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PETITIONER: V. RAMASWAMI AYYANGAR AND OTHERS

       Vs.

RESPONDENT: T.N.V. KAILASA THEVAR.

DATE OF JUDGMENT: 05/03/1951

BENCH: SASTRI, M. PATANJALI BENCH: SASTRI, M. PATANJALI

CITATION:  1951 AIR  189  CITATOR INFO :  D          1969 SC  69  (6)

ACT:     Madras’  Agriculturists’ Relief Act (IV of 1938), ss.  7, 19--Joint debtors--Application for scaling down made by some only--Decree for full amount against ex parte defendants and for   reduced  amount.  against  others--Legality  and   ef- fect--Indivisibility  of  debt--Payment of  full  amount  as sealed down--Whether  extinguishes decree against all.

HEADNOTE:     Under  the  Madras Agriculturists’ Relief Act,  1938,  a mortgage decree can be sealed down in favour of some of  the judgment  debtors alone, while as regards the others  it  is kept intact.     In  a suit to enforce a mortgage executed  by  defendant No.  1 on his own behalf and on behalf of defendants Nos.  2 to 7, the defendant No. 1 remained ex parte, and the  others contested the suit.  A decree for Rs. 1,08,098 was passed by the  trial  court. The Madras  Agriculturists’  Relief  Act, 1938, was passed during the pendency of an appeal and  cross appeal,  and  on the application of defendants Nos. 2  to  7 under the said Act the amount of the decree was sealed  down to  Rs.  49,255 so far as defendants Nos. 2 to 7  were  con- cerned.  So far as defendant No. 1 was concerned the  decree for  the  full amount remained as it was.  Defendant  No.  1 thereupon applied for scaling down, but his 293 application was rejected.  Defendants Nos. 2 to 7  deposited certain amounts and got their properties released.   Defend- ant No. 1 deposited the balance of the amount that  remained due  under the decree as scaled down on the  application  of defendants Nos. 2 to 7, and prayed that full satisfaction of the decree may be recorded.  The Subordinate Judge  rejected this  application      but the High Court, on  appeal,  held that defendant No. 1 was     entitled to the benefit of  the scaling  down  in favour of defendants Nos. 2 to 7,  as  the mortgage debt was one and indivisible.  On further appeal:     Held, that the ratio decidendi of the cases in which  it was held that a purchaser of mortgaged properties was  enti- tled to the benefit of a decree which has been scaled  down, even  though the purchaser himself was not an  agriculturist was  not applicable to the present case.  According  to  the

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plain  provisions  of the Act, there was no objection  to  a decree for a reduced amount being passed against an agricul- turist  debtor,  while the same relief is not given  to  his co-debtors,  and defendant No. 1 was not entitled  to  claim the benefit of the scaling down of the decree debt in favour of defendants No. 2 to 7.     Judgment of the Madras High Court reversed. Ramier  v. Srinivasiah ( [1940] 2 M.L.J. 872)  referred  to. Arunachalam  Pillai  v. Seetharam   (119413  1-M.L.J.  561), Pachigola v. Karatam ( [1942] 1 M.L.J. 506), Subramaniam  v. Ramachandra ( [1946] 2 M.L.J. 429) distinguished.

JUDGMENT:     CIVIL APPELLATE JURISDICTION:  Appeal  (Civil Appeal No. 32 of 1950), from a judgment and order of the High Court  of Judicature  at Madras dated 5th January, 1948, reversing  an order  of the District Judge of East Tanjore in an  applica- tion  under s. 47 and O. XXI, r. 2, of the  Civil  Procedure Code.     R.K. Kesava Aiyangar (T. K. Sundararaman, with him)  for the appellants. S. Ramachandra Aiyar for the respondent.     1951.  March 5.  The judgment of the Court was delivered by     MUKHERJEA  J.--This appeal is on behalf of  the  decree- holders  in  a mortgage suit and it is  directed  against  a judgment  and order of a Division Bench of the  Madras  High Court dated January 5, 1948, by which the 294 learned Judges reversed, on appeal, an order of the District  Judge of East Tanjore made in a  proceeding  under section  47  and Order 21, rule 2, of  the  Civil  Procedure Code.     The  material  facts are not in controversy and  may  be briefly stated as follows.  The appellants before us are the representatives of three original plaintiffs who, as mortga- gees,  instituted a suit (being O.S. No. 30 of 1934) in  the Court  of the District Judge, East Tanjore, for  enforcement of  a  mortgage,  against the present  respondent,  who  was defendant  No.  1 in the suit, and six  other  persons.  The mortgage bond, upon which the suit was brought, was executed by  defendant  No.  1 for himself and  his  minor  undivided brother,  the defendant No. 2, and also as authorised  agent on  behalf  of defendants 3 to 7 who  were interested  in  a joint  family  business. The suit was contested by  all  the defendants except defendant No. 1, against whom it proceeded ex  parte, and there was a preliminary decree passed on  May 15,1937,  by which a sum of RS. 1,08,098 was directed to  be paid by defendant No.1  and defendants 3 to 7, in default of which  the plaintiffs were declared entitled to apply for  a final decree for sale of the mortgaged properties, and   the suit  was  dismissed against defendant No. 2.  Against  this decree, two appeals were taken to the Madras High Court, one by  defendants  3  to 7--being Appeal No.  48  of  1938--who contended  that the mortgage was not binding on them  or  on their shares in the joint family property; and the other  by the  plaintiffs--being  Appeal No. 248 of 1938  --who  chal- lenged  the propriety of the judgment of the trial judge  in so far as it dismissed their claim against defendant No.  2. During the pendency of these appeals, the Madras Agricultur- ists’ Relief Act (Act IV of 1938) came into force and appli- cations  were made by defendants 2 to 7 to the  High  Court, praying  that in the event of a decree being passed  against

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them,  the decretal debt might be scaled down in  accordance with the provisions of the Act. The defendant No. 1, who did not appear at any stage of the proceeding, did not make  any such application. The High Court forwarded 295 these  applications to the lower court for enquiry into  the matter  and for return, with its finding on the question  as to whether the applicants were agriculturists, and if so, to what  extent, the decretal dues should be scaled down.   The District Judge,’ after making enquiries, submitted a finding that  the applicants were agriculturists and that the  debt, if  scaled down, would amount to Rs. 49,255  with   interest thereupon at 6% per annum from 1st of October, 1937,  exclu- sive of costs.  On receipt of this finding, the appeals were set down for final hearing and by their judgment dated March 23, 1942, the learned Judges of the High Court accepted  the finding  of the court below and held that defendants 2 to  7 were  entitled  to  have the debts scaled down;  but  as  no application  had been made on behalf of defendant No. 1,  he was  held entitled to no relief under the Act. A decree  was drawn  up in accordance with the  judgment.  The amount  due by defendants 2 to 7 was stated to be Rs. 49,255 with inter- est thereon at 6% per annum; while, so far as defendant  No. 1 was concerned, the decree of the trial judge was  affirmed subject  to  a slight modification  regarding  the  rate  of interest.   The defendant No. 1 thereupon filed an  applica- tion  in  the  court of the District  Judge,  East  Tanjore, claiming relief under the Agriculturists’ Relief Act  alleg- ing  that he too was an agriculturist and hence entitled  to the  benefits of the Act.  The application was dismissed  on February  25,  1943, on the ground that as  the  decree  had already been passed by the High Court definitely  negativing his  claim  to any relief under the  Agriculturists’  Relief Act,  such  application was not entertainable by  the  lower court.  The  next step taken by the defendant No. 1  was  to file  an application in the High Court itself,  praying  for setting  aside the ex parte decree which excluded  him  from the  benefits of Act IV of 1938.  This application  was  re- jected by the High Court on December 13, 1943.     As  no payment was made in accordance with the  prelimi- nary  decree  passed by the High Court, a  final  decree  in terms of the  same  was passed by the 296 District  Judge  on  September 25,  1943.’  Proceedings  for execution  of this  final decree were started on August  16, 1944, in E.P. 2 of 1945 of the court of the District  Judge, East Tanjore.  Two lots of the mortgaged properties were put up  to sale and purchased by the decree-holders for a  total sum  of  Rs. 12,005 on July  15,  1946.  The sale  was  con- firmed   on  August 17, 1946, and part satisfaction  of  the decree  was entered for that  amount.   Apparently,  certain terms   of  settlement  were  thereafter  offered   by   the judgment-debtors.  The estate of the decree-holders  was  in the  hands of the Receivers and from the  Receivers’  report dated January 10, 1947, it appears that the Receivers agreed with  the sanction of the court, to receive Rs. 24,000  only from or on behalf of defendant No. 2 and release him and his share  of the mortgaged property from the  decretal  charge. Likewise, the Receivers were agreeable to receive Rs. 48,000 from defendants 3 to 7 and to release them and their proper- ties from the decretal debt. With regard to defendant No. 1, the  proposal,  which  seems to have been  accepted  by  the Receivers,  was  that the amount payable by  him  under  the decree  was to be settled at Rs. 37,500 and one Yacob  Nadar would ’pay this amount on his behalf on consideration of the

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decree against defendant No. 1 being assigned to him by  the Receivers excluding the rights of the latter to execute  the decree against defendants 2 to 7 as scaled down by the  High Court.     The  records of the execution case show that on  January 20, 1947, a sum of Rs. 24,000 was paid on behalf of  defend- ant  No.  2; and his properties, namely, lots 2 and  6  were exonerated  from the decree.  On January 27, 1947, a sum  of Rs. 30,000 was paid by defendants 3 to 7 and on February  17 following, they paid a further sum of Rs. 18,610-12-0. These three  amounts aggregated to Rs. 72,610-12-0.   Nothing  was done towards the payment of the sum of Rs. 37,500 by defend- ant  No.  1  or by Yacob Nadar, but on March  6,  1947,  the defendant  No. 1 deposited in court a sum of Rs.  3,215  and put in a petition under section 47 and 297 Order 21, rule 2, Civil Procedure Code, praying that as  the amount  thus  deposited together with the  payments  already made completely wiped off the amount due under the decree as scaled  down by the High Court in favour of defendants 2  to 7, full satisfaction of the decree might be recorded exoner- ating the mortgaged properties and also the defendant No.  1 himself from any further liability in respect of the  decre- tal debt.     The position taken up by defendant No. 1, in  substance, was that the mortgage debt was one and indivisible and  even though  different amounts were mentioned as payable  by  two groups of defendants in the decree, the decree-holders  were bound  under the terms of the decree to release  the  entire mortgaged property even on payment of the amount directed to be  paid by defendants 2 to 7. In other words,  even  though the  defendant  No. 1 ’s application for  relief  under  the Madras Agriculturists’ Relief Act was expressly rejected and he  was  held liable for the entire amount of  the  mortgage debt,  he  would still be entitled to avail himself  of  the benefit  of  the  scaling down of the decree  in  favour  of defendants  2  to 7.  This contention was negatived  by  the District  Judge,  but  was accepted by the  High  Court   on appeal, who allowed the application  of defendant No. 1  and directed that the court below should enter up full satisfac- tion  of  the mortgage decree. It is against  this  judgment that  the  decree-holders  have come up on  appeal  to  this court.     The  learned  Judges of the High Court observed  at  the outset  that  in the working of the  Madras  Agriculturists’ Relief  Act  alongside  the provisions of  the  Transfer  of Property Act several curious and novel situations had arisen for  which it was not possible always to find logical  solu- tions. They then proceeded to discuss the various  decisions of  the Madras High Court which had a bearing on this  point and  the conclusion which they reached may be summed  up  in their words as follows:--     "It  is  no  doubt somewhat odd that when  a  person  is declared liable to pay a larger amount he should on 298 payment  or  tender  of a smaller amount  get  his  property exonerated from liability but this is inherent in and arises out of the proposition established by the decisions  already dealt with, namely, that by the application of the principle of  unity  and indivisibility of a mortgage  decree  a  non- agriculturist  can  indirectly get relief  which  he  cannot directly get".     It  seems  to us that the High Court’s approach  to  the case  has  not been a proper one and the conclusion  it  has reached cannot be supported in law.

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   The  learned Judges appear to have overlooked  the  fact that they were sitting only as an executing court and  their duty was to give effect to the terms of the decree that  was already  passed  and beyond which they could not go.  It  is true  that they were to interpret the decree, but under  the guise of interpretation they could not make a new decree for the parties.     As  said above, the mortgage decree was scaled  down  by the  High Court in favour of defendants 2 to 7 only and  the amended decree directs that the said defendants do pay  into court the sum of Rs. 49,255 with certain interest and  costs on  payment of which the plaintiff was to bring  into  court all the documents in his power or possession relating to the mortgage  and  reconvey  or retransfer the  property  if  so required. So far as defendant No. 1 is concerned, the decree states in clear and express terms that he is to pay the  sum of  Rs.  1,05,000 and odd and it is on payment of  this  sum only  that  redemption  would be allowed  of  the  mortgaged property. If the decision of the High Court is correct, this direction  in the decree would be manifestly  unmeaning  and without any effect. What is said, however, on behalf of  the respondent is  that he is not claiming any benefit in viola- tion of this clause. By virtue of the decree against defend- ants  2 to 7 being satisfied, the entire mortgaged  property would,  by force of the very decree, be freed from the  debt and if the respondent gets any benefit thereby, such benefit would  be merely incidental or consequential in its  nature. The High Court agreed in substance with this contention 299 and based its decision entirely upon the view that by opera- tion  of  the principle of indivisibility  of  the  mortgage decree, a non-agriculturist debtor, whose debt has not  been scaled  down  under the provisions  of  the  Agriculturists’ Relief  Act,  may indirectly get the benefit of  the  relief which has been granted to his agriculturist co-debtor  under the provisions of the Act.     The general law undoubtedly is that a mortgage decree is one and indivisible and exceptions to this rule are admitted in special circumstances where the integrity of the mortgage has been disrupted at the instance of the mortgagee himself; e.g., when there is severance of the interests of the  mort- gagors with the consent of the mortgagee or a portion of the equity  of redemption is vested in the latter. It is  to  be noted,  however, that the Madras Agriculturists’ Relief  Act is  a  special statute which aims at giving  relief  not  to debtors in general but only to a specified class of debtors, viz.,  those who are agriculturists as defined in  the  Act. To this extent it trenches upon the general law and  section 7  of the Act expressly provides that  "notwithstanding  any law,  custom, contract or decree of court to  the  contrary, all debts payable by an agriculturist at the commencement of this Act shall be scaled down in accordance with the  provi- sions of this chapter". Thus in case of a mortgage debt when the  loan has been advanced to more than one person, if  one of  the debtors happens to be an agriculturist while  others are  not, the agriculturist debtor would certainly be  enti- tled  to have his debts scaled down under the provisions  of the  Act  in  spite of the provision of  general  law  which prevents  a  mortgagor  from denying the  liability  of  the interest which he owns in the mortgaged property to  satisfy the entire mortgage debt. There is, therefore, nothing wrong in law in scaling down a mortgage decree in favour of one of the judgment debtors, while as regards others the decree  is kept  intact.  The Madras High Court expressly adopted  this view in Rainier v. Srinivasiah (1), which is one of the

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 (1) [1940] 2 M. 39     39 300 decisions  referred  to in the judgment appealed  from.  The fact  that in that case it was a puisne mortgagee and not  a mortgagor  whose application for relief under section 19  of the Madras Agriculturists’ Relief Act was allowed, does  not make  any difference in principle. The puisne mortgagee  was made  a party defendant in the suit instituted by the  first mortgagee  to recover his dues and as the  puisne  mortgagee was  liable to pay the debt due to the first  mortgagee,  he was  held  to be a debtor and hence entitled  to  claim  the benefit of section 19 of the Agriculturists’ Relief Act.  It may be mentioned here that section 14 of the Madras Agricul- turists’ Relief Act which provides for separation of a  debt incurred by a Hindu family, some members of which are  agri- culturists while others are not, affords a clear  indication that  the  splitting up of a debt in such  circumstances  is quite in accordance with the scheme of the Act.     The catena of cases upon which the learned Judges of the High  Court  relied in support of their  decision  seems  to proceed on a different principle altogether and whether that principle  is  right or wrong, it has, in  our  opinion,  no application  to  a case like the present. In this  class  of cases, the mortgagors were agriculturists and hence entitled to  have their debts scaled down under  the  Agriculturists’ Relief  Act,  but  there were purchasers  of  the  mortgaged property who were not agriculturists, and the question arose whether a purchaser could get the benefit of the debt scaled down  in favour of the original debtors. This  question  was answered in the affirmative. The reason for taking this view was  thus given by the learned Judges in Arunachalam  Pillai v. Seetharam(1), where the purchase of the equity of redemp- tion was at an execution sale:--     "When  the 12th respondent purchased the  properties  in court  auction,  he took them subject to the burden  of  the appellant’s  mortgage and if the burden is by reason of  the provisions  of s. 8 refer.red to above reduced without  pay- ment, the purchase proves to that    (1) [1941] 1 M.L.J. 561 301 extent an advantageous one, and there is nothing in the  Act to  deprive him of the fruits of his. lucky  purchase,  even though  he is not an agriculturist. He gets the  benefit  of the scaling down not because the provisions of the Act apply to him, for obviously they do not, but because such  benefit is  a necessary incident of his purchase under  the  general law and the Act does not deprive him of it."     A somewhat different reason was assigned in Pachigola v. Karatam(1) which however was a case where a portion of  the. equity  of  redemption was transferred to a purchaser  by  a private  sale.  It was held that the court by  allowing  the mortgagor to redeem the mortgage sale was not conferring  on the purchaser, a non-agriculturist, the benefit of the  Act, as he would have to refund to  his vendor the purchase money reserved with him   which as a result of the scaling down he would  not   have  to pay to the mortgagee.  In  both  these cases, the question was raised in the proceeding for scaling down  of the decree under the provisions of the  Agricultur- ists’  Relief  Act itself and not at  the  execution  stage. There   is  however the case of Subramanian  v.  Ramachandra (2),  where the question arose in course of  execution  pro- ceedings  and  a  purchaser of a portion of  the  equity  of redemption  was  held to be entitled to the benefit  of  the scaled down decree in favour of the mortgagors, although his

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own application for relief under the Act was refused.  It is not  necessary  for  purposes of this case  to  express  any opinion  as to the correctness or otherwise of  these  deci- sions.  It is enough to say that the ratio decidendi in  all these cases is not applicable to the case before us. In  the present  case  there  is  no  purchaser  of   the  mortgaged property  and consequently there is no question of the  pur- chaser, who is not an agriculturist himself, being  entitled to  the  benefit of a decree which has been scaled  down  in favour  of the agriculturist mortgagor.   Here   the   judg- ment-debtors  are the mortgagors themselves and according to the plain provisions of the Agriculturists’ Relief Act there could (1) [1949] 1 M.L.J. 506.         (2) [1946] 2 M. L. J. 429. 302 not  be any objection to a decree for reduced  amount  being passed  against  an  agriculturist debtor,  while  the  same relief is not given to his co-debtors who do not fulfil that description.     Some  exception could undoubtedly be taken to  the  form and  wording  of  the decree that has  been  passed  in  the present  case. The decree, in our opinion, should  not  only have  stated the amount payable by defendant No. 1 and  that by  defendants 2 to 7 separately but should  have  expressly directed ,that on payment of the amount directed to be  paid by  defendants 2 to 7 their interest alone in the  mortgaged property would not be liable to be sold.  The further direc- tion  should  have been that in case they did not  pay  this amount, the whole of the mortgaged property including  their interest would be sold for the entirety of the mortgage debt for which defendant No. 1 was made liable.  It is true  that the decree contains no such clear directions but reading the decree  as a whole and having regard to the actual  decision in  the  case, this must be taken to be its  plain  implica- tions.  The-subsequent agreement between the parties arrived at  in  course  of the execution proceedings  by  which  the decreeholders  agreed to release the interest  of  defendant No. 2 and that of defendants 3 to 7 separately on payment of certain  specified amounts by ’them proceeds clearly on  the assumption that the mortgage debt and the security have been split  up,  and in our opinion it is not  possible  for  the defendant  No. 1 to contend that the mortgage debt  remained indivisible.   Our conclusion is that the view taken by  the District Judge was right and should not have been disturbed.     The  result is that the appeal is allowed, the order  of the  High Court is set aside and that of the District  Judge restored.   We  make no order as to costs  of  this  appeal.                              Appeal allowed. Agent for the appellants: M.S.K. Sastri. Agent for the respondent: M.S.K. Aiyangar. 303