POLISETTY GURUMURTHY Vs. M V CHALAMAIAHSETTY

JUDGEMENT

(1.) This second appeal involves an interesting question of law regarding the application of the provisions of the A.P. Act. 7/77 vis-a-vis the Provincial Insolvency Act. The second appeal arises out of a suit for foreclosure of a mortgage deed dated 24-5-1967 executed by the first defendant in favour of the plaintiff-appellant for a principal amount of Rs. 5,000/-. The suit was instituted in the year 1977. Long before the institution of the suit i.e., on 1-9-1972, the first defendant-mortgagor filed I.P. 13 of 72 on the file of the Sub-Court, Madanapalle for adjudging him as an insolvent. On 31-7-1974, the Official Receiver was appointed as interim Receiver to take possession of the properties of the first defendant and ultimately an order adjudging the first defendant as insolvent Was passed on 25-1-1975. In the course of the administration of the estate of the insolvent, the Official Receiver sold the mortgaged property which is a residential house belonging to the insolvent in March, 1975. In the said sale, the 5th defendant purchased the said property subject to the mortgage in favour of the plaintiff. The sale was duly confirmed by the insolvency Court. The 6th defendant is said to be a subsequent mortgagee. The present suit was instituted in March, 1977 for foreclosure and for sale of the mortgaged property impleading the mortgagor as the first defendant and his undivided sons as defendants 2 to 4, the purchaser from the Official Receiver as the 5th defendant and the subsequent mortgagee as the 6th defendant. The first defendant alone filed a written statement which was adopted by defendants 2 to 4 contending inter alia that the suit mortgage deed was not fully supported by consideration, that the interest was liable to be scaled down in accordance with the provisions of the A.P. (A.A.) Agriculturists Relief Act (Act 4 of 38), that he was a small farmer entitled to the benefits of Act 7 of 77 and as such the suit debt shall be deemed to have been discharged. The 5th defendant remained ex parte. The sixth defendant also did not file a written statement. The trial Court, while upholding the truth and validity of the suit mortgage bond and holding all the other issues in favour of the plaintiff, dismissed the suit on the sole ground that the first defendant is a small farmer within the meaning of A.P.Act 7 of 77 and as such the suit debt shall be deemed to have been abated. The same was confirmed on appeal by the lower appellate Court. Hence this second appeal by the plaintiff.

(2.) Sri S.V. Bhat, the learned Counsel for the appellant has contended that as the first defendant was adjudged as an insolvent and all his properties vested in the Official Receiver and the Official Receiver sold the suit property to the 5th defendant, the first defendant had no locus standi either to resist the suit or to claim or to invoke the benefit of A.P.Act 7 of 77 and that, in any case, the finding that the first defendant is a small farmer within the meaning of Act 7 of 77 is erroneous and unsustainable. In support of his contentions, the learned Counsel for the appellant, besides relying on various provisions of the Provincial Insolvency Act, has also placed reliance on the following decisions: Kirpa Nath vs. Ganga Prasad Raghubir Sing vs. Balkrishnan Narandas vs. S.A. Kamtam Masthanaiah vs. Veeraiah.

(3.) On the other hand, Sri R. Prasad, the learned Counsel appearing for the first defendant has contended that the question regarding the locus standi of the first defendant was not raised by the plaintiff in the twoCourts below and as such it cannot be permitted to be raised for the first time in this second appeal. He further contended that insolvency has no effect on the status or right of the first defendant to claim the benefit of A.P. Act 7 of 77 and that the concurrent finding of the two Courts below that the first defendant was a small farmer within the meaning of Act 7 of 77 is perfectly correct and sound and it is not amenable for interference in the second appeal. He finally submitted that the suit is bad for non-joinder of the Official Receiver as a party. In support of his submissions, the learned Counsel for the first defendant has relied on the following decisions: B. Suryanarayana vs. C. Punnayya K. Kutumba Rao vs. Basava Purnamma V. Venkata Chari vs. R. China Demudu 1994 (4) ALT 11.2 (DN SC)