creditor within the meaning of that Explanation was neither raised nor considered. That question was expressly raised and considered by the aforesaid Division Bench in Vasantha Rao Anantha Rao and Others Vs. Vijapurapu Venkata Kothanda Rao and Others, In that case, a debt was assigned by the father in favour of his son and the subsequent promissory notes were executed or renewed in his favour. In dealing with the question whether the assignee was a creditor, the following observations were made:

At the first sight Explanation III appears to make a distinction between the case of a debtor and that of a creditor. In the case of a debtor, it expressly applies the same rule to his heirs, legal representatives or assigns. But, in the case of a creditor, those throe categories of persons are omitted. It is, therefore, argued that heirs, legal representatives or assigns arc not affected by the said Explanation. This argument ignores the definition of .the word ''creditor'' in the Act. Section 3 (v) of the Act defines creditor as follows:

Creditor includes his heirs, legal representatives and assigns.

But the Act, though it defines the word ''debt'' has not given the definition of the word ''debtor''. In view of the definition of the word ''creditor'' and because of the non-definition of the word ''debtor'' in the Act, it became necessary for the Legislature, while using the "word ''creditor'' of the Explanation, to add the words ''heirs, legal representatives or assigns'' in the case of a debtor for'' the word ''creditor'' itself by reason of the definition takes in the other three categories of persons, whereas the use of is word ''debtor'' may not fake in these Categories.

After considering the other aspects of the question, the following contusion was arrived at:

It is, therefore, reasonable to assume that the words ''heirs, legal representatives or assigns" were not added by the definition of the word ''creditor'' itself it takes in those categories of persons.

When the judgment in U Mad 2,''W 836 (A), was pressed upon the learned Judges, it was distinguished in the following order:

Reliance was placed on. s judgment of one of us in di Mad LW 83G (A).

At page 837 tile following, observations are found:

But in amending and, by introducing Explanation IV, they have omitted an obvious case: Under Examination IV, though a debt has been split up and allotted to the shares of the different members of erstwhile ''joint family it can be traced back to its origin. Bui: if a debt has not been split up so as to come within the provision of Explanation IV but only has been assigned to one of the brOrs. at the time of the partition, such a debt is not covered by Explanation III. Under Explanation III, the debt should be renewed in favour of a creditor or of any other person acting on his behalf or in his intereoo.

Can it be said that a promissory note, executed in favour of a person who separate himself from the rest of the family, was executed in favour of the same creditor, that is the favour of a person acting on behalf ct the bond or iu the interests of the family? Such a person does not come under any one of the through one of persons particularised in Explanation ill. I have already stated that Explanation. IV in. forms dries not apply to such a case-The result is unfortunate. There is a clear lacuna in the amendment carried out by Act XXIV of 1950.

It will be sure from the judgment that it was not argued in that case that though the debt was not split up to attract the provisions of Explanation III the divided brother, in. .''/hose favour the entire debt was assigned, won id b\\? a creditor within the meaning of the du.ro! ion raider the Act. It was argued that his case covered by the words "or any other person either on his behalf or in his interest" but it was not accepted by the Court. It is true that. on. the facts of that case, the decision would haw; hom otherwise if it was sought to bring in the Assessee under the inclusive meaning of the word "creditor defined in the Act. We would take this opportunity to state that that decision was not intended to lay down that an assignee of a creditor would not be a creditor within the meaning of the definition.

The next question is whether a member of a family to whom a debt has been allotted in a partition is an assignee of the creditor, i.e., the family. This question, though in the context of a debtor, was raised and considered by one of us (The Chief Justice) in Second Appeal No. 69 of 1951. There, the question was if a joint family debt is divided among the members of the joint family at-partition, whether the said members are "assigns'' within the meaning of the Act. The following view was expressed on that question.-"I would therefore hold that the word ''''assign" has wider connotation than the word "transfer" defined under the Transfer of Property Act. It will Include every act effected, inter vivos or by operation of law whereby a title is acquired or recognised. This meaning, which can be attributed to the word "assign" without doing violence to the language, will carry out the intention of the Legislature. Otherwise, the splitting up of debts between the members of a joint Hindu family which would cover a very wide field.... could nos have been the intention of the Legislature'' to exclude. I, -therefore, hold that the splitting up of a debt and the execution of fresh documents by persons to whom different parts of the debt have been allotted is covered by the Explanation to S. 8 of the Act. If so, what is the position in the present case?

The facts may be looked at from two different angles. The debt originally was that of the father alone. When he died, the said debt along with the assets devolved upon his sons as his heirs. The sons i.e., the heirs divided the debt and executed promissory notes. So looked at, Exhibit A-1 can be treated as one executed by the heir of a previous debtor. If, on the other hand, the original debt incurred by the father was a joint family debt, as contended by the Respondent, the Appellant would be an assignee from the joint family."

If the members of the family to whom different parts of the debt is allotted are assignees, a member of the family to whose share the entire debt is allotted would equally be an assignee within the meaning of the Explanation. There cannot be a distinction in the application of the principle between the case of a partition in the creditor''s family and that of a partition in the debtor''s family. If the allotment of a debt or part of a debt is an assignment of that debt in tin? case of the debtor, it will equally be so in the case of a creditor. In this case, we have held that, in the partition that was effected in the family of the creditor, the suit that was allotted to the share of the Respondent, and therefore, he was an assignee within the meaning of Explanation III to Section 8.

We therefore allow the appeal, set aside the order of the learned Subordinate Judge and restore that of the learned District Munsif. The Appellant will have his costs here and in the Court below.