GUDIVADA SURYANARAYANA Vs. TADIKONDA ALAVANDARARAO AND ORS.

JUDGEMENT

(1.) THE appellant was the first defendant in a suit on a promissory note Ex. P -1 executed on the 18th February, 1939, by defendants 1 and 2 in favour of the deceased first plaintiff for Rs. 17,195 -2 -0. This promissory note was executed after the commencement of the Madras Act IV of 1938 in discharge of an earlier promissory note Ex. P -2 dated the 19th February, 1936, for Rs. 12,240 -10 -0 which except for Rs. 35 cash was a renewal of a still earlier promissory note of 1930 the principal of which was Rs. 6,000. The appellant is admittedly an agriculturist. He claimed that the suit promissory note was executed in circumstances which give a basis for various pleas, one being failure of consideration and another being coercion. He also advanced a plea under the Usurious Loans Act.

(2.) IT is well settled that a debt incurred after the commencement of Madras Act IV of 1938 cannot be scaled down except in accordance with Section 13 of that Act. But it is also well settled that in a suit on such a debt the defendant may plead that the document executed after the commencement of the Act was a mere voucher acknowledging a debt incurred prior to the commencement of the Act to which Section 8 or Section 9 of that Act would apply. If so much is pleaded and established, the excess over the amount due under the prior document on applying Sections 8 and 9 of the Act may be treated as an amount in respect of which there is a failure of consideration; that is to say, with reference to a debt incurred after the commencement of the Act, the debtor if he seeks relief directly under the Act must rely only on Section 13; but if he can rely on a plea under the general law, he may in a proper case indirectly get a benefit which would not be available to him in the absence of such a special plea and evidence to support it.

(3.) THERE is no appeal on behalf of the second defendant and no evidence of the circumstances under which he came to sign the promissory note. In view of our conclusion on this plea, the further plea under the Usurious Loans Act becomes of minor importance, but we must state that we do not agree with the conclusion of the learned Subordinate Judge on this issue. Clearly, the suit promissory note provides for the payment of compound interest and though the plaintiff has had, the wisdom not to claim compound interest in his plaint that fact will not remove the contract from the purview of Section 3 of the Usurious Loans Act as amended in Madras. It is also quite clear that the first defendant is an agriculturist by. calling and the contract would therefore have to be deemed to be an usurious contract liable to be reopened with reference to its antecedent history. As a result of our finding that there has been a failure of consideration it is Unnecessary to consider the question of relief under the Usurious Loans Act any further. The amount which would have been due on a proper scaling down of the debt as on the date of the execution of the suit promissory note is Rs. 6,035 -4 -0 with interest at 6 1/4 per cent, from 1st October, 1937. There is a failure of consideration for the excess amount. The appeal is allowed and the plaintiff will have a decree so far as the first defendant is concerned for the above amount, the appellant being entitled to full costs in appeal and the parties paying and receiving proportionate costs in the trial Court.