THANDAMMA Vs. KURIAKOSE PUTHERICKAL IYPE

JUDGEMENT

(1.) The question for determination in this appeal relates to the applicability of the Cochin Agriculturists' Relief Act, (XVIII) of 1114, hereinafter referred to as the Cochin Act, and/or the applicability of the Travancore-Cochin Indebted Agriculturists Relief Act, 1956 (Act III of 1956), hereinafter referred to as the T. C. Act 1936, for fixing the amounts due from the appellants to the respondent. The main contention raised before the court below, and repeated before us, is that notwithstanding the provision in the overdraft agreement that appellants 1 and 2 (defendants 1 and 2) had' entered into with the respondent --the plaintiff Bank -- that interest accrued due and outstanding at the end of each quarter must be added to the principal, all such amounts added to the principal must be treated only as interest in calculating the amounts due under Section 14 of the Cochin Act. It was therefore urged that by the payment of Rs. 20,500/- on 1-1-1954 the debt due to the respondent was not only discharged but a sum of Rs. 826-7-6 will be repayable to appellants 1 and 2 along with the further sum of Rs. 4,100/- that appellants 1 and 2 had deposited on 6-12-1954 with interest Irom the date of withdrawal by the respondent of the above amount. These contentions were negatived by the court below and it passed a decree against appellants 1 to 3 the 3rd appellant. 3rd defendant being a guarantor, and the plaint properties which were equitably morgaged as security for the debt, for the sum or Rs. 7,268-6-9 with future interes at 6 per cent from 11-9-1956. The court below also declared, the right of the appellants to discharge the debt under the T. C. Act 1956.

(2.) In view of the importance of the question involved, the Division Bench before which this appeal came up for hearing has referred the case for the decision of a Full Bench and the appeal has accordingly come up before us.

(3.) On behalf of the appellants, it is contended that the decree of the court below unsustainable, that appellants 1 and 2 are culturists and that no amount will be found due if a proper calculation is made in accord ance with the provisions of the Cochin Act and/or the T. C. Act 1956. It is necessary at this stage to refer to Ext. B series, Ext. B be ing the overdraft agreement, B(1) the promis sory note and B(2) the letter of continuity exe cuted by appellants 1 and 2 on the first of August 1950. Paragraph 8 of Ext. B provides that interest agreed upon, viz., at 71/2 per cent will during the period of account be calculated quarterly on the last day of March, June, Sep tember and December every year and added to the principal. Reference may also be made to Ext. E, the extract of the current account ledger of the Bank of Cochin Ltd., the respon dent here, from 24th May 1945 to 1st March 1953. It is seen from Ext. E that the interest outstanding due at the end of each quarter has been added to the principal and it is not disputed that the account has been correctly maintained in accordance with the agreement between the parties. The 'amount outstanding due to the respondent on the 31st of December 1952 as disclosed by Ext- E was Rs. 28,384-13-9. This is the amount claimed in the plaint as due on that day. The point urged, as we indicated earlier, is that notwithstanding the provision in Ext. B that the interest outstanding as the end of each quarter should be added to the principal carrying interest thereafter the provision must be ignored in calculating amounts due in accordance with the provisions or the Cochin Act and the T. C. Act, 1956. The argument is that interest added to the principal still retains its character as interest and an amounts so added to the principal must be treated only as interest,