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Judgment
Wadsworth, J.—This appeal arises out of an application to scale down a compromise decree. The decree arose out of a suit for Rs. 3,000
due on a mortgage for Rs. 1,600. The compromise provided that the plaintiff would give up the whole amount of the suit claim and Court costs
except for Rs. 2,500. If the defendants paid before a certain date the plaintiff would give up a further sum of Rs. 500. Failing that, the whole
amount of Rs. 2,500 would be realised by the sale of the properties in the plaint schedule. The first defendant gave up all his contentions including
any claim for costs. On this decree the trial Court held that there was a simple renewal of the amount claimed on the mortgage by means of the
compromise and scaled down the debt to Rs. 1,600, which was the principal of the mortgage. The lower appellate Court applying the decision in
Seemakurti Subbarayudu Vs. Seemakurti Sreeramulu and Others, has held that the compromise is one in respect of which it is impossible to say
how much of the amount decreed represents the antecedent debt and that therefore the decree is not susceptible of being scaled down u/s 8 of
Madras Act IV of 1938 though the mortgage was one of 1922. The decision quoted is however concerned with facts decidedly more complicated
than those of the present case.
There is a good deal of case-law on the subject of the scaling down of compromise decrees, and its application is not made easier from the fact
that two important decisions of the Bench dealing with cases under Act IV of 1938 have not apparently been reported. After the early decisions in
Budiredla Ramamurti Vs. Matta Sitaramayya, and Periyatan Katanhipalli Kannan Nambiar Vs. Ullannur Madhathil Subramania Pattar and Others,
in which the principle was laid down that a compromise decree could be scaled down as a renewal of the antecedent liability if the facts made it
possible to show to what extent the antecedent liability with interest thereon made up the decree, there have been various other decisions. The
decision in Narayanan Chettiar Vs. Ottu Veeru Goundar and Another, when dealing with the appropriation of payments towards a compromise
decree deprecated the practice of taxing the costs at the time when the decree was scaled down for the purpose of appropriating the payments
towards the decree with reference to the proviso to Section 19; but the Court in that case was not concerned with the question whether the
amount of the costs could be ascertained for the purpose of finding out to what extent the compromise was a renewal of the original debt. This was
pointed out by a decision in A.S. No. 235 of 1941 where the Bench held that the circumstances established in that case that the effect of the
compromise was that the plaintiff gave up the claim to costs and consented to receive a lump sum in discharge of the pre-existing liability, and it
was held that the whole of the amount decreed could be treated as a renewal of that antecedent liability. There is a further unreported decision
which approximates very closely to the present facts. This is the judgment in A.A.O. No. 491 of 1939 and C.R.P. No. 2316 of 1939 where the
suit on a promissory note resulted in a compromise which provided for the payment of a lump sum of Rs. 11,011-6-6 towards the suit amount with
costs and subsequent interest; It was conceded that the costs of this suit would be Rs. 1,312-8-6. On these facts it was decided that since the
decree includes costs, on the assumption most favourable to the plaintiff it would seem to follow that the amount decreed less Rs. 1,312-8-6 must
at least be a renewal of the previous indebtedness, and there was no complication by the compromise taking into consideration matters outside the
suit, a decree was given on the basis that the rest of the amount due under the compromise must be treated as a renewal of the antecedent
transactions and the decree for costs was left intact.
It seems to me that this last decision must govern the present case. Here the suit claim was entirely made up of the amount due on the
antecedent mortgage for Rs. 1,600 executed in 1922. The parties agreed to pay and receive a lump sum in discharge of that claim and of the
amount due for costs. There is nothing to show that the claim for costs was waived. It is incumbent upon the debtor to prove the extent to which
interest is available for cancellation and the extent to which the compromise figure can be deemed to be a renewal of the antecedent liability. The
trial Court has found that the costs of this suit would amount to approximately Rs. 500. To this extent therefore the judgment-debtors cannot say
that the compromise figure is a renewal of the antecedent liability. The balance of the amount decreed must necessarily have been made up of the
principal and interest of the mortgage debt. The appellant is therefore entitled to the amendment of the decree so as to provide for the payment of
Rs. 1,600 with interest thereon at 5 per cent, from 1st October, 1937, and for Rs. 500 being the amount of costs with interest thereon at 5 per
cent, from the date of the decree, 21st July, 1933 to 22nd March, 1938, the date of the commencement of the Act and thereafter at 6 per cent.
The appeal will be allowed, and the decree will be amended accordingly. The parties will pay and receive costs here and in the lower appellate
Court proportionate to their failure and success.