BALASUBRAMANIA CHETTY Vs. WALAJABAD DHANASEKHARA SASWATHA NIDHI LTD, BY ITS SECRETARY, PRSUBRAMANIA NAIDU

JUDGEMENT

(1.) This appeal arises out of a suit filed by the first respondent, a Nidhi, on foot of two mortgages executed in its favour, one by the first defendant Natesa Chetti and his younger brother Thangavelu Chetti since deceased, on 25 July, 1929, for Rs. 1,000 (Ex. P-1) and the other by Natesa Chettiar for himself and as guardian of his son the second defendant then 8 months old and Thangavelu Chetti on 30 March, 1931, for Rs. 2,000 (Ex. P-2). The plaintiff prayed for a mortgage decree for Rs. 5,755-12-0 in the aggregate. The first defendant's principal contention was that the suit debts must be taken to have been completely discharged by an order passed under Section 10(2) of the Madras Debt Conciliation Act, 1936, by the Debt Conciliation Board, Chingleput, on 18 April, 1940. He also claimed a deduction of Rs. 480 being the principal amount of 30 shares held by him in the plaintiff Nidhi and relief under Madras Act IV of 1938. The first defendant's written statement was adopted on behalf of defendants 2 and 3, the minor sons of the first defendant by their mother and guardian ad litem. The third defendant was born some time in 1942. On 14 December, 1933, Thangavelu Chettiar executed in favour of Natesa Chetti what is termed a release deed, but what is in substance a deed of partition whereby the properties covered by the suit mortgages except suit items 1 and 2 were allotted to the first defendant while those two items were taken by Thangavelu Chetti. It was provided that the suit mortgages were to be discharged by the first defendant. Thangavelu Chetti died in July or August, 1942. Defendants 4 to 6 are his daughters who were obviously impleaded by the Nidhi to protect itself against a possible contention that the release deed was not real or not acted upon. The seventh defendant took a mortgage of items 1 and 2 from Thangavelu Chetti and after the latter's adjudication as an insolvent purchased the equity of redemption in them from the Official Receiver of Bangalore. The eighth defendant is a subsequent mortgagee from defendants 1 and 2 under a mortgage of 20 June, 1934 and defendants 9 to 11 are lessees of portions of the hypotheca.

(2.) The lower Court upheld the contention based upon the provisions of the Madras Debt Conciliation Act to the extent of the first defendant's share which it fixed at 1/6 but rejected it so far as the remaining 5/6 share is concerned. It refused to give credit in respect of the amount of Rs. 480 as claimed on behalf of defendants 2 and 3 but scaled down the debt to a certain extent under Madras Act IV of 1938. In the result it passed a mortgage decree for Rs. 3,702-8-0 and proportionate costs, interest on Rs. 3,000 at 6 1/4 per cent. per annum from date of suit to date of decree and interest at 6 per cent. per annum subsequent to decree against a 5/6 share in the hypotheca which according to it represents the interests of defendants 2 and 3 and of Thangavelu Chetti.

(3.) It is argued before us on behalf of the appellants (defendants 1 to 3 and 7) that the debts are discharged as against all the defendants and not merely as against the first defendant's share by the operation of Section 10(2) of the Debt Conciliation Act. Before dealing with this contention it is convenient to state a few more facts. On 24 June, 1939, the first defendant, who, it would be remembered, had become divided from his brother Thangavelu Chetti but, who, it cannot be doubted, was undivided from his minor son, the second defendant, who alone was born by that time, filed O. P. No. 29 of 1939 before the Debt Conciliation Board, Chingleput, , under Section 4 (1) of the Madras Debt Conciliation Act for a settlement of his debts. Creditor No. 7 of the creditors mentioned in the petition was the plaintiff Nidhi. The debt was stated to be a secured debt and the amount due was set down at Rs. 1,450. It is unnecessary to refer to the earlier stages of the petition. Notice under Section 10(1) of the Act was served on the Nidhi on 6 February, 1940, calling upon it to submit a statement of debts owed to it by the debtor. No statement, however, was filed by the Nidhi as required by Section 10(1) of the I Act within the period of two months prescribed for the purpose with the result that on 18 April, 1940, the Debt Conciliation Board passed an order that the suit debts were discharged under Section 10(2) of the Act. The petition was finally withdrawn on nth June, 1940, as no agreement was possible between the debtor and the creditors who had filed statements as required by Section 10(1) and whose debts were consequently not discharged. Nothing however turns on this later withdraw, the question for consideration being as to the effect of the order passed on 18 April, 1940. Sub-section (2) of Section 10 as it stood before it was amended by Madras Act IX of 1943 was as follows: Subject to the provisions of Sub-section (3) every debt of which a statement is not submitted to the Board in compliance with the provisions of Sub-section (1) shall be deemed for all purposes and all occasions to have been duly discharged. Sub-section (3) which it is unnecessary to set out provides that a creditor may apply to the Board or a Civil Court in certain circumstances for the revival of the debt discharged under Sub-section (2). It may be stated in passing that the plaintiff Nidhi did, as a matter of fact, apply for a revival of the suit debts to the Court below in O. P. No. 39 of 1943. The lower Court dismissed the petition and the order of dismissal is not challenged before us.