KANCHERLA PURSHOTHAM Vs. KADIMCHERLA NAGESWARA RAO

JUDGEMENT

(1.) This Full Bench is constituted to resolve a conflict of views in regard to the mode of appropriation of open payments made by an agriculturist debtor towards a debt contracted after the commencement of the Madras Agriculturists Relief Act, 1938 which was adapted in this State as the Andhra Pradesh (Andhra Area) Agriculturist Relief Act.

(2.) The appellant is the plaintiff. The contesting respondents 1 to 4 are the defendants 1 to 4 respectively. The second defendant is the undivided son of the first defendant. The defendants 1, and 4 executed a mortgage hand in favour of late Kancherla Narasimham, the father of the plaintiff for Re, 16,000 on 8-11-1951 agreeing to pay the amount in four equal yearly installments of Rs. 4,000 with interest at 10% p.a. and in default of payment of the instalments at 12% compound interest per annum. They made part-payments of Rs.7,000 on 15-3-53, Rs. 800 and 17-2-55, Rs. 600 on 19-3-55, Rs. 1,400 on 12-6-56, Rs. 1,460 on 22-9-56, Rs. 100 on 12-3-57, Rs. 100 on 7-11-59 and Rs. 950 on 9-6-61 No payments were made subsequent to the payment on 9-6-61. During his lifetime Kancherla Narasimham executed a registered will bequeathing all his movable and immovable properties in favour of his son, the plaintiff, After the death of Narasimnham the plaintiff instituted the suit against the suit four defendants for recovering an amount of Rs. 13 ,826-23 ps. being the principal and interest due on the bond by the date of suit, He impleaded the Official Receiver, West Godavari the 5th respondent herein, as the 5th defendant Since the first defendant was adjudged insolvent in I.P. 11 of 64 on 26-7-65. The plaintiff sued for an amount of Rs 13,800 and odd only, as the defendants 1 to 4 are agriculturists entitled to the scaling down of the interest at 5 1/2 p.a, simple interest. Before the trial Court, the plaintiff died a memo stating that by correctly Calculations the amount due to him under Section 13 of the Act 5 1/2% p.a. simple interest, he would be entitled to only Rs. 11,910-78 Ps. and prayed that a decree may be passed for that amount. The defendants 1 to 4 contended that the suit mortgage bond was not fully supported by consideration, that the suit was barred by time and that at any rate, the open payments made by them were not properly appropriated by the plaintiff.

(3.) The trial Court found that the suit mortgage band was supported by consideration only to extent of Rs, 15,525 that the suit is not barred by time and that as the part-payments made by the defendants were open, without any specification in regard to their appropriation towards interest or towards principal the plaintiff could not apply the payments towards the interest that accrued up to the dates of the payments and balance alone towards partial discharge the principal amount. It held that these open payments should be appropriated towards principal debt . Accordingly the trial Court passed a preliminary decree in plaintiffs favour for a sum of Rs. 8,226-85 ps, with proper costs together with interest at 5 1/2% p. a from the date of plaint till realisation. Granting three time for redemption the court the plaintiff to proceed against properties allotted to the share of the first defendant in the first instance to proceed against the share allot to the third defendant only in the event of the decree debt not being realised by the sale of the specified properties the first defendant. In passing a decree for Rs. 8,000 and odd, the learned Subordinate Judge relied an the decision in I. V. Subbaiah v. I. Venkatrayudu, (1973) 1 APLI 377 in which one of us held that under S.13 of the Andhra Pradesh (Andhra Area) Agriculturists Relief Act, 1938 an open part-payment made by a debtor towards a debt incurred after the commencement of the Act cannot be appropriated by the creditor towards the interest and the balance alone towards partial discharge of the principal amount but that the part-payment should be appropriated towards principal, or counter interest may be calculated on the open part-payment so as to see that the interest obtained by the creditor does not exceed the rate fixed in S.13 of the Act. Aggrieved with the decision of the trail Court and claimants towards the interest in the first instance and thus being entitled to a sum of Rs.11,000 and odd even at the rate of interest prescribed under S.13 of the Act, the plaintiff [referred this appeal which in the usual course came up before a single Judge. When the appellants learned counsel submitted that the decision in I.V.Subbaiah v.I.Venkatrayudu runs counter to a binding Division of the Madras High Court in Thiruvengadatha Aiyangar v.Sannappan Servai, (1941) 2 Mad LJ 307: (AIR 1941 Mad 799 (2)) and that the decision therefore required reconsideration, the learned Judge A.V.Krishna Rao, K. referred the case to a Division Bench. When the appeal came before a Division Bench consisting of Ramachandra Raju and Jeevan Reddi, JJ, the learned Judges noticed that the decision I.V.Subbaiah v.I.Venkatrayudu was confirmed in Letters patent Appeal No.131 of 1973 by a Division Bench of this Court consisting of Madhava Reddy, J. and Jayachandra Reddy, J. The learned Judges felt that there is conflict between the decisions of the Division Bench in L.P.A. No.131 of 1973 and the Division Bench in Thiruvengadatha Aiyangar v. Sannappan Servai, (1941) 2 Mad LJ 307:(AIR 1941 Mad 799 (2)) and therefore referred the appeal to a Full Bench.