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Case Number

Appeal No. 626 of 1949 against decree of Dist. Court, Krishna at Masulipatam, D/- 5-11-1948

Advocates

For the Appellant: B. Manavala Chowdary, D.P. Narayana Rao, S. Ramamurthy, Advocates.

Judges

Mack
Krishnaswami Nayudu, JJ.

Acts

Section 3(ii) of the Madras Agriculturists Relief Act,
Section 3 of the Madras Agriculturists Relief Act.14.
Section 3 of the Madras Agriculturists Relief Act
Madras Agriculturists Relief Act (Act IV of 1938),
Madras Agriculturists Relief Act (Act IV of 1933)
SECTION 3 USURIOUS LOANS ACT 1918
Madras Agriculturists Relief Act. Relief
Madras District Municipalities Act, 1920,
SECTION 3 USURIOUS LOANS ACT
Madras Agriculturists Relief Act,
USURIOUS LOANS ACT 1918
Madras Act VIII of 1937
S. 3 of Act IV of 1938.7.
S. 3(2) of Act IV of 1938.
S. 3 of Act IV of 1938.
S. 7 of Act IV of 1938

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Smart Summary

Structured Summary of the Provided Judicial Opinion

Factual and Procedural Background

The plaintiffs sued for recovery of Rs. 17,508-9-7, being the balance of principal and interest due on a mortgage bond dated 17 February 1933. The mortgage had been executed by the first defendant and his father, Venkataratnam (who died in February 1940), for Rs. 11,000 with compound interest at 9% per annum. The first defendant and his father were members of a joint undivided Hindu family which owned numerous properties, including more than 190 acres of agricultural land and a number of houses in Gudivada. Gudivada was a Union until 1937 and thereafter became a Municipality.

Defendants 2 and 3 were minor sons of the first defendant. The defendants contended they were entitled to relief under the Madras Agriculturists Relief Act (variously cited in the opinion) and to reduction of interest under the Usurious Loans Act, 1918. The District Judge found the defendants to be agriculturists and granted relief on the Usurious Loans Act issue; the plaintiffs appealed. The appellate court (panel including Mack, J. and Krishnaswami Nayudu, J.) considered (a) the entitlement to relief under the Usurious Loans Act, 1918; and (b) whether the defendants came within the definition of “agriculturist” under the Madras Agriculturists Relief Act (referred to as Act IV of 1938 in the opinion) and hence were entitled to relief under that Act.

Legal Issues Presented

Whether the defendants are entitled to relief under the Usurious Loans Act, 1918 (in particular, whether the charging of compound interest at 9% is excessive and therefore reducible).
Whether the defendants fall within the statutory definition of “agriculturist” under Section 3 of the Madras Agriculturists Relief Act (Act IV of 1938) (including the effect of proviso (C) concerning assessment to property/house tax within the relevant period), and thus whether the mortgage debt can be scaled down under that Act.
Whether a debt can be scaled down under Section 7 of Act IV of 1938 when the debt at the commencement of the Act was payable by a person who was not an agriculturist, but the current owner or heir claims to be an agriculturist.

Arguments of the Parties

Appellants (Plaintiffs)

The plaintiffs asserted their right to recover the mortgage balance and contended the defendants were not agriculturists within the meaning of the Madras Agriculturists Relief Act; consequently, they were not entitled to scaling down of the mortgage under that Act.
The plaintiffs (implicitly) disputed any entitlement to reduction beyond what statute required and sought enforcement of the mortgage subject to statutory constraints.

Respondents (Defendants)

The defendants claimed to be agriculturists and therefore sought relief under the Madras Agriculturists Relief Act (Act IV of 1938) to have the debt scaled down.
Separately, the defendants argued they were entitled to relief under the Usurious Loans Act, 1918 (relying on the proviso and Explanation (1) to Section 3), asserting that compound interest at 9% was excessive and the transaction substantially unfair.
The defendants further argued that because the first defendant's name did not appear in municipal property registers for the relevant period, he should not be treated as assessed to property/house tax for the purposes of proviso (C) and thus would qualify as an agriculturist under the relief Act.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Muthiah Chettiar v. Rayalu Aiyar Nagaswami Iyer & Co., AIR 1944 Mad 98	Applied by the District Judge to hold that where the name of the father appeared in municipal registers but not the son, the son could still be held to be an agriculturist (i.e., the absence of the son's name in registers was held to support agriculturist status).	The appellate court observed this decision was contrary to a later Full Bench ruling and held that, after the Full Bench decision (AIR 1944 Mad 359), AIR 1944 Mad 98 can no longer be held to be good law and must be treated as impliedly overruled.
Srinivasa v. Swaminatha (Full Bench), AIR 1944 Mad 359	The Full Bench stated the factors relevant to proviso (C) of Section 3: (i) ownership of property within the municipality with annual rental value not less than Rs.600; (ii) the property should have been assessed to house/property tax for the two years immediately preceding 1 Oct 1937; (iii) the municipality should have demanded or recovered the tax from the owner or otherwise treated him as liable to pay the tax.	This Full Bench decision was treated as authoritative. The appellate court followed its principle that ownership (even of joint family property) plus assessment in the relevant period brings a person within proviso (C), though the court observed the third condition (demand/recovery) is unnecessary to satisfy the proviso.
Swaminatha v. Srinivasa, AIR 1939 Mad 942	Earlier authority on the questions referred to the Full Bench; used in the Full Bench's examination of the issue.	The appellate court noted that the earlier decision was considered by the Full Bench and that the Full Bench's view governs the present case.
Rajoo v. Palaniappa Chettiar, AIR 1941 Mad 289	Illustrates the distinction between assessment of a person in his individual capacity and assessment of that person as manager of a joint family; when a person is assessed only as an individual, that assessment is not automatically an assessment of the family.	The court relied on the principle to analyse whether the municipal assessment of the father's name alone should be treated as assessment of the joint family or merely of the individual; ultimately the court found the family ownership made the first defendant an owner for proviso (C) purposes regardless of whose name appeared in registers.
A.S. No. 35 of 1941 (Mad) (unreported, cited)	Applied to hold that in the absence of evidence that the father was assessed as manager of the family, the municipality must be deemed to have assessed him as an individual and not as manager of the family.	The decision was discussed as one of the authorities referred to a Full Bench and as having influenced earlier judgments; the appellate court considered it in the context of deciding whether municipal entries in the father's name sufficed to bring the family (and thus the son) within proviso (C).
Swarnam Iswariah v. Kannappa, AIR 1941 Mad 704	Defines "assess" as "to fix the amount of the tax", "to determine the amount and impose the tax upon an individual", or "to estimate officially the value for purposes of taxation".	The court relied on this definition to conclude that the word "assess" does not require that the municipality must have demanded or recovered the tax; therefore the third Full Bench condition (demand/recovery) is not necessary to invoke proviso (C).
AIR 1944 Mad 93	Referenced among earlier decisions considered by the Full Bench; the opinion states it has been "considerably shaken" by the Full Bench decision.	The appellate court observed that although AIR 1944 Mad 93 has not been expressly overruled, its reasoning has been weakened by the Full Bench ruling and that the Full Bench decision should govern.

Court's Reasoning and Analysis

The opinion contains two complementary lines of reasoning delivered by Mack, J. and Krishnaswami Nayudu, J. The court separated the issues under two statutes and applied distinct legal tests to each.

Mack, J. — Focus on Act IV of 1938 and the Criterion in Section 7

Mack, J. emphasized that the definition of "agriculturist" in the proviso to Explanation (1) to Section 3 of the Usurious Loans Act, 1918 is different from the definition in Section 3(2) of Act IV of 1938; the latter is very wide and bears no necessary relation to the dictionary meaning of "agriculture".
He reasoned that Section 7 of Act IV of 1938 provides that only debts "payable by an agriculturist at the commencement of this Act" can be scaled down. Consequently, whether the present debt (a mortgage on urban property and agricultural lands executed by the father) can be scaled down depends on whether, at the commencement of Act IV of 1938, the debt was payable by an agriculturist.
Mack, J. rejected the defendants' contention that the son's later status as an agriculturist could convert a debt originally payable by a non-agriculturist (the father) into a debt payable by an agriculturist for the purpose of scaling down. He stressed the temporal criterion: the relevant question is the status of the debtor at the commencement of the Act.
Accordingly, if the debt at commencement was not payable by an agriculturist, it cannot be scaled down under Section 7; acceptance of the defendants' contention would permit successors or heirs who later become agriculturists to improperly obtain scaling down of debts the statute did not contemplate.

Krishnaswami Nayudu, J. — Usurious Loans Act (1918) and Madras Agriculturists Relief Act

On the Usurious Loans Act issue, the court accepted the District Judge's finding that the defendants were agriculturists for the purposes of that Act because they owned agricultural lands and cultivated them (directly or through tenants). Given that they were agriculturists and compound interest was charged, the court held (consistent with the proviso) that compound interest at 9% was excessive and that compound interest could not be claimed. The plaintiff was entitled to simple interest at 9% per annum throughout.
On the Madras Agriculturists Relief Act issue, the court explained that being an "agriculturist" within the Usurious Loans Act does not automatically make a person an "agriculturist" under Act IV of 1938; the latter requires satisfaction of the statutory definition in Section 3 (including avoidance of the provisos such as proviso (C)).
The court examined the municipal assessment evidence: 21 of 23 houses were registered in the father's name for the years 1934–1938; certificates and extracts showed assessments and aggregate rental values exceeding Rs. 600 in the relevant periods. Although the municipal registers named the father, the houses were joint family properties, and the first defendant had an interest in them; after the father's death, the first defendant continued in possession and paid taxes.
Relying on the Full Bench decision in AIR 1944 Mad 359, the court treated the decisive factors as ownership of property within the municipality with annual rental value not less than Rs. 600 and assessment to tax for the two years prior to 1 Oct 1937. The appellate court concluded that it was immaterial that the municipal register named the father alone: substance (ownership and joint family interest) rather than form controls.
The court also analysed the Full Bench's three-condition statement and concluded the third condition (that the municipality should have demanded or recovered the tax or otherwise treated the owner as liable) is unnecessary. The court relied on the statutory language and the meaning of "assess" (as explained in Swarnam Iswariah v. Kannappa) to hold that mere assessment suffices; demand or recovery is not required to invoke proviso (C).
Given the joint family ownership and the assessed rental values exceeding Rs. 600 in the relevant period, the court held the defendants come within the mischief of proviso (C) to Section 3 of the Madras Agriculturists Relief Act and therefore are not agriculturists under that Act.
The court further discussed precedent: earlier decisions (including AIR 1944 Mad 98) that took a contrary view were considered inconsistent with the Full Bench and thus no longer authoritative.

Holding and Implications

Final Disposition: The appeal was allowed.

Direct holdings and orders:

The defendants are entitled to relief under the Usurious Loans Act, 1918 in that compound interest at 9% per annum is excessive; compound interest cannot be claimed and the plaintiff is entitled only to simple interest at 9% per annum from the date of plaint to the date of payment.
However, the defendants are not "agriculturists" within the meaning of Section 3 (and proviso (C)) of the Madras Agriculturists Relief Act (Act IV of 1938) and therefore are not entitled to scaling down or other relief under that Act.
Consequently, the appeal was allowed in favour of the plaintiff on the Madras Agriculturists Relief Act point; there will be a mortgage decree for the amounts due under the mortgage after appropriation of amounts paid towards principal, with simple interest at 9% per annum from the date of plaint to the date of payment. Time for redemption was fixed at six months. Plaintiffs recover proportionate costs here and in the courts below.

Implications noted by the court:

The opinion follows and gives controlling effect to the Full Bench decision in AIR 1944 Mad 359 regarding the operation of proviso (C) to Section 3: ownership of property within the municipality and assessment for the relevant period are the decisive factors; municipal entry of a particular name in the register is not dispositive if the property is joint family property.
The court expressly held that the decision in AIR 1944 Mad 98 is inconsistent with the Full Bench ruling and can no longer be regarded as good law (it has been impliedly overruled by the Full Bench decision).
The court stated that it did not consider the third condition stated by the Full Bench (that the municipality should have demanded or recovered the tax or treated the owner as liable) to be necessary; the statutory language and the meaning of "assess" make mere assessment sufficient for proviso (C).
If no broader precedent-setting intent is evident beyond applying and following the Full Bench ruling, the practical consequence is limited to the parties: defendants lose relief under the Madras Agriculturists Relief Act but obtain reduction of interest under the Usurious Loans Act; no new statutory construction beyond applying existing Full Bench authority was asserted as creating novel law beyond this case's facts.

Note: This summary is strictly based on the content of the provided opinion. No facts, rulings, or implications beyond those expressly contained in the opinion have been inferred or added.

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Karipineni Rajayya And Others v. Vallurupalli Ramachandra Rao And Others

The Judgment of the Court was delivered by

Mack, J.:— I am in complete agreement with my learned brother that the definition of an agriculturist in the proviso to Explanation (1) to Section 3 of the Usurious Loans Act, 1918, is quite different from that of an agriculturist as defined in S. 3(2) of Act IV of 1938. The definition of “agriculturist” in Act IV of 1938 is an extremely wide one having no relation whatsoever to “agriculture” as such, which is defined in any dictionary as cultivation of the soil. “It includes a large category of persons, who have a saleable interest in agricultural or horticultural land — no matter where they live or whether they are absentee landlords or not—subject to important provisions, one of which is that a person shall not be deemed to be an agriculturist, if within two years prior to 1st October, 1937 he has been assessed to property or house tax in a Municipality, having an aggregate rental value of more than Rs. 600.

2. The appeal, as it appears to me, in this case must succeed on a very short ground. Under S. 7 of Act IV of 1938” all debts ‘payable by an agriculturist’, at the commencement of this Act, shall be scaled down in accordance with the provisions of this chapter”. The debt sought to be scaled down in the present case is a mortgage on urban property and also some agricultural lands executed by the father of the present first defendant one Venkataratnam, who died in 1940. Therefore at the time of the commencement of the Act the present debt can only be scaled down, if it was then payable by an agriculturist. It is common ground that Venkataratnam himself was not an agriculturist as defined by S. 3(2), and that his name appeared in the property tax register of the Gudivada Union, which in 1937 evolved into a municipality. The position put forward now is that his son is an agriculturist, because he himself was not mentioned by name in the property tax registers. As it appears to me, it is quite immaterial for the purpose of scaling down, the criterion being under Section 7 of the Act, whether at the commencement of the Act the debt was payable by an agriculturist. If the contention of the defendants is accepted, it would be open to an agriculturist who is bequeathed a Valuable urban house by a person who is not an agriculturist under the Act, subject to a mortgage, to apply for that mortgage debt being scaled down on the ground that he in his personal capacity was an agriculturist. This is far from being the case, as the words “provided that a person shall not be deemed to be an ‘agriculturist’ under S. 3(2)(b) must, it appears to me, be read with the words “payable by an agriculturist at the commencement of this Act”. The simple criterion in this case is, therefore, was the debt payable by an agriculturist at the commencement of the Act? If the answer is in the affirmative, the debt can be scaled down. If the answer is in the negative, it cannot. My learned brother has covered the case law on the subject placed before us but for reasons given by me in what appears to me a simple case, there can only be one decision according to the Act itself.

Krishnaswami Nayudu, J.:— An interesting question as to the application of the Madras Agriculturists Relief Act (Act IV of 1933) arises in this appeal. The plaintiffs are the appellants. They instituted a suit for recovery of a sum of Rs. 17,508-9-7, being the balance of principal and interest due on a mortgage bond dated 17-2-1933 executed by the first defendant and his father since deceased for Rs. 11,000 payable with compound interest at nine per cent per annum with yearly rests.

3. The father of the first defendant died in February 1940. Defendants 2 and 3 are the minor sons of the first defendant. The defendants contended that they are entitled to the benefits of the Madras Agriculturists Relief Act (Act IV of 1933), and further that they are entitled to relief by way of reduction of interest under the Usurious Loans Act, 1918.

4. It will be convenient to dispose of the claim to relief under the Usurious Loans Act, 1918, before dealing with the question arising out of the defence raised under the Madras Agriculturists Relief Act. Relief is claimed by the defendants relying on the proviso to Section 3 of the Usurious Loans Act, 1918. The defendants claim to be agriculturists and hence entitled to relief under the Usurious Loans Act, 1918. They ask the court to hold that the interest in this case of 9 per cent per annum compound interest is excessive.

5. Explanation (1) to proviso to Section 3 of the Usurious Loans Act says, that, if the interest is excessive, the court shall presume that the transaction was substantially unfair. Proviso to clause (b) of sub-sec. (2) has been amended by Madras Act VIII of 1937 which says that “provided that in the case of loans to agriculturists, if compound interest is charged the court shall presume that the interest is excessive”. In this case the appellants contend that the defendants are not agriculturists, but businessmen carrying on business in money lending and in running two rice mills in partnership with others. As the learned District Judge observed, the fact, that they own two rice mills, would not be sufficient to hold that they are not agriculturists, especially in view of the fact that they own agricultural lands and look after their cultivation. We see no reason to disagree with the finding of the learned District Judge that they are agriculturists, and they being agriculturists we consider that the rate of interest is excessive, and they are entitled to relief under the Usurious Loans Act, 1918 and compound interest cannot be claimed from them, as we also consider that the compound interest in this transaction is in any event excessive. The plaintiff will therefore be entitled to simple interest at 9 per cent per annum throughout.

6. The fact that the defendants are held to be agriculturists for the purpose of relief under the, Usurious Loans Act, 1918 does not entitle them to be treated as agriculturists under the Madras Agriculturists Relief Act (Act IV of 1938), since to come within the scope of Act IV of 1938, a person claiming relief must show himself to be an agriculturist as defined under S. 3 of Act IV of 1938. A person may be an agriculturist and claim relief under the Usurious Loans Act, 1918, if he shows that he owns agricultural land & cultivates the same by himself or his servants, or through tenants. But that would not be sufficient to bring him within the scope of definition of “agriculturist” under S. 3 of Act IV of 1938.

7. We may now proceed to consider whether the finding of the learned District Judge that the defendants are agriculturists and are entitled to relief under Act IV of 1938 can be sustained. It is common ground that the first defendant and his father were members of a joint undivided Hindu family, and the defendants are now members of the said joint undivided Hindu family possessed of joint family properties, which consisted of a number of houses in Gudivada, and more than 190 acres of agricultural lands. The evidence of D.W 2, a clerk, who was looking after the affairs of the joint family during the lifetime of the father and after his death working under the first defendant, says that the family of the defendants during the lifetime of their father, had 190 acres and after his death the first defendant disposed of 160 acres and acquired 830 acres.

8. Gudivada was a union till 1937 and afterwards, it became a Municipality. The family owned 23 houses situate in Gudiwada, out of which 21 houses were registered in the name of the first defendant's father Venkataratnam in the property registers of the Union and the Municipality for the years 1934 to 1938, and two houses alone-stood in the name of the first defendant. After Venkataratnam's death, the house properties continued to be in the possession of the first defendant, and he was paying the taxes due in respect of those properties. Ex. A. 1, a certificate issued by the Municipality of Gudivada at the instance of the plaintiff on 3rd March, 1948 is to the effect that Venkataratnam, that is the father of the first defendant, and Ramachandra Rao, the first defendant, have been assessed to property or house-tax within the two years immediately preceding 1st October, 1937, and that the aggregate annual value of such buildings in respect of which they were taxed was Rs. 2465-1-0, Rs. 2465-1-0 and Rs. 5268-14-7 for the years 1935–1936, 1936–1937 and 1937–1938 respectively.

9. In Exs. A. 3, A. 4 and A. 5, which are extracts from the property register the name of Venkataratnam appears under the column relating to the ownership of the property in respect of all the items excepting in regard to one item in Ex. A. 3, the name of the first defendant is mentioned. But the first defendant's ownership is in respect of a property which is of the capital annual value of Rs. 1800 which has been found-by the learned District Judge as not sufficient to yield an annual rent of Rs. 600. There is no doubt that during the relevant period, that is for the four half years preceding 1st October, 1937, in the Municipal registers the name of the first defendant's father alone appears as the owner in respect of the properties of the annual rental value exceeding Rs. 600. To bring himself within the definition of “Agriculturist” as defined; under S. 3, it is not enough for the defendant to;show that he merely has a saleable interest, in: agricultural land not being situated within the Municipality or Cantonment, but he has further to establish that he does not come under any of she provisos to that section, one of such provisos being proviso (C), which says that a person shall not be deemed to be an “agriculturist” if he has in all the four half years immediately preceding the 1st October, 1937, been assessed to property or house tax in respect of buildings or lands other than agricultural lands, under the Madras District Municipalities Act, 1920, etc. … provided that the aggregate annual rental value of such buildings and lands, whether let out or in the occupation of the owner is not less than Rs. 600.

10. The learned District Judge on the basis of the extract from the Municipal registers, where the name of the first defendant did not appear as the owner of the properties of the nature mentioned in the proviso to S. 3, his father's name only having appeared, following the decision in — ‘Muthiah Chettiar v. Rayalu Aiyar Nagaswami Iyer & Co.’, AIR 1944 Mad 98 (A), held that, even though the father, if alive, could not be an agriculturist and would come within the mischief of proviso (C) to S. 3, the first defendant was in any event, an agriculturist, as he was not assessed to property tax by reason of his name not appearing in the property registers during the relevant period. It is unfortunate that a later Full Bench decision of this court in — ‘Srinivasa v. Swaminatha’, AIR 1944 Mad 359 (B), was not brought to the notice of the learned District Judge, though it was decided prior to the date of the judgment of the lower court. It is held by the Full Bench in — ‘AIR 1944 Mad 359 (FB) (B)’,

“In order to find out whether a person has been ‘assessed’ to property or house tax within the meaning of proviso (C) to Section 3(ii) of the Madras Agriculturists Relief Act, the deciding factor is not the insertion of his name in the municipal assessment register as the owner of the property. A case will come within the proviso if these factors are present: (i) Ownership of property within the Municipality, which has an annual rental value of not less than Rs. 600/-; (ii) the property should have been assessed to house or property tax for two years immediately preceding 1st October, 1937; and (iii) the municipality should have demanded or recovered the tax from the owner or otherwise treated him as liable to pay the tax.”

11. It is therefore necessary to see whether in the present case the ownership of the property during the four half years prior to the 1st October, 1937 vested in the first defendant.

12. The first defendant and his father being members of a joint Hindu family and there being no dispute that the houses situate in the municipality are joint family properties, in which the first defendant had also an interest, it follows that the first defendant was the owner of those properties during the relevant period prior to 1st October, 1937, even though the father's name alone appeared in the municipal register, presumably he being the father and the eldest managing member of the family. Reliance is placed on the evidence of D.W 1, the clerk of the Municipality, who says that the properties were joint family properties and was in the name of the first defendant's father late Venkataratnam. It is not necessary to rely on the evidence of this witness to hold that the properties were joint family properties, as there has been no dispute about it, and we are also satisfied that these house properties were joint family properties and the first defendant is also entitled to the same as a member of the joint family.

13. No doubt Venkataratnam is not described as the manager of a joint family in the Municipal registers, and we consider that in view of the decision of the Full Bench in — ‘AIR 1944 Mad 359 (B)’, the description of the person in the books is immaterial. What is required to be established is as to who is the owner of the property. It is significant that the suit mortgage comprises not only the lands, but also the house properties, and the mortgage was executed both by the father and the first defendant representing themselves to be entitled to the properties mortgaged, and the recital in the mortgage deed is sufficient to hold that the first defendant is an owner of the house properties mortgaged, which are situate in the Gudivada Municipality and yield an aggregate rental value exceeding Rs. 600. We have, therefore, no hesitation in holding, following the ruling of the Full Bench in — ‘AIR 1944 Mad 359 (B)’, that the defendants are not agriculturists, but they come within the mischief of proviso (C) to Section 3 of the Madras Agriculturists Relief Act.

14. The learned counsel for the respondents refers to the decision in — ‘AIR 1944 Mad 98 (A)’, relied upon by the learned District Judge, and contends that decision is still good law not being overruled by the Full Bench decision. The learned Judges who decided — ‘AIR 1944 Mad 98 (FB) (A)’, are the very same Judges, Wadsworth J. and Patanjali Sastri J. as he then was, who referred to the Full Bench the question as to whether the decision in — ‘Swaminatha v. Srinivasa’, AIR 1939 Mad 942 (C), was correct, and in the referring judgment the learned Judges before stating the case for the decision of the Full Bench referred to the cases which deal with the question at issue, and in the cases mentioned in the referring judgment, the decision in — ‘AIR 1944 Mad 98 (A)’, is one, and the decision in an unreported case — ‘A.S No. 35 of 1941 (Mad) (D)’, is another, reliance on which was placed by the learned Judges in deciding — ‘AIR 1944 Mad 98 (A)’.

15. In — ‘AIR 1944 Mad 98 (A)’, Wadsworth, J. and Patanjali Sastri J. as he then was, held a view which is contrary to the opinion of the Full Bench. The learned Judges could have doubted the correctness of the view which they have expressed in — ‘AIR 1944 Mad 98 (A)’, only after their attention was drawn to the decision reported in — ‘AIR 1939 Mad 942 (C)’.

16. In — ‘AIR 1944 Mad 98 (A)’, with reference to a claim made by some members of a joint Hindu family to have the debt scaled down under the Madras Agriculturists Relief Act, the question arose as to whether the assessment to property tax could be a bar under the proviso (C) to Section 3 of the Madras Agriculturists Relief Act to their being classed as agriculturists, and in that case the buildings comprised in the mortgage deed were assessed by the Municipality during the relevant period on a total rental value exceeding Rs. 600, and they stood in the name of one Vairawan Chettiar, who was the eldest member, though not described in the books as the eldest member, or the family manager. With reference to the contention that, as the properties stood in the name of Vairavan Chettiar, he alone should be deemed to have been assessed and not the family, the learned Judges observed at page 555 as follows:

“We think this contention is correct and must prevail. It is true that the properties have been found to be joint family properties and that Vairavan Chetti has been found to be ‘de facto’ manager. But it does not follow that the family itself must be deemed to have been assessed by the Municipality in such circumstances in the absence of anything to show that the manager was assessed as such. It was pointed out in — ‘Rajoo v. Palaniappa Chettiar’, AIR 1941 Mad 289 (E), that in applying proviso (a) to S. 3(ii) the distinction between the assessment of a person in his individual capacity and the assessment of that person as manager of a joint family must be borne in mind. The same principle has been applied in applying proviso (C) in — ‘A.S No. 35 of 1941 (Mad) (D)’, where it was held that, in the absence of any evidence to indicate that the father, whose name alone appeared, in the assessment registers, was being assessed as the manager of the family, the municipality must be deemed to have assessed him as an individual and not the family of which he was the manager.”

17. Though the decision in — ‘AIR 1944 Mad 93 (A)’, has not been expressly overruled by the Full Bench, there can be no doubt that the learned Judges of the Full Bench must have examined that decision, as it was one of the decisions mentioned in the referring judgment, and the reasoning of that decision has however been considerably shakened by the decision of the Full Bench. We have therefore no doubt that after the Full Bench decision in — ‘AIR 1944 Mad 359 (B)’ the decision in — ‘AIR 1944 Mad 98 (A)’, can no longer be held to be good law and it must be held that it has been impliedly overruled by the Full Bench ruling.

18. Before leaving the Full Bench decision, it appears to us, whether, for a case to come within the proviso (C) to Section 3 of the Madras Agriculturists Relief Act, it would be necessary to satisfy all the three conditions mentioned by the learned Judges of the Full Bench. It is no doubt necessary to establish the two conditions, viz. (i) Ownership of property within the municipality, which has an annual rental value of not less than Rs. 600, and (ii) the property should have been assessed to house or property tax for two years immediately preceding 1st October, 1937. But it is very doubtful, and in our opinion not necessary, that the third condition, viz., the Municipality should have demanded or recovered the tax from the owner or otherwise treated him as liable to pay the tax, should also be fulfilled. We do not consider that under the language of Proviso (C) to S. 3, the third condition is necessary to be fulfilled. What all the proviso lays down is that a person, who wishes to bring himself within the definition of “agriculturist” has not been assessed to property or house tax of the aggregate annual rental value of Rs. 600. Further, the proviso does not require that it muse be shown that the Municipality should have demanded or recovered the tax from the owner or otherwise treated him as liable to pay the tax. It is sufficient, if he is shown as the owner of the property, and if the property is assessed.

19. The learned Judges of the Full Bench have referred to the meaning of the word “assess” as understood in the decision reported in — ‘Swarnam Iswariah v. Kannappa’, AIR 1941 Mad 704 (F). There the word “assess” was held to mean “to fix the amount of the tax” or “to determine the amount and impose the tax upon an individual” or merely “to impose a tax upon an individual” or “to estimate officially the value for purposes of taxation.” It cannot be said therefore the meaning of the word “assess” can be extended to include that there should have been also a demand’ by the Municipality or that the Municipality must have recovered the tax. Thus we consider; that the third condition referred to in the judgment of the Full Bench, with respect to the learned Judges of the Full Bench, appears to us totally unnecessary to be established before the conditions' of proviso (C) to S. 3 could be satisfied.

20. Learned Counsel for the respondents referred to Section 5 of the Act and urged that unless an undivided Hindu family is assessed to tax specified in the proviso (C) a person, who is a member of the family, can be an agriculturist under the definition of “agriculturist” in the Act, and that in the present case Venkataratnam has been mentioned as an individual and not as a manager of an undivided Hindu family.

21. The enactment of S. 5 only, in our view, emphasises the principle of the decision of the Full Bench, viz., that one has to look not to the form but to the substance or what is required under the proviso. If an undivided Hindu family which owns properties is assessed to tax under proviso (C), a person who is a member of the family cannot be an agriculturist, i.e, notwithstanding his being only an individual, by the fact of his being a member of the family he becomes a owner of the property and if the family property is assessed under proviso (C), he should also be considered to be a person contemplated under the proviso. Being an owner of the property, which is assessed to property tax in terms of proviso (C), it would be sufficient to hold that he is not an agriculturist, even though his name might not appear in the Municipal register and the municipal register might show the name of any other person. In our view, therefore, a case will come within the proviso (C) to Section 3 of the Madras Agriculturists Relief Act, if these two factors namely, (1) ownership of property within the Municipality, which has an annual rental value of not less than Rs. 600; and (2) the property, should have been assessed to house or property tax for two years immediately preceding 1st October, 1937, are present, irrespective of whether as to whose name appears in the property registers.

22. In that view, we consider that the finding of the learned District Judge cannot be upheld. The defendants are not agriculturists within the meaning of Act VI of 1938, and they are not entitled to the benefits of the Act. The appeal is allowed. There will be a mortgage decree for the amounts due under the mortgage after appropriating all the amounts paid towards principal with simple interest at 9 per cent per annum from the date of plaint to the date of payment. Time for redemption six months from this date. Plaintiff will have their proportionate costs here and in the courts below.

B/M.K.S

23. Appeal allowed.

Karipineni Rajayya And Others v. Vallurupalli Ramachandra Rao And Others

Structured Summary of the Provided Judicial Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellants (Plaintiffs)

Respondents (Defendants)

Table of Precedents Cited

Court's Reasoning and Analysis

Mack, J. — Focus on Act IV of 1938 and the Criterion in Section 7

Krishnaswami Nayudu, J. — Usurious Loans Act (1918) and Madras Agriculturists Relief Act

Holding and Implications

Karipineni Rajayya And Others v. Vallurupalli Ramachandra Rao And Others

Comments