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PETITIONER: P.   S. L. RAMANATHAN CHETTIAR & ORS.

       Vs.

RESPONDENT: O.   RM. P. RM.  RAMANATHAN CHETTIAR

DATE OF JUDGMENT: 04/03/1968

BENCH: MITTER, G.K. BENCH: MITTER, G.K. SHAH, J.C. RAMASWAMI, V.

CITATION:  1968 AIR 1047            1968 SCR  (3) 367

ACT: Madras Agriculturists Relief Act IV of 1938, ss. 3(iii)  and 19(2); If relief by way of scaling down of decree  available in  case of a deposit Whether ’deposit’ a ’debt’ within  the meaning  of  s.  3(iii)-Deposit in  court  pending,  appeal- Whether amounts to satisfaction of decree within s.  16(iii) of Madras Act 23 of 1948-If decree-holder can claim interest after date of deposit in court.

HEADNOTE: The  respondent’s ’father made a deposit of Rs.  5,000  with the  appellant’s  father in 1926 which  was  repayable  with interest.   A  demand wag made for repayment in 1944  and  a suit for recovery decreed in 1946 for Rs. 11,459.  The  High Court confirmed the decree- in appeal in September 1951  and thereafter  the  appellants father deposited Rs.  11,098  to obtain a stay of execution of the decree. Although  the  judgment-debtors had made no attempt  in  the trial court or before the appeal court to take any advantage of the provisions of the Madras Agriculturists Relief Act IV of 1938 on execution proceedings being commenced they  filed an  application  under the Act for scaling down  the  decree under  s.  19(2).   The  Subordinate  Judge  who  heard  the application rejected certain objections raised by the decree holder  and modified the decree.  The High Court in  appeal, reversed  the order of the Sub-Judge holding that the  money entrusted  to the plaintiffs’ father being a deposit with  a banker was not payable until there was a demand for it:  the money  became payable only on 2nd October, 1944  i.e.  after the coming into force of Act IV of 1938 and consequently the provisions  of s. 19(2) of the Act were not  applicable  and the decree was not liable to be scaled down. In the appeal to this Court it was also contended on  behalf of  the  respondent  that the, word "debt"  implied  a  pre- existing  loan and as such it could not apply to a  deposit; and  furthermore that the decree had already been  satisfied and  as  such  s.  16(3) of Madras Act  XXIII  of  1948  was applicable. HELD  :  The  appeal must be allowed and the  order  of  the subordinate Judge scaling down the decree upheld. (i)  The definition of "debt" in s. 3(iii) of the Act is  of

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a  very  wide import and would include any liability  of  an agriculturist  with  the  exceptions  specified  Section   4 specifies  and  takes  out of the ambit  of  the  definition various  liabilities and impositions on  the  agriculturist. If therefore there is a liability of an agriculturist not in terms excepted by sec. 3(iii) or sec. 4 of the Act, it would be a ’debt’ within the meaning of the definition given in s. 3(iii).  There can be no doubt that on a deposit being made, the  deposited  incurred a liability although the  time  for repayment  would  come only when a demand was made  and  the cause of action for the suit would arise on such a  demand.. [370 H; 371 D-E] Narayanan  Chettiar  v. Annamalai Chettiar. [1959]  Supp.  1 S.C.R. 237 and Kesoram Industries v. Commissioner of  Wealth Tax, [1966] 2 S.C.R. 688, referred to. 368 (ii) The  definition  in  s. 3(iii)  clearly  negatives  the respondent’s contention that the word "debt" implied a  pre- existing  loan and could not apply to a deposit.   If  loans alone  were  meant  to be covered by the  use  of  the  word ’debt’. there was no reason to exclude rent from the purview of  the expression.  In that case there would have  been  no need to mention expressly revenue, tax or cess or  liability arising  out  of  a  breach  of  trust  or  in  respect   of "Maintenance under a decree of court or otherwise" in s.   4. [371 E-F] (iii)     The  fact of a judgment-debtor’s depositing a  sum in  court to purchase peace by way of stay of  execution  of the  decree on terms that the decree-holder can draw it  out on furnishing security, does not pass title to the money  to the decree-holder.  He can if he likes take the money out in terms of the & her; but so long as he does not do so,  there is nothing to prevent the judgment debtor from taking if out by furnishing other security, say, of immovable property, if the court allows it and on his losing the appeal putting the decretal amount in court in terms of Order 21 rule 1  C.P.C. in satisfaction of the decree. [373 A, B] The real effect of the deposit of money in court as was done in  this case was to put the money beyond the reach  of  the parties  pending  the disposal of the appeal.   The  decree- ,holder could only take it out on furnishing security  which means that the payment wag not in satisfaction of the decree and such security could be proceeded against by the judgment debtor  in case of his success in the appeal.   Pending  the determination  of the same, it was beyond the reach  of  the judgment debtor. [373 C-D] Chowthmull  Maganmull  v.  The  Calcutta  Wheat  and   Seeds Association, I.L.R. 51 Calcutta 1010, distinguished. Keshavlal v. Chandulal, 37 Bombay Law Reporter 200, referred to. Held  also : There was no force in the content on  that  the decree-holder  cannot  claim any amount by way  of  interest after  the  deposit  of  the money in  court.   Ther  is  no substance in this point because the deposit in this case was not  unconditional  and the decree-holder was  not  free  to withdraw  it whenever he liked even before the  disposal  of the  appeal.   In case he wanted to do so. he  had  to  give security  in  terms of the order.  The deposit  was  not  in terms  of Order 21 rule 1 C.P.C. and’ as such, there  is  no question of the stoppage of interest after the deposit. [373 F]

JUDGMENT:

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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 462 of 1965. Appeal  by special leave from the judgment and  order  dated August 8, 1959 of the Madras High Court in A.A.0. No. 171 of 1953. M.   S. K. Sastri and M. S. Narasimhan, for the appellants. R. Thiagaraj    an, for the respondent. The Judgment of the Court was delivered by Mitter,  J.  This is an appeal by special leave  against  an order  of  the  High Court of Madras dated  August  8,  1959 reversing  an  order of the  Subordinate  Judge,  Devakottai scaling down the decree passed in O.S. No. 33 of 1945. The  facts necessary for the disposal of the appeal  are  as follows.   The  respondent’s father made a  deposit  of  Rs. 5,0001-  369 with the appellants’ father in 1926 repayable with  interest at  Rangoon Nadappu rate.  A demand was made for  re-payment on  1944 and a suit for recovery of the amount was fixed  on March  16,  1945.  The trial court decreed the suit  in  the year  1946  for  Rs. 11,459-14-0.   The  appellants’  father preferred an appeal therefrom to the High Court and  pending disposal of the same deposited Rs. 3,500/- in court on April 16, 1947.  The High Court confirmed the decree on  September 14,  1951.  There is some dispute about the actual date  but there  is no con-test that the appellants’ father  deposited Rs.  11,098-10-2 to obtain stay of execution of the  decree. On  August 20, 1947 the court passed an order to the  effect that the decree-holder would  be  allowed  to draw  out  the amount  on furnishing security.  Although an Act styled  The Madras Agriculturists Relief Act, 1938 was passed on 22nd of March  of  that year wherein provision was made  for  giving relief to agriculturist debtors, inter alia, by scaling down decrees  passed  against them, no attempt was  made  by  the defendants  to  take advantage thereof either in  the  trial court   or  before  the  court  of  appeal.   On   execution proceedings  being commenced, the judgment-debtors filed  an application  under  the aforesaid Act for scaling  down  the decree  under  s. 19(2) thereof.  The  decree-holder  raised various objections thereto.  The Subordinate Judge who heard the  application  in  the first  instance  turned  down  the contentions  of the decree-holder and modified  the  decree. An appeal therefrom was preferred by    the decree-holder to the Madras High Court.  There being conflicting decisions in the  High Court as to whether a judgment debtor who had  not claimed  relief  under  the Act before the  passing  of  the decree,  could  do so subsequently thereto, the  appeal  was directed  to  be  heard by a Full  Bench.   An  appeal  from another  decision  of  the same  High  Court  embracing  the identical question  was   disposed  of  by  this  Court   in Narayanan  Chettiar v. Annamalai Chettiar-(1).  There  after referring to the Act of 1938 as also to s. 16 of Madras  Act XXIII  of  1948 amending the Act of 1938, it was  held  that "the  appellant was entitled to the benefit of s.  19(2)  of the Act read with s. 16 cl. (ii), of the Amending Act." The Full Bench of the Madras High Court constituted for  the purpose of hearing the appeal from the order of the Subordi- nate  Jude held that the lower court was competent  to  give relief tinder s. 19(2) of the Act by way of scaling down the decree  passed  by the High Court, and referred  the  matter back for decision by a bench.  The Bench decided inter  alia that the  application  was  properly  presented  before  the Subordinate  Judge i.e., the court which passed the  decree. it  refused  to  go  into the question  as  to  whether  the plaintiff was an agriculturist in (1)  [1959] Supp.  S.C.R. 237

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370 view  of the concession before the Full Bench.   It  further negatived  the plea that the decree had become satisfied  by payment  of money into court on July 24, 1947.   It  however reversed the order of the Subordinate Judge by holding  that the  money  entrusted  to the  plaintiff’s  father  being  a deposit  with  a banker was not payable until  there  was  a demand  for  it  :  the money became  payable  only  on  2nd October, 1944 i.e. after the coming into force of Act IV  of 1938 and consequently the provisions of s. 19(2) of the  Act were not applicable and that the decree was not liable to be scaled down.  The present appeal is against this order.               Section  19  of  the  Act  which  we  have  to               consider is set forth below:               "  (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               judgment-debtor  or on the application of  the               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 re-               covered,   whether   before   or   after   the               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."               ’Debt’  has been defined in S. 3(iii)  of  the               Act  as  meaning " any liability  in  cash  or               kind,  whether secured or unsecured, due  from               an  agriculturist,  whether  payable  under  a               decree or order of a civil or revenue court or               otherwise,  but  does  not  include  rent   as               defined  in  clause (iv),  or  ’kanartham’  as               defined  in  section 3(1)(1)  of  the  Malabar               Tenancy Act, 1929." It  will  be  noted that the definition is of  a  very  wide import   and  would  include  any  liability  due  from   an agriculturist  with  the exceptions  specified.   Section  4 takes out of the ambit of the definition various liabilities and  impositions  on the agriculturist  expressly  specified therein.  If therefore there is a liability  371 of an agriculturist not in terms excepted by sec. 3(iii)  or sec. 4 of the Act it would be a ’debt’ within the meaning of the definition given in s. 3(iii). In Kesoram Industries v. Commissioner of Wealth Tax(1)  this Court  had to consider the meaning of the expression  "debts owed by the assessee" which had to be taken into account  in computin-  his net wealth in terms of s. 2(m) of the  Wealth Tax Act.  One of the questions there raised was, whether the amount of the provision for payment of income-tax and super- tax  in respect of a particular year of account was  a  debt owed within the meaning of s. 2(m) and as such deductible in

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computing  the net wealth of the assessee.  It was  held  by this Court that even though   the Finance Act may be  passed later  "the  tax liability at the latest will arise  on  the last   day  of  the  accounting  year".   The   Court   went elaborately into the question as to the meaning of the  word ’debt’  and held that it could be defined as a liability  to pay  in  presenting  or in future an  ascertainable  sum  of money.   As  regards the meaning of the word ’owed’  it  was observed  that "it did not really add to the meaning of  the word ’debt"’. In the light of this decision there can be no doubt that  on a  deposit  being made, the depositee incurred  a  liability although  the  time  for repayment would come  only  when  a demand  was made and the cause of action for the suit  would arise on such a demand. On  behalf  of the respondent, it was argued that  the  word ’debt’ implied a pre-existing loan and as such it could  not apply  to  a deposit. The definition in  s.  3(iii)  clearly negatives such a    proposition.  If loans alone were  meant to be covered by the          use of the word ’debt’,  there was no reason to exclude rent from      the  purview of  the expression. In that case there would have         been    no need  to mention expressly revenue tax or cess or  liability arising  out  of  a  breach  of  trust  or  in  respect   of "maintenance under a decree of court or otherwise" in s. 4. The  plea  of the decree-holder which succeeded  before  the High Court cannot therefore be accepted. It  was  however argued that the decree had  been  satisfied already and as such s. 16 cl. (iii) of Madras Act XXI[II] of 1948 was  applicable.  That section for our purpose runs  as follows :               "The  amendments made by this Act shall  apply               to   the  following  suits  and   proceedings,               namely:-               (i)................................               (ii).............................               (1)   [1966] 2 S.C.R. 688.               372               (iii) all  suits and proceedings in which  the               decree  or order passed has not been  executed               or  satisfied in full before the  commencement               of this Act It was argued that as the full amount of the decree had been put  in  court before 1948, the judgment-debtors  could  not apply  for  scaling down thereafter.   In  this  connection, reliance was placed on a decision of the Calcutta High Court in  Chowthmull  Maganmull v. The Calcutta  Wheat  and  Seeds Association(1).  There. the defendant-appellant had appealed from  a  decree  for Rs. 21,850/- with  interest  and  costs passed  against  it and on the respondents taking  steps  to execute  the  decree  had obtained an  ,order  for  stay  of execution  thereof  on depositing the said sum in  court  as security  to the credit of the suit.  There after  an  order was  made  adjudicating the appellants as  insolvents.   The Official  Assignee did not proceed with the appeal  and  the respondent  applied for the appeal being dismissed  and  the money  being  paid  over to  them.   The  Official  Assignee claimed the money as belonging to the insolvents’ estate and for  the benefit of the general body of creditors.   It  was held  that  the  effect  of the order  of  August  29,  1923 directing stay of execution on terms of a deposit being made was that "the money was paid into Court to give security  to the  plaintiff that in the event of their succeeding in  the appeal they should obtain the fruits of their success,," and the  "money which was paid into court belonged to the  party

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who  might be eventually found entitled to the sum." On  the other hand, there is a decision of the Bombay High Court  in Keshavlal  v.  Chandulal(2)  where  a  judgment-debtor   had obtained an order for stay of execution of the decree on his depositing  the  decretal  amount in court.   Later  on  the application of the judgment debtor the deposit was  invested in Government promissory notes which appreciated in value by the  time  the appeal was heard.  The appeal resulted  in  a small  sum  being disallowed from the decree  whereupon  the judgment-debtor  applied for a return of the  investment  to him  on  his  paying into court the  amount  due  under  the decree.  But the decree-holder claimed the securities  which represented the decretal amount at the time the deposit  was made.  On behalf of the decree-holder reference was made  to the  above  judgment  of the  Calcutta  High  Court.   There distinguishing the Calcutta judgment, Macklin, J. said  that the  amount in court "was primarily. a deposit  of  security rather than a deposit of the decretal debt, and the  decree- holder cannot claim it as his own unless the judgment-debtor fails to satisfy the decree by the payment of the money  due under the decree." (1) I.L.R. 51 Cal. 1010. (2) 37 1.L.R. 200.  373 On principle, it appears to us that the facts of a judgment- debtor’s depositing a sum in court to purchase peace by  way of stay of execution of the decree on terms that the decree- holder can draw it out on furnishing security, does not pass title to the money to the decree-holder.  He can if he likes take the money out in terms of the order; but so long as  he does  not do it, there is nothing to prevent  the  judgment- debtor from taking it out by furnishing other security, say, of immovable property,’ if the court allows him to do so and on  his  losing the appeal putting the  decretal  amount  in court in terms of Order 21 rule 1 C.P.C. in satisfaction  of the decree. The real effect of deposit of money in court as was done  in this  case  is  to put the money beyond  the  reach  of  the parties  pending  the disposal of the appeal.   The  decree- holder  could only take it out on furnishing security  which means that the payment was not in satisfaction of the decree and the security could be proceeded against by the  judgment debtor  in case of his success in the appeal.   Pending  The determination  of the same, it was beyond the reach  of  the judgment-debtor. The  observations in.  Chowthmull’s case(1) do not help  the respondent.  In that case, the appeal was not proceeded with by  the Official Assignee.  Consequently, the  decree-holder could  not be deprived of the money which had been put  into court  to obtain stay of execution of the decree as but  for the order, the decree-holder could have levied execution and obtained satisfaction of the decree even before the disposal of the appeal. The  last contention raised on behalf of the respondent  was that  at any rate the decree-holder cannot claim any  amount by way of interest after the deposit of the money in  court. There  is no substance in this point because the deposit  in this  case was not unconditional and the  decree-holder  was not  free to withdraw it whenever he liked even  before  the disposal of the appeal.  In case he wanted to do so, he  had to give security in terms of the order.  The deposit was not in terms of Order 21 rule I C.P.C. and as such, there is  no question of the stoppage of interest after the deposit. In the result, the appeal is allowed, the order of the  High Court set aside and that of the Subordinate Judge  restored,

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The respondent will pay the costs of this appeal. R.K.P.S.                                              Appeal allowed. (1) 1. L.R. 51 Cal. 1010. 374