KOMPELLA YEGNANARAYANA SOMAYAJULU Vs. AKELLA SUBBARAYUDU

JUDGEMENT

(1.) The question which is raised in this reference is whether the judgment of the Federal Court in Bank of Commerce, Ltd., Khulna V/s. Kunja Behari Kar (1945) 1 M.L.J. 24 (F.C.) : (1944) F. 151 (F.B.) has overruled the decision of the Full Bench of this Court in Nagaratnam, v.Seshayya (1939) 1 M.L.J. 272 : I.L.R. (1939) Mad. 151 (F.B.) in so far as it relates to negotiable instruments. The Full Bench held that the Madras Agriculturists Relief Act, 1938, was infra vires the Provincial Legislature in all respects. The main attack on the Act was that its scaling down provisions were repugnant to the Negotiable Instruments Act, and that legislation on matters affecting negotiable instruments was confined to the Federal Legislature. It was held that as the Act was intended for the relief of agriculturists over-burdened with debt and that as money-lending and agriculture were Provincial subjects, the Provincial Legislature had th6 power to pass the Act, notwithstanding that in some respects it trenched on a subject confined to the Federal Legislature. It was pointed out that the only effect of the Act, so far as such instruments were concerned, was to reduce liability where the maker or indorser was an agriculturist.

(2.) There was no appeal from this judgment, but in another case, Subramania. Chettiar v. Muthuswami Goundan the question of the validity of the Act was considered by the Federal Court. In that case, an agriculturist had given a promissory note in respect of money lent to him and the lender had obtained a decree on it before the commencement of the Act. The Federal Court, without deciding whether the Madras Agriculturists Relief Act was ultra vires in so far as it affected negotiable instruments, held that in all other respects it was intra vires and that the argument that it affected negotiable instruments did not arise there, because the negotiable instrument had ripened into a decree of Court before the Act was passed. The question whether it was ultra vires in so far as it affected moneys due under negotiable instruments which had not ripened into decrees was left entirely open

(3.) The question left open fell for decision in the Bank of Commerce, Ltd., Khulna V/s. Kunja Behari Kar (1945) 1 M.L.J. 24 (F.C) 188 (F.C) which raised the question whether the Bengal Money-Lenders Act, 1940, was intra vires the Bengal Legislature. That Act provided for the scaling down of all debts. The Madras Act was confined merely to debts due by agriculturists. The Federal Court held that the Bengal Act was intra vires the Provincial Legislature except in so far as it affected negotiable instruments. To that extent it was ultra vires because it ran counter to Secs.32, 79 and 80 of the Negotiable Instruments Act. The contention that the rules enacted in these sections were among the essentials of the law relating to promissory notes and that Secs.30, 36, and 38 of the Bengal Act affected them so substantially that it would be impossible to regard them as merely incidental encroachments on the law relating to promissory notes, was accepted.