Yeddula Kothapalle Muthyalu vs Bolla Chinnayya and Others

Wadsworth, J.—The question in this civil revision petition is whether the petitioner, who gave a surety bond undertaking to satisfy any

decree which might be passed against respondents 2 and 3, can be deemed to be a judgment-debtor entitled to scale down the decree which was

ultimately passed, by the procedure laid down in Section 19 of Madras Act IV of 1938.

The matter arises out of a suit brought by the first respondent against respondents 2 and 3 on two promissory notes, one dated 31st July, 1929

and the other dated 27th June, 1931. A decree was passed ex parte and subsequently there was an application to set aside the ex parte decree.

The defendants were required to give security as a condition precedent to the setting aside of the decree and the present petitioner gave a bond on

4th July, 1934 in which he undertook to satisfy any decree which might be passed against the respondents 2 and 3. The ex parte decree was

therefore set aside and the suit reopened and on 10th September, 1934, a compromise decree was passed in favour of the first respondent against

respondents 2 and 3 for a sum of Rs. 603-10-0 with interest at 12 per cent, on Rs. 500 from the date of the plaint to the date of the decree and

Rs. 83 costs and subsequent interest at six per cent. After this compromise decree was obtained, the decree-holder proceeded to execute the

decree against the surety. The surety contended that he was not bound to satisfy the decree because it was based on a compromise. This

contention was overruled both in the executing Court and in two appellate Courts. After the appeals had failed, the surety filed applications under

Sections 19 and 20 of Act IV. The application u/s 19 was dismissed in limine on the ground that the surety was riot a judgment-debtor entitled to

maintain the application. Against this order the civil revision petition is preferred.

It is contended that by reason of Section 145 of the CPC the decree becomes executable against the surety and for purposes of execution he is

in fact in exactly the same position as a judgment-debtor and that there is no reason why to the extent to which he is an agriculturist entitled to relief

under Act IV, he should not claim that relief by asking that the decree be scaled down u/s 19. Now it seems to us quite manifest that the surety,

assuming that he is entitled to take proceedings u/s 19, must be limited to the relief which he can get with reference to the actual decree debt. But

he cannot treat that decree as a renewal or inclusion in a fresh document of a previous debt due from himself and therefore there is no occasion for

going into the origin of the two promissory notes upon which the decree was passed. The surety executed his bond in 1934 and it was in 1934 that

the liability against him first became crystalised in the form of the decree which he had undertaken to satisfy. The liability of the surety therefore falls

u/s 9 of Act IV and the proviso to that section has no bearing on the case.

u/s 7, all debts payable by an agriculturist at the commencement of the Act must be scaled down in accordance with the provisions of the

Chapter, notwithstanding any law, custom, contract or decree of Court to the contrary. From this it follows that on the admission that the surety is

an agriculturist, he is entitled to a remission of interest on the decree debt to the extent laid down in the first part of Section 9. The only question is :

what is the procedure by which the relief shall be given? Two courses might be open. It might be possible for the surety to plead in bar of

execution the statutory relief to which he has become entitled; or it might be open to the surety to claim to be treated as a judgment-debtor and to

get the decree amended u/s 19 by the Court which passed the decree, by the reduction of interest in accordance with Section 9. The respondents

here have relied upon two judgments of a single Judge which seem to suggest that the proper procedure is by pleading the Act in bar of execution.

The two cases are C.R. Ps. Nos. 1965 of 1939 and 1869 of 1939. We think the latter case has no bearing because it was a case in which the

surety was a non-agriculturist. The former case does contain an observation that the surety cannot apply to have the decree amended u/s 19

though he might have a right to a reduction of interest on the amount treating it as a debt u/s 9. But the question really agitated in that case was not

the procedure whereby the surety could get the decree for interest reduced, but the right of the surety to apply u/s 19 to get the substantive liability

scaled down on the basis of the antecedent debt. To the extent to which the observations in C.R.P. No. 1965 of 1939 appear to indicate that the

procedure u/s 19 is not available to an agriculturist-surety, against whom a decree is being executed, to get the interest embodied in the decree

reduced, we are of opinion that they are misleading. Since the surety is, for the purposes of execution in the position of a judgment-debtor, we see

no reason why he should not be given the benefit of the procedure laid down in Section 19 for agriculturist judgment-debtors to the limited extent

of the reduction or scaling down of interest under the decree with reference to the appropriate section of the Act having regard to the date on

which the liability of the surety himself was incurred. In the present case, the matter is simple. Both the bond and the decree came into being in the

course of 1934. It follows that the surety is entitled to the benefit of the first part of Section 9; that is to say, the amount of the debt both for costs

and for the substantive portion of the decree will bear interest not at the rate of six per cent, as laid down in the decree but at the rate of five per

cent, with effect from the date of the decree to 22nd March, 1938, subsequent interest being at the decree rate of six per cent.

The decree will be amended accordingly. As the petitioner has failed in his attempt to go behind the decree and scale down his liability with

reference to the original notes, we think it proper to order that each party should bear his own costs.