Sp. Pl. N. Karuppan Chettiar vs Doraiswsami Ambalam and another

Ganapatia Pillai, J.—The appellant in this second appeal is the plaintiff in the trial Court. The suit was laid for recovery of a sum of Rs. 212-

14-4 being the principal sum of Rs. 200 and balance of interest for the other deed Ex A. 1 of the year 1941, and interest was claimed at the

statutory rate as provided in S. 13 of Madras Act IV of 1938 for fasts 1359 and 1360. The defence raised was that the mortgagor had been

paying the mortgagee by virtue of a lease arrangement three kalams of paddy for every fails from 1351 till 1358 as rent for the mortgaged property

that the value of the paddy so delivered came to Rs. 337-8-0 (which was not disputed) and since the mortgagor was only liable to pay interest at

the rate of 5 1/2 per cent per annum from the date of the mortgage, the excess payment made towards interest should be readjusted towards the

principal Calculated on this basis it was contended that the entire mortgage debt stood discharged as the entire inter est. due according to S. 13

was only a sum of Rs. 110. This contention was accepted by both the lower Court Admittedly neither S. 8 nor S. 9 of Madras Act IV of 1938

applies to this case The only Section of Act IV of 1938, which has any bearing on the question arising for decision in this appeal is S. 13, It is in

these terms:

In any proceeding for recovery of debt, the Court shall scale down all in tersest due on any debt incurred by an agriculturist after the

commencement of this Act, so as not to exceed a sum calculated at 6 1/4 per cent per annum, simple interest, that is to say, one pie per rupee per

menses, simple interest, or one Anna per rupee per annum simple interest

Provided that the State Government may, by notification in the Official Gazette, alter and fix any other rate of interest from time to time.

Then follows an explanation which may be omitted as it is not material for the purpose of this case Both the trial Court and the first appellate Court

held that interest paid at the rate of three kales of paddy per year for the period from fails 1351 to 1358 which in value amounted to Rs. 337-8-0

should be re-appropriated at the rate of 5 1/2 percent per annum and the balance should be adjusted towards the principal Two decisions have

been relied on by the lower Courts as authority for this contention. The first is a Full Bench decision inVeerraju v. Baal koteswara Rao (1951)

1M.L.J. 42=64 L. W. 133 (F.B.). There the conflict between the Division Bench decisions in Itikala Suryanarayanamurthy Vs. Redi Viranna, and

Anantharamakrishna Aiyar Vs. V. Sundaram Aiyar, on the one hand and Chelikani Lakshmi Venkayamma Vs. Mandapati Venkatapathiraju and

Others, on the other hand had to be resolved. The question that arose was one which had to be decided with reference to Ss. 8 and 9 of Act IV of

1938 It had no reference at all to S. 13 of the Act. There is a fundamental difference between the scheme of scaling down as provided in Ss. 8 and

9 and the purpose of S. 13. Ss. 8 and 9 not only provide for reduction of interest by fixing a certain rate as the one applicable to certain categories

of debts to which those sections apply but also provide for reduction of principal in certain contingencies. But S. 13 has no concern whatever with

the reduction of the principal amount. The Full Bench decision has therefore no application to the facts of this case, which has to be decided

entirely with reference to S. 13. The next decision relied on by the two lower Courts is the Bench decision in Venkatappayya v. Ponnayya (1951)1

M.L.J. 21=64 L.W. 168. There the Bench had to consider what constituted interest. "" Interest"" as defined in S. 3 (iii a) of the Madras

Agriculturists Relief Act was ruled by that Bench decision to mean anything paid or intended or agreed to be paid over and above the principal

sum borrowed. That was a case where, in reduction of a loan given in cash the obligor undertook to deliver a certain quantity of paddy in full

discharge of the loan. It was contended there that there was no provision for payment of interest in the case of that borrowing and this contention

was negative by the Bench decision which held that interest as defined in S. 3 of the Madras Agriculturists Relief Act as amended by Madras Act

XXII of 1948 included anything paid over and above the amount borrowed This decision also has no application to the facts of the present case.

On the other hand, the decisions in Ramalakshmi v. Gopalakrishna (1944) 2 M.L.J. 285=57 L.W. 550 (2 T.V. Srinivasaraghava Aiyangar Vs. M.

Narasimha Mudaliar, are directly applicable to the facts of this case In the absence of any specific provision in Act IV of 1938 authorizing, in

respect of a debt borrowed after the commencement of the Act, re appropriation of money paid for interest and already appropriated by a

creditor with authority, the lower Courts ought to have held that the amount claimed was due. The decrees of the lower Court are therefore

improper and they are hereby set aside. The appeal is allowed There will be a preliminary decree for sale of the mortgaged property for the sum

claimed in the plaint with costs throughout Time for payment three months No leave.