Subbaraya Goundan vs O.K. Nachimuthu Mudaliar and Another

Wadsworth, J.—The appellant in the appeal was the tenth defendant in a suit on a mortgage executed on the 17th October, 1927, by

defendants 1 and 2 in favour of the plaintiff. The third and fourth defendants obtained a later usufructuary mortgage binding certain portions of the

hypotheca. In June, 1929 and June, 1930, there were two sales under money decrees whereby the equity of redemption in the mortgaged

properties was lost to the mortgagors (defendants 1 and 2) and passed to persons now represented by defendants 5 to 9. In 1940, that is to say

long after Madras Act IV of 1938 came into force, defendants 5 to 9 sold their interest in the properties to the present appellant. It is common

ground that the personal remedy against defendants 1 and 2 had become barred before Act IV of 1938 came into force. It is alleged though there

is no finding to that effect that the mortgagors (defendants 1 and 2 ) were agriculturists. The purchasers of the equity of redemption (defendants 5

to 9) are admittedly not agriculturists. The tenth defendant claims to be an agriculturist himself. The question is whether the tenth defendant

(appellant here) can claim the benefits of Act IV with reference to the suit mortgage. The answer to that question depends on the answer to a

further question, whether there was at the commencement of the Act on 22nd March, 1938, a debt payable by an agriculturist.

For the appellant it has been contended that although the mortgagors could not as on the commencement of the Act be compelled to pay the

mortgage debt, either by proceeding against them personally, or by proceeding against property in which they had an interest, the debt was still due

from them, though ordinarily it could not be recovered. This argument is fortified by reference to Section 60 of the Contract Act, which enables a

creditor to whom an unappropriated payment is made to apply it at his discretion to any lawful debt actually "" due and payable "" by the debtor to

the creditor, whether its recovery is or is not barred by the law of limitation. No doubt the words "" due and payable "" found in Section 60 of the

Contract Act are used with reference to a debt the recovery of which is barred by limitation and if they are used in that sense in Madras Act IV of

1938, it may be argued that there was a debt due from the alleged agriculturists in the present case at the commencement of the Act. For the

appellant, Mr. Bhashyam Ayyangar has endeavoured to reinforce his argument by referring to the practical desirability of applying the Act in a case

to which Section 60 of the Contract Act might be applied. He suggests that there might be a case in which an agriculturist debtor owed two debts,

one barred and the other not barred, a payment being made to the creditor after the commencement of Act IV without any indication of the debt to

which it was to be appropriated and it is contended that the creditor should not be allowed to appropriate this payment to the barred debt if that

debt was one which would largely disappear by the application of the procedure contemplated in Act IV of 1938. We do not wish to decide what

would be the result of applying Act IV to the hypothetical case which has been put before us. It might perhaps be possible having regard to the

unusual circumstance of the applicability of Section 60 of the Contract Act to regard the barred debt in such a case as something different from an

ordinary barred debt for the purpose of granting relief. It is, however, apparent to us that in the vast majority of cases to read Section 7 of the Act

IV of 1938 as applying to irrecoverable debts would be to go against the general purport of the section itself. The section after laying down that all

debts payable by an agriculturist at the commencement of the Act shall be scaled down goes on to prescribe that no sum in excess of the amount

as so scaled down shall be recoverable from the debtor or from his land. It seems to us apparent that in laying down the procedure for the scaling

down of debts, the Legislature had in mind the protection of agriculturists from the claims of creditors in respect of debts payable and recoverable

by process of law and that it was not concerned with the making of mere declarations regarding the amount of debts which the creditors could not

recover. That was the view of the law taken by this Bench in a case under the rules framed under this Act J.A. Subba Rao Vs. Vommena

Seshayya, , where it was held that a debtor could not combine with a prayer for the scaling down of his debt under the Act, another prayer for a

declaration that there was no debt at all recoverable by reason of the law of limitation. We have been referred to a decision of the Privy Council

under the Indian Companies Act, AIR 1933 63 (Privy Council) where their Lordships declined to interpret the words "" money due "" in Section

186(1) of that Act as including a barred debt, having regard to the place and context in which the words were found. A Full Bench of this Court

dealing with the power of mortgagor to bind a transferee of the equity of redemption by an acknowledgment '' in Pavayi and Others Vs. Palanivela

Goundan and Others, observed that when the personal remedy against the mortgagor who had lost his interest in the property was barred, he was

no longer liable to pay the debt. It is no doubt true that even after the mortgagor has ceased to be liable to pay the debt personally by reason of

the, law of limitation and has ceased to be liable to pay the debt out of his property by reason of the sale of the hypotheca, he still has a right to

redeem the debt and must for that reason be impleaded in the suit on the mortgage. We are however not prepared to hold that in such.

circumstances the mere existence of a right on his part to pay the debt involves a consequence of deeming him to be under a liability to pay that

debt. We do not think that the provisions of Act IV of 1938 were intended for the benefit of agriculturists who voluntarily paid debts which could

not be enforced against them.

In this view we dismiss the appeal with costs of the plaintiff-respondent.

The connected Civil Revision Petition arises out of an application by the legal representatives of the deceased third defendant one of the

subsequent usufructuary mortgagees, of a portion of the hypotheca under the suit mortgage. It appears that the third defendant died while the

mortgage suit was pending and for six months no action was taken by the plaintiff either to bring on record his legal representative or to be excused

of the necessity of impleading them under the provisions of Order 22, Rule 4, Civil Procedure Code, the third refendant having allowed the suit to

proceed ex parte. The learned Subordinate Judge having regard to the very belated nature of the application of the legal representatives of the third

defendant to come on record and the probability that they had been set up by the other parties to complicate the question arising in the suit

declined to implead them. The learned Judge also observed that it was but just that the plaintiff should be exempted from substituting the legal

representatives of the ex parte third defendant under Rule 4 of Order 22, Civil Procedure Code. We are doubtful of the propriety of the learned

Judge''s order refusing to implead the legal representatives merely On the ground of their delay in coming forward. We are also doubtful of the

propriety of applying the provisions of Order 22, Rule 4 to a case in which the plaintiff has allowed the suit to abate against the deceased

defendant and has made no attempt to set aside the abatement. The question is, however, now academic because in the final decree proceedings

the plaintiff has exonerated the properties in the possession of defendants 3 and 4, including the legal representatives of the third defendant, from

liability to be sold under the mortgage deed. This exoneration makes it unnecessary for us to pass any further order. The result of the exoneration

of defendants 3 and 4 is that the rights of the legal representatives of the third defendant and of the fourth defendant have not been affected either

by the preliminary or the final decree.

The Civil Revision Petition is therefore dismissed without costs.