http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8  

PETITIONER: PULAVARTHI VENKATA SUBBA RAOAND ORS.

       Vs.

RESPONDENT: VALLURI JAGANNADHA RAO & ORS.

DATE OF JUDGMENT: 13/03/1963

BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. GAJENDRAGADKAR, P.B. SHAH, J.C.

CITATION:  1967 AIR  591            1964 SCR  (2) 310  CITATOR INFO :  RF         1969 SC 971  (5)  R          1971 SC 664  (23)

ACT: Relief  to agriculturists-Scaling down  of  debts-Compromise decree--Nature-Whether   can  be  scaled   down-Whether   re judicata-Madras Agriculturists Relief (Amendment) Act,  1948 (Mad.  23 of 1948), s. 16 (ii)-Madras Agriculturists  Relief Act, 1938 (Mad. 4 of 1938), 8. 19.

HEADNOTE: A  suit  was filed in 1941 for the recovery of  Rs.  50,000. The  respondents prayed for the scaling down of  the  amount due  from them under the Madras Agriculturists  Relief  Act, 1938, on the ground that they were agriculturists.  The suit was  compromised for Rs. 37,0001/- Some payments  were  also made. In 1949, another application was made by the respondents for the  scaling down of the debt on the ground that  they  were agriculturists  and hence were entitled to the  benefits  of the  Act of 1938 as amended in 1948.  The contention of  the decree-holder  was that the Amending Act was not  applicable in view of the provisions of s. 16 (ii) of the Amending  Act as  the compromise decree had become final.   Moreover,  the earlier compromise decree operated as res indicate.  Another contention  was  that the judgment-debtors  were  not  agri- culturists  as  they  were a joint Hindu  family  owning  an estate  for  which  a peshkash of more than  Rs.  500/-  was payable.  The trial court held that the decree was liable to be  scaled  down in view of the provisions of  the  Amending Act.   The matter was taken to the High Court  in  revision. The High Court directed the trial court to take evidence and submit its finding on the point whether the appellants  were agriculturists  or not.  The finding of the trial court  was that  the judgment-debtors constituted a joint Hindu  family which  owned an estate for which peshkash of more  than  Rs. 500/- was payable and hence were not agricultrists. The High Court came to the conclusion that the estat Was not held jointly but in definite shares.  The peshkash in  311 respect of the two villages constituting an estate could not

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8  

be  aggregated.  Under the circumstances, the peshkash  paid by the individual judgment-debtors did not exceed Rs.  500/- and  hence  the judgment debtors were  agriculturists.   The High Court also held that the compromise decree could not be regarded as final for purposes of s. 16 (ii) of the Amending Act,  and the principle of res judicata did not  apply.   It was  also  held that the judgment-debtors were  entitled  to have  the decree scaled down.  The appellants came  to  this Court by special leave. Held  that  the  appeal had no merit  and  must  fail.   The judgment-debtors were agriculturits and the peshkash paid by them individually did not exceed Rs. 500/-.  Hence they were entitled to get their debts scaled down. Held  also,  that all decrees which had  been  executed  and satisfied  before  the commencement of the Amending  Act  in January, 1949, were unaffected by the Amending Act, but  all decrees  which  were  not final and  which  remained  to  be executed,  either wholly or in part, were  subject  thereto. However, the decree-holder was not to be required to  refund any  sum which might have been paid or realized by him.   No distinction  was made between decrees passed  after  contest and  decrees  passed on compromise.  Both kinds  of  decrees were  amenable to the provisions of s. 19 (2) of the Act  of 1938  and s. 16 (ii) of the Amending Act of 1948.  The  case was thus governed by s. 16 (iii) and not by s. 16 (ii). Held  also, that although the conduct of the respondents  in omitting  to press the claim for reduction of the amount  of the  claim on the first occasion was significant,  yet  that did  not  constitute  res  judicata,  either  statutory   or constructive.   The compromise decree was not a decision  by the Court.  It was the acceptance by the Court of  something to  which  the parties had agreed.   The  compromise  decree merely  set the seal of the court on the  agreement  between the  parties  and  the  court did  not  decide  anything,  A decision  of the court was not implicit in  the  compromise. Only a decision by the court could be res judicata,  whether it  be statutory under s. II of the Code of Civil  Procedure or  constructive as a matter of public policy on  which  the entire  doctrine  rests.   The earlier  decision  could  not strictly  be  regarded  as a matter  which  was  "heard  and finally decided".  The decree might have created an estoppel by conduct between the parties but that had not been pleaded and tried at any time. Held also, that the Act of 1938 as amended in 1948 conferred upon the petty agriculturists the right to get their 312 debts scaled down in order to save them from the  oppressive loans taken at usurious rates of interest. Arunachala Mudaliar v. C. A. Muruganatha Mudaliar, [1954] S. C.  R. 243 and Venakataratnam v. Seshamma, 1. L.  R.  (1952) Mad. 492, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 17 of 1959. Appeal  from the judgment and order dated April 6, 1955,  of the  High Court of Andhra Pradesh at Guntur in C. R. P.  No. 656 of 1950. N.Narsaraju,  Advocate-General, Andhra Pradesh and T. V.  R. Tatachari, for the appellants. T. Satyanarayan, for the respondents. 1963.  March 13.  The judgment of the Court was delivered by HIDAYATULLAH  J.-This appeal on certificate granted  by  the High  Court  of  Andhra Pradesh,  is  directed  against  its

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8  

judgment  dated  April 6, 1955,  dismissing  Civil  Revision Petition  No.  656 of 1950.  The High Court  held  that  the respondents   were   agriculturists   within   the    Madras Agriculturists  Relief  Act, 1938 (called for  brevity  "the Act")  and were entitled to a scaling down of the decree  in O.  S. No. 52 of 1941, dated August 27, 1945.   The  decree- holders are the appellants before us.  We will now give  the facts relevant to the present appeal. The respondents were members of an undivided  313 Hindu  family  and  the following  genealogy  is  useful  in following the facts :- Valluri Jagannadha Rao I           -------------------------    Srivatsankara  Rao    Narasimha Rao                 ---------------------      jagannadha Rao II   Satyanarayanamurthi      (1st respondent)    (2nd respondent)                            Srivatsankara Rao                            (5th respondent)          ----------------------      Narasimha Rao     Subba Rao      (3rd respondent)    (4th respondent) Narasimha Rao had taken loans on promissory notes from   the ancestors  of the present appellants, and a suit  was  filed for  Rs. 50,000 odd in 1941 against the family.   That  suit was O. S. No. 52 of 1941.  In that suit, an application  was made by the respondents, claiming to be agriculturists,  for the scaling down of the amount.  The plaintiffs in the  case denied  that the defendants were agriculturists.  The  suit, however,  ended in a compromise decree for Rs.  37,000/-  on August  23, 1945, as against the claim for  Rs.  50,964-1-9. It  appears that some payments were also made  towards  this decretal amount.  On February 21, 1949, the judgment-debtors made  another application in the suit  (Interim  Application No. 279 of 1949) for scaling down the decretal amount on the ground  that  they  were  agriculturists  entitled  to   the benefits of the Act, as amended in 1948.  The decrec-holders have  raised three defences, (i) that the Amending  Act  was not  applicable in view of the provisions of s. 16  (ii)  of the Amending Act as the compromise decree had 314 "become  final"  (ii)  that the  earlier  compromise  decree operated  as  res  judicata, and (iii)  that  the  judgment- debtors  were not agriculturists as they were a joint  Hindu family  owning an estate for which a peshkash of  more  than Rs. 500/- was payable. The Subordinate judge, Narsapur, before whom the application was made, framed two issues as follows :-               (1)   Whether     the     petitioners      are               agriculturists entitled to the benefits of the               Act, and               (2)   Whether  the present petition is  barred               under  s. 16 (ii) of the Amending  Act  Madras               Agriculturists  Relief  (Amendment)  Act  (No.               XXIII), 1948. The  learned Subordinate judge first considered  the  second issue which was one of law and by his order dated March  15, 1950  held that the decree was liable to be scaled  down  in view  of  the provisions of the Amending Act.  He  then  set down  the  first  issue for trial and posted  the  case  for evidence  on the question whether the judgment-debtors  were agriculturists.   The  decree-holders  meanwhile  filed   an application  for  revision (C.  R. P. No. 656  of  1950)  on April  28, 1950.  The High Court heard this  application  on

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8  

August  20, 1952, and decided to call for a a  finding  from the  Subordinate  judge whether  the  judgment-debtors  were agriculturists.   A preliminary order was made by  the  High Court directing the Subordinate judges to take evidence  and to submit his finding on this point and the parties were  to be  given an opportunity to object to the finding  after  it was  received.  The Subordinate Judge, after  recording  the evidence,  submitted his finding on December 17,  1952.   He held  that  the judgment debtors constituted a  joint  Hindu family  which owned an estate for which a peshkash  of  more than  315 Rs. 500/- was    payable and were thus not agriculturists. When  this  finding  was received in  the  High  Court,  the revision   application   consideration.   The   High   Court Subordinate  judge that the ding Act were  applicable,  that could not be regarded as final was taken up for  agreed with the  provisions  of  the amen  the  compromise  decree   for purposes of cl. (ii) of s. 16 of the Amending Act, and  that the principle of res judicata did not apply.  The High Court endorsed  the  opinion  of the Subordinate  judge  that  the judgment-debtors  were  entitled in law to have  the  decree scaled  down, provided they were agriculturists.   The  High Court  then  considered the second question,  and  differing from the Subordinate Judge, came to the conclusion that  the judgment-debtors  were agriculturists and entitled  to  have the decree scaled down.  The decree-holders have appealed. Before dealing with the questions that arise in this case, a few  more  facts  relevant  to  the  question  whether   the judgment-debtors  can be considered to be agriculturists  or not,  may be stated.  The family, it is admitted, owned  two villages,  namely,  Kalagampudi and  Pedamamidipalli,  which were  an estate as defined in the Madras Estates  Land  Act. The  villages  belonged  to Valluri Jagannadha  Rao  1,  the original  holder,  and were  his  self-acquired  properties. jagannadha  Rao  I executed a will in respect of  these  and other  properties on March 20, 1902 (exh.  A 17).   By  that Will,  he gave a life-estate in the two villages to his  two sons--Valluri  Srivatsankara Rao and Valluri Narasimha  Rao- and  an absolute estate to such of the sons of these two  as might  be  living  at the termination of each  of  the  life estates,  respectively.  The will provided further  that  if any  of  his sons left no son , the sons of  his  other  son would be absolutely entitled to the properties at the end of 316 the life estate.  It was also provided that if his two  sons wished  to divide the property, the elder son  Srivatsankara Rao  was to take Kalagampudi and the younger son, the  other village.  The two sons divided the properties in which  they were  given life estates, vide, exhibit B I dated  June  14, 1911.  Srivatsankara Rao took Kalagampudi and Narasimha  Rao took  Pedamamidipalli.  Srivatsankara Rao died  on  December 15,  1936, without leaving a son, and jagannadha Rao II  and Satyanarayanamurthi,  the two sons of Narasimha Rao,  became absolutely  entitled  to Kalagampudi in  equal  shares.   On February 18, 1941, Narasimha Rao executed a sale-deed  (exh. A  57)  in  respect of two-fifth  share  in  Pedamamidipalli village in favour of Subhadradevi, his daughter.   Narasimha Rao  died  on  May  17, 1943,  and  jagannadha  Rao  II  and Satyanarayanamurthi became entitled to a half share each  in the three-fifth share in Pedamamidipalli village in addition to  the  half share in  Kalagampudi.   The  judgment-debtors claimed  that there was a partition between the two sons  of Narasimha Rao in 1946. The  peshkash, which was payable for the two  villages  when

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8  

they  were in the name of jagannadha Rao I, was Rs.  979-3-0 (vide  exh.   I.  A. dated 6.10.1879). After  the  death  of Shrivatsankara Rao in 1936, the two villages were separately Registered.   Pedamamidipalli was registered in the name  of Narasimha Rao and Kalagampudi in the name of his sons.   The peshkash  was then apportioned between the two villages  and Rs.  483-12-10  was fixed as  peshkash  for  Pedamamidipalli village  and Rs. 495-6-2, for Kalagampudi village.  This  is stated  in the proceedings of the Collector, West  Godavari, (exh.  A 4), dated April 24, 1940. To decide whether the conclusion of the Subordinate judge or of the High Court is right, it is necessary at this stage to read a few provisions of                             317 the Act.  ’Agriculturist’ is defined by s. 3 (ii) of the Act and the relevant parts of the definition are as follows : --                 "(ii) ’agriculturist’ means a person who--               (a)   has a saleable interest in any agri-               cultural or horticultural land in the State of               Madras,  not  being  land  situated  within  a               municipality or cantonment, which is  assessed               by the State Government to land revenue (which               shall be deemed to include peshkash and  quit-               rent),  or which is held free of tax  under  a               grant   made,  confirmed  or   recognized   by               Government ; or               (b)   holds  an interest in such land under  a               landholder under the Madras Estates Land  Act,               1908, as tenant, ryot or undertenure holder  ;               or               x     x     x     x     x     x      x               Provided that a person shall not be deemed  to               be an ’agriculturist’ if he-               (D)   is  a landholder of an estate under  the               Madras  Estates Land Act, 1908, or of a  share               or   portion   thereof,   whether   separately               registered or not, in respect of which estate,               share  or  portion  any  sum  exceeding   five               hundred rupees is payable as peshkash, or  any               sum  exceeding one hundred rupees  is  payable               under  one  or more of  the  following  heads,               namely, quitrent, jodi, kattubadi, poruppu  or               other  due  of a like nature, or  is  a  janmi               under  the Malabar Tenancy Act, 1929,  who  is               liable  as  such  janmi to pay  to  the  State               Government  any  some exceeding  five  hundred               rupees as land revenue." The word ’Person’ is defined by cl. (i) of s. 3 as including an undivided Hindu family. 318 The  contention of the judgment-debtors was that there  were two  persons who were legatees under the will.    They  took the  villages  not  as ancestral  properties  but  as  self- acquired  properties and the  peshkash payable on these  two villages  must  be divided between them before  s.  3  (ii), proviso(D)  of the Act was made applicable.  The  contention on the side of the decree-holders was that these  properties were  held  by an undivided   Hindu family and the  sons  of Narasimha  Rao  took  the  properties  under  the  will   as ancestral properties,and the peshkash in respect of the  two villages  must  be added together for the,  purpose  of  the application  of the said proviso.  The High Court  held  the properties taken by the two sons of Narasimha Rao under  the will  were  their  separate  properties  and  not  ancestral properties,  as  there  were  no  words  to  showa  contrary

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8  

intention.The High Court also referred to the conduct of the respondents  in partitioning the villages and held that  the property was held not jointly but  in definite shares.   The High Court therefore,     held that the peshkash in respect two  villages  could  not  be  agreggated.  The  High  Court accordingly,   broke   up  the   Peshkash  in   respect   of Kalagampudi  and  the three-fifth share  of  Pegamamidipalli into  two halves and held that as each Esn of Narasimha  Rao was required to pay only his share the peshkash paid by them individually  did not exceed Rs. 500/- mentioned in  proviso (D),     and     that     the     judgment-debtors     were, therefore,agriculturists.   This  part of the case  was  not challenged  before  us by the  learned  Advocate-General  of Andhra  Pradesh.Indeed,  the decision of the High  Court  is supported  by C.N. Arunachala v. C. A. Muruganatha  Mudaliar character of the property inherited by the of Narasimha Rao, and this fundamental not be questioned.  We Mudaliar (1), in respect of the the two sons fact could must then start  with the conclusion that the judgment-debtors are agriculturists. Before we consider the other objections to (1)  [1954] S.C.R. 243.  319 the claim of the respondents to have the decree scaled down, we will deal with another argument on this part of the case. It  is  contended  that  the High  Court  was  in  error  in interfering  with. the finding that the respondents are  not agriculturists in an application for revision under s.  115, Civil  Procedure  Code.   This, in our  opinion,  is  not  a correct  summing  up of what the High Court did.   The  High Court  had called for a finding and it was to be subject  to objections by the parties.  The High Court could have called for  the  evidence  and  itself given  a  finding.   In  re- examining  the  evidence with a view to reaching  a  correct finding  on the question whether the  judgment-debtors  were agriculturists or not, the High Court was not interfering in revision with a finding of fact, but was drawing the correct inference from evidence it had itself ordered to be recorded before  considering the law applicable to the case.  In  our opinion, this objection has no validity. It  was  next argued that the respondents cannot  claim  the benefit  of the Act, because the compromise decree  must  be considered  to  have become a final decree  and  the  second clause  of  s.  16 of the Amending Act  and  not  the  third applied, and in any event, the respondents were concluded by the  compromise decree which operated as res  judicata.   To understand  this argument, it is necessary to read s. 19  of the  Act and s. 16 of the Amending Act.  Section 19  of  the Act was amended by the addition of sub-s. (2)     in   1948. Section 19, as amended, reads :-               "19 (1) Where before the commencement of  this               Act,  a  court  has passed a  decree  for  the               repayment   of  a  debt,  it  shall,  on   the               application  of any judgment-debtor who is  an               agriculturist  or in respect of a Hindu  joint               family debt, on the application of any  member               of  the family whether or not he is the  judg-               ment-debtor, or on the application of the               320               decree-holder,  apply the provisions  of  this               Act to such decree and shall,  notwithstanding               anything  contained  in  the  Code  of   Civil               Procedure  1908, amend the decree  accordingly               or enter satisfaction, as the case may be :               Provided  that  all payments made  or  amounts               recovered,   whether  before  or   after   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8  

             commencement  of this Act, in respect  of  any               such decree shall first be applied in  payment               of  all  costs as originally  decreed  to  the               creditor.               (2)   The provisions of sub-section               (1)   shall  also apply to cases where,  after               the  commencement  of this Act,  a  Court  has               passed  a decree for the repayment of  a  debt               payable at such commencement."               The Amending Act also provided by s. 16               "16.   The amendments made by this  Act  shall               apply to the following suits and  proceedings,               namely               (i)   all  suits  and  proceedings  instituted               after the commencement of this Act;               (ii)all   suits  and  proceedings   instituted               before the commencement of this Act, in  which               no  decree  or order has been  passed,  or  in               which  the  decree  or order  passed  has  not               become final, before such commencement;               (iii)all  suits and proceedings in  which  the               decree or order passed has not been excuted or               satisfied  in full before the commencement  of               this Act :               Provided that no creditor shall be required to               refund any sum which has been paid to or                321               realized  by him, before the  commencement  of               this Act." The contention of the appellants is that a compromise decree is  a  decree  which finally determines the  rights  of  the parties and the case is, therefore, governed by cf. (ii)  of s.  16 and not by cl. (iii); as claimed by the  respondents. There  seems  to have been at one time  some  difference  of opinion  in the interpretation of this section in  the  High Court, but the view which has prevailed is that the  section applies only to those decrees which can be said to be  final in   contra-distinction   to  decrees   which   are   merely interlocutory or preliminary.  It has also been held now for a  long  time in the High Court that cl. (iii)  governs  all cases  of money decrees in which the decree passed  has  not been  executed or satisfied in full before the  commencement of  the Act.  See Venkataratnam v. Seshamma (1).   In  other words,  all decrees which have been executed  and  satisfied before  the commencement of the Amending Act on January  12, 1949,  are unaffected by the Amending Act, but  all  decrees which  are not final and which remain to be executed  either wholly  or  in part, are subject thereto,  but  the  proviso states that in scaling down such decrees, the decree  holder would  not  be required to refund any sum which  might  have been  paid  or  realised by him.   No  distinction  is  made between  decrees passed after contest and decrees passed  on compromise.   Both the kinds of decrees are amenable to  the provisions  of  s. 19 (2) and also of s.  16  (iii).   There being  no distinction between decrees passed  after  contest and  decrees passed on compromise, the words "in  which  the decree or order passed has not become final" in cl. (ii)  of s. 16, cannot be held to refer to a compromise decree but to decrees   which  are  final  such  as  final   decrees   for foreclosure,  etc., in suits on mortgages.   The  prevailing interpretation   of  the  section  in  the  High  Court   is preferable in view of the generality (1)  I.L.R. 1952 Mad. 492. 322 of the words used in ss. 19 (2) and 16 (iii).  In any event,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8  

it would be improper to unsettle a view of law which has now become  inveterate.  This case was governed by s. 16  (iii), read  with  s. 19 (2) and the respondents were  entitled  to broach  the question of the scaling down of the decree  once again. The  appellants  then  seek  to reach  the  same  result  by invoking  the  principle of res judicata.  It  is  contended that  the earlier decision amounts to res judicata  and  the respondents- were not entitled to raise the same issue which by  implication must be held to be decided against  them  by the compromise judgment and decree.  In the alternative,  it is  contended that the earlier compromise decree creates  an estoppel  against the respondents because the appellants  at that time had shown some concession in the amount which they were  claiming and a decree for a lessor amount was  passed. This  estoppel was said to be an estoppel by  judgment.   In our opinion, these contentions cannot be accepted.  The  Act as  amended confers this right upon petty agriculturists  to save  them  from the operation of loans  taken  at  usurious rates  of interest.  No doubt the conduct of respondents  in omitting  to press the claim for reduction of the amount  of the claim on the first occasion is significant, but this did not   Constitute   res   judicata,   either   statutory   or constructive.   The compromise decree was not a decision  by the Court.  It was the acceptance by the Court of  something to  which the parties had agreed.  It has been said  that  a compromise  decree merely sets the seal of the court on  the agreement  of  the  parties.   The  court  did  not   decide anything.   Nor can it be said that a decision of the  court was  implicit in it.  Only a decision by the court could  be res  judicata, whether statutory under s.11 of the  Code  of Civil  Procedure,  or  constructive as a  matter  of  public policy on which the entire doctrine rests.  The  respondents claim to raise the issue  323 over  again  because  of the new  rights  conferred  by  the Amending  Act, which rights include, according to them,  the re-opening  of  all decrees which had not  become  final  or which  had  not been fully executed.   The  respondents  are entitled  to  take  advantage of the amendment  of  the  law unless  the law itself barred them, or the earlier  decision stood in their way.  The earlier decision cannot strictly be regarded as a matter which was "heard and finally  decided". The decree might have created an estoppel by conduct between the  parties; but here the appellants are in an  unfortunate position,  because they did not plead this estoppel  at  any time.  They only claimed that the principle of res  judicata governed the case or that there was an estoppel by judgment. By  that  expression,  the principle-  of  res  judicata  is described  ’in English law.  There is some evidence to  show that  the  respondents had paid two sums under  the  consent decree,  but  that  evidence cannot be looked  into  in  the absence of a plea of estoppel by conduct which needed to  be raised  and tried.  The appellants are, however,,  protected in respect of these payments by the proviso to cl. (iii) of s.   16 of the Amending Act. In our opinion, this appeal has no merits and must fail.  It is  accordingly dismissed, but in the circumstances  of  the case, we make no order about costs in this Court. Appeal dismissed. 324