K.V. Srinivasa Ayyangar v. P. N. Venkatasubramania Iyer and Others
Mudholkar, J. This is an appeal from .a judgment of the
Madras High Court modifying the decree passed by a single
Judge of that High Court in a suit for recovery of money.
Admittedly the appellant had executed a promissory note at
Madras for a sum of Rs. 10,600 in favour of one Narayana Iyer,
since deceased, on January 28, 1946 and agreed to pay interest
on that amount at 12% p.a. It is also admitted ,that no repay
ment was made by the appellant. Narayana Iyer, therefore,
instituted a suit against him for recovery of a sum of
Rs. 14,402-5-0, which includes interest upon the sum of
Rs. 10,600.
The appellant contended that the promissory note was only
a renewal of a previous promissory note which itself as well as
three earlier prnmissory notes were in renewal of the original
promissory note for Rs. 1,000 executed in the year 1930.
According to the appellant that promissory note was executed by
his brother but was renewed by the appellant himself in the year
1932; that this promissory note was renewed on January 11,
1937 by him and that at that time Narayana Iyer had given an
additional amount of Rs. 350 to him. The amount for which
!his promissory note was executed was Rs. 4,000 and it included
interest on the first advance up to that date. Narayana Iyer,
however, instead of taking a promissory note in his own name
took it in the name of General Bank which is a private limited
company which admittedly was under his control. The debt was
renewed in favour of the General Bank on January 3, 1940 by
executing a fresh promissory note for Rs. 5,650 on that date and
again on September 13, 1944 when it was renewed by obtaining
a promissory note for Rs. 9 ,27 5. According to the respondents
Narayana Iyer paid off the dues to the General Bank at the
instance of the appellant and obtained a promissory note in his
favour for Rs. 10,600. As the amount was not paid, Narayana
Iyer instituted the suit out of which this appeal arises. He,
however, died during the pendency of the suit and is now repre
sented by his sons, the respondents. Upon the aforesaid facts
and the further fact that the appellant is an agriculturist he
claimed that he was entitled to the benefits of the Madras Agricul-
iurists Relief Act IV of 1938. He claimed that under the provi
sions of that Act he was entitled to have the debts scaled down.
His pka was upheld by the learned single Judge of the High
C:ourt who held that the respondents after scaling down the
interest as provided in the Act were entitled to a ~um of Rs. 1,350
together with interest thereon at 6t% from March 22, 1938 up
to the date of the decree. In the appeal preferred by the respon
dents under the Letters Patent the appeal court held that the
respondent> were enritle<l to a decree for the entire amount for
which the promissory note was executed, that is, Rs. 10,600
together with interest thereon at 6i% p.a. In coming to this
conclusion the appeal court placed an interpretation on explana
tion III to s. 8 of the Act different from that placed by the
learned single Judge.
Section 7 of the Act provides that all debts payable by an
agriculturist at the commencement of the Act shall be scaled down
in accordance with the provisions of Chapter II. The Act
received assent of the Governor General on March 11, 1938 and
was first published in the Official Gazette on March 22, 1938 and
must be deemed to have come into force as from the former date.
Section 8 provides for the scaling down of debts incurred before
December 1, 1932. Sub-section (I) thereof says that all
interest outstanding on the 1st of October, 193 7 against an
agriculturist shall be deemed to be discharged and only the
principal outstanding on that date shall be deem~d to be the
amount repayable by the agriculturist debtor. Sub-sections (2),
( 3) and ( 4) of that Act deal with classes of cases in which pay
ments have been made from time to time by the debtor to the
creditor. It is not necessary to refer to them because even
according to the appellant he had not made any repayments before
the cxecutic.n of the rromissory note in the suit. It is common
ground th:tt explanations I, II and IV have no applica1ion to
the present case. The only explanation which is relevant is
explanation III. This explanation has been twice amended. The
original explanation was as follows :
"Where a debt has been renewed or included in a
fresh document in favour of the same creditor the prin
cipal originally advanced by the creditor together with
such sums, if anv, as have been subsequently advanced
as principal shall alone be treated as the principal sum
repayable by the agriculturist under this section."
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SRINIVASA v. VENKATASUBRAMANIA (Mudho/kar, J.) 211
The amending Act 23 of 1948 substituted for it the following :
"Where a debt has been renewed or included in a
fresh document executed before or after the commence
ment 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 unaer this section."
. This was amended by Madras Act 24 of 1950 and now runs
thus :
"Where a debt has beeu renewed or included in a
fresh document executed before or after the com
mencement of this Act, whether by the same debtor or
by his heirs, legal representatives or assigns or by any
other person acting on his behalf or in his interest and
whether in favour of the same creditor or of any other
person acting on his behalf or in his interest, the princi
pal originally advanced together with such items, if any,
as have been subsequently advanced as principal shall
alone be treated as the principal sum repayable under
this section."
It is common ground that it is the explanation which was.
amended by Act 24 of 1950 which applies to the case before us.
It will be seen that under the original explanation the benefit of
sub-s. (1) of s. 8 was available only in cases where the debt had
been renewed in favour of the same creditor as the one from whom
it was originally obtained. It is contended on the appellant's
behalf that by virtue of the amendment of 1948 the benefit of the
provision was available even if the creditor in whose name the
debt was renewed was different from the one who had originally
~dvanced the loan and also even where the original debtor was
different from the one who executed the document under which
the debt was renewed.
It is pointed out that the second amendment was necessitated
by reason of certain decisions of the Madras High Court holding
that the words "different creditor" in Explanation Ill to s. 8 did
not include a third party in whose favour the debtor had executed
a document renewing an earlier debt. According to learned
counsel this interpretation defeated the object which the Legisla
ture had in view in amending Explanation Ill in 1948 and that,
therefore, that explanation was amended a second time to make it
212 SUPREME COURT REPORTS (1966) JS.CR.
clear that once it is found that a document was in renewal of a A
previous debt the benefit of s. 8 would be available to the pro
mbor whether the person renewing it or the person in whose
favour it is renewed is different.
It is unnecessary for us to consider what the reason for umend-
ing Explanation Ill by Act 23 of 1948 was. All that we arc B
concerned wi1h is the ex;1lanation as amended by Act 24 of 1950.
By vinue of this explanation the benefit of s. 8 ( 1) would be
available in a case where (a) a <lcht h<ts been renewed or included
in a fresh document; an<l where that is <lone
(b) (i) by the same debtor, or
(ii) by his heirs, legal representatives or assigns; or
(iii) by any olher person acling on his behalf; or
(iv) by any other person ac1ing in his interest.
Such a lransaclion will he en1itlcd lo the benefit of the Act if the
renewal or frc,h ugrcemctll is in favour of (a) the same creditor;
or ( b) of any other person acting in his behalf or ( c) any other
person acting in his interest. In the instant case though the
debtor in the transaction of 1930 was stated to be the appellant's
brother, in all subsequent tr:rnsactions it was the appellant who
was the debtor It would follow, therefore, that the requirements
of the explanation perlaining to the debtor arc satisfied in the sense
that the same per>cltl h:" been the debtor. The second require
ment of the explanation is with respect to the creditor. As already
stated, after 1940 ii was n!ll '.;arayana Iver but the G.'neral Bank
which was the creditor up to January 28, 1946 on which date the
promissory note in suit was executed by the appellant in his
favour. The General Bank has an independent existence and even
though the controlling interest therein was with Narayana Iyer
and his family it would not he correct to say that there is an iden
tity between that bank and Narayana Iyer. Mr. Tatachari, how
ever, contended that it was Narayana Iyer who was the original
creditor and that as he had full power of management and control
with respect to the General Bank he went on obtaining promissory
notes from the appellants. sometimes in his own favour and some
times in favour of the Bank. For all praclical purposes, there
fore, accordin~ to the appelbnt, the creditor has been the same
throughout. We cannot accept this argument in the ah,ence of
any material to show that the Bank a<:ted on his behalf when the
appellant executed the rromissory notes, dated January 3, 1940
and Septcrnhcr :JO, 1944 in favour of the Bank. The contention
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SRIN!VASA V. VENKATASUBRAMANIA (Mudholkar, !.) 213
of Mr. Tatachari then is that the Bank in obtaining those pro
missory notes in renewal of the original debt was acting in his
interest and that, therefore, the explanation was available to the
appellant. In the High Court it was urged that when the appel
lant executed the promissory note dated January 28, 1946
Narayana Iyer acted in the interest of the Bank. The ground
on which the argument advanced before the High Court and tho
argument advanced before us is, however, the same. It is that
the words "in the interest of" mean "for the benefit of". Even
assuming that that is the meaning to be given to these words the
argument of learned counsel cannot be sustained on the facts of
this case. It has been found as a fact by the appeal court that
Narayana Iyer actually paid Rs. 10,600 by cheque in favour of
the General Bank Ltd., to the credit of the appellant. It has also
been found by the High Court that Narayana Iyer paid off the
debt due from the appellant to the Bank at the request of the
appellant for discharging the appellant's liability upon the pro
missory note executed by him in favour of the Bank. These
findings of the High Court have not been seriously challenged
before us and in our opinion quite rightly. In view of these
findings the contention of learned counsel that the payment was
made "in the interest of the creditor" cannot be sustained. In the
circumstances, therefore, we uphold the decree of the appeal
court and dismiss the appeal with costs.
Appeal dismissed.