P. S. L. Ramanathan Chettiar & Ors. v. O. Rm. P. Rm. Ramanathan Chettiar
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. 5,000/·
P.S.L.R. CHETTIAR v. O,R.M.P.R.M. CHETTIAR (Mitter, I.) 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 prefer
red 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. Al
though an Act styled The Madras Agriculturists Relief Act,
1938 was passed on 22nd of March of that year wherein pro
Yision was made for giving relief to agriculturist debtors, inter
<tlia, 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 pro
ceedings being commenced, the judgment-debtors filed an appli
cation under the aforesaid Act for scaling down the decree under
s. 19(2) thereof. The decree-h.older raised various objections
thereto. The Subordinate Judge who heard the application in
the first instance turned down the contentions of the decree-hol
der and modified the decree. An appeal therefrom was preferred by
the decree-bolder to the Madras High Court. There being con
flicting 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 Chelliar v. Annamalai
Chettiar('). 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 Judge held that the lower court was competent to give relief
under 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 bef0re the Subordinate Judge
i.e., the court which passed the decree. It refused to go into
the question as to whether the plain~itff was an agriculturist in
(I) [19l9] Supp, 1 S.C.R. 237
view of the concession before the Full Bench. It further nega
tived the plea that the decree had become satisfied by payment
of money into court on Iuly 24, 1947. It however reversed the
order of the Subordinate' Judge by holding that the money en·
trusted 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 com·
ing into force of Act IV of 1938 and consequently the provi
sions 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 fQl'th
below:
"(l) 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
<>f 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, not·
withstanding anything contained in the Ccide 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
<>f 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 thia
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 sec
tion 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 agricul
turist expressly specified therein. If therefore there is a liability
JI
P.S.L.R. CHETTIAR v. O.R.M.P.R.M. CHETTIAR (Mitter, /.) 37)
of an agriculturist not in terms exc~tcd by sec. 3(iii) or sec. 4
of the Act it would be a 'debt' withm the meaning of the defi
nition 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
computing 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 res
pect of a particular year of account was a debt owed within the
meaning of s. 2(m) and as such deductible in 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
presenti or in futuro 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(fu) clearly negatives such a
propositiou. 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 collrt or otherwise" in s. 4.
The plea · of the decree-bolder which succeeded before thct
High Court cannot therefore be accepted.
G It was however argued that the decree had been satisfied already
and as such s. -16 cl. (iii) of Madras Act XXIII 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 :-
H (i) •
(ii)- •
(l} [1966)'2 S.C.R. 688.
372 SUPREME COURT RBPOllTS [1968) 3 S.C.R.
(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 Coun in Chcrwthmull Magan
mu// v. The Calcutta Wheat and Seeds Association('). There
the defendant-appellant )lad 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. Thereafter an order
was made adjudicating the appellants as insolvents. The Offi
cial 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 be
longing 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 Coun 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 coun belonged to the party who
might be eventually found entitled to the sum." On the other
hand, there is a decision of the Bombay High Court in Keshav/al
v. Chandulal(') 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 disalloweQ. from the
decree whereupon the judgment-debtor applied for i. 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 judgmenf of the Calcutta High Court. There distin
guishing 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. SI Cal. 1010. (2) 37 B.L.R. 20Q.
0
P.S.L.R. CHETTIAR v. 0.R.M.P.R.M. CHETTIAR (Mitter, !.) 373
On principle, i.t appears to us that the .facts of a judgment
debtor's depositing a sum in ~ourt 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 iu 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 satisfac
tion 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 1 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. The
respondent will pay the costs of this appeal.
R.K.P.S. Appeal allowed.
(I) I. L.R. SI Cal. 1010.