In these two revision petitions a common question arises as to the applicability of section 9 of the Madras Agriculturists Relief Act (IV of 1938) to a debt incurred by an agriculturist after the commencement of the Act in discharge of an anterior debt incurred before the comment of the Act. On this question here is a conflict between two Bench decisions of the Madras High Court which are both binding on me, and the conflict has to be resolved by a Full Bench. Since, however, under the Appellate Side Rules, a single Judge cannot directly refer a matter to a Full Bench, I would direct these Civil Revision Petitions to be posted before a Bench of two Judges.

2. In Thiruvengadatha Aiyangar v. Sannappan Servai . 1941-2 M.L.J 307, a Division Bench of the Madras High Court, consisting of Wadsworth, J., and Patanjali Sastri, J., (as he then was), held that section 9 has no application to a debt incurred after 22nd March, 1938, and all debts incurred after the commencement of the Act, whether hey are in discharge of prior debts or not, will fall only under section 13.

3. This decision was followed by Subba Rao, J., (as he then was) in Krishnayya v. Venkata Subbarayudu . 1952-1 M.L.J 638. and by Umamaheswaram, J., in Ramamomurthy v. ??? . 1955-An. W.R 43., wherein the learned Judge, referring to that Bench decision, observed:

“That decision has not been dissented from but has been applied in all the subsequent cases by the Madras High Court.”

4. The attention of the learned Judge was obviously not drawn to an unreported decision of another Division Bench consisting of Patanjali Sastri, and Shahabuddin, JJ., in A.S No. 290 of 1944 which was followed by Rajamannar, C.J, in Mallikharjuna Rao v. Tripurasundari . 1953-2 M.L.J 313.. This Division Bench held that where a promissory note executed prior to the commencement of the Act was renewed subsequent to the Act for the full amount due under the earlier note without taking to account the statutory reduction of the liability thereunder, it was open to the debtor to take the plea under section 44 of the Negoitable Instruments Act at the subsequent promissory note sued on was not supported by consideration the extent which was in excess of what was due on the basis of Act IV of 1938. The plaintiff in such a case cannot recover anything more than what would be found due and properly payable under the prior note after applying the provisions ??? the Act.

5. Rajamannar, C.J, following this Bench ruling, observed:

“This decision is binding on me and I am also in respectful agreement with it.”

6. In the suits out of which these Civil Revision Petitions arise, the lower Court as followed the latter view and scaled down the debt applying section 9 of the ???

7. Let the papers be placed before the Hon'ble the Officiating Chief Justice for orders as to posting.

8. In pursuance of the above Order of Reference, these Civil Revision Petitions came on before a Bench (P. Chandra Reddy C.J, and Munikanniah, J.); the Bench made the following

9. This is posted before a Bench to be referred to a Full Bench, since it is thought there is a conflict between two Bench decisions of the Madras High Court. These will be posted before a Full Bench.

10. In pursuance of the above Order, these Revision Petitions came on for hearing before the Full Bench.

JUDGMENT**

The Judgment of the Court was delivered by

Chandra Reddy, C.J

11. The question to be answered by the Full Bench is whether section 9 of, the Madras Agriculturists Relief Act, (IV of 1938) (hereinafter referred to as the Act) applies to a promissory note executed after the commencement of the Act in;discharge of an anterior debt incurred after 1st October, 1932 and before the commencement of the Act.

12. The question involved in both the revision petitions is the same. The two suits giving rise to these revisions are based on promissory notes executed in the years 1950 and 1952 but the liability of the respondents in both the cases originated in the year 1937. Though the debts were liable to be scaled down after the Act came into operation, the suit promissory notes were executed for the full amounts, i.e, for the principal and interest at the contract rate.

13. It was contended on behalf of the plaintiffs that they were entitled to a decree on the basis of the suit promissory notes End that it is section 13 of the Act that applies and not section 9. The defence was that the debts in question should be treated as renewals of earlier debts and that interest should be calculate at the rate provided under section 9 of the Act from the date of commencement of the dealings. The trial Court gave effect to the plea of the defendants and Reduced the interest to 5 per cent in the view that the debts have to be traced back to the sums originally advanced, and that interest should be reduced to five per cent from the date of the first borrowing. The plaintiffs seek to revise those judgments and decrees.

14. Now, the problem to be solved is whether it is section 9 of the Act that applies or section 13. At this stage, it is convenient to read sections 9 and 13:

“Section 9.—(1) Debts incurred on or after the 1st October, 1932, shall be scaled down in the manner mentioned hereunder, namely:

Interest shall be calculated upto the commencement of this Act at the rate applicable to the debt Under the law, custom, contract or decree of Court under which it arises or at five per cent per annum simple interest whichever is less and credit shall be given for all sums paid towards interest, and only such amount as is found outstanding, if any, for interest thus calculated shall be deemed payable together with the principal amount or portion it as of is due.

Provided that any part of the debt which is found to be a renewal of a prior debt (whether by the same or a different debtor, and whether in favour of the same or different creditor) shall be deemed to be a debt contracted on the date on which such porior debt was incurred and if such debt had been contracted prior to the 1st October, 1932, shall be dealt with under the provisions of section 8.

Section 13.—In any proceeding for recovery of a debt, the Court shall scale down all interest, due on any debt incurred by an agriculturist after the commencement of this Act, so as not to exceed a sum calculated at 6 1/4 per cent per annum, simple interest, that is to say, one pie per rupee per mensem simple interest or one anna per rupee per annum simple interest.”

15. There is conflict of judicial opinion on the interpretation of these sections. In Thiruvengadatha Aryangar v. Sannappau Servar, a Division Bench of the Madras High Court consisting of Wadsworth, J., and Patanjali Sastri, J., (as he then was) ruled that section 9 had no application to a debt incurred after 22nd March, 1938, since all debts incurred after the commencement of the Act, whether they be in discharge of prior debts or not, would fall only under section 13.

16. There are observations to the same effect by the same learned Judges in Saryeswara Rao v. Venkatasubbayya, though that was not a case of the renewal of a debt after the coming into force of the Act. They remarked:

“The obvious intention of the Legislature in enacting this Proviso was merely to give, a rule for the classification of debts into those to which section 8 will apply and those to which section 9 will apply. The latter class of debts has to be scaled down with reference to the actual contract modified to the extent indicated by the reduction of the rate of interest.”

17. These decisions were followed by Subba Rao, J. (as he then was) in Krishnayya v. Venkatasubbarayudu. It may be mentioned here that the judgment in A.S No. 290 of 1944 was not noticed by Subba Rao, J., in this case.

18. Another single Judge of this Court followed Thiruvengadatha Aiyangar v. Sannappan Servar, and Krishnayya v. Venkatusubbarayudu, in Ramamurthy v. Narasimham. The learned Judge said that Thiruvengadatha Aryangar v. Sannappan Servai, was not dissented from but had been applied in all the subsequent decisions of the Madras High Court. Obviously, the attention of the learned Judge was not drawn to the unreported decision of a subsequent Division Bench of the same Court consisting of Patanjali Sastri and Shahabudin, JJ., in A.S No. 290 of 1944 or the decisions that followed it. It was laid down in that First Appeal that where a promissory note executed prior to the commencement of the Act was renewed subsequent to the Act for the full amount due under the earlier note without taking into account the statutory reduction of the liability thereunder, the debtor was entitled by reason of section 44 of the Negotiable Instruments Act, to plead that the subsequent promissory note sued on was not supported by consideration to the extent which was in excess of what was due on the basis of Act IV of 1938 and that the plaintiff in such a case could only recover so much as would, be found due and properly payable under the previous promissory note after applying the provisions of the Act.

19. Chief Justice Rajamannar relied upon the above ruling in Mallkarjuna Rao v. Tripurasundari.5 In both these cases the renewals were made after the commencement of the Act in discharge of a debt contracted after 1st October, 1932.

20. We have now to consider which of the two views is correct. In our judgment, the law stated in A.S No. 290 of 1944 and followed by Chief Justice Rajamannar in Malikarjuna Rao v. Tripurasundari, is correct as it seems to be more in accord with the language of section 9(1) and the Provision.

21. In the first set of rulings, due regard was not had to the expression ‘debts incurred’ occurring in both sections 9 and 13 of the Act. We feel that section 13 can have application only to a borrowing made for the first time after the Ac. came into force and is not attracted to renewal of debts incurred prior to the commencement of the Act. It is difficult to regard renewal as incurring a debt within the purview of that section.

22. It has been pointed out by a Bench of this Court in Punyavatamma v. Saiyanarayana, that a debt is incurred only when the borrowing is made, and it cannot be postulated that a debt is incurred each time a promissory note is renewed.

23. To the same effect are the remarks of another Bench of this Court in Beekamchand Dhannalal Firm v. Subbaraju. It is pertinent to note that the expression ‘incurred’ is employed in sections 8, 9 and 13. The word ‘incurred’ in section 9 cart have reference only to a fresh loan because renewals of advances prior to 1st October, 1932, fall within the ambit of section 8. As such, the word would be meaningless if it is interpreted to include a renewal with reference to section 9. The object of section 8 also strengthens the view that the word is used as connoting only a new liability. In Bouvier's Law Dictionary the meaning given to that expression is ‘to have liabilities cast upon one by act of parties or operation of law’. Therefore, the operation of section 13 cannot be extended to debts contracted before the commencement of the Act but only to debts incurred after the commencement of the Act.

24. There is nothing in section 9 to indicate that it should be restricted to renewals of debts falling under that section effected before the commencement of the Act. On the other hand, the proviso makes it clear that section 9 is applicable renewed promissory notes whether executed before or after the commencement of the Act. We are not convinced that it operates only in respect of debts falling within the ambit of section 8. That section contains a provision in the shape of an Explanation which takes in all debts renewed or included in fresh documents and there is no reason why this Proviso should have been inserted in section 9 to cover debts incurred prior to 1st October, 1932. If the Proviso is construed as applying only to borrowings made prior to 1st October, 1932, it is otiose for the reason that section 8 itself contains adequate provision to deal with such cases.

25. The object of the Legislature in enacting the last part of the Proviso is not to limit the operation of the section to debts incurred before 1st October, 1932, but to require a Court to trace the debt back to the original advances, where it is found that it was contracted prior to 1st October, 1932, and not to stop wit scaling it down under section 9. The Proviso contains a machinery for scaling down a debt either under section 8 or under section 9 as the case may be depending upon whether the debt was contracted before 1st October, 1932 or thereafter.

26. In this connection, we may usefully extract the following passage from the judgment of a Bench of the Madras High Court consisting of Wadsworth and Patanjali Sastri, JJ., in Chindambaram Aiyar Manickavasagam Pillar.

“There is nothing in the language of the Proviso to suggest that it can be applied but once in the process of scaling down. The section makes provision for scaling down debts incurred on or after the 1st October, 1932 and directs that if any part of the debt sought to be scaled down is found to be a renewal of a prior debt, that part should be deemed to be a debt contracted on the earlier date and scaled down accordingly but in doing so, if it is itself a renewal in part or in whole of a still earlier debt, the Proviso comes into operation again, for it is an integral part of the mode of scaling down prescribed under the section. We are of opinion that the object of the Legislature in enacting this provision is plainly to require the Court to trace the debt back through various renewals, to the principal sum or sums originally advanced and scale it down under section 8 or section 9 as the case may be.”

27. It is true that the ruling was concerned only with a debt incurred in 1935 and decree obtained in 1937 and not with a case of renewal after the commencement of the Act. But the principle is stated in general terms and would apply with full vigour to a case of renewal after 22nd March, 1938.

28. The above remarks lend support to the theory that the language of section 9(1) is wide enough to include debts renewed after the commencement of the Act. In our view, the purpose of the section was to benefit a debtor whose dealings began after 1932 and this object will be defeated if a restricted interpretation is accepted. It is well-settled that in interpreting the provisions of a benefical legislation, Courts should lean in favour of a construction which should further the object of such an enactment.

29. The foregoing discussion establishes that section 9 should be applied to debts incurred after 1st October, 1932, despite their being renewed after the commencement of the Act and that section 13 cannot be extended to such cases.

Reference answered.

30. On receipt of the opinion of the Full Bench, the Court delivered the following

JUDGMENT

31. In view of the Full Bench decision, these Civil Revision Petitions have to be dismissed. There will be no costs in these petitions.

Revisions dismissed.