ARUNACHALAM PILLAI Vs. SEETHARAM NAIDU

JUDGEMENT

(1.) The question raised in this appeal is whether a mortgagee who sues to enforce his mortgage is entitled to a decree for the whole amount due under the mortgage against a non-agriculturist Court auction purchaser of the equity of redemption when the agriculturist mortgagor claims to have the debt scaled down under the provisions of the Madras Agriculturists Relief Act. The appellant brought the suit out of which this appeal arises in August, 1937, for recovery of Rs. 8,500 by the sale of the mortgaged properties on foot of a mortgage executed by the managers of the joint family of respondents 1 to 8 (hereinafter referred to as the mortgagors) for Rs. 5,000 on 29 October, 1931. Respondents 9 to 11 are subsequent encumbrancers in respect of one of the properties comprised in the mortgage, and respondent 12 is the purchaser of all the properties subject to the mortgage in execution of a decree for money obtained by a third party against the mortgagors. While the suit was pending, the Madras Agriculturists Relief Act came into force on 22nd March, 1938, and the mortgagors were allowed to file an additional written statement on 4 August, 1938, raising the plea that they were agriculturists as defined by the said Act and that the debt was liable to be scaled down in accordance with the provisions thereof. The appellant filed on 12th August, 1938, a reply statement , whereby he relinquished his personal remedy against the mortgagors, confining the relief sought in the suit to a decree for sale of the properties in the hands of respondent 12. There is no dispute that all the respondents except respondent 12 are agriculturists within the meaning of the Act and that the amount due as scaled down under Section 8 is Rs. 3,050. The learned Subordinate Judge of Madura who tried the suit overruled the contention of the appellant that the debt should not be scaled down under the Act so far as the twelfth respondent was concerned and passed a preliminary decree for sale for the sum of Rs. 3,050 with interest thereon from 1 October, 1937, against all the respondents.

(2.) It is argued for the appellant that inasmuch as all the mortgaged properties are now in the hands of the twelfth respondent who is not an agriculturist and a decree is sought only against such properties, the Act has no application and a decree for sale for the full amount due under the mortgage ought to be passed against the twelfth respondent. In support of this contention, reliance is placed by learned counsel upon the decision reported in Ramier V/s. Srinivasiah , where it was accepted as a general proposition that the right of an agriculturist judgment- debtor to scale down a decree should not be allowed to enure for the benefit of a non-agriculturist judgment-debtor. That was a case where the mortgagor was not an agriculturist and the puisne mortgagee who claimed the benefit of the Act was an agriculturist and it was held, in view of an earlier decision, that the pusine mortgagee must be regarded as a debtor within the meaning of the Act and, being an agriculturist, was entitled to have the debt scaled down so far as his interest in the hypotheca was concerned, notwithstanding that it was payable in full by the non-agriculturist mortgagor. It is undoubtedly true that agriculturist debtors alone are entitled to the relief provided in the Act which does not contemplate any scaling down of debts due by others, but it does not follow that a non-agriculturist debtor can in no circumstances be benefited by the scaling down of a debt under the provisions of the Act. The properties now held by the twelfth respondent are liable only as security for the debt due by the mortgagors, and if as a result of the Act there is a statutory discharge or reduction of the debt, the properties cannot, it seems to us, be proceeded against for anything more than the scaled down amount of the debt. S. 8 of the Act so far as it is material here says: Debts incurred before the 1 October, 1932, shall be scaled down in the manner mentioned hereunder, namely 1. All interest outstanding on the 1 October, 1937, in favour of any creditor of an agriculturist whether the same be payable under law, custom or contract or under a decree of the Court and whether the debt or other obligation has ripened into a decree or not, shall be deemed to be discharged, and only the principal or such portion thereof as may be outstanding shall be deemed to be the amount repayable by the agriculturist on that date.

(3.) It cannot be denied that the appellant was on the material date, namely, the 1 October, 1937, a creditor of the mortgagors who are agriculturists in respect of a debt incurred before the 1 October, 1932, and the plain consequence of this provision is that all interest outstanding on that date is wiped out and the principal amount then outstanding is repayable. The appellant whose only right as a simple mortgagee is, in the event of his (mortgagor s) failing to pay according to his contract to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage money (see Section 58(b) of the Transfer of Property Act), cannot claim to proceed against the properties in the hands of the 12 respondent for anything in excess of what is repayable under the mortgage. When the 12 respondent purchased the properties in court-auction, he took them subject to the burden of the appellant's mortgage and if the burden is by reason of the provisions of Section 8 referred to above reduced without payment, the purchase proves to that extent an advantageous one, and there is nothing in the Act to deprive him of the fruits of his lucky purchase, even though he is not an agriculturist. He gets the benefit of the scaling down not because the provisions of the Act apply to him for obviously they do not, but because such benefit is a necessary incident of his purchase under the general law and the Act does not deprive him of it. The appellant laid stress on his relinquishment of the claim for a personal decree against the mortgagors and urged that it had the effect of converting the mortgage into a debt payable solely by the 12 respondent as that expression has been understood in Perianna V/s. Sellappa . It is, however, difficult to see how the appellant's relinquishment of his right to a personal decree against the mortgagors after the Act had come into force and the mortgagors had in fact applied for relief under it, can affect the position which arises under the Act with reference to a date long prior to such relinquishment. It is unnecessary to consider what the consequence would be if the appellant had agreed to exonerate the mortgagors from all personal liability before the Act came into force.