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Nooney Veeraraju v. Boda Venkataratnam
Factual and Procedural Background
A mortgage bond dated 24-3-1931 for Rs. 8,000 was executed by the defendant for himself and as guardian of his undivided minor son. The defendant was adjudged insolvent on 23-3-1933. While insolvency proceedings were pending, the plaintiff valued his security under Section 47 of the Provincial Insolvency Act at Rs. 8,500 by filing I.A. No. 18 of 1939 before the Official Receiver and proved as an unsecured creditor for the balance (Rs. 11,513-11-6).
During insolvency, the elder son filed a partition suit (O.S. No. 4 of 1940) and the plaintiff filed a separate mortgage suit (O.S. No. 22 of 1941) to enforce his mortgage. The partition and mortgage suits were tried together; preliminary decrees were passed. The plaintiff obtained a final mortgage decree, but before confirmation of sale the Official Receiver deposited the entire decretal amount in Court and satisfied the decree.
The defendant sought annulment of his adjudication in I.A. No. 15 of 1942; the Insolvency Court dismissed it but the District Court allowed annulment on 7-10-1944 while ordering that the defendant's properties continue to vest in the Official Receiver under Section 37 of the Provincial Insolvency Act. That direction as to vesting was set aside by the High Court while confirming annulment in revision proceedings. The High Court in appeals relating to the partition suit modified the trial decree, scaled down certain debts under the Madras Agriculturists' Debt Relief Act for particular shares, and directed the Official Receiver to continue as Commissioner under the decree.
In the present suit the plaintiff seeks from the father (the defendant) one-third share of the mortgage debt without statutory reduction, less the amount already received from the Official Receiver.
Legal Issues Presented
- Whether the present suit is barred by Order II, Rule 2 of the Civil Procedure Code because the plaintiff previously limited his claim in O.S. No. 22 of 1941 after valuing his security under Section 47 of the Provincial Insolvency Act.
- Whether, following annulment of adjudication, the defendant is entitled to be treated as an agriculturist and claim relief under the Madras Agriculturists' Debt Relief Act (i.e., whether annulment operates so as to restore the defendant's entitlement to such relief).
- Whether the rate of interest charged is unconscionable and liable to reduction under the Usurious Loans Act.
Arguments of the Parties
Appellant's (Defendant) Arguments
- The suit is barred by Order II, Rule 2 CPC because the plaintiff, having limited his claim in the earlier mortgage suit (O.S. No. 22 of 1941) to the amount at which he valued his security, cannot now sue for the remainder.
- By reason of the subsequent annulment of the adjudication, the defendant's right to be treated as an agriculturist is not lost and he is entitled to claim under the Madras Agriculturists' Debt Relief Act; reliance placed on Subbia Goundan v. Ramaswami Goundan.
- The rate of interest claimed by the plaintiff is unconscionable and should be reduced under the Usurious Loans Act.
Respondent's (Plaintiff/Learned Advocate-General) Arguments
- When a creditor has valued his security under Section 47, such valuation imposes a statutory bar against the creditor claiming in a suit any amount in excess of that valuation while insolvency is pending (i.e., valuation limits the mortgagee's right to recover more than the assessed value in subsequent suits during insolvency).
- It was argued that the matter is res judicata — that prior proceedings (the partition suit and associated appeals) decided that the defendant was not an agriculturist; therefore the defendant cannot now claim agriculturist relief.
- Reference was made to cases (including Haveli Shah and Khupchand Nathmal Marwadi) to support the proposition that certain steps taken or omitted during insolvency limit a creditor's rights to pursue further sums outside insolvency procedures.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Arunachalam Chettiar v. Narayanaswami Goundar (Full Bench decision) | Where an adjudication is annulled under Section 35 and no vesting order is made under Section 37, the annulment relates back to the date of adjudication; property reverts to insolvent and he is deemed to have had a saleable interest for purposes of relief under the Madras Agriculturists Relief Act. | The court treated this authority as directly applicable and decisive: it held the defendant entitled to claim agriculturist status on the material dates because annulment related back and restored his saleable interest. |
| Subbia Goundan v. Ramaswami Goundan (Full Bench decision, cited as 1958 2 M.L.J 766 and earlier mention) | Affirmation of the view in Arunachalam Chettiar that annulment of adjudication restores the insolvent's position and entitles him to agriculturists' relief where applicable. | The court relied on this Full Bench affirmation to confirm that the defendant could be treated as an agriculturist despite earlier adjudication and its subsequent annulment. |
| Sundaram v. Subbarao (1942 (1) M.L.J 327) | Interpreted Section 6 of the Madras Agriculturists Relief Act as inapplicable to joint families consisting only of a person and his descendants (principle cited in High Court's reasoning). | The High Court had used this decision in explaining why the first defendant was not eligible for relief at the commencement of the Act when his share remained vested in the Official Receiver; the present court noted that the High Court’s reference did not decide the specific issue between the present parties. |
| Haveli Shah v. Mt. Hussaina Jan | Held that where a creditor realised the security before an order of discharge and had not valued his security but proved for balance, an order of discharge released the insolvent from personal liability provable under the Act. | The court distinguished this decision: it found the ratio inapplicable to the present question whether valuation under Section 47 prevents a mortgagee from suing for the full amount. |
| Khupchand Nathmal Marwadi v. Rajeswar Shanker Deshpande | Where a secured creditor ignores the Insolvency Court and realises his security, he is confined to the proceeds and is debarred from claiming any dividend if proceeds prove insufficient. | The court observed that this decision does not support the Advocate-General's contention that valuation under Section 47 prevents a secured creditor from seeking relief beyond the valuation in a mortgage action. |
Court's Reasoning and Analysis
The court addressed the second contention first (agriculturist status after annulment). It observed that aside from the adjudication and vesting, the defendant would be an agriculturist within the meaning of the Madras Agriculturists Debt Relief Act. The crucial question was the legal effect of annulment of adjudication on that entitlement.
The court relied on the Full Bench decision in Arunachalam Chettiar v. Narayanaswami Goundar (and the later Full Bench affirmation in Subbia Goundan v. Ramaswami Goundan) which hold that where adjudication is annulled under Section 35 and no vesting order is made under Section 37, annulment relates back to the date of adjudication, so property reverts to the insolvent and he is to be treated as having had a saleable interest for purposes of the Agriculturists Relief Act. Applying these authorities, the court concluded the defendant was entitled to claim agriculturist relief on the material dates.
The court addressed the res judicata argument (that prior proceedings decided the defendant was not an agriculturist). It examined the pleadings and decrees in the earlier partition and mortgage suits and concluded that no issue was framed or decided between the plaintiff and the defendant on whether the defendant was an agriculturist on the basis that annulment relates back. The cited paragraph in the High Court's decree that appeared to refer to the plaintiff as "defendant 7" was treated as a mistake and not determinative. Consequently, the court rejected the res judicata contention.
On that basis the court held the present suit — which sought the difference between what would be payable without statutory reduction and what had already been received on the basis of the Act — was not sustainable because the plaintiff had already received the decretal amount through the Official Receiver on the basis of the applicability of the Agriculturists Relief Act. The court therefore concluded that nothing remained due to the plaintiff.
The court then considered the first contention (Order II, Rule 2 CPC vs. valuation under Section 47 Provincial Insolvency Act). It quoted the relevant provisions of Order II, Rule 2 and Section 47 and analysed their meaning. The Advocate-General's position — that valuation under Section 47 prevents a secured creditor from suing for more than the valuation — was rejected.
The court reasoned that Sub‑section (5) of Section 47 expressly contemplates that where security is realised the net amount realised is to be substituted for any previous valuation; that substitution may result in a higher or lower figure than the prior valuation. Therefore the valuation under Sub‑section (3) is provisional and does not bar the creditor from suing for the whole debt and realising the property; if realised for a higher amount the creditor benefits and adjustments to dividends follow. The court referred to analogous provisions in the Presidency Towns Insolvency Act (Second Schedule, Rules 9–16) and to English authorities (extracts from Halsbury) to support the interpretation that valuation does not extinguish the mortgagee's right to pursue full relief in a mortgage action.
The court further distinguished decisions relied upon by the respondent (Haveli Shah and Khupchand Nathmal Marwadi), finding that they do not support the Advocate‑General’s contention that valuation under Section 47 permanently restricts the mortgagee to the assessed valuation in subsequent suits.
The court observed that the secured creditor should have sued for the whole amount in the earlier mortgage action; after obtaining a decree for the whole amount he could have sold the property for what it fetched and claimed any balance subsequently. It noted that, had insolvency continued, the creditor could have claimed a dividend for the balance; and in the event of annulment, could have applied for a personal decree for the balance under Order XXXIV, Rule 6 CPC.
Because the court found for the defendant on either the agriculturist point or the Order II, Rule 2/Section 47 point, it did not need to decide the Usurious Loans Act contention.
Holding and Implications
Core Ruling: APPEAL ALLOWED; Plaintiff's suit dismissed with costs.
Direct consequences for the parties: the court held that (a) the defendant is entitled to be treated as an agriculturist by reason of the annulment of adjudication (in light of the Full Bench authorities), and (b) the plaintiff has already received what was due on the basis of the applicability of the Madras Agriculturists Relief Act, so nothing further is payable. The plaintiff's suit seeking the difference was therefore dismissed and costs were awarded to the appellant throughout.
Broader implications: the court applied existing Full Bench authorities on the effect of annulment of adjudication and interpreted Section 47 of the Provincial Insolvency Act as not operating to bar a secured creditor from suing for the full debt (valuation being provisional). The opinion does not state that it establishes a new precedent; it rests on and applies prior Full Bench and other decisions.
Bhimasankaram, J.:— The defendant is the appellant. The suit is rather of an unusual nature and as its maintainability is in question in this appeal, it is necessary to set out the circumstances which constitute its background. A simple mortgage bond, dated 24-3-1931 securing a sum of Rs. 8,000 in discharge of previous simple money debts was executed by the defendant for himself and as guardian of his undivided minor son, Suryanarayana Murthy. As a result of a creditor's application, the defendant was adjudged insolvent on 23-3-1933 in I.P No. 19 of 1931, Pending the insolvency petition, the present plaintiff filed I.A No. 18 of 1939 on 9-2-1939 before the Official Receiver valuing his security under Section 47 of the Provincial Insolvency Act at Rs. 8,500 and proved for the balance of the money due to him under the mortgage bond as an unsecured creditor, i.e, for a sum of Rs. 11,513-11-6. During the insolvency, another son was born to the defendant. Suryanarayanamuithy, the elder son, filed O.S No. 4 of 1940 on the file of the Sub-Court, Rajahmundry, for partition of the joint family properties impleading besides his father and brother, the Official Receiver, the creditors of the family and alienees of some portions of the family property. The plaintiff was thus made a party thereto and an issue was raised as to whether the present plaintiff's mortgage debt was binding on the plaintiff in that suit. At about the same time, the present plaintiff filed O.S No. 22 of 1941 in the same Court against this defendant and his sons, a suit to enforce his mortgage. In the plaint therein, he stated that the mortgage debt was not liable to be scaled down under the terms of Act IV of 1938 against this defendant for the reason that a devidend had already been declared in the insolvency proceedings. He admitted that so far as defendants 2 and 3 in that suit (sons of the present defendant) are concerned, the amount was liable to be scaled down. He however limited the claim against all of them to the lesser amount stating that he did so without prejudice to his right “to claim the entire amount under the terms of the bond as unsealed less the suit amount as now scaled down in the insolvency of the 1st defendant in consonance with the valuation of the security made by” him before the Official Receiver. The partition suit and the mortgage suit were tried together and preliminary decrees were passed in both of them. There was no appeal taken against the preliminary mortgage decree, but there was an appeal filed to the High Court of Madras against the preliminary decree in the partition suit by the plaintiff therein. One of the creditors also filed an appeal against the latter decree. The present plaintiff obtained a final mortgage decree in due course, but before the sale which took place thereunder was confirmed, the Official Receiver deposited in Court the entire decretal amount and thus satisfied that decree in toto. Meanwhile, the present defendant filed I.A No. 15 of 1942 for annulment of his adjudication. Though that application was dismissed by the Insolvency Court, the District Court, East Godavary, on appeal, directed the annulment of the adjudication on 7-10-1944 while making an order at the same time that the properties of the defendant were to continue to vest in the Official Receiver under Section 37 of the Provincial Insolvency Act. A revision was taken against that order of the District Judge to the High Court of Madras in C.R.P No. 1621 of 1944. That revision petition came on for hearing a few days before the two appeals above mentioned were disposed of, and the High Court, while confirming the order of annulment, set aside the direction of the District Court vesting the property in the Official Receiver. On the appeals, the Decree of the trial Court was modified and it was declared “that the ⅓rd share of the plaintiff and the ⅓rd share of the 1st defendant of the debts except the mortgage debt in favour of the present plaintiff, be scaled down under the Madras Agriculturists' Debt Relief Act and that the plaintiff and the 3rd defendant be liable each to the ⅓rd share of the said debts as scaled down and that the 1st defendant (father) be liable for a ⅓rd share of the said debts without the statutory reduction.” The decree of the High Court further provided that the Official Receiver should continue as Commissioner for carrying out the directions under the decree. In the present suit, the plaintiff claims against the father the ⅓rd share of the debt due under the mortgage bond from the defendant without the statutory reduction less the amount received from the Official Receiver as stated above.
2. Three main contentions were raised on behalf of the defendant in the Court below and they are repeated here. In the first place, it is contended that the suit is barred under the provisions of Order II, Rule 2, Civil Procedure Code. In the second place, it is argued placing reliance on Subbia Goundan v. Ramaswami Goudan 1953 2 M.L.J 766., that because of the subsequent annulment of adjudication the right of the defendant to claim that he is an agriculturist is not lost and that he is entitled to claim in the present suit that the mortgage bond is liable to be scaled down. Thirdly, the rate of interest is stated to be unconscionable and liable to be reduced under the Usurious Loans Act.
3. We propose to deal with the second contention first. On the facts above stated, it is clear that the insolvent along with his sons would be an agriculturist within the meaning of the Madras Agriculturists Debt Relief Act save for the order of adjudication and the consequential vesting of the properties in the Official Receiver. But the Order of adjudication having been subsequently annulled, the question is what is the effect of the annulment as regards his claim to be treated as an agriculturist entitled to relief under that Act. This point is directly covered by an authority in favour of the appellant reported in Arunachalam Chettiar v. Narayanaswami Goundar, an authority which was not available to the learned Subordinate Judge at the time of his decision in this case. That decision has ruled that where an adjudication is annulled under Section 35 and no vesting order is made under Section 37 of the Provincial Insolvency Act (V of 1920), the property does not merely revest in the insolvent but it reverts to him, that the effect of the annulment relates back to the date of adjudication and that therefore the insolvent must be deemed to have had a saleable interest in that property for the purpose of being treated as an agriculturist entitled to the benefits of the Madras Agriculturists Relief Act. The view taken in the above Full Bench decision has since been affirmed in Subbia Goundan v. Ramaswami Goundan 1958 2 M.L.J 766., another Full Bench decision of the same Court. Applying that decision to the facts of this case, it is clear that the defendant would be entitled to claim that he was an agriculturist on the material dates. But, it is argued for the respondent that it is not open to the appellant to contend that he is an agriculturist as the matter is res judicata having been decided against him in prior proceedings between the parties. The contention is that there was a decision in the earlier suits to which reference has already been made that the defendant was not an agriculturist. It has to be noticed that the mortgagee (present plaintiff) was the 7th defendant in the partition suit and the 7th respondent in A.S No. 89 of 1943 one of the two appeals taken against the Judgment in the partition suit to the High Court. The 5th paragraph of the Decree of the High Court runs thus:
“That the one-third share of the plaintiff and the one-third share of the third defendant of the debts described in plaint Schedule B attached to the Decree of the lower court excepting the mortgage debt in favour of the seventh defendant which has ripened into a Decree in O.S No. 22 of 1941 on the file of the lower court and which was already scaled down, be “Scaled down under Section 14 of Madras Act IV of 1938 and that the plaintiff and the third defendant be liable each to one-third share of the said debts as scaled down and that the first defendant be liable for one-third share of the said debts without the statutory reduction.”
4. This paragraph is founded on the following paragraph in the Judgment:
“It only remains to deal with the claim to relief under the Madras Agriculturists Relief Act, 1938, in respect of the debts due to defendants 7 to 18. It is not disputed that the plaintiff and the third defendant as well as their family are agriculturists within the meaning of the Act. The first defendant is not eligible for relief, as he was not an agriculturist at the commencement of the Act, his share in the family properties having remained vested in the Official Receiver till the annulment of his adjudication. It has been held that Section 6 of the Act is inapplicable to joint families consisting only of a person and his descendants [vide Sundaram v. Subbarao (1942 (1) M.L.J 327]. It follows that under Section 14 the plaintiff and the third defendant will be liable respectively for one-third of the liabilities as scaled down under the Act, and the first defendant will be liable for one-third of the debts without the statutory reduction.”
5. O.S No. 22 of 1941 mentioned above is the other suit filed by the present plaintiff in which he scaled down the debt according to the provisions of the Act stating, as has been already noticed, that he did so without prejudice to his right to claim against this defendant the entire amount under the terms of the bond. That being so, no issue was raised in that suit as between the present plaintiff and the present defendant as to whether the latter was or was not an agriculturist. In the partition suit also, there was no controversy between them as to the applicability of the Act to the suit mortgage. It is therefore impossible to hold that there was a decision in the previous litigation on the question now posed, namely, whether the effect of the annulment being to wipe out the insolvency altogether, the defendant is not entitled to say that the debt is liable to be scaled down under the Agriculturists Relief Act. It is true that in the paragraph cited above from the judgment of the High Court there is a reference to defendant 7, but we have no doubt that it is a mistake, for, the 5th paragraph in the decree above cited makes it clear that the question did not fall to be decided in the partition suit from which that appeal arose. We are therefore clearly of opinion that the present defendant is entitled to the benefits of the Act and that the present suit launched on the basis that the defendant was not an agriculturist and seeking a decree against the defendant for the differences between what is payable on the basis of the Agriculturists Relief Act and what is due independently of it, is not sustainable. The suit is therefore liable to be dismissed on the ground that nothing is due to the plaintiff because admittedly he has received whatever is due to him on the basis of the applicability of the Madras Agriculturists Relief Act to the mortgage debt.
6. As the point has been argued by both sides at some length, we propose to deal also with the first of the contentions raised by the appellant. In order to appreciate the arguments, it is necessary to quote the relevant portions of Order II, Rule 2 of the Civil Procedure Code and Section 47 of the Provincial Insolvency Act. Order II, Rule 2, Civil Procedure Code in so far as it has any bearing on the present discussion is as follows:
(1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action.
(2) Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished.
7. The material portion of Section 47 of the Provincial Insolvency Act runs thus:
(3) Where a secured creditor does not either realise or relinquish his security, he shall, before being entitled to have his debt entered in the schedule, state in his proof the particulars of his security, and the value at which he assesses it, and shall be entitled to receive a dividend only in respect of the balance due to him after deducting the value so assessed.
(4) Where a security is so valued, the Court may at any time before realisation redeem it on payment to the creditor of the assessed value…….
(5) Where a creditor, after having valued his security subsequently realises it, the nett amount realised shall be substituted for the amount of any valuation previously made by the creditor and shall be treated in all respects as an amended valuation made by the creditor.”
(6) Where a secured creditor does not comply with the provisions of this section, he shall be excluded from all share in any dividend.
8. It is contended for the appellant that the valuation of his security by the creditor under Sub-Section (3) of the above section does not disentitle him from filing a suit for the whole of the amount due in respect of the debt and that the present plaintiff having limited his claim in the mortgage suit, O.S No. 22 of 1941 to a sum of Rs. 8,133-6-0 is precluded under Order II, Rule 2 Civil Procedure Code from suing for the relief sought by him in the present suit. On the other hand, the learned Advocate-General argues for the respondent that when a creditor has valued his security at a certain amount there is a statutory bar against his claiming any amount in excess of that valuation in a suit filed by him to enforce the debt while the insolvency is pending. We are unable to accept the latter contention. If the learned Advocate-General is right, the nett amount realised should always only be lesser than the amount of the original valuation and in no case greater than that amount. The wording of Sub-Section (5) would have been different if the intention of the Legislature as expressed in the earlier sub-section was to restrict the mortagagee's right of realisation to the amount at which he valued his security. As it stands, Sub-Section (5) admits of the realisation by the mortgagee of a higher as well as a lower amount than what the property was valued at under sub-section (3). The mere valuation of security at a particular price, a price which the court may pay, if it thinks fit, to redeem the security, does not, in our opinion, compel the mortgagee to limit the relief sought for by him in a mortgage action to the assessed value of the security. If the property could be sold for a higher price than for what it was assessed at, the mortgagee is clearly entitled to the advantage of the higher price obtained and the nett amount so realised will then have to be substituted for the amount at which it was previously valued and the creditor can claim a dividend only in respect of the balance due to him after deducting the value as so amended. It may be more or it may be less. In our judgment, the valuation by the creditor is not made, so to say, at his risk. It is only a provisional and not a final valuation. The Court may accept his valuation and offer to redeem the property on that basis, in which case the creditor may be bound to receive the sum and release the security. He can then prove for the balance as an unsecured creditor. If, on the other hand, the court does not redeem it, he is free to sue for the whole of the sum due to him and, after getting the property sold claim a dividend in respect of the balance due. If a dividend had already been paid to him on the basis of a valuation different from that for which the property is ultimately sold, the actual figure will be substituted for the provisional one and necessary adjustments will be made so as to see that dividend is paid to him only for the amount of difference between what he is entitled to and what he had realised. Rules 9 to 16 of the Second Schedule to the Presidency Towns Insolvency Act embody similar provisions. Rule 15 corresponds to Sub-Section 5 of Section 47 of the Act under discussion. The position of a secured creditor under that Act also seems to us to be the same as under the Provincial Act. The English Law on the subject may also be usefully referred to. It is stated in Sections 988 and 995 of the second volume of Lord Simonds' Third edition of Halsbury's Laws of England.
“If he (secured creditor) neither realises nor surrenders his security he must, before ranking for dividend, state in his proof the particulars of his security, the date when it was given and the value at which he assesses it, and he will be entitled to receive dividends only in respect of the balance remaining after deduction of the assessed value…………… Again, if after valuation of a security the creditor realises it, or it is realised at the instance of the trustee the nett amount realised is to be substituted for the valuation and treated in all respects as an amended valuation made by the creditor.”
9. It is further stated:
“On the amendment of a valuation the creditor must forthwith repay any dividend which he may have received in excess of that to which he would have been entitled on the amended valuation. He will be entitled to be paid out of any money, for the time being available for dividend, any dividend or share of dividend which he may have failed to receive by reason of the inaccuracy of the original valuation, before that money is made applicable to the payment of any future dividend; but he is not entitled to disturb the distribution of any dividend declared before the date of the amendment.”
10. The above extracts make it clear that in England the right of a secured creditor to realise the security in accordance with the terms of the bond in his favour is not affected in any manner whatsoever by the valuation which he puts upon his security. We can see no warrant in the language of Section 47 to support the contention that the law in India is different. In this view, a secured creditor is clearly entitled to make a claim in respect of the whole of the amount due under the security despite the valuation made by him of his security at a lesser figure. It therefore follows that the present plaintiff was bound to have instituted his former suit not only for the amount claimed therein but for the whole of the amount as unsealed down. After obtaining a decree for sale for the whole of such amount he should have sold the property for what it fetched and thereafter if the insolvency continued he could have claimed a dividend for the balance, and if, as has happened in the present case, the insolvency was annulled, he could have applied for a personal decree for the balance under the provisions of Order XXXIV, Rule 6, Civil Procedure Code.
11. No decided cases directly in point have been cited to us, but the learned Advocate-General has referred to two cases in support of his argument. The first of them is Haveli Shah v. Mt. Hussaina Jan. All that decision decides is that where a creditor who had a mortgage decree against the insolvent realised his security before the Order of discharge is passed but had not valued his security and proved for the balance in the insolvency, the order of discharge released the insolvent from personal liability under the mortgage because that was a debt provable under the Act and under Section 44(2) of the Act an insolvent is released from all such debts. It is argued that in so far as the debt is provable in insolvency, no action could be laid pro tanto to enforce the security. One cannot see how the ratio in this decision applies to the present case. There can be no doubt whatsoever that the claim against the insolvent's estate after the security has been realised is one to be made in insolvency and, if not so made, it is extinguished after an order of discharge. This case clearly does not deal with the question as to whether when a mortgage suit is instituted after valuation of the security, the suit should be restricted only to the amount at which the security was valued.
12. The next decision to which reference was made is Khupchand Nathmal Marwadi v. Rajeswar Shanker Desbpande. This decision has ruled that where a secured creditor instead of taking any of the courses prescribed by Section 47 of the Provincial Insolvency Act ignores the Insolvency Court altogether and realises his security, he must be content with the proceeds and will be debarred from claiming any dividend should the proceeds prove insufficient. This again, does not in our opinion, support the contention of the learned Advocate-General that a court has no power to grant and the secured creditor has no right to claim a relief for more than the amount at which he has valued his security.
13. In the view we have taken on the first two points raised on behalf of the appellant it is not necessary for us to go into the question of the applicability of the Usurious Loans Act. The appellant is entitled to succeed on either of the points discussed above. The result, therefore, is that this appeal is allowed and the plaintiff's suit dismissed with costs throughout.
T.A.B
14. Appeal allowed.
Agriculturists Relief Act.Alert