PATNALA RAMALAKSHMI AND ORS. Vs. DOWLATABAD GOPALAKRISHNARAO

JUDGEMENT

(1.) THE plaintiff filed a small cause suit on a promissory note dated 11th April 1938, for a sum of Rs. 300 carrying interest at 12 per cent. There was a series of payments of interest expressly appropriated by endorsements. The result was that all the interest was paid at the contract rate up to 11th. August 1941. The plaintiff sued for the principal amount of the note together with interest at the contract rate from 10th August 1941. The lower Court has held that the debtor is entitled to relief Under Section 13 of the Madras Act 4 of 1935 and has scaled down the debt by the process of calculating the total amount of principal and interest at the statutory rate and deducting therefrom the payments made, ignoring the fact that these payments have been actually appropriated as they were made towards interest at the contract rate. We do not consider that the procedure of the learned Subordinate Judge is justifiable. Under Section 13 it is provided that:

(2.) THERE is no provision for the scaling down of interest already paid. We had to deal with a similar question in an unreported case, A.A.O. No. 387 of 1942. There, the debt was a mortgage of 1st June 1932, towards which a payment of Rs. 6000 was made on 11th August 1940, towards interest which had then accrued at the contract rate, without taking into consideration the reduction of that interest which might have been claimed under Act 4 of 1938. We observed that the payment towards the accrued interest must be deemed to be an overpayment made owing to a mistake of law. We go on to say: