31 August 1964
Supreme Court


Case number: Appeal (civil) 618 of 1961






DATE OF JUDGMENT: 31/08/1964


CITATION:  1965 AIR  639            1965 SCR  (1) 195  CITATOR INFO :  R          1992 SC 195  (6A)

ACT: Madras Agriculturists’ Relief Act (4 of 1938), ss. 9(1)  and 13--Debt   incurred  after  1st  October  1932  but   before commencement  of  Act  Renewal after  commencement  of  Act- Provision applicable.

HEADNOTE: Dealings  between the family of the  appellants  (creditors) and  the  family of the respondents (debtors)  commenced  in 1934.   In September 1938, after the Madras  Agriculturists’ Relief  Act  (4 of 1938) came into force in  March  1938,  a promissory  note  was  executed  by  the  debtors  (who  are agriculturists)  in favour of the creditors for  the  amount then found due.  The debtors also agreed to pay interest  at the  rate  of 93/8 per cent per annum on  that  amount.   In arriving  at  the amount due to the creditors in  1951,  the debtors contended that the debt should be scaled down  under s. 9(1) of the Act, whereas the creditors contended, on  the basis that it was a debt incurred after the commencement  of the  Act,  that the only relief to which  the  debtors  were entitled,  was  calculation of interest under s. 13  of  the Act. HELD  :  Though the transaction was entered into  after  the commencement  of  the Act, since the  original  indebtedness arose  before the commencement of the Act but after  October 1, 1932, s. 9(1) of the Act would be applicable. [210 D] Under s. 7 of the Act every debt payable by an agriculturist at  the  commencement of the Act shall be  scaled  down  and nothing  in  excess  of  the  amount  scaled  down  will  be recoverable; and this would in effect operate as a discharge of  the rest of the liability.  Where, therefore, a suit  is instituted for recovery of a debt from an agriculturist, the court  will have to scale down the debt as provided in s.  8 if  the debt was incurred before 1st October, 1932.  If  the debt  was incurred after that date, the Court will  have  to apply  the  provisions  of a. 9. In such a  case,  the  debt incurred after the commencement of the Act will not cease to be  a  debt  incurred after October 1, 1932, when  it  is  a transaction  in renewal of a liability which arose prior  to



the  commencement  of  the  Act.   As  to  future  interest, transactions prior to the commencement of the Act covered by ss.  8 and 9, are governed by s. 12, and transactions  after the  commencement of the Act, by s. 13.  The object  of  the Legislature  in  enacting  s. 13 is only to  provide  for  a maximum rate of interest payable by agriculturists, on debts incurred  for the first time after the commencement  of  the Act. [200 F-G; 201 C-E; 204 C-F]. Case law reviewed. Nagabhushanam  v. Seetharamaiah, I.L.R. [1961] 1 ˜A.P.  485, approved. Thiruvengadatha Ayyangar v. Sannappan Serval, I.L.R.  [1942] Mad. 57, overruled.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 618 of 1961. 196 Appeal  by special leave from the judgment and decree  dated December 23, 1960 of the Andhra Pradesh High Court in Second Appeal No. 653 of 1956. K.Bhimasankaram,  C.  M. Rao and K. R.  Sharma,  for  the appellant. A.V. V. Nair and P. Ram Reddy, for respondents Nos. 2 and 4. The Judgment of the Court was delivered by Mudholjkar  J.The question that falls for decision  in  this appeal by special leave from the judgment of the High  Court of  Andhra  Pradesh is whether a debtor who has  executed  a promissory  note after the coming into force of  the  Madras Agriculturists’  Relief  Act, 1938 (Madras Act  4  of  1938) (hereafter  referred  to as the Act) in renewal  of  a  debt incurred prior to the commencement of the Act is entitled to claim  the  benefit of S. 9 of the Act.   The  trial  court- upheld the debtor’s contention but in appeal the Subordinate Judge rejected it and decreed the appellants’ suit in  full. The  High Court held that the interpretation placed  on  the relevant provisions of the Act by the Subordinate Judge  was erroneous, allowed the appeal and restored the decree passed by the trial court. Certain  facts have to be stated in order to appreciate  the contentions  of  the parties.  The plaintiffs  who  are  the appellants before us and the fourth defendant constituted  a Hindu  joint  family of which the first  plaintiff  was  the manager  till  the  year  1944  when  the  fourth  defendant separated from the rest and the remaining members  continued to remain joint.  On, September 14, 1938 the first defendant as  manager of the joint family consisting of  himself,  the second  and the third defendants executed a promissory  note in  favour of the first plaintiff as manager ,of  the  joint family consisting of the plaintiffs and the fourth defendant for a sum of Rs. 9,620-2-9 and agreed to pay interest at the rate of 9 and 3/8% per annum.  This amount was found due  to the family of the plaintiffs and defendant No. 4 on foot  of dealings between that family and the family of defendants  1 to 3 which commenced in the year 1934. In Original Suit No. 84 of 1949 brought by the fourth defen- dant  against  the plaintiffs for partition  of  the  family property  the  first  defendant  deposited  a  sum  of   Rs. 13,576-0-0  on March 17, 1951 alleging that was  the  amount due to the family of the plaintiffs and defendant No. 4 from the  family of defendants 1 to 3 on foot of  the  promissory note of September 14, 1938.  In 197



arriving  at  this amount the defendants 1 to  3  took  into account  the  provisions  of the Act  and  scaled  down  the interest as permitted by s. 9(1) of the Act.  The plaintiffs disputed  the correctness of the calculation  whereupon  the defendants  1  to 3 withdrew their application but  all  the same  the  plaintiffs withdrew the amount  eventually.   The plaintiffs thereafter instituted the suit out of which  this appeal arises in which they claimed Rs. 3,858-13-3 and costs on the basis of the calculations made by them and set out in the memo accompanying the plaint. Defendants  1 to 3 denied the plaintiffs’ claim  and  stated that  the  amount deposited by them in  the  partition  suit having been withdrawn by the plaintiffs nothing more is  due to them from these defendants on the foot of the  promissory note dated September 14, 1938. The trial court, as already stated, substantially upheld the contention of the defendants 1 to 3 and passed a decree  for Rs.  92-2-2  in  favour of the  plaintiffs  and  the  fourth defendant and dismissed the suit with respect to the rest of the  amount.   This  decree  which  was  set  aside  by  the appellate court has been restored by the High Court. On behalf of the plaintiffs who are the appellants before us it  is strenuously contended by Mr. Bhimasankaram  that  the relevant provision of the Act with reference to which a debt like the one evidenced by the promissory note in suit can be scaled down would be s. 13 and not s. 9 as held by the  High Court. the relevant portion of s. 13 reads thus :               "In any proceeding for recovery of a debt, the               court shall scale down all interest due on any               debt  incurred by an agriculturist  after  the               commencement of this Act, so as not to  exceed               a  sum  calculated at 61 per  cent  per  annum               simple  interest, that is to say, one pie  per               rupee per mensem simple interest,, or one anna               per rupee per annum simple interest               Provided  that  the State Government  may,  by               notification  in the Official  Gazette,  alter               and  fix any other rate of interest from  time               to time." According to learned counsel the execution of the promissory note  itself  brought into existence a debt  and  since  the promote  was  executed  on  September  14,  1938,  the  debt evidenced  by  it must be regarded as having  been  incurred after  the  commencement of the Act and consequently  s.  13 alone  will  have  to be borne in mind for  the  purpose  of calculating interest.  Learned 198 counsel   did  not  dispute  the  fact  that  the   original indebtedness of the respondents 1 to 3 commenced in the year 1934.   But according to him the liability which was  sought to  be  enforced against them was the one arising  from  the promissory note dated September 14, 1938 and, therefore, the debt must be deemed to have been incurred on the date of the execution  of  the promissory note in  suit.   Relying  upon certain  decisions of -the High Courts of Madras and  Andhra Pradesh he contended, that the Act places debts incurred  by agriculturists  into  -three  classes:  (1)  those  incurred before  the 1st of October, 1932; (2) those incurred  on  or after  the 1st of October, 1932 but before the  coming  into force  of  the Act and (3) those incurred after  the  coming into  force  of the Act.  Section 8 applies  to  the,  first category of debts, S. 9 to the second category of debts  and s.  13 to the third category of debts.  Since, the  argument proceeds, all these provisions have reference to the date on which  a debt is incurred and since a debt can  be  incurred



only  once, it would follow that for the purposes  of  these provisions  the  date  on which the  last  transaction  with reference to a debt took place can alone be regarded as  the date  on which the debt was incurred.  The result  of  this, according to him, would be that the provisions of s. 8 would apply only when the last transaction was entered into before the  1st of October, 1932 subject to the provisions  of  the proviso to sub. s. (1) of s. 9; the provisions of s. 9 would apply only to a case where the last transaction was  entered into  after October 1, 1932 but before the  commencement  of the  Act; and the provisions of s. 13 would apply where  the last transaction was entered into after the commencement  of the Act.  It is desirable to set out fully the provisions of both ss. 8 and 9. They are as follows :               "Debts  incurred before the 1st  October  1932               shall  be scaled down in the manner  mentioned               hereunder, namely:-                (1)All  interest  outstanding  on  the  1st               October, 1937 in favour of any creditor of  an               agriculturist  whether  the  same  be  payable               under  law,  custom  or contract  or  under  a               decree of court and whether the debt or  other               obligation  has ripened into a decree or  not,               shall be deemed to be discharged, and only the               principal  or such portion thereof as  may  be               outstanding  shall be deemed to be the  amount               repayable by the agriculturist on that date.               (2)Where  an  agriculturist has  paid  to  any               creditor  twice  the amount of  the  principal               whether                                    199               by way of principal or interest or both,  such               debt including the principal, shall be  deemed               to be wholly discharged.               (3)   Where   the  sums  repaid  by   way   of               principal  or interest or both fall  short  of               twice the amount of the principal, such amount               only  as would make up this shortage,  or  the               principal  amount  or  such  portion  of   the               principal amount as is outstanding which  ever               is smaller, shall be repayable.                (4)Subject  to the provisions of sections  22               to  25 nothing contained in sub-sections  (1),               (2)  and  (3) shall be deemed to  require  the               creditor to refund any sum which has been paid               to  him,  or to increase the  liability  of  a               debtor to pay any sum in excess of the  amount               which  would have been payable by him if  this               Act had not been passed.               Explanation  I  : In  determining  the  amount               repayable  by  a debtor  under  this  section,               every  payment  made by him shall  be  debited               towards the principal, unless he has expressly               stated  in writing that such payment shall  be               in reduction of interest.               Explanation  II  :  Where  the  principal  was               borrowed in cash with an agreement to repay it               in  kind,  the debtor  shall,  notwithstanding               such agreement, be entitled to repay the  debt               in  cash,  after deducting the  value  of  all               payments made by him in kind, at the rate,  if               any, stipulated in such agreement, or if there               is  no  such stipulation, at the  market  rate               prevailing at the time of each payment.               Explanation  III  :  Where  a  debt  has  been



             renewed,  or  included  in  a  fresh  document               executed  before or after the commencement  of               this  Act, whether by the same or a  different               debtor and whether in favour of the same or  a               different  creditor, the principal  originally               advanced  together with such sums, if any,  as               have  been subsequently advanced as  principal               shall  alone be treated as the  principal  sum               repayable under this section.               Section 9: Debts incurred on or after the  1st               October  1932  shall  be scaled  down  in  the               manner mentioned hereunder, namely:-               (1)   Interest  shall be calculated up to  the               commencement   of   this  Act  at   the   rate               applicable to the               200               debt under the law, custom, contract or decree               of Court under which it arises or at five  per               cent  per annum simple interest, whichever  is               less  and credit shall be given for  all  sums               paid towards interest, and only such amount as               is  found  outstanding, if any,  for  interest               thus   calculated  shall  be  deemed   payable               together  with  the principal amount  or  such               portion of it as is due:               Provided  that any part of the debt  which  is               found to be a renewal of a prior debt (whether               by the same or a different debtor and  whether               in   favour  -of  the  same  or  a   different               creditor)  shall  be  deemed  to  be  a   debt               contracted  on  the date on which  such  prior               debt  was incurred, and if such debt had  been               contracted prior to the 1st October 1932 shall               be dealt with under the provisions of S. 8.               (2)Subject to the provisions of sections 22               to  25,  nothing  herein  contained  shall  be               deemed  to require the creditor to refund  any               sum which has been paid to him or to  increase               the liability of the debtor to pay any sum  in               excess  of  the amount which would  have  been               payable  by  him  if this  Act  had  not  been               passed." We  will proceed to examine these provisions and  the  other relevant  provisions  of  the Act before  we  refer  to  the decisions upon which reliance has beer% placed on behalf  of each of the parties to the appeal. Chapter II of the Act deals with "Scaling down of debts  and future  rate of interest.  Section 7 appears to be the  most important  provision  therein because it is  here  that  the legislature  has given a mandate that every debt payable  by an  agriculturist  at the commencement of the Act  shall  be scaled  down  and that nothing in excess of  the  amount  so scaled  down  will be recover,able from such  debtor.   That section runs as follows:               "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  provisions  of  this               chapter.               No  sum in excess of the amount as  so  scaled               down shall be recoverable from him or from any               land or interest 201               in  land  belonging  to  him;  nor  shall  his



             property be liable to be attached and sold  or               proceeded   against  in  any  manner  in   the               execution of any decree against him in so  far               as  such decree is for an amount in excess  of               the sum as scaled down under this Chapter."   We  will  have  to bear in mind the  provision,%  of  this section while construing the other provisions in Chapter II, including those of sections 8, 9 and 13. Where  a  suit  is  instituted before a  court  of  law  for recovery  of a debt from an agriculturist the court,  having regard  to  the document on foot of which the  creditor  has instituted a suit was executed, finds that that document was executed  before October 1, 1932 it will have to proceed  to scale  down the debt as provided in section 8. If  it  finds that  the  debt was incurred after October 1, 1932  it  will have  to  apply the provisions of s. 9 of the  Act.   It  is these  two  broad  categories into  which  debts  have  been divided under the Act.  But, Mr. Bhimasankaram argued, there is  also  a  third  category and that is  where  a  debt  is incurred subsequent to the commencement of the Act.  In  one sense  he  is  right because s. 13  also  provides  for  the scaling  down of interest due on a debt incurred  after  the commencement  of  the Act.  But it has to be borne  in  mind that a debt incurred after the commencement of the Act  will not cease to be a debt incurred’ after October 1, 1932.   It is common place that every provision of a statute has to  be given full effect and wherever possible the court should not place that construction upon a provision which would tend to make  it  redundant or to overlap another  provision  or  to limit   its   application  in  disregard  of   its   general applicability unless, of course, that is the only  construc- tion  which  could  be reasonably placed upon  it.   If  Mr. Bhimasankaram’s contention is accepted we will have to limit the  application of s. 9 only to such of the debts  incurred after  October  1,  1932  as  were  incurred  prior  to  the commencement  of the Act.  There is nothing in the  language of   the  section  which  would  justify  so  limiting   its provisions.  Nor again is there anything in section 13 which would  preclude  the  application  of  s.  9  to  any   case whatsoever of a debt incurred after the commencement of  the Act.   For,  a debt may have been incurred  after  the  com- mencement of the Act in the sense that the last  transaction with  respect  to indebtedness may have been  entered  into, after the commencement of the Act.  But that transaction may be  in  renewal  of a liability which  arose  prior  to  the commencement  of  the  Act.  Where such is the  case  it  is difficult to exclude the 202 applicability Of s. 9 of the Act.  As to how interest is  to be calculated with respect to a debt incurred after  October 1, 1932 the court cannot ignore the provisions of sub-s. (1) of  s.  9. It was, however, contended that  where  the  last transaction  was subsequent to the commencement of  the  Act the  court  has no power to go behind it and find  out  what interest has been charged by the creditor up to the date  of the  last  transaction.  No doubt, where the  accounts  have been settled between the parties and on the basis of settled accounts  a  new transaction is entered into  between  them, normally speaking, the court has no power to enquire further ,  except  in  the circumstances envisaged in  some  of  the provisions of the Contract Act.  But then there are  special provisions  like  the  Usurious Loans Act  and  the  Act  in question  which clothe the courts with the requisite  power. Hem  such a power is specifically given to the courts  under Chapter  II. Now, the proviso to sub-s. (1) of s. 9  clearly



states  that  any part of the debt which is found  to  be  a renewal  of  a  prior  debt shall be deemed  to  be  a  debt contracted  on  the  date  on  which  such  prior  debt  was incurred.  Therefore, though a promissory note may have been executed  after  the, commencement of the Act if it  was  in fact in renewal of a -prior debt, it will hale to be treated as  if  it  was  a debt incurred when  the  prior  debt  was incurred.   This  appears  to be the  true  meaning  of  the proviso,  though  according to Mr. Bhimasankararn  it  deals with  a debt originally incurred prior to October  1,  1932. In  support of his contention Mr. Bhimasankaram relies  upon the   concluding   portions  of  the  proviso   which   read thus:..........  and if such debt had been contracted  prior to  the 1st October 1932, shall be say that the use  of  the conjunction  ’and’ clearly shows that the dealt  with  under the  provisions of section 8." it is sufficient  to  proviso applies  as  much to debts contracted prior to  October  1st 1932 as to debts contacted after October 1, 1932 even though they  may have been incurred after the commencement  of  the Act.  If indeed it was the intention of the  legislature  to limit the application of the proviso in the manner suggested by  Mr.  Bhimasankaram  it  would have  been  easy  for  the legislature to say "provided that any debt or any part of  a debt  which is found to be the renewal of a debt  contracted prior to 1st October, 1932" instead of using the  expression "prior  debt"  in that Part of the proviso and then  in  the concluding  portion  say "if such debt has  been  contracted prior to 1st October, 1932".  Then Mr. Bhimasankaram  argued that  the  proviso is to sub-s. ( 1 ) of S.  9  and  should, therefore,  not be extended to embrace a debt renewed  after the commencement of the Act.  To accept this argument  would give 203 rise to this curious position that a debt renewed after  the commencement  of the Act would for the purposes of  the  Act not be a debt incurred after October 1, 1932.      Another argument advanced by Mr. Bhimasankaram is  that unless a statute makes a provision to the effect that a debt would  in certain circumstances be deemed to be  discharged, the liability to pay it would still remain on the debtor and that  merely providing for the scaling down of  interest  is not  enough.  In this connection he refers to the  provision in  sub-s.  (1)  of  s. 8.  Under  that  provision  interest outstanding on October 1, 1937 in favour of any creditor  of an  agriculturist shall be deemed to be discharged and  only the principal or such portion thereof as may be  outstanding shall  be  deemed to be the amount repayable  by  the  agri- culturist  on  that date.  Sub-setion (2) of  s.  8  further provides  that  where  an  agriculturist  has  paid  to  the creditor  twice  the  amount whether by  way  of  principal, interest  or  both, the entire debt shall be  deemed  to  be wholly discharged.  It is true that sub-s. (1) of s. 9 which provides  for  scaling down of debts incurred  on  or  after October 1, 1932 does not use similar language.  But it seems to  us  that the difference in language would not  make  any difference in the result because reading sub-s. (1) of s.  9 along  with  the provisions of s. 7 it is  abundantly  clear that what the creditor would be entitled to obtain from  the court  and what the court will have to do would be to  award interest only to the extent permissible by sub-s. (1) of  s. 9  and  this would in effect operate as a discharge  of  the rest  of  the  liability for  interest  under  the  contract between  the parties.  Learned counsel further said that  by applying  the  provisions of sub-s. (1) of s. 9  to  a  debt renewed after the commencement of the Act would result in an



anomaly  in  that with respect to renewals  of  certain  old debts  the  entire liability for interest after  October  1, 1932  will  be wiped out whereas with regard to  others  the liability would exist to the extent of 5% per annum,  simple interest.   In our judgment no anomaly results  because  the complete  discharge  of interest up to October  1,  1937  is provided for only with respect to debts first incurred prior to  October 1, 1932 and this would be the position  whatever be  the  date of renewal of such debts.  This would  be  the consequence of the express terms of the proviso to sub-s.(1) of  s.  9 which makes the provisions of s. 8  applicable  to debts contracted prior to October 1, 1932 but renewed  after October 1, 1932 but not to debts incurred subsequent to that date.    The last contention of Mr. Bhimasankaram is that there is no  provision for future interest corresponding to  that  in sub-s. 204 (1)  of  S. 13 of the Act and, therefore, in so far  as  the interest after the commencement of the Act is concerned,  s. 13  alone will, have to be resorted to.  As already  stated, Chapter IV divides debts into two broad categories and in so far as debts incurred prior to October 1, 1932 are concerned transactions  in  renewal of older ones  have  been  brought within the purview of s. 8 by adding thereto Explanation III and  transactions subsequent to October 1, 1932  within  the purview  of s. 9 by the proviso to sub-s. (I).  Having  made these  provisions,  there  was  nothing  further  that   the legislature  need  have done in so far  as  transactions  in renewal of debts contracted prior to the commencement of the Act  were  concerned.  As to future interest, in so  far  as transactions  prior  to the commencement of,  the  Act  were concerned, the legislature has made a provision in s. 12 and in so far as transactions after the commencement of the  Act are concerned it has made a provision in S. 13 . Indeed, the object of the legislature in enacting s. 13 does not  appear to  be  any other than to provide for the  maximum  rate  of interest payable on debts incurred after the commencement of the Act and since it follows S. 12 it seems that just as the legislature  divided  debts  into  two  categories  it  also divided rates of interest payable after the commencement  of the  Act  into  two  categories.   In  section  12  it   has prescribed  the  maximum rate of interest payable  on  debts scaled down under ss. 8 and 9 and in s. 13 has provided  for an identical maximum rate with respect to debts which  could not be scaled down under ss. 8 and 9 subject to the power of the  State Government to alter it from time to time.   There does  not appear to be any other object such as  creating  a separate or independent category of debts while enacting  S. 13.    Upon  a  plain  construction  of  these   provisions, therefore,  we see no difficulty in upholding  the  ultimate decision of the High Court.   Coming now to the decisions which were referred to at  the bar,  the  earliest  in point  of  time  is  Thiruvengadatha Ayyangar  v. Sannappan Servai(1).  This incidentally is  the only  decision  which completely  supports  the  appellants’ contention.   In that case the debt was due on a  promissory note  dated  October  2, 1938  which  discharged  the  prior promissory note dated October 1, 1931.  The District Munsiff had  applied the proviso to sub-s. (1) of s. 9  and  treated the  debt as renewal of an earlier debt upon which  interest upto March 22, 1938 bad to be reduced to 5%.  The High Court pointed  out  that  the scaling down  machinery  under  that section  has the effect of only reducing interest up to  the date of the commencement of the Act and



(1)  I.L.R. [1942] Mad. 57. 205 said that it may reasonably be, inferred from this that  the legislature  did  not intend the section to apply  to  those debts  which had no existence before the last point of  time up  to  which  the  scaling down  under  the  Act  could  be effected.   The  High  Court  had  not  lost  sight  of  the provisions of s. 12 which empower the court to award  future interest  after the commencement of the Act but  it  pointed out  that that section would not apply to a debt  which  was incurred  for  the  first  time after  March  22,  1938  and therefore  s. 9 would not be applicable to an  earlier  debt renewed after March 22, 1938.  The High Court then observed:               "It  seems  to us that, having regard  to  the               scheme  of  the  Act,  if  it  had  been   the               intention of the Legislature to introduce  the               theory  of  renewals  into  the  scaling  down               operations in respect of debts incurred  after               the  commencement  of the Act,  some  specific               provisions  would  have  been  made  in   this               behalf.   We  are of opinion  that  all  debts               incurred  after  the common man  of  the  Act,               whether they be in discharge of prior debts or               not, will fall only under section 13."    The answer to the view of the High Court would be that in the first place every provision in the statute must be given effect  to  unless by doing so any conflict with  any  other provision  of the Act would arise.  In the second  place  we cannot ignore the object of the legislature in enacting this law which was to grant relief to the agriculturists and that any  beneficial  measure  of this kind  should,  as  far  as permissible,  be, interpreted in such a way as to carry  out the main object which the Legislature had in view.  What  we have  said  earlier in our judgment is  in  consonance  with these principles and by interpreting ss. 9 and 13 in the way we  have  done no violence will be done to the  language  of either  of these provisions.  The basis of the  decision  of the  High Court appears to be that unless every  transaction entered  into  after  the commencement of  the  Act  can  be brought  within  the  purview of s. 9, sub-s.  (  1  )  that provision  could not apply to it at all whatever may be  the date  on  which  the  original  indebtedness  arose.    With respect, we do not see any reason for so construing the  two provisions  i.e.,  ss. 9(1) and 13.  In our judgment  it  is sufficient  to say that full effect has to be given to  both the provisions and they are to be construed harmoniously.   The  next  decision is Arunagiri  Chettiar  v.  Kuppuswami Chettiar(1).   This is a judgment by one of the  two  Judges who was (1) [1942] 2 M.I.J. 275. supp.164-14 206 ,a party to the earlier decision.  That was a case in  which a claim -was made on behalf of a debtor for refund of excess interest which was paid by the debtor to the creditor  after the  commencement  of  the Act.  Negativing  the  claim  the learned Judge ,observed:               "The  two  payments  in  1938  and  1939  were               definitely  appropriated towards  interest  at               the  time  when they were made.   Neither  the               debtor nor the creditor has the right to  tear               up these appropriations by an unilateral  act.               The  Court has no power to re-appropriate  the               payments to principal unless the Act  contains               a  provision for such re-appropriation.  I  am



             not  aware of any such provision in Act IV  of               1938."    Then  the  learned Judge observed that the  only  way  in which a debtor might get back money which he has paid  after the Act came into force in excess of the amount properly due under  the provisions of the Act would be by establishing  a right to a refund under the ordinary law on the ground  that the payment was made under a mistake.  It will thus be  seen that the matter involved in this case is different from  the one before us.    The  next  decision is  Mellacheruvu  Pundarikakshudu  v. Kuppa  Venkata  Krishna Shastri(1).  That was a  suit  based upon  a promissory note dated August 18, 1948 which  was  in renewal  of a -promissory note executed on August 14,  1945. It  was thus a case which was covered by S. 13  alone.   The learned Judges rightly held that under S. 13 a debtor cannot trace  back his debt to the, original debt which itself  was incurred after the Act came into force.  In this  connection they relied on Thiruvengadatha Ayyangar’s case(2) as well as on  the decision in Krishanayya v.  Venkata  Subbarayudu(3). In the latter case it was held: "It is we,]] settled that  a debt  incurred  after the commencement of Madras  Act  4  of 1938,  cannot  be  scaled down  except  in  accordance  with section  13 of that Act." The words ’a debt  incurred’  were meant to include a transaction in renewal of a debt actually contracted  prior to the commencement of the Act.  This  is, therefore, a statement which supports the appellants but  in point  of fact the learned Judges were not concerned with  a pre-1932 debt and so they did not have to decide the kind of point  which arises in the case before us.  While  we  agree that s. 13 by itself does not enable a debtor to trace  back the  debt to the original debt a further question can  arise whether upon the facts the provisions (1) I.L.R. [1957] A.P. 532. (2) I.L.R. 1942  Mad. 57. (3)  [1952] 1 M.L.J. 638. 207 of  s.  9  are  attracted  to  a  debt  incurred  after  the commencement  of  the  Act  (in  the  sense  that  the  last transaction   pertaining  to  it  was  subsequent   to   the commencement  of  the Act) because  the  original  liability arose  prior  to the commencement of the Act.  If  s.  9  is attracted the proviso to subs.(1) thereof which permits  the tracing  back  of certain debts can be resorted  to  if  the facts permit that to be done.    Then  there  is  the decision  in  Mallikharjuna  Rao  v. Tripura Sundari(1).  That was a decision of a single  Judge, Rajamannar  C. J., who held that where a promissory note  is executed  for  an amount in excess of what was  due  on  the basis of Madras Agriculturists’ Relief Act there is  failure of consideration in so far as the excess amount is concerned and  the plaintiff would not be entitled to more  than  what would  be due to him after applying the provisions  of  that Act to the original debt and its renewals.    The  next decision relied on is Nainamul v. B. Subba  Rao (2)  The point which was referred to the Full Bench for  its opinion was as follows:               "Whether in the case of a debt incurred  after               the  Act  came  into  force  a  payment   made               expressly  towards  interest at  the  contract               rate,can   be  reopened   and   reappropriated               towards interest payable under the  provisions               of s. 13 of the Act."   The  question  was  answered  by the  Full  Bench  in  the affirmative.  This decision thus substantially goes  against



the   contentions  of  Mr.  Bhimasankaram.   The   following observations  of  Subba Rao C. J. (as he then  was)  may  be quoted in support of the view which we have taken:               "Unhampered by decided cases, I shall  proceed               to  consider the scope of the  section  having               regard to the aforesaid declared object of the               Act and the express words used in the section.               The  object  of  s. 13 is to  give  relief  to               agriculturists  in the matter of  interest  in               respect of a debt incurred after the Act.   If               such  a debt is sought to be enforced,  it  is               caught in the net of the scaling down process.               At  that  stage, all the interest due  on  the               debt is reduced to the statutory level or,  to               put  it  differently,  whatever  may  be   the                             contract  rate of interest, it is  rep laced  by               the statutory rate.  If the appropriations               (1) A.I.R. 1953 Madras 975.               (2) A.I.R. 1957 A.P. 546 F.B               208               made  earlier are not reopened, the  intention               of  the  statute  would be  defeated  for  the               contract rate prevails over the statutory rate               up to a stage.               Doubtless  the courts are concerned  with  the               expressed  intention of the legislature.   The               crucial  words in s. 13 are ’all interest  due               on   any  debt’.   The  word   ’interest’   is               qualified  by  two words ’all’  and  ’due.  If               interest outstanding alone is scaled down  the               emphatic  word ’all’ becomes otiose.  If  that               was   the  intention,  the   words   ’interest               outstanding’ would serve, the purpose as well.               The  word ’all’, therefore, cannot be  ignored               and  must  be given a meaning.   It  indicates               that the entire interest, which a debt earned,               is scaled down." The next decision referred to is that in Mansoor v. Sankara- pandia(1).   That  was a decision of the Full Bench  of  the High Court and the points which arose for consideration  and the  decision of the Court are correctly summarised  in  the following head note:               "Section  13  of  the  Madras  Agriculturists’               Relief  Act  (IV  of 1938)  deals  with  debts               incurred  after the Act.  Under  that  section               there  is  no  provision  for  any   automatic               discharge  of  interest stipulated at  a  rate               higher  than  that prescribed  therein.   Such               excess interest is only made irrecoverable  if               the  creditor sought to enforce it in a  court               of  law.   ’Mere being neither  a  prohibition               against  a  stipulation  for  payment  nor  an               automatic   discharge  of  higher   rates   of               interest agreed to be paid by an agriculturist               debtor,  it  cannot  be  said  that,  when   a               creditor in regard to a debt contracted  after               the Act with the assent of his debtor added to               the  principal  loan the interest  accrued  in               terms  of the contract and the debtor  entered               into    a   fresh   contract   treating    the               consolidated amount as principal for the fresh               loan, there would be anything illegal or  even               a  failure of consideration in regard  to  the               new  loan.  Such a new loan  would  constitute



             the  debt incurred on the date of renewal  and               if   a  suit  is  based  on  that  debt,   the               provisions of section 13 could be attracted to               that debt alone and not to the earlier debt of               which it was a renewal or substitution.               (1)   I.L.R. [1959] Mad. 97.               209                 The  power to go behind a suit debt  and  to               apply  the  provisions  of  the  Act  for  the               original  liability is confined only to  cases               falling  under  sections 8 and 9 of  the  Act.               But  even in cases coming under section 13  it               would  be open to the defendants to plead  and               prove that the debt sued on could not form the               basis of an action or that there was a failure               of  consideration  in respect of it.   Such  a               defence  is  not by virtue of anything  in  or               peculiar to the Act, but one under the general               law.   In  cases where a debt  was  contracted               prior to the Act, but renewed after the Act by               one  or series of successive  documents,  such               renewals  including interest at  the  contract               rate, which had been statutorily discharged by               reason  of the provisions of sections 8 and  9               of  the  Act,  there would  be  a  failure  of               consideration  to  the  extent  to  which  the               interest  was so discharged.   This  principle               will or can have no application in the case of               a  debt  incurred after the  Act  and  renewed               thereafter.  In those cases there would be  no               failure  of consideration, for no  portion  of               interest has been discharged by section 13, it               being  open to the debtor to agree to pay  the               higher stipulated rate of interest." That  again was a case where the original  indebtedness  was subsequent  to the commencement of the Act  and,  therefore, stands  on a footing different from the one before us.   The observations  made  by  the court in  the  case  upon  which reliance  is  placed on behalf of the appellants  appear  to have been limited by the learned Judges to cases which  fall under s. 13 alone.  Since, however, the learned Judges  seem to   have  accepted  the  view  taken   in   Thiravengadatha Ayyangar’s  case(1)  it is necessary for us to say  that  to that extent we do not concur in the view taken by them.   It has  to be remembered that where the plaintiff sues  upon  a document  executed  after the commencement of  the  Act  the Court  has  to  bear in mind also the  provisions  of  s.  9 inasmuch  as the document is one executed after  October  1, 1932.  If the pleadings show that the original  indebtedness commenced before the coming into force of the Act the  court will first have to deal with the document with reference  to the provisions which precede s. 13 of the Act.  It is not as if  the Court has to shut its eyes to everything except  the fact that the document sued upon was executed subsequent  to the commencement of the Act.  There-  I.L.R. [1942] Mad. 57. 210 fore,  if  the court finds that  the  original  indebtedness arose prior to the commencement of the Act either s. 8 or s. 9 will apply and it would not be relevant for it to consider whether by executing a renewal after the commencement of the Act  the parties agreed to treat the interest accrued up  to the  date  of  renewal as principal from  the  date  of  the renewal of the debt.  That consideration may be relevant  in cases  which completely exclude the applicability of  ss.  8



and 9.    We were also referred to the decision in Punyavatamma. v. Satyanarayana(l);   Nagabushanam  v.  Seetharamaiah(2)   and Chellammal v. Abdul Gaffoor Sahib(3).  In the first and  the third of these cases the original liability arose after  the commencement  of  the  Act but in the second  one  it  arose before the commencement of the Act.  We agree with the  view taken  in  the latter case that relief can be  given  to  an agriculturist in such a case under s. 8 or S. 9 as the  case may be.    Thus  it  would appear that wherever  a  transaction  was entered  into  after  the commencement of the  Act  but  the original  indebtedness arose before the commencement of  the Act, the preponderant view is that ss. 8 and 9 would not  be inapplicable.   That, as already stated, is also  our  view. In the result we dismiss the appeal with costs. Appeal dismissed (1) I.L.R. [1960] 2 A. P. 111. (2)  I.L.R. [1961] 1 A. P. 485. (3) I.L.R. [1961] Mad. 1061. 211