SANNAYA ALIAS NARAYANA HOLLA Vs. BALARAMA HANDE

JUDGEMENT

(1.) These appeals preferred respectively by the decree-holder and the second defendant arise out of an application by the second defendant under Section 19 of Madras Act IV of 1938 to scale down a debt due under a mortgage decree. There is no doubt about the facts. In 1918 the first defendant, who is the father of the second defendant, was a junior member of a family the manager of which was his cousin, the 20 defendant. 20 defendant and the first defendant together executed a promissory note Ex. B dated 15 July, 1918, for a sum of Rs. Rs. 4,900-15-2 expressly reciting that the money was required for family purposes. In November, 1918 there was a partition in the debtor's family, the liability under the promissory note Ex. B being allotted to the branch represented by the first defendant. In discharge of this liability the suit mortgage Ex. A was executed by the first defendant in favour of the same creditor on 27 June, 1922 for a sum of Rs 10,000 made up of the principal and interest due under Ex. B and a sum of Rs. 2679 and odd cash advanced. The mortgage recites the fact that at a partition in the debtor's family the liability under Ex. B had been allotted to the first defen-ant's branch. plaintiff filed a suit in 1935 on this mortgage asking for a decree against the first defendant, his children and grandchildren. Somewhere about the year 1936, when the suit was still pending, the first defendant died and his son the second defendant became the head of the family. On 7 August, 1936, a preliminary decree was passed for the payment of Rs. 25,000 and odd, including a sum of Rs 1,981-14-6 by way of costs. The time fixed for redemption extended upto 7 November, 1937. Between the date of this preliminary decree and 22nd March, 1938 when Madras Act IV of 1938 came into force, five payments were made, the first two being made before the important date 1 October, 1937, and the other three after 1 October, 1937 and before the commencement of the Act. The total amount of these payments was Rs 9,827. The payments were made By the sale of portions of the hypotheca with the consent of the decree-holder and the decree-holder executed release deeds freeing the items sold from the burden of the mortgage. Each of these release deeds recites that the money has been paid to the decree-holder " out of the amount due under the said decree," and particular attention has been devoted to the recital in Ex. E which runs. Out of the amount remaining due after deducting what has been received according to the registered release deeds heretobefore executed by me out of the decree amounts due to me.

(2.) On these facts the lower Court has found that the payments made towards the decree before 1 October, 1937, must be treated as open payments remaining available in reduction of principal after cancellation of interest as on 1 October, 1937 under Section 8(1) of Madras Act IV of 1938. The lower Court has also found that by reason of the partition between the two executants of the promissory note Ex. B. the mortgage Ex. A cannot be regarded as a renewal of the antecedent promissory note liability. Against the latter decision the judgment-debtor has filed Appeal No. 317 of 1942 and against the former decision the decree-holder has filed Appeal No. 299 of 1942.

(3.) It seems to us clear that the decision of the lower Court on the appropriation question is correct. When these payments were made towards the decree there was no recording of satisfaction and no act either on the part of the debtor or on the part of the creditor indicating how the sums paid should be adjusted towards the decree. All that can be said with any certainty is that these payments were made for the specific purpose of reducing the decree. We do not consider that the reference in the release deed to " the balance after deducting the previous payments " can be taken to establish an actual adjustment of the previous payments in reduction of the decree amount, so as to throw the burden upon the debtor of showing an appropriation in the manner most favourable to himself. Attention has been invited to our decision in Srinivasachariar V/s. Bysani Krishnayya (1941) 1 M.L.J. 833 where we held that a payment towards a decree in respect of which the Court had recorded part satisfaction could no longer be treated as an unappropriated payment. That was a case in which by the act of Court the money Ceased to be at the disposal of either the judgment debtor or the decree- holder and was definitely adjusted to the decree and the Court may be presumed to have adjusted it following the usual rule that the payment would go first towards interest and any balance towards principal. We have also been referred to cases in which the creditor in drafting his plaint filed before 1 October 1937, has indicated to the debtor that he was appropriating a particular payment hitherto unappropriated towards interest and was claiming the balance after making such an appropriation. Such a case is Periakaruppan Chettiar v. Marappa Goundan (1940) 2 M.L.J. 654. In both these cases there has been a clear and unambiguous adjustment of the payment towards the debt and the payment no longer remains open so that either party may indicate the manner of its appropriation.