JOHN MATHEW Vs. JOSEPH THOMAS

JUDGEMENT

(1.) THE question, for answering which this case has come up before us, is whether an agriculturist debtor who has committed six consecutive defaults of the installments speeded in sub -sections (2) and (3) of section 4 of Act 31 of 1958 forfeits the benefits of sub -section (1) of Section 5 of the Act, or the sub -section as we shall hereafter call it. Or rather, since this has already been answered in the negative by a full bench of this court in Harihara Iyer v. Joseph, 1965 K. L J = 1964 K.L. T 789 (F.B.) (approving the decisions in Mannanda v. Mathai, 1963 K.L. T. 390 = 1963 K.L. J. 1116, Varkey v Mathew, 1963 K.L. T. 1044 and Antony v. Krishnan Nair, 1963 K.L. T. 1047, the last of these of a division bench) whether that decision requires reconsideration. Doubt has been cast on the correctness of this full bench decision on the score that it does not pay due heed to the words, "for the purpose of payment under this Act" appearing in the sub -section. The contention is that it is only for the purpose of a payment specified by some provision or other of the Act that relief under the sub -section is available. A debtor who defaults the payments specified in sub -sections (2) and (3) of Section 4 has failed to comply with the provisions of the Act. Any payment: he might make cannot properly be described as a payment under the Act, and therefore he is not entitled to the benefit of the sub -section. So runs the argument. But it does not impress us -at any rate it does not so impress us as to persuade us to unsettle what must now be regarded as well settled. Even if the underlying assumption that the benefit of the sub -section is available only for making a payment specified by the Act were correct, is would not be difficult to meet the argument. For, the proviso to sub -section (5) of Section 4 of the Act says that the whole debt due from the hexadic defaulter (if we may call him so) "shall be forthwith payable" so that any payment towards the debt would be a payment specified by and therefore as much a payment under the Act as a payment under sub -sections (2) and (3) of the section. But, it seems to us that the assumption is wrong and we are afraid it stems from a mistaken reading of the sub section. Were it well -founded it would lead to the absurd result pointed out by Joseph J. in Antony v. Krishnan Nair that a debtor who chooses to pay his debt in lump without availing himself of the benefit of the installments provided by Section 4 would not get the benefit of the sub -section unless his payment is to be regarded as an advance payment of the installments. He would have to pay the debt in the 17 equal half yearly installments specified in sub -sections (2) and (3) of section 4 to get the benefit: and, what of a post -Act determination under section 7 or section 8 or section 10, which we suppose must necessarily calculate interest (and principal) in accordance with the sub -section. Does the determination stand vacated if repayment is not made "under the Act"? If that be so, and the creditor becomes entitled to the entire contract debt, how is he to obtain a decree for this? And does not sub -section (i) of section 6, which says that payments already made shall be applied towards interest as recalculated under section 5 before being applied towards principal clearly indicate that recalculation under section 5 is by no means confined to cases where payments specified by the Act are made? Again, what of a debt in which, by reason of renewals or otherwise, interest has been added to the principal from time to time and which, because of the large repayments made, stands discharged if interest and principal scaled down in accordance with the sub -section and if the appropriations enjoined by section 6 are made? There is here no payment under the Act. Is it then to be denied the benefit of the sub -section as a reward for the usurious lender and a penalty for the honest debtor Will the latter have to pay the entire contract debt outstanding in lump while, if he had repaid nothing, he would have had to pay much less (being entitled to a scaling down of both interest and principal under section 5(1) on the basis of the original principal) and that in installments; Surely no law could so penalize honesty and reward dishonesty although most statutes which relieve persons from contracts regarded as unconscionable confine the relief to those who have defaulted, denying it to those who have kept their word and fulfilled the contract. And how is a debtor coming within the body of sub -section (5) of Section 4 to be given the benefit of having to pay only the original principal in the case of a renewed debt as undoubtedly he must? He would be in a worse case than the debtor we are here considering, namely, a debtor coming within the proviso, since any payment made by hi can in no sense be regarded as a "payment under, the Act." True, the benefits of section 4 are expressly preserved for him but that, at best, is only the benefit of paying in installments and of paying interest at the rate specified in sub -section (1) of section 5 on the principal debt outstanding at the time of each payment. Now is he to be given the benefit of that part of the sub -section which says that only the outstanding interest as calculated thereunder together with the outstanding (original) principal shall be payable since any payment by him would not be a payment under the Act?

(2.) HAVING regard to the purpose of the Act, namely, the relief of indebted agriculturists, we can think of no conceivable reason why the benefits of sub -section (1) of Section 5 should be confined to those debtors who make payments specified by the Act and should be denied to those who make payments not so specified. And we are inclined to the view that the words, "under this Act" occurring in the sub -section really qualify the word, "debt" rather than the word, "payment" so that all that is meant is that, for the purpose of paying a debt falling under the Act (as distinguished from liabilities of the kind referred to in sub -section (2) of the section which are not debts within the meaning of the Act) the amount of the debt shall be determined by calculating interest as provided by the sub -section. Indeed the words, "for the purpose of payment'' serve no special purpose and seem to have found place in the sub -section only because the form in which the Act gives relief to the debtor is not so much by reducing the debt itself as by providing for its discharge on payment of a reduced sum and by allowing payment of that sum in installments. But that is a mere matter of form. In substance the debt itself is, for all practical purposes, reduced.

(3.) WE are in respectful agreement with the view expressed in Harihara Iyer v Joseph, 1965 K.L.J. 1 = 1964 K.L.T. 789 (F.B.) and do not think that that decision requires reconsideration.